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.

Real Estate Agent

Get yourself a good property estate agent who can provide you the services of selecting and buying a real estate. He should guide with the rest of the process of transaction.

Ensure the ownership

Before purchasing, ensure that you are buying the property from the original owner.

Eligible to Sell

Check and make sure the seller has the eligibility to sell his property and is not under any bank debt or mortgage. If that is the case then inquire about permission from the lender or bank to sell the property.

Eligible to Buy

There are strict rules for buying HDB flat or property so makes sure you have the eligibility to buy yourself. As for foreigner investors, there are some restrictions by the government of Singapore.

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

Data released by the Urban Redevelopment Authority (URA) on Friday showed that overall prices rose by 5.3 per cent in the second quarter of 2010, compared to 5.6 per cent in the first three months of the year.

This was marginally higher than the initial forecast of a 5.2 per cent climb for Q2 reported earlier this month.

The increase pushed the residential property price index to an all-time high, surpassing the market peak of 181.4 points in Q2 of 1996.

Non-landed home prices in the city and prime districts rose 5.4 per cent in Q2. Those in the city fringe cost 4.6 per cent more. And suburban home prices increased 5.7 per cent.

Landed home prices rose at a slower rate of 6.2 per cent in Q2 compared with 8.3 per cent in Q1.

Projects like The Minton and Waterbank were among the star performers in the second quarter.

But new home sales slowed in late-May, with sentiment hit by the European debt crisis.

Even with prices at a new high, observers do not expect more government intervention, for now.

Liang Thow Ming, Credo Real Estate’s executive director (residential services), said: “The measures that they have put in over the last two years have already brought sub-sales, in terms of percentage point, to a not-normally-seen single-digit (number). In that sense, I think speculation has been managed.”

Sub-sales, a key gauge of speculative activity, fell to 7.7 per cent in Q2, down from 9.6 per cent in the first three months.

Looking ahead, market watchers expect home prices to continue to moderate. They said prices could rise by some 3 to 5 per cent in the third and fourth quarter. That will bring the full-year increase to between 16 and 21 per cent.

Investors may also be comforted by rentals of private residential properties rising 5.9 per cent in Q2, up from 4.7 per cent a quarter ago.

Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic, said: “This could be due to the improving job market. We are starting to see more foreigners being attracted to our shores and this will likely to continue due to the better economic forecast.”

Higher rentals may also spill over into the HDB rental market.

With economic recovery, observers expect property market sentiment to remain positive.

All in, new home sales reached 8,413 units in the first half. Analysts said sales could hit 14,000 units for the whole year.

- CNA

They said prices and rental rates for residential and commercial properties could fluctuate if the problem continues for another three months. This may force businesses to move out.

Landlords may have to lower rent or take measures to prevent flooding to attract tenants.

Some buyers are now asking about the risk of flooding when they check out a property, including those that are not directly hit.

Executive director of Residential Projects, Orange Tee, Steven Tan, said: “In the past, this was never an issue. Now we can see that they are starting to have a concern whether the condominium or house that they want to buy will encounter this problem.”

Nicholas Mak, Real Estate lecturer at Ngee Ann Polytechnic, said: “Even if the property is not prone to flooding, but just because it is near another property that often suffers flooding whenever it rains, it could be guilty by association and its value could also be adversely affected.”

Source: Channel NewsAsia

The Bill works under Part IV of the Act, in particular, to prevent the use of such property as security or collateral for any debt, obligation or claim, except in favour of specified or approved parties; and to make several other unrelated amendments.

Clause 1 relates to the short title and commencement.

Clause 2 amends section 13 to include a new function for the Board, to allow it to provide technical and consultancy services in respect of matters within its expertise.

Clause 3 inserts a new section to make it clear that the Board has the power to develop and acquire intellectual property rights, and to sell and deal with them on a commercial basis anywhere in the world.

Clause 4 amends section 27 to allow penalties to be prescribed for the breach of restrictions, conditions or requirements in leases for the rental of flats directly from the Board, e.g. penalties for subletting rental flats meant only for those who are in need.

Clause 5 repeals and re-enacts section 51 that:

implements a new rule that voids any contract or agreement to use property sold under Part IV of the Act (including the proceeds of transactions involving such property) as security or collateral, except in favour of the Board, specified financial institutions and persons prescribed by the Minister. The exception ensures that the use of such property to secure financing for the purchase of the property from the Board or specified lenders (under the Housing and Development (Mortgage to Lender) Rules (Cap. 129, R 10)) will not be affected;
prevents any deed, instrument or document that purports to protect rights under or give effect to such contracts or agreements that are voided from having any effect and from being registered under the provisions of the Registration of Deeds Act (Cap. 269) or the Land Titles Act (Cap. 157). An owner may, for his own reasons, decide to execute documents to give effect to a voided contract or agreement. Such documents will also be of no effect, and consequently, no instruments (including caveats) can be filed at the relevant registries on the basis of the purported execution of such void contracts or agreements;
provides a procedure for the relevant land registries to cancel the registration of any deed, instrument or document that is of no effect; and
includes all the existing protection in section 51 for property sold under Part IV of the Act, with drafting refinements.
EXPENDITURE OF PUBLIC MONEY

This Bill will not involve the Government in any extra financial expenditure.

A BILL
An Act to amend the Housing and Development Act (Chapter 129 of the 2004 Revised Edition).

Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:

Short title and commencement

This Act may be cited as the Housing and Development (Amendment) Act 2010 and shall come into operation on such date as the Minister may, by notification in the Gazette, appoint.

Amendment of section 13

Section 13 of the Housing and Development Act (referred to in this Act as the principal Act) is amended by inserting, immediately after paragraph (d), the following paragraph:

“(da) to provide technical and consultancy services within or outside Singapore, in respect of matters within its expertise acquired in the exercise of its functions under this Act, and to act as an agent for the Government or, with the approval of the Minister, as an agent for another public authority in the provision of such services;”.

New section 22A

The principal Act is amended by inserting, immediately after section 22, the following section:

“Power in respect of intellectual property rights 22A. The Board may create, develop, apply for, acquire and hold intellectual property rights and enter into agreements (whether in Singapore or elsewhere) for the sale, licensing or commercial application of such rights, on its own or in conjunction with other persons.”

Amendment of section 27

Section 27(2) of the principal Act is amended:

by deleting the word “and” at the end of paragraph (c); and by deleting the full-stop at the end of paragraph (d) and substituting the word “; and”, and by inserting immediately thereafter the following paragraph:“ prescribing the penalty (such penalty, if unpaid, to constitute a debt due to the Board and be recoverable as such) to be paid by the person who leases a flat from the Board, for non-observance or non compliance with any of the restrictions, conditions or requirements of the lease.”
Repeal and re-enactment of section 51

Section 51 of the principal Act is repealed and the following section 5 substituted therefor:

“Property not to be used as security or attached, etc., and no trust in respect thereof to be created without approval of Board

51.—(1) Subject to subsection (4), any contract or agreement to directly or indirectly use protected property (or the proceeds of sale of protected property) as security or collateral for any debt, obligation or claim shall be null and void.

Any act (including the deposit of title deeds), deed, instrument or document that purports to protect rights under or give effect to any contract or agreement that is null and void under subsection (1) shall
be of no effect and shall not result in or create any interest in land or be capable of being registered under the provisions of the Registration of Deeds Act (Cap. 269) or the Land Titles Act (Cap. 157).

Where any deed, instrument or document referred to in subsection (2) is registered under the provisions of the Registration of Deeds Act or the Land Titles Act:

the Board may, by an instrument lodged with the Registrar of Deeds or the Registrar of Titles, as the case may be, declare such deed, instrument or document to be null and void; and
the Registrar of Deeds or the Registrar of Titles shall register the instrument lodged by the Board under paragraph
without being concerned to inquire into its regularity or validity, and upon registration thereof shall cancel the registration of such deed, instrument or document declared by the Board to be null and void.
Subsection (1) does not apply if the security or collateral is to be created or granted in favour of:

the Board;
an approved financial institution; or
any person or person belonging to a class of persons prescribed by the Minister as a person to whom, or a class of persons to which, subsection (1) will not apply.
No protected property shall vest in the Official Assignee on the bankruptcy of the owner thereof.

No protected property shall be attached in execution of an order of any court unless the order of the court is obtained by:

a mortgagee in exercise of his rights under a mortgage created with the prior written consent of the Board over that property; or
a chargee in exercise of his rights under a charge under any written law over that property.
Subsections (5) and (6) shall not apply if the sole owner of any protected property is not a citizen of Singapore or, where there is more than one owner, all the owners are not citizens of Singapore.

No trust in respect of any protected property shall be created by the owner thereof without the prior written approval of the Board.

Every trust which purports to be created in respect of any protected property without the prior written approval of the Board shall be null and void.

No person shall become entitled to any protected property (or any interest in such property) under any resulting trust or constructive trust whensoever created or arising.

In this section, “approved financial institution” means:

any bank licensed under the Banking Act (Cap. 19);
any finance company licensed under the Finance Companies Act (Cap. 108);
any direct insurer registered under the Insurance Act (Cap. 142); and
any merchant bank approved as a financial institution under the Monetary Authority of Singapore Act (Cap. 186);
“proceeds of sale”, in relation to any property, means the proceeds from any transaction involving the sale, transfer, conveyance, assignment, mortgage, charge or the disposal in any manner of the property or an estate or interest in the property;

“protected property” means any flat, house or other building that has been sold by the Board under the provisions of this Part; “Registrar of Deeds” means the Registrar of Deeds appointed under the Registration of Deeds Act (Cap. 269) and includes any Deputy Registrar of Deeds; “Registrar of Titles” means the Registrar of Titles appointed under the Land Titles Act (Cap. 157) and includes any Deputy Registrar of Titles and Assistant Registrar of Titles.”.

Article printed from Gov Monitor: http://www.thegovmonitor.com

Singapore investment property

That’s 24.3 per cent above the S$5.72 billion chalked up in the first quarter of this year.

Colliers released the information in its latest Knowledge Report Tuesday.

It found that the investment sales market was driven predominantly by developers’ aggressive land acquisition activity.

In all, developers picked up some $3.25 billion worth of development sites from both the public and private sectors in the quarter.

In fact, Colliers says the total investment sales value for the first half of this year stood at S$12.83 billion – already surpassing the S$10.54 billion accumulated for the whole of 2009.

Going forward, Colliers expects developers to continue acquiring land, particularly for residential sites located in outlying suburban areas.

However, developers will likely be more selective with the ample supply and wide selection of sites available from the second half Government Land Sales programme, and this should keep tender bids in check.

The report also found that the Singapore office property market surprised with a moderately strong rebound in the second quarter, despite concerns over large new supply.

The average monthly gross rents of Grade A office space posted gains of between five and seven per cent, with the Shenton Way – Tanjong Pagar micro-market leading the climb.

The uptick in rents came as occupancy rates tightened across all micro-markets, in spite of the addition of more than 1.5 million square feet of Grade A office space since the second half of last year.

On average, the occupancy rates of Grade A office space climbed three percentage points in the second quarter.

Going forward, Colliers says the positive economic outlook for 2010 is expected to further boost demand for office space.

While there are concerns over the possible hollowing out of the older office buildings in the central business district when companies move to the newly completed office buildings, Colliers notes that some of these spaces will be maintained by the expanding companies, or have secured new tenants.

The report also noted that the recovery of the industrial property market continued into the second quarter, with values outperforming rents.

Industrial strata sales volume continued to climb in the period, reaching a new high of 340 deals.

This brings the industrial strata sales volume for the first half of this year to an estimated 669, up 9.7 per cent on year.

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