Lots to pick from for home buyers

Home buyers will be so spoilt for choice this year that most won't know where to turn - or which developer's sweetener to take up. The launches and freebies are already coming thick and fast with loads of new projects lined up. The news is less certain for pricing but few experts expect huge bargains on the horizon. While some say prices might stay firm because developers have strong holding power, others predict price cuts ranging mostly from 3 to 10 per cent - depending on the segment - although there does not appear to be any industry-wide price reduction yet, apart from the various sweeteners. Still, the Urban Redevelopment Authority's price index inched up just 0.2 per cent in the three months to Dec 31, suggesting that a turning point might be around the corner. But on the supply side, it's all guns blazing. At least 10 developments were launched in the first two months of this year, including Bartley Residences, Watertown and Guillemard Edge, as firms rush to meet buyer demand, stoked by rock-bottom interest rates. Property consultancy CBRE said that up to 48 new private projects - more than 5,000 landed and non- landed units - may be launched this year. They range from high- end homes in River Valley, Nassim Hill and Newton to mass-market projects in Yishun, Bedok, Choa Chu Kang and Pasir Ris. But they do not include recently sold sites that could be launched by year's end, so the total number of new projects could be even higher. Apart from these private residential projects, at least two more executive condominium (EC) projects with another 1,100 units are expected to be launched. So competitive is the landscape that developers have been pulling out the stops to lure buyers, with incentives like furniture vouchers and the absorption of stamp duty thrown in. The bumper crop of new launches expected this year stems from the Government's ramped-up land sales programme (GLS) that began in the second half of 2010 and attracted keen developer interest. It also comes from the roughly 50 collective sale deals sealed last year. Like last year, the bulk of the new launches is expected to be in suburban areas, catering to first- time buyers and upgraders who have been powering the market over the past few years. The pipeline supply of sites and projects will provide a variety in terms of location and pricing so buyers will have numerous options to consider, say experts. Mr Ku Swee Yong, chief executive of International Property Advisor (IPA), noted that with average unit sizes shrinking, the number of units eventually launched on GLS sites might exceed official estimates by 20 per cent or more. Land parcels that could yield an estimated 7,000 units were placed on the confirmed list of the GLS for the first half of this year. Mr Lee Liat Yeang, a partner in Rodyk & Davidson's Real Estate Practice Group, agreed, saying that developers are aware of the importance of keeping homes small and hence, overall prices affordable. 'Some two-bedroom units are smaller than 500 sq ft. These small two-bedders should appeal to investors of projects within the city or city fringe, who tend to rent out these units.' Private home prices Experts say that price trends are likely to be project-specific, with better located projects with strong selling points achieving higher prices. But while developers will be cautious on pricing, they will push the market for what it will bear if there is an opportunity or when sentiment is good, said Mr Colin Tan, research head at Chesterton Suntec International. Mr Tan Kok Keong, OrangeTee's head of research and consultancy, expects mass-market projects in less well-located areas to be priced at $800 to $900 per sq ft (psf), while better located projects like Sky Habitat in Bishan could be in the $1,400 to $1,500 psf range. IPA's Mr Ku, however, estimates that mass-market home prices will average $1,100 psf in upcoming launches. Homes in the city centre like Leedon Residences might go for $2,000 psf and up to $4,000 psf for Ardmore 3, he said. In the high-end market where sales have been lacklustre, Chesterton's Mr Tan said that developers will likely try to rent them out or delay completion as long as they can while OrangeTee's Mr Tan said prices might fall by 'a single digit'. 'Developers need to sell enough units to finance their construction costs and do not need to sell out their projects within a short period from first launch,' added Rodyk's Mr Lee. 'In short, developers who have done very well in the past few years have strong holding power and should not panic-sell so long as they can clear a reasonable percentage of units in each project.' Completed projects Completed projects are an alternative for buyers in urgent need of a new home that's not from the resale market. The URA lists 66 projects that are completed but with unsold units as of the fourth quarter of last year. Most of these projects are in the high-end segment where sales have been slow. These include Reflections at Keppel Bay with 290 unsold, Hilltops at Cairnhill Circle with 208 and Newton Imperial with all its 36 units unsold. Executive condos ECs are an interesting segment to watch as the Government recently lifted the quota for second-time purchasers. This means that they will now be able to buy 30 per cent of units in an EC project within the first month of sale, up from 5 per cent before. The Government has also said it is ready to supply sites for up to 5,000 EC units this year if demand remains strong. Credo Real Estate executive director Ong Teck Hui said that prices for upcoming EC launches in areas such as Pasir Ris and Yishun can be expected to range from $680 to $750 psf. While private property prices remain high, there will be buyers who opt for ECs instead as these are typically cheaper by 20 per cent or more. The pool of eligible EC buyers has also increased with the upward revision of the monthly household income ceiling last August from $10,000 to $12,000. 'The main advantage of buying a new EC is the price discount over private homes when they are bought, and the value boost when they can be sold on the open market and fully privatised,' said Mr Credo's Mr Ong. 'Depending on location, the capital appreciation can be significant. For example, the average launch price of Bishan Loft was $420 psf in 2001 but there are resale units commanding above $1,000 psf recently.' ECs are subject to a minimum occupation period of five years. They can then be sold only to Singaporeans and permanent residents. They become private property after 10 years and can then be sold to foreigners. Deal sweeteners Developers are also increasingly pushing out new and creative promotions, discounts or freebies to beat the stiff competition. There is very often an early bird or VIP preview price which can be up to 20 per cent lower than the list price. This discount gradually gets scaled back later into the launch, encouraging buyers to commit early. Some developers have also started absorbing part of the stamp duty to cushion the impact of the latest cooling measures announced on Dec 8 last year. Far East Organization offers furniture vouchers, with the amount based on apartment size and usually given when a project attains its Temporary Occupancy Permit. It has also given additional discounts of 1 per cent, labelled Valentine's Day or Leap Year promotions, for some projects. Experts say that some of these incentives are an attempt to boost sales without dropping the price as doing so might damage the reputation of the developer and anger earlier buyers. 'There is the good feeling when you have received a deep discount whether real or perceived,' said Chesterton's Mr Tan. Snazzy showflats decked out in posh furnishings can also help sway buyers, and developers are now spending more time and big bucks creating concepts and designs that appeal to different buyer segments. The 15,000 sq ft Thomson Grand showflat along Upper Thomson Road, for example, cost $8 million to build. Its furnishings include Swarovski crystal chandeliers, Louis Vuitton luggage and Hermes plates - all to project its luxury positioning. [e-mail] Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.
» Why Singaporeans love to buy property	Straits Times: Sun, Mar 11
Despite a looming supply of new homes and government curbs on demand, Singaporeans' love affair with property continues. Make that Singaporeans and foreigners, who are also significant buyers of Singapore homes. It is easy to see why local real estate is hot. While there has been a huge upheaval in the global investment climate since the 2008 US sub-prime mortgage crisis, investing in bricks and mortar in this little oasis of an island has remained profitable and safe. Many rounds of government cooling measures to curb demand has had limited impact, except for the luxury home segment. There are many reasons for this state of affairs. An oft-heard refrain is 'scarcity of land as Singapore is a small country'. While this is true in the long run, scarcity has not prevented a fall in property prices from time to time. Real estate investment is not immune to the boom-bust cycle, as seasoned property investors who have gone through the lean years from 1997 to 2005 can attest. The fixation on property investments instead stems from three prevailing circumstances. Low interest rates The low interest rate environment has been damaging to savers. With saving rates running as low as 0.1 per cent a year against inflation of about 5 per cent, the erosion in the value of money kept in a bank has been particularly severe. Simply put, for every $1 in interest you earn, buying power falls by $50. When interest rates are this low, there are just three reasons for keeping cash: to fund daily expenses and short-term spending; as a buttress for a rainy day; or to build up a war chest if you believe a downturn is coming and you are hoping to pick up assets on the cheap. On the other side of the equation, low interest rates are a boon to borrowers. For consumers, the lowest lending rates can be found in the home loan market, with rates typically well below 2 per cent. So it makes sense to invest in residential property, which can yield 3-4 per cent in rentals. Also, real estate investment is an effective hedge against inflation. Relative safety Compared to other forms of investment like unit trust and shares, investing in property is less volatile. As long as you are financially prudent, your investment is safe. In Singapore, properties do not become worthless overnight. This is an important consideration for conservative investors. The losses suffered by investors of minibonds and High Notes linked to bankrupted US investment bank Lehman Brothers have given structured notes a bad reputation. The financial shenanigans at some China-based, Singapore-listed firms like China Gaoxian, Sino Techfibre, China Printing & Dyeing Holding and China Hongxing have hurt the image of stock investing among ordinary investors. The disclosure-based principle behind stock investing has led to situations that are akin to shutting the barn door long after the horses have bolted. In contrast, the Singapore housing market is more tightly regulated, which results in better protection for buyers. Strict rules on project accounts have ensured that there has never been a case of a developer leaving buyers in the lurch with uncompleted homes. Past performance Nothing attracts investors more than a winning streak. Boom-bust cycle notwithstanding, it is human nature to look at the immediate past and project the trend into the future. Local home prices remain at a record high. They have been on an uptrend since 2005, save for a brief period between the second quarters of 2008 and 2009. The economy may be slowing, but there is full employment. Meanwhile, the world is awash with hot money as a result of a huge injection of liquidity by the central banks of the US, Europe and Japan. Some of it has come to our shores, which may explain why the Government introduced an additional buyer's stamp duty of 10 per cent last December on home purchase by foreigners. So, property remains a solid bet in the near future. But past performance is no guarantee of future showing. One need only look at the West where a whole generation of Americans and some Europeans have been deeply scarred by their housing busts. Today, many no longer see property as a viable long-term investment and prefer to rent than buy a home. Those with longer memories may also recall that it took 14 years for the Urban Redevelopment Index - which measures home prices - to surpass the last market's peak in 1996. Unlike stocks and shares, property investment is more cumbersome. There are additional taxes and recurring fees to pay plus the hassle of tenants. It is a matter of time before interest rates will rise from today's low levels. Price discovery is less transparent than the stock market. In a downturn, a home owner may not be able to find a tenant or buyer. These are relevant factors to consider. Property investment may indeed be described as a love affair. But to enjoy the payoff, one needs to be in it for the long haul. Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.
» Property is in Singapore's DNA	Straits Times: Sun, Mar 11
Last month, I visited six flats in Tiong Bahru in one afternoon. It was like chain-smoking showrooms, down to the throng of people lining up to get in, the brochures pressed earnestly into your hands and the sweaty deliriousness that set in somewhere between flat #4 and #5. The flats were also aggressively tidy with signs of supposed life - cutlery, trendy American literature - perched around exactly so. It was a mise en scene made possible by real estate developers. Or, anxious hosts expecting the company of literally thousands. These six Tiong Bahru residents had agreed to open their homes to an army of strangers two weekends in a row. Ostensibly, it was for an 'arts walkabout' known as OH! Open House. Special pieces commissioned for this heartland arts gallery hung on their walls and, in some cases, filled their bedrooms. It was a lovely experience, stunning, thought-provoking, and one that genuinely brought my friends and I closer together. I'm not talking about the art although that was nice too. For us - and all the other visitors who are Singaporean - the occasion was one to indulge, unabashedly, our deep-seated and perennial desire to discuss at length other people's property. It was the chance for intense comparison of rentals, leases and PSF prices. It was the moment to ponder and debate several questions: 'Did all this balcony space make up for facing the main road? Are these amazingly spacious and unique flats trade-off enough for having to walk up six flights of stairs every day and 1960s plumbing? Can one collect enough rent from hipster expats to make it worthwhile buying a flat that has only 60 years left on its HDB lease?' I should feel bad about not paying enough attention to the art, and about snooping around in 'out of bounds' areas pretending that I thought the art was in there. But I could sooner change this behaviour than renounce my red passport. The truth is, the property market occupies an intrinsic - and occasionally dark and creepy - part of the Singapore soul. It inspires and animates us the way other people are moved by, well, art. The Singapore Improvement Trust flats in Tiong Bahru are, to us, like major Old Master works - breathtaking, rare and from a forgotten age. Usually seen from metres away, protected by bullet-proof glass. Can you blame us for being excited? After all, we have been languishing for so long in a period of Minimalism, delusions of grandeur pierced by the austere aesthetic of blocks and blocks of HDB estates. Sure, flashy new public developments such as Pinnacle @ Duxton have come along like Pop Art, over-subscribed, meaningless, and then maybe meaningful in its meaninglessness. But, as with all true native art, we are still convinced that the foreigners are making off with it all. Our art history textbooks are the HDB rules and regulations; our moments of artistic frisson when we find out we are eligible for a grant. You see, a developed society does not simply achieve a home ownership rate of 90 per cent without being itself transformed in the process. Our property is where we store our wealth, hearts and hopes; its rises and falls are our triumphs and disappointments; its nonsensical definition as 'good debt' the very contradiction of our existence. I wonder if this birthright - and curse - will be equally alive in successive generations of Singaporeans. With space running out and prices inexorably rising, will this aspect of the Singapore soul fade in tandem with the possibility of owning one's home - already more difficult for my generation than ever before? Things have already changed so much - HDB flats are smaller, taller, and I predict a conservation battle of epic proportions when the leases are up on those Tiong Bahru flats. After all, that prime land could house tens of thousands more families in new developments. But I remain hopeful. For it is precisely when we hand-wring that the best is behind us that new genius begins to flourish. Every art movement worth its salt has arisen as a reaction to the perceived barrenness of its predecessor. New ideas come when old ones become unequal to the changing times. I am confident that generations from now, the property market will still be Singaporeans' favourite topic of conversation. Sure, my great-grandchildren may be discussing flats underwater or in labyrinthine caverns or in complex networks suspended in the air. But I bet they still won't be looking at the art. Plus ça change... [e-mail] Source: The Straits Times