Lushhomemedia

Archive for April 8th, 2008

« Previous Entries

S’pore home prices make 2nd highest jump globally

Posted by luxuryasiahome on April 8, 2008

Bulgaria, with 33.7% surge, tops world index, beating S’pore’s 31.3% rise

THE average price of private housing in Singapore surged 31.3 per cent between Q4 2006 and Q4 2007 – the second-biggest jump in a world index topped by Bulgaria at 33.7 per cent.

Knight Frank tracks average prices worldwide via its Global House Index, which is based on an assessment of price changes in the mainstream housing markets of countries covered.

According to the index, Russia, Poland and Hong Kong, with respective hikes of 30, 22.4 and 22.3 per cent, ranked third, fourth and fifth.

However, price growth across the markets covered in the index fell year on year in the final quarter of 2007.

Knight Frank said price inflation globally during the year was 8.2 per cent, compared with 9.7 per cent the year before.

Knight Frank’s head of residential research Liam Bailey said that while property prices in Europe and America appear to be, ’suffering from the downturn in economic conditions’, prices in Asia and elsewhere, notably Singapore and Hong Kong, are performing well. Besides Singapore and Hong Kong, other Asian countries where home prices increased last year include China and Indonesia, which ranked 12th and 17th in the index with respective increases of 10.5 and 4.7 per cent. Knight Frank said prices in Singapore rose steadily for all types of property, especially apartments.

It said that in Hong Kong, almost half of the growth in prices happened in the last quarter of 2007 alone.

In China, home prices in 70 cities rose 10.5 per cent in 2007, with Shanghai’s 10.8 per cent growth marginally exceeding the national average.

Figures for December 2007 showed prices in Beijing fell as policies aimed at cooling speculative investment were introduced.

Shenzhen also saw a fall in prices towards the end of the year after credit was tightened in mid-2007.

Of Knight Frank’s list of top-30 countries with price movements, only five countries registered falls – the US, Germany, Latvia, Ireland and Estonia.

Underscoring the volatility of certain markets, Mr Bailey noted: ‘The most outstanding feature in this index in Europe is Bulgaria’s continued strong showing against the astonishing reversal of fortune witnessed in the three Baltic countries.’

Two of the three; Latvia and Estonia, suffered negative growth of -7.1 and -14.5 per cent, while prices in Lithuania grew only one per cent.’

He said that a year earlier, these countries saw respective price increases of 66.6, 23.8 and 23 per cent.

Source : Business Times – 8 Apr 2008

Posted in General, Market Reports | Tagged: , , , | Leave a Comment »

Home leases stagnant for 2 years, still looking soft

Posted by luxuryasiahome on April 8, 2008

Foreigners could be switching from leasing to buying property, says Savills Singapore

Residential leasing transactions have stagnated in the past two years after falling from a recent high of 33,874 in 2005.

According to an analysis of Urban Redevelopment Authority data by Savills Singapore, transactions were about 15 per cent lower at 28,928 in 2006 and 28,893 in 2007, versus 2005.

Savills Singapore director of marketing and business development Ku Swee Yong said that as leases are generally renewed on a two-year basis, the drop between 2005 and 2006 should imply a rise in 2008.

But figures for the first two months of this year indicate that residential leasing is not likely to pick up. Indeed, Savills’ analysis reveals only 3,495 transactions.

The lowest number of quarterly transactions since the start of 2000 was 4,024 in Q1 2003, while the high of 9,917 was recorded in Q3 2005.

Mr Ku, who reckons foreigners make up about 90 per cent of the leasing market here, said it will be important to watch the figures over the next few quarters.

He thinks fewer financial-sector expatriates may relocate here due to the global credit crunch.

But according to some foreign business associations, there has been no let-up in the influx of expatriates so far.

American Chamber of Commerce executive director Dom LaVigne said: ‘Due to the strong business conditions in Singapore and based on what we’ve heard from our members hiring more employees, we think that the number of American expats living here will continue to rise in the coming years. Two years ago, there were 14,000 Americans in Singapore. Today there are 15,000 Americans and more than 3,000 US businesses here.’

The number of British expatriates here has also increased over the past two years, with the British Chamber of Commerce (BCC) saying about 20,000 British nationals now live in Singapore.

BCC spokesman Roman Scott, who is also managing director of the Calamander Group, said: ‘Although everyone is moaning (about rents), it’s mourning the end of a particularly good deal, not complaining that the recent sharp rises are unfair.’

BCC, which tracks the cost of housing and offices, believes the rise in rents is a function of market forces and a ‘long-overdue cyclical correction from artificial lows’.

Pointing out that rents fell sharply 10 years ago, Mr Scott said: ‘Given that real wages and wealth have actually risen in those 10 years in Singapore, this means rents are still cheaper in real terms than the previous high 10 years back, and affordable compared with other global cities, particularly Hong Kong and Tokyo.’

Rents, however, have been increasing rapidly. Based on Savills’ basket of properties, rents for high-end homes increased about 30 per cent year on year in Q4 2007. Savills noted that a 2,885-sq-ft unit at Ardmore Park was recently leased for $20,000 a month or about $7 per square foot (psf) a month.

For high-end properties, Savills says the quarterly average rent is now $6.68 psf a month.

January saw a particularly low number of new leases, with just 1,474 transactions. District 10, the most popular district, suffered a 42.2 per cent drop to 203 transactions, compared with 351 a year earlier.

Other districts in the top five, including districts 15, 9, 14 and 16, saw transactions fall 39.2, 50, 19.8 and 43.2 per cent respectively.

A shrinking pool of leasing properties due to collective sales could have exacerbated the drop in numbers, especially in the prime districts. But as Savills’ Mr Ku points out, demand should have spilled over into other districts, keeping the overall number of transactions up.

He believes foreigners could be simply switching from leasing to buying property.

‘This was helped by the attractive low cost of mortgages in Singapore and also the favourable tax advantages foreigners from certain countries enjoy from owning properties in Singapore,’ he said. ‘We certainly saw many tenants convert from leasing to owning in 2006-2007, starting with a change in US Federal Tax on US nationals’ housing benefits overseas.’

A separate analysis of property data by Chesterton International seems to support this assertion.

Comparing data from 1995 – during the run-up to previous property market peak – and 2007, Chesterton’s head of research and consultancy Colin Tan notes that while the percentage of foreigners, including permanent residents (PRs), buying non-landed private property increased from 17.9 per cent in 1995 to 29 per cent in 2007, the percentage of acquisitions by PRs alone doubled from 6.7 per cent to 14.4 per cent.

The relevance of this, according to Mr Tan, is that PRs tend to buy for owner-occupation while foreigners are more likely to buy for investment.

He said: ‘In recent years we have seen many purchases by Indian and Chinese nationals who are buying for owner-occupation, not investment. These people eventually become citizens. I personally know a number of them.’

Source : Business Times – 8 Apr 2008

Posted in Foreigners, General, Market Reports, Rental | Tagged: , , , , , , , | Leave a Comment »

S’pore Grade A office rents continue to rise in Q1

Posted by luxuryasiahome on April 8, 2008

8.4% surge driven by banks with eye on private wealth management in Asia

OFFICE rents in Singapore continued to power ahead in the first quarter of this year, despite a slowdown in the US economy and possible fallout for Asia.

According to a Jones Lang LaSalle (JLL) report, the CBD core Grade A gross effective office rent now stands at $17.35 per sq ft per month – an increase of 8.4 per cent from $16 psf per month in Q4 2007.

JLL said: ‘Amid a slowdown in the US economy, the Singapore office market remains positive with sustained rental growth recorded island-wide.’

Chris Archibold, JLL’s national director and head of commercial markets, said he was ‘quite surprised’ by the 8.4 per cent increase in Grade A rents, especially as it represents almost half of JLL’s projected rental increase of around 18 per cent for full-year 2008.

JLL says demand for CBD core office space continues to be driven by the banks and financial institutions, ‘many of which have set their sights on the burgeoning private wealth management in Asia’.

CBD core Grade B office rents rose by a more sanguine 11.2 per cent to $13.80 psf per month in Q1 2008 from Q4 2007. Noting the rise, Mr Archibold said CBD core Grade B office rents are ‘catching up’.

‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market, the increase in rental value is largely a spillover from the previous quarters,’ he said.

‘The supply environment will remain in the landlord’s favour for a few more quarters before any significant increase in supply tilts the balance towards the occupiers.’

Supply of office space here remains tight.

According to a report by CB Richard Ellis (CBRE), the Grade A vacancy rate remained below one per cent in the first quarter of the year, even though at 0.6 per cent it was slightly higher than the 0.2 per cent rate in Q4 2007.

CBRE executive director (office services) Moray Armstrong said: ‘There is currently an excess of demand over available space and landlords will still be able to achieve high rents on rent and lease renewals due to the absence of alternatives for occupiers. Further rental advancement is likely in selected buildings that enjoy full occupancy.’

According to CBRE, prime rents averaged $16 psf per month while Grade A rents averaged $18.65 psf per month in Q1 this year, reflecting respective increases of 6.7 per cent and 8.7 per cent from the preceding quarter.

CBRE noted that the rate of increase in Q1 2008 moderated compared with the four quarterly increases in 2007.

It also estimates that 10.3 million sq ft of office space could be completed between 2008 and 2012, the bulk of which will come on stream in 2010 and 2011.

Mr Armstrong said: ‘The overall volume of confirmed office supply does not appear excessive, but we believe the government needs to be sensitive to the forces of demand and supply – prudence in future Government Land Sales programmes is required.’

Source : Business Times – 8 Apr 2008

Posted in General, Market Reports, Office / Retail Space, Rental | Tagged: , , , , | Leave a Comment »

Growth seen in Asia office rentals in ‘08

Posted by luxuryasiahome on April 8, 2008

But analysts say some cities, including S’pore, may see slowing rental growth, reports UMA SHANKARI

BUOYED by limited office supply in some cities and high GDP growth, all major office markets in Asia are expected to see rental growths in 2008, but the pace of growth will vary from city to city, property analysts say.

‘Across the board, we still see positive demand for office markets across Asia,’ said Megan Walters, director of research and business analytics for Asia Pacific at Cushman & Wakefield (C&W). ‘But obviously the problems in the financial markets in the US have not been played out yet, and we have yet to see how it will affect investment markets in the region.’

The firm expects all offices markets in key cities across Asia to record increasing rents in 2008. However, about half the cities profiled – Singapore, Beijing, Shanghai, Chengdu, New Delhi, Mumbai, Kuala Lumpur and Bangkok – are expected to see slowing rental growth. The other cities – Hong Kong, Tokyo, Seoul, Taipei, Bangalore and Ho Chi Minh City – are still seeing accelerating rental growths.

Industry players here will perhaps be most interested in what is happening in Singapore and Hong Kong – long been seen as rivals in the region as a centre for international office services. The slowing rental growth in Singapore will be welcomed by many on the back of fears that the Singapore office market was overheating.

Rents here have been pushed up over the last few years mainly by expansion in the financial services sector owing to factors such as domestic growth, economic restructuring that resulted in the expansion of the service industries as well as the influx of both regional and global jobs into the market.

Rentals are not just climbing – they are climbing at a pace faster than ever seen before. Industry veterans have expressed fears that this could make Singapore less competitive compared with Hong Kong, where rents are rising at a more sedate pace.

For example, data from C&W shows that rents at Raffles Place in Singapore’s Central Business District (CBD) have risen 100 per cent in the last year unlike Hong Kong’s more moderate 15 per cent. And according to some reports, it is now more expensive to take up office space in Singapore than in Hong Kong.

Data released by Jones Lang LaSalle (JLL) yesterday shows that CBD core Grade A gross effective office rent in Singapore for the small space category (less than 10,000 square feet) stands at $17.35 per square foot per month (psf pm), up 8.4 per cent quarter on quarter from the $16.00 psf pm seen in Q4 2007. This is marginally higher than the quarterly rental growth of 7.4 per cent registered in Q4 2007, JLL said.

‘In comparison with Hong Kong, the current gross effective rent of Grade A offices in Hong Kong Central – equivalent to Raffles Place in Singapore – stands at US$15.10 psf pm,’ said JLL’s report. ‘This is some 21 per cent higher than Singapore’s CBD core prime Grade A gross effective rental value of US$12.50 psf pm (or $17.35 psf pm).’

However, things should even out with more supply coming onstream in Singapore. Market watchers say that the rate of rental growth will slow and occupancy rates will fall this year. ‘The growth in rental values is expected to moderate this year after a record increase in 2007,’ said Cheng Siow Ying, DTZ Debenham Tie Leung’s executive director.

Chris Archibold, head of commercial leasing at JLL, similarly noted that the rapid rental increase seen in Q1 2008 is mainly due to spillover demand.

He said: ‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market condition, the increase in rental value is largely a spillover from the previous quarters.’

And a new report by DTZ says that islandwide office occupancy dipped in the first quarter of 2008, easing half a percentage point quarter on quarter to 97.1 per cent. The dip followed a 0.1 point drop in Q4 2007 from Q3.

The average occupancy of office buildings at Raffles Place dropped half a percentage point to 97.8 per cent in Q1, while that at Marina Centre rose 0.7 percentage point to 99.8 per cent.

DTZ attributed the slight dips in occupancy partly to two office buildings coming onstream. Together, The Central and VisionCrest Commercial added some 538,100 sq ft of new office space – raising islandwide office stock one per cent quarter on quarter to 56.6 million sq ft. Both buildings are not even fully leased yet.

Some occupiers are beginning to exercise caution in their medium-term leasing requirements, DTZ’s Ms Cheng said. Going forward, the demand for CBD core office space in Singapore is expected to continue to be strong on the back of more demand from banks and financial institutions, many of which have set their sights on the burgeoning private wealth management in Asia.

But there will be some moderation for both rents and capital values. ‘Although the financial and business sector is still expected to remain robust, the more modest economic growth projected will see companies limiting their expansion of office space requirements,’ Knight Frank noted in a recent note. ‘Some landlords would also be more accommodating of tenants in order to attract or retain these users of office space.’

And for the rest of Asia, a lot depends on how the sub-prime crisis in the US plays out, property analysts said. The region’s investment markets – including for the office sector – are expected to emerge from the credit crunch better than their US or European counterparts.

Source : Business Times – 8 Apr 2008

Posted in General, Market Reports, Office / Retail Space, Rental | Tagged: , , , , | Leave a Comment »

Tulip Garden sale off? How the deal went

Posted by luxuryasiahome on April 8, 2008

Condo owners likely to call off $516m en bloc deal after developer misses payment deadline

THE $516 million collective sale of Tulip Garden condominium near Holland Road seems to be dead in the water after the developer missed a payment deadline yesterday.

The condo owners appear poised to formally call off the deal and pocket a cool $25.8 million – the original 5 per cent deposit paid by developer Bravo Building Construction.

LOSS AND GAIN: Bravo will forfeit its $25.8 million deposit if the Tulip Garden sale is axed. Each owner could pocket over $100,000.

Bravo would forfeit the sum if the deal is scrapped. That would mean each of the 164 unit owners could pocket more than $100,000 on average.

The cancellation of a collective sale because of a cash crunch is a rare event. Bravo and its partners say they have had trouble raising the necessary funds.

Earlier this year, the $162.8 million collective sale of Makeway View in the Newton area was ditched by an associate of Bravo. The firm said a higher-than-expected development charge was the reason for backing out. A deposit of $1.63 million was reportedly forfeited.

Last Saturday, Tulip Garden owners held a meeting and indicated in an informal show of hands that they wanted to cancel the sale if Bravo missed the latest payment, also $25.8 million. This payment had already been delayed at Bravo’s request from the middle of March.

By late yesterday, no payment had been made. Bravo was putting on a brave face but it was, in effect, accepting that the deal appeared to have been lost.

The developer had asked for more payment extensions – to make the next 5 per cent payment by June 7 and then complete the deal by Aug 7.

But based on last Saturday’s meeting, the owners appear unlikely to agree.

Almost all the owners at the meeting indicated that they wished to call off the sale and keep the deposit if Bravo did not pay up by yesterday, according to the people present.

A Bravo spokesman said yesterday that the firm is now seeking an ‘unconditional’ extension of time.

‘If these extensions are not obtained, the consortium will accept this costly missed opportunity to develop a stunning 350-unit condo with unmatched features in a prominent Holland Road corner,’ she said. The condo is on the corner of Holland Road and Farrer Road.

Bravo inked a deal to buy the freehold site in July last year. It was due to have been completed late next month.

The Bravo spokesman said the firm has been seeking partners since November last year.

‘The current turmoil in the financial and stock markets matched with sporadic bad news have caused unforeseen delays in securing ultimate approvals to commit funds,’ said Bravo. It added that the Tulip Garden owners had consented to the sale earlier than anticipated.

‘Coupled with the consortium’s strategic decision to significantly increase equity to balance the current cautious lending by banks, the current deadlines for next payments have become too constricted and no longer practical,’ it said.

Bravo added that it has tied up with two local and two foreign parties to buy Tulip Garden. But unless an extension is given, they will not be offering more money, said the spokesman.

She said that if Tulip Garden owners still want to attempt to sell en bloc, they may face an ‘unwelcome lower bid price’ given weaker market conditions.

Tulip Garden sold for about $1,018 per sq ft (psf), more than its earlier guide price of $900 psf in January last year. The development has 164 units comprising 96 flats, 66 maisonettes and two shophouses.

If the sale works out, flat owners stand to reap $2.5 million to $4.2 million while maisonette owners would receive about $3.4 million each. The shop units would get about $1.1 million each.

Amid last year’s booming market, Bravo also made two other fairly large collective sale deals: Pender Court, off Telok Blangah Road, at $80 million in July last year, and Makeway View.

Bravo has postponed the completion of Pender Court’s sale until late this month.

Given the slower market, more sellers are now open to lower prices. Yesterday, Royalville, a freehold mixed development off Sixth Avenue, was relaunched for sale en bloc at a lower indicative price of around $305 million.

It was offered for sale in a Nov 9 tender, which failed to attract bidders at its earlier guide price of $330 million to $350 million.

How the deal went

July 2007: Bravo Building Construction decides to buy Tulip Garden en bloc for $516 million. It later pays a 5 per cent deposit of $25.8 million.

February 2008: The Strata Titles Board approves the sale. The sale completion date is set for May 28.

March 13: Bravo is due to pay another $25.8 million, but asks for – and is granted – an extension of time until yesterday.

March 18: Bravo asks to extend the payment deadline from yesterday until May 5. It also asks to set back the sale completion date from May 28 to July 23.

March 24: Before agreement for its earlier requests can be given, Bravo asks for further extensions of time to pay by June 7, instead of yesterday, and to complete the sale by Aug 7, instead of May 28.

April 5: Owners indicate in an informal show of hands to cancel the sale and take the $25.8 million deposit if Bravo misses the payment deadline yesterday.

Source : Straits Times – 8 Apr 2008

Posted in Enbloc, General | Tagged: , , , , | Leave a Comment »

Tulip Garden en bloc may be called off

Posted by luxuryasiahome on April 8, 2008

Buyer Bravo will ‘accept costly missed opportunity’ if it’s not granted payment extensions

The owners of Tulip Garden met over the weekend and BT understands that most of them have taken the view to rescind the $516 million collective sale to an associate company of Bravo Building Construction – if the second 5 per cent instalment due to them is not paid by the deadline of midnight yesterday.

BT understands the owners could not accede to the Bravo unit’s request for another extension to pay up the second 5 per cent instalment which was to have been paid yesterday, to June 7, as well as to extend the completion date of the transaction, which is when it would have to pay up the remaining 90 per cent of the purchase price, from May 28 to Aug 7.

However, Tulip Garden’s owners, through their lawyers, are understood to have informed Bravo yesterday that the payment deadline will not be extended and that they reserve their rights to rescind the sale.

A Bravo spokeswoman said yesterday the consortium buying Tulip Garden is seeking an ‘unconditional extension of time’ for making the two payments, that is, it is not prepared to make any further payment to the sellers in exchange for the extensions, until June 7.

If the sale is rescinded, Tulip Garden owners will keep the $25.8 million or 5 per cent of the purchase price they had been paid so far, BT understands.

‘If these extensions are not obtained, the consortium will accept this costly missed opportunity to develop a stunning 350-unit condo with unmatched features in a prominent Holland Road corner,’ Bravo said in a statement.

Bravo has a minority stake in the consortium buying Tulip Garden. The en bloc sale of Tulip Garden was approved by Strata Titles Board in February.

In its statement, Bravo said that it and its majority consortium partners for the purchase of Tulip Garden intend to complete the purchase. Bravo did not identify the consortium partners. ‘Since December 2007, major foreign institutional investors and a few local investors have expressed strong interest to form the consortium. The current turmoil in financial and stock markets matched with sporadic bad news have caused unforeseen delays in securing ultimate approvals to commit funds,’ Bravo said in its statement.

Bravo also indicated that approval for Tulip Garden’s sale from Strata Titles Board in February came earlier than anticipated. ‘Coupled with the consortium’s strategic decision to significantly increase equity to balance the current cautious lending by banks, the current deadlines for next payments have become too constricted and no longer practical,’ it added.

BT understands that Tulip Garden owners declined to further extend the completion date of the sale of Tulip Garden as the STB had already given its order for the sale, binding all owners to a sale, and the sales committee does not have the powers to vary the completion date of the sale beyond the originally agreed May 28. The date was based on three months from receiving the STB order for sale, as stipulated in the sale and purchase agreement for Tulip Garden inked last year.

Assuming Tulip Garden’s sale is rescinded, it may be a while before the prime District 10 site is back on the en bloc bandwagon. If owners wish to do a fresh en bloc sale, they would have to do it under revised collective sales rules that took effect in October last year and which are more stringent.

The $516 million deal for the property worked out to a unit land price of $1,018 psf per plot ratio. No development charge is payable.

Last month, the $162.8 million collective sale of Makeway View in the Newton area to another associate of Bravo was rescinded. BT reported that one per cent of purchase price paid by Bravo so far was forfeited.

Source : Business Times – 8 Apr 2008

Posted in Enbloc, General | Tagged: , , , , | Leave a Comment »

Simei site for condo-like HDB flats

Posted by luxuryasiahome on April 8, 2008

MORE condo-style Housing Board flats will soon be offered to home buyers looking to live in Singapore’s east side.

The HDB yesterday released a plum 181,108 sq ft site in Simei Road for tender – the fifth under its Design, Build and Sell Scheme (DBSS), which is open to private developers.

The 99-year site has a gross floor area of about 380,327 sq ft – enough for 360 homes.

Market watchers said developers will be keen on the plot due to its attractive location in a mature, established HDB estate just 10 minutes’ walk from Simei MRT station.

Knight Frank director of research and consultancy Nicholas Mak said the site, which could have residential blocks going up to 15 storeys, was likely to attract bids from medium-size developers and construction companies. He projected offers ranging from $49 million to $76 million, or $130 to $200 per sq ft per plot ratio.

The new site tender comes after National Development Minister Mah Bow Tan said recently that HDB will cater to buyers with different aspirations by providing a range of housing options. But the minister also stressed that standard flats built by HDB will continue to be the main stock of new supply.

A further two DBSS sites – in Toa Payoh and Bedok – are expected to be released soon. These and the Simei site could mean up to 1,500 new public condo-like flats coming on to the market.

That figure is 4,000 if flats earmarked for the four sites already released – Tampines, Boon Keng, Ang Mo Kio and Bishan – are included.

Flats at City View @Boon Keng, comprising three- to five-room units, were offered at between $349,000 and $727,000 – about $520 psf. The Simei tender closes at noon on June 3.

Source : Straits Times – 8 Apr 2008

Posted in General, HDB News, Land Sales | Tagged: , , , , , | Leave a Comment »

HDB launches fifth DBSS site at Simei

Posted by luxuryasiahome on April 8, 2008

THE Housing and Development Board (HDB) has launched a fifth Design, Build and Sell Scheme (DBSS) site at Simei Road for sale.

According to Nicholas Mak, director of consultancy and research at Knight Frank, the site may fetch between $49 million and $76 million, or $130 to $200 per square foot per plot ratio (psf ppr), and is likely to attract bidders such as medium-sized developers and construction companies.

The Simei site is the first to be offered under the scheme this year and has a site area of 16,825.5 square metres, with an allowable gross floor area of 35,333.55 sq m.

Property consultants considered the site attractive as it is located in a mature estate with comprehensive facilities. The site is a short walk from Simei MRT station and East Point Mall, and is also close to schools such as Anglican High School.

Director of marketing and business development at Savills Singapore, Ku Swee Yong, noted: ‘Demand should be strong with recent announcements by the MNCs and foreign banks that they are pushing backroom services into Changi’s office and industrial parks.’

He estimated that the Simei site may fetch between $57 million and $60 million, or $150 to $160 psf ppr.

On the supply side, Mr Mak pointed out: ‘As there has not been any major launch for a mass-market residential project in the Simei and Tampines areas, flats in the DBSS development at Simei Road will be more appealing to purchasers.’

He expected the site to take about 320 to 360 units.

The tender will close on June 3 at noon.

Under the DBSS, private developers undertake the design, construction and sale of public housing. Flats sold under the scheme come with a 99-year lease and buyers have to meet HDB eligibility conditions similar to those set for HDB-developed flats.

HDB awarded the fourth DBSS site in Bishan to Qingdao Construction Group in February, which put in a bid of $135.9 million or $237 psf ppr.

HDB plans to launch another two DBSS sites in Toa Payoh and Bedok.

Source : Business Times – 8 Apr 2008

Posted in General, HDB News, Land Sales | Tagged: , , , , , | Leave a Comment »

Don’t blame ‘house lust’ for US property funk

Posted by luxuryasiahome on April 8, 2008

DID McMansion fever cause the US housing bust? Now that the home crisis finger-pointing season is in full swing, it’s a good time to take a look at how ‘house lust’, as author Daniel McGinn calls it, affected the property market.

McGinn, who recently published a book on the topic, points to a convergence of personal economics and good old-fashioned status-seeking as one of the root causes of the crisis. More likely, it went much deeper, as a combination of the American Dream and a mass amnesia of economic reality took hold.

Identifying ‘primary drivers’ for what caused house lust, McGinn cites the revolution in home finance. Many homebuyers, whose only qualification for a mortgage was a human pulse, qualified for large loans. As rates dropped in the last decade, homeowners also operated like ‘mini-CFOs, deciding just how much of their wealth to keep in their houses’, he writes.

Millions figured if home prices were going to keep climbing at double-digit levels, whatever they pulled out of their homes in refinancing or home-equity loans would be replaced by appreciation.

As we know now, that didn’t happen and far too many homeowners ended up with more debt and almost no equity.

Those that took the equity-gain bet with little or no downpayment are looking at a losing hand as home prices and sales continue to fall in most US markets. Even Manhattan apartment sales, which were until recently immune from the slump, dipped 34 per cent in the first quarter – the most in 18 years.

Slide in equity

The massive vacuuming of home equity has been huge in recent years and is a far cry from the way Americans saved after World War II.

Home equity fell to about 48 per cent of total household real-estate holdings in the fourth quarter of 2007, the lowest level since the Federal Reserve began keeping records in 1951.

Americans used to store equity in their homes like a well-stocked larder. In 1952, American homeowners maintained more than 80 per cent of the value of their homes in equity, according to Michael Rizzo, a senior economist at the American Institute for Economic Research, based in Great Barrington, Massachusetts.

Homeowners have ‘taken on larger debt to buy their homes and increasingly spend down their equity via home-equity loans’, Rizzo says.

A generation or two ago, McGinn says, ‘the average family took out a 30-year mortgage, which they intended to pay off one day. There were no home-equity lines of credit, refinancing was unusual and whatever wealth a homeowner built up in the house stayed there until it was sold. No more.’ During the housing boom, homeowners became speculators, making double wagers on the bond market maintaining or providing low rates and properties delivering guaranteed appreciation.

This Las Vegas attitude towards homeownership was aided and abetted by the built-in cultural bias that homeownership was a solid investment, not a gamble. Is the irony lost that the state with the highest foreclosure rate through February was Nevada? Not only was home gambling legal in Nevada, it was permitted in every state as mortgage brokers, banks and Wall Street got in on the action.

Hypnotised by the dual mantras ‘buy as much house as you can afford’ and ‘your home is your retirement plan’, Americans were sold on the home-as-investment mythology.

Home investors also stopped or slowed their investing in non-real-estate assets as the nation’s savings rate turned negative in 2005. Why squirrel away money in stocks or bonds when your house is a veritable cash machine? Since financing was cheap and popular optimism irrational, the participants in the boom felt like they were on a run at the craps table. So they upped the ante by buying bigger houses.

The average new-home size is more than 2,500 square feet, according to the National Association of Homebuilders, a Washington-based trade group.

That compares with 1,600 square feet in 1973. The number of single-family homes with three bathrooms or more has doubled in that period.

Almost 40 per cent of new homes have at least four bedrooms, compared with less than 25 per cent in 1973. Twice as many houses have three bathrooms or more compared with 1987.

Status was a powerful force in the building of ever-larger homes. Those who wanted to make their neighbours envious leveraged up to build three- and four-car garages, master suites and commercial-quality kitchens that would make Wolfgang Puck jealous.

Moving up into fancier digs didn’t get the housing market into its current morass, though.

Homes aren’t investments

Since McGinn focused on the nation’s physical obsession with home amenities, I was disappointed he didn’t explore more of the economic maladies. The long-term reality is that homeownership in non-bubble times is unlikely to beat inflation once you subtract maintenance, taxes and financing costs.

Yale economist Robert Shiller estimates that homes gained an average of 0.4 per cent annually from 1890 to 2004.

With the exception of rental properties, residential real estate produces no earnings or dividends. It doesn’t split like profitable stocks. The cost of ownership always goes up. If this is a love affair gone sour, then a new focus on building equity and the laws of supply and demand will make for a quicker housing rebound. — Bloomberg

John F Wasik, author of ‘The Merchant of Power’, is a Bloomberg News columnist. The opinions expressed are his own

Source : Business Times – 8 Apr 2008

Posted in General, Global Economy | Tagged: , , , | Leave a Comment »

US dollar rebounds despite weak data

Posted by luxuryasiahome on April 8, 2008

The dollar rebounded in Asian trade yesterday as some traders looked beyond recent gloomy US data, betting on a recovery in the world’s largest economy later in the year, dealers said.

The dollar stood at 102.44 yen in Tokyo afternoon trade, up from 101.45 yen in New York on Friday. The euro slipped to US$1.5668 from US$1.5736 but rose slightly to 160.51 yen from 159.60.

The US currency clawed back after falling on Friday in response to news that the US economy lost 80,000 jobs last month, the biggest drop in five years. The decline was much worse than the 50,000 losses in non-farm payrolls that most economists had been anticipating.

‘But the market was already factoring in recession in the United States,’ said Shigeru Nakane, senior strategist at Resona Bank. ‘All in all, we are starting to see receding pessimism for the US economy. Things should not get much worse than they are now.’

‘We expect the housing market to remain weak, but people are starting to think that the overall US economy should not deteriorate much further,’ he said.

Wall Street managed to hold up relatively well in the face of the weak data, gaining support from hopes of further US interest rate cuts. Traders said the weak US jobs report raised the odds that the Federal Reserve would continue its rate-cutting campaign. ‘Traders responded by pricing more Fed easing which hurt the dollar,’ noted NAB Capital currency strategist John Kyriakopoulos. ‘Still, US stocks recovered from an initial post-payrolls decline to end flat on the day, so investor risk-appetite did not appear to suffer a large blow.’

Some economists said they expect the central bank to unleash fresh rate cuts later this month following the release of the March jobs report.

Against regional currencies, the US dollar slipped to S$1.3817 in late Asian trade from S$1.3844 on Friday, to NT$30.40 from NT$30.418, and to 9,220.00 Indonesian rupiah from 9,225.00. It also fell to 32.63 Thai baht from 31.65, and to 41.65 Philippine pesos from 41.72, but firmed to 974.00 South Korean won from 973.85. — AFP

Source : Business Times – 8 Apr 2008

Posted in General, Global Economy | Tagged: , , | 1 Comment »

« Previous Entries