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Posted by on in Property Market Trends

Sim Lian tops bids for EC site, beating market expectations

 

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The latest state tender for an executive condominium (EC) site in Choa Chu Kang Drive shows that developers would still make a beeline for attractive sites.

Located about 550 metres from Choa Chu Kang MRT Station and Bus Interchange and Lot One Shoppers' Mall, the 1.9-hectare plot drew eight bids, with the highest at S$361.08 psf ppr from Sim Lian Land - slightly above market expectations.

Some market watcher had expected the site to draw 5-6 bids with the winning bid at S$320-350 psf ppr. However, he added: "I see a mix of both caution and optimism. The optimism is in the top bid being higher than expected; the caution is the top bid being pretty close to the S$357 psf ppr average price for the two adjacent Choa Chu Kang Grove EC plots sold in February - despite the latest site being more attractive."

The pair of Choa Chu Kang Grove sites are about 1.1 km from Choa Chu Kang MRT Station.

At the latest tender in Choa Chu Kang Drive, Sim Lian's bid was just 2.2 per cent above the next highest, $353.21 psf ppr, from a consortium comprising Hoi Hup Realty, Sunway Developments and Oriental Worldwide Investments.

The number of bids and close winning margin indicate the healthy interest in the EC market, despite current market conditions.

City Developments Limited (CDL) unit Verwood Holdings teamed up with TID Residential to bid nearly S$343 psf ppr, the third highest. Back in March 2011, CDL had paid S$321 psf ppr for the next-door plot, on which it is developing The Rainforest EC project.

Also bidding at Thursday's tender were Nanshan Group Singapore (S$337 psf ppr) and Qingjian Realty (S$331.08 psf ppr). A partnership of Evia Real Estate (6), Ho Lee Group, CNH Investment, OKP Land and Lian Soon Holdings offered S$311.46 psf ppr while MCL Land priced the site at S$305.17 psf ppr . This was significantly lower than the S$357 psf ppr average price that it had paid earlier this year for the pair of Choa Chu Kang Grove plots, in a much inferior location. MCL plans to amalgate the plots and build a project of over 1,300 units.

The lowest bid at Thursday's tender - from Koh Brothers unit KBD Ventures - was S$280.21 psf ppr.

The strong turnout of eight bidders along with the higher-than-expected top bid of S$361 psf ppr constrasts with the lacklustre performance seen two months ago for an EC site in Sembawang Avenue, about 550 metres from Sembawang MRT Station.

That site drew just four bids and its winning bid of S$320 psf ppr was the lowest price for an EC site since November 2012.

ECs are a public-private housing hybrid with initial buyer eligibility and resale conditions that are fully lifted 10 years after the completion of the project.

Demand for ECs has softened following the December 2013 introduction of a mortgage service ratio (MSR) cap for EC purchases from developers.

Nevertheless, pent-up demand for this housing type is expected for the five EC project launches slated by year-end.

This is because no new EC projects have been launched in nearly a year, following regulations announced in January 2013 stipulating that developers would be allowed to sell units in EC projects only 15 months from the date of award of the site, or after completion of foundation works, whichever is earlier. Given that mass-market condo prices have started to soften, most analysts would expect prices of EC units to follow suit.

Market watchers reckon that based on the top bid for the Choa Chu Kang Drive site, the breakeven cost could be around S$700-720 psf. This still leaves the bidder with some cushion for a potential price softening from current levels. In the first half of this year, developers' sales of EC units averaged around S$790 psf going by caveats data.

When contacted, a Sim Lian spokesman said that the group expects to launch a project on the site in early 2016, given current rules. "We're looking at a project of 500-plus units. This is an attractive location, near the MRT station, a fairly big suburban mall and other amenities."

Developers who pay high prices for EC sites may raise the proportion of smaller-sized units - for instance, by building more two-bedders instead of three-bedroom units, in order to keep the price quantum within reach of buyers' MSR cap.

Source: Business Times – 5 September 2014

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More elderly flat owners are likely to be interested in the Lease Buyback Scheme if they have a choice of how many years of their lease to retain and how many to sell back to the Government, said property experts.

But they also warned about allowing too much flexibility and suggested pegging such options to the flat owner's age.

On Sunday, National Development Minister Khaw Boon Wan said that the Government is looking at ways to create more flexibility in the Lease Buyback Scheme.

Currently, the scheme lets Housing Board flat owners keep 30 years of their lease and sell the rest back to the HDB.

The sales proceeds are used to top up their Central Provident Fund (CPF) Retirement Accounts, with any extra being received in cash.

Mr Khaw said his ministry is studying whether elderly flat owners may be given the option to retain more or fewer years on their flat's lease.

A longer lease would mean that flat owners do not have to worry about outliving the 30 years.

A shorter lease would let them get more cash upfront.

Details of the changes are set to be announced this week.

Experts were upbeat about the the proposed move, but highlighted the need for safeguards.

Offering a shorter lease to an 80-year-old, for instance, will free up more cash for these older flat owners who might have more medical costs, said R'ST Research director Ong Kah Seng.

But allowing too short a lease to be left on the flat runs the risk that flat owners will outlive it.

 

Taken from ST Property

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Property developer Wing Tai does not intend to slash prices of its high-end properties despite poor sales and the rules requiring them to sell off units by a designated period. This is because they liken such properties to high-end retail luxury products. Such products do not go on fire sales as they are not sold for utility but for their luxury high end brand and image they carry, as explained by Chairman Cheng Wai Keung during a results briefing yesterday.

The decision not to slash prices will apply to current Wing Tai projects like the luxury condominium, Le Nouvel Ardmore and the upcoming 156-unit Nouvel 18 at Anderson Road. All units at Le Nouvel Ardmore must be sold by April 2016 under the Qualifying Certificate rules. Nouvel 18 at Anderson Road is a joint venture between Wing Tai and Citi Developments. This project must obtain its temporary Occupation Permit by December 17 2014 and all units need to be sold by late 2016.

Wing Tai may way its strategy closer to the end of the designated period of sales for these projects.

The remarks come amid a pe­riod of slumping sales and buy­er caution, as seen by Wing Tai's numbers yesterday. Net profit for the fourth quarter to June 30 declined 48 per cent year-on-year to $143 million, with revenue dropping 42 per cent to $180 million over the same period. Net profit for the 12 months plummeted by 52 per cent to $254 million, on the back of a 40 per cent drop in revenue to $803 million. Development property, its core business, recorded the big­gest slide in revenue, down 49 per cent to $546 million.

Chief financial officer Ng Kim Huat attributed the drop in property development turn­over to lower contributions from Foresque Residences, Hellos Residences and Belle Vue Residences in Singapore, and Verticas Residences in Ma­laysia. This was partly offset by higher contribution from L'Viv.

The disappointing results will hit investors in the form of a lower total dividend of six cents per share, down from 12 cents per share last year.

Chief financial officer Ng Kim Huat attributed the drop in property development turn­over to lower contributions from Foresque Residences, Hellos Residences and Belle Vue Residences in Singapore, and Verticas Residences in Ma­laysia. This was partly offset by higher contribution from L'Viv.

 Earnings per share fell from 37.5 cents a year earlier to 16'.6 cents, while net asset value was $3.78 at June 30, up from $3.62 a year back.

 Mr Cheng said the company will hold prices steady for its luxury condo project, Le Nouv­el Ardmore, which has sold three of the 43 units launched.

 "The good part is our gearing ratio is 0.16 ... Even if we hold on to property, we won't go beyond 0.5."

 Mr Cheng remains cautious about the market, noting that the Urban Redevelopment Au­thority residential property price index had a third straight quarter of price decline.

 Wing Tai shares closed at $1.87 yesterday, up 0.5 cents.

 

(Taken from The Straits Times - 29 August 2014, Friday.)


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Posted by on in Property Market Trends

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The upcoming Thomson-East Coast Line (TEL) will ease transport woes for many thousands of commuters and help send home prices north, consultants said.

The 13km stretch could transform the area's prospects overnight by bringing the central business district and other parts of the island within striking distance.

For a long time, residents in the East Coast have been relying on buses or private transport.

With better accessibility, existing and future properties in the area will benefit positively in the long run.

The line is set to pass through Tanjong Rhu, Katong Park, Amber, Marine Parade, Marine Terrace, Siglap, Bayshore, Bedok South and Sungei Bedok, according to a Land Transport Authority announcement last week.

It will significantly cut travelling time to the central city and the northern part of Singapore.

A resident going from Marine Parade to Shenton Way will halve his journey time from 40 to 20 minutes, for example.

Private residential areas from Tanjong Rhu through to Marine Parade and the boutique developments in Siglap and Bayshore will enjoy the most accessibility as they do not have MRT access now.

Moving further east to Bedok South, the impact could be less, as residents there have had some access to the Bedok and Tanah Merah MRT stations.

99-year leasehold condominiums such as Casuarina Cove, Tanjong Ria Condominium and Water Place in Tanjong Rhu could be among the winners, while the freehold Meyer Residence and The Belvedere in Katong Park are near enough to benefit as well. At Amber Road, projects that may enjoy some lift are mostly small to medium-sized freehold apartments like Aalto, Amber Point and King's Mansion, she added.

Condominiums at Marine Parade like Cote D'Azur, The Palladium and The Seaview could enjoy price gains as could projects in Siglap and Bayshore such as Lagoon View, Laguna Park, Elliot at the East Coast, Bayshore Park, The Bayshore and Costa Del Sol.

Median prices of non-landed properties near the stations range from $905 at Sungei Bedok to $1,547 at Katong Park.

Some property owners may increase their asking prices by 5 to 10 per cent over the next few months - as seen when the stations were announced for the North-East Line (NEL).

People just wanted to capitalise on the news and they knew that their property would eventually appreciate. Granted, that was when the market was more buoyant.

But the full benefits would only be reaped when the line nears completion, suggesting that the sweet spot would be a 24-month period, one year before and one after the service gets going. There could be a 10 to 12 per cent rise in prices over that two-year period.

Some upcoming projects in the area include CapitaLand's 124-unit Marine Blue at Marine Parade Road, which has not yet been launched, and 109-unit Amber Skye at Amber Road.

Amber Skye, a joint venture between China Sonangol Land and OKP Land, had launched 28 units as at the end of last month, with five selling.

MRT stations would help sales move faster but would probably not result in developers raising their selling prices.

If developers peg prices competitively to attract buyers, especially investors, project sales will move faster. A convenient location will make it easier for investors or landlords to rent out their property.

But should the total debt servicing ratio (TDSR) framework stick around, projects priced at $1,400 to $2,000 psf would not have much interest as that is the price range where buyers still need a loan - a far harder task these days.

Source: The Straits Times – 23 August 2014


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A number of property outfits owning sites along the future Thomson-East Coast Line have been touted as likely beneficiaries of the 13km, nine-station MRT line skirting the east shoreline.

They include real estate investment trusts (Reits) and mainboard-listed developers.

Residential developments in the vicinity will likely see 5 per cent to 10 per cent capital gains, retail malls will benefit from growth in shopper traffic, while office and industrial properties will benefit from improved tenant demand," UOB KayHian analyst Vikrant Pandey said in a research report this week.

Potential beneficiaries include CapitaLand, Keppel Land, Roxy Pacific, Chip Eng Seng, UOL, Suntec Reit, Keppel Reit, Frasers Centrepoint Trust, Keong Hong Holdings and Ascendas Reit, he said.

Maintaining an "overweight" call on the property sector, Mr Pandey saw the new line as a long-term catalyst.

"We like deep-value and diversified property stocks, preferably those with exposure to the commercial and hotel segments."

He added: "CapitaCommercial Trust, Suntec Reit, Keppel Land, CDL Hospitality Trusts, CapitaLand and Wing Tai are our preferred picks."

DBS Group Research, in a report this week on the construction sector, said further rail developments in the Thomson-East Coast Line will add $24 billion worth of construction activity for the period until 2024.

Scheduled to be completed in two phases, the $6.8 billion line will run almost parallel to the East-West Line and the future Downtown Line 3, significantly cutting travel time from the East Coast to the Central Business District, Orchard Road and the northern part of Singapore.

It is also expected to bring the MRT to within walking distance of an estimated 160,000 households there.

Upon the line's completion by 2024, properties near the new MRT stations - at Tanjong Rhu, Katong Park, Amber, Marine Parade, Marine Terrace, Siglap, Bayshore, Bedok South and Sungei Bedok - are all expected to see higher rentals, which lead to potential capital appreciation.

New residential developments along the East Coast, including CapitaLand's Marine Blue condo project in Marine Parade and UOL's Seventy St Patrick's, are likely to see renewed interest.

Meanwhile, developers with existing investments in the area could realise significant redevelopment potential in the medium to long term, Mr Pandey said.

These include Roxy Pacific's Grand Mercure Roxy Hotel, and the upcoming Master Contract Services' and Keong Hong Construction's hotel development along East Coast Road.

Existing residential developments near the new line, including Water Place, Pebble Bay, The Waterside, Aalto, Cote D'Azur, Laguna Park, Bayshore Park, The Bayshore and Costa Del Sol, could benefit in the medium term, said Mr Pandey.

However, the ongoing property cooling measures may dampen price appreciation in the near term, he added.

Retail Reits including Frasers Centrepoint Trust, which owns Changi City Point; Starhill Global Reit, which partially owns Wisma Atria and Ngee Ann City malls; and SPH Reit, which owns Paragon, could benefit from increased shopper traffic as a result of better connectivity.

Improving connectivity to Changi Business Park and housing estates such as Tampines, the Downtown Line will be extended with a new station, Xilin, linking Sungei Bedok along the Thomson-East Coast Line with the Expo station on the Downtown Line, Mr Pandey said.

Greater connectivity to Changi may increase demand for logistics space in Changi South and Changi Business Park, which could benefit Ascendas Reit, Soilbuild Reit, Cache Logistics Trust, Viva Industrial Trust and Mapletree Industrial Trust.

Office developments along the new line, including Marina Bay Financial Centre and OUE Downtown in Shenton Way, may see improved demand, he said.

Source: The Straits Times – 23 August 2014

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Only 482 units sold last month against May's all-time monthly high of 1,488

THE record-breaking sales of new private homes in May became a distant memory last month when transactions fell off a cliff as developers put out fewer projects.

Potential buyers also turned their attention to the World Cup and stayed on the sidelines due to the school holidays, market watchers said.

Developers sold only 482 units last month, down 67.6 per cent from the all-time monthly high of 1,488 recorded in May.

June's figures were the lowest since the 480 sales figure in March and brought new condo transactions for the first half to 4,466 - down 56 per cent from the same period a year ago.

If executive condominiums are included, 531 units were sold in June, according to Urban Redevelopment Authority (URA) data yesterday.

May's sales were kick-started by developers putting more projects with lower prices on the market but that strategy was abandoned last month.

"Developers focused on moving units in previously launched developments, and generally avoided releasing new projects amid the June school holidays and World Cup season," said Ms Chia Siew Chuin, director of research and advisory at Colliers.

Sales at new launches tend to slow to a trickle after the initial rush, holding developers back from releasing new projects, added Mr Ong Teck Hui, national director of research and consultancy at Jones Lang LaSalle.

The 944-unit Coco Palms indicates the wild swings in the market between May and June.

The City Developments project was May's top seller with 580 units sold at a median price of $1,018 per sq ft (psf). It was the top seller again last month but attained its position this time by shifting only 55 homes at a median price of $1,014 psf.

May's numbers look an aberration given the generally flat market and a recovery is not on the cards, as any sustained sales pickup would be reined in by rules on lending, Mr Ong said.
Roxy-Pacific's 222-unit Trilive in Kovan and Wing Tai's 469-unit The Crest in Prince Charles Crescent were the only projects launched last month and made up the bulk of the 418 new homes put on the market.

Mass-market units continued to lead sales in June, with 269 shifted in the suburbs. City-fringe projects sold 167 new homes while only 46 were sold in the city centre.

"Even though the private residential market was soft, some projects still enjoyed relatively good sales if they were perceived to be attractively priced by buyers," said SLP International research head Nicholas Mak. "Buying demand was not totally absent in the market but it had to be drawn out by attractive pricing."

Wheelock Properties' The Panorama in Ang Mo Kio was the second best seller last month after Coco Palms. It moved 49 units at a median price of $1,287 psf with The Crest next on 35 units at a median price of $1,682 psf.

Consultants noted that home seekers will remain selective in this half of the year, with the project's location and price points as the main drivers of demand.

Ms Alice Tan, research head at Knight Frank, expects upcoming launches such as Keppel Land's The Highline Residences and World Class Land's City Gate to underpin sales in this quarter, while Mr Joseph Tan, head of residential sales at CBRE, expects the year's sales tally to come in between 8,000 and 9,000 units.

 

Taken from The Straits Times via ST Property

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It should have come as no surprise that on the first anniversary of the most significant measures aimed at underpinning principles of prudent borrowing and lending, a fresh call should come from the property industry for a review of measures that have left the market here listless and lacklustre.

The Total Debt Servicing Ratio framework, which took effect on June 29 last year, was not articulated nor specifically designed as a property cooling measure but was billed as a means of ensuring that borrowers do not overstretch themselves and accumulate too much debt.

It has nevertheless been in the property market where the measure's reach and impact have been felt most significantly. Its stipulation that banks must factor in a borrower's total debt obligations before a new property loan can be granted - coupled with other new measures such as additional stamp duties - had multiple hits: on market sentiment, transaction volumes and prices.

It is perhaps fair, one year on, to ask for a reassessment of the usefulness and validity of the cooling measures. Industry veteran Kwek Leng Beng's argument is that Singapore could lose its edge as an investment destination as foreigners opt instead for property markets elsewhere. Property players assert that speculators have been weeded out, prices have dipped and a cooler, more stable market has been established. There is also the fear of a systemic downward spiral.

But the reality is that underlying concerns remain, including whether prices are currently at levels which home buyers believe are realistic and, importantly, affordable. Given that private home prices surged 60 per cent during the most recent market upswing that began in mid-2009, the decline in prices since the introduction of the cooling curbs is anything but significant. This, in part, underpins the conviction of the authorities that it is too early to consider a rollback of the measures.

Many buyers remain on the sidelines in the hope of a more substantial price correction. Developers are clearly not unaware of how to respond to a buyers market. They have recognised, for instance, that they can move existing stock at discounted re-launches, especially if their new units are reasonably priced.

Hard as the year of cooling measures might have been on certain groups of people, the steps must be viewed, however, for what they have forced on those making financial decisions about property. It has provided the time and space for all to pause and take stock of their expectations, recalibrate their finances, and weigh the outlays required for what is, without doubt, the single most significant physical asset and stake that they will have in the country - and the responsibilities that go with it.

Such determinations are more likely to be sound in a calm, unfrenzied and stable market. If the cooling measures have and continue to enable people to make such important decisions pragmatically, they have a value which must be acknowledged. Market stability, which is a boon to developers and individuals alike, is better achieved when market behaviour, too, can be characterised as both sober and stable.

 

Taken from The Straits Times via ST Property

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Experts predict Q1 slowdown carried on into Q2 ahead of half-year data

THE half-time scorecard for private property sales will be out next week, with most in the industry bracing for a downbeat set of numbers that few expect will get any better as the year progresses.

The first-quarter slowdown is likely to have lingered on into the second quarter as tough home loan curbs continue to deter buyers, consultants said yesterday.

They predicted that overall private home prices could have slid 1 per cent to 2 per cent in the second quarter from the preceding three months, but sales could have been slightly higher.

Dr Chua Yang Liang, Jones Lang LaSalle's head of research for Singapore and South-east Asia, told The Straits Times that the second-quarter overall price drop would probably be around the same as the 1.3 per cent decline in the first quarter.

This could place the decline within a range of 1 per cent to 1.5 per cent from the preceding quarter, he said. "Prices are very competitive right now, and will likely remain like that going forward."

Knight Frank research head Alice Tan also thinks the flash estimates on Tuesday will show that private home prices fell further in the second quarter and added that this weakness is likely to stay.

"The total debt servicing ratio (TDSR) and property cooling measures continue to bite market sentiment, as challenges in private property financing persist. As such, the private homes market could remain fairly subdued in the second half this year," she said.

TDSR caps a borrower's total monthly debt repayments at 60 per cent of his gross monthly income. It was imposed in June last year.

Ms Tan forecast the overall second-quarter price drop to be between 1 per cent and 2 per cent from the preceding three months.

If the market does continue to slow at this pace, the widely expected fall in private home prices this year could be milder than initially feared.

Analysts had earlier forecast a 5 per cent to 8 per cent overall price decline over the course of this year.

However, Dr Chua reckoned yesterday that the price drop will likely come in at the lower end of expectations, adding that the market's performance in the second half of this year would depend on how well upcoming new launches are received. "If projects are priced well, there will be buyers out there," he said.

He said that about 2,200 to 2,300 new private homes are likely to have been sold in April through June, in large part due to the relative bumper crop of 1,470 units moved in May.

There were 1,791 new homes sold in January through March, according to Urban Redevelopment Authority figures.

Ms Tan noted that since there were no major project launches this month, the total number of new homes sold in the first six months of the year would likely be less than 5,000 units.

Upcoming launches include the mixed development City Gate in Beach Road, The Crest in Prince Charles Crescent, Highline Residences in Tiong Bahru and Marina One in Marina Bay.

City Gate, which opens for preview today, sits on the site of the former commercial development Keypoint and is being jointly developed by World Class Land and Fragrance Group.

Units there range from 431 sq ft one-bedders to 1,819 sq ft penthouses.

Prices are expected to be in the range of $1,900 to $2,200 per sq ft (psf).

 

Taken from The Straits Times via ST Property

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