singapore property weekly issue 99

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CONTENTSp2 Will the Sea Change in HDB Policy

Drag Property Prices Down?

p6 Property Renting Tip #3: Rental Approval

p8 Singapore Property News This Week

p14 Resale Property Transactions

(March 27 – April 2)

Welcome to the 99th edition of the Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 99

Page | 2Back to Contents

By Mr. Propwise

Over the weekend Housing Minister Khaw

Boon Wan gave an interview to the Straits

Times, where he spoke about what I believe to

be a radical shift in policy for the pricing of

new Housing Development Board (HDB) flats.

In this article we’ll look at the potential

changes and how they could negatively affect

property prices, especially in the mass market

segment.

HDB to be price-setter, not follower

Historically, the prices of new HDB flats have

been pegged to the movements of resale HDB

prices, i.e. they followed market-based pricing.

This created a vicious (or virtuous, depending

on whether you were a potential buyer or a

home owner) cycle where rising private

Will the Sea Change in HDB Policy Drag Property Prices Down?



property and resale HDB prices would push

up the pricing of new HDB flats, which would

then serve to further bolster pricing in the

secondary market.

Over the past six years, resale HDB prices

rose by 80 percent, dragging new flat prices

up with it, and making them less affordable to

new buyers. Rising new HDB prices then set

the floor for resale prices, and increased

expectations that prices would only keep

going up.

But going forward, HDB will no longer be a

price follower, but instead act to be a price

setter as the chief supplier of homes. As

Minister Khaw puts it, HDB will no longer let

“the tail wag the dog.” Instead, new HDB

prices will now be based on affordability

benchmarks instead of market prices of

resale flats.

Build to Order (BTO) flats to be priced

based on affordability

This de-linking of prices seeks to break the

cycle of self-reinforcing price increases

between the new and resale HDB flat

markets. One possible mechanism that

Minister Khaw spoke about was to price BTO

flats based on a multiple of median income.

Specifically, he referred to pricing new flats in

non-mature estates at four times the annual

median income of applicants, which would

imply a 30 percent fall from current pricing.

However, the exact implementation will be a

sensitive issue, as the government has to do

it without affecting the larger existing base of

flat owners’ asset values. To get feedback

and buy in, these ideas will be opened up for

debate to Singaporeans in a national

conversation.



It will not be easy to balance the interests of

home buyers versus those of home owners.

Impact on private property prices

While the government can’t set private

property prices, they can influence them via

HDB policy. By flooding the market with low-

priced public housing, this will certainly serve

as an overhang on private property prices if

the price disparity is too great.

Previously, there was some segregation

between the public and private housing

markets, primarily through the use of the

income ceiling as a way to restrict access to

public housing. But even this sacred cow may

be slaughtered. Minister Khaw has suggested

doing away with the income ceiling for BTO

flats so that anyone could apply for them

(although there are still likely to be other

restrictions, such as the concurrent ownership

of private property).

If this really happens, then the private property

market will be under threat from public

housing as first-time home buyers of all

income levels will now be able to make their

purchase decision while comparing across the

entire spectrum of housing types.Practically

speaking, the mass market private property

segment will be most affected as high income

earners are less likely to consider HDB flats.

Of course, for this to have an impact, the

government also has to ramp up the supply of

HDB flats.

Government continues to talk the market

down

The government clearly wants to send a signal

to the market that prices should come down.

In the interview, Minister Khaw made several

ominous remarks, including saying that

judging from the crowded showrooms, it has

not “sunk in” for buyers that the era of large

capital gains are at an end, and then



“what goes up must come down.” To further

drive in his point, he suggested that there is

still scope for prices to fall in some market

segments. I believe he is referring to the

currently overheated mass market property

segment, where per square foot prices of

certain developments have almost closed the

gap with more centrally located projects.

As I’ve previously discussed, controlling the

property market and even bringing down

prices have now become a policy aim for the

government. The fact that private home prices

have risen 60% since 2Q09 despite seven

rounds of property measures has become an

embarrassment for the government.

Worse, the high level of developer sales in

March (from a huge 4,000 plus units newly

launched) is likely to accelerate a potential

new round of policies to curb investor

enthusiasm for property. While the sustained

low level of interest rates have continued to

feed investor hunger for any asset with yield,

thus pushing up their prices, don’t forget that

in the Singapore housing market the

government ultimately holds the keys.

Property buyers have shrugged off the

previous seven rounds of property control

measures, pushing prices and volumes

higher.But with the government controlling

both the longer term supply of public (through

BTO launches) and private (through

Government Land Sales) housing, and the

means to curb demand (through taxes and

financing), I wouldn’t bet against the house,

especially one that is determined not to “lose

any more face.”

By Mr. Propwise, founder of Propwise.sg, a

Chartered Financial Analyst and resident real

estate analyst at PropertyMarketInsights.com,

a site to help property owners and investors

make profitable decisions in uncertain times.

Click here to learn more

http://propwise.sg/

http://propwise.sg/

http://propwise.sg/

http://propertymarketinsights.com/














Property Renting Tip #3: Rental Approval

(Reference:

www.hdb.gov.sgwww.subcourts.gov.sg)

For renting of an HDB flat, you have to apply

for rental approval or renewal (this can be

done online) before you lease the unit, and

after meeting the Minimum Occupation Period

(MOP).

If the unit is not approved for rental renewal

and the Tenants have to move out, the

Landlord has to refund the deposit as well as

the pro-rated rent already paid by the Tenant.

If there is any dispute during the process, the

Tenant or Landlord can lodge the case

withthe Small Claims Tribunal. The Tenancy

Agreement (TA) would become evidence for

such disputes.

At the point of this writing, there is a tighter

policy for Permanent Residents to rent out

their HDB after the MOP.

For Singaporeans, the approval is granted

for three years per application with no cap on

the number of renewals and the total period

of subletting.

For PRs, the approval will be granted for

one year per application and the extension

will be assessed on a case-by-case basis. It

will be granted only if there are extenuating

reasons. The total period of subletting during

the flat owners’ entire duration of the flat

ownership is capped at five years.

By Eileen Tan and Ui Wei Teck, property

investors and authors of Enjoying Mid-Life

Without Crisis. This tip and dozens more are

from their book.

http://www.hdb.gov.sg/







http://aktive.com.sg/store/enjoying-mid-life-without-crisis/












http://www.buybyeproperty.com/


Singapore Property This Week


Residential

BTO flats construction not delayed by

tighter foreign workers policies so far

To ensure that the construction of BTO flats

will not delayed by the tighter foreign worker

policies, HDB may replace contractors unable

to cope. However, the impact of the tighter

policies on HDB is likely to be small since

60% to 70% of the super-structure of HDB

projects is constructed with precast parts.

Another possible impact of the tighter policies

is an increase in construction costs. However,

the government will increase the subsidy and

absorb the additional subsidy if the costs

increased.

(Source: Business Times)

Freehold Nassim Road GCB up for sale by

tender

The bungalow which sits on an 84,839 sq ft

freehold site at No 33 Nassim Road with a

nearly 100-metre road frontage is asking for

$250-300 million or $2,947-3,536 psf. The

seller is also willing to sell it in two parcels of

31,647 sq ft and 53,192 sq ft, the first of

which can be subdivided into two GCB plots

and the second three. It is expected to see

much interest given the size of the plot, its

rectangular shape, location, and the scarcity

of freehold sites over 80,000 sq ft. The tender

will close on May 16.




99-year Twin Fountains EC at Woodlands

launched

99-year leasehold Twin Fountains, an EC

development located at the junction of

Woodlands Avenue 6 and Woodlands Drive

16 has been launched at a price of $660-790

psf. It consists of 418 units housed in eight

14-storey blocks, of which 53% or 221 units

are three bed-room units, with the rest being

two-bedroom and four-bedroom units, and

two penthouses. Prices start from $580,000

for an 828 sq ft two-bedroom unit to $1.26

million for a 1,593 sq ft four-bedroom unit. It

is expected to be popular, with draws such as

its affordable pricing, proximity to the

Woodlands and Admiralty MRT stations and

the upcoming Woodlands South MRT station

as well as the Seletar and Tampines

expressways and the future North South

Expressway. Another draw would be the

authorities’ plan to develop the town into a

regional hub.


Resale prices of non-landed private

residential properties rose in Q1

According to the SRX, resale prices of units in

the CCR, RCR and OCR increased from

$1,816 psf to $1,837 psf, $1,208 psf to

$1,259 psf and $958 psf to $1,010 psf

respectively, despite the fall in transactions

from 3,271 to 1,982 units. This is a result of

the low interest rates, and as well as buyers’

confidence in high returns from property

investment. The fall in transactions can be

attributed to the lack of supply as a result of

the cooling measures which deter owners

from selling.




99-year Sengkang West Way private

residential site attracts $262.1m top bid

The above site attracted a total of eight bids,

with the top bid of $262.1 million or $488.84

psf ppr from UOL Group unit Secure

Development. The 179,900 sq ft site has a

3.0 GPR and a 536,000 sq ft GFA. The

popularity of the site is attributed to the

popularity of sites with water views amongst

developers and home owners and the need

for developers to replenish their land banks. It

also reflects confidence of demand for mass-

market homes despite recent cooling

measures. A 20-storey development with 600

units in planned for the site near Sungei

Punggol, Sengkang Sports and Recreation

Centre and Sengkang Riverside Park. The

expected breakeven price and average

selling price are $900 psf and $1,000-1,100

psf respectively.


Commercial

Park Hotel Group said to be selling Grand

Park Orchard Hotel

After the sale of 336-room Park Hotel Clarke

Quay for $300 million or $893,000 per room,

it is said that the Park Hotel Group is

intending to sell its two remaining Singapore

hotels - Grand Park City Hall in Coleman

Street and Grand Park Orchard (along with its

retail podium Knightsbridge). It is said to be

asking for $1 million per room for the Grand

Park City Hall which sits on a site with a

remaining lease of about 79 years and over

$1 billion or a per-room price in the high-$1

million range for the freehold 308-room Grand

Park Orchard. The latter also includes about

74,000 sq ft NLA of retail space.




Q1 sees fall in sales of industrial property

The sales volume of industrial property fell by

62.3% from847 lodged in Q4 2012 to 319

caveats in Q1 2013, as a result of the cooling

measures. Specifically, new sale and sub-

sale transactions slid by 71.3% from 480 to

138 transactions in Q1 while resale

transactions of strata-titled factory units fell by

50.7% from 356 to 181 transactions. The fall

in prices is not as great, as seen in the 4.2%

fall in prices of 30-year leasehold new strata

factory units to $345 psf, the 4% fall in prices

of units with a 60-year lease to $425 psf, and

the 1.6% fall to $876 psf for 99-year leases,

and 3.5% to $956 psf for freehold units. For

resales, however, prices of strata-titled

factory units with 30-year leases saw a 10.7%

to $219 psf, and prices of units of 99-year

leases fell by 0.6% to $551 psf while prices of

units with 60-year leases and freehold units

increased by 3.8% to $390 and 3.3% to $634

psf respectively. Islandwide industrial gross

rents also saw a 5% increase to $2.13 psf in

Q1, though this is unlikely to rise by much in

2013 given the upcoming supply of 24.12

million sq ft of new factory spaces.

Looking ahead, demand is expected to slow

in the near term as a result of the cooling

measures and the slowing manufacturing

activity. As a result of this, prices are also

unlikely slow.


Flight to quality trend in business parks

As more tenants shift to new buildings with

quality specifications and in better locations

with competitive rents, there had been a

positive net absorption in Q1 2013, with a fall

in vacancy rate from 7.2% in Q4 2012 to

6.4%.



Average rents have also stabilised at $3.80

psf per month. Such a trend will also lead to

the creation of 800,000 sq ft of secondary

space in Q2 and Q3 2013. This, coupled with

the upcoming supply of 750,000 sq ft space

which are not pre-committed, the expected

supply of 1.55 million sq ft and competitive

rents in the Grade B office market and light

industrial markets, are likely to prevent sharp

rental increases. It may even lead to a fall in

rents in business parks and force older parks

to undergo asset enhancement or

redevelopment to compete with newer ones.


Sub-letting rule for third-party facility

providers relaxed

Previously, lessees of JTC property intending

to sub-let their GFA must sub-let at least 50%

of the building's GFA to one or more JTC-

approved anchor tenants, with a minimum

GFA 3,000 sq m each. The figure has now

been reduced to 1,500 sq m. This is a

welcomed move since it would make it easier

for landlords in floor planning. Nevertheless,

the impact is likely to be small outside of

Reits and only felt when there are lease

renewals since it is easier to find replacement

tenants for smaller spaces. The change

would also mean that spaces can also

possibly be leased to SMEs, and rents may

also rise since smaller anchor tenants have

less bargaining power.


30-year Tuas Bay Close industrial plot

attracts $37.1m top bid

The 30-year leasehold 2.5 ha site located at

Tuas Bay Close has attracted four bids, with

a top bid of $37.1 million or $81.19 from a



joint bid by ZACD Investments and Bohai

Investments (Sengkang). Zoned for Business

2 development, it has a plot ratio of 1.7. The

lack of active participation in the tender is

attributed to the narrow shape of the plot and

the requirement that the at least 12 factory

units, with 10 contiguous 1,000 sq m units,

and two 3,000 sq m factory units be build.

Units in any development on the site are

expected to be sold at $350-400 psf for

ground floor units and $250-300 psf for units

on the upper floors.


http://www.moneymatters.sg/



Non-Landed Residential Resale Property Transactions for the Week of Mar 27 – Apr 2

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

3 RIVER PLACE 721 1,150,000 1,595 99

8 STUDIOS @ MARNE 517 760,000 1,471 FH

9 PATERSON SUITES 2,196 6,094,500 2,775 FH

9 GRANGE INFINITE 2,594 6,000,000 2,313 FH

9 TRIBECA 1,033 1,900,000 1,839 FH

9 LE WILKIE 829 1,210,000 1,460 FH

10 THE GRANGE 1,765 4,000,000 2,266 FH

10 ONE TREE HILL RESIDENCE 1,130 2,380,000 2,106 FH

10 BOTANIC GARDENS VIEW 1,410 2,750,000 1,950 FH

10 AVALON 1,582 2,750,000 1,738 FH

10 WATERFALL GARDENS 1,830 3,028,000 1,655 FH

10 PROXIMO 1,119 1,830,000 1,635 FH

10 PROXIMO 1,119 1,760,000 1,572 FH

10 RIDGEWOOD 1,722 2,250,000 1,306 999

11 SUITES @ SURREY 926 1,481,600 1,601 FH

11 NOVENA HILL 710 1,030,000 1,450 FH

11 IRIDIUM 2,573 3,250,000 1,263 FH

12 PRESTIGE HEIGHTS 334 707,000 2,119 FH

12 CITY REGENCY 484 695,000 1,435 FH

12 CALARASI 1,227 1,360,000 1,108 FH

14 GRANDLINK SQUARE 1,109 1,146,600 1,034 FH

14 CASA EMERALD 1,055 980,000 929 FH

15 THE ATRIA AT MEYER 1,345 1,880,000 1,397 FH

15 THE WATERSIDE 2,142 2,800,000 1,307 FH

Postal


Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

15 COSTA RHU 2,239 2,700,000 1,206 99

15 D'ECOSIA 1,755 1,810,000 1,032 FH

15 MANDARIN GARDEN CONDOMINIUM 1,528 1,545,000 1,011 99

15 CASTLE LOFT 1,173 1,150,000 980 FH

15 LAGOON VIEW 1,647 1,330,000 808 99

16 THE BAYCOURT 1,658 1,800,000 1,086 FH

16 BAYSHORE PARK 936 950,000 1,014 99

16 CASA MERAH 1,442 1,460,000 1,012 99

16 TROPICANA CONDOMINIUM 1,658 1,408,888 850 999

17 ESTELLA GARDENS 657 705,000 1,074 FH

18 SAVANNAH CONDOPARK 1,453 1,350,000 929 99

18 EASTPOINT GREEN 1,173 1,080,000 920 99

18 ELIAS GREEN 1,550 1,023,800 661 99

19 KENSINGTON PARK CONDOMINIUM 1,991 2,250,000 1,130 999

19 KOVAN MELODY 1,302 1,450,000 1,113 99

19 THE QUARTZ 1,066 1,180,000 1,107 99

19 KOVAN MELODY 1,216 1,300,000 1,069 99

19 THE QUARTZ 1,216 1,280,000 1,052 99

19 KOVAN MELODY 1,227 1,275,000 1,039 99

19 SUNGLADE 1,281 1,288,000 1,006 99

19 COMPASS HEIGHTS 1,033 990,000 958 99

19 REGENTVILLE 1,152 970,000 842 99

20 CLOVER BY THE PARK 1,281 1,700,000 1,327 99

20 GRANDEUR 8 2,314 1,990,000 860 99



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


Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

21 THE CASCADIA 883 1,527,000 1,730 FH

21 GARDENVISTA 861 1,180,000 1,370 99

21 CAVENDISH PARK 1,313 1,650,000 1,256 99

21 ENG KONG GREEN 1,044 1,200,000 1,149 FH

21 SHERWOOD CONDOMINIUM 926 1,000,000 1,080 FH

21 SIGNATURE PARK 1,087 1,160,000 1,067 FH

22 THE LAKESHORE 936 1,170,000 1,249 99

23 HILLVIEW REGENCY 1,195 1,150,000 963 99

23 THE WARREN 1,572 1,500,000 954 99

23 NORTHVALE 1,087 903,800 831 99

23 HILLTOP GROVE 1,184 960,000 811 99

25 WOODGROVE CONDOMINIUM 2,626 1,680,000 640 99

26 SEASONS PARK 1,292 1,100,000 852 99

27 ORCHID PARK CONDOMINIUM 1,206 1,020,000 846 99


singapore property weekly issue 99

Documents

1m top bid

private property

resale hdb

top bid

cooling measures

home owners

year leases

business parks