Complete Property Market Updates of Singapore

May 12, 2008

JLL re-entering housing project sales business

Filed under: Agency News,Developer News,General,Market Watch,World Property — Propertymarketupdates @ 1:13 am

JONES Lang LaSalle (JLL) is poised to re-enter the Singapore residential project sales business after a hiatus of about seven years.

It has clinched appointments to market Floridian, a 336-unit freehold condo development in Bukit Timah by Far East Organization and Wing Tai Holdings, as well as Lippo’s Centennia Suites at Kim Seng Road.

It is also marketing 34 units at the completed 99-year leasehold Amaryllis Ville condo in the Newton area on behalf of Goodearth Hotel group of Australia. Goodearth – controlled by the family of the late Teo Lay Swee, who used to own the Cockpit Hotel site – bought the 34 units from the project’s developer, Wing Tai, about two years ago and is expected to sell the units for about $1,500 per square foot (psf).

JLL will focus on the upper end of the Singapore residential market, rather than the mass market. ‘As well as marketing Singapore residential projects here, we’ll market them through our international office network,’ JLL managing director (Southeast Asia) Chris Fossick said in a recent interview with BT.

‘I believe that with an increasing number of overseas buyers in the local market, the benefits of an international marketing campaign will grow in importance. We believe we can stay ahead of the game because we already have successful residential project sales businesses in Hong Kong, Jakarta and London, and a large presence in India, China, Korea, Japan and the UAE – we can mine our database of international investors in these places when marketing Singapore residential properties.’

‘We believe the proportion of foreign buying in the Singapore housing market will continue to increase. Singapore is a destination for people to want to be in; it’s becoming an exciting place,’ Mr Fossick added.

He views the current slowdown in housing sales here as a temporary thing, ‘driven by sentiment, not fundamentals’.

‘The fundamentals for Singapore and Asia remain very strong. But we’re being somewhat sidetracked by the goings-on in the world credit market.’

The property consulting group will also step up investment sales of Singapore residential properties – for instance, by matching foreign property funds/ institutional investors with local developers buying land for housing projects here, or helping these investors purchase stacks of apartments in new projects.

‘The other idea we have for our residential business is to help Singaporeans who want to diversify into overseas property investments. The UK market, for instance, has been so high for so long and the currency so strong, we feel that for the last five years, UK has not been overly attractive. But that could change over the next 12 months.

‘The pound has been coming off against the Sing dollar. But I think UK home prices have to come down further, but may be in 12 months, UK property might start looking reasonably attractive.’

Helping JLL achieve some of its new business plans is Julian Sedgwick, who joined as a local director in JLL Singapore’s residential investments department earlier this year. He used to work with Chesterton London, where he marketed homes and condos in Central London.

‘He brings an international flavour, and some new ideas on how they do project sales in London versus how we do it here. He will be quite helpful to Jacqueline Wong, who heads our Singapore residential business,’ Mr Fossick said.

In a separate development, JLL regional director and head of investments Lui Seng Fatt is leaving the group. Mr Fossick confirmed Mr Lui’s departure. ‘He made a decision to move on. We’re grateful for his contributions in the success of our investment business and wish him the best on his new ventures,’ he added. Mr Lui, who is overseas, could not be reached for comment.

Meanwhile, Mr Fossick is expected to oversee the investments department. ‘We’ve got a big team; we might as well find somebody within that team to take the helm.’

Source : Business Times – 6 May 2008


May 5, 2008

Middle East investors ‘looking to S-E Asia’

Filed under: Financing,General,Genius Thoughts,Investment Tips,Market Watch,Singapore Economy — Propertymarketupdates @ 2:52 pm

MIDDLE Eastern investors are increasingly looking to Singapore and other South-east Asian nations for deals as financial ties grow between the two regions.

So says Standard Chartered (Stanchart) Bank’s group head for origination and client coverage, Mr V. Shankar.

Stanchart is well-positioned to become a leading player in this area. In the past year, it has advised on more than 40 per cent of the deal flow from Middle East to this region, which totalled US$8 billion (S$10.9 billion).

The figure was up from the US$987 million in the 12 months preceding, and Mr Shankar believes it will continue to rise in the years ahead.

‘The financial ties between the Middle East and Asia are strengthening by the day and we are seeing more East-East relationships being formed,’ he said in a recent interview.

‘Oil and natural gas from the Middle East are vital for China, Japan and all the fast-growing markets in the Asia-Pacific region, which are fast ramping up their infrastructure.

‘And the oil-generated capital and liquidity in the Middle East are fuelling a search for investments with high returns.’

Mr Shankar added that a recent report by McKinsey estimated that Gulf countries would have US$9 trillion to invest by 2020.

Stanchart began boosting its presence in the Middle East three years ago and now has a team of 50 corporate advisers there.

Mr Shankar, who is also a member of Stanchart’s group management committee, said this put the bank in an enviable position as Singapore’s business with the Gulf looks set to soar.

‘Between 2004 and 2006, total trade between Singapore and the Middle East shot up from US$20.9 billion to US$30.8 billion, an increase of 47 per cent.

‘Currently, Singapore companies are working on more than $6 billion worth of projects in the Middle East.’

Stanchart is no stranger to deals between the Republic and Gulf countries. It recently advised the Al-Futtaim group in its successful bid for Singapore’s oldest retailer, Robinson & Co.

Looking ahead, Mr Shankar said the bank would leverage on its experience and capabilities in the region to shore up its position as a major player.

‘Stanchart is well-placed to seize future opportunities, thanks to our growing geographical reach and the scale and breadth of our products and capabilities.

‘We have an established history in Singapore, having been in the market for 150 years, and we have been operating in the Middle East for more than 50 years. We feel we can act as a strong local bank in all the different markets for our clients.’

Source : Straits Times – 5 May 2008

March 31, 2008

End of property boom in sight?

Filed under: Market Watch — Propertymarketupdates @ 4:25 am


FLASH estimates of the property market’s showing in the first three months of the year will be released by the Government tomorrow.

The figures, released quarterly, track prices and rents of HDB flats and private property. They are based on caveats lodged in the first 10 weeks of each three-month period.

Fuller figures and more detailed information will be given out on April 25.


This round of figures is expected to shed light on the million-dollar question: Is it the beginning of the end for the housing boom?

The last set of numbers showed that a stellar rise in home prices over the last two years was starting to slow.

Since then, the market has reached a virtual standstill.

Property developers have delayed launches as buyers, spooked by the worsening global credit crunch stemming from the US, are holding off buying.

Individual home sellers convinced of Singapore’s economic fundamentals, meanwhile, are refusing to lower their prices.

If tomorrow’s data shows prices have plateaued or even dipped, it will be welcome news for homebuyers.

Source : Straits Times – 31 Mar 2008

February 29, 2008

Where to find homes at or below $600,000

Filed under: Market Watch,Property Deal — Propertymarketupdates @ 8:39 am

They include executive condos as well as older private apartments in suburban locations

THE property market has quietened considerably this year, but prices have yet to fall.

Nevertheless, if you have a modest budget of about $600,000 for a home, your choices are not just confined to HDB flats.

Some fairly new executive condominiums as well as older private condos or apartments are within reach, if you look hard enough.

These are typically 99-year leasehold properties in suburban locations such as Woodlands, Choa Chu Kang and Jurong.

Some city-fringe locations such as Geylang, where the red-light district is nestled, or small apartments in places such as Upper East Coast Road, may also offer some bargains. Landed homes, however, will require a bigger budget. So will new condo launches, unless you do not mind tiny studio apartments.

New versus Old

BUYERS tend to prefer buying new properties directly from developers, rather than old ones. They are drawn by the slick marketing promotions put out by developers and pay a premium for their new homes. But new properties may not be worth buying when you have a tight budget.

‘In 2006, all the record prices were achieved by new launches,’ said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

‘Units at Ardmore Park, an older development which is in a very good location and is well-maintained, were transacted at much lower prices than those in new high-end condos in not-so-good locations.’

It is the same in suburban locations, as buyers pay more for what is new, he said.

The 99-year leasehold apartments at the 636-unit Maysprings in the Bukit Panjang area are mostly going for $650,000 and below. A year ago, they went for $500,000 and below.

The 17-year-old, 616-unit Orchid Park Condominium in Yishun, which faces Lower Seletar Reservoir, also had some units that went for around $600,000.

At the West Bay Condominium, a 936 sq ft unit was sold for $585,000 in January, while a bigger 1,216 sq ft unit went for $650,000.

Studio apartments, which can range from around 500 sq ft to 600 sq ft, can be bought for $600,000 or less. The only problem is that there are not many of them in suburban projects, Mr Mak pointed out.

Private versus HDB

NOW that HDB prices have risen and there is overwhelming demand for new HDB flats, buyers may do well to consider private homes if they can afford them.

‘There will be growing demand for mass market properties as Singapore continues to create jobs,’ said Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong. The opening of the two integrated resorts alone will create a significant number of entry-level jobs, he said.

‘Our unemployment rate is at a 10-year low, which means that we will need foreigners for some of these jobs,’ he said.

‘As long as rental values remain strong, capital values should also trend up.’

For those buyers who may one day want to rent out their homes, a private property could be a better choice than an HDB flat.

First of all, not everybody can buy an HDB flat. Also, there are leasing restrictions.

Yields may be higher for some HDB flats than private homes, but a private condo unit may be easier to rent out as condos usually come with amenities and security, property consultants said.

On average, net rental yields for private homes across Singapore are at 3.6 per cent, said Mr Mak.

Government data shows that the median rental rate in the fourth quarter of last year for Maysprings was $2.38 per sq ft a month. For a 904 sq ft unit at Maysprings, the rent would work out to $2,151 a month, or a 5.2 per cent gross yield.

The median rate was $2.09 psf for Orchid Park Condominium and $2.98 psf for West Bay Condominium.

Using this rate, the rent at West Bay Condominium would work out to $2,789 a month for a 936 sq ft unit.

Whether you are buying a property to live in or to rent out, know that you have a fair number of choices even if your budget is only $600,000.

Source : Sunday Times – 17 Feb 2008

Demand for mass market projects shifts into higher gear

Filed under: Developer News,Market Watch — Propertymarketupdates @ 8:12 am

Developers not keen to release high-end projects in shaky market, say analysts

DEVELOPERS’ housing sales figures for January reflect a change in strategy to focus more on mass market projects.

Despite the still lacklustre figures for overall developer launches and sales last month, an analysis by Knight Frank shows the number of private homes (excluding executive condominiums) launched and sold in January in the Outside Central Region (covering traditional mass-market/suburban locations) rose 190 per cent and 123 per cent respectively from December 2007.

In contrast, launches and sales in the Core Central Region and Rest of Central Region fell in January, compared to December.

Given the dearth of activity in high-end locations, the Core Central Region suffered the biggest drop in median prices for units transacted during the month, with the figure halving to $1,623 per square foot in January, from $3,200 psf the previous month.

Elsewhere, median prices held steady, edging up 1.6 per cent to $1,053 psf in the Rest of Central Region and $811 psf in the Outside Central Region. The median prices include private homes as well as ECs.

Property consultants expect developers to continue to push out mass market projects, since demand fundamentals are stronger in this segment than the high-end sector, where buying traditionally emanates more from speculators.

‘Despite the more dismal global economic outlook, the employment rate in Singapore is still high and this will continue to support demand for mass market homes,’ says Colliers International director of research and consultancy Tay Huey Ying.

‘As for high- end/luxurious projects, developers are quite cautious and not so prepared to release them amid the current, uncertain market conditions. They will want to wait for better conditions before they launch these projects,’ she said.

Monthly data from the Urban Redevelopment Authority (URA) show developers sold a total 316 private homes (excluding ECs) in January, up slightly from 305 units in December, which was the lowest figure since URA began publishing developers’ monthly sales figures and prices in June 2007.

However, Colliers’ Ms Tay says that stripping out the bulk sale of 97 units at Goodwood Residence in December, the January sales figure was roughly a 52 per cent improvement from December.

January volume was boosted by the launch of new projects like Waterfront Waves at Bedok, which sold 79 units during the month, and Wilkie 80, which saw 50 units sold.

‘We observed that luxury prices remained firm despite a decline in sales volume. In the prime districts, units in Grange Infinite, Helios Residences, Hilltops and Scotts Square were sold at median prices between nearly $3,300 psf and $3,700 psf.

‘At Sentosa Cove, units in Marina Collection and Turquoise were sold at above $2,650 psf,’ says CB Richard Ellis executive director Li Hiaw Ho.

However, Knight Frank director (consultancy & research) Nicholas Mak points out that the number of homes priced above $4,000 psf sold by developers has fallen from 72 units last July to five units in December.

In January, there was not a single primary market transaction in this price range.

Colliers’ analysis shows the highest priced home sold in January was a $3,671 psf unit at Scotts Square, compared with $5,146 psf in December achieved at The Ritz-Carlton Residences, and the record $5,600 psf achieved for a unit at The Orchard Residences last October.

The number of new private homes (excluding ECs) developers launched in January sank to a low of 410 units, about 8 per cent less than the 446 units in December and about a fifth of the high of 1,885 units in August last year.

Property consultants suggest developer sales in February may be lower than those in January because of the Chinese New Year.

‘However, developers are likely to maintain prices at current levels as they monitor the market situation,’ CBRE’s Mr Li says.

Source : Business Times – 16 Feb 2008

Some govt units moving out to free up city space

Filed under: Commercial,Market Watch,Rental News — Propertymarketupdates @ 7:59 am

20,000 sq m or more will be available to private sector

THE government has decided to relocate several agencies out of the Central Area to free up space of 20,000 square metres or more by first quarter next year for use by the private sector.

The space being released, which will help to address the office space shortage in the near term, is equivalent to 20 floors or more of an office tower block in Suntec City.

Finance Minister Tharman Shanmugaratnam did not identify the government agencies that will be moving out of the city but market watchers suggest that they may include Singapore Land Authority, which currently occupies several floors at Temasek Tower near Tanjong Pagar MRT Station; the Energy Market Authority, which is housed in Singapore Power Building on Somerset Road; Intellectual Property Office of Singapore, located at Plaza by The Park on Bras Basah Road; and Info-Communications Development Authority of Singapore, now at Suntec City.

The Workforce Development Agency, housed at One Marina Boulevard, has also been highlighted by market watchers as being a possible candidate for relocation out of its prime CBD offices.

The Economic Development Board is expected to vacate its offices at Raffles City when its lease expires next year and move into Fusionopolis at one-north in Buona Vista.

Market watchers suggest that some of these government agencies with public counters are likely to move to city-fringe locations, rather than to outlying areas to minimise inconvenience to the public. ‘Vacant state properties could be their new homes,’ an industry observer reckons.

In his Budget speech, Mr Tharman noted that in the short term, Singapore faces tight office space capacity, caused by the surge in business growth, especially in the business and financial sector.

‘Office rentals have risen sharply. Although office space still costs 30 to 50 per cent less in Singapore on average, compared to Hong Kong and Tokyo, the pace of cost increases has been rapid and unsettling for businesses,’ he added.

‘The tightness in office space should ease over the medium term, with the completion of major projects currently under construction, such as phases one and two of the Marina Bay Financial Centre, the Marina View sites and South Beach. By 2012, we will have an additional 1.4 million sq m of office space.’

To address the problem in the short term, the government has released a total of 15 transitional office sites and vacant state properties, which will yield 150,000 sq m of additional office space. Companies are already relocating to some of these sites, and to new regional centres, Mr Tharman noted.

Source : Business Times – 16 Feb 2008

Revision of DC rates expected to be ‘moderate’

Filed under: Collective Sale,Facts & Figures,Land Sale,Market Watch — Propertymarketupdates @ 5:13 am

Consultants project smaller DC rate rise for residential and commercial use

THE coming March 1 revision of development charge (DC) rates – payable to enhance the use of sites or build bigger projects on them – is generally expected to be more moderate than the past couple of revisions, which imposed steep rises.

That’s because on the whole, land price increases have slowed considerably in the the past few months. And collective sales, which traditionally account for the lion’s share of private-sector land sales, have virtually ground to a halt, property consultants have told BT.

‘We believe collective sale brokers are unlikely to feel inspired by the upcoming DC rate revisions,’ says Jones Lang LaSalle’s regional director and head of investments Lui Seng Fatt.

Most consultants project smaller average DC rate increases for residential and commercial use this time. However, JLL is predicting bigger hikes for industrial and hotel use, as hotel and industrial sites sold at government land sale (GLS) tenders in recent months have fetched top bids significantly higher than the land values implied by current DC rates.

This can be attributed to the shortage of hotel rooms and strong demand for industrial space by office tenants looking for cheaper backroom space, says JLL’s head of research (South-east Asia) Chua Yang Liang.

For non-landed residential use, JLL reckons the average DC rate will go up just about 5 per cent come March 1, compared with the 58 per cent hike that took effect on Sept 1, 2007.


CB Richard Ellis executive director (investment sales) Jeremy Lake also reckons that on the whole, non-landed residential DC rates are unlikely to rise significantly, although there may be hikes in locations where land sales have taken place at prices significantly above values implied by the prevailing Sept 1, 2007 DC rates.

Market watchers point to examples such as Westwood Apartments in Orchard Boulevard, Toho Garden in Yio Chu Kang Road and 15 terrace houses at Jalan Bunga Raya in the Balestier/Novena area.

Agreeing, Credo Real Estate executive director Yong Choon Fah says the increases for such locations could be in the order of 30-40 per cent, while the average islandwide hike will be much smaller at 5-20 per cent.

DC rates – revised every six months, on March 1 and Sept 1 – are listed according to use (for example, non-landed residential, commercial, and industrial) and 118 locations across Singapore.

Savills Singapore director Steven Ming, who predicts a 0-10 per cent rise in the average non-landed residential DC rate, reckons both prime and suburban/mass-market areas will see only moderate increases.

However, bigger rises may be seen in mid-tier locations like Pasir Panjang, Balestier, Upper Bukit Timah, Hillview and Upper Thomson, where condo prices have risen 20-40 per cent in the past six months.

For landed residential use, JLL projects the average increase this time could be 8-15 per cent – again lower than the 11.3 per cent rise in Sept 2007.

Jones Lang LaSalle expects the rates for places like Dunsfold Drive and Binchang Rise in the Bishan/Ang Mo Kio area, Sentosa and Chestnut Drive to increase about 20-25 per cent, as market values of landed properties in these locations are significantly above the values implied by prevailing DC rates.

JLL reckons that after a 42 per cent spike in the average commercial-use DC rate on Sept 1 last year, the rate could still rise a further 30-35 per cent come March 1. However, it believes rates may generally stay put in the central business district (CBD), and expects increases mostly in suburban locations, particularly in the Jalan Sultan and Toa Payoh areas. In the past few months in these areas, commercial GLS sites have been sold at prices more than double the land values implied by prevailing DC rates.

Agreeing, Credo’s Ms Yong sees the islandwide increase in commercial DC rates around 5-15 per cent, with increases mostly outside the CBD.

Market watchers highlight the sharply different top bids for two white sites – with stipulated minimum office components – at Marina View in the CBD sold just three months apart late last year, reflecting how swiftly investor sentiment in the office market turned cautious.

JLL estimates industrial DC rates will appreciate around 30 per cent on average, compared with a 2.2 per cent increase last round. It also expects the average hotel DC rate to go up 30-35 per cent, after a 23 per cent hike last round, pointing out that hotel sites offered under the GLS programme at Upper Pickering Street and New Market Road/Merchant Road have been sold at premiums of 80 and 64 per cent respectively above prevailing DC rate-based land values.

The coming round of DC rate revisions will have ‘minimum impact on the already slowing collective sales market’, according to Savills’ Mr Ming.

But for en bloc sites with a significant DC component, and where the reserve price has been fixed by owners, a substantial DC increase will make it even harder to find takers, says Credo’s Ms Yong.

JLL’s Dr Chua reckons owners of properties in fast-changing neighbourhoods like Buona Vista and Telok Blangah – and possibly Paya Lebar and Jurong East, which are earmarked by the government for development into business hubs – will be watching the coming DC rate changes as they may set the tone for potential change-of-use applications.

Potential bidders for reserve list sites under the GLS programme will also be watching the revisions to get a sense of the Chief Valuer’s sentiment before making any applications for these sites to be released, says Dr Chua.

Source : Business Times – 14 Feb 2008

February 28, 2008

Some small property launches but most still hold back

Filed under: Agency News,Developer News,Market Watch,Property Deal — Propertymarketupdates @ 11:12 pm

Developers selling projects abroad first before launching them in Singapore.

PROPERTY developers are starting to gingerly test the volatile market with a few launches now that the festive season is behind them.

Those dipping their toes into the choppy waters, however, are mostly offering smaller projects away from the prime areas, said property agents.

Home seekers may have to wait a bit longer for major launches, with the earliest set for next month or April.

Meanwhile, developers waiting for the market to regain momentum are selling Singapore projects overseas before launching them locally, said Mr Ku

Swee Yong, director of business development and marketing at Savills Singapore.

‘Developers are still waiting for the stock market here to settle down,’ said Mr Ku.

Savills is dispatching a large sales team to Dubai next week to market Skypark at St Thomas Walk, CapitaLand’s condo on the Silver Tower site in Cairnhill, and the units Kuwait Finance House bought in Reflections at Keppel Bay and Goodwood Residences last year.

For local buyers, one project likely to be launched within weeks is the 47-unit Cosmo at Guillemard Lane. Prices could be $1,100 to $1,200 per sq ft (psf), said Mr Patrick Oei, associate group director for Huttons Real Estate, which is marketing the project.

Another upcoming launch is that of the 108-unit Verve Residences near Jalan Rajah, with prices likely to range from $900 to $1,100 psf.

These prices are similar to recent transactions in each area, showing that levels are still holding steady.

Homebuyers also picked up a few units in three freehold boutique projects launched in Telok Kurau recently. One is the 28-unit Costa Este, which is selling at $663 to $980 psf. The others are Palm Galleria and Espira Spring, launched during the Chinese New Year weekend with average prices of $850 to $870 psf.

Generally, smaller projects have done well, even in shaky market conditions, said Mr Oei, citing Casa Fortuna in Balestier and Wilkie 80 in Wilkie Road. Both were sold out within three days of their launches late last year. The 106-unit Casa Fortuna sold at about $1,000 psf, while Wilkie 80’s 50 units were taken up at $1,500 to almost $1,800 psf, Mr Oei said.

As for bigger projects, the first phase of Waterfront Waves at Bedok Reservoir will be officially launched this weekend. Prices for the 60-odd units still unsold will rise marginally from the current average of $750 psf, said Ms Kellie Liew, a project director at HSR Property Group.

The next brand-new launch may be Frasers Centrepoint’s Martin Place Residences in Kim Yam Road, due next month. Staff previews for the 302-unit condo started last month, at $1,800 to $2,300 psf.

Other launches to look out for include the delayed Marina Bay Suites and Ho Bee’s project at Dakota Crescent.

Not all industry players, though, have high hopes for upcoming launches. ‘The market is really quiet,’ said one agent. ‘Showflat crowds have thinned out to five or 10 people at a time. We’re still placing advertisements, but no telephone calls are coming in.’

Source : Straits Times – 13 Feb 2008

Germans remain bullish about Singapore

Filed under: Market Watch,Singapore Economy — Propertymarketupdates @ 4:52 pm

Business community upbeat on growth prospects: survey

THE German business community remains bullish about Singapore as a regional business hub, a survey published yesterday shows.

The survey of businesses varying from small operations to multinationals was conducted by Droege & Comp in December, for the Singaporean-German Chamber of Industry and Commerce.

The companies were asked about growth prospects and about what they saw as the challenges ahead.

Findings show that all participating companies here strongly confirm Singapore’s position as the undisputed hub for Asean markets, affirming that Singapore would be the cornerstone of their future Asia strategy. The republic will continue to attract foreign direct investments from German companies.

Respondents attributed their positive attitude to the competitive advantages of the ‘Singapore package’ of excellent infrastructure, socio-political stability, efficient logistics hub and protection for intellectual property rights, which outweighed the rising costs of doing business here.

There were also several less promising findings. One hot topic was that despite Singapore’s push for R&D, most German companies were reluctant to shift R&D capabilities here.

In addition, some medical and healthcare companies were seriously considering neighbouring countries as alternative locations for further investments, particularly Malaysia.

A grouse of all the companies is that despite viewing themselves as attractive employers, they are finding it difficult to recruit and retain skilled personnel.

But even so, a majority of the companies still planned to hire more local people and cut back on their expatriate staff. Calling Singapore the gateway to Asean, Alexander Melchers, vice-president of the chamber, said that Germany is an important trading partner, with bilateral trade valued at more than $20 billion last year. There are 5,600 German people working in Singapore.

Mr Melchers added that Singapore could look forward to better business relations with German companies, especially in the area of environmental engineering and technology such as the clean energy sector where the interests of both countries are ‘perfectly matched’.

Source : Business Times – 6 Feb 2008

Prime properties in for 5% fall in ‘08: UBS

Filed under: Developer News,Financing,Market Watch,Regulators,Singapore Economy — Propertymarketupdates @ 4:12 pm

Bank expects modest 0-5% growth in mass and mid-tier segments

ANALYSTS from Swiss bank UBS believe Singapore’s property market will ‘remain intact’, but they are nonetheless projecting a drop of 5 per cent in prime property prices for the year.

In the more affordable mass and mid-tier segments, where prices increased at a slower pace, UBS expects a modest growth of between 0-5 per cent in prices this year.

In its report on the Singapore property market, UBS says that in light of the uncertainty over the global economic outlook, buyers are likely to defer purchases of new property for at least six months. UBS said that demand ‘is highly dependent on the market’s outlook for the next three or four years, when the projects are completed’.

It added that with supply of new homes on the rise, there could be pressure on developers to reduce launch prices to ’stimulate demand’ – and some developers may start cutting prices as early as the second quarter of this year.

While the larger developers are expected to have more holding power, smaller ones could feel the strain of holding costs sooner. UBS estimates that of the units to be launched between this year and 2010, around 9 per cent are held by small, unlisted developers. Still, it said that there is little evidence to suggest that the market will be affected if small developers ‘capitulate and cut prices aggressively when holding costs build up’.

In its report on the current property market conditions, UBS made comparisons with the previous property slump of 1998. ‘Markets appear to be pricing a 70 per cent fall in Singapore residential prices, similar to 1998,’ it noted.

But UBS said: ‘We think the residential market in 2008 will not replicate the 1998 scenario where launch prices fell by 50 per cent in a year, and stock prices fell by 75 per cent.’

It added that expected GDP growth of 3.5 per cent should keep population inflow positive, which combined with negative real interest rates and low unemployment should underpin resale prices.

‘Even if job growth were to halve in 2008 to 90,000-100,000, this could still mean housing demand for at least around 15,000-18,000 units, assuming half the newly- weds (23,000 per annum) want to move out, and around 6,000 new households – of new permanent residents and expatriates – relocate to Singapore,’ UBS added. It pointed out that the figure is much higher than the expected number of home completions – 8,700 in 2008 and 16,000 in 2009.

As such UBS believes that current share prices for listed property developers have been ‘over-corrected’.

‘Allgreen’s price ($1.17 per share currently) attributes no value to its residential (portfolio), while City Development’s price ($12 per share currently) implies a 70 per cent writedown in unsold land,’ said UBS.

UBS said that it has adjusted the revalued net asset value and earnings per share for Allgreen, City Developments, CapitaLand and Keppel Land, and given current price levels ‘we have retained our Buy ratings on all these developers’.

Source : Business Times – 5 Feb 2008

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