Singapore banks

Singapore banks’ credit-loss risks are limited as housing remains affordable, borrowers can repay the loans and the government is taking steps to cool the market, Standard & Poor’s Ratings Services said.

The assessment is valid even if a property asset bubble forms in the city-state, S&P said in a report today. S&P said Singapore banks have begun to raise mortgage rates, limiting returns from property investments.

“This in turn helps reduce the likelihood of a speculative bubble and limit the risk of credit loss for banks,” Ivan Tan, an S&P credit analyst, said in the report.

Mortgages represent about 25% of loan portfolios for Singapore’s banks, making them the single largest industry risk, S&P said. The island-state’s three local banks are DBS Group Holdings, Oversea-Chinese Banking Corp. and United Overseas Bank.

Singapore’s private home prices surpassed the previous all- time peak achieved in 1996, after rising 5.2% in the second quarter and 5.6% in the first three months of the year, according to the Urban Redevelopment Authority.

Working and interacting closely with bankers and a few select real estate agents, I can feel that there are signs that the private condo/apartment market is showing signs of slowing down. The reasons being —too many coming on stream from all directions, developers trying to off-load as many units as they possibly can, price reaching a level that hits buyers’ affordability threshold . The way i see it, this sector has reach a plateau and likely to stay flat for sometime until the surplus stock is taken up. As to when it will take off again is anybody guess. But personally I do not expect a acute dip in price here as the economy is still vibrant and there is no intention by those in charge to slow the growing population.

On the HDB front, HDB resale is still very hot and selling like Macdonalds at Liat Tower. Somebody in the HDB had done some miscalculation and reduced the supply side from 2002 onwards. That was a boo-boo. As a result of this mismatch, the present fierce demand for low cost housing can only be met by the supply from the HDB resale market. The great influx of buying by foreigners who have become citizens and PRs have also weighed in on the pressurized demand. If you ask me, putting your money ( provided you meet HDB rulings) in a well select big unit HDB near MRT is still the best bet if you are looking for something with good upside potential. Need I tell you why?

The next sector that is still hot is landed properties of all shapes and sizes. There is this perception among increasing number of landed buyers that paying $1000 for per sq ft on landed is better that putting same or more on a apartment space in the sky. While you can increase your living space in a landed, you cannot do that with a apartment. The demand for freehold/999 leasehold landed is so strong that sellers are now playing hard to get and asking price that banks are reluctant to match. If this trend continue, you will now see a COV ( cost over value) syndrome taking over this sector of the market. The reason for the heated demand is scarcity. At present landed constitute 6% of the total 1.2 million households. If you look at detached and semi-D houses they comprise 2.7%. This number will only get smaller as supply is diminishing. Government’s release land is mainly for high density housing. Occasionally they do release pockets of lip-service supply for 99 year landed.

In the last 3 months, I have arranged an increasing number of loan packages for purchase of landed properties by foreigners( PRs). Almost all share the same perception —-they all see greater appreciative value in parking their money in a good landed property.They all believe that landed will still have room for price to go up. They all have stable income and have intent to make Singapore their permanent home. More importantly, they all have no problem getting approval from the authority to buy as long as it is one and for owner occupation.

So if you ask me, I believe that even in this high market, there is still a good buy ………….provided you have deep pockets and a good nose.

Moses CM Tan
Synergy Business Network
Email : mosestan4@yahoo.co.uk
Mobile phone; +65- 96359288

RESALE prices for HDB flats have smashed records for the eighth straight quarter with a surge of 4.1 per cent in the April to June period. Prices passed the 1996 peak back in 2008 and have not looked back since. And the march shows no sign of letting up, with median cash over valuation (COV) at a record $30,000 in the second quarter.

This is 20 per cent ahead of the $25,000 in the January to March quarter.

COV is the cash paid upfront by a buyer over a flat’s valuation, and is often an indication of demand levels. The HDB figures out yesterday show resale prices are almost 18 per cent above the previous peak in the last quarter of 1996. Meanwhile, the HDB said yesterday it launched almost 9,000 new flats in the first half – equal to last year’s total supply – and will launch another 7,200 in the second half to meet demand.

It will launch 1,000 new flats in Jurong West and Bukit Panjang this month. The total home supply will be complemented by 4,700 new homes under HDB’s design, build and sell scheme (DBSS) and recently sold executive condo sites. Despite this, resale activity keeps growing. Transactions hit 9,114 in the second quarter, up about 7 per cent on the first. Nearly all deals involved cash paid upfront. The percentage of resale transactions done above valuation increased to 96 per cent, up from 93 per cent in the previous quarter.

The pace being set by buyers and sellers has also prompted fresh concerns on whether the market is overheating. In estates like Queenstown the median resale price for an executive flat was an eye-popping $781,500 in the second quarter and $685,500 in Bishan. The median resale price for five-roomers was $682,500 in Marine Parade and $675,000 for Queenstown.

Associate Professor Sing Tien Foo of the National University of Singapore’s real estate department noted that apart from the price index surpassing the 1996 peak, it has also increased by more than 60 per cent compared with 2003 prices. He said that price increases appear to be supported by strong economic fundamentals for now, with demand coming from upgraders, downgraders, PRs and home buyers who cannot wait three years for new HDB flats.

As government policies on resale flats discourage speculation, this price growth is unlikely to be a housing bubble, observed ERA Asia-Pacific associate director Eugene Lim. Prof Sing added: ‘But if price rises continue unabated, we should be concerned. When deviations from fundamentals are too large, some corrections in prices could occur.’

Mr Lim noted that the robust resale market is having a spillover effect on private property as HDB owners can upgrade thanks to the relatively high prices they can get for their flats.
Values in the private property market rose 5.3 per cent in the second quarter over the first despite slowing sales. But as private property prices inch up, some buyers in that market could turn to the HDB resale sector, adding to demand, said PropNex chief executive Mohamed Ismail.

Some analysts believe prices have reached a new era. ‘Property prices move in cycles and prices will go up and down. But generally, it will move in an uptrend due to scarcity of land in Singapore,’ said Mr Lim. ‘Even if prices come down, I think it’ll still be higher than five years ago. It is unlikely we will go back to that level.’

While property agents say home buyers – especially first-timers – are getting increasingly disgruntled about blazing resale prices, some estates are still selling at levels below the 1996 peak.
PropNex agent Steven Ng, who recently helped a couple in their 50s sell a five-room Bishan flat for $615,000 – $70,000 above valuation – said the sellers were happy as they bought it at less than half that amount more than 10 years ago. ‘But some sellers in Bishan who bought at 1996 peak have still yet to see price levels at the price they paid,’ he said.

Source : Straits Times – 24 July 2010

At present, all factors are pointing to a strong and stable property market with another round of upward momentum in store. And Minister Mentor Lee recently came forward to say that there is no bubble in our property market. The man has got all the statistics and the experts working for him , so what better assurance can you get? So if you still prefer to stand on the sideline and wait for the bubble to burst, I have got a good suggestion for you. Let me touch on that at the end.

The figures are out and showing the first half 2010 GDP hitting 18%. Isn’t this amazing? This phenomenal figure is really mind-boggling, minding the Credit Crunch that rocked the world financial system happened only not too long ago in 2007. Remember, stocks across the board were then dropping like ten pins at the bowl. And now, most analysts are in agreement that ——- our GDP will hit at least 15% for 2010. It looks like we can start ordering fat turkey and Dom Perignon for Christmas. Following that, it was officially announced we need 100,000 foreign workers immediately to cope with the explosive growth. More and more tourists are coming and we all know the integrated resorts have certainly helped to provide the X-magnetic factor. Talk to any taxi drivers and the sincere ones will tell you business very good as there are more passengers to pick and choose. Take a drive to Geylang or Serangoon part of Little India and you can be caught in a traffic jam even at 3 in the afternoon, a clear sign of good business starting early . With the general election coming —-some say this year end and some say early next year—-there will be more goodies and good news from the government. The feel good feeling must be generated and prevailed for reasons that we all know too well. With money lining up pockets of those who have and those who have made it , the buying spree and spin-offs must come. In the Singapore context, investing your money in property is the best, well-proven, and time tested form of growing and protecting your asset. Those who have little, work and save hard to buy that one roof over the head, and the first step has alway been the HDB path. Those who can afford go for the private. Those who own one property, aspire to own two. Those who own two, want to own three ……and so on. Many property investors that I know, have dreamed to retire a successful landlord. With properties to rent out, you need not work ( or work so hard ) as you now have rental income to supplement. How nice !

It is also everybody knowledge that Singapore property market is buoyant and poised for continuous growth ( I am sure for sometime to come ) as it is constantly augmented by the constant inflow of foreigners coming to work and settle here. Foreign residents who can afford, will go for the private apartments and landed , while those who have smaller budget go for the HDB resale market. Interestingly, according to Alvin Tan of Savills Realtor, 23.2 per cent of private property in 2009 was bought by foreigners. The top three foreign nations buying private homes in 2009 were Malaysia (25.1 per cent) Indonesia (18.4 per cent) and mainland China (16 per cent). These traditional 3 front running nations now has another contender looming close and catching up fast. That is India. In today’s Straits Times, we learn —-of the the 1.79 million foreigners and PRs living in Singapore, almost a quarter or 400,000 plus are from India. The Indian professionals employed by the IT, finance, trading, manufacturing, service sectors , are seeing rising number applying for PR status which allow them to buy into the HDB resale market. Recently , while helping my nephew on a house hunting trip in the HDB resale market, my agent kept reminding my nephew to decide fast if he wants to secure that good unit near the Serangoon MRT. According to her, she has seen growing number of foreign professionals snapping up HDB resale in the heartland and most have wisely chosen units near to MRT or light train stations. If you are slow and indecisive, they will beat you to it.

So for those who are side- lined, indecisive, and still waiting for market to drop, my suggestion to you is don’t wait. Do something. Remember habit number one —–Be Proactive. If you think that the price of private property is too high, reaching unrealistic level, gone beyond your reach, you still have a choice. Go and park your money in a big HDB resale flat. I honestly believe the big, modern ones (be it 5-room improved, executive, HUDC ) , well located near MRT and amenities is the best bet with good upside potential. The reasons why this category of HDB is in my opinion the best bet are—–PRs and locals can buy and they are buying them up now, private property market is flooded with too many small ( less than 1100 sq ft and mickey mouse) units asking above $1000psf and that is pricy. Hence a well located big HDB, with many still priced at around $400 psf in the resale market is really value for money. So if property price still keep going upward ( and God knows when it will stop ) and refuses to come down, at least you still have a HDB roof over your head. Also after 3 years, you can rent it out and get a monthly return that will far exceed your monthly installment that you pay to the bank .

While some are unhappy with this state of affair, most of the more than 90 percent Singaporeans who own one or more properties are not complaining. You see, when they see the price of their own property goes up, it gives them a feeling of stability, satisfaction, and abundance.

Best regards and have a blessed day.

Moses Tan.

The writer Moses C.M Tan was a senior bank officer with United Overseas Bank for more than 30 years and played a significant role in growing the bank’s home loan, credit card, and branch banking business. He called it a day in 2004 and is now a loan specialist and spend most time helping his clients in arranging financing for their property investment. He has a wide network of friends and associates in the banking industry and is therefore best able to obtain for his clients the best loan package tailored to their specific needs. Besides loan brokering, he does consulting, training of bank officers, head hunting for banks. He has a wealth of knowledge in the financing and marketing of residential /commercial properties, and has helped many of his friends and associates in making the right choice in this alluring area of investment. After all, the key to making money, saving money and protecting your money in property investment is all about making the right choice in WHEN to buy, WHAT to buy, HOW much to pay, and WHERE to borrow.

Moses Tan Chee Meng
Synergy Business Network.
Mobile: 96359288.
Email: Mosestan4@yahoo.co.uk

Singapore real estate

Li Hiaw Ho, Executive Director of CB Richard Ellis Research, said: “The momentum of new home sales slowed in June as expected. Developers sold only 847 units, compared to 1,083 units and 2,208 units in May and April respectively. This translates to a total of 4,138 new homes sold in the entire second quarter of 2010, 5.5 per cent fewer than the 4,380 units sold in the previous quarter. In total, 8,518 new homes have been sold in the first six months of the year, averaging 1,420 units per month. In comparison, the average monthly sales volume in 2009 was 1,224 units.”

Dr Chua Yang Liang, Head of Research South East Asia at Jones Lang LaSalle, added: “While transaction volume has declined, prices are likely to hold up. As the previous period of capital appreciation has already over capitalised the market’s worth, we can expect a more moderate buying mood backed by conservative global economic conditions and hence a continual slow down in capital values growth.”

Jones Lang LaSalle noted a total of 429 units, or about 51 per cent of June’s sales volume, were located in Outside Central Region (OCR). The Rest of Central Region (RCR) recorded 275 units sold (32 per cent) while only 123 units (17 per cent) of the units were located in the Core Central Region (CCR).

The Minton at Lorong Ah Soo, a 99-year leasehold condominium which was launched in May, continued to sell well with 173 units sold in June at the median price of S$871 (US$634) per sq ft. This is higher than the median price of S$849 (US$618) per sq ft for first 204 units which were sold in May.

Waterfront Gold at Bedok Reservoir Road was launched in June and 77 units were sold at the median price of S$996 (US$725) per sq ft. This price is about 10 per cent higher than its neighbouring project, Waterfront Keys, attributable to its relatively better view of the Bedok Rservoir.

La Brisa at Lorong 28 Geylang reported 82 sales out of a total of 84 units, at the median price of S$960 (US$698) per sq ft. The strengths of this project lie in its proximity to Aljunied MRT station and affordable price quantum due to the small-format units offered. Most of the units ranged from 409 sq ft to 689 sq ft.

Although the volume of luxury units sold above S$2,500 (US$1,820) per sq ft remained thin, the price points reached in June were higher than those in May. For example, in June, the highest price point of S$4,120 (US$2,999) per sq ft was achieved by a unit in Nassim Park Residences, followed by a unit in Skyline@Orchard Boulevard which was sold at S$3,901 (US$2,829) per sq ft. In May, the highest price point of S$3,641 (US$2,650) per sq ft was achieved by a unit in Orchard View.

The third quarter has started well with the strong sales seen at 368 Thomson and Terrene. Market sentiment could be improving with the latest government’s upward revision of GDP estimates for 2010 to 13 per cent to 15 per cent, from 7 per cent to 9 per cent previously, due to a stronger than expected economic growth in the second quarter. However, buying interest will remain selective, depending on the location and product attributes as well as price points of new launches.

“The private home market is definitely stabilizing,” says PropNex Chief Executive Officer Mohamed Ismail. “The 6,640 units sold in the first four months of 2010 was a figure that was simply not sustainable, and the latest figures equate to a movement towards equilibrium of about 1,000 units on average per month.” Ismail noted that the market stability is also indicated by the fact that the three top-selling projects in June all posted median transaction prices of below S$1,000 (US$728) per sq ft.

“The comparatively brisk sales at the three projects, La Brisa, Waterfront Gold and The Minton, are signs that the consumers are feeling the effects of the rising private property prices and are looking to mass market projects that are more budget-friendly,” said Ismail, referring to URA’s price index flash estimate of 184.1, an all-time record high.

Continuing this trend, he expects an average of about 900 to 1,000 units sold per month for the rest of 2010.

Also looking ahead is Tay Huey Ying, Director for Research and Advisory at Colliers International.

She said: “The end of the World Cup season and June school holiday will likely see buyers returning to the market, and the upgrade of Singapore’s 2010 GDP growth by the MTI yesterday to between 13 per cent and 15 per cent will likely work to boost buyers’ confidence. In addition, the impending lunar seventh month, which will commence some time in the second week of August, could also see superstitious buyers looking to pick up homes in July ahead of the inauspicious home-buying period.”

Bangkok Real Estate

The company’s chief executive officer Alan Lin said that property prices, especially for city condominiums could rise up to 20 per cent in a couple of years time due to increase in cost of land. However, he said, they are still priced at an affordable level, especially compared to many countries in the region such as Singapore and Indonesia.

“It’s not a surprise now to find a condo unit in downtown area that could cost up to THB 100,000-200,000 (US$ 3,080-6,160) per square metre. The city condo price has increased 5-10 per cent from last year and I’m sure that it could go up more in the years to come”.

Lin also had similar views towards land prices. “Since 2006-2008 land prices in popular locations in Bangkok like Silom, Sathorn, Ploenchit, and Sukhumvit have increased up to 50 per cent

Despite that fact, Lin is confident that demand for properties in prime locations will remain high.

In Q3, Lin said the company will be adding 10 new projects worth about THB 12 billion (US$ 370 million) into its portfolio, all of which are located in the prime area of Bangkok. It also plans to launch the sales of another 10 new projects, worth over THB 6 billion (US$ 185 million), during the remainder of 2010.

Mickey Mouse Flats!

According to Credo Real Estate, transactions of Mickey Mouse units made up 9.5 per cent of total transactions in the first half of this year.

This is a three percentage point increase from the same period last year. But analysts are divided on whether demand for these units can be sustained.

Shoebox living in apartments of 500 square feet or under has become somewhat of a talking point in property circles.

Experts said the popularity of these units is due to their lower price quantum, making them affordable to young professional and expats.

They also tend to be located in the prime districts, luring buyers with their attractive location.

According to Credo Real Estate, pricing of Mickey Mouse units in the CBD area could range between S$1,800 to S$2,000 per square foot while those outside the CBD area could range between $1,200 to $1,400 psf.

This is about a 20 per cent increase compared to last year.

Liang Thow Ming, executive director Residential Services, Credo Real Estate, said: “I would think that this trend will continue to increase. I would not be surprised if we see Mickey Mouse units making up 10% of total sales in the second half of this year, and probably going up to 11 or 12% next year.”

But other market watchers said these apartments cater mainly to investors who want to cash in on rising property prices.

Last year, sub sales in the broad residential market was 12 per cent and have come down to 10 per cent in the first half of this year.

Speculative sales of Mickey Mouse units have increased from 13 per cent last year to 17 per cent in the first six months of this year alone.

Nicholas Mak, lecturer, School of Engineering, Ngee Ann Polytechnic, said: “Starting from May, Singapore private home sales market is starting to slow down. So they are concerned that there could be a correction on the horizon. As a result, they are selling off their investments. Some of these investors of small apartments are actually speculators. They are not intending to hold their investment for long term rental gains but rather just for speculative short term capital gains.”

As for rental gains, the views are also divided.

Some said the rentals are hard to predict as most of these units are still under construction.

But others said that rents for Mickey Mouse units in the prime districts could fetch up to S$7 per square foot.

This represents a 4.2 per cent return on rents, when compared to a 3.5 per cent per cent return on rent for a 1,200 square foot three-bedroom apartment. – CNA/vm

Bangkok Property

The company’s chief executive officer Alan Lin said that property prices, especially for city condominiums could rise up to 20 per cent in a couple of years time due to increase in cost of land. However, he said, they are still priced at an affordable level, especially compared to many countries in the region such as Singapore and Indonesia.

“It’s not a surprise now to find a condo unit in downtown area that could cost up to THB 100,000-200,000 (US$ 3,080-6,160) per square metre. The city condo price has increased 5-10 per cent from last year and I’m sure that it could go up more in the years to come”.

Lin also had similar views towards land prices. “Since 2006-2008 land prices in popular locations in Bangkok like Silom, Sathorn, Ploenchit, and Sukhumvit have increased up to 50 per cent

Despite that fact, Lin is confident that demand for properties in prime locations will remain high.

In Q3, Lin said the company will be adding 10 new projects worth about THB 12 billion (US$ 370 million) into its portfolio, all of which are located in the prime area of Bangkok. It also plans to launch the sales of another 10 new projects, worth over THB 6 billion (US$ 185 million), during the remainder of 2010.

Singapore skyline

Prices of luxury property in Singapore are set to rise between 5 and 8% due to solid economic fundamentals, strong cash holdings by Singaporeans and low interest rates, it is claimed.

According to a leading strategist at Swiss bank UBS prices of mid and lower range real estate could hold at current levels for at least the next 12 months, prices of high end properties will grow.

‘Luxury properties such as those at Sentosa, Nassim Road and Ardmore Park, where condominiums go for above $3,000 per square foot, could see further upsides. From now till the end of the year, a 5 to 8% price appreciation is not difficult,’ said Kelvin Tay, chief investment strategist at UBS Wealth Management Singapore.

‘The lower luxury segment, at districts 9, 10 and 11, might see some positive flows because of the luxury end moving up but I think that will be muted,’ he added.

He explained that the government seems to have no desire to control the luxury real estate market but the rest of the residential sector is likely to be slow as more land is released.

Figures from the National University of Singapore released in late May showed that its price index for non-landed private homes rose 2.5% in April over the previous month, reflecting an increase of about 6% since the end of last year.

But the pace of growth in home prices has slowed in the second quarter of 2010 with the exception of the mass market segment, according to DTZ Research.

The resale prices of leasehold homes in the suburban areas rose by 4% in the second quarter of 2010 to $648 per square foot compared with the 2.1% increase in the first three months of the year.

Looking ahead, DTZ analysts expects prices of mass market homes to be kept in check as the government releases more state land to meet demand.

Developers are also likely to tone down their land bids in view of the unprecedented high number of suburban sites available for tender in the second half of the year, DTZ said.

HDB Flats

HDB’s flash estimate for the second quarter showed the Resale Price Index (RPI) rise 3.8% on-quarter to 160.9, surpassing the 1996 peak of 136.9 points.

Some analysts said the second quarter tends to see the strongest activity as many home buyers leave their flat purchases till after the Lunar New Year.

But others didn’t expect resale prices to rise so quickly, because of the government’s aggressive launch of new flats this year.

The government on Wednesday announced its single largest launch of HDB flats and said if demand continues it will add more units for sale, bringing the total to 16,000 for the whole of this year.

Analysts said this will help assure home buyers there are enough flats to go around, and will in the long-term, moderate prices of resale flats.

But over the next few months, they do not expect any let-up either in resale demand or price.

Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic, said: “In the HDB market, although the slowdown might be more in terms of the Cash Over Valuation, or the seller’s expectations, the buyers, I think, are fairly bullish because in a way, the HDB public housing market forms the very base, the cheapest form of housing to anyone in Singapore.”

Furthermore, analysts said mass market condominiums are still out of the reach of most buyers.

Despite a slowdown in sales in recent months, private home prices have remained firm, increasing at 5.2 percent in the second quarter.

This is slightly smaller than the 5.6 percent rise in the first three months of this year.

It is also one of the smallest rate of increases in the last 12 months.

ERA Asia Pacific’s Associate Director Eugene Lim added that developers “are not likely to cut prices to move sales, as most of them have strong balance sheets.”

Chris Koh, Director of Dennis Wee Group, estimated that private home transactions have gone down by about 20 percent in recent months.

He said: “You speak to some of us who do private property transactions, we will tell you, yeah, the market is correcting a bit.

“We’re not seeing a steep rise in prices anymore for the private market. Instead private property prices have only inched one, two percent up and you can see that it’s more or less starting to plateau out.

“If that happens maybe the HDB market will mirror it….but at the moment I’m not seeing that in the HDB market yet.”

Overall, market watchers expect resale prices for 2010 to increase by 8 to 15 percent.

On Thursday, the government announced three more land parcels for sale, which could yield about 1,300 residential units, including 460 Executive Condominium flats.

The Urban Redevelopment Authority will also launch another three sites later this month, which will include sites for residential purposes.

In total, the Government Land Sales (GLS) Programme for the second half of 2010 comprises 27 residential sites and four mixed-use sites where private residential housing can be built.

The total potential supply of 13,905 private residential units is the highest potential supply quantum from any half yearly GLS Programme since the Confirmed List/Reserve List system started in the second half of 2001.

SOURCE: Channel NewsAsia