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Sep 11, 2006 CDL chief expects all high-end homes to cross $3,000 psf He predicts rise to be over 2 to 3 years, pulling rest of the market up By Fiona Chan LUXURY home prices may still be a shade off their peak in 1996, but they are set to achieve dazzling new heights soon, said property tycoon Kwek Leng Beng. He predicted that, amid strong foreign demand, posh projects will all hit prices of $3,000 per sq ft (psf) - a record so far attained only by St Regis Residences, the ultra- exclusive condominium developed by his own City Developments (CDL). 'I believe definitely that all the high-end developments will cross $3,000 psf. in the next two to three years,' Mr Kwek told The Straits Times in an exclusive interview. This will bring prices of St Regis up to a new all-time high of $3,500 psf, he added. And when the upcoming integrated resorts at Marina Bay and Sentosa are completed, home prices in Sentosa could be pulled up to $1,700 or $1,800 psf in just one or two years, said Mr Kwek. He heads Hong Leong Group and CDL, South-east Asia's second-largest developer. The most expensive Sentosa condos so far are at CDL's Oceanfront, which is almost completely sold - only eight units are left - at prices of above $1,400 psf. Mr Kwek also said that as luxury home prices rise, they will pull up the rest of the market, which has been in the doldrums for about six years. He anticipates that the mid-tier market - homes priced between $800 and $1,300 psf - will 'correspondingly move up next year'. Foreign demand may be the initial driver of this property recovery, but he believes that local home buyers will soon follow suit. Justifying his bullish assessment of the market, Mr Kwek said he is 'very confident' because 'the Singapore Government has proven that it reacts very fast to crises'. 'People always ask me, is there going to be a relapse in the property market, but I don't think this will happen,' he said. 'London recovered very quickly from the bombings last year, and bird flu we've had before, it takes less than one year to recover. So the market shouldn't be too affected by these.' On a more practical note, Mr Kwek also pointed out that building and development costs have been increasing steadily and it is only a matter of time before developers start raising prices of their projects to match. The costs of building materials have jumped about 30 per cent over the last year, while construction costs have risen between 6 per cent and 8 per cent in the same period. Also, the rates for development charges - fees that developers have to pay the Government to enhance the value of a site - have already gone up by up to 38 per cent, making it more expensive for developers to buy plots of land on which to build homes. fiochan@sph.com.sg Copyright © 2006 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access Buyers could 'go in when no one dares'

BADLY burnt by the property downturn over the last few years, most home owners have shunned new home purchases, choosing instead to sit on loss- making properties and lick their wounds. But this reluctance to move on from their losses is preventing such owners from potentially profiting through a new home purchase in a rising market, said City Developments chief Kwek Leng Beng. He added that currently, home owners seem 'frightened to crystallise their losses' by selling their homes for less than the original prices they paid. Home prices are slowly on the rise but still remain, on average, some 30 per cent below their peak in 1996. However, Mr Kwek observed that 'if you always sit on a paper loss, you can never make money', adding that if owners traded in their existing homes for new ones now, 'they may be selling low, but they're also buying low'. Speaking from over 40 years of experience in the industry, Mr Kwek said home buyers tend to regain faith in the market only when it begins to move fast, by which it may be too late to make a good profit. 'People don't want to buy now, when the market is just starting to move up,' he said. 'They look around and see that prices are only moving a bit and not many people are buying. When prices are hitting their peak, that's the time everyone will rush in to buy.' This strategy, is however flawed: Mr Kwek said buyers should instead 'go in when no one dares to go in, and don't go in when everyone is already going in.' He also believes that home owners should constantly upgrade their apartments to keep ahead of the market. 'If you sell your old apartment and buy a new one, then you are hedging against market movements,' he said. 'If the market continues to be good, the price of a new unit will move up faster than that of an old one. And if the market crashes, the price of an old apartment will go down faster than the price of a new one.' As for those who have earned big bucks from selling their homes in one of the many recent collective sales, Mr Kwek has this advice: Learn from these experiences and reinvest the profits in property. 'Many of them are seeing a lot of money for the first time in their lives and they don't know what to do with it, so they put it in a bank, or they buy a smaller unit than their previous one,' he said. 'But through no planning on their part, these people have managed to enjoy significant capital value appreciation through an en bloc sale, so why not learn from this unplanned experience and buy another home?' FIONA CHAN

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