PROPERTY developers such as Koh Brothers and GuocoLand, which bought collective sale sites during boom times, are now becoming landlords as they wait out the market slowdown.
They are leasing out apartments they bought to existing occupants as a way to generate some income instead of simply leaving them vacant.
If the property upswing had continued, these developers might well have moved quickly to tear down the older homes to put up new developments.
But the sharp slowdown in home sales has put paid to such thoughts for now.
Market observers say renting is a nimble move given present market conditions.
For sellers of units in collective deals who have yet to buy a new home, it is a win- win situation as they would have collected their sale proceeds.
Take, for example, the consortium that bought freehold Lincoln Lodge for $243 million in June last year.
It has decided to allow occupants to keep renting homes for six months from the sale completion date of July 8, and thereafter on a monthly extension basis.
‘Upon requests by some of the sellers to stay on, and while waiting for approvals, we have decided to grant them this request by extending a lease,’ said Mr Francis Koh, Koh Brothers’ managing director and chief executive.
Rents at Lincoln Lodge range from $2,700 to about $4,500 for larger units.
In the middle of last year, at the height of the collective sale frenzy, Koh Brothers bought the Newton site with Heeton Holdings, KSH Holdings and Lian Beng Group for a record $1,449.30 per sq ft (psf) per plot ratio.
A Lincoln Lodge seller, who wished to be known only as Mr Tan, welcomed the rental move as sellers had collected sale proceeds in January, and those who had not bought a home could take their time.
‘It’s an option…I know someone who negotiated the rent down to $2,500,’ he said.
GuocoLand seems to be the early rental front runner.
It offered residents short-term leases at Sophia Court in Adis Road last year, followed by Leedon Heights off Holland Road earlier this year. The leases started in March at Sophia Court and yesterday at Leedon Heights. Both last till Jan 31 next year.
A three-bedroom unit at Leedon Heights costs $2,850 a month, while rents at Sophia Court range from $800 to more than $4,000 a month.
GuocoLand bought Leedon Heights in April last year for $835 million and Sophia Court in late 2006 for $230 million.
Renting out units is a way to ‘wait out the current quiet in the market’, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.
‘If developers were to launch their projects now, it may be challenging for them to reach their target price for some of the projects.’
Frasers Centrepoint said it may offer short-term leases to the former owners of the 185-unit Flamingo Valley, a freehold site in Siglap Road that it bought for $194 million in February last year.
‘We had 50 owners who wrote to ask us to extend their lease…They haven’t found anything suitable,’ said the firm’s general manager of development and property, Mr Cheang Kok Kheong.
He said the firm was likely to extend a lease of six months to a year. This would ‘give us more time to think about our plans’.
City Developments (CDL) has said it is still exploring the renting option.
Renting out apartments bought in collective sales is not new. CDL did so a few years back, when it rented out all 124 apartments in Kim Lin Mansion in Grange Road.
It had bought it in late 1999 for $251 million, or $996 psf of potential built-up area, but pushed it out for sale only at the height of the property boom last year. It fetched prices of $3,600 psf.
Win-win deal
· Developers lease out units to generate income instead of leaving them empty as they sit out the market slowdown.
· Sellers of collective sale projects who have yet to buy new homes can stay on in their existing units as tenants.
TOUGH TARGET
‘If developers were to launch their projects now, it may be challenging for them to reach their target price for some of the projects.’ - MR MAK of Knight Frank, on companies holding out for better prices
Source : Straits Times - 4 Jun 2008
Friday, June 27, 2008
4 sites relaunched for collective sale at lower prices
PropNex hopes 30% cut in asking price will attract buyers, as demand is ’still there’
A BOLD property firm is defying market trends with a renewed bid to sell four housing sites en bloc, even though the market appears dead for now.
PropNex Realty admits its move is ‘contrarian’ but hopes a hefty asking price cut of up to 30 per cent will attract buyers.
Even then, developers may not bite, given market uncertainties, property consultants say.
Some other sites were relaunched for collective sale this year, but none was sold. Any bids that did emerge were below the owners’ expectations.
PropNex is relaunching four sites: Cavenagh Gardens in Cavenagh Road, Novena Hill in the Novena area, Seletar Gardens along Yio Chu Kang Road and Hong Thye in Geylang.
‘We are trying to take a contrarian view,’ said the firm’s head of investment sales and commercial department, Mr Charles Chua. ‘We believe the demand is still there. Someone has to take the lead and kick-start the market.’
The four estates were first launched for sale around September and October last year. Their owners had since lowered their expectations, but not their reserve prices. This was the minimum sale price fixed when the owners first agreed to a collective sale.
In the case of the 130,000 sq ft Cavenagh Gardens, the asking price is now $450 million to $455 million, well down from $619 million in October.
Mr Chua hopes the prospect of combining the freehold site with an adjoining piece of state land will be an added attraction.
That will lower the price to as little as $1,481 per sq ft per plot ratio (psf ppr). Last year, the price was $2,308 psf ppr, excluding the state land. A developer could then sell the new units at about $2,200 psf, said Mr Chua.
Seletar Gardens is also heavily discounted now. The asking price is $50 million to $55 million from $75 million last year.
The asking price at Novena Hill is now at $42 million to $45 million, down from up to $60 million last year.
And the price tag on the Geylang plot has had about $3 million lopped off and is now going for up to $13 million.
However, even if the sellers have lowered their pricing expectations, there are other issues to consider, observers say.
‘It depends on how reasonable the seller’s price is. It is quite meaningless to lower just the asking prices and not the reserve,’ said a market observer. ‘If developers were interested in buying below the asking prices, they would already have asked for it.’
Most developers already have some projects on their books, so they may not be keen, said Mr Colin Tan, Chesterton International’s head of research and consultancy.
‘The issue is the construction bottleneck,’ he said. ‘For new sites, they have to consider rising construction costs, in addition to the risk of a declining market.’
Mr Karamjit Singh, the managing director of Credo Real Estate, which has handled a significant amount of collective sales, said developers would need a greater profit margin in the event selling prices soften even further.
Source : Sraits Times - 5 Jun 2008
A BOLD property firm is defying market trends with a renewed bid to sell four housing sites en bloc, even though the market appears dead for now.
PropNex Realty admits its move is ‘contrarian’ but hopes a hefty asking price cut of up to 30 per cent will attract buyers.
Even then, developers may not bite, given market uncertainties, property consultants say.
Some other sites were relaunched for collective sale this year, but none was sold. Any bids that did emerge were below the owners’ expectations.
PropNex is relaunching four sites: Cavenagh Gardens in Cavenagh Road, Novena Hill in the Novena area, Seletar Gardens along Yio Chu Kang Road and Hong Thye in Geylang.
‘We are trying to take a contrarian view,’ said the firm’s head of investment sales and commercial department, Mr Charles Chua. ‘We believe the demand is still there. Someone has to take the lead and kick-start the market.’
The four estates were first launched for sale around September and October last year. Their owners had since lowered their expectations, but not their reserve prices. This was the minimum sale price fixed when the owners first agreed to a collective sale.
In the case of the 130,000 sq ft Cavenagh Gardens, the asking price is now $450 million to $455 million, well down from $619 million in October.
Mr Chua hopes the prospect of combining the freehold site with an adjoining piece of state land will be an added attraction.
That will lower the price to as little as $1,481 per sq ft per plot ratio (psf ppr). Last year, the price was $2,308 psf ppr, excluding the state land. A developer could then sell the new units at about $2,200 psf, said Mr Chua.
Seletar Gardens is also heavily discounted now. The asking price is $50 million to $55 million from $75 million last year.
The asking price at Novena Hill is now at $42 million to $45 million, down from up to $60 million last year.
And the price tag on the Geylang plot has had about $3 million lopped off and is now going for up to $13 million.
However, even if the sellers have lowered their pricing expectations, there are other issues to consider, observers say.
‘It depends on how reasonable the seller’s price is. It is quite meaningless to lower just the asking prices and not the reserve,’ said a market observer. ‘If developers were interested in buying below the asking prices, they would already have asked for it.’
Most developers already have some projects on their books, so they may not be keen, said Mr Colin Tan, Chesterton International’s head of research and consultancy.
‘The issue is the construction bottleneck,’ he said. ‘For new sites, they have to consider rising construction costs, in addition to the risk of a declining market.’
Mr Karamjit Singh, the managing director of Credo Real Estate, which has handled a significant amount of collective sales, said developers would need a greater profit margin in the event selling prices soften even further.
Source : Sraits Times - 5 Jun 2008
Four en bloc sites back on market with lower tags
Cavenagh Gardens, Novena Hill, Seletar Garden, Hong Thye offered in Q4 2007
FOUR collective sale sites are back on the market, with price expectations much lower than when they were offered in Q4 last year. Cavenagh Gardens, Novena Hill, Seletar Garden and Hong Thye are for sale after attracting weak bids the last time round.
The freehold Cavenagh Gardens near the Istana could fetch $450-$455 million or $1,671 to $1,689 per sq ft per plot ratio (psf ppr). This is 27 per cent lower than the expected price of $619 million or $2,308 psf ppr last October.
The buyer may be able to alienate adjoining parcels of state land for a further $10 million. If approved, the combined site would have a potential gross floor area (GFA) of 310,649 sq ft, bringing the price down to $1,481 to $1,497 psf ppr.
The site could yield 155 units with an expected breakeven cost of $1,915 psf and an expected selling price of $2,200 psf.
If the authorities allow redevelopment with a plot ratio equivalent to the development baseline of 3.24, the site’s potential GFA could increase to 479,287 sq ft.
Riding on the back of redevelopment plans for Paya Lebar Central under Draft Master Plan 2008, Hong Thye at Lorong 39 Geylang is also up for sale again. The freehold site could fetch $12-$13 million, which translates to $359 to $385 psf ppr including an estimated $1.9 million development charge (DC).
With a potential GFA of 38,702 sq ft, the site could house 40 units with an expected breakeven cost of $709 to $735 psf, and an expected selling price of $780 to $809 psf.
Last October, the site was up for sale at $15-$17 million or $438 to $489 psf ppr including DC.
The expected price for a freehold residential site at Novena Hill is $42-$45 million or $1,170 to $1,254 psf ppr. The site, with a potential GFA of 35,885 sq ft, could yield 40 boutique apartments. The site was up for sale last October at $56-$60 million.
The last site, Seletar Garden in Yio Chu Kang Road, is an estate in perpetuity. Located near the Seletar Aerospace Park, the mixed-development site could fetch $50-$55 million or $488 to $537 psf ppr. The expected price was $70-$75 million last September.
There is also the possibility of alienating three parcels of adjoining state land at an estimated additional cost of $7.9 million. The combined site would have a potential GFA of 132,219 sq ft, lowering the price to $438 to $476 psf ppr.
Propnex is marketing the four sites. According to its head of investment sales Charles Chua, although the property market is relatively quiet, ‘we do believe that there are pockets of pent-up demand’.
Source : Business Times - 5 Jun 2008
FOUR collective sale sites are back on the market, with price expectations much lower than when they were offered in Q4 last year. Cavenagh Gardens, Novena Hill, Seletar Garden and Hong Thye are for sale after attracting weak bids the last time round.
The freehold Cavenagh Gardens near the Istana could fetch $450-$455 million or $1,671 to $1,689 per sq ft per plot ratio (psf ppr). This is 27 per cent lower than the expected price of $619 million or $2,308 psf ppr last October.
The buyer may be able to alienate adjoining parcels of state land for a further $10 million. If approved, the combined site would have a potential gross floor area (GFA) of 310,649 sq ft, bringing the price down to $1,481 to $1,497 psf ppr.
The site could yield 155 units with an expected breakeven cost of $1,915 psf and an expected selling price of $2,200 psf.
If the authorities allow redevelopment with a plot ratio equivalent to the development baseline of 3.24, the site’s potential GFA could increase to 479,287 sq ft.
Riding on the back of redevelopment plans for Paya Lebar Central under Draft Master Plan 2008, Hong Thye at Lorong 39 Geylang is also up for sale again. The freehold site could fetch $12-$13 million, which translates to $359 to $385 psf ppr including an estimated $1.9 million development charge (DC).
With a potential GFA of 38,702 sq ft, the site could house 40 units with an expected breakeven cost of $709 to $735 psf, and an expected selling price of $780 to $809 psf.
Last October, the site was up for sale at $15-$17 million or $438 to $489 psf ppr including DC.
The expected price for a freehold residential site at Novena Hill is $42-$45 million or $1,170 to $1,254 psf ppr. The site, with a potential GFA of 35,885 sq ft, could yield 40 boutique apartments. The site was up for sale last October at $56-$60 million.
The last site, Seletar Garden in Yio Chu Kang Road, is an estate in perpetuity. Located near the Seletar Aerospace Park, the mixed-development site could fetch $50-$55 million or $488 to $537 psf ppr. The expected price was $70-$75 million last September.
There is also the possibility of alienating three parcels of adjoining state land at an estimated additional cost of $7.9 million. The combined site would have a potential GFA of 132,219 sq ft, lowering the price to $438 to $476 psf ppr.
Propnex is marketing the four sites. According to its head of investment sales Charles Chua, although the property market is relatively quiet, ‘we do believe that there are pockets of pent-up demand’.
Source : Business Times - 5 Jun 2008
Prices of some new properties coming down
Move may signal end of months-long stand-off between buyers and sellers
GOOD news for homebuyers: The prices of some new developments are finally starting to come down.
At least two new projects have been tagged with prices below what they were expected to fetch just months ago.
Shelford Suites (left)Sold in March for: $1,869 psf - $1,905 psfCurrent price: $1,600 psf
Dakota ResidencesPlanned price: $1,000 psf - $1,100 psfCurrent price: $950 psf — PHOTO: CITY DEVELOPMENTS
This may be because developers are faced with no sign of improvement in the cooling property market, consultants say. They may be choosing to move units by making their projects more affordable rather than continuing to wait out the gloomy sentiment.
One example is Dakota Residences in Dakota Crescent, a 99-year leasehold project by Ho Bee Investment and NTUC Choice Homes.
Sales of its 348 units will start next Saturday at an average of about $950 per sq ft (psf) - below the $1,000 psf to $1,100 psf that Ho Bee had previously targeted.
This means a 1,300 sq ft three-bedroom unit would cost about $1.24 million, down from as much as $1.43 million previously.
‘After the land cost and building cost, the break-even price is actually almost $900 psf,’ said a property agent, who asked not to be named.
The Straits Times understands that about 120 units will be released in the first phase, and prices may go up by at least 5 per cent for the remaining units, depending on demand.
For now, the two- and three-bedroom units that face away from Geylang River are said to cost $950 psf to $970 psf, while the bigger four-bedroom units facing the river will go for $1,000 psf.
City Developments’ (CDL) Shelford Suites in Shelford Road has also started previews for its 77 units at about $1,600 psf on average.
Market watchers said this was lower than expected, as two units were sold in March for $1,869 psf and $1,905 psf.
Shelford Suites’ launch had been delayed for months as CDL waited for sentiment to improve.
Property consultants say the act of lowering prices may be the beginning of the end of a months-long stand-off between homebuyers and home sellers that has led to a slump in transactions.
Would-be buyers have proved strongly resistant to current property prices, which have jumped 36 per cent in the last five quarters, while sellers have refused to reduce their prices until now.
But while lowering prices may jump-start the market, a one-off reduction may not be enough to sustain sales, said Mr Colin Tan, the head of research and consultancy at Chesterton International.
‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers,’ he said.
Meanwhile, developers are gearing up to launch more mid-tier projects for an increasingly price-sensitive market.
East Bay, a 40-unit condominium at Tay Lian Teck Road off Upper East Coast Road, will be on sale in the coming weeks. Prices average $1,100 psf, starting at about $600,000.
Also in the east, Ivory at Ceylon Road has sold about five of its 28 units. Prices start at $558,000 for a 640 sq ft two-bedroom apartment, averaging $800 psf.
At 353 Pasir Panjang Road, a 19-unit boutique project will be completed soon, though sales have just started. A handful of units have been sold so far, with one-bedroom apartments going for $550,000, and three-bedroom units priced at $1.4 million to $1.5 million.
ONE-TIME PRICE CUT NOT ENOUGH
‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers.’ - MR COLIN TAN, head of research and consultancy at Chesterton International, who thinks one-off price reductions may not be enough to sustain sales
Source : Straits Times - 12 Jun 2008
GOOD news for homebuyers: The prices of some new developments are finally starting to come down.
At least two new projects have been tagged with prices below what they were expected to fetch just months ago.
Shelford Suites (left)Sold in March for: $1,869 psf - $1,905 psfCurrent price: $1,600 psf
Dakota ResidencesPlanned price: $1,000 psf - $1,100 psfCurrent price: $950 psf — PHOTO: CITY DEVELOPMENTS
This may be because developers are faced with no sign of improvement in the cooling property market, consultants say. They may be choosing to move units by making their projects more affordable rather than continuing to wait out the gloomy sentiment.
One example is Dakota Residences in Dakota Crescent, a 99-year leasehold project by Ho Bee Investment and NTUC Choice Homes.
Sales of its 348 units will start next Saturday at an average of about $950 per sq ft (psf) - below the $1,000 psf to $1,100 psf that Ho Bee had previously targeted.
This means a 1,300 sq ft three-bedroom unit would cost about $1.24 million, down from as much as $1.43 million previously.
‘After the land cost and building cost, the break-even price is actually almost $900 psf,’ said a property agent, who asked not to be named.
The Straits Times understands that about 120 units will be released in the first phase, and prices may go up by at least 5 per cent for the remaining units, depending on demand.
For now, the two- and three-bedroom units that face away from Geylang River are said to cost $950 psf to $970 psf, while the bigger four-bedroom units facing the river will go for $1,000 psf.
City Developments’ (CDL) Shelford Suites in Shelford Road has also started previews for its 77 units at about $1,600 psf on average.
Market watchers said this was lower than expected, as two units were sold in March for $1,869 psf and $1,905 psf.
Shelford Suites’ launch had been delayed for months as CDL waited for sentiment to improve.
Property consultants say the act of lowering prices may be the beginning of the end of a months-long stand-off between homebuyers and home sellers that has led to a slump in transactions.
Would-be buyers have proved strongly resistant to current property prices, which have jumped 36 per cent in the last five quarters, while sellers have refused to reduce their prices until now.
But while lowering prices may jump-start the market, a one-off reduction may not be enough to sustain sales, said Mr Colin Tan, the head of research and consultancy at Chesterton International.
‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers,’ he said.
Meanwhile, developers are gearing up to launch more mid-tier projects for an increasingly price-sensitive market.
East Bay, a 40-unit condominium at Tay Lian Teck Road off Upper East Coast Road, will be on sale in the coming weeks. Prices average $1,100 psf, starting at about $600,000.
Also in the east, Ivory at Ceylon Road has sold about five of its 28 units. Prices start at $558,000 for a 640 sq ft two-bedroom apartment, averaging $800 psf.
At 353 Pasir Panjang Road, a 19-unit boutique project will be completed soon, though sales have just started. A handful of units have been sold so far, with one-bedroom apartments going for $550,000, and three-bedroom units priced at $1.4 million to $1.5 million.
ONE-TIME PRICE CUT NOT ENOUGH
‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers.’ - MR COLIN TAN, head of research and consultancy at Chesterton International, who thinks one-off price reductions may not be enough to sustain sales
Source : Straits Times - 12 Jun 2008
Singapore private home sales down 40% in Q1
Sentiments in the Singapore residential property market continued to weaken in the first quarter on the back of a possible recession in the United States.
Private home sales dropped by 40 percent in the first quarter of this year compared with the last quarter of 2007, according to a report by DTZ Research.
Transactions of private condominium units, based on caveats lodged, fell 41 percent to 2,500, while sales of landed homes declined 38 percent to 566.
Analysts said the poor sales were due to a stand-off between buyers and sellers’ price expectations.
“A lot of these sellers are still looking for prices at the peak of the market, which is probably in the middle of last year. They are still confident that the market would trend up in the mid term, and that the current slowdown is likely to be temporary,” said Tay Huey Ying, Director of Research & Advisory at Colliers International.
But the slowdown looks set to stay for a while. Developers are launching fewer units. Only 487 private condominium units were released for sale in the first quarter of this year, down 49 percent compared with the previous quarter. This is the lowest since the SARS period in the first three months of 2003.
The number of new properties resold before completion continued to decline, by 40 percent in the first quarter, the lowest in one and a half years.
“I think sub-sales will continue to remain at a very low volume in the coming quarters…..Speculators are likely to continue to stay away from the market at this point because the road ahead is still very uncertain - the uncertainty in the US economy, as well as the global financial market turmoil,” said Tan.
Going forward, analysts expect overall prices in the private residential property market to increase by between 0.5 and 1.5 percent in the second quarter of this year. - CNA /ls
Source : Channel NewsAsia - 12 Jun 2008
Private home sales dropped by 40 percent in the first quarter of this year compared with the last quarter of 2007, according to a report by DTZ Research.
Transactions of private condominium units, based on caveats lodged, fell 41 percent to 2,500, while sales of landed homes declined 38 percent to 566.
Analysts said the poor sales were due to a stand-off between buyers and sellers’ price expectations.
“A lot of these sellers are still looking for prices at the peak of the market, which is probably in the middle of last year. They are still confident that the market would trend up in the mid term, and that the current slowdown is likely to be temporary,” said Tay Huey Ying, Director of Research & Advisory at Colliers International.
But the slowdown looks set to stay for a while. Developers are launching fewer units. Only 487 private condominium units were released for sale in the first quarter of this year, down 49 percent compared with the previous quarter. This is the lowest since the SARS period in the first three months of 2003.
The number of new properties resold before completion continued to decline, by 40 percent in the first quarter, the lowest in one and a half years.
“I think sub-sales will continue to remain at a very low volume in the coming quarters…..Speculators are likely to continue to stay away from the market at this point because the road ahead is still very uncertain - the uncertainty in the US economy, as well as the global financial market turmoil,” said Tan.
Going forward, analysts expect overall prices in the private residential property market to increase by between 0.5 and 1.5 percent in the second quarter of this year. - CNA /ls
Source : Channel NewsAsia - 12 Jun 2008
Low demand so fewer govt sites for sale
THE Government’s latest half-yearly release of land for sale takes into consideration current low demand, but also anticipates a possible recovery in the medium or long term. National Development Minister Mah Bow Tan said that the Government’s decision to cut back on the number of development sites being released for outright sale in the second half of this year reflected feedback from the market.
‘Demand is currently slow and the market is quiet, so based on feedback we received, we decided to reduce the supply,’ he said on the sidelines of a dialogue in Tampines yesterday.
The Government announced on Thursday that only eight sites would be put up for outright sale in the next six months following poor interest in the 37 sites that have been available since the start of the year.
Of the 11 sites on the confirmed list, five sites have been sold, tenders for three sites have not closed and one site has not been launched. The other two were not sold.
The remaining 26 sites on the reserve list were not released for sale. These sites go on sale only if a developer makes a minimum bid.
For the second half of the year, 13 new sites were added, with 27 carried over from the first six months.
Of this batch of 40, eight are on the confirmed list with the rest on reserve.
Despite the flagging demand at the moment, Mr Mah said: ‘There may be some demand that could be waiting on the sidelines that we do not know about.
‘So we have to make sure that there is enough supply in the medium term.’
And while the Government does not want to put pressure on the market by flooding it with a supply of space in the short term, Mr Mah believed that land on the reserve list would meet requirements in the months ahead.
‘In the medium term, based on Singapore’s projected economic growth, population growth and demand for hotels and offices, we have worked to make sure that there will be enough supply on the reserve list.
‘We want steady and sustainable growth,’ he said.
Source : Sunday Times - 22 Jun 2008
‘Demand is currently slow and the market is quiet, so based on feedback we received, we decided to reduce the supply,’ he said on the sidelines of a dialogue in Tampines yesterday.
The Government announced on Thursday that only eight sites would be put up for outright sale in the next six months following poor interest in the 37 sites that have been available since the start of the year.
Of the 11 sites on the confirmed list, five sites have been sold, tenders for three sites have not closed and one site has not been launched. The other two were not sold.
The remaining 26 sites on the reserve list were not released for sale. These sites go on sale only if a developer makes a minimum bid.
For the second half of the year, 13 new sites were added, with 27 carried over from the first six months.
Of this batch of 40, eight are on the confirmed list with the rest on reserve.
Despite the flagging demand at the moment, Mr Mah said: ‘There may be some demand that could be waiting on the sidelines that we do not know about.
‘So we have to make sure that there is enough supply in the medium term.’
And while the Government does not want to put pressure on the market by flooding it with a supply of space in the short term, Mr Mah believed that land on the reserve list would meet requirements in the months ahead.
‘In the medium term, based on Singapore’s projected economic growth, population growth and demand for hotels and offices, we have worked to make sure that there will be enough supply on the reserve list.
‘We want steady and sustainable growth,’ he said.
Source : Sunday Times - 22 Jun 2008
Gillman Heights enbloc sale to move ahead following court’s ruling
AFTER three months of deliberation, Justice Choo Han Teck has delivered a 31-page judgment that - for now - signals the end of the Gillman Heights en-bloc saga.
However, it was not the outcome hoped for by the 22 minority owners seeking to scupper the S$548 million deal.
The judge said the specific issue was not one concerning protection for the minority, but “whether a privatised HUDC estate can participate in the benefits of an en-bloc sale if the requisite conditions are met”.
Under current laws, a 90 per cent approval is required for estates less than 10 years old and 80 per cent for those older.
Some 87.5 per cent of the 608 unit owners had agreed to the sale of Gillman Heights, built in 1984.
On the issue of the estate’s age, which the plaintiffs claimed was less than 10 years old since the condo only underwent privatisation in 1995 and acquired the Temporary Occupation Permits or Certificates of Strata Completion (CSC) in 2002, the judge ruled that the estate was more than 10 years old.
He said that there was also no bad faith and breach of natural justice due to the involvement of the National University of Singapore (NUS), which held 46.86 per cent share at the development.
Five months after the en-bloc sale was inked in February last year, it emerged that NUS was also a shareholder of Gillman Heights’ purchaser Ankerite Pte Ltd.
While some owners claimed this was a conflict of interest, Justice Choo said NUS was entitled to exercise its right as a consenting subsidiary proprietor (CSP) to vote for the collective sale.
He added: “The minority CSPs were duly noted of the NUS vote and execution of the collective sale agreement about six weeks before the application for approval was submitted to the Strata Titles Board.”
Futhermore, Gillman Heights was sold before property prices skyrocketed last year, so “it would not be appropriate for the Board or this court to assess good faith with regard to the sale price of the development through the lens of hindsight”.
Despite the setback, one minority owner - who declined to be named - said he is not giving up the fight.
“Many of us are still disappointed by the conflict of interest and we will stick it out till the end and take this case to the Court of Appeals.”
But Lee & Lee senior partner Quek Mong Hua, who represented the majority owners, said: “They have every right to appeal, but they have to consider if it is in their interest bearing in mind the cost.”
For now, Mr Quek said his clients were happy the judgement is out and they are hoping to complete the sale. - TODAY
Source : Channel NewsAsia - 25 Jun 2008
However, it was not the outcome hoped for by the 22 minority owners seeking to scupper the S$548 million deal.
The judge said the specific issue was not one concerning protection for the minority, but “whether a privatised HUDC estate can participate in the benefits of an en-bloc sale if the requisite conditions are met”.
Under current laws, a 90 per cent approval is required for estates less than 10 years old and 80 per cent for those older.
Some 87.5 per cent of the 608 unit owners had agreed to the sale of Gillman Heights, built in 1984.
On the issue of the estate’s age, which the plaintiffs claimed was less than 10 years old since the condo only underwent privatisation in 1995 and acquired the Temporary Occupation Permits or Certificates of Strata Completion (CSC) in 2002, the judge ruled that the estate was more than 10 years old.
He said that there was also no bad faith and breach of natural justice due to the involvement of the National University of Singapore (NUS), which held 46.86 per cent share at the development.
Five months after the en-bloc sale was inked in February last year, it emerged that NUS was also a shareholder of Gillman Heights’ purchaser Ankerite Pte Ltd.
While some owners claimed this was a conflict of interest, Justice Choo said NUS was entitled to exercise its right as a consenting subsidiary proprietor (CSP) to vote for the collective sale.
He added: “The minority CSPs were duly noted of the NUS vote and execution of the collective sale agreement about six weeks before the application for approval was submitted to the Strata Titles Board.”
Futhermore, Gillman Heights was sold before property prices skyrocketed last year, so “it would not be appropriate for the Board or this court to assess good faith with regard to the sale price of the development through the lens of hindsight”.
Despite the setback, one minority owner - who declined to be named - said he is not giving up the fight.
“Many of us are still disappointed by the conflict of interest and we will stick it out till the end and take this case to the Court of Appeals.”
But Lee & Lee senior partner Quek Mong Hua, who represented the majority owners, said: “They have every right to appeal, but they have to consider if it is in their interest bearing in mind the cost.”
For now, Mr Quek said his clients were happy the judgement is out and they are hoping to complete the sale. - TODAY
Source : Channel NewsAsia - 25 Jun 2008
Gillman en bloc sale to proceed
High rise tussle: Gillman Heights is set to be sold to CapitaLand, Hotel Properties and two private funds
Business Times - 26 Jun 2008
Judge says minority owners did not provide adequate reasons to stop sale
By MICHELLE QUAH
THE High Court has dismissed an appeal by minority owners of Gillman Heights Condominium to stop its en bloc sale.
This means that the $548 million sale of the development to CapitaLand, Hotel Properties and two private funds is set to go through.
Justice Choo Han Teck, in his judgment yesterday, said that he was 'satisfied' that the appeal by the minority owners 'must fail', as they did not provide adequate reasons as to why he should stop the sale.
The Strata Titles Board (STB) had approved the collective sale of the 607-unit, 99-year leasehold estate late last year. But a group of minority owners, represented by Senior Counsel Michael Hwang, had appealed that decision.
They argued that the STB had erred in approving the sale. They said that collective sale rules do not apply to Gillman Heights, which is an former HUDC estate. They also argued that insufficient notices were put up informing owners of the proposed sale and that the collective sale agreement - signed by the consenting owners - was not validly extended before the deal was brokered with the CapitaLand consortium.
Justice Choo ruled yesterday that the law does not mean to treat privatised HUDC estates differently from other private strata developments with a management corporation. He said that a privatised HUDC estate can participate in the benefits of an en bloc sale if the requisite conditions are met. He also agreed with the STB's ruling that sufficient notices had been posted and that the collective sale agreement had been validly extended.
The minorities had also argued that the sale was done in bad faith. They said that the National University of Singapore (NUS), which owns a sizeable chunk of Gillman Heights and had agreed to the en bloc sale, has a 15 per cent stake in Ankerite, the entity that purchased Gillman Heights.
Justice Choo noted yesterday that NUS's relationship with the buyer - which came to light after the STB approval - was not presented before the STB at the relevant time. 'A court deliberates only on the basis of the evidence before it,' he said. He said that it was strictly up to the STB to judge if there was an act of bad faith by reason of the relationship between NUS and Ankerite - but that he was not persuaded that the board should hear the issue again.
Justice Choo also agreed with the STB that there was no bad faith regarding the sale price of Gillman Heights, as it was $20 million above the reserve price.
The minorities had also argued that one of the STB board members, Michael Ng of Savills (Singapore), was a real estate valuation professional who had worked on projects involving the consenting owners' lawyers.
But Justice Choo said: 'I am of the view that it is too tenuous an objection. Professionals cannot avoid working on the same projects. It does not follow that they necessarily agree or have reasons to be biased or prejudiced against other professionals.'
Gillman Heights owners will get between $870,000 and $950,000 per unit in the en-bloc sale. But many of those objecting to the sale say that it is more important for them to be able to keep their homes.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved
Business Times - 26 Jun 2008
Judge says minority owners did not provide adequate reasons to stop sale
By MICHELLE QUAH
THE High Court has dismissed an appeal by minority owners of Gillman Heights Condominium to stop its en bloc sale.
This means that the $548 million sale of the development to CapitaLand, Hotel Properties and two private funds is set to go through.
Justice Choo Han Teck, in his judgment yesterday, said that he was 'satisfied' that the appeal by the minority owners 'must fail', as they did not provide adequate reasons as to why he should stop the sale.
The Strata Titles Board (STB) had approved the collective sale of the 607-unit, 99-year leasehold estate late last year. But a group of minority owners, represented by Senior Counsel Michael Hwang, had appealed that decision.
They argued that the STB had erred in approving the sale. They said that collective sale rules do not apply to Gillman Heights, which is an former HUDC estate. They also argued that insufficient notices were put up informing owners of the proposed sale and that the collective sale agreement - signed by the consenting owners - was not validly extended before the deal was brokered with the CapitaLand consortium.
Justice Choo ruled yesterday that the law does not mean to treat privatised HUDC estates differently from other private strata developments with a management corporation. He said that a privatised HUDC estate can participate in the benefits of an en bloc sale if the requisite conditions are met. He also agreed with the STB's ruling that sufficient notices had been posted and that the collective sale agreement had been validly extended.
The minorities had also argued that the sale was done in bad faith. They said that the National University of Singapore (NUS), which owns a sizeable chunk of Gillman Heights and had agreed to the en bloc sale, has a 15 per cent stake in Ankerite, the entity that purchased Gillman Heights.
Justice Choo noted yesterday that NUS's relationship with the buyer - which came to light after the STB approval - was not presented before the STB at the relevant time. 'A court deliberates only on the basis of the evidence before it,' he said. He said that it was strictly up to the STB to judge if there was an act of bad faith by reason of the relationship between NUS and Ankerite - but that he was not persuaded that the board should hear the issue again.
Justice Choo also agreed with the STB that there was no bad faith regarding the sale price of Gillman Heights, as it was $20 million above the reserve price.
The minorities had also argued that one of the STB board members, Michael Ng of Savills (Singapore), was a real estate valuation professional who had worked on projects involving the consenting owners' lawyers.
But Justice Choo said: 'I am of the view that it is too tenuous an objection. Professionals cannot avoid working on the same projects. It does not follow that they necessarily agree or have reasons to be biased or prejudiced against other professionals.'
Gillman Heights owners will get between $870,000 and $950,000 per unit in the en-bloc sale. But many of those objecting to the sale say that it is more important for them to be able to keep their homes.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved
Saturday, May 24, 2008
Hopes of property market rebound fading
Source : Business Times - 22 May 200
Uncertain economy, housing glut fears seen taking toll on developers
HOPES that a slowdown in Singapore’s property market is temporary are fading as an uncertain economic outlook and a looming housing glut threaten to plunge the sector into a prolonged downturn.
Homebuilders such as CapitaLand, Keppel Land and GuocoLand have delayed launching new projects in the moribund market, taking a hit to first-quarter earnings as they hoped for a rebound later this year.
Prospects could be dented further in coming months if smaller developers face financing troubles and have to unload properties at massive discounts. Some have gorged themselves on expensive land acquisitions over the past two years.
With home prices expected to fall 30 to 40 per cent over the next three years, Singapore’s developers could be badly hit and analysts may slash their earnings estimates further.
‘This is the start of a multi-year price correction. Private residential property prices could easily fall by up to 30 per cent by 2010,’ said Barclays Capital economist Leong Wai Ho.
Credit Suisse in a report this month saw rents and property prices falling even more steeply by as much as 40 per cent, and downgraded its investment recommendation for the sector to ‘underweight’.
Warning signs have been flashing as first quarter 2008 sales volumes slumped to the lowest in five years and price growth slowed for two straight quarters, with concerns about a global economic slowdown and the US sub-prime mortgage crisis scaring off potential homebuyers.
Mr Leong said an impending oversupply will worsen the problem, with 66,000 new homes expected to be completed over the next four years, against forecast demand for 50,000 in the same period.
The three-month Singapore Interbank Offered Rate - a benchmark for mortgage loans - has fallen to near record lows below 1.3 per cent, but that may not be enough to revive buyers’ flagging confidence, economists say.
‘Negative real interest rates will be at best a cushion, rather than a boost to housing demand in the near term, although they could lift property demand if and when sentiment turns,’ said Citi analyst Kit Wei Zheng.
‘The worst is yet to come and price cuts are imminent,’ said ABN Amro analyst Fera Wirawan.
BNP Paribas has flagged high financial risks for small developers including Bukit Sembawang, Low Keng Huat and Lian Beng, which have almost all their debts due within a year. Even major builders such as Allgreen, Keppel Land and GuocoLand could face difficulties after steep drops in profit in the last quarter as they launch fewer projects, analysts say.
Slower sales and rising costs could raise developers’ gearing or debt-to-equity ratio to dangerous levels above 70 per cent, up from the industry average of about 62 per cent.
‘We identify three developers, namely Allgreen, GuocoLand and Keppel Land, that could face some pressures on cash flow,’ JPMorgan analyst Christopher Gee said in a report, noting that gearing levels could be pushed up to between 80 and 130 per cent.
The risk of price falls has been heightened by property speculators buying in recent years with little upfront cash, relying on a deferred payment scheme. The government scrapped the scheme last October in a bid to cool down the sector.
Analysts expect speculators will dispose of about 700 units on the cheap this year, and another 2,000 next year, as the properties near completion and instalments are due.
Some developers are still counting on home prices in the city state to rise for at least another year, as they see the market in the middle of an upswing even as the US housing market grapples with its worst downturn since the Great Depression.
‘This is a temporary hiccup. We just had a boom starting in 2006 and it’s usually a seven-year cycle,’ property tycoon Kwek Leng Beng, who heads Singapore’s No 2 developer City Developments, told Reuters. The property market will be supported by greater foreign investments as Singapore sees the completion of two casino projects and the influx of major events such as Formula One races and the Youth Olympics over the next few years, Mr Kwek argued.
But Barclays’ Mr Leong said his bearish scenario, which calls for a near one-third drop in property value, already takes into account any boost resulting from these economic developments. ‘It’s not the worst-case scenario. This is the most likely scenario based on the numbers,’ he said. — Reuters
Uncertain economy, housing glut fears seen taking toll on developers
HOPES that a slowdown in Singapore’s property market is temporary are fading as an uncertain economic outlook and a looming housing glut threaten to plunge the sector into a prolonged downturn.
Homebuilders such as CapitaLand, Keppel Land and GuocoLand have delayed launching new projects in the moribund market, taking a hit to first-quarter earnings as they hoped for a rebound later this year.
Prospects could be dented further in coming months if smaller developers face financing troubles and have to unload properties at massive discounts. Some have gorged themselves on expensive land acquisitions over the past two years.
With home prices expected to fall 30 to 40 per cent over the next three years, Singapore’s developers could be badly hit and analysts may slash their earnings estimates further.
‘This is the start of a multi-year price correction. Private residential property prices could easily fall by up to 30 per cent by 2010,’ said Barclays Capital economist Leong Wai Ho.
Credit Suisse in a report this month saw rents and property prices falling even more steeply by as much as 40 per cent, and downgraded its investment recommendation for the sector to ‘underweight’.
Warning signs have been flashing as first quarter 2008 sales volumes slumped to the lowest in five years and price growth slowed for two straight quarters, with concerns about a global economic slowdown and the US sub-prime mortgage crisis scaring off potential homebuyers.
Mr Leong said an impending oversupply will worsen the problem, with 66,000 new homes expected to be completed over the next four years, against forecast demand for 50,000 in the same period.
The three-month Singapore Interbank Offered Rate - a benchmark for mortgage loans - has fallen to near record lows below 1.3 per cent, but that may not be enough to revive buyers’ flagging confidence, economists say.
‘Negative real interest rates will be at best a cushion, rather than a boost to housing demand in the near term, although they could lift property demand if and when sentiment turns,’ said Citi analyst Kit Wei Zheng.
‘The worst is yet to come and price cuts are imminent,’ said ABN Amro analyst Fera Wirawan.
BNP Paribas has flagged high financial risks for small developers including Bukit Sembawang, Low Keng Huat and Lian Beng, which have almost all their debts due within a year. Even major builders such as Allgreen, Keppel Land and GuocoLand could face difficulties after steep drops in profit in the last quarter as they launch fewer projects, analysts say.
Slower sales and rising costs could raise developers’ gearing or debt-to-equity ratio to dangerous levels above 70 per cent, up from the industry average of about 62 per cent.
‘We identify three developers, namely Allgreen, GuocoLand and Keppel Land, that could face some pressures on cash flow,’ JPMorgan analyst Christopher Gee said in a report, noting that gearing levels could be pushed up to between 80 and 130 per cent.
The risk of price falls has been heightened by property speculators buying in recent years with little upfront cash, relying on a deferred payment scheme. The government scrapped the scheme last October in a bid to cool down the sector.
Analysts expect speculators will dispose of about 700 units on the cheap this year, and another 2,000 next year, as the properties near completion and instalments are due.
Some developers are still counting on home prices in the city state to rise for at least another year, as they see the market in the middle of an upswing even as the US housing market grapples with its worst downturn since the Great Depression.
‘This is a temporary hiccup. We just had a boom starting in 2006 and it’s usually a seven-year cycle,’ property tycoon Kwek Leng Beng, who heads Singapore’s No 2 developer City Developments, told Reuters. The property market will be supported by greater foreign investments as Singapore sees the completion of two casino projects and the influx of major events such as Formula One races and the Youth Olympics over the next few years, Mr Kwek argued.
But Barclays’ Mr Leong said his bearish scenario, which calls for a near one-third drop in property value, already takes into account any boost resulting from these economic developments. ‘It’s not the worst-case scenario. This is the most likely scenario based on the numbers,’ he said. — Reuters
Singapore inflation rate hits new 26-year high of 7.5% in April
Source : Channel NewsAsia - 23 May 2008
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore inflation rate hits new 26-year high of 7.5% in April
Source : Channel NewsAsia - 23 May 2008
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore inflation rate hits new 26-year high of 7.5% in April
Source : Channel NewsAsia - 23 May 2008
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Luxury home prices down 2.0%, says report
Source : Straits Times - 13 May 2008
Number of foreign purchases fall; many buying homes in suburban areas
HIGH-END homes have become the first to buckle under the pressure of volatile market conditions and gloomy buyer sentiment.
Prices of luxury developments dipped in the first three months of this year, even as foreign buyers - a traditional source of demand for such properties - turned to cheaper options.
A report by property firm Savills Singapore released yesterday showed that prices of expensive homes fell 2.1 per cent in the first quarter, after a steady 21/2-year climb that saw values more than double.
Foreigners also began switching from the prime central districts to suburban areas, such as East Coast, Bukit Batok and Serangoon, said Savills.
Its analysis covered luxury developments located in districts 1, 4, 9, 10 and 11, which include Shenton Way, Sentosa, Orchard, Holland, Newton and Bukit Timah. The average price of these homes fell to $2,360 per sq ft (psf) in the period from January to March, from $2,410 psf in the previous three months.
At the very top end, the priciest condominiums registered a 2.9 per cent dip in prices to $3,577 psf in the first quarter, from $3,683 psf in the previous quarter, Savills said. These are developments that have crossed $2,500 psf.
While Savills would not disclose the names of the buildings it analysed, a check of caveats showed that luxury projects such as Ardmore Park and St Regis Residences in Cuscaden Road recently lodged sales at gradually lower prices.
Savills suggested that luxury condos might be more vulnerable to the global credit crisis.
On the bright side, foreign buying islandwide stayed strong despite the softening housing market, it added.
Foreign buyers took up 28 per cent of private homes in the first quarter, up from 25.9 per cent for the whole of last year.
But the total number of foreign purchases fell, in line with the general slowdown in market activity. Foreigners bought only 901 private homes from January to March this year, less than half the 2,245 homes they took up in the same period last year.
Surprisingly, many of the homes they bought were well away from their usual stronghold of districts 9 to 11.
Savills’ report showed that areas as far-flung as Changi and Hougang made it to the most-bought list, while traditionally foreigner-friendly areas such as Shenton Way dropped out of the top 10.
This could be because more of the foreign buyers now are expatriates living here with their families, rather than investors looking for prime assets, said Mr Ku Swee Yong, Savills’ director of business development and marketing.
‘Rentals are still holding up at high levels, and many expats who are more price-sensitive may now be converting from leasing homes to buying them,’ he said.
‘Some of these expats postponed buying homes last year, but now they could be taking advantage of the slowdown in the market to get a good deal.’
This would explain the foreign demand for suburban areas, as expatriates are likely to buy homes in neighbourhoods that have good schools or where they are currently renting houses.
Bolstering this theory is a sudden drop in the number of leasing transactions this year, said Mr Ku. Based on leases that were signed in 2006, there should be a lot more renewals this year than had actually taken place, he explained.
Savills expects private home prices to grow a moderate 5 per cent to 10 per cent this year.
Number of foreign purchases fall; many buying homes in suburban areas
HIGH-END homes have become the first to buckle under the pressure of volatile market conditions and gloomy buyer sentiment.
Prices of luxury developments dipped in the first three months of this year, even as foreign buyers - a traditional source of demand for such properties - turned to cheaper options.
A report by property firm Savills Singapore released yesterday showed that prices of expensive homes fell 2.1 per cent in the first quarter, after a steady 21/2-year climb that saw values more than double.
Foreigners also began switching from the prime central districts to suburban areas, such as East Coast, Bukit Batok and Serangoon, said Savills.
Its analysis covered luxury developments located in districts 1, 4, 9, 10 and 11, which include Shenton Way, Sentosa, Orchard, Holland, Newton and Bukit Timah. The average price of these homes fell to $2,360 per sq ft (psf) in the period from January to March, from $2,410 psf in the previous three months.
At the very top end, the priciest condominiums registered a 2.9 per cent dip in prices to $3,577 psf in the first quarter, from $3,683 psf in the previous quarter, Savills said. These are developments that have crossed $2,500 psf.
While Savills would not disclose the names of the buildings it analysed, a check of caveats showed that luxury projects such as Ardmore Park and St Regis Residences in Cuscaden Road recently lodged sales at gradually lower prices.
Savills suggested that luxury condos might be more vulnerable to the global credit crisis.
On the bright side, foreign buying islandwide stayed strong despite the softening housing market, it added.
Foreign buyers took up 28 per cent of private homes in the first quarter, up from 25.9 per cent for the whole of last year.
But the total number of foreign purchases fell, in line with the general slowdown in market activity. Foreigners bought only 901 private homes from January to March this year, less than half the 2,245 homes they took up in the same period last year.
Surprisingly, many of the homes they bought were well away from their usual stronghold of districts 9 to 11.
Savills’ report showed that areas as far-flung as Changi and Hougang made it to the most-bought list, while traditionally foreigner-friendly areas such as Shenton Way dropped out of the top 10.
This could be because more of the foreign buyers now are expatriates living here with their families, rather than investors looking for prime assets, said Mr Ku Swee Yong, Savills’ director of business development and marketing.
‘Rentals are still holding up at high levels, and many expats who are more price-sensitive may now be converting from leasing homes to buying them,’ he said.
‘Some of these expats postponed buying homes last year, but now they could be taking advantage of the slowdown in the market to get a good deal.’
This would explain the foreign demand for suburban areas, as expatriates are likely to buy homes in neighbourhoods that have good schools or where they are currently renting houses.
Bolstering this theory is a sudden drop in the number of leasing transactions this year, said Mr Ku. Based on leases that were signed in 2006, there should be a lot more renewals this year than had actually taken place, he explained.
Savills expects private home prices to grow a moderate 5 per cent to 10 per cent this year.
Developers face higher funding costs
Source : Business Times - 17 May 2008
PROPERTY developers in Asia face a ‘double whammy’ of rising credit spreads on loans and banks lending less against the value of new projects, a senior Asian property fund manager said yesterday.
And the wider interest margins that banks have been demanding on loans since the start of the financial market turmoil are likely to be sustained, said Olivier Lim, chief financial officer of CapitaLand, South-east Asia’s largest developer.
Mr Lim and Ng Beng Tiong, the Singapore-based director of operations at ARA Asia Dragon Fund, were speaking at a panel discussion on the last day of a conference organised by Merrill Lynch that started on Tuesday.
Mr Ng said that although benchmark interest rates in Singapore and Hong Kong have fallen, ‘what we’ve seen is that the margins have shot up tremendously - more than double in many cases’.
Before the US sub-prime mortgage crisis broke, property companies in Asia could borrow at spreads of less than 100 basis points or one percentage point above interbank lending rates, Mr Ng said.
‘Now banks are quoting 200, 300 and for some smaller developers we understand that they’re being quoted 400′ basis-point spreads.
Besides paying higher interest rate spreads on loans, developers are also finding that the proportion of a project’s value that banks are willing to fund - the loan-to-value (LTV) ratio - has shrunk, he said.
‘In the bullish days, we were seeing 70-80 per cent LTV. Now banks are quoting 50-60 per cent, so it’s a double whammy for project financing.’
ARA Asia Dragon Fund is the flagship private real estate fund of ARA Asset Management, an affiliate of Hong Kong’s Cheung Kong Group. At the end of last year, the fund, which invests in major cities throughout Asia, had more than US$1.5 billion of capital from institutional investors worldwide, including Calpers, the largest US public pension fund.
CapitaLand’s Mr Lim said the first quarter saw ‘the worst credit market situation I’ve seen in my 19-year career’.
Although spreads have since narrowed slightly, ‘I think the blow-out in the credit margins will be sustained’, he added. ‘I don’t see it compressing to where it was last year.’
At CapitaLand, ‘we’re seeing, on average, rates go up by between 60 to 100 basis points, depending on whether it’s corporate risk or project risk’.
‘But we are sensing a flight to quality, so for us we’ve been able to raise about S$4 billion overall of credit debt from multiple sources in the first quarter alone. We still have access, but we do have to adjust to a higher margin. Thankfully, the cost of money is much lower, so the overall cost is about the same as it was last year.’
Last month, the firm raised another S$2 billion of bank funding for its new condominium development at Farrer Court. ‘Banks are still lending,’ he said.
In Asia, outside its main markets of Singapore, China and Australia, CapitaLand has been ‘probing many other markets’ including Thailand, Malaysia and the Middle East, ‘but it’s becoming much clearer to us that two countries are at the top of the list - Vietnam and India’, he said. ‘We’re starting to accelerate our investments in both of those countries.’
Meanwhile, despite suggestions that property prices in Singapore have risen too far too fast, ‘I think the market is a lot healthier than people indicate’, Mr Lim said.
PROPERTY developers in Asia face a ‘double whammy’ of rising credit spreads on loans and banks lending less against the value of new projects, a senior Asian property fund manager said yesterday.
And the wider interest margins that banks have been demanding on loans since the start of the financial market turmoil are likely to be sustained, said Olivier Lim, chief financial officer of CapitaLand, South-east Asia’s largest developer.
Mr Lim and Ng Beng Tiong, the Singapore-based director of operations at ARA Asia Dragon Fund, were speaking at a panel discussion on the last day of a conference organised by Merrill Lynch that started on Tuesday.
Mr Ng said that although benchmark interest rates in Singapore and Hong Kong have fallen, ‘what we’ve seen is that the margins have shot up tremendously - more than double in many cases’.
Before the US sub-prime mortgage crisis broke, property companies in Asia could borrow at spreads of less than 100 basis points or one percentage point above interbank lending rates, Mr Ng said.
‘Now banks are quoting 200, 300 and for some smaller developers we understand that they’re being quoted 400′ basis-point spreads.
Besides paying higher interest rate spreads on loans, developers are also finding that the proportion of a project’s value that banks are willing to fund - the loan-to-value (LTV) ratio - has shrunk, he said.
‘In the bullish days, we were seeing 70-80 per cent LTV. Now banks are quoting 50-60 per cent, so it’s a double whammy for project financing.’
ARA Asia Dragon Fund is the flagship private real estate fund of ARA Asset Management, an affiliate of Hong Kong’s Cheung Kong Group. At the end of last year, the fund, which invests in major cities throughout Asia, had more than US$1.5 billion of capital from institutional investors worldwide, including Calpers, the largest US public pension fund.
CapitaLand’s Mr Lim said the first quarter saw ‘the worst credit market situation I’ve seen in my 19-year career’.
Although spreads have since narrowed slightly, ‘I think the blow-out in the credit margins will be sustained’, he added. ‘I don’t see it compressing to where it was last year.’
At CapitaLand, ‘we’re seeing, on average, rates go up by between 60 to 100 basis points, depending on whether it’s corporate risk or project risk’.
‘But we are sensing a flight to quality, so for us we’ve been able to raise about S$4 billion overall of credit debt from multiple sources in the first quarter alone. We still have access, but we do have to adjust to a higher margin. Thankfully, the cost of money is much lower, so the overall cost is about the same as it was last year.’
Last month, the firm raised another S$2 billion of bank funding for its new condominium development at Farrer Court. ‘Banks are still lending,’ he said.
In Asia, outside its main markets of Singapore, China and Australia, CapitaLand has been ‘probing many other markets’ including Thailand, Malaysia and the Middle East, ‘but it’s becoming much clearer to us that two countries are at the top of the list - Vietnam and India’, he said. ‘We’re starting to accelerate our investments in both of those countries.’
Meanwhile, despite suggestions that property prices in Singapore have risen too far too fast, ‘I think the market is a lot healthier than people indicate’, Mr Lim said.
Profiteering adds to construction woes
Source : Business Times - 19 May 2008
As costs of materials rise, some suppliers default on earlier contracts to make more
THE last thing the construction industry needs now is another roadblock. But with the cost of materials and shortages soaring, the opportunity to inflate prices is too much for some errant suppliers and sub-contractors to resist.
Sources told BT that some suppliers of building materials have been opting to default on earlier contracts because the current demand and prices are so strong, they can easily secure more profitable contracts elsewhere, stock piling materials in the meantime.
To add to the strain, labour supply has become so tight that crane operators, for instance, are said to be commanding salaries upwards of $8,000 per month.
A check with the Building and Construction Authority (BCA) reveals, however, that this opportunistic behaviour is not widespread - yet.
A BCA spokesman also said it has not received feedback of contract defaults by suppliers of steel and other construction materials, or of any delay in construction works due to such default of contractual obligations.
However, BCA said: ‘We do understand that the suppliers have increased their importation and stocking up of steel rebars in view of the surging prices. Suppliers have also shortened the period of supply contract for rebars from the previous 12 months to the current six months.’
‘Contractors and developers have to resolve the price issue based on their business practices, relationship and understanding. For projects which adopt price fluctuation for these materials, the cost impact on the contractors will be minimal,’ added BCA.
Construction companies that BT spoke with had mixed reactions to the situation.
A spokesman for United Engineers Ltd said: ‘The industry is particularly seeing some delays in projects, either in the midst of or commencing construction, that were awarded before the construction boom as prices negotiated at that time were definitely lower compared to now.’
Straits Construction director Wong Chee Herng said the industry has seen some smaller suppliers defaulting on contracts and causing delays but the level is still ‘manageable’.
He added: ‘Prices have moved up and there is no point lamenting . . . It’s a choice of either negotiating or just walking away.’
With so much uncertainty, Straits Construction is more selective about tendering for jobs. ‘If we feel we can’t deliver, we won’t tender,’ Mr Wong said.
Other construction companies like Hiap Hoe and Sim Lian say they are not facing any delays.
Giving an insight into how suppliers are also facing the same challenges, Lee Metal Group executive director Lee Heng Thiam revealed how a steel supplier for Marina Bay Sands was contracted to supply 85,000 tonnes over a two- year period at US$600 per tonne. However, the price of this steel has since risen to US$1,000. ‘It is too much for anyone to bear,’ he said. And while the particular supplier was able to renegotiate the contract, Mr Lee said: ‘I think they will still make a loss.’
To mitigate the risks, Lee Metal has to hedge its position. ‘In the past, the practice was to sell first and buy later; now, it’s the other way around,’ he explained. This means it keeps a stockpile of 6-8 months worth of supply to ensure it can fulfil its obligations.
Price fluctuation clauses are not a big help to suppliers who stockpile. ‘If prices are on a downward trend, we are in trouble,’ he explained. ‘Buying and selling needs to be managed tightly.’
HG Metal manages its stock on a tighter basis by maintaining 3-4 months worth of inventory amounting to as much as $200 million worth in stock at any one time. HG Metal CEO Wee Piew also said that it does not ‘lock in’ its prices. ‘Most major suppliers don’t set contracts,’ he added.
‘The only issue is when a big contractor wants to lock in prices. Then they have to deal with steel mills directly,’ he added.
These mills are usually in China but both HG Metal and Lee Metal say their supply comes from international traders instead because of the uncertain supply from Chinese mills.
PSL Holdings, a foundation engineering specialist contractor, says that its operators of construction cranes and other vehicles are commanding ‘very high salaries’ but it has managed to factor increasing manpower costs into its contracts. ‘The effect on our margins is minimal,’ added a PSL spokesman.
PSL says it has not encountered delays so far but apart from rising salaries, it is faced with rising costs due to surging diesel prices as well as shortage of personnel. PSL said: ‘We have managed to mitigate the higher costs because of the short duration of our projects.’
Developers that BT spoke too also say they are not facing delays.
City Developments Ltd (CDL) says it has not encountered any significant delays from its contractors. ‘Perhaps they have made early confirmation orders on the construction materials and are not really affected by the present rising costs of materials,’ added CDL’s spokesman.
Frasers Centrepoint COO Cheang Kok Kheong did say that to counter rising costs, it has had to take certain steps including continuously reviewing its plans and specifications to ensure that cost-effective construction methods and alternatives are considered. ‘In addition, we have improved and streamlined our procurement methods to get bulk pricing for construction supplies from our associates,’ he added.
The construction industry is perhaps beginning to show signs of strain, and may need more help.
To this end, BCA says it is also working with the Real Estate Developers’ Association of Singapore to encourage their member developers to make prompt payment to help ease the cashflow of the contractors.
As costs of materials rise, some suppliers default on earlier contracts to make more
THE last thing the construction industry needs now is another roadblock. But with the cost of materials and shortages soaring, the opportunity to inflate prices is too much for some errant suppliers and sub-contractors to resist.
Sources told BT that some suppliers of building materials have been opting to default on earlier contracts because the current demand and prices are so strong, they can easily secure more profitable contracts elsewhere, stock piling materials in the meantime.
To add to the strain, labour supply has become so tight that crane operators, for instance, are said to be commanding salaries upwards of $8,000 per month.
A check with the Building and Construction Authority (BCA) reveals, however, that this opportunistic behaviour is not widespread - yet.
A BCA spokesman also said it has not received feedback of contract defaults by suppliers of steel and other construction materials, or of any delay in construction works due to such default of contractual obligations.
However, BCA said: ‘We do understand that the suppliers have increased their importation and stocking up of steel rebars in view of the surging prices. Suppliers have also shortened the period of supply contract for rebars from the previous 12 months to the current six months.’
‘Contractors and developers have to resolve the price issue based on their business practices, relationship and understanding. For projects which adopt price fluctuation for these materials, the cost impact on the contractors will be minimal,’ added BCA.
Construction companies that BT spoke with had mixed reactions to the situation.
A spokesman for United Engineers Ltd said: ‘The industry is particularly seeing some delays in projects, either in the midst of or commencing construction, that were awarded before the construction boom as prices negotiated at that time were definitely lower compared to now.’
Straits Construction director Wong Chee Herng said the industry has seen some smaller suppliers defaulting on contracts and causing delays but the level is still ‘manageable’.
He added: ‘Prices have moved up and there is no point lamenting . . . It’s a choice of either negotiating or just walking away.’
With so much uncertainty, Straits Construction is more selective about tendering for jobs. ‘If we feel we can’t deliver, we won’t tender,’ Mr Wong said.
Other construction companies like Hiap Hoe and Sim Lian say they are not facing any delays.
Giving an insight into how suppliers are also facing the same challenges, Lee Metal Group executive director Lee Heng Thiam revealed how a steel supplier for Marina Bay Sands was contracted to supply 85,000 tonnes over a two- year period at US$600 per tonne. However, the price of this steel has since risen to US$1,000. ‘It is too much for anyone to bear,’ he said. And while the particular supplier was able to renegotiate the contract, Mr Lee said: ‘I think they will still make a loss.’
To mitigate the risks, Lee Metal has to hedge its position. ‘In the past, the practice was to sell first and buy later; now, it’s the other way around,’ he explained. This means it keeps a stockpile of 6-8 months worth of supply to ensure it can fulfil its obligations.
Price fluctuation clauses are not a big help to suppliers who stockpile. ‘If prices are on a downward trend, we are in trouble,’ he explained. ‘Buying and selling needs to be managed tightly.’
HG Metal manages its stock on a tighter basis by maintaining 3-4 months worth of inventory amounting to as much as $200 million worth in stock at any one time. HG Metal CEO Wee Piew also said that it does not ‘lock in’ its prices. ‘Most major suppliers don’t set contracts,’ he added.
‘The only issue is when a big contractor wants to lock in prices. Then they have to deal with steel mills directly,’ he added.
These mills are usually in China but both HG Metal and Lee Metal say their supply comes from international traders instead because of the uncertain supply from Chinese mills.
PSL Holdings, a foundation engineering specialist contractor, says that its operators of construction cranes and other vehicles are commanding ‘very high salaries’ but it has managed to factor increasing manpower costs into its contracts. ‘The effect on our margins is minimal,’ added a PSL spokesman.
PSL says it has not encountered delays so far but apart from rising salaries, it is faced with rising costs due to surging diesel prices as well as shortage of personnel. PSL said: ‘We have managed to mitigate the higher costs because of the short duration of our projects.’
Developers that BT spoke too also say they are not facing delays.
City Developments Ltd (CDL) says it has not encountered any significant delays from its contractors. ‘Perhaps they have made early confirmation orders on the construction materials and are not really affected by the present rising costs of materials,’ added CDL’s spokesman.
Frasers Centrepoint COO Cheang Kok Kheong did say that to counter rising costs, it has had to take certain steps including continuously reviewing its plans and specifications to ensure that cost-effective construction methods and alternatives are considered. ‘In addition, we have improved and streamlined our procurement methods to get bulk pricing for construction supplies from our associates,’ he added.
The construction industry is perhaps beginning to show signs of strain, and may need more help.
To this end, BCA says it is also working with the Real Estate Developers’ Association of Singapore to encourage their member developers to make prompt payment to help ease the cashflow of the contractors.
Property seems paler but its anyones call
Business Times - 16 May 2008
Volumes shrink, prices weaken but some segments are holding firm
(SINGAPORE) Based on the latest monthly developer sales data from the Urban Redevelopment Authority (URA), property prices could be on the downward trend.
Developer sales fell, with April seeing only 274 transactions. This is about 9 per cent lower than the 301 units sold in March, though still higher than the 174 units sold in February.
And while it is difficult to accurately pinpoint price movements with such low volume, an analysis by Knight Frank of overall median prices achieved nevertheless registered an 8.9 per cent drop in April, falling to $943 psf compared to $1,035 psf in March.
The peak median price of over $1,400 psf was reached in August 2007.
Knight Frank director (research and consultancy) Nicholas Mak also explained that the analysis was a 'median of median prices', and so may not be a precise reflection of price movements.
Mr Mak also said that applying a different mode of analysis to the same data - the formula used to calculate URA's quarterly property price index for instance - could even show that prices have increased slightly.
Still, a comparison of monthly median prices of recently launched developments does suggest that prices could be falling.
The 79-unit Blu Coral was launched in February with nine units sold at a median price of $872 psf. In March, 28 units were sold at a median price of $802 psf, while in April, 18 units were sold at a median price of $657.
Similarly, 53 units of the 106-unit, The Verve, were launched in March with 36 units sold at a median price of $1,187 psf. In April, 8 units were sold at a median price of $1,055 psf.
And nine units of the 625-unit, The Quartz, were sold in March at a median price of $742 psf, followed by 14 units sold in April at a median price of $721 psf.
Interestingly, one unit of Waterfront Waves was sold at $909 psf in April, higher than the median price of $806 in March when 14 units were sold.
Perhaps another indication of the weakening market is that 43 units of 659-unit The Parc Condominium, previously reported as being fully sold, have re-emerged on the market. According to the monthly data, the returned units first appeared in February.
A source that did not want to be named also said that these units were returned by buyers who chose not to exercise their options, forfeiting a quarter of the 5 per cent downpayment in the process.
Jones Lang LaSalle head of research (South-East Asia) Chua Yang Liang has also analysed median prices as a measure of volatility and suggests that this has increased in the Outside Central Region (OCR).
Dr Chua explained that volatility, as a measure of how wide market prices are per unit dollar of the median price achieved could also reflect, 'the market's speculative level'. As such, he said: 'It would appear that upgraders may be returning, with entry level projects that are moderately priced between $750 to $850 psf as the preferred choice.'
Supporting this were the healthy sales of the 56-unit Stadia at Yio Chu Kang, which saw 52 units sold. Two units were sold for under $750 psf while the remaining 50 were sold at between $750 and $1,000 psf.
In the OCR, Dr Chua said based on the analysis, median prices continued to soften by 4.2 per cent. But he also added that the analysis was just an 'indication of the market's mood', and does not account for product differentiation or physical attributes of each development.
While the volume of sales was low in the Central Core Region with just 19 non-landed homes transacted, Dr Chua believes that the low volatility in median prices there suggests that market activity and future prices in the high end market are likely to remain stable.
Also holding this view is CB Richard Ellis Research executive director Li Hiaw Ho who noted that two units in Scotts Square were sold at around $4,300 psf, a unit at Orchard Scotts was sold at $2,520 psf and two units at Skypark were sold at around $2,300 psf.
'Although high-value transactions were limited, the individual transactions seemed to indicate that prices in the high-end market were still holding firm,' he added.
The analysis of price movements will however, remain an academic one, and as such will remain open to debate.
Colliers International director (research and advisory) Tay Huey Ying said there were too few transactions at the higher end of the market to comment fairly on the sector.
And even for the OCR, she noted that the median transacted price for mass-market units averaged $792 psf in April, about 8 per cent higher than the average median price of $729 in August 2007 when the highest sale volume for the sector was registered.
Volumes shrink, prices weaken but some segments are holding firm
(SINGAPORE) Based on the latest monthly developer sales data from the Urban Redevelopment Authority (URA), property prices could be on the downward trend.
Developer sales fell, with April seeing only 274 transactions. This is about 9 per cent lower than the 301 units sold in March, though still higher than the 174 units sold in February.
And while it is difficult to accurately pinpoint price movements with such low volume, an analysis by Knight Frank of overall median prices achieved nevertheless registered an 8.9 per cent drop in April, falling to $943 psf compared to $1,035 psf in March.
The peak median price of over $1,400 psf was reached in August 2007.
Knight Frank director (research and consultancy) Nicholas Mak also explained that the analysis was a 'median of median prices', and so may not be a precise reflection of price movements.
Mr Mak also said that applying a different mode of analysis to the same data - the formula used to calculate URA's quarterly property price index for instance - could even show that prices have increased slightly.
Still, a comparison of monthly median prices of recently launched developments does suggest that prices could be falling.
The 79-unit Blu Coral was launched in February with nine units sold at a median price of $872 psf. In March, 28 units were sold at a median price of $802 psf, while in April, 18 units were sold at a median price of $657.
Similarly, 53 units of the 106-unit, The Verve, were launched in March with 36 units sold at a median price of $1,187 psf. In April, 8 units were sold at a median price of $1,055 psf.
And nine units of the 625-unit, The Quartz, were sold in March at a median price of $742 psf, followed by 14 units sold in April at a median price of $721 psf.
Interestingly, one unit of Waterfront Waves was sold at $909 psf in April, higher than the median price of $806 in March when 14 units were sold.
Perhaps another indication of the weakening market is that 43 units of 659-unit The Parc Condominium, previously reported as being fully sold, have re-emerged on the market. According to the monthly data, the returned units first appeared in February.
A source that did not want to be named also said that these units were returned by buyers who chose not to exercise their options, forfeiting a quarter of the 5 per cent downpayment in the process.
Jones Lang LaSalle head of research (South-East Asia) Chua Yang Liang has also analysed median prices as a measure of volatility and suggests that this has increased in the Outside Central Region (OCR).
Dr Chua explained that volatility, as a measure of how wide market prices are per unit dollar of the median price achieved could also reflect, 'the market's speculative level'. As such, he said: 'It would appear that upgraders may be returning, with entry level projects that are moderately priced between $750 to $850 psf as the preferred choice.'
Supporting this were the healthy sales of the 56-unit Stadia at Yio Chu Kang, which saw 52 units sold. Two units were sold for under $750 psf while the remaining 50 were sold at between $750 and $1,000 psf.
In the OCR, Dr Chua said based on the analysis, median prices continued to soften by 4.2 per cent. But he also added that the analysis was just an 'indication of the market's mood', and does not account for product differentiation or physical attributes of each development.
While the volume of sales was low in the Central Core Region with just 19 non-landed homes transacted, Dr Chua believes that the low volatility in median prices there suggests that market activity and future prices in the high end market are likely to remain stable.
Also holding this view is CB Richard Ellis Research executive director Li Hiaw Ho who noted that two units in Scotts Square were sold at around $4,300 psf, a unit at Orchard Scotts was sold at $2,520 psf and two units at Skypark were sold at around $2,300 psf.
'Although high-value transactions were limited, the individual transactions seemed to indicate that prices in the high-end market were still holding firm,' he added.
The analysis of price movements will however, remain an academic one, and as such will remain open to debate.
Colliers International director (research and advisory) Tay Huey Ying said there were too few transactions at the higher end of the market to comment fairly on the sector.
And even for the OCR, she noted that the median transacted price for mass-market units averaged $792 psf in April, about 8 per cent higher than the average median price of $729 in August 2007 when the highest sale volume for the sector was registered.
Inflation to hit Singapore harder than US economic slowdown
Source : Channel NewsAsia - 8 May 2008
Inflation is a more serious problem for Singapore and other Asian economies than an economic slowdown in the United States, according to HSBC’s senior Asian economist, Robert Prior-Wandesforde.
He said if inflation continues to push upwards, Asia could find itself facing an economic slowdown next year. His comment came at a seminar organised by the Singapore International Chamber of Commerce.
Inflation in Asian economies has been on a relentless move upwards, with Singapore seeing inflation rising at its fastest pace in more than 26 years.
HSBC said the Singapore government appears to be tackling inflation well, but external factors are key when assessing the overall outlook.
Mr Prior-Wandesforde said: “Singapore isn’t too badly placed; I think we can manage this reasonably well. The countries that I’m more worried about would be some of the lesser developed countries, where inflation is starting to get a bit out of hand.
“The governments and central banks are going to need to do something about that. That means pressure on growth eventually, and that could be the bigger danger for Singapore as we go into 2009 and 2010.”
He said inflation is a bigger worry than the anticipated slowdown in the US because as a whole, Asia is still expected to show robust growth, led by economies such as China and India.
He added: “Asia has survived what has already been a reasonably big US downturn surprisingly well. In fact, some Asian countries have picked up at exactly the same time as the US has been slowing down.
“I do think there’s a possibility that the reverse could happen with these various commodity price shocks having a bigger impact on Asia than the Western world. Asia is slowing down more aggressively in 2009 (and) 2010, at exactly the same time as the US picks up.”
Prices of commodities such as oil and rice have been surging, leading to protests in Thailand, Vietnam and the Philippines. - CNA /ls
Inflation is a more serious problem for Singapore and other Asian economies than an economic slowdown in the United States, according to HSBC’s senior Asian economist, Robert Prior-Wandesforde.
He said if inflation continues to push upwards, Asia could find itself facing an economic slowdown next year. His comment came at a seminar organised by the Singapore International Chamber of Commerce.
Inflation in Asian economies has been on a relentless move upwards, with Singapore seeing inflation rising at its fastest pace in more than 26 years.
HSBC said the Singapore government appears to be tackling inflation well, but external factors are key when assessing the overall outlook.
Mr Prior-Wandesforde said: “Singapore isn’t too badly placed; I think we can manage this reasonably well. The countries that I’m more worried about would be some of the lesser developed countries, where inflation is starting to get a bit out of hand.
“The governments and central banks are going to need to do something about that. That means pressure on growth eventually, and that could be the bigger danger for Singapore as we go into 2009 and 2010.”
He said inflation is a bigger worry than the anticipated slowdown in the US because as a whole, Asia is still expected to show robust growth, led by economies such as China and India.
He added: “Asia has survived what has already been a reasonably big US downturn surprisingly well. In fact, some Asian countries have picked up at exactly the same time as the US has been slowing down.
“I do think there’s a possibility that the reverse could happen with these various commodity price shocks having a bigger impact on Asia than the Western world. Asia is slowing down more aggressively in 2009 (and) 2010, at exactly the same time as the US picks up.”
Prices of commodities such as oil and rice have been surging, leading to protests in Thailand, Vietnam and the Philippines. - CNA /ls
GIC warns global economic risks may rise
Source : Business Times - 9 May 2008
Singapore’s sovereign fund GIC, one of the world’s biggest state-owned investors, warned on Friday that risks to the global economy could rise in the next 12 months due to falling house prices and a spike in energy costs.
The comments by Government of Singapore Investment Corp (GIC) deputy chairman Tony Tan come after he cautioned last month that financial markets would remain fickle and the world could face its worst recession in 30 years - a scenario that was widely perceived as being too gloomy.
‘Steep falls in house prices in the US could deepen mortgage-related losses and dampen consumer spending,’ Dr Tan said, according to the text of a speech delivered in Shanghai.
‘Higher energy costs could potentially offset the positive impact of tax rebates US households receive from the fiscal stimulus package,’ he said.
Dr Tan acknowledged that market uncertainty and volatility had made it harder for investors to achieve strong returns, while taking acceptable risks.
GIC, estimated to have more than US$300 billion in assets, is heavily exposed to the financial industry through its multi-billion dollar investments in beleaguered banks UBS and Citigroup made in the wake of the credit crisis.
GIC said last month it was confident that the bank investment would give good long-term returns. Its sister fund, Temasek Holdings, has invested in Merrill Lynch and Barclays. — REUTERS
Singapore’s sovereign fund GIC, one of the world’s biggest state-owned investors, warned on Friday that risks to the global economy could rise in the next 12 months due to falling house prices and a spike in energy costs.
The comments by Government of Singapore Investment Corp (GIC) deputy chairman Tony Tan come after he cautioned last month that financial markets would remain fickle and the world could face its worst recession in 30 years - a scenario that was widely perceived as being too gloomy.
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‘Steep falls in house prices in the US could deepen mortgage-related losses and dampen consumer spending,’ Dr Tan said, according to the text of a speech delivered in Shanghai.
‘Higher energy costs could potentially offset the positive impact of tax rebates US households receive from the fiscal stimulus package,’ he said.
Dr Tan acknowledged that market uncertainty and volatility had made it harder for investors to achieve strong returns, while taking acceptable risks.
GIC, estimated to have more than US$300 billion in assets, is heavily exposed to the financial industry through its multi-billion dollar investments in beleaguered banks UBS and Citigroup made in the wake of the credit crisis.
GIC said last month it was confident that the bank investment would give good long-term returns. Its sister fund, Temasek Holdings, has invested in Merrill Lynch and Barclays. — REUTERS
Experts divided over whether good times are back
Source : Straits Times - 3 May 2008
Is the global financial crisis really over? Many in the financial industry seem to think so.
On Thursday, Britain’s central bank suggested that the credit crisis was easing, saying the market has been overly pessimistic in valuing certain assets which now even look like bargains.
But a number of economists continue to caution that much of the optimism is misplaced. The full extent of the crisis, they say, has yet to wend through the wider economy, and may be the trigger for a long-overdue unwinding of economic imbalances that have built up in recent years.
Echoing earlier optimistic comments by heads of investment banks, the Bank of England (BOE) said that ‘while there remain downside risks, the most likely path ahead is that confidence and risk appetite will return gradually in the coming months’.
Mr John Gieve, a BOE deputy governor, said in the bank’s twice-yearly Financial Stability Report that ‘the pricing of risk in credit markets seems to have swung from being unsustainably low last summer to being temporarily too high relative to fundamentals’.
The report added, ‘As uncertainty falls and market liquidity improves, it should become clearer that some assets appear cheap relative to credit fundamentals.’
The comments are the latest in a discussion among policymakers, bankers, economists and investors about whether the current financial and economic turmoil is nearing the end.
On Wednesday, United States Treasury Secretary Henry Paulson Jr said that credit market conditions were improving. ‘We are closer to the end of this problem than we are to the beginning,’ he told Bloomberg Television.
The International Monetary Fund has estimated that the ultimate cost will reach nearly US$1 trillion (S$1.36 trillion) in write-downs and credit losses in the current crisis. But this estimate, based on imperfect information and models, may turn out to have been unduly pessimistic, the BOE said.
Still, some economists, like Mr Julian Jessop, the chief international economist at Capital Economics in London, said that even if conditions in the financial markets improved quickly, the wider economic fallout from the credit crisis would persist for many months or even years to come.
‘Indeed, the financial crisis might be seen as simply the trigger for the long-overdue unwinding of the economic imbalances that have built up in recent years,’ he said.
Uncertainties about the extent of the economic downturn and house price declines, Mr Jessop added, will add to the risk aversion in the financial sector.
The BOE shared some of that caution in its report on Thursday, saying tight credit conditions could lead to a pickup in defaults among vulnerable borrowers, parts of the commercial property sector and some non-financial companies with a lot of debt.
The BOE cut its benchmark interest rate last month for a third time since December, to 5 per cent, while the US Federal Reserve on Wednesday lowered its benchmark rate to 2 per cent, its seventh cut since September.
The BOE, following a similar initiative by the Fed, also announced a plan to swop £50 billion (S$133.59 billion) of British government bonds for up to three years in exchange for the illiquid mortgage securities that banks were holding on their balance sheets.
But some analysts pointed out that the banks’ need for such a facility illustrated that there were still not enough buyers for these assets in the market and that their value might have to drop further.
Banks worldwide have already written off more than US$300 billion in soured investments since the crisis began last summer with the collapse of the US sub-prime mortgage market.
The BOE is conscious that the market is partly ruled by sentiment, and the bank made clear in its report that too much pessimism about valuations and persisting concerns ‘could become self-fulfilling’.
Mr James Knightley, an economist at ING Financial Markets in London, said that ‘there may be signs that the credit crunch is easing up but there are still uncertainties about write-downs, and the macro numbers will get worse before they get better’.
‘There is still so much uncertainty that it is difficult to value the costs of the credit crisis, and there are so many shifts and turns in sentiment that it’s impossible to predict any timeframe,’ he said.
PROBLEMS WILL PERSIST
‘The financial crisis might be seen as simply the trigger for the long-overdue unwinding of the economic imbalances that have built up in recent years.’ - MR JULIAN JESSOP, chief international economist at Capital Economics in London, who believes the wider economic fallout from the credit crisis will persist for many months or even years
STILL TOO EARLY TO TELL
‘There is still so much uncertainty that it is difficult to value the costs of the credit crisis, and there are so many shifts and turns in sentiment that it’s impossible to predict any timeframe.’ - MR JAMES KNIGHTLEY, an economist at ING Financial Markets in London
Is the global financial crisis really over? Many in the financial industry seem to think so.
On Thursday, Britain’s central bank suggested that the credit crisis was easing, saying the market has been overly pessimistic in valuing certain assets which now even look like bargains.
But a number of economists continue to caution that much of the optimism is misplaced. The full extent of the crisis, they say, has yet to wend through the wider economy, and may be the trigger for a long-overdue unwinding of economic imbalances that have built up in recent years.
Echoing earlier optimistic comments by heads of investment banks, the Bank of England (BOE) said that ‘while there remain downside risks, the most likely path ahead is that confidence and risk appetite will return gradually in the coming months’.
Mr John Gieve, a BOE deputy governor, said in the bank’s twice-yearly Financial Stability Report that ‘the pricing of risk in credit markets seems to have swung from being unsustainably low last summer to being temporarily too high relative to fundamentals’.
The report added, ‘As uncertainty falls and market liquidity improves, it should become clearer that some assets appear cheap relative to credit fundamentals.’
The comments are the latest in a discussion among policymakers, bankers, economists and investors about whether the current financial and economic turmoil is nearing the end.
On Wednesday, United States Treasury Secretary Henry Paulson Jr said that credit market conditions were improving. ‘We are closer to the end of this problem than we are to the beginning,’ he told Bloomberg Television.
The International Monetary Fund has estimated that the ultimate cost will reach nearly US$1 trillion (S$1.36 trillion) in write-downs and credit losses in the current crisis. But this estimate, based on imperfect information and models, may turn out to have been unduly pessimistic, the BOE said.
Still, some economists, like Mr Julian Jessop, the chief international economist at Capital Economics in London, said that even if conditions in the financial markets improved quickly, the wider economic fallout from the credit crisis would persist for many months or even years to come.
‘Indeed, the financial crisis might be seen as simply the trigger for the long-overdue unwinding of the economic imbalances that have built up in recent years,’ he said.
Uncertainties about the extent of the economic downturn and house price declines, Mr Jessop added, will add to the risk aversion in the financial sector.
The BOE shared some of that caution in its report on Thursday, saying tight credit conditions could lead to a pickup in defaults among vulnerable borrowers, parts of the commercial property sector and some non-financial companies with a lot of debt.
The BOE cut its benchmark interest rate last month for a third time since December, to 5 per cent, while the US Federal Reserve on Wednesday lowered its benchmark rate to 2 per cent, its seventh cut since September.
The BOE, following a similar initiative by the Fed, also announced a plan to swop £50 billion (S$133.59 billion) of British government bonds for up to three years in exchange for the illiquid mortgage securities that banks were holding on their balance sheets.
But some analysts pointed out that the banks’ need for such a facility illustrated that there were still not enough buyers for these assets in the market and that their value might have to drop further.
Banks worldwide have already written off more than US$300 billion in soured investments since the crisis began last summer with the collapse of the US sub-prime mortgage market.
The BOE is conscious that the market is partly ruled by sentiment, and the bank made clear in its report that too much pessimism about valuations and persisting concerns ‘could become self-fulfilling’.
Mr James Knightley, an economist at ING Financial Markets in London, said that ‘there may be signs that the credit crunch is easing up but there are still uncertainties about write-downs, and the macro numbers will get worse before they get better’.
‘There is still so much uncertainty that it is difficult to value the costs of the credit crisis, and there are so many shifts and turns in sentiment that it’s impossible to predict any timeframe,’ he said.
PROBLEMS WILL PERSIST
‘The financial crisis might be seen as simply the trigger for the long-overdue unwinding of the economic imbalances that have built up in recent years.’ - MR JULIAN JESSOP, chief international economist at Capital Economics in London, who believes the wider economic fallout from the credit crisis will persist for many months or even years
STILL TOO EARLY TO TELL
‘There is still so much uncertainty that it is difficult to value the costs of the credit crisis, and there are so many shifts and turns in sentiment that it’s impossible to predict any timeframe.’ - MR JAMES KNIGHTLEY, an economist at ING Financial Markets in London
Saturday, May 10, 2008
Slowdown may stretch into next year: PM Lee
Business Times - 02 May 2008
For S'pore, much depends on the shape of the US downturn - whether it's V, U or L
By CHUANG PECK MING
(SINGAPORE) To the eternal optimists who think that the Singapore economy will rebound from its lean patch in the months to come, Prime Minister Lee Hsien Loong offered a sobering projection: he expects the slowdown to continue into next year.
While the economy is on track to hit 4-6 per cent growth this year, Mr Lee sees its momentum slowing in the next few quarters as the United States economy limps along, dragged down by still-unfixed sub-prime mortgage problems.
And whether it's a V-shaped or U-shaped downturn in the US, it could extend the slowdown in Singapore's economy into 2009, Mr Lee told some 1,500 unionists yesterday at a National Trades Union Congress May Day Rally.
'The first quarter is good,' he said. 'Second, third, fourth quarters - prepare ourselves that it will slow down. And the slowdown may last into next year.'
It could be worse if the US falls into an L-shaped economic trajectory - the gloomiest scenario, when there is a severe and extended downturn in the US, like the decade-long recession Japan went into in the 1990s.
'If that happens, then America is in trouble,' Mr Lee said. 'So too Europe, so too Japan. And Singapore will be caught up in this and we will be in serious difficulties too.'
But he noted that most analysts don't think this is on the cards.
The best scenario for the US is a V-shaped downturn - a quick recession followed by a quick rebound - which is also the best scenario for Singapore, Mr Lee said. 'But it is hoping for the best'.
He said the US could easily slip into a U-shaped downturn because its underlying housing problems remain unsolved. The actions taken so far have only postponed the problems into the future.
'The property prices have to go down further,' Mr Lee said. 'When they go down, the banks will have more problems. When the banks have problems, they shrink. That will cause the economy to have more problems.'
In a U-shaped downturn, the bottoming will last longer and the US economy will take some time to sort itself out - perhaps until 2009, according to him.
'This could well happen and then Singapore too will be slowed down significantly,' Mr Lee warned.
'But whatever it is, we have to stay on our guard and stay prepared,' he said. 'Overall, I would expect V-shaped if we are lucky (or a) U-shaped downturn in the US - better plan on that.'
Whatever shape the US downturn takes, Mr Lee said the impact on the Singapore economy will be uneven. Construction, marine engineering, ports and shipyards will be 'all right', according to him.
'Construction will be okay because we have so many things building in Singapore,' Mr Lee said.
'Marine engineering will be okay because the shipyards are doing well. Ports will be okay because the port is highly competitive and bringing in a lot of business.'
But tourism, financial services and perhaps information technology will feel at least some pain.
All this suggests that Singapore's year-on-year economic growth in the coming quarters will fall below the surprisingly strong 7.2 per cent gain estimated for Q1.
'Essentially, Singapore has to be prepared for fairly rough weather ahead,' said Manu Bhaskaran of Centennial Group, a US-based economic consultancy.
He sees a prolonged period of 'meagre' economic growth in the US - and Europe and Japan are not going to take up the slack, because the leading indicators for these two large economies also point to a slowdown, according to him.
Mr Bhaskaran said Singapore has built up some resiliency in its services sector, which puts it in a better position than before to absorb the impact of a US recession. But even then, it remains an open economy and a downturn in the US, Europe and Japan at the same time will hit Singapore.
For S'pore, much depends on the shape of the US downturn - whether it's V, U or L
By CHUANG PECK MING
(SINGAPORE) To the eternal optimists who think that the Singapore economy will rebound from its lean patch in the months to come, Prime Minister Lee Hsien Loong offered a sobering projection: he expects the slowdown to continue into next year.
While the economy is on track to hit 4-6 per cent growth this year, Mr Lee sees its momentum slowing in the next few quarters as the United States economy limps along, dragged down by still-unfixed sub-prime mortgage problems.
And whether it's a V-shaped or U-shaped downturn in the US, it could extend the slowdown in Singapore's economy into 2009, Mr Lee told some 1,500 unionists yesterday at a National Trades Union Congress May Day Rally.
'The first quarter is good,' he said. 'Second, third, fourth quarters - prepare ourselves that it will slow down. And the slowdown may last into next year.'
It could be worse if the US falls into an L-shaped economic trajectory - the gloomiest scenario, when there is a severe and extended downturn in the US, like the decade-long recession Japan went into in the 1990s.
'If that happens, then America is in trouble,' Mr Lee said. 'So too Europe, so too Japan. And Singapore will be caught up in this and we will be in serious difficulties too.'
But he noted that most analysts don't think this is on the cards.
The best scenario for the US is a V-shaped downturn - a quick recession followed by a quick rebound - which is also the best scenario for Singapore, Mr Lee said. 'But it is hoping for the best'.
He said the US could easily slip into a U-shaped downturn because its underlying housing problems remain unsolved. The actions taken so far have only postponed the problems into the future.
'The property prices have to go down further,' Mr Lee said. 'When they go down, the banks will have more problems. When the banks have problems, they shrink. That will cause the economy to have more problems.'
In a U-shaped downturn, the bottoming will last longer and the US economy will take some time to sort itself out - perhaps until 2009, according to him.
'This could well happen and then Singapore too will be slowed down significantly,' Mr Lee warned.
'But whatever it is, we have to stay on our guard and stay prepared,' he said. 'Overall, I would expect V-shaped if we are lucky (or a) U-shaped downturn in the US - better plan on that.'
Whatever shape the US downturn takes, Mr Lee said the impact on the Singapore economy will be uneven. Construction, marine engineering, ports and shipyards will be 'all right', according to him.
'Construction will be okay because we have so many things building in Singapore,' Mr Lee said.
'Marine engineering will be okay because the shipyards are doing well. Ports will be okay because the port is highly competitive and bringing in a lot of business.'
But tourism, financial services and perhaps information technology will feel at least some pain.
All this suggests that Singapore's year-on-year economic growth in the coming quarters will fall below the surprisingly strong 7.2 per cent gain estimated for Q1.
'Essentially, Singapore has to be prepared for fairly rough weather ahead,' said Manu Bhaskaran of Centennial Group, a US-based economic consultancy.
He sees a prolonged period of 'meagre' economic growth in the US - and Europe and Japan are not going to take up the slack, because the leading indicators for these two large economies also point to a slowdown, according to him.
Mr Bhaskaran said Singapore has built up some resiliency in its services sector, which puts it in a better position than before to absorb the impact of a US recession. But even then, it remains an open economy and a downturn in the US, Europe and Japan at the same time will hit Singapore.
Not feasible to raise en bloc consent level to 99%
Source : Straits Times - 1 May 2008
I REFER to the letter ‘Raise en bloc consent level to 99%’ by Ms Susan Prior (April 19) .
Her letter seems to me to be a way of asking the relevant government authorities to revert to the 100 per cent consent ratio for collective sales. How so?
For apartment buildings and condominiums with 50 units or fewer, a 99 per cent consent ratio means that 49.5 units have to agree to the collective sale.
As this is absurd, rounding up to the nearest whole figure means 50 units, that is, 100 per cent. Similarly, for developments with 99 units or fewer, a 99 per cent consent ratio means 98.01 units. Rounding up means that 99 units have to agree, or 100 per cent again. Over the years, how many projects that had been sold collectively had 99 units or fewer each?
I would say a significant number, going from my clippings of such reports published in the papers.
If Ms Prior’s suggestion is adopted, these developments would not have succeeded in being sold collectively.
However, I do agree that fairly new condominiums should not go under the en bloc hammer. My proposal is for the relevant authorities to consider disallowing buildings less than 20 years old from being demolished, unless there are extenuating circumstances, like a structural defect.
This does not prevent developers from buying and refurbishing them via a collective sale if they find that option financially viable.
Secondly, to allow for urban renewal to continue but at a more gradual pace, the consent ratio could be amended as follows: Buildings 20-24 years old (80 per cent); 25-29 years old (75 per cent); 30-34 years old (70 per cent); 35-39 years old (65 per cent); more than 40 years old (60 per cent).
Ace Matthews
DO IT THE OLD WAY
‘Why not put an immediate stop to this entire flawed, resource-wasting, socially divisive process and revert to a… supply-and-demand property market situation?” - MR DENNIS BUTLER, responding to a letter by Madam Ong Boot Lian calling for an end to the collective property sale mediation process
I REFER to the letter ‘Raise en bloc consent level to 99%’ by Ms Susan Prior (April 19) .
Her letter seems to me to be a way of asking the relevant government authorities to revert to the 100 per cent consent ratio for collective sales. How so?
For apartment buildings and condominiums with 50 units or fewer, a 99 per cent consent ratio means that 49.5 units have to agree to the collective sale.
As this is absurd, rounding up to the nearest whole figure means 50 units, that is, 100 per cent. Similarly, for developments with 99 units or fewer, a 99 per cent consent ratio means 98.01 units. Rounding up means that 99 units have to agree, or 100 per cent again. Over the years, how many projects that had been sold collectively had 99 units or fewer each?
I would say a significant number, going from my clippings of such reports published in the papers.
If Ms Prior’s suggestion is adopted, these developments would not have succeeded in being sold collectively.
However, I do agree that fairly new condominiums should not go under the en bloc hammer. My proposal is for the relevant authorities to consider disallowing buildings less than 20 years old from being demolished, unless there are extenuating circumstances, like a structural defect.
This does not prevent developers from buying and refurbishing them via a collective sale if they find that option financially viable.
Secondly, to allow for urban renewal to continue but at a more gradual pace, the consent ratio could be amended as follows: Buildings 20-24 years old (80 per cent); 25-29 years old (75 per cent); 30-34 years old (70 per cent); 35-39 years old (65 per cent); more than 40 years old (60 per cent).
Ace Matthews
DO IT THE OLD WAY
‘Why not put an immediate stop to this entire flawed, resource-wasting, socially divisive process and revert to a… supply-and-demand property market situation?” - MR DENNIS BUTLER, responding to a letter by Madam Ong Boot Lian calling for an end to the collective property sale mediation process
Monday, April 28, 2008
Market turmoil expected to hit developers this year
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
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
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.
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