singapore property weekly issue 173

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CONTENTS

p2 Are Australian Properties Marketed

Truthfully to Singapore Investors?

p8 Singapore Property News This Week

p13 Resale Property Transactions

(August 27 – September 2 )

Welcome to the 173th edition of the Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR

mailto:[email protected]

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SINGAPORE PROPERTY WEEKLY Issue 173

Page | 2Back to Contents

By Property Soul (Guest Contributor)

A journalist from The Sydney Morning Herald

contacted me in mid-June to find out more

about the recent trend of Singaporeans

snapping up Australian properties. The article,

"Singaporean investors hungry for a piece of

the Australian housing market", was finally

published in the paper on July 26, 2014. It is

about Singapore property buyers flocking

Down Under for properties because of

restrictive measures at home, a strong

Singapore dollar, record low interest rates

and the promise of attractive return from

Australian developers.

Are Australian Properties Marketed Truthfully to Singapore Investors?

http://www.smh.com.au/business/property/singaporean-investors-hungry-for-a-piece-of-the-australian-housing-market-20140725-zsvj9.html























While browsing through the article to find the

quotes from myself, the brutal truth pointed

out by the journalist caught my attention:

1. How the Australian locals see

Singaporeans going after their properties

targeted for foreigners; and

2. How different the facts are versus what is

being presented to Singapore buyers.

How Australians see Singapore buyers

According to the Australian foreign investment

laws, non-residents can only buy newly built

properties with approval from the Foreign

Investment Review Board, but not established

homes. Most locals, especially first-time

home buyers, buy established rather than

new properties. Their average purchase price

is A$328,000 which is far below the prices of

properties marketed to Singaporeans.

The locals don't mind 'foreigners' snapping up

those new high-end properties as they are not

competing with them. After all, foreign

investment in new properties is benefiting

their construction sector.

My concern is: if one day Singapore owners

want to cash-out, the buyer market will be

rather small since these 'pricey' properties

can only be sold to foreigners.

Marketing is one thing and reality is

another

The article reveals the fact that Australian

property advertisements in the Singapore

papers can be misleading:

“Buy where the local Australians are buying,"

says one ad in Singapore's Straits Times ...

Singapore-based property author Vina Ip is

concerned that the rosy picture painted



by Australian developers in glamorous

presentations at the St Regis hotel is tainted

by rental guarantees and other incentives.

"I always warn people to actually go to see

the properties themselves, go for a trip and

see where it’s located, talk to the landlords

and see if the rental return is actually that

good," Ms Ip said.

Some ads include location pitches that could

best be described as generous.

The presentation for Mirvac's Harold Park

complex in Glebe, though not to scale, gives

the impression that the site of the former trot

raceway is bigger than the large Sydney

suburbs of Leichhardt and Annandale

combined. It also points out it is conveniently

located next to the harbour foreshore. As

most in the inner city suburb know, access to

the harbour can be tricky.

Another ad on Singapore property site, Jalin,

for Australand’s Botanica complex in

Lidcombe describes it as being in Sydney’s

inner west.

By most definitions, Lidcombe falls well to the

west of the boundaries of the cosmopolitan

suburbs of the inner city Sydney.

Exclusive offer and high return 'for

Singapore buyers only'

Other common marketing tactics from the

developers and marketers include:

1. The promise of an 'exclusive offer' with

exceptional terms just for Singapore buyers;

2. The waiving of stamp duties and legal fees;

3. The offer of lower interest rates; and

4. A guarantee of a minimum 6 percent

annual rental return.



ANZ Singapore is offering a variable interest

rate of 1.17 percent when Australians are

borrowing at 5.88 percent. A federal

parliamentary inquiry just questioned the

checks the banks are conducting on foreign

buyers. Both ANZ and Macquarie Group were

asked "to provide details to a broader House

of Representatives economics committee

inquiry into residential housing."

What about the guaranteed rental return of 6

percent or higher? Quoting from the article:

By most measures, however, these figures

represent a premium to the market.

Rental yields in apartments in Melbourne and

Sydney ranged between 4.8 and 5 per cent in

the March quarter, according to property

listing business Domain.

“A 6 per cent guarantee would indicate a top

up from the developer,’’ said Domain senior

economist Andrew Wilson.

Tim Lawless, a director of property research

firm RP Data notes a yield of 6 per cent "is

well above market".

"When the guarantee period expires, in all

likelihood, the purchaser will be left holding

an asset on a lower yield," he says.

The developers offering such guarantees,

including Kokoda Property in central

Melbourne, Newstead in Brisbane and their

Singaporean agent, Reapfield Property

Consultants, all declined to comment.

Even so, these risks haven’t deterred

Singaporean investors.



"In Singapore if you get a 2 to 3 per cent

rental return it’s considered very lucky," says

Singaporean property author, Vina Ip. This

makes the 6 per cent return on Australian

properties look attractive, she adds.

Herd mentality, emotional need, or no

choice?

Australian property marketers also claim that,

apart from financial incentives, Singaporeans

have that 'connection' or 'love affair' with

Australian properties because many have

traveled, studied, or worked in Australia

before.

I was taken aback by this statement.

As a property investor, the thing I least want

is to be emotionally attached or fall in love

with any property without looking at the facts

and numbers, no matter how attractive the

packaging is.

As long as the prohibitive conditions on the

purchase of second homes exists in

Singapore and the economic climate remains

favourable, Ms Ip believes that Singaporeans

will continue to look to Australian property as

an investment haven, spurred on by generous

rental guarantees from hungry Australian

developers.

"They have no choice but to look overseas,"

Ms Ip says.

This last quote from me has two words

missing. It should be "(They think) they have

no choice but to look overseas.“



Just when I was about to wrap up this blog

post, someone from Hong Kong sent me a

picture of a leaflet marketing Twin Peaks at

Leonie Hill. The Whatsapp message said:

"Why are they selling this over here?"

I replied: “Wait, send me all the pages.” I want

to see how the developer markets this luxury

condo to Hong Kong property buyers.

By guest contributor Property Soul, a

successful property investor, blogger, and

author of the No B.S. Guide to Property

Investment.

http://propertysoul.com/

http://aktive.com.sg/store/no-b-s-guide-to-property-investment/














http://www.moneymatters.sg/


Singapore Property This Week


Residential

Development charge rates for private

residential land lowered

The development charge rates for non-landed

residential use fell by an average of 1.6 per

cent from 25 August to 30 August. According

to an analysis by JLL, this is the first time

since March 2012, that there is a drop in the

average development charge rates for non-

landed residential use. According to Ministry

of National Development, development

charge rates for non-landed residential use

have fallen between 2.8 per cent to 5 per cent

in 55 sectors. On the other hand,

development charges for industrial use rose

by 1.9 per cent in the same period of time.

Development charges which are imposed on

sites that are undergoing enhancements have

been revised on 1 March and 1 September

across 118 sectors. The revision will be

effective from 1 September this year to 28

February next year. Changes in the rates

were made by the Ministry of National

Development, based on current market

values. According to Business Times, the

development charge rates on hotels, hospital,

places of worship and civic and community

institutions are expected to increase by an

average of 9 per cent. As hotel values remain

inflated, it is no surprise that there the

government will be increasing development

charges, said Donald Han from Chestertons.



Chia Siew Chuin from Colliers International

said that development charge on industrial

land has not changed this year most likely

because bid prices for industrial land tenures

have been unpredictable. Chia believes the

government might still be monitoring the

industrial market before any making changes.

(Source: Business Times)

Fall in home equity reduces credit for

consumption

According to Citi economist Kit Wei Zheng,

the amount of credit for consumption may

have decreased because there is a drop in

home equity prices. Data from the

Department of Statistics showed that the total

value in housing assets fell to $820.6 billion

due to corrections in home prices. On the

other hand, mortgages went up by 5.6 per

cent year-on-year to $210.8 billion in Q2 this

year. While Kit is concerned about the effect

of falling home equity on consumption, other

experts argue that there is no cause of

concern as employment rates have been

high. Nonetheless, Song Seng Wun from

CIMB Research believes that the Total Debt

Servicing Ratio has moderated private

consumption. Selena Ling from OCBC Bank

said that the falling prices may negatively

affect property owners who already have

difficulties financing their properties.


Commercial

Straits Trading Building predicted to sell

for record prices

The Straits Trading Building, which is located

at Battery Road, is expected to sell for at

least $2,800 per square foot or $450 million,



the highest offer made for any office block in

the past six years. The 999-year leasehold

office tower has a net lettable area of about

159,000 square feet. If the transaction pulls

through, the Straits Trading Building will

generate a net yield of about 3 per cent. Its

long leasehold tenure and its prime location

justified the high pricing, said market experts.

According to market experts, other nearby

office blocks sold for similar prices this year.

For example, a strata office floor at the 999-

year leasehold Samsung Hub, at Church

Street, was sold for $3,030 per square feet.

Nonetheless, the Straits Trading Building has

been priced higher than office blocks at

Equity Plaza, which sold for $2,181 per

square feet, because it had a longer lease

remaining. Furthermore, Straits Trading

Building is almost fully let. While it was built in

1972, it has undergone renovations and was

redeveloped in 2009.


Land bids for industrial sites fall

Land bids for a site at Gambas Crescent and

another at Tuas South Avenue 7 have fallen.

Both sites have a 30-year leasehold and were

released for tender as part of the H1 2014

Industrial Government Land Sales list. The

winning bid for the Gambas Crescent site was

sold for $83.03 per square foot per plot ratio

to NSS Realty. This was 19 per cent lower

than Parcel 3, a neighbouring site that was

sold last December for $102.20 per square

foot per plot ratio. Parcel 2 and 1 were sold in

October last year for about $127 per square

foot per plot ratio and $138 per square foot

per plot ratio respectively. The four sites have

been zoned for B1 use and have a maximum



gross floor to land area of 2.5 plot ratio.

Parcel 1 has since been converted into 130

factory units. 44 out of its 55 released units

have been sold for an average of $325 per

square feet. On the other hand, the Tuas site

was sold for $56 per square foot per plot

ratio. This was about half the value of the

winning bids for earlier sites such as The

Index, at Tuas South Avenue 3. Ong Kah

Seng from R’ST Research said that the site at

Tuas South Avenue 7, which was released

this year, may have been less appealing to

investors because it was zoned for B2 use.

According to Ong, industrial land zoned for

B1 zone are more popular because it typically

attracts tenants that require modern strata

factories.


Tender launched for 7 sites at Bukit Merah

Seven industrial units at Kewalram House in

Bukit Merah Industrial Estate have been

launched for tender on Aug 25. The total land

area of all seven units is 18,800 square feet.

All units are 99-year leasehold units and still

have 45 years remaining on their tenures.

They have been zoned for B1 use and have a

maximum gross plot ratio of 2.5. Of the seven

units, two units are sized 3,100 square feet

and 4,300 square feet respectively. They are

located on the ground floor and can be

converted into a warehouse or factory space.

The other five units are located on the third

floor and are between 2,100 square feet to

2,400 square feet. The units are priced

between $480 per square foot and $620 per

square foot.



Its marketing agent, JLL believes that there

are en bloc opportunities for the building,

because its gross floor area is within the

maximum gross floor area permitted under

the Master Plan 2014.


Jln Besar commercial sites on sale

A three-storey freehold commercial site that

has about 2,726 square feet and a gross floor

area of about 7,887 square feet is on sale.

The commercial building has a mechanised

car park and an internal lift. Another four-

storey residential building with commercial

land space on its ground floor is also on sale.

The four-storey building has about 1,335

square feet of land and has a gross floor area

of about 4,324 square feet. Both properties

are located at Sam Leong Road, at Jalan

Besar, but are not zoned for conservation. As

such, they may be redeveloped. Both

buildings are being marketed by Chestertons

Singapore. Their indicative price is about

$17.5 million or $1,433 per square feet.

(Souce: Business Times)

http://propertymarketinsights.com/



Non-Landed Residential Resale Property Transactions for the Week of Aug 27 – Sep 2

NOTE: This data only covers non-landed residential resale property

transactions with caveats lodged with the Singapore Land Authority.

Typically, caveats are lodged at least 2-3 weeks after a purchaser

signs an OTP, hence the lagged nature of the data.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

3 ASCENTIA SKY 1,991 3,000,000 1,507 99

3 THE ANCHORAGE 1,550 1,980,000 1,277 FH

3 QUEENS 1,410 1,765,000 1,252 99

4 REFLECTIONS AT KEPPEL BAY 3,380 10,500,000 3,107 99

4 THE OCEANFRONT @ SENTOSA COVE 2,077 3,999,000 1,925 99

5 VILLA DE WEST 1,012 1,080,000 1,067 FH

5 FABER CREST 1,249 1,293,000 1,036 99

5 FABER CREST 1,776 1,620,000 912 99

9 ILLUMINAIRE ON DEVONSHIRE 635 1,400,000 2,204 FH

9 CAIRNHILL RESIDENCES 1,238 2,600,000 2,100 FH

9 THE LIGHT @ CAIRNHILL 893 1,730,000 1,936 FH

9 UE SQUARE 1,119 1,567,500 1,400 929

10 TANGLIN REGENCY 1,109 1,340,000 1,209 99

10 RIDGEWOOD 1,367 1,530,000 1,119 999

11 AMARYLLIS VILLE 1,238 1,825,000 1,474 99

11 BIRMINGHAM MANSIONS 1,066 1,520,000 1,426 FH

11 THE ARCADIA 3,778 3,925,000 1,039 99

12 KEMAMAN POINT 850 988,000 1,162 FH

12 THE CITRINE 1,281 1,355,000 1,058 FH

12 AVA TOWERS 1,281 1,180,000 921 FH

13 BLOSSOMS @ WOODLEIGH 1,410 1,810,000 1,284 FH

14 EUNOSVILLE 1,679 1,000,000 596 102

15 AMBER POINT 1,690 2,450,000 1,450 FH

15 KING'S MANSION 1,808 2,100,000 1,161 FH

15 THE WATERSIDE 2,411 2,765,000 1,147 FH

16 THE BAYCOURT 1,625 1,820,000 1,120 FH

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

17 COASTAL VIEW RESIDENCES 1,163 1,150,000 989 999

18 WATERVIEW 1,130 1,200,000 1,062 99

18 LIVIA 915 918,000 1,003 99

18 SAVANNAH CONDOPARK 1,227 1,150,000 937 99

18 MELVILLE PARK 936 850,000 908 99

18 SAVANNAH CONDOPARK 1,453 1,230,000 846 99

18 WATERVIEW 4,672 3,008,000 644 99

19 COMPASS HEIGHTS 689 680,000 987 99

19 THE QUARTZ 1,066 1,050,000 985 99

20 CLOVER BY THE PARK 1,765 2,030,000 1,150 99

20 GRANDEUR 8 1,227 1,180,000 962 99

21 CASA ESPERANZA 1,841 2,600,000 1,413 FH

21 GARDENVISTA 947 1,260,000 1,330 99

21 GRAND REGENCY 1,119 1,200,000 1,072 FH

21 CLEMENTI PARK 1,798 1,800,000 1,001 FH

21 THE CASCADIA 4,532 4,450,000 982 FH

21 CHUN TIN COURT 2,164 1,780,000 823 FH

21 MAYFAIR GARDENS 1,894 1,500,000 792 99

22 THE LAKESHORE 926 1,040,000 1,123 99

22 CASPIAN 872 958,000 1,099 99

23 THE WARREN 1,066 930,000 873 99

28 GRANDE VISTA 1,647 1,380,000 838 999

singapore property weekly issue 173

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