Archive for June 14th, 2008

Slice of Singapore on Bintan?

Posted by luxuryasiahome on June 14, 2008

A new development of bungalows on Bintan is hoping to attract Singaporeans to set up a second home there

CHEAP and big bungalows located less than an hour by ferry from Singapore and resort-style living – this is the vision that Bintan Resort Cakrawala wants to sell to Singaporeans.

In 10 to 20 years, the master planner for the northern strip of the Indonesian island hopes to see between 50,000 and 75,000 residents, with the majority being Singaporeans, on a 200 sq km site which is 40 times the size of Sentosa.

SUN, SEA AND SAND: The existing Nirwana Resort Hotel was part of the first phase of development by Gallant Ventures on the northern coast of Bintan. — PHOTO: GALLANT VENTURES

Mr Eugene Park, chief executive of Bintan Resort Cakrawala’s parent company, the Singapore-listed Gallant Ventures, said the balmy isle could be a suburb for Singaporeans to retreat to.

It could be a beach resort such as Bali’s Kuta Beach and Phuket’s Patong Beach, but minus the commercial trappings and touts, he said.

After the first phase of development over the last decade, which saw the construction of 10 hotels with 1,350 rooms, four 18-hole golf courses and famous spas such as Banyan Tree Spa, the master planner is ready to launch phase two.

A ground-breaking ceremony was held for its latest project, the 1,300ha Lagoi Bay development, last month.

Where previous projects have mostly been for resorts and hotels, this time round, there are sites for homes. Land sales started in July last year and over 300,000 sq m have been sold for $45 million.

Bintan Resorts was first set up in 1990 by Gallant Ventures to develop the northern coast of the Riau island. Over $1 billion had been pumped in to build infrastructure, hotels and resorts.

Existing hotels range from the budget Bintan Lodge to the family-oriented Nirwana Resort Hotel to the five-star Banyan Tree.

Singaporeans form a third of the 350,000 visitors last year, drawn by white sandy beaches and clear waters. Other visitors hail from Europe, the United States, Japan, Korea, China and India.

The average visitor spent $642 per person last year, up from $488 in 2006.

Tourism fortunes are heavily dependent on Singapore as it is the main gateway for international arrivals. Tanah Merah Ferry Terminal is a mere 55-minute ride from Bintan.

Mr Park said the strategy all along has been to tap Singapore’s strengths and tourism arrivals.

Bintan’s target is to grow tourism arrivals to one million, to piggyback on Singapore’s ambition to grow arrivals to 17 million by 2015.

To do that, Bintan Resorts has in the pipeline:

# a $100-million tourist airport;
# a marina;
# $150-million worth of infrastructure for the Lagoi Bay project;
# a $150-million power plant;
# a $5-million upgrade of the domestic and international ferry terminals; and
# $31 million invested in two new high-speed ferries which will shave travelling time by 10 minutes.

Investors, old and new, have also announced plans for the next five years. Indonesia hotel group Alila Resorts and Hotels bought a 20ha plot to build a five-star resort with 40 to 50 villas.

Malaysia’s Landmarks is building Bintan Treasure Bay, a 343ha integrated resort seven times the size of Resorts World at Sentosa.

Even small-time investors such as Singaporean Crystal Sim are keen to cash in. Ms Sim, owner of an interior fabrication company in Singapore, bought a plot on the Lagoi waterfront to build a boutique hotel with 60 to 80 rooms.

Setting up second home

The master planner’s goal is to increase hotel rooms to 5,000 in the next five years.

Private residences are also part of the plan. For now, 26 of 50 plots in the Samudra Villas cluster have been snapped up by individuals. These 800 to 1,200 sq m plots were launched at $300 per sq m.

Real estate agents interviewed love the idea of an integrated resort on Bintan, saying it will offer a more vibrant and exciting holiday option for Singaporeans.

However, they are more cautious when it comes to Singaporeans setting up a second home there. The upside is land price. At $150 to $260 per sq m of villa residential sites, and $120 to $250 for condo-type development sites, the land price is a steal.

PropNex chief executive Mohamed Ismail said the prices are 10 to 15 times cheaper than land in areas such as Choa Chu Kang and Lim Chu Kang, and 30 to 40 times cheaper than in the central areas.

But potential buyers must consider factors such as the lease period, saleability and accessibility to Singapore. Johor Baru across the Causeway seems to be a better option as properties there are mostly freehold, demand is higher for them and it is easier to commute to and from Singapore by road, he said.

‘It is not practical to commute every day to work or go to school in Singapore by ferry, which is subject to stormy weather.’

Mr Jack Chua, director of ERA Realty, said Bintan is not too bad a location for people who crave a resort-feel environment as it is close to Singapore. ‘But,’ he qualified, ‘if you are looking at investment, ultimately you must consider whether you can rent it out and sell it again. You must also consider how prudent the law system is and the country’s by-laws.’

The land lease of 30 years is renewable, said Mr Park. He assured investors that this is a commitment his company managed to secure from the Bintan government. Plus, he added that they are buying into a gated community, which gives added privacy.

The province is eager to make the development project work. Bintan regent Ansar Ahmad said the provincial government has made it easier for investors by setting up a one-stop service to handle permit application and land lease issues, among others.

Having its headquarters on Batam, a 15-minute ferry ride away, has shortened project approval time from three months to 33 days, he said. Three development projects have been approved and three are under way.

Mr Ansar looks forward to having a tourism school set up on Bintan as it will provide skills as well as employment opportunities for residents.

He added: ‘It is good for us. With the new development, tourist attractions and small to medium businesses in the villages in all parts of Bintan will also thrive.’

Source : Straits Times – 14 Jun 2008

Posted in General, Overseas Property | Tagged: Bintan Property | Leave a Comment »

Prime condo prices heading for long, gentle decline

Posted by luxuryasiahome on June 14, 2008

Cushman model shows subdued market until 2012 but firm argues it’s still a good time to buy

The prices of condos and private apartments in the Core Central Region (CCR) will inch downwards and are unlikely to touch their recent peaks for almost the next four years, a model developed by Cushman & Wakefield (C&W) shows. The extent of the fall will depend on how slowly the Singapore economy grows, but C&W expects these median prices to drop between 8 per cent and 17 per cent from their peak of Q1 2008, before recovering by some time in 2012.

Even so, it argues that now may be a good time to look at buying into new developments, as the developers are unlikely to slash prices dramatically. Instead, a gentler decline is on the cards.

The trigger for this is ‘there’s still a lot of private housing supply’, says C&W’s head of forecasting Lee Chong Yong, who developed the model.

Mr Lee points to the Urban Redevelopment Authority’s projections that about 8,000 non-landed private homes will be completed this year, followed by another 12,000 units next year, around 16,000 in 2010, and some 20,000 in 2011, before the supply eases to around 8,000 units again in 2012.

‘Some of these units have not been launched yet. As time goes on, the unsold or yet-to-be-sold stock will keep creeping up, until 2011. The extent to which there will be downward price pressure from this will depend on the pace of economic growth. The stronger the economic growth, the faster the supply can be absorbed,’ Mr Lee says.

Assuming Singapore’s GDP grows at a rate of 4 per cent a year between 2008 and 2012, the median per square foot (psf) price for non-landed private homes in CCR – which includes the prime districts 9, 10 and 11, Downtown Core location and Sentosa Cove – will fall a total of 17 per cent between the Q1 2008 high and Q1 2012.

Based on a higher 5 per cent GDP growth rate, the price decline will be a lower 12 per cent over the same period.

If GDP grows at 6 per cent, the median price will decline 8 per cent between early 2008 and Q3 2009 before recovering back to the Q1 2008 high by end-2012.

C&W also tracked developers’ sales in 255 new condo projects across Singapore and constructed an islandwide non-landed private residential new sales price index, which showed a 2.2 per cent decline between the peak in December last year and May this year.

‘From the start of the credit crunch in August 2007 through to May 2008, developers of only 10 per cent of the 255 new condo projects tracked have cut their prices by more than a fifth,’ C&W said.

C&W argues that ‘compared to the 1997-1998 Asian crisis, today’s falling prices are at present moderate without any signs of panic from the developers’. During the Asian crisis, most developers cut prices by at least 20 per cent while some reduced asking prices by up to 40 per cent in 12 months, it said.

The property consultancy group says ‘now would be a good time to consider buying into new developments’. It also notes that expats living in Districts 9, 10 and 11 have seen a doubling of rents over the past two years, while sale prices of many condos are starting to see a slow price decline. ‘For expats expecting to stay in Singapore, it would be a good time to consider buying (a condo) to take advantage of this short-term dip in the market,’ C&W’s head of residential Connie Looi says.

But JPMorgan analyst Christopher Gee gave a different view, saying that compelling values were needed to get buyers back to the market. ‘The fear of making a purchase now, only to have prices fall later, is what’s holding buyers back at this stage. Developers too don’t want to sell too cheap; if prices recover, then they would have missed out on making bigger profits.’

One property market watcher said that tempting buyers back would require mass-market condos to be launched at $600-$650 psf on average, compared with a price of $700-$800 psf last year.

In the mid-range category, a freehold condo in the Balestier area for instance would today need to be priced at $900-plus psf, instead of the $1,000-plus psf they’re still being marketed at, based on last year’s pricing. For freehold projects in the prime districts 9,10 and 11, what would lure buyers back today would be an average price of no more than $3,000 psf, instead of $3,500-$4,000 psf last year, another industry observer said.

Giving his take, an experienced property industry player said: ‘How Singapore home prices will pan out will depend on both internal and external factors. Residential property prices have fallen in many markets across the globe, such as the US, Europe, UK, Australia, Vietnam and China. If we want to be in line with the rest of the world, we’ll also see some slide.’

Source : Business Times – 14 Jun 2008

Posted in General, Market Reports | Tagged: Buying Property, Cushman & Wakefield, Property Investment, Singapore Property, Singapore Property Market, Singapore Property Outlook, Singapore Property Prices | Leave a Comment »

Home prices in mid to low tier expected to stay stable: CapitaLand

Posted by luxuryasiahome on June 14, 2008

PROPERTY giant CapitaLand expects prices of mid- to low-tier homes to remain largely stable this year despite signs of a weaker market.

Chief executive Liew Mun Leong reportedly said in Beijing on Thursday that demand for homes in Singapore is still holding up well.

Prices of lower-end homes will be ‘marginally up or down’, Mr Liew said in an interview at a press conference, Bloomberg reported.

He also noted prices of mid-market and lower-end homes, usually bought by HDB flat upgraders, have risen 3 per cent to 5 per cent this year.

His comments come against the backdrop of a much quieter property market, with many buyers keeping to the sidelines.

Industry sources say demand exists but only at lower price tiers. Home prices, particularly those for high-end projects, shot up to unrealistic levels during the property boom last year, they say.

The market turned silent this year, which has led some analysts to project that home prices will fall by as much as 40 per cent over the next two years.

Last month, CapitaLand reiterated its target of launching 800 to 1,000 units this year. Among those lined up for launch are Latitude in River Valley and the project on the Silver Tower site in Orchard. Projects in the pipeline include those on the Char Yong Gardens, Farrer Court and Nassim Hill sites.

CapitaLand also bought the huge Gillman Heights site. But the objecting owners are trying to overturn the sale and the High Court judge has yet to decide on the case.

On Thursday in Beijing, Mr Liew was also quoted as saying that the group is looking for distressed assets in Japan and China to aid its expansion in the two markets. CapitaLand is seeking such assets at a time when rising energy and commodity prices as well as a slowing global economy are putting additional financial stress on firms and stoking defaults worldwide.

Source : Straits Times – 14 Jun 2008

Posted in Developer News, General, Market Reports | Tagged: Capitaland, Developers, Latitude, Liew Mun Leong, Singapore Property, Singapore Property Market, Singapore Property Outlook | Leave a Comment »