Singapore Real Estate

Simplify land use changes

The government’s decision to set up a task force to identify ways of providing affordable housing is very timely. Country-wide appreciation in real estate prices, together with high interest rates, has severely eroded affordability for a greater section of the population. The shortage of nearly 25 million dwelling units is primarily for the weaker and low income categories.

This section had found housing difficult even when real estate prices were down. At current elevated prices many in the middle class would have given up hope of owning a house. But even before we deliberate the policy response, it is important to define affordability. Does it mean providing housing to the economically weaker sections in the heart of the city? Also, does it mean outright ownership or rented accommodation?

The idea should be to provide people affordable housing at a reasonable distance from their work place. This is where public transport comes in. But the abysmal failure of public transport systems in most Indian cities has meant that people are forced to live close to their work place, which has created unwarranted demand pressure and high prices. The archaic land laws that make conversion difficult and discourage land pooling have further accentuated the problem.

Therefore, what is required is an integrated land-use and transport policy. Good public transport would help develop satellite towns where it may be possible to provide affordable housing through simpler measures such as subsidised loans as land prices would not weigh unduly on cost. This calls for a forward looking land-use policy and better planning. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) has provided an incentive structure for states to put in place relevant reforms. We need to build on that. more…

SINGAPORE : The property market has gone on a bull run this year, and industry watchers believe prices will continue to climb in 2008, albeit at a slower pace.

Good demand sent property prices soaring this year. In the first nine months alone, prices rose by over 20 percent, double the increase for the entire 2006. Industry watchers said this level of optimism has not been seen since the late 1990s.

“Residential sales this year have hit a record high. We haven’t seen anything as high as this. The typical 10-year average is about 7,200-over private homes sold a year. This year, we are going to see more than double that figure,” said Nicholas Mak, analyst at Knight Frank.

“This market sentiment has greatly helped the local buyers. Mainly, I must say it’s fuelled by foreign investors, picking up many of the high-end condos. Likewise, we also witnessed a lot of foreign international funds, Middle Eastern funds, European funds and even some local investors picking up properties en bloc,” said Mohd Ismail, CEO of PropNex.

The spike in en bloc sale transactions has also contributed to the property boom. In the first half of this year, the Strata Titles Board received a record 45 collective sale applications, compared to 43 for the whole of 2006. more…

IT WAS probably the most profitable “flip” in the property market.

In a deal announced last week, GE Real Estate made a whopping 73 per cent profit on its initial $75-million investment, when it sold Anson House for $129.5 million, a year after purchasing it.

The 13-storey building, located at Anson Road, is now owned by a private property fund managed by Australia’s Macquarie Bank.

Analysts told Today the sale is a sign that in the booming local property market, price flipping — the practice of buying assets and quickly reselling them for a tidy profit — is expected to be the norm.Mr Donald Han of property consultants Cushman and Wakefield said he is seeing scores of investors putting their money in prime spaces in the Shenton Way area because the potential gain from a sale could be huge.

“Many investors we know have the intention of keeping their assets for a minimum of two to five years because the Singapore office property market has climbed 90 per cent rental-wise and capital values have almost doubled,” said the managing director.

Foreign financiers eyeing office space in the financial district have no qualms paying anywhere between $1,800 and $3,000 per sq ft in rentals, he added.

The new owners of Anson House, for instance, are paying about $1,701 per sq ft for a net lettable area of 76,127 sq ft.

As Singapore’s economy grows, so will property prices, said Ms Ong Choon Fah, executive director of global estate advisers Debenham Tie Leung.

And these escalating prices could be a godsend to developers, she added. “As these new owners take over, these older sites may also be given a chance to rejuvenate through renovations and the like,” said Ms Ong.

Even though a supply glut is expected by 2010, it is unlikely to affect “high-grade buildings” in the financial district.

“Investors are buying into quality and location, so, if there is going to be an oversupply, they can still rent them out without much of an issue,” said Mr Han.

But one analyst disagreed.

“That really depends on how fast the economy is growing, but when the oversupply cover comes, we believe rents could face downward pressures,” said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

It may look like a quick way to make a profit, but Mr Colin Tan of Chesterton International argued that these big investors usually come into a market armed with an exit plan.

“These include things such as the number of years they’ve been holding the property, and once their targets have been realised, they would seriously consider selling their properties.”

Such was the case with the Anson House sale, said Savills Singapore’s director of marketing and business development, Mr Ku Swee Yong.

“But, we can’t use the word ‘flipping’ for the Anson sale because funds like GE Real Estate are in for the long haul. They had only one asset here, so, they couldn’t say no when the right price was offered to them,” he explained.

Flipping prices or not, will this constant buying and selling ultimately affect rents in the long run?

“In the next 30 months, right up to mid-2010, you can be sure that rentals would continue to go up at a higher rate,” said Mr Ku. more…

SINGAPORE : Sales of new private residential homes in Singapore look set to plateau this quarter.

According to the Urban Redevelopment Authority (URA), 593 units were sold in November, up by about 5% from the previous month.

Market watchers said they expect overall prices to rise by 5-8% for the last quarter of this year. This will bring the full year price increase to between 27% and 30%.

Based on the latest figures, analysts said they expect the number of units sold this quarter to fall below 2,000, compared to 5,129 in the second quarter and 3,450 on the third quarter.

Analysts said the withdrawal of the deferred payment scheme took some wind out of the market, but strong economic fundamentals meant the mass market segment will see strong interest well into 2008.

“I think we’ll probably be in a region of about 5-8%, in terms of the increase (in price) for the fourth quarter. That brings the overall close to about 30% and I think that’s still respectable, considering that the main movement of the market came about during the first 7 months of this year,” said Donald Han, Managing Director of Cushman & Wakefield.

In November, 80% of the units sold were in the mid-tier or mass market segments. This follows from October, when there was a more than 50% drop in the the number of units sold in the core central region. more…

SINGAPORE (Reuters) - LaSalle Investment Management is raising investment in Asia over the next three to four years to up to $20 billion as investor appetite for the region grows despite a credit squeeze, an executive said on Friday.

The firm, which manages about $47 billion in assets including private real estate and publicly listed property securities, is upbeat on Asia as the region has remained largely unscathed from the U.S. subprime mortgage crisis that has dented business and consumer confidence elsewhere.

“Even with all the uncertainty in the global debt markets, we still see opportunity in this part of the world and are confident in raising more money,” David Edwards, the firm’s regional investment strategist for Asia Pacific, told Reuters.

“We expect that at least half of our investment will be in Japan but we don’t make specific market allocations,” he added.

LaSalle raised more funds for direct real estate investment in the region after saying in August that it would plough $15 billion in the next three to five years to buy and develop property in Asia. more…

SINGAPORE (Thomson Financial) - Singapore shares closed slightly higher Tuesday as investors sought out blue chip bargains to end a three-session losing streak.

But gains were capped as some investors stayed on the sidelines, still worried about the subprime credit crisis in the US.

The Straits Times Index closed up 12.92 points or 0.4 percent at 3,683.10, after trading between 3,660.81 and 3,704.16.

Gainers outnumbered decliners 480 to 257, with 250 stocks unchanged.

There were 2.2 billion shares traded valued at 2.6 billion Singapore dollars.

While newsflow on domestic fundamentals are rosy, investors remain wary about the financial markets and the health of the US economy.

‘The volatility of the market tells you there is concern,’ said K Ajith, analyst at UOB Kay Hian.

Market upside is limited near-term and further sharp swings can be expected in the STI this month, with ‘cracks appearing in key sectors’ such as property, banks, and oil and gas, Ajith said.

‘It is not going to be smooth sailing from here onwards,’ the UOB Kay Hian analyst said while recommending that investors sell into strength and switch to defensive plays with strong yields.

Gains were led by a rebound in banking stocks.

Read more on Forbes.com…

S’pore A-Reit’s Q2 income for distribution up 15% at $46.4m

By UMA SHANKARI
ASCENDAS Real Estate Investment Trust (A-Reit) said yesterday its second-quarter distributable income rose 15 per cent to $46.4 million, from $40.5 million a year earlier, as demand for the trust’s business space grew.

The better performance lifted A-Reit’s distribution per unit (DPU) to 3.51 cents, up 11 per cent from 3.16 cents paid for the previous corresponding period.

Net property income for Q2 ended Sept 30, 2007 increased 16 per cent to $60.1 million, from $51.9 million a year earlier.

Read more…

Sotheby’s International Realty has set up a franchise in Singapore, attracted by the growing stream of foreign buyers seeking a home in the red-hot property market. Singapore Sotheby’s International Realty, which has an office in Palais Renaissance on Orchard Road, is part of the expanding global network of Sotheby’s International Realty Affiliates LLC.

Sotheby’s International Realty is owned by US-based Realogy, the world’s leading franchisor of real estate brokerages, and the brand is offered via an exclusive 25-year master franchise. It was recently secured by JVC Capital, a firm controlled by investors including seasoned property investor, Dr Goh Seng Heng.

“Singapore is an important market for our international growth plans,” said Michael R. Good, President and CEO of Sotheby’s International Realty Affiliates LLC. “Dr Goh Seng Heng, the firm’s owner, shares our brand’s core values and commitment to providing the highest levels of service.”

Read more on Asian Property Report..

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