Source : Business Times - 26 Apr 2008
SINGAPORE’S top two developers are expected to report strong core earnings from apartment sales thanks to a three-year property boom, but slower sales since late last year will hit full-year results in 2008.
Private home prices in the city-state jumped 31 per cent in 2007 for the largest increase in eight years, but growth slowed for a second consecutive quarter in January-March as volumes slumped to the lowest since the Sars epidemic in 2003.
Government moves to cool the market, by ending a scheme that allowed delayed payments, coupled with the impact of a global economic slowdown, are expected to hit top developers CapitaLand and City Developments.
This week, Singapore’s third-biggest developer Keppel Land by market value, reported a 3.5 per cent fall in quarterly net profit as new property launches were hurt by the US sub-prime mortgage crisis.
‘Volumes have dwindled down to a trickle as the halt of the deferred payment scheme coincided with the sub-prime issue,’ said Kim Eng property analyst Wilson Liew, who has cut annual forecasts for Singapore developers by 15-18 percent to reflect lower sales.
For the first quarter, CapitaLand, South-east Asia’s largest developer by market value, is expected to report a 59 per cent drop in net profit in the absence of divestment and revaluation gains, analysts said.
Divestment gains, coupled with the sale of an office building and the sale of units in its Ascott Residence Trust, had lifted results five-fold in the first quarter of 2007.
‘CapitaLand will probably continue to book some revaluation gains this year, but most of the increments would already have been booked in 2007,’ Mr Liew said.
CapitaLand’s aggressive moves to grow in overseas markets such as China and India are expected to help it weather a slowdown in Singapore’s property sector. Overseas operations contributed 40 per cent to CapitaLand’s profits in 2007.
City Developments, Singapore’s second-biggest developer, is expected to report a 63 per cent jump in first-quarter net profit, boosted by strong sales of its luxury apartments in the last two years.
‘CityDev is best poised to ride out the current downturn in the property sector and will be a key mover upon the first signs of a market recovery,’ said DBS Vickers analyst Lock Mun Yee, adding that the developer had a large landbank and deep pockets to delay launches until conditions improved. — Reuters
Monday, April 28, 2008
Property market sentiment softens
Source : Today - 26 Apr 2008
Supply of homes, vacancy rates up, but buyers discouraged by high prices
THE lacklustre property market seen in the first quarter of this year is likely to persist, with developers expected to launch more projects in the months ahead, increasing the supply of new homes even as buyers stay away.
The prices of homes in both the private and public sectors rose at a much slower pace in the first quarter while the volume of transactions remained thin.
Private home prices rose 3.7 per cent in the first quarter, according to the Urban Redevelopment Authority (URA), lower than its earlier estimate of 4.2 per cent and well below the 6.8-per-cent rise in the previous quarter.
Developers sold 762 private residential units in the quarter, the lowest number of transactions since Sars-stricken 2003.
The URA data released on Friday for the full three months were an update from its April 1 estimates, which were based on transactions in the first 10 weeks of the quarter.
“This is quite a marked difference and it shows that in the last two weeks of the quarter, there has been some evidence of price cutting in the market,” said Mr Donald Han, managing director of real estate firm Cushman and Wakefield.
The vacancy rate for completed private residential units rose 6.3 per cent, up from 5.6 per cent in the previous quarter, the URA data showed. With more supply in the market, there is added pressure to reduce prices.
“If the vacancies continue rising at this rate, the market will definitely turn this year. Prices will peak for sure,” said Mr Colin Tan, head of consultancy and research at Chesterton International.
Among the projects to be launched in the coming months are the Marina Bay Suites and Duchess Royale on Duchess Avenue. They add on to developments such as The Verte at Telok Kurau and Waterfront Waves at Bedok Reservoir Road that were launched in the first quarter.
Foreigners — who have been a key catalyst in the 30-per-cent jump in private home prices last year — are increasingly being discouraged by high asking prices.
This is especially so amid the continued uncertainty over the United States economy and the fallout from the sub-prime mortgage crisis.
Kuwait Finance House, which last December took an option to buy 97 units of the luxurious Goodwood Residence condominium for $818 million from Guocoland, has decided not to go through with the purchase.
The lacklustre real estate market in Singapore and the region has affected the performance of listed property firms.
Keppel Land reported a 7.6-per-cent fall in property sales to $273.1 million in the first three months of the year due to the increasingly cautious sentiment.
Mr Ku Swee Yong, a director at property consultancy Savills, said that until global stock markets show clear signs of a recovery, investors would remain wary of putting their money in real estate. He noted that banks here had not been selling many home loans this year.
“Other parts of consumer expenditure are still going strong, it’s just that property is taking the brunt of it,” said Mr Ku.
For the office sector, rentals increased at a slower rate of 7.3 per cent, down from 10.9 per cent in the previous quarter.
The URA said there was a total supply of 16 million sq ft in gross floor area of office space at the end of the first quarter.
Since last July, the Government has made available land on short-term leases for transitional office sites to meet the high demand for such space.
Mr Han said that the pace of office rental increase would continue to moderate for the rest of the year.
Mr Nicholas Mak, a director from Knight Frank, said that despite this moderation in pace, rentals will still rise by 15 to 20 per cent this year as “demand for office space is still healthy”.
Resale transactions for HDB flats down down 6%
The public housing market is also showing nascent signs of waning.
The number of resale transactions of Housing and Development Board (HDB)flats fell 6 per cent to 6,360 in the first quarter of the year from 6,750 in the previous quarter. Meanwhile, the HDB Resale Price Index rose 3.7 per cent from the previous quarter, down from 5.7 per cent in the fourth quarter of last year.
“HDB flat buyers were resisting the rise in resale prices,” said assistant vice-president of property agency ERA Eugene Lim.
The median cash-over-valuation (COV) for resale transactions was $21,000 in the first quarter, slightly lower than the previous quarter’s $22,000. The COV is the difference between the actual transacted price of the flat and its valuation. It cannot be paid from a loan or from savings in the Central Provident Fund.
“We saw the resale market hitting resistance level in the fourth quarter last year as HDB flat buyers do not have or are not willing to part with so much cash. This resistance carried through to the first quarter,” said Mr Lim.
“Very often, the deal cannot be closed or takes much longer to close because of unrealistic sellers demanding high COV,” he added.
Also, with more new flats coming on stream, some demand will be removed from the resale market. Buyers who can afford to wait up to three years for the completion of the flats may prefer to buy new flats directly from the HDB as this often involves a very small or no immediate cash outlay.
Supply of homes, vacancy rates up, but buyers discouraged by high prices
THE lacklustre property market seen in the first quarter of this year is likely to persist, with developers expected to launch more projects in the months ahead, increasing the supply of new homes even as buyers stay away.
The prices of homes in both the private and public sectors rose at a much slower pace in the first quarter while the volume of transactions remained thin.
Private home prices rose 3.7 per cent in the first quarter, according to the Urban Redevelopment Authority (URA), lower than its earlier estimate of 4.2 per cent and well below the 6.8-per-cent rise in the previous quarter.
Developers sold 762 private residential units in the quarter, the lowest number of transactions since Sars-stricken 2003.
The URA data released on Friday for the full three months were an update from its April 1 estimates, which were based on transactions in the first 10 weeks of the quarter.
“This is quite a marked difference and it shows that in the last two weeks of the quarter, there has been some evidence of price cutting in the market,” said Mr Donald Han, managing director of real estate firm Cushman and Wakefield.
The vacancy rate for completed private residential units rose 6.3 per cent, up from 5.6 per cent in the previous quarter, the URA data showed. With more supply in the market, there is added pressure to reduce prices.
“If the vacancies continue rising at this rate, the market will definitely turn this year. Prices will peak for sure,” said Mr Colin Tan, head of consultancy and research at Chesterton International.
Among the projects to be launched in the coming months are the Marina Bay Suites and Duchess Royale on Duchess Avenue. They add on to developments such as The Verte at Telok Kurau and Waterfront Waves at Bedok Reservoir Road that were launched in the first quarter.
Foreigners — who have been a key catalyst in the 30-per-cent jump in private home prices last year — are increasingly being discouraged by high asking prices.
This is especially so amid the continued uncertainty over the United States economy and the fallout from the sub-prime mortgage crisis.
Kuwait Finance House, which last December took an option to buy 97 units of the luxurious Goodwood Residence condominium for $818 million from Guocoland, has decided not to go through with the purchase.
The lacklustre real estate market in Singapore and the region has affected the performance of listed property firms.
Keppel Land reported a 7.6-per-cent fall in property sales to $273.1 million in the first three months of the year due to the increasingly cautious sentiment.
Mr Ku Swee Yong, a director at property consultancy Savills, said that until global stock markets show clear signs of a recovery, investors would remain wary of putting their money in real estate. He noted that banks here had not been selling many home loans this year.
“Other parts of consumer expenditure are still going strong, it’s just that property is taking the brunt of it,” said Mr Ku.
For the office sector, rentals increased at a slower rate of 7.3 per cent, down from 10.9 per cent in the previous quarter.
The URA said there was a total supply of 16 million sq ft in gross floor area of office space at the end of the first quarter.
Since last July, the Government has made available land on short-term leases for transitional office sites to meet the high demand for such space.
Mr Han said that the pace of office rental increase would continue to moderate for the rest of the year.
Mr Nicholas Mak, a director from Knight Frank, said that despite this moderation in pace, rentals will still rise by 15 to 20 per cent this year as “demand for office space is still healthy”.
Resale transactions for HDB flats down down 6%
The public housing market is also showing nascent signs of waning.
The number of resale transactions of Housing and Development Board (HDB)flats fell 6 per cent to 6,360 in the first quarter of the year from 6,750 in the previous quarter. Meanwhile, the HDB Resale Price Index rose 3.7 per cent from the previous quarter, down from 5.7 per cent in the fourth quarter of last year.
“HDB flat buyers were resisting the rise in resale prices,” said assistant vice-president of property agency ERA Eugene Lim.
The median cash-over-valuation (COV) for resale transactions was $21,000 in the first quarter, slightly lower than the previous quarter’s $22,000. The COV is the difference between the actual transacted price of the flat and its valuation. It cannot be paid from a loan or from savings in the Central Provident Fund.
“We saw the resale market hitting resistance level in the fourth quarter last year as HDB flat buyers do not have or are not willing to part with so much cash. This resistance carried through to the first quarter,” said Mr Lim.
“Very often, the deal cannot be closed or takes much longer to close because of unrealistic sellers demanding high COV,” he added.
Also, with more new flats coming on stream, some demand will be removed from the resale market. Buyers who can afford to wait up to three years for the completion of the flats may prefer to buy new flats directly from the HDB as this often involves a very small or no immediate cash outlay.
Residential sector seen taking hit
Source : Business Times - 22 Apr 2008
Prices expected to fall further, with the high-end most at risk due to a lack of foreigner interest, reports UMA SHANKARI
RESIDENTIAL markets across Asia are expected to take a hit in the wake of the credit crunch in the US. While the residential sectors in key Asian cities are forecast to continue to grow strongly, as they have since the start of 2007, equity bull markets were the main contributing factor to well-received launches last year, industry sources say. ‘Without the sentiment that has pushed up capital values and rents of residential property across the region, there will obviously be some slackening,’ a market player says.
However, the fundamentals of the region - including Singapore - are strong, which means residential markets should not take too hard a beating, analysts point out.
‘The story of real estate in Asia is one of continuing investment - particularly by foreigners. Occupier demand remains in place, and with limited supply in most developing cities, the future looks fine,’ property firm Cushman & Wakefield (C&W) says in a recent report.
The report notes, however, that Hong Kong and Singapore are the two cities expected to be most affected by the credit crunch and global economic slowdown
In Singapore, the impact on the residential market is already being felt, with slowing sales and price cuts.
The number of new homes sold in the first quarter of 2008 was 787, or about half the 1,449 sold in the previous quarter, official data shows.
DTZ Debenham Tie Leung, for one, points out that the numbers represent the second-lowest quarter of developer sales since Sars-hit Q1 2003.
The lacklustre performance is expected to continue, say property analysts.
‘The current market sentiment is likely to continue into the second quarter,’ says Li Hiaw Ho, executive director for research at CB Richard Ellis (CBRE).
Nicholas Mak, director of research and consultancy at Knight Frank, agrees. ‘Sales are expected to stay thin in the coming few months due to the continuing uncertainty about the US economic outlook and financial market problems. Home-buyers, especially in the mass-market segment, are expected to remain cautious until there is a sustained recovery in financial markets and economic conditions, which would spill over to the property market.’
Interestingly, news has emerged that some developers are starting to cut their prices - a sure sign of weakening market sentiment.
A recent media report says property heavyweight Far East Organization has achieved encouraging sales for three 99-year leasehold suburban projects - after it trimmed their prices 3-5 per cent after the Chinese New Year.
‘If the credit crisis or economic slowdown deepens, launches and take-up would remain subdued and prices are likely to ease,’ according to DTZ. ‘Some smaller developers have lowered prices to dispose of their units and this may spread as the residential property market is largely affected by sentiments.’
UBS Investment Research notes similarly that it expects mass-market projects to be launched at lower-than-expected prices. Sentosa Cove prices have also fallen - 13-20 per cent in Q1 2008, potentially wiping out the profit of Sentosa sites bought by SC Global and Ho Bee, UBS notes.
‘We expect the negative news to motivate sellers to close the wide bid-ask spreads and home prices to fall further, with high-end prices most at risk due to a lack of foreigner interest,’ UBS analyst Regina Lim says in a recent note.
Her research team has downgraded its residential price forecasts for 2008 and 2009 by as much as 20 per cent - expecting prices in prime and mid-range segments to fall 20 per cent and 10 per cent respectively. Mass-market prices are expected to hold steady.
Rent increases for private residential property are also likely to moderate due to budget constraints and the slower influx of expatriates, analysts say.
And residential investment sales also fell hard in Q1 2008, data from property firm Colliers International shows.
‘Investment sales value dipped some 35.7 per cent in Q1 2008 to $2.27 billion, from $3.54 billion in the preceding quarter,’ the firm says.
Colliers notes, in particular, that the residential collective sales market virtually ground to a halt in Q1, with just one deal - that of Ban Guan Park for $31.1 million or $871 per square foot per plot ratio. This was a big slide from $1.16 billion sealed in Q4 2007 from 10 collective sale sites, and a dramatic plunge from 41 collective sale transactions totalling some $6.53 billion sealed during the peak in Q2 2007.
Despite all the negative news, there seems to be some optimism. DBS Group Research, for example, recently upgraded its call on the Singapore property sector from ‘neutral’ to ‘overweight’.
But many are taking a wait-and-see approach to the market, including the residential segment.
‘We believe Singapore’s property secular uptrend is still intact, thanks to its ongoing efforts to transform itself into a globalised city-state,’ says DBS Vickers Securities analyst Lock Mun Yee.
‘However, in the near term, spillover uncertainties from the credit crunch and talks of a possible US recession have affected sentiment.’
According to Margaret Thean, DTZ’s executive director for residential: ‘It is still too early to gauge the residential sector performance as this is just the first quarter.’
Prices expected to fall further, with the high-end most at risk due to a lack of foreigner interest, reports UMA SHANKARI
RESIDENTIAL markets across Asia are expected to take a hit in the wake of the credit crunch in the US. While the residential sectors in key Asian cities are forecast to continue to grow strongly, as they have since the start of 2007, equity bull markets were the main contributing factor to well-received launches last year, industry sources say. ‘Without the sentiment that has pushed up capital values and rents of residential property across the region, there will obviously be some slackening,’ a market player says.
However, the fundamentals of the region - including Singapore - are strong, which means residential markets should not take too hard a beating, analysts point out.
‘The story of real estate in Asia is one of continuing investment - particularly by foreigners. Occupier demand remains in place, and with limited supply in most developing cities, the future looks fine,’ property firm Cushman & Wakefield (C&W) says in a recent report.
The report notes, however, that Hong Kong and Singapore are the two cities expected to be most affected by the credit crunch and global economic slowdown
In Singapore, the impact on the residential market is already being felt, with slowing sales and price cuts.
The number of new homes sold in the first quarter of 2008 was 787, or about half the 1,449 sold in the previous quarter, official data shows.
DTZ Debenham Tie Leung, for one, points out that the numbers represent the second-lowest quarter of developer sales since Sars-hit Q1 2003.
The lacklustre performance is expected to continue, say property analysts.
‘The current market sentiment is likely to continue into the second quarter,’ says Li Hiaw Ho, executive director for research at CB Richard Ellis (CBRE).
Nicholas Mak, director of research and consultancy at Knight Frank, agrees. ‘Sales are expected to stay thin in the coming few months due to the continuing uncertainty about the US economic outlook and financial market problems. Home-buyers, especially in the mass-market segment, are expected to remain cautious until there is a sustained recovery in financial markets and economic conditions, which would spill over to the property market.’
Interestingly, news has emerged that some developers are starting to cut their prices - a sure sign of weakening market sentiment.
A recent media report says property heavyweight Far East Organization has achieved encouraging sales for three 99-year leasehold suburban projects - after it trimmed their prices 3-5 per cent after the Chinese New Year.
‘If the credit crisis or economic slowdown deepens, launches and take-up would remain subdued and prices are likely to ease,’ according to DTZ. ‘Some smaller developers have lowered prices to dispose of their units and this may spread as the residential property market is largely affected by sentiments.’
UBS Investment Research notes similarly that it expects mass-market projects to be launched at lower-than-expected prices. Sentosa Cove prices have also fallen - 13-20 per cent in Q1 2008, potentially wiping out the profit of Sentosa sites bought by SC Global and Ho Bee, UBS notes.
‘We expect the negative news to motivate sellers to close the wide bid-ask spreads and home prices to fall further, with high-end prices most at risk due to a lack of foreigner interest,’ UBS analyst Regina Lim says in a recent note.
Her research team has downgraded its residential price forecasts for 2008 and 2009 by as much as 20 per cent - expecting prices in prime and mid-range segments to fall 20 per cent and 10 per cent respectively. Mass-market prices are expected to hold steady.
Rent increases for private residential property are also likely to moderate due to budget constraints and the slower influx of expatriates, analysts say.
And residential investment sales also fell hard in Q1 2008, data from property firm Colliers International shows.
‘Investment sales value dipped some 35.7 per cent in Q1 2008 to $2.27 billion, from $3.54 billion in the preceding quarter,’ the firm says.
Colliers notes, in particular, that the residential collective sales market virtually ground to a halt in Q1, with just one deal - that of Ban Guan Park for $31.1 million or $871 per square foot per plot ratio. This was a big slide from $1.16 billion sealed in Q4 2007 from 10 collective sale sites, and a dramatic plunge from 41 collective sale transactions totalling some $6.53 billion sealed during the peak in Q2 2007.
Despite all the negative news, there seems to be some optimism. DBS Group Research, for example, recently upgraded its call on the Singapore property sector from ‘neutral’ to ‘overweight’.
But many are taking a wait-and-see approach to the market, including the residential segment.
‘We believe Singapore’s property secular uptrend is still intact, thanks to its ongoing efforts to transform itself into a globalised city-state,’ says DBS Vickers Securities analyst Lock Mun Yee.
‘However, in the near term, spillover uncertainties from the credit crunch and talks of a possible US recession have affected sentiment.’
According to Margaret Thean, DTZ’s executive director for residential: ‘It is still too early to gauge the residential sector performance as this is just the first quarter.’
Majority owners at Airview Towers win appeal
Source : Business Times - 25 Apr 2008
THE Court of Appeal has overturned the ruling by the High Court and Strata Titles Board (STB) on the collective sale of Airview Towers, paving the way for mainboard-listed Bukit Sembawang Estates to acquire the property for $202 million.
Located at St Thomas Walk, Airview Towers became the subject of a civil appeal after a sole resident, Ken Lee, objected to the collective sale, arguing that the minimum 80 per cent approval rate needed was not met in time.
This was because during the process of the collective sale, a few owners had sold their units and their successors had apparently not signed the documents agreeing to the en bloc sale at the date of application.
Although STB and the High Court had ruled in Mr Lee’s favour, the Court of Appeal rejected their decision, based on a different interpretation of the reference period during which the minimum approval should be obtained.
The Court of Appeal also ruled that when previous flat-owners signed in favour of the en bloc sale during the permitted period, they also bound their property successors in title.
The group of majority owners in favour of the collective sale was represented by Harry Elias Partnership. The collective sale of the freehold property is expected to rake in about $2 million for each of the 100 owners.
Bukit Sembawang Estates plans to build a 36-storey condominium at the site.
Shares of Bukit Sembawang Estates were unchanged at $9.50 yesterday.
THE Court of Appeal has overturned the ruling by the High Court and Strata Titles Board (STB) on the collective sale of Airview Towers, paving the way for mainboard-listed Bukit Sembawang Estates to acquire the property for $202 million.
Located at St Thomas Walk, Airview Towers became the subject of a civil appeal after a sole resident, Ken Lee, objected to the collective sale, arguing that the minimum 80 per cent approval rate needed was not met in time.
This was because during the process of the collective sale, a few owners had sold their units and their successors had apparently not signed the documents agreeing to the en bloc sale at the date of application.
Although STB and the High Court had ruled in Mr Lee’s favour, the Court of Appeal rejected their decision, based on a different interpretation of the reference period during which the minimum approval should be obtained.
The Court of Appeal also ruled that when previous flat-owners signed in favour of the en bloc sale during the permitted period, they also bound their property successors in title.
The group of majority owners in favour of the collective sale was represented by Harry Elias Partnership. The collective sale of the freehold property is expected to rake in about $2 million for each of the 100 owners.
Bukit Sembawang Estates plans to build a 36-storey condominium at the site.
Shares of Bukit Sembawang Estates were unchanged at $9.50 yesterday.
Airview Towers en bloc case back to Strata board
Source : Straits Times - 25 Apr 2008
THE $202 million collective sale of Airview Towers may now be back on after the Court of Appeal yesterday overturned a High Court decision to axe the sale.
The case now goes back to the Strata Titles Board (STB), which will decide whether to approve the sale.
The Court of Appeal found that the 80 per cent requirement for a collective sale to go through was not necessary at the point of application with the STB.
Owners can apply for an STB order as long as the 80 per cent approval of owners is achieved within the set 12-month period for collecting signatures.
The STB and the High Court had rejected the sale of the River Valley area condominium to Bukit Sembawang Estates. They interpreted the law to mean that the 80 per cent requirement was necessary as at the date of application with the STB over the sale.
The Court of Appeal also found that the collective sale agreement bound all owners, including new ones who might have purchased a unit from a majority owner during the collective sale process.
The original owners, in signing up for a collective sale, signed for themselves and future buyers. Part of the dispute centred on two flats the owners sold after signing up for the sale.
The 100-unit estate had one objector, Mr Ken Lee, who was unrepresented. He was ordered to pay costs at the STB, High Court and Court of Appeal levels.
THE $202 million collective sale of Airview Towers may now be back on after the Court of Appeal yesterday overturned a High Court decision to axe the sale.
The case now goes back to the Strata Titles Board (STB), which will decide whether to approve the sale.
The Court of Appeal found that the 80 per cent requirement for a collective sale to go through was not necessary at the point of application with the STB.
Owners can apply for an STB order as long as the 80 per cent approval of owners is achieved within the set 12-month period for collecting signatures.
The STB and the High Court had rejected the sale of the River Valley area condominium to Bukit Sembawang Estates. They interpreted the law to mean that the 80 per cent requirement was necessary as at the date of application with the STB over the sale.
The Court of Appeal also found that the collective sale agreement bound all owners, including new ones who might have purchased a unit from a majority owner during the collective sale process.
The original owners, in signing up for a collective sale, signed for themselves and future buyers. Part of the dispute centred on two flats the owners sold after signing up for the sale.
The 100-unit estate had one objector, Mr Ken Lee, who was unrepresented. He was ordered to pay costs at the STB, High Court and Court of Appeal levels.
Sharp drop in Q1 new home sales
Source : Today - 18 Apr 2008
But don’t expect prices to fall, say analysts
IN another sign of a lull in the private residential property market, developers managed to sell only 795 new homes in the first three months of this year — a hefty 46 per cent decline from the fourth quarter of last year.
“This was the second lowest quarter of developer sales since the Sars-stricken quarter” in the first three months of 2003, said DTZ Research in the real estate consultancy’s first-quarter Singapore Property Market Report released yesterday.
“Developers and buyers are taking a wait-and-see attitude and some are holding back launches,” said DTZ in the report.
According to the Urban Redevelopment Authority (URA), developers launched 1,395 units in the first quarter this year, 291 fewer than the 1,686 in the previous quarter.
But even with the dwindling activity in the first quarter, most developers — especially the larger ones — are in no hurry to cut prices. “Developers were still able to put up with lacklustre sales, bolstered by the revenue surge during the past two years,” noted DTZ.
The bigger and more established developers are likely to hold out until the market regains its firm footing — unless a darker cloud of prolonged gloom descends in the form of a deepening United States sub-prime mortgage crisis or regional uncertainties, said Mr Donald Han, managing director of real estate firm Cushman and Wakefield.
Currently, a generally optimistic outlook for Singapore’s economy continues to prop up the property market. In fact, larger developers may even hold out for as long as two years until the Temporary Occupation Permits are obtained for their projects.
And even then, they may choose to rent out instead of selling the new apartments. Indeed, monthly rents of prime apartments have risen between 2.1 and 2.5 per cent quarter-on-quarter, noted the DTZ report.
However, some smaller developers subject to tighter bank credit, may yield to pressure to cut prices.
“Some developers may have taken out loans pegged to higher interest rates so they may price their property lower to clear stock,” said Mr Han.
Earlier this month, estimates from the URA showed that the rise in home prices had been moderating, with prices up 4.2 per cent in the first three months, down from the 6.8 per cent growth in the previous quarter. Overall, there were only about 2,000 private residential transactions in January and February this year, down sharply from the 5,200 deals recorded over the same period last year.
The number of private home transactions has fallen in part due to the cooling of en bloc sales, which stood at a “standstill” in the first quarter, noted real estate firm Colliers International.
There was just one collective deal — that of Ban Guan Park at Holland Road with a price tag of $31.1 million.
At the peak of en bloc fever in the second quarter of last year, there were 41 collective sales worth a total of about $6.5 billion, which supplied the market with potential buyers.
While the residential sector is cooling down, other segments of the property market such as office, industrial and retail are going strong. This has kept overall property investment sales at $8.4 billion in the first quarter this year, just 1 per cent above the previous quarter, according to the DTZ report.
But don’t expect prices to fall, say analysts
IN another sign of a lull in the private residential property market, developers managed to sell only 795 new homes in the first three months of this year — a hefty 46 per cent decline from the fourth quarter of last year.
“This was the second lowest quarter of developer sales since the Sars-stricken quarter” in the first three months of 2003, said DTZ Research in the real estate consultancy’s first-quarter Singapore Property Market Report released yesterday.
“Developers and buyers are taking a wait-and-see attitude and some are holding back launches,” said DTZ in the report.
According to the Urban Redevelopment Authority (URA), developers launched 1,395 units in the first quarter this year, 291 fewer than the 1,686 in the previous quarter.
But even with the dwindling activity in the first quarter, most developers — especially the larger ones — are in no hurry to cut prices. “Developers were still able to put up with lacklustre sales, bolstered by the revenue surge during the past two years,” noted DTZ.
The bigger and more established developers are likely to hold out until the market regains its firm footing — unless a darker cloud of prolonged gloom descends in the form of a deepening United States sub-prime mortgage crisis or regional uncertainties, said Mr Donald Han, managing director of real estate firm Cushman and Wakefield.
Currently, a generally optimistic outlook for Singapore’s economy continues to prop up the property market. In fact, larger developers may even hold out for as long as two years until the Temporary Occupation Permits are obtained for their projects.
And even then, they may choose to rent out instead of selling the new apartments. Indeed, monthly rents of prime apartments have risen between 2.1 and 2.5 per cent quarter-on-quarter, noted the DTZ report.
However, some smaller developers subject to tighter bank credit, may yield to pressure to cut prices.
“Some developers may have taken out loans pegged to higher interest rates so they may price their property lower to clear stock,” said Mr Han.
Earlier this month, estimates from the URA showed that the rise in home prices had been moderating, with prices up 4.2 per cent in the first three months, down from the 6.8 per cent growth in the previous quarter. Overall, there were only about 2,000 private residential transactions in January and February this year, down sharply from the 5,200 deals recorded over the same period last year.
The number of private home transactions has fallen in part due to the cooling of en bloc sales, which stood at a “standstill” in the first quarter, noted real estate firm Colliers International.
There was just one collective deal — that of Ban Guan Park at Holland Road with a price tag of $31.1 million.
At the peak of en bloc fever in the second quarter of last year, there were 41 collective sales worth a total of about $6.5 billion, which supplied the market with potential buyers.
While the residential sector is cooling down, other segments of the property market such as office, industrial and retail are going strong. This has kept overall property investment sales at $8.4 billion in the first quarter this year, just 1 per cent above the previous quarter, according to the DTZ report.
Regent Garden owners ordered to complete en bloc sale to Allgreen
Source : Straits Times - 17 Apr 2008
OWNERS at Regent Garden must complete the collective sale of their condominium after the High Court handed down a landmark decision in favour of developer Allgreen Properties yesterday.
The $34 million sale, which the Strata Titles Board (STB) threw out in late January, must be finalised by May 16.
The decision ends one of the more unusual collective sale disputes.
Initially, 25 owners signed off on the sale in April last year, but they later tried to overturn the deal, claiming, among other things, that the condo was undervalued.
Although the owners had opted for a fixed $34 million price, they were unhappy that a development charge payable by Allgreen turned out to be much lower than expected.
There were six dissenting owners in April, however. They later withdrew their objections, but the case still went to the STB.
The STB usually assesses a sale if there are objections. In this case, however, the sale was now unanimous. Yet, it said it was still required to examine the case, whether objections were filed or not, to satisfy itself that the sale was made in good faith. It axed the deal in January, ruling that it had not been done in good faith.
Allgreen had already asked the High Court for an order to get the majority owners to complete the sale. It argued that the STB had no need to even examine the sale, as all owners had agreed to sell.
The court agreed, ruling that allegations of mistake and breach of contract were without merit and that the STB’s decision to halt the sale of the West Coast Road estate was irrelevant. It also ordered the 25 owners to pay Allgreen’s costs.
The developer said in a statement last night that the 25 owners who signed the deal had subsequently asked Allgreen to raise its sale price. It refused.
‘Allgreen had entered into a solemn contract. It was not prepared on account of the baseless allegations to renegotiate the price,’ it said.
The developer also described the decision as a ‘victory for the sanctity of contract’ and sent a ’strong message’ that owners would be held to their bargain.
Allgreen was represented by senior counsel Davinder Singh, while the 25 majority owners were represented by senior counsel Molly Lim.
OWNERS at Regent Garden must complete the collective sale of their condominium after the High Court handed down a landmark decision in favour of developer Allgreen Properties yesterday.
The $34 million sale, which the Strata Titles Board (STB) threw out in late January, must be finalised by May 16.
The decision ends one of the more unusual collective sale disputes.
Initially, 25 owners signed off on the sale in April last year, but they later tried to overturn the deal, claiming, among other things, that the condo was undervalued.
Although the owners had opted for a fixed $34 million price, they were unhappy that a development charge payable by Allgreen turned out to be much lower than expected.
There were six dissenting owners in April, however. They later withdrew their objections, but the case still went to the STB.
The STB usually assesses a sale if there are objections. In this case, however, the sale was now unanimous. Yet, it said it was still required to examine the case, whether objections were filed or not, to satisfy itself that the sale was made in good faith. It axed the deal in January, ruling that it had not been done in good faith.
Allgreen had already asked the High Court for an order to get the majority owners to complete the sale. It argued that the STB had no need to even examine the sale, as all owners had agreed to sell.
The court agreed, ruling that allegations of mistake and breach of contract were without merit and that the STB’s decision to halt the sale of the West Coast Road estate was irrelevant. It also ordered the 25 owners to pay Allgreen’s costs.
The developer said in a statement last night that the 25 owners who signed the deal had subsequently asked Allgreen to raise its sale price. It refused.
‘Allgreen had entered into a solemn contract. It was not prepared on account of the baseless allegations to renegotiate the price,’ it said.
The developer also described the decision as a ‘victory for the sanctity of contract’ and sent a ’strong message’ that owners would be held to their bargain.
Allgreen was represented by senior counsel Davinder Singh, while the 25 majority owners were represented by senior counsel Molly Lim.
Court directs Regent Garden sale to Allgreen to proceed
Source : Business Times - 17 Apr 2008
THE stop-start en bloc sale of Regent Garden, a 31-unit West Coast Road condominium, to Allgreen Properties looks set to finally go through after the High Court yesterday directed the majority owners to complete the agreement.
The court also ruled that the Strata Titles Board’s decision in January to reject the deal was irrelevant and ordered the majority owners to pay costs to Allgreen, the developer.
The agreement with Allgreen, originally signed in April last year, was first delayed when six owners out of the 31 held out.
When the dissenting six finally agreed to sell out by November, the majority owners, who together own 25 units and over 80 per cent of the share value in Regent Garden, did an about turn and tried to abort the deal, arguing that the $34 million sale price was too low partly because of a wrongly estimated $7.2 million development charge.
They wanted the High Court to void the agreement, or alternatively, to award damages or an addition to the sale price.
Allgreen, represented by Davinder Singh of Drew & Napier LLC, itself went to the High Court in mid-January to ask for an order requiring the majority owners to complete the sale deal. The six minority owners joined in the proceedings as well.
But on Jan 30, the Strata Titles Board ruled the sale had not been done in good faith because Regent Garden’s valuation was wrong and well below the market price.
Yesterday, Allgreen said in a statement that ‘the decision by the High Court is a victory for the sanctity of contract and is a strong message that owners will be held to their bargain’.
‘The court’s decision is very good news for the entire industry,’ said Allgreen.
The majority owners were represented by Molly Lim of Wong Tan & Molly Lim LLC.
THE stop-start en bloc sale of Regent Garden, a 31-unit West Coast Road condominium, to Allgreen Properties looks set to finally go through after the High Court yesterday directed the majority owners to complete the agreement.
The court also ruled that the Strata Titles Board’s decision in January to reject the deal was irrelevant and ordered the majority owners to pay costs to Allgreen, the developer.
The agreement with Allgreen, originally signed in April last year, was first delayed when six owners out of the 31 held out.
When the dissenting six finally agreed to sell out by November, the majority owners, who together own 25 units and over 80 per cent of the share value in Regent Garden, did an about turn and tried to abort the deal, arguing that the $34 million sale price was too low partly because of a wrongly estimated $7.2 million development charge.
They wanted the High Court to void the agreement, or alternatively, to award damages or an addition to the sale price.
Allgreen, represented by Davinder Singh of Drew & Napier LLC, itself went to the High Court in mid-January to ask for an order requiring the majority owners to complete the sale deal. The six minority owners joined in the proceedings as well.
But on Jan 30, the Strata Titles Board ruled the sale had not been done in good faith because Regent Garden’s valuation was wrong and well below the market price.
Yesterday, Allgreen said in a statement that ‘the decision by the High Court is a victory for the sanctity of contract and is a strong message that owners will be held to their bargain’.
‘The court’s decision is very good news for the entire industry,’ said Allgreen.
The majority owners were represented by Molly Lim of Wong Tan & Molly Lim LLC.
Wednesday, April 16, 2008
Private home sales tumble, prices weaken
Business Times - 16 Apr 2008
Buyers may have slight edge in power stakes but analysts expect caution to reign for a while
(SINGAPORE) Official numbers yesterday confirmed what many had already suspected as developers sold only 795 private homes in the first quarter of this year - just about half the 1,469 units that they had sold in the preceding quarter.
But there was also an equally significant pointer for market watchers looking for data on the direction of private home prices.
The islandwide median price of private homes (excluding executive condos) sold by developers dipped 0.8 per cent from $1,064 psf in February to $1,055 psf in March, with the decline coming from the Outside Central Region (where suburban mass-market projects are typically located).
The median price there slipped about 3.8 per cent, from $844 psf in February to $812 psf in March.
However, the median price in the Core Central Region jumped from $1,723 psf to $2,450 psf, while that for the Rest of Central Region rose from $1,095 psf to $1,104 psf over the same period. These figures are based on Urban Redevelopment Authority's monthly survey of developers' sales.
Property analysts cautioned against reading too much into the monthly price data given that sales volumes are still relatively thin.
Developers sold 301 private homes in March, a significant improvement from 174 units in February but slightly lower than the 320 units for January.
These numbers are lower than the monthly sales of more than 500 units for September to November last year. The dizzy days between June and August last year had seen more than 1,000 units being sold each month.
Chesterton International's head (research & consultancy) Colin Tan said that, focusing on projects with sales of at least five units in February as well as March, there were 14 developments that recorded month-on-month price declines, outpacing just seven projects with increases.
'The number of declines versus rises gives some sense of the power play between buyers and sellers. The market is on balance at the moment, with some hint that buyers have a slight edge. We cannot yet say for sure that the market has definitely turned,' he added.
URA's data showed that developers launched a total of 642 private homes (excluding ECs) in March, up significantly from 343 units in February, which had a shorter period for home sales because of the Chinese New Year festivities. The March launch figure was the highest in seven months.
Jones Lang LaSalle, looking only at private apartment and condo sales, said the ratio of units sold to units launched has fallen from 101.2 per cent in November last year to 46.4 per cent in March 2008. 'But the ratio may be stabilising since the March figure was just slightly lower than the 47.5 per cent ratio in February,' said JLL's head of research (South-east Asia) Chua Yang Liang.
'It seems developers' optimism on the mass market far exceeds buyers' expectations. Buyers maintain a more cautious outlook of the market as the economy is expected to ease in the next few months, despite the strong advance estimate of 7.2 per cent GDP growth for Q1 2008.'
The highest-priced primary market transaction in March was the $4,612 psf fetched by a unit at Scotts Square along Scotts Road - higher than the $4,140 psf top price achieved in February, for a unit at The Ritz-Carlton Residences in the Cairnhill area.
Looking ahead, CB Richard Ellis executive director Li Hiaw Ho said: 'The current market sentiment is likely to continue into the second quarter. Activity may pick up in terms of project launches, but buyers' response will be price sensitive.'
Knight Frank director Nicholas Mak too expects sales volumes to remain thin in the next few months in the face of continuing uncertainty of the US economic outlook and financial market problems. 'Homebuyers, especially in the mass-market segment, are expected to remain cautious until there is a sustained recovery in the financial markets and economic conditions, which would spill over to the property market. Developers, on the other hand, are likely to launch their projects slowly in the next few months to take advantage of any improvement in market sentiments,' Mr Mak added.
Buyers may have slight edge in power stakes but analysts expect caution to reign for a while
(SINGAPORE) Official numbers yesterday confirmed what many had already suspected as developers sold only 795 private homes in the first quarter of this year - just about half the 1,469 units that they had sold in the preceding quarter.
But there was also an equally significant pointer for market watchers looking for data on the direction of private home prices.
The islandwide median price of private homes (excluding executive condos) sold by developers dipped 0.8 per cent from $1,064 psf in February to $1,055 psf in March, with the decline coming from the Outside Central Region (where suburban mass-market projects are typically located).
The median price there slipped about 3.8 per cent, from $844 psf in February to $812 psf in March.
However, the median price in the Core Central Region jumped from $1,723 psf to $2,450 psf, while that for the Rest of Central Region rose from $1,095 psf to $1,104 psf over the same period. These figures are based on Urban Redevelopment Authority's monthly survey of developers' sales.
Property analysts cautioned against reading too much into the monthly price data given that sales volumes are still relatively thin.
Developers sold 301 private homes in March, a significant improvement from 174 units in February but slightly lower than the 320 units for January.
These numbers are lower than the monthly sales of more than 500 units for September to November last year. The dizzy days between June and August last year had seen more than 1,000 units being sold each month.
Chesterton International's head (research & consultancy) Colin Tan said that, focusing on projects with sales of at least five units in February as well as March, there were 14 developments that recorded month-on-month price declines, outpacing just seven projects with increases.
'The number of declines versus rises gives some sense of the power play between buyers and sellers. The market is on balance at the moment, with some hint that buyers have a slight edge. We cannot yet say for sure that the market has definitely turned,' he added.
URA's data showed that developers launched a total of 642 private homes (excluding ECs) in March, up significantly from 343 units in February, which had a shorter period for home sales because of the Chinese New Year festivities. The March launch figure was the highest in seven months.
Jones Lang LaSalle, looking only at private apartment and condo sales, said the ratio of units sold to units launched has fallen from 101.2 per cent in November last year to 46.4 per cent in March 2008. 'But the ratio may be stabilising since the March figure was just slightly lower than the 47.5 per cent ratio in February,' said JLL's head of research (South-east Asia) Chua Yang Liang.
'It seems developers' optimism on the mass market far exceeds buyers' expectations. Buyers maintain a more cautious outlook of the market as the economy is expected to ease in the next few months, despite the strong advance estimate of 7.2 per cent GDP growth for Q1 2008.'
The highest-priced primary market transaction in March was the $4,612 psf fetched by a unit at Scotts Square along Scotts Road - higher than the $4,140 psf top price achieved in February, for a unit at The Ritz-Carlton Residences in the Cairnhill area.
Looking ahead, CB Richard Ellis executive director Li Hiaw Ho said: 'The current market sentiment is likely to continue into the second quarter. Activity may pick up in terms of project launches, but buyers' response will be price sensitive.'
Knight Frank director Nicholas Mak too expects sales volumes to remain thin in the next few months in the face of continuing uncertainty of the US economic outlook and financial market problems. 'Homebuyers, especially in the mass-market segment, are expected to remain cautious until there is a sustained recovery in the financial markets and economic conditions, which would spill over to the property market. Developers, on the other hand, are likely to launch their projects slowly in the next few months to take advantage of any improvement in market sentiments,' Mr Mak added.
Monday, April 14, 2008
Comments on Tampines Court
"Dear Owners,
The Tampines Court en bloc has the overwhelming support of the owners.
If there was a general election in any democratic country, the en bloc would be said to have received a landslide victory from amongst the owners.
Surely the wishes of the overwhelming majority in any democracy must prevail over the wishes of the minority!
The minority owners are exactly what they are, that is, they are in the minority.
The owners of Tampines Court own the land according to their share values - they are joint owners of the land.
If the majority owners of the land wish to sell the land, should the minority owners hold all of us up?
The minority have lost the fight to prevent the majority from obtaining the 80% consensus.
They have failed, and now they try to block the process in the STB, against the will of the majority.
Only a minority of the minority objects at the STB
Of the ....minority owners who have not signed the CSA, there are only....objectors.
Obviously the other minority owners are prepared to let the objectors fight the futile fight, whilst they watch the fire from a safe distance.
If the STB orders costs against the objectors, the objectors alone will have to bear the costs. Do all the objectors appreciate that they are risking their money for the good of the non-objecting minority owners?
Some of the minority (and the objectors) have themselves bought alternative flats!
So why are the objectors still objecting?
Surely the thing to do is to get the en bloc STB order as soon as possible, so that completion could take place as soon as possible.
In another en bloc case, some of the owners bought alternative units and the objector 'fought' all the way.
The objector lost the case, and had to pay huge costs to the majority.
In the process, the owners who had contracted to buy alternative flats were sued by the sellers of the alternative flats, because of the delay in the completion of the en bloc.
The objector caused much misery to himself and all the other owners.
The Property Market has fallen!
At the time that the en bloc process was started, owners were looking at a substantial premium.
Now, if Tampines Court is to be tendered out, the price would have fallen. The subprime losses are said to be in the region of $1,000 billion!
The whole market is uncertain, and developers are looking more at state land sales instead. There are so many sites available, and developers do not have to wait for the troublesome process of the STB.
Just look at the following examples:
Royalville, a 174,176-sq ft freehold residential property located along Bukit Timah Road, will be put up jointly with an 8,420-sq ft drainage reserve for collective sale. The combined indicative asking price is S$305 million. Including a development charge (DC) of S$6 million, the price works out to S$1,106 per sq ft per plot ratio (ppr), which is 10 to 15 per cent lower than the previous indicative. (The Business Times, 8th April 2008)
The S$516 million collective sale of Tulip Garden, a freehold residential property located along Farrer Road, to a unit of Bravo Building Construction has been officially rescinded. The collapse of the en bloc transaction was down to the majority owners’ refusal to accept the developer’s request for an ‘unconditional’ extension of time of the next 5 per cent instalment payment due to them. (The Business Times, The Straits Times, 9th April 2008)
Amber Glades, a freehold residential property located along Amber Gardens, has been relaunched for collective sale at an indicative asking price of S$127 million. Including of a DC of S$3.5 million, the price works out to S$1,140 per sq ft ppr, which is 15 per cent lower than the previous indicative. (The Business Times, 9th April 2008)
Replacement units are available
If the STB order is obtained quickly, then we would all be paid quickly as well.
Then we would be able to use that money to buy alternative units.
The Tampines Court en bloc has the overwhelming support of the owners.
If there was a general election in any democratic country, the en bloc would be said to have received a landslide victory from amongst the owners.
Surely the wishes of the overwhelming majority in any democracy must prevail over the wishes of the minority!
The minority owners are exactly what they are, that is, they are in the minority.
The owners of Tampines Court own the land according to their share values - they are joint owners of the land.
If the majority owners of the land wish to sell the land, should the minority owners hold all of us up?
The minority have lost the fight to prevent the majority from obtaining the 80% consensus.
They have failed, and now they try to block the process in the STB, against the will of the majority.
Only a minority of the minority objects at the STB
Of the ....minority owners who have not signed the CSA, there are only....objectors.
Obviously the other minority owners are prepared to let the objectors fight the futile fight, whilst they watch the fire from a safe distance.
If the STB orders costs against the objectors, the objectors alone will have to bear the costs. Do all the objectors appreciate that they are risking their money for the good of the non-objecting minority owners?
Some of the minority (and the objectors) have themselves bought alternative flats!
So why are the objectors still objecting?
Surely the thing to do is to get the en bloc STB order as soon as possible, so that completion could take place as soon as possible.
In another en bloc case, some of the owners bought alternative units and the objector 'fought' all the way.
The objector lost the case, and had to pay huge costs to the majority.
In the process, the owners who had contracted to buy alternative flats were sued by the sellers of the alternative flats, because of the delay in the completion of the en bloc.
The objector caused much misery to himself and all the other owners.
The Property Market has fallen!
At the time that the en bloc process was started, owners were looking at a substantial premium.
Now, if Tampines Court is to be tendered out, the price would have fallen. The subprime losses are said to be in the region of $1,000 billion!
The whole market is uncertain, and developers are looking more at state land sales instead. There are so many sites available, and developers do not have to wait for the troublesome process of the STB.
Just look at the following examples:
Royalville, a 174,176-sq ft freehold residential property located along Bukit Timah Road, will be put up jointly with an 8,420-sq ft drainage reserve for collective sale. The combined indicative asking price is S$305 million. Including a development charge (DC) of S$6 million, the price works out to S$1,106 per sq ft per plot ratio (ppr), which is 10 to 15 per cent lower than the previous indicative. (The Business Times, 8th April 2008)
The S$516 million collective sale of Tulip Garden, a freehold residential property located along Farrer Road, to a unit of Bravo Building Construction has been officially rescinded. The collapse of the en bloc transaction was down to the majority owners’ refusal to accept the developer’s request for an ‘unconditional’ extension of time of the next 5 per cent instalment payment due to them. (The Business Times, The Straits Times, 9th April 2008)
Amber Glades, a freehold residential property located along Amber Gardens, has been relaunched for collective sale at an indicative asking price of S$127 million. Including of a DC of S$3.5 million, the price works out to S$1,140 per sq ft ppr, which is 15 per cent lower than the previous indicative. (The Business Times, 9th April 2008)
Replacement units are available
If the STB order is obtained quickly, then we would all be paid quickly as well.
Then we would be able to use that money to buy alternative units.
Thursday, April 10, 2008
En bloc market suffers double whammy as investors look elsewhere
Source : Channel NewsAsia - 8 Apr 2008
En bloc sales have been slowing down over the past few months, but it’s not just due to the recent tightening of the rules governing such transactions.
Amid the global credit crunch, property watchers said foreign investments have pulled back, and the overall downturn is pushing developers to look at other moneymaking options.
But they also noted that fundamentals remain strong in Singapore, and the current slowdown is due more to external factors.
Collective sales saw strong demand a few months ago, but developers are now changing tack in the tighter credit environment.
Those on the buying end of en bloc sales are choosing to hang on to their properties longer, delaying new project launches. They are also getting picky about additions to their landbank.
“They’ve got plenty to choose from. The most straightforward possibility for developers to partake would be going to government sale of site programme. A lot are more configured toward mass market, lower mid-tier level where we’re seeing some activity in the end-market purchases,” said Donald Han, MD of Cushman & Wakefield (Singapore).
Many said the current slowdown is largely due to the external environment, rather than the fundamentals of Singapore.
“A lot of buying that resulted in last round of en bloc came from overseas funds… We are rather small, in terms of available of units or land, so an amount which may not make an impact in another country will have a big impact on us. (Funds) either coming in or out have got that exponential effect on the market in Singapore,” said Dr SK Phang, a lawyer.
So with tightening credit conditions worldwide causing a dip in foreign inflows, Singapore’s property market is taking a hit.
But analysts said many developers took home huge profits in the past two years, and will definitely be able to weather stormy skies for now.
While there is little to be done about the external environment, analysts said en bloc rules can be further tweaked to allow the process to be speeded up.
Said Dr Phang: “The long timeline has to be shortened; it’s too long, the whole en bloc process. The law allows you 12 months to get 80 percent. And after that, the law allows you 12 months to file the ST (strata title). And when you do, the STB (Strata Title Board) may take short of 4 months or a long time of a year.
“Of course not every case is that long but if you look at the historical maximum permissible time, you’re looking at something about 2 years plus. And that’s a long time to wait for the money.
Given the volatile market conditions in Singapore, if it goes up, owners get concerned with replacement. If it goes down, developers (become) concerned. So we should try to manage the timeline and shorten it.”
The en bloc market saw more than a 100 deals valued at more than S$13 billion last year. - CNA /ls
En bloc sales have been slowing down over the past few months, but it’s not just due to the recent tightening of the rules governing such transactions.
Amid the global credit crunch, property watchers said foreign investments have pulled back, and the overall downturn is pushing developers to look at other moneymaking options.
But they also noted that fundamentals remain strong in Singapore, and the current slowdown is due more to external factors.
Collective sales saw strong demand a few months ago, but developers are now changing tack in the tighter credit environment.
Those on the buying end of en bloc sales are choosing to hang on to their properties longer, delaying new project launches. They are also getting picky about additions to their landbank.
“They’ve got plenty to choose from. The most straightforward possibility for developers to partake would be going to government sale of site programme. A lot are more configured toward mass market, lower mid-tier level where we’re seeing some activity in the end-market purchases,” said Donald Han, MD of Cushman & Wakefield (Singapore).
Many said the current slowdown is largely due to the external environment, rather than the fundamentals of Singapore.
“A lot of buying that resulted in last round of en bloc came from overseas funds… We are rather small, in terms of available of units or land, so an amount which may not make an impact in another country will have a big impact on us. (Funds) either coming in or out have got that exponential effect on the market in Singapore,” said Dr SK Phang, a lawyer.
So with tightening credit conditions worldwide causing a dip in foreign inflows, Singapore’s property market is taking a hit.
But analysts said many developers took home huge profits in the past two years, and will definitely be able to weather stormy skies for now.
While there is little to be done about the external environment, analysts said en bloc rules can be further tweaked to allow the process to be speeded up.
Said Dr Phang: “The long timeline has to be shortened; it’s too long, the whole en bloc process. The law allows you 12 months to get 80 percent. And after that, the law allows you 12 months to file the ST (strata title). And when you do, the STB (Strata Title Board) may take short of 4 months or a long time of a year.
“Of course not every case is that long but if you look at the historical maximum permissible time, you’re looking at something about 2 years plus. And that’s a long time to wait for the money.
Given the volatile market conditions in Singapore, if it goes up, owners get concerned with replacement. If it goes down, developers (become) concerned. So we should try to manage the timeline and shorten it.”
The en bloc market saw more than a 100 deals valued at more than S$13 billion last year. - CNA /ls
Amber Glades on the block again, at $18m discount
Source : Today - 9 Apr 2008
A day after the Royalville site off Sixth Avenue was relaunched at a much lower price, another en bloc site has been put back on the market at a significant discount from the heady prices its sellers were asking for less than six months ago.
The Amber Glades site on the East Coast is being relaunched today at an indicative price of $127 million, more than 12 per cent lower than the asking price of $145 million when it was first launched last October, according to its marketing agent Colliers International.
“Including an estimated development charge of $3.5 million, the price will work out to some $1,140 per sq ft per plot ratio,” said Mr Ho Eng Joo, executive director of investment sales at Colliers.
The 40,917 sq ft freehold residential site has a plot ratio of 2.8. Amber Glades, comprising two 10-storey residential blocks with a total of 63 units, currently stands on the land.
The site can be re-developed to accommodate a residential development comprising 88 units of 1,300 sq ft each, Colliers said.
Amenities can be found at the nearby Parkway Parade, Katong Shopping Centre and East Coast Park, while access to other parts of the island is available via East Coast Parkway and the new Kallang-Paya Lebar Expressway.
A day after the Royalville site off Sixth Avenue was relaunched at a much lower price, another en bloc site has been put back on the market at a significant discount from the heady prices its sellers were asking for less than six months ago.
The Amber Glades site on the East Coast is being relaunched today at an indicative price of $127 million, more than 12 per cent lower than the asking price of $145 million when it was first launched last October, according to its marketing agent Colliers International.
“Including an estimated development charge of $3.5 million, the price will work out to some $1,140 per sq ft per plot ratio,” said Mr Ho Eng Joo, executive director of investment sales at Colliers.
The 40,917 sq ft freehold residential site has a plot ratio of 2.8. Amber Glades, comprising two 10-storey residential blocks with a total of 63 units, currently stands on the land.
The site can be re-developed to accommodate a residential development comprising 88 units of 1,300 sq ft each, Colliers said.
Amenities can be found at the nearby Parkway Parade, Katong Shopping Centre and East Coast Park, while access to other parts of the island is available via East Coast Parkway and the new Kallang-Paya Lebar Expressway.
Fewer home loans taken up as property market cools further
Source : Straits Times - 9 Apr 2008
Mortgage default rate also falls but some banks see refinancing deals rise
The number of home loans taken up has fallen sharply in recent months as the property market continues to contract.
Only 4,200 new home loans were approved in January, up about 13 per cent on the 3,722 in December but down 21 per cent from the peak of 5,319 last August.
The Credit Bureau of Singapore figures also show that 2,544 second mortgages were taken up in January, a 31 per cent drop from the high of 3,698, also last August.
‘We expect the growth in new mortgages to slow further this year,’ said Credit Bureau general manager Mark Rowley.
Inquiries for new home loans have also dropped, down to 8,923 in February, the lowest since April 2006.
Mr Gregory Chan, OCBC Bank’s head of consumer secured lending, said: ‘We have observed that property buyers are becoming more cautious in their purchase decisions.’
United Overseas Bank’s (UOB’s) head of loans, Mr Kevin Lam, said that ‘in line with property sales transactions, our loan applications were slower in January and February’ but there was ‘a pick-up in market activity at the end of March’.
His counterpart at HSBC Singapore, Ms Alice Chia, said the bank has ’seen a reduction in applications for new home loans, which is reflective of sentiment towards the property market’.
But she pointed to one area where banks are getting increased business - more people are re-mortgaging their home to take advantage of the declining interest rate environment.
‘We have seen an increase in the number of refinancing applications over recent months,’ she said.
Maybank and OCBC have also encountered more home owners looking to refinance.
Ms Helen Neo, Maybank’s head of consumer banking in Singapore, said it launched financing packages in February ‘catering to customers seeking refinancing’ and has received ‘an encouraging response’.
However, Standard Chartered and UOB said they have not seen a significant increase in customers wanting to refinance.
The Credit Bureau figures also revealed certain more positive aspects of the mortgage market.
The number of delinquent account holders has fallen to 4,636, or just 1.63 per cent of total mortgage holders - the lowest in two years.
This allays concerns raised during the speculative frenzy last year that some buyers would overstretch by taking on loans they could not afford.
Mr Rowley said the lower delinquency rate is ‘a good sign’ that Singapore customers are creditworthy, even as loan amounts have risen steadily.
The increase in the number of home owners with significantly larger mortgages has also been striking.
There were 7,404 home owners with outstanding balances on their mortgages of over $1 million in January. This was an 81 per cent jump over February last year. This segment makes up almost 3 per cent of the total number of mortgage holders in Singapore.
Mortgage default rate also falls but some banks see refinancing deals rise
The number of home loans taken up has fallen sharply in recent months as the property market continues to contract.
Only 4,200 new home loans were approved in January, up about 13 per cent on the 3,722 in December but down 21 per cent from the peak of 5,319 last August.
The Credit Bureau of Singapore figures also show that 2,544 second mortgages were taken up in January, a 31 per cent drop from the high of 3,698, also last August.
‘We expect the growth in new mortgages to slow further this year,’ said Credit Bureau general manager Mark Rowley.
Inquiries for new home loans have also dropped, down to 8,923 in February, the lowest since April 2006.
Mr Gregory Chan, OCBC Bank’s head of consumer secured lending, said: ‘We have observed that property buyers are becoming more cautious in their purchase decisions.’
United Overseas Bank’s (UOB’s) head of loans, Mr Kevin Lam, said that ‘in line with property sales transactions, our loan applications were slower in January and February’ but there was ‘a pick-up in market activity at the end of March’.
His counterpart at HSBC Singapore, Ms Alice Chia, said the bank has ’seen a reduction in applications for new home loans, which is reflective of sentiment towards the property market’.
But she pointed to one area where banks are getting increased business - more people are re-mortgaging their home to take advantage of the declining interest rate environment.
‘We have seen an increase in the number of refinancing applications over recent months,’ she said.
Maybank and OCBC have also encountered more home owners looking to refinance.
Ms Helen Neo, Maybank’s head of consumer banking in Singapore, said it launched financing packages in February ‘catering to customers seeking refinancing’ and has received ‘an encouraging response’.
However, Standard Chartered and UOB said they have not seen a significant increase in customers wanting to refinance.
The Credit Bureau figures also revealed certain more positive aspects of the mortgage market.
The number of delinquent account holders has fallen to 4,636, or just 1.63 per cent of total mortgage holders - the lowest in two years.
This allays concerns raised during the speculative frenzy last year that some buyers would overstretch by taking on loans they could not afford.
Mr Rowley said the lower delinquency rate is ‘a good sign’ that Singapore customers are creditworthy, even as loan amounts have risen steadily.
The increase in the number of home owners with significantly larger mortgages has also been striking.
There were 7,404 home owners with outstanding balances on their mortgages of over $1 million in January. This was an 81 per cent jump over February last year. This segment makes up almost 3 per cent of the total number of mortgage holders in Singapore.
Prices of high end condos starting to fall as sales dwindle
Source : Straits Times - 9 Apr 2008
Downward trend may continue for next few quarters, experts predict
HOME prices are starting to fall, as several high-end properties begin to feel the squeeze of retreating buyers.
Sales of Singapore’s most expensive condominiums - all the rage last year - have dwindled to just a trickle this year.
And with plunging sales, prices have also started to dip, although official figures have yet to reflect this trend.
Early signs of the slide lie in the handful of caveats filed involving many luxury projects in the first quarter. These showed prices fell from the previous quarter, in some cases by up to 20 per cent.
In Districts 9 to 11, Singapore’s creme de la creme of residential locations covering Orchard, Holland and Bukit Timah, average prices have fallen by about 30 per cent since the beginning of the year, according to caveats.
They dropped to an average of $1,564 per sq ft (psf) between January and March from $2,023 psf in the preceding three months.
In luxury island enclave Sentosa Cove, almost all condos posted drops in average psf prices, ranging from 2 per cent for the Marina Collection to 23 per cent for The Azure.
Property experts say this could be because luxury home buyers are now selecting only the most competitively priced properties.
‘Market activity is very slow now, so any transactions that do take place are likely to be from people who have found attractive buys,’ said Mrs Ong Choon Fah, the executive director at property firm DTZ Debenham Tie Leung.
She said high-end properties in the traditional prime districts were more dependent on investor buying, so they could be more affected by the current global credit crunch and weaker sentiment.
‘A lot of people who bought luxury homes are also ’specuvestors’, so they may be happy making just a small profit and selling quickly,’ Mrs Ong explained.
The Government estimated last week that private home prices continued to climb in the first three months of the year, albeit at a slower pace. They rose 4.2 per cent, down from 6.8 per cent in the previous three months.
In the priciest segment, the core central region, the price gain dropped to 4.4 per cent from 7.5 per cent in the previous quarter. This region covers Districts 9 to 11, the Marina Bay area and Sentosa.
Anecdotal evidence from property insiders and caveats lodged, however, showed that prices at many projects fell rather than rose this year. At Scotts Square in Scotts Road, only two units have been sold so far this year - at an average price of $3,700 psf, down from $4,000 psf for 42 units in last year’s fourth quarter.
Similarly, at The Oceanfront @ Sentosa Cove, the most recent deals were in February, where three units were sold at $1,720 to $1,751 psf. Just six months before that, 15 units were sold at an average price of $2,480 psf.
Other high-profile, pricey condos, such as the Marina Bay Residences and The Marq on Paterson Hill, have yet to see a single caveat lodged this year.
But the story is not all bad. The Orchard Residences, which holds the title of Singapore’s most expensive condo, has sold only one unit this year - but at $4,700 psf, higher than most of its other sales.
Other older condos in areas such as Cavenagh or Balmoral may also be trading at higher prices from their previously low base, pushing up the overall prices for the whole district, suggested Mr Ku Swee Yong, director of marketing and business development at Savills Singapore.
But he said the price index for high-end homes may be under pressure in the next two quarters, now that ‘everyone wants a bargain’.
‘You only need developers to start giving discounts or people starting to buy lower-
floor units instead of penthouses. That will push the index down and put pressure on prices.’
Downward trend may continue for next few quarters, experts predict
HOME prices are starting to fall, as several high-end properties begin to feel the squeeze of retreating buyers.
Sales of Singapore’s most expensive condominiums - all the rage last year - have dwindled to just a trickle this year.
And with plunging sales, prices have also started to dip, although official figures have yet to reflect this trend.
Early signs of the slide lie in the handful of caveats filed involving many luxury projects in the first quarter. These showed prices fell from the previous quarter, in some cases by up to 20 per cent.
In Districts 9 to 11, Singapore’s creme de la creme of residential locations covering Orchard, Holland and Bukit Timah, average prices have fallen by about 30 per cent since the beginning of the year, according to caveats.
They dropped to an average of $1,564 per sq ft (psf) between January and March from $2,023 psf in the preceding three months.
In luxury island enclave Sentosa Cove, almost all condos posted drops in average psf prices, ranging from 2 per cent for the Marina Collection to 23 per cent for The Azure.
Property experts say this could be because luxury home buyers are now selecting only the most competitively priced properties.
‘Market activity is very slow now, so any transactions that do take place are likely to be from people who have found attractive buys,’ said Mrs Ong Choon Fah, the executive director at property firm DTZ Debenham Tie Leung.
She said high-end properties in the traditional prime districts were more dependent on investor buying, so they could be more affected by the current global credit crunch and weaker sentiment.
‘A lot of people who bought luxury homes are also ’specuvestors’, so they may be happy making just a small profit and selling quickly,’ Mrs Ong explained.
The Government estimated last week that private home prices continued to climb in the first three months of the year, albeit at a slower pace. They rose 4.2 per cent, down from 6.8 per cent in the previous three months.
In the priciest segment, the core central region, the price gain dropped to 4.4 per cent from 7.5 per cent in the previous quarter. This region covers Districts 9 to 11, the Marina Bay area and Sentosa.
Anecdotal evidence from property insiders and caveats lodged, however, showed that prices at many projects fell rather than rose this year. At Scotts Square in Scotts Road, only two units have been sold so far this year - at an average price of $3,700 psf, down from $4,000 psf for 42 units in last year’s fourth quarter.
Similarly, at The Oceanfront @ Sentosa Cove, the most recent deals were in February, where three units were sold at $1,720 to $1,751 psf. Just six months before that, 15 units were sold at an average price of $2,480 psf.
Other high-profile, pricey condos, such as the Marina Bay Residences and The Marq on Paterson Hill, have yet to see a single caveat lodged this year.
But the story is not all bad. The Orchard Residences, which holds the title of Singapore’s most expensive condo, has sold only one unit this year - but at $4,700 psf, higher than most of its other sales.
Other older condos in areas such as Cavenagh or Balmoral may also be trading at higher prices from their previously low base, pushing up the overall prices for the whole district, suggested Mr Ku Swee Yong, director of marketing and business development at Savills Singapore.
But he said the price index for high-end homes may be under pressure in the next two quarters, now that ‘everyone wants a bargain’.
‘You only need developers to start giving discounts or people starting to buy lower-
floor units instead of penthouses. That will push the index down and put pressure on prices.’
Sites relaunched at lower prices as collective sales agreement deadlines loom
Business Times - 09 Apr 2008
Property agents are expected to keep pushing out a steady stream of relaunched en bloc sales over the next few months, as they attempt a last hurrah before their collective sales agreements (CSAs) inked last year expire.
Asking prices for such sites this time round are about 10-20 per cent lower than last year. Agents hope developers will bite, given their strong participation in recent government land tenders.
'Whatever collective sales that went into the market in the third or fourth quarter of last year and which are not yet sold, you can expect their CSAs to expire around mid-2008 or Q3 this year. So the current second quarter is pretty much the only window of opportunity for the sellers and agents to make a last try,' a seasoned agent in the en bloc sales business says.
Data from Credo Real Estate show there were 14 en bloc sale sites launched in Q3 last year but which are still unsold, while another 30 launched in Q4 last year have yet to find takers. These include The Riverwalk, Elizabeth Towers, Cairnhill Mansion, Grange Heights, Chancery Court, Thomson View Condo, Villa delle Rose, Spanish Village, Estoril and Vista Park.
From the time the minimum 80 per cent consent level is secured for a CSA, agents have up to 12 months to find a buyer and submit an application to the Strata Titles Board for an order for the collective sale.
Says Colliers International executive director of investment sales Ho Eng Joo: 'We can expect to see a rush on the part of owners and agents to take another shot at the market. If you don't do that, the old CSA expires and any fresh attempt at an en bloc sale will fall under new rules that took effect last October - and these are a lot more onerous.'
Colliers yesterday relaunched Amber Glades along Amber Gardens with an indicative price of about $127 million or $1,140 psf per plot ratio, inclusive of development charges. This is about 15 per cent lower than the $1,345 psf ppr sought by Amber Glades' owners in October last year.
In recent weeks, Landmark Tower in Chin Swee Road, Pinetree Condo in the Balmoral area and Royalville in Bukit Timah have also been relaunched at indicative prices ranging from 10-20 per cent below what they had been offered at in Q3 or Q4 last year.
Typically, these sites are being relaunched under the existing CSAs and based on the same reserve prices as last year. However, this time round, owners' asking prices are closer to reserve prices, whereas last year, the asking prices may have been pegged at a significant premium to the reserve prices, market watchers say.
Some agents are also believed to be in discussion with owners who've signed a CSA to see if they are willing to sign a supplementary agreement to lower the reserve price.
Savills Singapore director Steven Ming says: 'The initial asking prices were a bit lofty when the sites were launched last year. That was when the market was still exuberant. As the sub-prime crisis set in, confidence weakened and home sales slowed. Developers have had to factor this in when pricing their bids for en bloc sites.
'They also have to take into account higher construction costs and with the ongoing credit squeeze, the opportunity cost for putting in more equity into the project.'
Knight Frank managing director Tan Tiong Cheng has this advice for en bloc sellers: 'Developers are no longer prepared to pay the price owners had expected last year, but if you can still collect a premium from an en bloc sale than if you were to sell your unit on your own, why not adjust your pricing and collect the windfall? You may also be able to take advantage of a more subdued market to shop for a replacement property.'
Besides the pressure of looming CSA expiry dates, market watchers point to another factor in the impetus for the current wave of en bloc sale relaunches: the strong bidding at recent state tenders, for instance, for a reservoir-fronting condo site in Yishun and a 'white' site at Serangoon Central. 'This has brought back a bit more confidence in the market,' says Credo Real Estate managing director Karamjit Singh.
'Property bigwigs like Mr Kwek Leng Beng and Mr Liew Mun Leong have also come out to say they remain confident about prospects for the Singapore property market, but that we need time for sub-prime to clear before we see activity coming back again. If there were a barometer to measure the mood of the day in the property market, April's measure appears to be slightly better than March,' he says.
Opinion:
Amber Glades, a freehold residential property located along Amber Gardens, has been relaunched for collective sale at an indicative asking price of S$127 million. Including of a DC of S$3.5 million, the price works out to S$1,140 per sq ft ppr, which is 15 per cent lower than the previous indicative.
The 40,917-sq ft site has a gross plot ratio of 2.8 and a maximum GFA of 114,577 sq ft
Pinetree Condominium site relaunched for sale by tender
Source : Channel NewsAsia - 31 Mar 2008
The freehold Pinetree Condominium site in prime district 10 has been re-launched for sale by tender.
The property in the Balmoral area currently comprises a five-storey block with 50 apartment units.
Consultants Jones Lang LaSalle, which is marketing the site, said it has an indicative asking price of S$128 million.
But if a neighbouring plot, which is presently housing some landed homes, is included, the total price increases to S$190 million.
Overall, the successful developer may be paying S$1,700 per sq ft per plot ratio.
Under the masterplan, the 41,361 sq ft property is zoned for residential use and has a gross plot ratio of up to 1.6. This means the new development can be up to 12 storeys high.
The site could be redeveloped into an exclusive residential development with a gross floor area of 66,178 sq ft, subject to approval. No development charge is payable.
Jones Lang LaSalle also said the land could be combined with an adjoining plot of landed properties to form a total potential land area of 81,303 sq ft. This will yield a combined gross floor area of 130,084 sq ft.
With this combined area, a developer could build 60 to 80 high-end apartment units of between 1,500 and 2,000 sq ft each.
The tender will close on 23 April.
The freehold Pinetree Condominium site in prime district 10 has been re-launched for sale by tender.
The property in the Balmoral area currently comprises a five-storey block with 50 apartment units.
Consultants Jones Lang LaSalle, which is marketing the site, said it has an indicative asking price of S$128 million.
But if a neighbouring plot, which is presently housing some landed homes, is included, the total price increases to S$190 million.
Overall, the successful developer may be paying S$1,700 per sq ft per plot ratio.
Under the masterplan, the 41,361 sq ft property is zoned for residential use and has a gross plot ratio of up to 1.6. This means the new development can be up to 12 storeys high.
The site could be redeveloped into an exclusive residential development with a gross floor area of 66,178 sq ft, subject to approval. No development charge is payable.
Jones Lang LaSalle also said the land could be combined with an adjoining plot of landed properties to form a total potential land area of 81,303 sq ft. This will yield a combined gross floor area of 130,084 sq ft.
With this combined area, a developer could build 60 to 80 high-end apartment units of between 1,500 and 2,000 sq ft each.
The tender will close on 23 April.
Pinetree back with lower en bloc asking price
Source : Business Times - 1 Apr 2008
PINETREE Condominium, which was put up for collective sale in September 2007, has been relaunched at a lower indicative price of about $1,700 per square feet per plot ratio (psf ppr).
This is about 20 per cent lower than the previous indicative price of $2,100 psf ppr seven months ago. The indicative asking price now is $128 million.
The property is being marketed by Jones Lang LaSalle (JLL). JLL associate director (investments) David Batchelor said: ‘Market conditions have changed.’ But on the residential collective sales market, he added: ‘I believe there is still interest but the market is more cautious.’
The 41,361 sq ft site at Balmoral Park has a 1.6 plot ratio. JLL said the site has the potential to be redeveloped into a residential development with a gross floor area (GFA) of up to 66,178 sq ft, subject to approval. Mr Batchelor said that currently, Pinetree Condominium is built up to a plot ratio of about 1.816 and added that there is no development charge payable.
The potential developer of the Pinetree site also has the opportunity to combine seven adjoining landed properties to form a total potential land area of 81,303 sq ft, yielding a combined GFA of 130,084 sq ft. This combined total will allow a developer to have a project with 60 to 80 apartment units ranging from 1,500 sq ft to 2,000 sq ft.
Mr Batchelor said the seven landed properties have a total indicative price of about $62 million, bringing the total land price to about $190 million. There is also a development charge of $46 million to $47 million for the landed housing properties.
In March 2006, Pinetree was on the market with an indicative price of around $59 million, or $888 psf ppr.
PINETREE Condominium, which was put up for collective sale in September 2007, has been relaunched at a lower indicative price of about $1,700 per square feet per plot ratio (psf ppr).
This is about 20 per cent lower than the previous indicative price of $2,100 psf ppr seven months ago. The indicative asking price now is $128 million.
The property is being marketed by Jones Lang LaSalle (JLL). JLL associate director (investments) David Batchelor said: ‘Market conditions have changed.’ But on the residential collective sales market, he added: ‘I believe there is still interest but the market is more cautious.’
The 41,361 sq ft site at Balmoral Park has a 1.6 plot ratio. JLL said the site has the potential to be redeveloped into a residential development with a gross floor area (GFA) of up to 66,178 sq ft, subject to approval. Mr Batchelor said that currently, Pinetree Condominium is built up to a plot ratio of about 1.816 and added that there is no development charge payable.
The potential developer of the Pinetree site also has the opportunity to combine seven adjoining landed properties to form a total potential land area of 81,303 sq ft, yielding a combined GFA of 130,084 sq ft. This combined total will allow a developer to have a project with 60 to 80 apartment units ranging from 1,500 sq ft to 2,000 sq ft.
Mr Batchelor said the seven landed properties have a total indicative price of about $62 million, bringing the total land price to about $190 million. There is also a development charge of $46 million to $47 million for the landed housing properties.
In March 2006, Pinetree was on the market with an indicative price of around $59 million, or $888 psf ppr.
Property fever here starting to cool
Source : Today - 4 Apr 2008
More signs of Singapore’s property market slowing: Tenders for a plot of government development land have closed, attracting one of the lowest bids in recent years.
The residential site bordering Choa Chu Kang Road and Woodlands Road on offer attracted just two bids. The highest offer came from an arm of Peak Properties, which is controlled by the Wee family. It offered $61 million, which works out to just $162 per sq ft (psf) per plot ratio.
Knight Frank research head Nicholas Mak said: “The current bid is one of the lowest in recent years.”
The low point came last month when just $78 psf was offered for land in Westwood Avenue. This was rejected by the Urban Redevelopment Authority (URA).
The last time residential land bids fell below $200 psf was between 2000 and 2002, at the height of Singapore’s decade-long property slump. It is not yet known whether the URA will accept the Peal Properties’ offer.
The Choa Chu Kang Road site can be potentially used to develop up to 240 condominium units or serviced apartments.
This tender may serve as a good benchmark for another nearby site in Choa Chu Kang Drive. Bids for this site close in May. Prices of completed units in nearby Maysprings condominium recently transacted at an average price of $530 to $630 psf.
More signs of Singapore’s property market slowing: Tenders for a plot of government development land have closed, attracting one of the lowest bids in recent years.
The residential site bordering Choa Chu Kang Road and Woodlands Road on offer attracted just two bids. The highest offer came from an arm of Peak Properties, which is controlled by the Wee family. It offered $61 million, which works out to just $162 per sq ft (psf) per plot ratio.
Knight Frank research head Nicholas Mak said: “The current bid is one of the lowest in recent years.”
The low point came last month when just $78 psf was offered for land in Westwood Avenue. This was rejected by the Urban Redevelopment Authority (URA).
The last time residential land bids fell below $200 psf was between 2000 and 2002, at the height of Singapore’s decade-long property slump. It is not yet known whether the URA will accept the Peal Properties’ offer.
The Choa Chu Kang Road site can be potentially used to develop up to 240 condominium units or serviced apartments.
This tender may serve as a good benchmark for another nearby site in Choa Chu Kang Drive. Bids for this site close in May. Prices of completed units in nearby Maysprings condominium recently transacted at an average price of $530 to $630 psf.
US$945b: IMF's estimate of losses from sub-prime crisis
Business Times - 10 Apr 2008
Banks will bear roughly half of the losses, the Fund says in a report
It's going to be an almost trillion-dollar meltdown. That's the message on the likely magnitude of the US sub-prime-related crisis from the International Monetary Fund (IMF). In its Global Financial Stability Report released in Washington yesterday, the IMF points out that the crisis is spreading beyond the US sub-prime market, to the prime residential and commercial real estate markets, consumer credit and the corporate debt markets.
The IMF loss estimates are in line with those put out by some private economists who have closely tracked the crisis, such as George Magnus of UBS, although others, such as New York University professor Nouriel Roubini, cite US$1 trillion as a minimum loss figure, with the maximum going as high as US$2.7 trillion in the worst case.
According to the IMF, of the US$945 billion of total losses, US$565 billion will be due to residential mortgage debt, US$240 billion will come from commercial real estate debt, US$120 billion from corporate debt and US$20 billion from consumer credit debt.
US$720 billion, or about 76 per cent of the total losses, will come from securitised debt - that is, debt that has been packaged into tradable securities.
Banks will bear roughly half of the sub-prime mortgage-related losses, with insurance companies, pension funds, money market funds, hedge funds and other institutional investors accounting for the rest. Globally, banks are estimated to have US$740 billion of net sub-prime exposure, 53 per cent of which is held by US banks and 41 per cent by European banks. Asian (including Japanese) banks hold about 5 per cent.
The IMF estimates potential losses of US$144 billion for US banks and US$121 billion for European banks. Losses of Asian banks are likely to be less than one-tenth of losses in Europe, it says.
It points out that most sub-prime-related losses appear to have been reported already, noting that through mid-March 2008, banks had reported US$190 billion in losses on US mortgage market exposure. However, it adds that much of that represents mark-to-market losses (losses arising from loans being valued at low prevailing market prices) and some could yet be recoverable in the future.
Still, the IMF says that US banks and government-sponsored enterprises could report a further US$49 billion in additional writedowns, while European banks could report as much as US$43 billion.
Nonbank financial institutions, including insurance companies, may yet also report sizeable additional writedowns.
However, the IMF urges that loss estimates should be treated with caution, because:
They depend on the quality of disclosure, and are sometimes based on estimates of exposures;
Aggregate losses are highly sensitive to bank exposures to different types of loans, which are again estimates. Different tranches of securities are also valued differently;
The timing of loss recognition is uncertain and the norms vary across countries; and
Loss estimates could be lowered by remedial measures such as the modification of mortgage loan terms.
On the ripple effects of the crisis, the IMF points out that emerging-market countries have been 'broadly resilient' so far. But it adds that some remain vulnerable to a credit pullback, especially where domestic credit growth has been fuelled from external funding and large current account deficits need to be financed.
However, this is not so much the case in Asia, where most countries have current account surpluses. Eastern European countries are the most exposed.
The IMF's report comes ahead of tomorrow's meetings of Group of Seven finance ministers. This will be followed by the spring meetings of the IMF and the World Bank, where the sub-prime crisis is expected to top the agenda.
With regard to policy measures, the IMF says 'the immediate challenge is to reduce the duration and severity of the crisis. Actions that focus on reducing uncertainty and strengthening confidence in mature market financial systems should be the first priority'.
Comparing the magnitude of the US sub-prime crisis to previous financial crises, the IMF points out that in absolute dollar terms, it is slightly larger than Japan's banking crisis of the 1990s.
But relative to GDP, the losses stemming from the sub-prime crisis would be around 7 per cent, which makes it much smaller than either the Japanese crisis or the Asian financial crisis of 1997/98, where the total losses came to 15 per cent and 35 per cent of GDP, respectively.
Banks will bear roughly half of the losses, the Fund says in a report
It's going to be an almost trillion-dollar meltdown. That's the message on the likely magnitude of the US sub-prime-related crisis from the International Monetary Fund (IMF). In its Global Financial Stability Report released in Washington yesterday, the IMF points out that the crisis is spreading beyond the US sub-prime market, to the prime residential and commercial real estate markets, consumer credit and the corporate debt markets.
The IMF loss estimates are in line with those put out by some private economists who have closely tracked the crisis, such as George Magnus of UBS, although others, such as New York University professor Nouriel Roubini, cite US$1 trillion as a minimum loss figure, with the maximum going as high as US$2.7 trillion in the worst case.
According to the IMF, of the US$945 billion of total losses, US$565 billion will be due to residential mortgage debt, US$240 billion will come from commercial real estate debt, US$120 billion from corporate debt and US$20 billion from consumer credit debt.
US$720 billion, or about 76 per cent of the total losses, will come from securitised debt - that is, debt that has been packaged into tradable securities.
Banks will bear roughly half of the sub-prime mortgage-related losses, with insurance companies, pension funds, money market funds, hedge funds and other institutional investors accounting for the rest. Globally, banks are estimated to have US$740 billion of net sub-prime exposure, 53 per cent of which is held by US banks and 41 per cent by European banks. Asian (including Japanese) banks hold about 5 per cent.
The IMF estimates potential losses of US$144 billion for US banks and US$121 billion for European banks. Losses of Asian banks are likely to be less than one-tenth of losses in Europe, it says.
It points out that most sub-prime-related losses appear to have been reported already, noting that through mid-March 2008, banks had reported US$190 billion in losses on US mortgage market exposure. However, it adds that much of that represents mark-to-market losses (losses arising from loans being valued at low prevailing market prices) and some could yet be recoverable in the future.
Still, the IMF says that US banks and government-sponsored enterprises could report a further US$49 billion in additional writedowns, while European banks could report as much as US$43 billion.
Nonbank financial institutions, including insurance companies, may yet also report sizeable additional writedowns.
However, the IMF urges that loss estimates should be treated with caution, because:
They depend on the quality of disclosure, and are sometimes based on estimates of exposures;
Aggregate losses are highly sensitive to bank exposures to different types of loans, which are again estimates. Different tranches of securities are also valued differently;
The timing of loss recognition is uncertain and the norms vary across countries; and
Loss estimates could be lowered by remedial measures such as the modification of mortgage loan terms.
On the ripple effects of the crisis, the IMF points out that emerging-market countries have been 'broadly resilient' so far. But it adds that some remain vulnerable to a credit pullback, especially where domestic credit growth has been fuelled from external funding and large current account deficits need to be financed.
However, this is not so much the case in Asia, where most countries have current account surpluses. Eastern European countries are the most exposed.
The IMF's report comes ahead of tomorrow's meetings of Group of Seven finance ministers. This will be followed by the spring meetings of the IMF and the World Bank, where the sub-prime crisis is expected to top the agenda.
With regard to policy measures, the IMF says 'the immediate challenge is to reduce the duration and severity of the crisis. Actions that focus on reducing uncertainty and strengthening confidence in mature market financial systems should be the first priority'.
Comparing the magnitude of the US sub-prime crisis to previous financial crises, the IMF points out that in absolute dollar terms, it is slightly larger than Japan's banking crisis of the 1990s.
But relative to GDP, the losses stemming from the sub-prime crisis would be around 7 per cent, which makes it much smaller than either the Japanese crisis or the Asian financial crisis of 1997/98, where the total losses came to 15 per cent and 35 per cent of GDP, respectively.
7 signs of a property slowdown
Buyers seem to be gaining ground again in the private homes market but consultants say it’s far from crashing yet
After rocketing to dizzying heights last year, the private homes market has stalled because of the global credit crunch - an external factor that took the market by surprise.
The withdrawal of the deferred payment scheme last year has also dampened demand somewhat.
Sales volumes and interest have fizzled out just as quickly as the market surged last year.
While many players hang on to the notion that strong fundamentals - low interest rates, for instance - will support the market, sentiment has fast melted away.
Is the property market slowing to a crawl? We examine the mounting evidence.
1 Growth in home prices weakens
The Urban Redevelopment Authority’s (URA’s) early estimate of first-quarter data showed a 4.2 per cent rise in private home prices against 6.8 per cent in the previous quarter and 31 per cent last year.
Consultants expect price growth to weaken. Prices, especially for high-end homes, might fall but not significantly as sellers are still reluctant to accept lower prices, said a seasoned property agent. ‘There’s no urgency to do so.’
2 Launches are held back
Developers have ample properties to sell but most continue to hold back launches. Some small ones have gone ahead but the response has been unimpressive.
With buyers and sellers choosing to remain on the sidelines as the global impact of a slowing United States economy remains uncertain, the market is largely quiet.
URA data showed that only 185 new private homes were sold in February, down from 328 in January. Last year, developers sold 14,811 new homes.
3 Collective sales have died down
This market is dead, for now at least, as developers stay away and new rules make it tougher for owners to sell en bloc.
So far this year, only one sale has been done compared with 26 in the first quarter of last year.
And one potential sale - that of Makeway View in Newton - was cancelled after the buyer, Bravo Building Construction, said it had found out that it would have to pay a higher-than-expected development charge.
Owners of some estates are starting to lower their price expectations.
Pinetree Condominium in Balmoral Park, for instance, was recently relaunched at a lower indicative price of $128 million - down from around $145 million last September, but still well above the 2006 price tag of $59 million.
4 Investor funds pull out or hold off
Islamic investment bank Kuwait Finance House, which agreed last December to buy 97 Goodwood Residence units for $818.4 million from GuocoLand, allowed the purchase option to lapse.
Both parties said last month that they were still in talks but did not provide clear reasons for the pullout. Industry sources had speculated that the fund’s price - a record for the condo’s area - was too high.
A recent DTZ Research report said some funds are holding off making investments, at least for the first half of this year, until the extent of the US slowdown and its global impact become clearer.
5 Sellers hand out discounts galore
In the resale market, sellers are getting more flexible. There are more desperate sellers in the market this year, property agents said.
Some want to sell one or two of their properties because they had bought some units under the deferred payment scheme, and payment is due in six months to a year, one agent said.
For new launches or sales of new units, some developers are also willing to give discounts when asked, while others offer stamp duty rebates to attract buyers.
6 Agents less sought after, ads dwindle
Property agents have more free time and are taking out fewer advertisements because of the poor response.
Last year, a seller’s unit could be marketed by five to six agents, with the deal going to the agent who garnered the best price.
But this year, a seller might go with one agent, said HSR Property Group’s executive director, Mr Eric Cheng.
On average, an ad for a reasonably priced unit could attract 12 to 15 calls last year. That is now down by half, he said. Prime, high-end homes have it worse, he added, noting that there could be no calls at all for some ads.
‘I have not been advertising since Nov 15 because I could see sales volume falling,’ said agent Andrew Soh.
7 Buyers toss in low bids to test the waters
Some developers have offered rather low bids in recent land tenders, which signals a slowing property market.
The Government in mid-March decided not to award a landed housing site in Jurong West as the bids were too low.
Then, the lowest bid for a Yishun condo site came in at just $95 per sq ft of potential gross floor area.
‘The developers are pricing in the risks of falling prices,’ said Knight Frank’s director for consultancy and research, Mr Nicholas Mak.
‘Given thin volume, they could also be hoping that there is no competition.’
Going forward, optimistic players are waiting for the market to regain some of its former glory in the next six months.
The pessimistic ones are prepared to ride out the whole year and possibly the next.
‘If volume remains thin, there is a chance that private home prices might weaken this year, but the market is not expected to crash,’ said Mr Mak.
Source : Sunday Times - 6 Apr 2008
After rocketing to dizzying heights last year, the private homes market has stalled because of the global credit crunch - an external factor that took the market by surprise.
The withdrawal of the deferred payment scheme last year has also dampened demand somewhat.
Sales volumes and interest have fizzled out just as quickly as the market surged last year.
While many players hang on to the notion that strong fundamentals - low interest rates, for instance - will support the market, sentiment has fast melted away.
Is the property market slowing to a crawl? We examine the mounting evidence.
1 Growth in home prices weakens
The Urban Redevelopment Authority’s (URA’s) early estimate of first-quarter data showed a 4.2 per cent rise in private home prices against 6.8 per cent in the previous quarter and 31 per cent last year.
Consultants expect price growth to weaken. Prices, especially for high-end homes, might fall but not significantly as sellers are still reluctant to accept lower prices, said a seasoned property agent. ‘There’s no urgency to do so.’
2 Launches are held back
Developers have ample properties to sell but most continue to hold back launches. Some small ones have gone ahead but the response has been unimpressive.
With buyers and sellers choosing to remain on the sidelines as the global impact of a slowing United States economy remains uncertain, the market is largely quiet.
URA data showed that only 185 new private homes were sold in February, down from 328 in January. Last year, developers sold 14,811 new homes.
3 Collective sales have died down
This market is dead, for now at least, as developers stay away and new rules make it tougher for owners to sell en bloc.
So far this year, only one sale has been done compared with 26 in the first quarter of last year.
And one potential sale - that of Makeway View in Newton - was cancelled after the buyer, Bravo Building Construction, said it had found out that it would have to pay a higher-than-expected development charge.
Owners of some estates are starting to lower their price expectations.
Pinetree Condominium in Balmoral Park, for instance, was recently relaunched at a lower indicative price of $128 million - down from around $145 million last September, but still well above the 2006 price tag of $59 million.
4 Investor funds pull out or hold off
Islamic investment bank Kuwait Finance House, which agreed last December to buy 97 Goodwood Residence units for $818.4 million from GuocoLand, allowed the purchase option to lapse.
Both parties said last month that they were still in talks but did not provide clear reasons for the pullout. Industry sources had speculated that the fund’s price - a record for the condo’s area - was too high.
A recent DTZ Research report said some funds are holding off making investments, at least for the first half of this year, until the extent of the US slowdown and its global impact become clearer.
5 Sellers hand out discounts galore
In the resale market, sellers are getting more flexible. There are more desperate sellers in the market this year, property agents said.
Some want to sell one or two of their properties because they had bought some units under the deferred payment scheme, and payment is due in six months to a year, one agent said.
For new launches or sales of new units, some developers are also willing to give discounts when asked, while others offer stamp duty rebates to attract buyers.
6 Agents less sought after, ads dwindle
Property agents have more free time and are taking out fewer advertisements because of the poor response.
Last year, a seller’s unit could be marketed by five to six agents, with the deal going to the agent who garnered the best price.
But this year, a seller might go with one agent, said HSR Property Group’s executive director, Mr Eric Cheng.
On average, an ad for a reasonably priced unit could attract 12 to 15 calls last year. That is now down by half, he said. Prime, high-end homes have it worse, he added, noting that there could be no calls at all for some ads.
‘I have not been advertising since Nov 15 because I could see sales volume falling,’ said agent Andrew Soh.
7 Buyers toss in low bids to test the waters
Some developers have offered rather low bids in recent land tenders, which signals a slowing property market.
The Government in mid-March decided not to award a landed housing site in Jurong West as the bids were too low.
Then, the lowest bid for a Yishun condo site came in at just $95 per sq ft of potential gross floor area.
‘The developers are pricing in the risks of falling prices,’ said Knight Frank’s director for consultancy and research, Mr Nicholas Mak.
‘Given thin volume, they could also be hoping that there is no competition.’
Going forward, optimistic players are waiting for the market to regain some of its former glory in the next six months.
The pessimistic ones are prepared to ride out the whole year and possibly the next.
‘If volume remains thin, there is a chance that private home prices might weaken this year, but the market is not expected to crash,’ said Mr Mak.
Source : Sunday Times - 6 Apr 2008
US financial crisis: Why the Fed rushed to the rescue
Timothy Geithner, president and chief executive officer of the Federal Reserve Bank of New York, testified before the US Senate Banking Committee last week on the US financial crisis. Below is an excerpt of his testimony.
THE intensity of the crisis we now face in United States and global financial markets is a function of the size and character of the financial boom that preceded it.
This was a period of rapid financial innovation - particularly in credit risk transfer instruments such as credit derivatives and securitised and structured products. There was considerable growth in leverage, greater reliance on ratings on structured credit products and a marked deterioration in underwriting standards.
The innovation in financial products was accompanied by a dramatic increase in the amount of financial intermediation occurring outside the core banking system. The importance of securities broker-dealers, hedge funds and mutual funds in the financial system rose steadily. Off-balance-sheet vehicles of various forms proliferated, and increased concentrations of longer-dated assets were held in funding vehicles with substantial liquidity risk.
The deterioration in the US housing market last summer precipitated a sharp rise in uncertainty about the value of securitised assets. Demand for these assets contracted dramatically and the securitisation market for mortgages and other credit assets stopped working. This increased funding pressures for a diverse mix of financial institutions. Uncertainty about the magnitude and the level of losses for financial institutions fuelled concern about credit risk in exposure to those institutions.
Part of the dynamic at work was that banks were forced to provide financing for - or take over - the assets in a range of structured investment vehicles and conduits financed by asset-backed commercial paper. As some investors attempted to liquidate their holdings of these assets, many of the traditional providers of unsecured funding to banks pulled back from their counterparties in anticipation of the potential withdrawals of funds by their own investors.
Market participants’ willingness to provide term funding even against high-quality collateral declined dramatically. As a result, the cost of unsecured term funding rose precipitously and the volume shrunk. Banks were funding themselves at shorter and shorter maturities. As unsecured term funding markets deteriorated, the premium on liquid marketable collateral - such as Treasury securities - rose considerably.
Even with the dramatic actions by the Federal Reserve and other central banks to address these liquidity pressures, the strains in financial markets persisted. In many respects, conditions worsened in February and last month.
Credit spreads on financial institutions widened, equity prices declined and market functioning deteriorated. By the early part of last month, the threat of a disorderly adjustment was growing.
What we were observing in US and global financial markets was similar to the classic pattern in financial crises. Asset price declines - triggered by concern about the outlook for economic performance - led to a reduction in the willingness to bear risk and to margin calls.
Borrowers needed to sell assets to meet the calls; some highly leveraged firms were unable to meet their obligations and their counterparties responded by liquidating the collateral they held.
This put downward pressure on asset prices and increased price volatility.
Dealers raised margins further to compensate for heightened volatility and reduced liquidity. This, in turn, put more pressure on other leveraged investors. A self-reinforcing downward spiral of higher haircuts forced sales, lower prices, higher volatility and still lower prices.
This dynamic poses a number of risks to the functioning of the financial system. It reduces the effectiveness of monetary policy, as the widening in spreads and risk premiums worked to offset part of the reduction in the Fed funds rate. Contagion spreads, transmitting waves of distress to other markets, from sub-prime to prime mortgages and even to agency mortgage-backed securities, to commercial mortgage-backed securities and to corporate bonds and loans. In the current situation, effects were felt in the municipal and student loan markets.
The most important risk is systemic: If this dynamic continues unabated, the result would be a greater probability of widespread insolvencies, severe and protracted damage to the financial system and, ultimately, to the economy as a whole. This is not theoretical risk, and it is not something that the market can solve on its own. It carries the risk of significant damage to economic activity.
Absent a forceful policy response, the consequences would be lower incomes for working families; higher borrowing costs for housing, education and the expenses of everyday life; lower value of retirement savings; and rising unemployment.
I believe that the Federal Reserve System’s response has helped reduce the risk of systemic damage to the financial system, and thereby helped mitigate a potential source of downside risk to growth. This in turn has helped mitigate the risks to the broader economy.
It is important to recognise that a substantial adjustment, recognition of losses and reduction in risk have already taken place. And a range of different prices of financial assets now reflects a very cautious view of the future.
The severity of the pressures in markets evident over the last few months is in part a reflection of the speed and force with which markets and institutions in our financial system adapt to fundamental changes in the outlook. This capacity to adjust and adapt is one of the great strengths of our system.
Nevertheless, we still face a number of challenges ahead. The seeds of this crisis took a long time to build up, and they will take some time to work through.
Source : Straits Times - 8 Apr 2008
THE intensity of the crisis we now face in United States and global financial markets is a function of the size and character of the financial boom that preceded it.
This was a period of rapid financial innovation - particularly in credit risk transfer instruments such as credit derivatives and securitised and structured products. There was considerable growth in leverage, greater reliance on ratings on structured credit products and a marked deterioration in underwriting standards.
The innovation in financial products was accompanied by a dramatic increase in the amount of financial intermediation occurring outside the core banking system. The importance of securities broker-dealers, hedge funds and mutual funds in the financial system rose steadily. Off-balance-sheet vehicles of various forms proliferated, and increased concentrations of longer-dated assets were held in funding vehicles with substantial liquidity risk.
The deterioration in the US housing market last summer precipitated a sharp rise in uncertainty about the value of securitised assets. Demand for these assets contracted dramatically and the securitisation market for mortgages and other credit assets stopped working. This increased funding pressures for a diverse mix of financial institutions. Uncertainty about the magnitude and the level of losses for financial institutions fuelled concern about credit risk in exposure to those institutions.
Part of the dynamic at work was that banks were forced to provide financing for - or take over - the assets in a range of structured investment vehicles and conduits financed by asset-backed commercial paper. As some investors attempted to liquidate their holdings of these assets, many of the traditional providers of unsecured funding to banks pulled back from their counterparties in anticipation of the potential withdrawals of funds by their own investors.
Market participants’ willingness to provide term funding even against high-quality collateral declined dramatically. As a result, the cost of unsecured term funding rose precipitously and the volume shrunk. Banks were funding themselves at shorter and shorter maturities. As unsecured term funding markets deteriorated, the premium on liquid marketable collateral - such as Treasury securities - rose considerably.
Even with the dramatic actions by the Federal Reserve and other central banks to address these liquidity pressures, the strains in financial markets persisted. In many respects, conditions worsened in February and last month.
Credit spreads on financial institutions widened, equity prices declined and market functioning deteriorated. By the early part of last month, the threat of a disorderly adjustment was growing.
What we were observing in US and global financial markets was similar to the classic pattern in financial crises. Asset price declines - triggered by concern about the outlook for economic performance - led to a reduction in the willingness to bear risk and to margin calls.
Borrowers needed to sell assets to meet the calls; some highly leveraged firms were unable to meet their obligations and their counterparties responded by liquidating the collateral they held.
This put downward pressure on asset prices and increased price volatility.
Dealers raised margins further to compensate for heightened volatility and reduced liquidity. This, in turn, put more pressure on other leveraged investors. A self-reinforcing downward spiral of higher haircuts forced sales, lower prices, higher volatility and still lower prices.
This dynamic poses a number of risks to the functioning of the financial system. It reduces the effectiveness of monetary policy, as the widening in spreads and risk premiums worked to offset part of the reduction in the Fed funds rate. Contagion spreads, transmitting waves of distress to other markets, from sub-prime to prime mortgages and even to agency mortgage-backed securities, to commercial mortgage-backed securities and to corporate bonds and loans. In the current situation, effects were felt in the municipal and student loan markets.
The most important risk is systemic: If this dynamic continues unabated, the result would be a greater probability of widespread insolvencies, severe and protracted damage to the financial system and, ultimately, to the economy as a whole. This is not theoretical risk, and it is not something that the market can solve on its own. It carries the risk of significant damage to economic activity.
Absent a forceful policy response, the consequences would be lower incomes for working families; higher borrowing costs for housing, education and the expenses of everyday life; lower value of retirement savings; and rising unemployment.
I believe that the Federal Reserve System’s response has helped reduce the risk of systemic damage to the financial system, and thereby helped mitigate a potential source of downside risk to growth. This in turn has helped mitigate the risks to the broader economy.
It is important to recognise that a substantial adjustment, recognition of losses and reduction in risk have already taken place. And a range of different prices of financial assets now reflects a very cautious view of the future.
The severity of the pressures in markets evident over the last few months is in part a reflection of the speed and force with which markets and institutions in our financial system adapt to fundamental changes in the outlook. This capacity to adjust and adapt is one of the great strengths of our system.
Nevertheless, we still face a number of challenges ahead. The seeds of this crisis took a long time to build up, and they will take some time to work through.
Source : Straits Times - 8 Apr 2008
Royalville condo relaunched for sale by tender
Source : Channel NewsAsia - 7 Apr 2008
The owners of Royalville, a freehold mixed development along Bukit Timah Road, are giving the collective sale market another try.
They have relaunched the property for sale by tender, with an asking price of S$305 million. Including a development charge of S$6 million, this works out to a land rate of about S$1,106 per square foot of gross floor area.
Royalville is made up of 93 residential units and 11 shop units. Some 85 per cent of the owners had agreed to the collective sale before new laws on such sales took effect in October 2007.
Royalville has a land area of 174,176 square feet. Based on the 2003 Master Plan, the site is zoned for residential use, with a gross plot ratio of 1.4. The new development can be up to five storeys high.
The winning developer may incorporate an adjoining drainage reserve of about 8,420 square feet into the site, enlarging the land area to 182,596 square feet.
The drainage reserve is currently under the charge of the official receiver who has also appointed Credo Real Estate to act in the sale.
The new development on site could accommodate a condominium project with a gross floor area of 281,198 square feet. This will yield 140 apartment units with an average size of 2,000 square feet each.
The tender closes on 9 May. - CNA/vm
Opinion:
Royalville, a 174,176-sq ft freehold residential property located along Bukit Timah Road, will be put up jointly with an 8,420-sq ft drainage reserve for collective sale. The combined indicative asking price is S$305 million. Including a development charge (DC) of S$6 million, the price works out to S$1,106 per sq ft per plot ratio (ppr), which is 10 to 15 per cent lower than the previous indicative.
The owners of Royalville, a freehold mixed development along Bukit Timah Road, are giving the collective sale market another try.
They have relaunched the property for sale by tender, with an asking price of S$305 million. Including a development charge of S$6 million, this works out to a land rate of about S$1,106 per square foot of gross floor area.
Royalville is made up of 93 residential units and 11 shop units. Some 85 per cent of the owners had agreed to the collective sale before new laws on such sales took effect in October 2007.
Royalville has a land area of 174,176 square feet. Based on the 2003 Master Plan, the site is zoned for residential use, with a gross plot ratio of 1.4. The new development can be up to five storeys high.
The winning developer may incorporate an adjoining drainage reserve of about 8,420 square feet into the site, enlarging the land area to 182,596 square feet.
The drainage reserve is currently under the charge of the official receiver who has also appointed Credo Real Estate to act in the sale.
The new development on site could accommodate a condominium project with a gross floor area of 281,198 square feet. This will yield 140 apartment units with an average size of 2,000 square feet each.
The tender closes on 9 May. - CNA/vm
Opinion:
Royalville, a 174,176-sq ft freehold residential property located along Bukit Timah Road, will be put up jointly with an 8,420-sq ft drainage reserve for collective sale. The combined indicative asking price is S$305 million. Including a development charge (DC) of S$6 million, the price works out to S$1,106 per sq ft per plot ratio (ppr), which is 10 to 15 per cent lower than the previous indicative.
Owners say enbloc sale of Tulip Garden has been called off
Source : Channel NewsAsia - 7 Apr 2008
The enbloc sale of Tulip Garden, a freehold development in District 10, appears to be off.
Tulip Garden was sold in July 2007 in a collective sale valued at S$516 million. The property is along the prime Holland Road and Farrer Road area.
Channel NewsAsia understands that owners are now waiting to hear more details from the developer.
Bravo Building Construction bought Tulip Garden at more than S$1,000 per square foot and the sale was scheduled to be completed by May.
However, earlier reports stated that Bravo Building Construction was delaying the completion date and there was some talk that it was trying to arrange for alternative financing.
Some owners of Tulip Garden have already received their share of the deposit for the sale.
According to earlier reports, Bravo Building Construction has called off another enbloc sale - that of Makeway View in the Newton area and is also said to be delaying the completion date of the sale of Pender Court off West Coast Highway. - CNA/vm
The enbloc sale of Tulip Garden, a freehold development in District 10, appears to be off.
Tulip Garden was sold in July 2007 in a collective sale valued at S$516 million. The property is along the prime Holland Road and Farrer Road area.
Channel NewsAsia understands that owners are now waiting to hear more details from the developer.
Bravo Building Construction bought Tulip Garden at more than S$1,000 per square foot and the sale was scheduled to be completed by May.
However, earlier reports stated that Bravo Building Construction was delaying the completion date and there was some talk that it was trying to arrange for alternative financing.
Some owners of Tulip Garden have already received their share of the deposit for the sale.
According to earlier reports, Bravo Building Construction has called off another enbloc sale - that of Makeway View in the Newton area and is also said to be delaying the completion date of the sale of Pender Court off West Coast Highway. - CNA/vm
Tulip Garden en bloc may be called off
Tulip Garden: The $516 million deal for the property worked out to a unit land price of $1,018 psf per plot ratio. The buyer had intended to build a 350-unit condo on the Holland Road site
Buyer Bravo will 'accept costly missed opportunity' if it's not granted payment extensions
Business Times - 08 Apr 2008
The owners of Tulip Garden met over the weekend and BT understands that most of them have taken the view to rescind the $516 million collective sale to an associate company of Bravo Building Construction - if the second 5 per cent instalment due to them is not paid by the deadline of midnight yesterday.
BT understands the owners could not accede to the Bravo unit's request for another extension to pay up the second 5 per cent instalment which was to have been paid yesterday, to June 7, as well as to extend the completion date of the transaction, which is when it would have to pay up the remaining 90 per cent of the purchase price, from May 28 to Aug 7.
However, Tulip Garden's owners, through their lawyers, are understood to have informed Bravo yesterday that the payment deadline will not be extended and that they reserve their rights to rescind the sale.
A Bravo spokeswoman said yesterday the consortium buying Tulip Garden is seeking an 'unconditional extension of time' for making the two payments, that is, it is not prepared to make any further payment to the sellers in exchange for the extensions, until June 7.
If the sale is rescinded, Tulip Garden owners will keep the $25.8 million or 5 per cent of the purchase price they had been paid so far, BT understands.
'If these extensions are not obtained, the consortium will accept this costly missed opportunity to develop a stunning 350-unit condo with unmatched features in a prominent Holland Road corner,' Bravo said in a statement.
Bravo has a minority stake in the consortium buying Tulip Garden. The en bloc sale of Tulip Garden was approved by Strata Titles Board in February.
In its statement, Bravo said that it and its majority consortium partners for the purchase of Tulip Garden intend to complete the purchase. Bravo did not identify the consortium partners. 'Since December 2007, major foreign institutional investors and a few local investors have expressed strong interest to form the consortium. The current turmoil in financial and stock markets matched with sporadic bad news have caused unforeseen delays in securing ultimate approvals to commit funds,' Bravo said in its statement.
Bravo also indicated that approval for Tulip Garden's sale from Strata Titles Board in February came earlier than anticipated. 'Coupled with the consortium's strategic decision to significantly increase equity to balance the current cautious lending by banks, the current deadlines for next payments have become too constricted and no longer practical,' it added.
BT understands that Tulip Garden owners declined to further extend the completion date of the sale of Tulip Garden as the STB had already given its order for the sale, binding all owners to a sale, and the sales committee does not have the powers to vary the completion date of the sale beyond the originally agreed May 28. The date was based on three months from receiving the STB order for sale, as stipulated in the sale and purchase agreement for Tulip Garden inked last year.
Assuming Tulip Garden's sale is rescinded, it may be a while before the prime District 10 site is back on the en bloc bandwagon. If owners wish to do a fresh en bloc sale, they would have to do it under revised collective sales rules that took effect in October last year and which are more stringent.
The $516 million deal for the property worked out to a unit land price of $1,018 psf per plot ratio. No development charge is payable.
Last month, the $162.8 million collective sale of Makeway View in the Newton area to another associate of Bravo was rescinded. BT reported that one per cent of purchase price paid by Bravo so far was forfeited.
Buyer Bravo will 'accept costly missed opportunity' if it's not granted payment extensions
Business Times - 08 Apr 2008
The owners of Tulip Garden met over the weekend and BT understands that most of them have taken the view to rescind the $516 million collective sale to an associate company of Bravo Building Construction - if the second 5 per cent instalment due to them is not paid by the deadline of midnight yesterday.
BT understands the owners could not accede to the Bravo unit's request for another extension to pay up the second 5 per cent instalment which was to have been paid yesterday, to June 7, as well as to extend the completion date of the transaction, which is when it would have to pay up the remaining 90 per cent of the purchase price, from May 28 to Aug 7.
However, Tulip Garden's owners, through their lawyers, are understood to have informed Bravo yesterday that the payment deadline will not be extended and that they reserve their rights to rescind the sale.
A Bravo spokeswoman said yesterday the consortium buying Tulip Garden is seeking an 'unconditional extension of time' for making the two payments, that is, it is not prepared to make any further payment to the sellers in exchange for the extensions, until June 7.
If the sale is rescinded, Tulip Garden owners will keep the $25.8 million or 5 per cent of the purchase price they had been paid so far, BT understands.
'If these extensions are not obtained, the consortium will accept this costly missed opportunity to develop a stunning 350-unit condo with unmatched features in a prominent Holland Road corner,' Bravo said in a statement.
Bravo has a minority stake in the consortium buying Tulip Garden. The en bloc sale of Tulip Garden was approved by Strata Titles Board in February.
In its statement, Bravo said that it and its majority consortium partners for the purchase of Tulip Garden intend to complete the purchase. Bravo did not identify the consortium partners. 'Since December 2007, major foreign institutional investors and a few local investors have expressed strong interest to form the consortium. The current turmoil in financial and stock markets matched with sporadic bad news have caused unforeseen delays in securing ultimate approvals to commit funds,' Bravo said in its statement.
Bravo also indicated that approval for Tulip Garden's sale from Strata Titles Board in February came earlier than anticipated. 'Coupled with the consortium's strategic decision to significantly increase equity to balance the current cautious lending by banks, the current deadlines for next payments have become too constricted and no longer practical,' it added.
BT understands that Tulip Garden owners declined to further extend the completion date of the sale of Tulip Garden as the STB had already given its order for the sale, binding all owners to a sale, and the sales committee does not have the powers to vary the completion date of the sale beyond the originally agreed May 28. The date was based on three months from receiving the STB order for sale, as stipulated in the sale and purchase agreement for Tulip Garden inked last year.
Assuming Tulip Garden's sale is rescinded, it may be a while before the prime District 10 site is back on the en bloc bandwagon. If owners wish to do a fresh en bloc sale, they would have to do it under revised collective sales rules that took effect in October last year and which are more stringent.
The $516 million deal for the property worked out to a unit land price of $1,018 psf per plot ratio. No development charge is payable.
Last month, the $162.8 million collective sale of Makeway View in the Newton area to another associate of Bravo was rescinded. BT reported that one per cent of purchase price paid by Bravo so far was forfeited.
Confirmed: Tulip Garden's en bloc sale to Bravo rescinded
Business Times - 09 Apr 2008
IT'S official. Tulip Garden's owners have rescinded the $516 million en bloc sale of the estate to a unit of Bravo Building Construction.
Lee & Lee partner Ow Yong Thian Soo, representing Tulip Garden owners, confirmed that the firm yesterday sent a notice of rescission of the sale- and-purchase agreement for Tulip Garden to Bravo's lawyers. 'We also informed them that the sellers will be forfeiting the 5 per cent of the transaction price paid to them so far. And our clients reserve all rights,' he said.
The notice of rescission was sent to Bravo after it failed to pay the second 5 per cent instalment by the deadline on April 7. Bravo had requested another extension of this deadline to June 7, as well as to extend the completion date of the transaction (which is when it would have had to pay up the remaining 90 per cent of the purchase price) from May 28 to Aug 7. Tulip Garden owners met over the weekend and most indicated they wanted to cancel the sale if Bravo missed the payment deadline on April 7.
Opinion:
The S$516 million collective sale of Tulip Garden, a freehold residential property located along Farrer Road, to a unit of Bravo Building Construction has been officially rescinded. The collapse of the en bloc transaction was down to the majority owners’ refusal to accept the developer’s request for an ‘unconditional’ extension of time of the next 5 per cent installment payment due to them.
IT'S official. Tulip Garden's owners have rescinded the $516 million en bloc sale of the estate to a unit of Bravo Building Construction.
Lee & Lee partner Ow Yong Thian Soo, representing Tulip Garden owners, confirmed that the firm yesterday sent a notice of rescission of the sale- and-purchase agreement for Tulip Garden to Bravo's lawyers. 'We also informed them that the sellers will be forfeiting the 5 per cent of the transaction price paid to them so far. And our clients reserve all rights,' he said.
The notice of rescission was sent to Bravo after it failed to pay the second 5 per cent instalment by the deadline on April 7. Bravo had requested another extension of this deadline to June 7, as well as to extend the completion date of the transaction (which is when it would have had to pay up the remaining 90 per cent of the purchase price) from May 28 to Aug 7. Tulip Garden owners met over the weekend and most indicated they wanted to cancel the sale if Bravo missed the payment deadline on April 7.
Opinion:
The S$516 million collective sale of Tulip Garden, a freehold residential property located along Farrer Road, to a unit of Bravo Building Construction has been officially rescinded. The collapse of the en bloc transaction was down to the majority owners’ refusal to accept the developer’s request for an ‘unconditional’ extension of time of the next 5 per cent installment payment due to them.
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