www.shaproperty.com

Sep 24, 2007

25% more HDB flats rented out since March

By Tan Hui Yee, Housing Correspondent

MORE Housing Board (HDB) flatowners are cashing in on the rising rental market by letting out their units following a relaxation of the rules on doing so.

The new rules have spurred 5,700 more people to rent out their flats over the past six months.

The latest figures from the HDB show that a total of 15,773 flats have been given the green light for rental by the middle of this month.

This is a 25 per cent jump on the total figure before the March 3 rule change. About 39 per cent of these additional homeowners would not have qualified had the rules not been eased.

Previously, flatowners could rent out their flats only five years after buying them - or 10 years if they had not paid off HDB home loans.

Now, they can do so after living in their flats for just three years - or five years if they had bought it with a government subsidy or grant. It no longer matters if the home loan has been paid off.

The change almost doubled the pool of eligible flats to 645,000, out of more than 800,000 across the island.

The relaxation was part of a series of measures to make it easier for flatowners to earn income from their units.

Besides easing subletting rules, the HDB also allowed homeowners to take out reverse mortgages on their flats. It is also looking into a novel scheme to buy back the tail-end of flats' leases from homeowners.

Newly minted landlords included Madam Yee Kin Moi, 58. The retired hawker and her husband rented out their four-year-old flat in Choa Chu Kang just last month for about $1,000 a month, and moved in with their daughter to help take care of their 18-month-old grandson.

The rental income, said Madam Yee, covers their monthly housing instalments and helps pay daily expenses as well.

She told The Straits Times: 'The good thing about renting the flat out is that we do not need to sell it. We can go back to live in it if our children choose to migrate elsewhere.'

According to the HDB, about 27 per cent of flats rented out after March 3 belonged to owners who were older - aged 55 years and above.

Most of those renting out their flats under the revised rules moved in with their family members. About 22 per cent now live with their children, while another 36 per cent live with their parents, siblings and other relatives.

About two-thirds of flats being rented out are three- and four-room units.

HDB statistics show that three-room flats fetched a median rental of $980 islandwide from April to June, while four-room flats fetched $1,180.

Property agents estimate that rents are up about 10 per cent to 15 per cent since then, but say demand for rental flats remains strong as tenants, deterred by rising private rentals, choose public housing instead.

Median rentals of non-landed private homes islandwide grew by 11 per cent from April to June to $31.87 per sq m per month. This means it would cost about $3,200 a month to rent a 100 sq m, three-bedroom home.

As a result, rental flats being put on the market are being snapped up within a month, said the chief executive of property agency Propnex, Mr Mohamed Ismail.

Most homeowners, though, will not rush to rent out their flats even if rental rates become even more attractive. This is simply because they would have nowhere else to live if they did.

The director of Dennis Wee Properties, Mr Chris Koh, pointed out: 'Not every elderly couple would want to live with their children.'

tanhy@sph.com.sg

Sep 25, 2007

HPL to ask to adjourn Horizon Towers hearing on Thursday

Decision follows official confirmation of extension of sale deadline to Dec 11

By Joyce Teo, Property Correspondent

THE move by the Horizon Towers sellers to extend the sale deadline of their estate has succeeded in fending off Thursday's High Court hearing.

Hotel Properties (HPL) said yesterday that it will apply to have the hearing adjourned. This came after it received official confirmation of the extension from the condominium's sale committee.

Law firm Tan, Rajah & Cheah informed HPL that the estate's new committee had extended the time for obtaining a collective sale order to Dec 11. The seven-member committee represents owners of 177 units. These are the majority owners who have signed the agreement to sell en bloc.

HPL and its two partners, the intended buyers of the Horizon Towers, are suing the sellers of the 99-year leasehold estate for an alleged breach of contract.

The sale committee, the third at the Leonie Hill estate since the saga began a few months ago, was formed last Thursday. That was when almost all who were at a meeting voted to extend the deadline to Dec 11. Sellers of 135 units - out of 177 units which signed the sale agreement - attended.

This option to extend by four months was part of the original sale agreement. The owners also agreed to do everything 'reasonably necessary' to effect the sale.

Those owners who organised the meeting were believed to have stated in a circular that absent owners were deemed to have agreed with the majority decision made at the meeting.

All eyes will now be on another legal front - Friday's High Court hearing over the sellers' appeal to quash the Strata Titles Board (STB) ruling last month that aborted the collective sale deal.

STB dismissed the Horizon Towers case over a procedural error and not over any arguments put up by a group of owners opposed to the sale. That deal lapsed as the sellers did not extend the Aug 11 deadline.

Last Friday, the HPL-led consortium filed an affidavit asking that it be allowed to participate in Friday's appeal, claiming that the issues would be more effectively adjudicated with its involvement. A decision will be made on Friday.

If the appeal succeeds, the case could go back to the STB. But a negative verdict could end the Horizon Towers deal once and for all.

If it goes back to the STB, the minority owners who object to the sale will resurface issues such as the contract's apparently low price and the unusual fact that the commission for the estate's marketing agent will be paid by the buyers, not the sellers.

HPL said earlier that it will drop its lawsuit if a collective sale order is obtained. Its group wants Horizon Towers for $500 million, the price inked in February.

joyceteo@sph.com.sg

Sep 26, 2007

HDB flat prices in Fernvale rose too rapidly

I REFER to the article, 'HDB launches sixth build-to-order project in Fernvale' (ST, Sept 21).

The HDB's pricing policy recently has increased the prices of new flats, and may lead to Singaporeans having to incur higher mortgage liabilities.

This may result in lesser CPF funds for retirement, more mortgages in arrears, defaults, etc.

For example, the prices of four-room flats in the HDB's latest build-to-order project (Coral Spring) in Fernvale are between $188,000 and $252,000, compared to Fernvale Vista Phase 2 ($145,000 to $200,000) in May, and Fernvale Court ($138,000 to $177,000) two years ago.

Based on the average prices of the three projects, which are in the same location, the increase is about 40 per cent from two years ago, and 28 per cent from just four months ago.

On an annual basis, the increase is 18 per cent per annum over the last two years, and 75 per cent per annum over just the last four months.

Why does the HDB have to increase its prices by so much so rapidly?

Leong Sze Hian

Sep 26, 2007

REDAS CHIEF ON BRIEF PAUSE

Collective sales ease as new rules take hold

THE market for collective sales has had a spectacular run this year, but new rules are likely to act as a brake to it, Mr Simon Cheong, chief executive of property developer SC Global, said yesterday.

Mr Cheong, who is also chairman of the Real Estate Developers Association Singapore (Redas), said the market is still digesting changes in collective sale legislation passed in Parliament last week.

'In the process of digesting, obviously there will be a pause,' he said.

The new rules, which are likely to kick in next month, will lengthen the collective sale process and likely constrict land supply.

'For us developers, we are already anticipating that it will be more difficult to get choice sites in the near future. If we do, it will be at a higher price,' Mr Cheong said on the sidelines of a Redas lunch yesterday to mark the mid-autumn festival.

In a separate move, a Knight Frank report yesterday forecast a slowdown in collective sales. The property consultancy said developers have been spending $10.22 billion on sites for collective sales since January, more than the $8.08 billion outlay for all of last year.

Activity, however, is already abating, with only 13 deals worth $1.65 billion done in the third quarter. This compared with 27 deals worth $5.24 billion in the second quarter, said Knight Frank.

Sep 26, 2007

Boutique developer buys Sentosa Cove site for $79m

It beats 7 others for landed property plot; plans to build 20 houses there

By Joyce Teo, Property Correspondent

A YOUNG entrepreneur who became a full-time polo player after selling his Silicon Valley dot.com firm has emerged as a successful property developer here.

Indian-born Satinder Garcha, 36, signalled his growing status in the industry yesterday when his company paid $78.68 million for a 200m-long landed plot in Sentosa Cove.

Boutique developer Elevation Developments beat seven other bidders in what Sentosa Cove, which is marketing the land, said was a highly competitive process.

Its price for the 71,589 sq ft plot, which faces the Sentosa Golf Club's Tanjong course, works out to $1,099 per sq ft of potential gross floor area.

This surpassed the $771.25 psf collective sale price paid for the enclave's Sandy Island in March.

Sentosa Cove now has just one last landed parcel to be sold en bloc to developers.

Mr Garcha's property portfolio will be worth $400 million to $500 million once the developments are completed.

He has 22 other properties - about half of which are good class bungalows - in prime areas such as Swettenham Road and Gallop Road. Most are in various stages of development.

Mr Garcha, who is the captain of the Singapore polo team, plans to build 20 houses on the Sentosa site, each with a rooftop pool.

The houses will have 10m glass frontages giving residents a clear view of the golf course.

Many of the homes the firm is building around Singapore will be rented out but

Mr Garcha intends to sell the Elevation Golf Villas for $9 million to $10 million each once they are completed around 2010.

These numbers are dwarfed by the price tag of two other properties he owns - bungalows in Nassim Road designed by world-renowned architect Zaha Hadid.

These houses, with a built- up space of 10,000 sq ft, will probably sell for $40 million to $50 million, he said.

The bungalows, now at the design stage, are expected to be ready by 2010. They are Ms Hadid's first residential project in Asia, said Mr Garcha.

'She was very excited about Singapore,' he said.

The Iraqi-born architect, known for projects such as the classic Vitra Fire Station in Germany, had worked on the masterplan for Singapore's science hub one-north.

When Mr Garcha first came to Singapore, he was intent only on playing polo.

He had sold his information technology company people.com in late 2000 to TMP Worldwide, a recruitment advertising business.

He then set up his own polo team that competed around the globe.

Mr Garcha used part of his dot.com windfall - he will not disclose his firm's sale price - to enter property development about three years ago when he saw the opportunities.

'I saw a lot of value in the property market. Prices were at a 10-year low,' he said.

Mr Garcha, who is of Indian descent, has become a Singapore citizen.

joyceteo@sph.com.sg

Sep 26, 2007

Singapore office rentals still competitive

COMPANIES are paying more for labour and rentals in Singapore than before, but prices are still competitive compared to global cities such as London, New York, Tokyo and Hong Kong.

Minister Mentor Lee Kuan Yew pointed this out yesterday, but said the Government would ensure prices stayed lower than countries 'in a similar position'.

This is so that Singapore can stay competitive.

'I think we should be able to manage that,' Mr Lee said. 'I believe we've got to watch it closely, make sure that it doesn't run away and get us into an uncompetitive fashion.'

He gave this assurance at a dialogue which followed the inaugural Singapore Maritime Lecture. A member of the audience asked how Singapore was balancing its bid to be a cosmopolitan city, with the need to stem soaring costs.

Mr Lee noted there was a property crunch now, with both commercial and residential sectors hit, as a result of the 'sudden influx' of bankers and top corporate types. However, the Government has already taken action to tackle it, he said.

'I think we can sort it out in two to three years. In the meantime, we have put into our plans some release of buildings from one use to another in order to loosen up the market,' he added.

On Monday, the Government also released a second temporary office site for sale to help ease an office crunch that has sent rents and prices soaring.

LYNN LEE

Sep 26, 2007

Best city in Asia to meet? It's still S'pore

Globally, Republic up to 3rd spot after Paris and Vienna for Mice events, says think-tank

By Lim Wei Chean

SINGAPORE remains Asia's top city when it comes to hosting business meetings and major events.

It also climbed up one rung in the world ladder to third place - behind the likes of first-placed Paris, and Vienna.

This is according to an international report produced by a think-tank in Belgium - which ranked the cities by the number of big events they managed to attract last year.

The report by non-governmental organisation Union of International Association is closely watched by tourism officials around the world, as it is one of the few global indicators as to who is getting the largest piece of the lucrative international meetings pie.

The report also showed that Singapore's share of the meetings business doubled over the last five years.

From doctors gathering to hear about the latest medical innovations to grey-haired retirees travelling to understand more about the art of baking, these are all part of the meetings, incentives, conventions and exhibitions business, also known as the Mice industry.

In Singapore, it is already a multibillion-dollar business: Last year, the Republic had close to three million Mice tourists, and they spent about $4 billion here.

According to the international rankings, Paris ranked at the top of the charts while Singapore pipped Brussels to third spot.

Industry players here say that last year's International Monetary Fund (IMF) and World Bank meetings, which brought in 16,000 delegates, played a big role in improving the Republic's stature in the world Mice game.

For the Singapore Tourism Board (STB), the latest ranking was the icing on the cake for an already spectacular year for the Mice segment.

According to STB's assistant chief executive for business travel and the Mice group, Mr Aloysius Arlando, this is a strong signal that the 'buoyant outlook' for the industry was set to continue.

And the bookings look promising. For instance, Suntec Singapore - which hosted the IMF meetings - had a total of 1,176 events last year, of which 83 were international ones. Going forward, it expects to host more than 1,300 events this year, of which 107 are international ones.

Its chief operating officer Pieter Idenburg said Singapore is now 'bearing the fruits' of the marketing strategies it embarked upon a few years ago.

STB has stated publicly that the aim is for the Mice segment to bring in $10.5 billion in tourist dollars by 2015.

weichean@sph.com.sg

Sep 26, 2007

Case, property body seek licensing of housing agents

Calls come amid growing number of complaints lodged against agents

By Jessica Cheam

A SHARPLY rising tide of consumer complaints against property agents has emerged in recent data, amid a spike in property sales in the current market boom.

Complaints include claims of misrepresentation and a failure to explain contract terms and conditions fully, the consumer watchdog, the Consumers Association of Singapore (Case), said.

This has led to renewed calls by Case for a stronger industry watchdog to regulate the sector.

Case, together with the Institute of Estate Agents (IEA), is seeking the mandatory licensing of property agents in Singapore.

In the interim, IEA yesterday launched a new 'practising certificate' to all its members, aimed at boosting their credibility and giving homebuyers and sellers more confidence in agents' professionalism.

The IEA represents about 900 property agents in Singapore. Its president, Mr Jeff Foo, said mandatory regulation for estate agents was overdue, especially given the current property market's bullishness.

The IEA practising certificate will have the identification number of the agent who, as a member, is bound to adhere to the organisation's strict guidelines and code of conduct.

Case president Yeo Guat Kwang said yesterday at a public forum held by the IEA, that agents should be licensed individually. He said Case and IEA will 'push the message to the relevant authorities'.

Complaints lodged against estate agents have almost doubled in the last two years. Case received 991 complaints last year, up from 672 in 2005, and 469 in 2004.

So far this year, 557 complaints have been made.

Mr Yeo said some complainants claimed that unexplained contract clauses were added by the agents, such as changing the level of commission that had been agreed upon.

Mr Yeo, an MP for Aljunied GRC, also said that Case and IEA are already in talks to introduce more regulatory measures.

This could be in the form of a standardised proficiency test that every agent has to pass before being allowed to operate, he said.

Currently, there is no mandatory qualification or licence requirement for housing agents. To operate, an agent has to join a licensed property agency, whose licence is issued by the Inland Revenue Authority of Singapore.

Mr Yeo told The Straits Times: 'Even taxi drivers have to fulfil certain criteria before they can operate. What more for property agents, who deal with the hard-earned life savings of Singaporeans.'

Even if rogue agents were sacked, they could join another agency because of the lack of a central body to regulate these agents, he added.

Mr Yeo said IEA's new initiative was a good way to encourage self-regulation, and encouraged consumers to choose agents with such recognition.

To boost membership numbers, the IEA also announced a new tie-up with NTUC yesterday, which enables IEA members to enjoy social benefits under the NTUC.

NTUC's secretary-general, Mr Lim Swee Say, who was at the signing of the memorandum of understanding yesterday, said that through IEA, NTUC can now extend its membership to agents.

He said this was another step closer towards the labour movement's 2011 vision of an all-inclusive membership for workers of all backgrounds.

jcheam@sph.com.sg

Published September 25, 2007

US economy's latest ditty: The worst is yet to come?

By LEON HADAR
WASHINGTON CORRESPONDENT

IT'S not clear whether the cheerful investors on Wall Street who were celebrating last Tuesday's decision by the Federal Reserve Board's monetary policy committee to slash federal funds rates by half a percentage point were paying much attention to Thursday's Congressional testimony by the US Federal Reserve chairman Ben Bernanke when he seemed to be warning that sub-prime defaults could actually surge in coming months.

But the financial markets as well as US President George Bush were in such a great mood - 'I'm optimistic about our economy. Inflation is down, job markets are steady and strong,' said Mr Bush - that the continuing credit crunch, rising energy prices and a decline in some key economic indicators were having no effect on exuberant investors who pushed the Dow Jones Industrials Average and the broader S&P index to new highs.

Yes, just like in the good old days of former Fed Chairman Alan Greenspan. Mr Greenspan incidentally was appearing on numerous television news shows and book parties trying to sell his memoirs The Age of Turbulence as his successor was addressing lawmakers on Capitol Hill where he promised to use the Fed's regulatory powers 'to address potentially deceptive mortgage loan advertisements and to require lenders to provide mortgage disclosures more quickly'.

During his congressional testimony two days after reducing the federal funds rate from 5.25 per cent to 4.75 per cent, Mr Bernanke reiterated that the Fed's main goal - cutting rates was not to bail out reckless investors but to contain the threat of an economic recession that seemed evident after new data indicated that US employment had declined in August.

'The turbulence originated in concerns about sub-prime mortgages, but the resulting global financial losses have far exceeded even the most pessimistic estimates of the credit losses on these loans,' Mr Bernanke explained to the lawmakers, using dry economic jargon to highlight the potential for an economic crash that could have resulted from the crisis in the housing market and the ensuing credit crunch.

Of course, it would be difficult to show that the Fed's interest cuts last week ended up averting a wider economic crisis. But no one doubts that if anxiety returns to the financial markets in the coming week, critics will blame Mr Bernanke for providing incentives to irresponsible investors to take more risks - the so-called 'moral hazard' problem. And if inflation rears its ugly head soon, the dramatic cut in rates by the Fed will be held responsible for the mess.

In addition to rising oil prices and labour costs, inflation hawks who had opposed the rate cuts are also pointing to the rise in long-term interest rates and in the value of gold, two important indicators of inflation.

At the same time, they argue that there are no signs of an economic recession in the retail and manufacturing sectors and that the earlier warnings about unemployment were overblown.

Moreover, lower rates have helped to push down the US dollar against other major currencies, including the euro, which is, in turn, making imports more expensive and increases pricing pressures and inflation pressures.

At the same time, the fall in the value of the US dollar is also helping to increase US exports which is clearly good news for the American economy by helping the growth of many US industries and creating conditions for a reduction in the huge trade deficit.

From that perspective, the rate cut could prove to be just the kind of stimulus that a somewhat soft US economy needed. But fears of inflation cannot be discounted, especially when one takes into consideration that the rate cuts by Mr Greenspan's Fed were made at a time when the globalisation process helped counter the inflationary pressures of those rate cuts.

That is not the case today. This makes the rate cut by Mr Bernanke's Fed more risky. And when it comes to some of the most serious structural problems facing the US economy - the massive current-account deficit and the accumulating debt by households and businesses - the prospect of Mr Bernanke showering cheap money on the American economy - is certainly not going to help.

It could make things worse by encouraging financial institutions to come up with new ways to extend credit, take more new risks and ignite new financial crises.

Published September 25, 2007

Credit fallout to hit London office building

CBRE sees 2.5m sq ft of new space instead of 4.5m forecast earlier

(LONDON) The equivalent of two to four skyscrapers per year are now unlikely to be built in London in 2009 to 2011 due to fallout from the US subprime crisis, property services firm CB Richard Ellis (CBRE) said yesterday.

CBRE said it expected 2.5 million square feet (232,300 sq metres) of new office space per year to be built in central London in 2009 through 2011, instead of a previously forecast 4.5 million square feet.

But that could help to extend London's commercial property cycle by reducing the risk of too many new offices going up in the crane-dotted UK capital, Peter Damesick, head of UK research at CBRE, said. He said the decision to slash his estimate for London's development programme by 44 per cent was the result of higher funding and construction costs and because financial market turbulence had cast a pall over the UK capital's jobs outlook, potentially holding back rental growth. 'Funding for office developments has become harder to obtain and got more expensive,' Mr Damesick told Reuters, citing anecdotal evidence which showed lending margins doubling in some cases to 175 basis points over benchmark interest rates. J'There is also a feeling that the strength of (occupier) demand in the short-term will be less than was expected six months ago due to the impact of potential financial dislocation on London's financial services,' he said. In addition, the regeneration of a large area of London before the 2012 Olympics was likely to push up construction costs even further, he said.

But a degree of self-regulation now would benefit the property industry going into the next decade, even though the supply of office space was near a record low in central London, with an average vacancy rate of 3.3 per cent at the end of August, according to CBRE data.

'It will reduce the risk, which was beginning to appear in the pipeline, of medium-term oversupply and enhances the prospects for rental stability,' Mr Damesick said. 'So we'll probably see slower rental growth in the short-term but less risk of a rental downturn in the medium term.'

Excessive office building helped to extend and deepen a downturn in London's property market in the early 1990s.

Among the ambitious office development projects that have come into question in recent weeks is the 72-storey London Bridge Tower - nicknamed the Shard of Glass - which is due for completion in 2010/11 and lies on the city's south bank. Property investment firm CLS Holdings plc, one of the joint venture partners behind the Shard project, said financing options were under review and demolition works were still due to begin before the end of the year. -- Reuters