BTO flats affordable for first-timers

Monday, 19 November, 2012

RESIDENTIAL MARKET

BTO flats affordable for first-timers: Khaw
The rise in prices of new Housing Board flats is less than that of resale HDB units, National Development Minister Khaw Boon Wan said in Parliament yesterday.
Since January 2009, the price of new HDB flats for first-time buyers has risen by 12 per cent, which is lower than the corresponding 34 per cent rise in the HDB resale price index.
These homes for first-time buyers are also affordable, he added.
“We take affordability fully into account when pricing BTO (Build-To-Order) flats. New flats enjoy generous discounts off market prices,” he told the House when replying to Ms Lee Bee Wah (Nee Soon GRC).
But Ms Lee argued that a 12 per cent rise could still be higher than the salary increase of many Singaporeans.
She asked if the Government could keep prices stable.
Mr Khaw replied that first- time buyers of new flats in non- mature estates used, on average, 23 per cent of their monthly income for housing loans.
Also, they were able to pay their monthly instalments using their Central Provident Fund contributions, with minimal or no cash outlay.
“You judge by the figure that I’ve given – 23 per cent of their monthly income – I think that is affordable for BTO,” he said.
The price of a four-room HDB flat in Sengkang or Choa Chu Kang ranges from $250,000 to $310,000, he said. “Looking at it from the situation that we are facing today, I find these figures very reasonable,” he added.
Mr Khaw said a lot of the misunderstanding over HDB home prices resulted from people looking at the resale price index – which hit a record high in the last quarter. The Government is trying to stabilise that, he added.
“Resale price is beyond my control. That is set by buyer and seller. But for first-timers buying BTO flats, that is within my control and it is my job to ensure it will be affordable,” he said.
In fact, he added, it is “quite an achievement” to have brought about a 12 per cent price rise in new flats compared with the 34 per cent increase in resale prices.
“I think not enough credit has been given to my ministry,” he said, with a smile.
Source: The Straits Times –17 November 2012
Hot in the suburbs
City fringe and eastern suburban estates have broken new home price records in the past six months as clear pricing hot spots emerge across Singapore.
Once considered sky-high outside upscale precincts, the $1,500 per sq ft (psf) mark is fast becoming the norm in some hot spots – most dominant in the east.
Many new mass market projects eclipsing the $1,500 psf mark are tied to “titillating new lifestyle concepts” to attract buyer interest, experts say.
But the eastern suburban estates, with their ample, appealing lifestyle amenities, have surged ahead of the western districts in terms of prices.
One reason could be that the east was one of the first parts of Singapore outside the city centre to be developed, experts add.
Another factor is the substantial number of government land sale sites in eastern towns where developers have launched new projects at benchmark prices.
This has driven up other prices in the vicinity in tandem.
Freehold homes on the city fringe and suburban planning areas of Bukit Timah, Geylang, Marine Parade and Bedok have recorded the most transactions surpassing $1,500 psf so far this year.
This includes The Seawind project in Bedok, with a median price of $1,520 psf, and The Sound, at $1,650 psf.
Developments in the Marine Parade planning area, such as The Seafront on Meyer and Aalto, have also easily eclipsed the $1,500 psf mark.
For 99-year leasehold homes, Bukit Batok, Bukit Merah, Bishan and Kallang areas saw the most number of homes topping the price chart, said Mr Ong.
For instance, Citylights had a median price of $1,550 psf, while Southbank was sold at $1,590 psf. Both projects can be found in the Kallang planning area.
Experts note that home prices in western districts such as Jurong Gateway and one-north in Buona Vista are also expected to catch up when they are fully developed.
Moreover, the improvement of transport links across the island will also change the landscape of suburban living, they add.
The completion of Downtown Line 2, for instance, will boost the Bukit Panjang and Upper Bukit Timah areas, and Housing Board upgraders are likely to review their many housing options.
Suburban home prices have inched up 2.7 per cent in the first nine months of this year, according to the Urban Redevelopment Authority.
This is more than the 0.7 per cent rise for city fringe areas and the 0.1 per cent gain for city centre homes.
Source: The Straits Times –17 November 2012
 
Amber Rd condo enclave hot with expats
It used to be a quiet beachfront road lined with old bungalows, but today Amber Road is packed with condominiums and popular with expatriates.
The area, in District 15 and near the Parkway Parade mall, still retains some pre-war flavour with historical landmarks such as the Chinese Swimming Club, founded in 1905.
Most homes here are private. Major condominium projects in the area include the 400-unit The Esta, which was completed in 2008, and One Amber, with 562 apartments finished in 2010.
Both are freehold properties.
The 114-unit freehold Amber Residences obtained its temporary occupation permit (TOP) last year, while the freehold The Cape, with 76 apartments, was launched with a TOP expected in 2015.
The upcoming Silversea, which was launched in 2009 and expected to obtain its TOP in 2014, is also nearby.
383-unit project on a 99-year lease had sold around 370 of the 377 units launched as of September.
Analysts expect about 700 new homes to be completed in the next few years.
The bulk of these will come from Silversea, as well as from the collective sale in January last year of Marine Point on Marine Parade Road, which is expected to be redeveloped into around 150 freehold private residential units.
Overall, developer prices for 99-year leasehold and freehold properties in the Amber Road area range from $1,600 per sq ft (psf) to $2,000 psf, analysts said.
Reputable schools such as Convent of the Holy Infant Jesus Katong Primary School and Tao Nan School are also close by..
Monthly rents at Amber Residences range from $5,000 to $6,800, and at One Amber, from $3,700 to $6,600.
Resale activity has been relatively healthy, but waned recently, in line with an islandwide slowdown.
The number of resale transactions for Cote D’Azur on Marine Parade Road has ranged from five to 10 each quarter since the final three months of last year.
Another newer project, the 546-unit The Seaview, which obtained its TOP in 2008, has seen a similar level of resale activity.
In comparison, there were 10 to 20 transactions every quarter in 2010 and the first half of last year for the Cote D’Azur and The Seaview.
Source: The Straits Times –17 November 2012
 
Cooling measures likely to boost sales of sub-$1.5m homes
Demand for homes under $1.5 million is expected to increase thanks to recent cooling measures aimed at preventing buyers from over-extending themselves.
Demand for lower-priced, non-landed private homes is likely to be healthier as the measures restrict the maximum term of loans.
It offered some examples to show the impact of the latest cooling measures on affordability.
For instance, a home buyer aged 35 with a monthly household income of $12,000 can now afford a residential property with a maximum value of $1.5 million to $1.6 million on a 30-year loan period.
This assumes a debt-servicing ratio – a buyer’s total monthly debt payments divided by net income – of 35 per cent, which is the recommended position of affordability, the report noted.
An older home buyer aged 40 years with a similar monthly household income can now afford a home that costs $1.3 million to $1.4 million. This takes into account a 25-year loan term under the new rules.
These buyers could look to District 19 – comprising Hougang, Sengkang and Punggol – to meet their housing needs.
The area has the highest concentration of homes of at least 70 sq m in size sold for under $1.5 million in the past four months.
It is followed by District 18, which includes Pasir Ris, Tampines and Simei.
The sixth round of cooling measures introduced last month sought to restrict all home loans to more reasonable time frames, of up to 35 years.
Home buyers who take up a loan that lasts more than 30 years or extends past their retirement age of 65 will now have to fork out much more in cash.
Where previously a buyer may borrow up to 80 per cent of the property’s value for his first mortgage, he can now do so for up to 60 per cent if he busts the 30-year loan or 65-year-old age limit. Under a similar scenario, the borrowing ceiling shrinks to just 40 per cent for his second and subsequent mortgages.
Overall demand for homes could moderate in the coming quarter as the pool of local investors and foreign buyers thins on the back of multiple rounds of cooling measures.
Investors who have already bought homes would also be monitoring the market changes before making their next move.
“Any potential lower demand coupled with ample upcoming supply of new homes will put downward pressure on residential property prices.
“Competition in the secondary market will set in if the economy cools and unemployment rate increases,” it added.
The firm expects overall prices to increase marginally by around 0.1 to 0.3 per cent in the last three months of the year.
Source: The Straits Times –17 November 2012
 
8 projects may be nearing sales deadline
At least eight private housing projects, mostly in prime areas, are likely running out of time to sell their units within two years of completion, as stipulated by the authorities.
High-end developments such as The Marq on Paterson Hill and Hilltops in Cairnhill Circle, for instance, have been completed for at least a year but still have hundreds of new units sitting unsold.
If they are not sold within the next 12 months or less, developers may have to fork out extension charges to buy themselves more time after the two-year deadline.
Developers pay 8 per cent, 16 per cent and 24 per cent of the property purchase price for the first, second and third extra years, respectively. The amount is pro-rated based on the proportion of unsold units.
SC Global’s 241-unit Hilltops, for example, was completed in the second quarter of last year and has till about June next year to sell its 196 apartments still unsold as at the end of September.
Its other luxury project, the 66-unit The Marq on Paterson Hill, completed in the first quarter of last year, has till about March next year to find buyers for its 33 unsold units.
Wheelock Properties’ Scotts Square in Scotts Road also has 72 units unsold. It was completed in the third quarter of last year and also has less than a year to move its remaining units.
Other projects facing a similar predicament, with at least 10 units still unsold, include 88-unit Martin No. 38 with 21 units left and Residences at Emerald Hill with all its 33 units unsold.
SC Global and Wheelock Properties declined to comment about whether they had obtained or are planning to get an extension.
The high-end market has been languishing with slow sales and prices that are still below their peak. The additional buyer’s stamp duty of up to 10 per cent introduced last year also whittled down foreign home demand, further hurting sales.
Under the Residential Property Act, housing developers whose shareholders and directors are not all Singaporeans have to get a Qualifying Certificate (QC) to buy residential property for development. This is imposed to control foreign ownership of land here.
This gives developers up to five years to build the project and requires them to sell all the units within two years of obtaining the temporary occupation permit (TOP). They are not allowed to rent out unsold units.
To ensure compliance, a developer has to put up a banker’s guarantee for 10 per cent of the purchase price of the property, which may be forfeited if it fails to fulfil the QC’s conditions.
Since January last year, a developer has been given the option to pay an “extension charge” if it cannot meet the five years’ deadline from the issue of the QC to complete its project.
It might also be liable for a pro-rated extension charge, based on the proportion of unsold units it still holds, if it cannot meet the two-year deadline to sell all its units after the project is completed.
Some developers are understood to have sought extensions to the two-year window. However, since the implementation of the extension charge scheme last year, six developers have paid charges, the Ministry of Law said.
The Real Estate Developers’ Association of Singapore has also submitted a proposal this year to extend this two-year period. The Law Ministry said that it is “looking into the feedback”.
Experts say that while indirect discounts such as rental guarantees or stamp duty absorption might be offered by some projects as the deadline nears, large cuts in prices are unlikely.
Source: The Straits Times –19 November 2012
 

COMMERCIAL MARKET

Katong Junction sold for $55.28m
Katong Junction, a four-storey freehold commercial building at Joo Chiat Road, has been sold for $55.28 million.
This works out to $1,162 per square foot based on the building’s existing gross floor area of 47,558 sq ft.
Katong Junction has been bought by East Coast Holdings, whose shareholders comprise real estate investor Kishore Buxani and offshore investors advised by Mukesh Valabhji of Seychelles-based Capital Management Group.
The property is being sold by a company controlled by Tan Suat Hua, an architect by training and one of the original shareholders of Singapore Healthpartners Pte Ltd (now known as The Farrer Park Company), which is developing Connexion, a hospital, medical centre and hotel project. She later sold her stake.
Katong Junction is almost fully tenanted. Two restaurants occupy the ground level while offices fill levels two to four.
Mr Buxani, who confirmed the purchase when contacted by BT, said the plan is to spruce up the asset when the existing leases run out by late 2014 and reposition it as a retail property comprising mostly food outlets. “F&B outlets are thriving in the East Coast area, which is shaping up as the Holland Village of the east.”
A strong selling point of Katong Junction is the 30 car park lots in the basement, adds Mr Buxani.
BT understands that the average monthly passing rent in the building is in the $3-4 psf range, which spells considerable upside if the asset is successfully repositioned.
At the nearby 112 Katong in East Coast Road, F&B outlets are generally fetching rents of $10-20 psf.
However, Mr Buxani is not ruling out the possibility of strata titling Katong Junction and selling individual units.
The building was completed in the late 1990s and refurbished in 2007-2008.
Its existing 47,558 sq ft gross floor area (GFA) reflects a plot ratio of about 3.56 based on the land area of 13,346 sq ft. This exceeds the 3.0 plot ratio for the site under Master Plan 2008. The site is zoned for commercial use.
Market watchers consider the $1,162 psf on GFA price for Katong Junction reasonable. Earlier this year, Oxley Holdings paid $76.1 million or $1,298 psf of potential gross floor area inclusive of development charge for GRTH Building at 66 East Coast Road.
Katong Junction’s $55.28 million transacted price is 10.8 per cent below the latest valuation of $62 million ($1,303 psf on GFA) for the property in August this year.
Mr Buxani, a former Goldman Sachs banker, has also partnered Mr Valabhji’s Capital Management Group for other property investments in Singapore.
Earlier this year, they bought 51 strata-titled office units at Parkway Centre in Marine Parade Central for $53.375 million or $1,043 psf on strata area.
Since then, 10 of these units have been resold at an average price of $1,600 psf. Parkway Centre is on a site with a balance lease term of some 68 years.
In 2007, the partnership acquired six floors at Samsung Hub at Church Street from OCBC Properties for $122.4 million or $1,560 psf. Last year it divested one of these floors – the 20th level – to a Chinese investor at $2,800 psf.
“We’ve recently received an offer of $3,000 psf for another floor,” said Mr Buxani. Samsung Hub has 999-year-leasehold tenure.
Mr Buxani and Capital Management also own a half stake in Finexis Building (formerly GMG Building) at 108 Robinson Road.
Source: Business Times –17 November 2012