Cash rich domestic buyers continued to underpin investment activity, while foreign investors gradually emerged from a quiet first half year to look for medium- to long-term investments.

Direct real estate investment in Asia, excluding land transactions, jumped 25 per cent quarter-on-quarter to an estimated US$9.1 billion. Hong Kong accounted for the largest portion of capital at US$3.2 billion, or 36 per cent of the total volume, followed by China, South Korea and Taiwan, which accounted for 18 per cent, 14 per cent and 12 per cent respectively. However, overall transaction volume remained low in the first nine months of 2009, falling by 49 per cent year-on-year.

The third quarter saw foreign investors become more active in the region, with cross border investment jumping from a low of 6 per cent and 9 per cent of total volume in the first and second quarter respectively, to a high of 21 per cent. The amount of non-Asian capital accounted for just 9 per cent of total cross-border transaction volume, while more than 90 per cent came from within Asia.

Despite the quarter-on-quarter improvement in cross-border investment activity, overall foreign investment in the region remained limited in the first nine months of 2009, falling by 70 per cent over the corresponding period in 2008.

Investment in the Bangkok real estate investment market continued to focus on condominium projects in the third quarter, with domestic players driving demand. Sales exceeded expectations as demand for residential projects began to recover. Large, well-capitalised and listed companies launched a series of new projects but small and mid-sized companies found it hard to raise finance.

Notable transactions completed during the third quarter included major acquisitions by Bliss-Tel Public Co. Ltd and Bangkok Broadcasting & Television Co. Ltd. Bliss-Tell paid around US$4.6 million to AngKet Holding Co. Ltd for 250 units in the AngKet condominium project in Pattaya, while Bangkok Broadcasting & Television Co. Ltd spent around US$3.7 million to acquire 28 units at Star Estate @ Rama III from Eastern Star Real Estate Public Co. Ltd. Both transactions involved developers clearing unsold inventory from recently completed buildings.

Although the real estate sector generally remained quiet, three new property funds were listed on the Stock Exchange of Thailand during the third quarter. They were the MFCStrategic Storage Fund (M-STOR), Sala @ Sathorn Property Fund (SSPF) and 101 Montri Storage Property Fund (MONTRI). The three funds had a market capitalisation at IPO of approximately THB2.88 billion. These funds were trading at a level where investors can obtain yields as high as 11.68 per cent per annum. Fund managers are planning to list a further series of new property funds over the next 12 months.

SOURCE: Property Report

The new tax is set to impose an annual charge on land assets and property throughout the Kingdom, with local administrations being given the ability to set flexible rates based on individual priorities and needs.

Rates are also expected to vary depending on how the property is utilised, such as whether it is being used for agricultural, residential or commercial activities.

Currently 90 per cent of tax revenues come from income taxes. The Ministry expects the new tax will help to expand the tax base and improve social justice.

SOURCE: Property Report

Singapore

CMC said recent rallies have run ahead of fundamentals. And there are also concerns about when central banks will withdraw stimulus measures from the global financial system.

Stock markets may have rallied and shown signs of stabilising in recent months, but CMC Markets believes there should be caution going into 2010.

For one, it said, the recent stock market rallies have been fuelled by the weakness of the US dollar and Japanese yen. And when these currencies stabilise, the stock rally may falter.

Then there is the question of how markets will react to central banks eventually pulling back the massive stimulus for the global economy.

CMC believes there are significant headwinds ahead for markets.

Ashraf Laidi, chief market strategist, CMC Markets, said: “First of all, the fallout from the Dubai story is really not over yet and just starting. The question really depends upon the extent to which these various entities that are part of the Dubai Holdings umbrella may be forced sell some of their UK and US-based property.”

CMC said other problem areas include the current credit tensions inside some Eurozone countries like Greece and Spain. There are also signs of weakness in the commercial real estate sector in the UK and the US.

Mr Ashraf Laidi added: “I think currencies like the Malaysian ringgit and the Singapore dollar could be boosted by a concrete improvement in interest rates.

“I think the real estate sector in these regions probably cannot be described to be in a bubble as others can. I think that services and activity in financial services here and the demand is really taking a life of its own.”

CMC also sees a bright spark in gold as a long-term investment. It said while gold prices may dip in the next two quarters, the yellow metal may hit a high of US$1,500 an ounce in the second half of next year.

SOURCE: Channel NewsAsia

Property prices

According to Colliers International estimates, 10,671 private homes are set for launch next year. And 46 per cent or 4,958 units will be in the core central region (CCR).

Prime projects that could hit the market include the former Farrer Court site, which CapitaLand and partners bought en bloc in 2007, and Wheelock Properties’s Ardmore 3.

Another 33 per cent or 3,498 units will originate from the rest of central region (RCR). The outside central region (OCR) will account for the remaining 21 per cent or 2,215 launch-ready units.

The distribution of homes already launched this year is almost exactly the reverse, with the bulk of units coming from the booming mass-market sector. Colliers estimates that by end-December, 13,542 homes will have been released, of which 43 per cent or 5,822 units will be from OCR.

About 33 per cent or 4,429 units will be from RCR, while 24 per cent or 3,291 units would be from CCR.

‘Developers are likely to be encouraged to release more mid-tier or high-end units in 2010,’ says Colliers research and advisory director Tay Huey Ying. She cites several reasons – signs of investors and foreign buyers returning, improved economic prospects and the opening of the integrated resorts.

The strong take-up rate at Marina Bay Suites’ recent preview has raised hopes. Of the 90 units released, 87 were sold and the average price ranged from $2,200-$2,500 psf.

Property

Backing this view, a recent study by Barclays Wealth and the Economist Intelligence Unit found that wealthy individuals here plan to allocate a larger share of their investment portfolios to property in the next two years.

The big question is how much developers can sell fancy homes for, as doubts linger over the sustainability of economic recovery. DTZ Southeast Asia research head Chua Chor Hoon is one of several observers who expect ‘more upside potential’ for high-end property prices in the coming year.

According to Urban Redevelopment Authority indices, prices of non-landed CCR properties are still some way below the 2008 peak – 16.8 per cent down at Q3. In comparison, non-landed OCR property prices shot up this year and were just 2.5 per cent short of the peak.

Deutsche Bank analysts wrote in a report on Monday that high-end prices could rise 5-10 per cent in the coming year.

But even as optimism grows, some players are quick to highlight uncertainties. JLL’s Dr Chua stresses that new demand for property has to be backed by global or regional economic growth.

Several economists have flagged the risk of bubbles forming in Asian property markets. The Singapore government introduced cooling measures in September.

The Monetary Authority of Singapore also said more action may be needed if recent measures to dampen speculation prove insufficient.

City Developments executive chairman Kwek Leng Beng told BT last month the private home market here ‘will slow down’, following the MAS warning and the return of the confirmed list.

This article was first published in The Business Times.

For some employees at RWS, being away from home will also be a new adventure. The integrated resort will be hiring a considerable number of foreigners, and it is said to be searching for hundreds of HDB flats to help them settle in. C&H Realty managing director Albert Lu said that RWS is looking for HDB flats to rent, and approached his firm a few months ago to find out about the rental market. RWS did not share many details then, but the number of flats is ‘in the hundreds’, he told BT.

Another property market insider who declined to be named also said that RWS has been ‘aggressively looking for flats to rent’, and is probably in need of ‘a few hundred’ units.

So far, there is no official statement on the number of foreigners that RWS could hire. Overall, it will employ about 10,000 people when it opens next year. RWS spokesman Robin Goh told BT that it remains committed in recruiting Singaporeans and Singapore permanent residents.

A media report in June noted that RWS had hired 600 workers, of whom 80 per cent are locals. Assuming that the local-foreign ratio stays constant, its headcount from abroad could reach 2,000.

Going by HDB rules, one- or two-room flats can each be rented out to at most four people; three-room flats to at most six people; and four-roomers or bigger flats to at most nine people. Assuming that RWS hires 2,000 foreigners and all of them rent four-room flats, it would need to find at least about 220 units.

Mr Goh said that RWS started looking for ’suitable accommodation’ for foreign staff early this year, with help from a ‘reputable service provider’. He did not specify the types and number of housing involved.

‘To help reduce their stress and anxiety of relocating overseas, we assist our foreign team members in addressing one of their basic needs – accommodation,’ he said. ‘We make sure that they settle down comfortably as well as enjoy working and living in Singapore.’ And it is important for RWS to keep its employees happy because that could enhance their work performance and in turn, visitors’ experience at the integrated resort, he said.

Mr Goh added that RWS considered several factors in choosing accommodation, including the place’s accessibility and proximity to amenities such as convenience stores. ‘The locations we have chosen facilitate good interaction between the local community and foreign talent,’ he added. BT understands that units at Tiong Bahru and Toa Payoh have been found.

C&H Realty’s Mr Lu said that he believes that RWS would want flats in areas near Sentosa, such as Telok Blangah. But he pointed out that the supply of rental flats in such central locations is tight, and RWS might have to broaden its search to estates near MRT stations.

Rents of HDB flats in the central region rose between the second and third quarter of the year. For instance, the median sub-letting rent for a four-room flat in the area increased from about $2,000 to $2,200.

HDB’s website shows that up to the third quarter of this year, the agency has granted 11,235 sub-letting approvals. The bulk of these – 3,978 or 35 per cent – were for three-room flats. Another 3,593 approvals were for four-room flats.

Also, looking across all towns and flat types, median sub-letting rents have remained relatively steady from the first to third quarter.

Dennis Wee Group director Chris Koh observed that the HDB rental market is ‘more stabilised’ compared with the period when collective sales were rife and many displaced residents were looking for lodging. His firm has seen more rental enquiries direct from foreigners working with RWS.

Marina Bay Sands, the other integrated resort due to open next year, has not engaged property agents to look for accommodation for its foreign staff. ‘Housing arrangements will take into account the needs of the prospective foreign employees,’ said a spokeswoman. ‘At this time, Marina Bay Sands is giving priority to attracting and selecting Singaporeans and permanent residents for our job opportunities.’ – Business Times

Republished from Business Times on 28 November 2009

Registered three months ago, Primespace Investments Pte Ltd is marketing “shares” in apartments to investors with at least S$62,000 (RM149,000) to spare.

It has two studio units available — one at One-North Residences in Buona Vista and the other at One Shenton near Raffles Place.

While Primespace says it is selling “fractional ownership”, investors will not own the properties directly. The apartments will be bought and held by other private limited companies, and what investors pay for are shares in those vehicles. BT understands investors will not lodge caveats on the properties.

Each of these companies’ share capital will be split into 15 lots. An investor has to pay S$62,000 for one lot in the company which owns the One-North unit, or S$110,000 for one lot in the company that owns the One Shenton unit.

After the share capital is allotted to investors, Primespace will continue to manage and rent out the properties. It says it will distribute rental income to investors every year, and it is offering a guaranteed yield of 5 per cent for the first year of investment. If an apartment’s value increases by “a certain level (usually 40 per cent)”, Primespace will sell it and share the profit among investors.

Investors who wish to cash out before the homes are sold can sell their shares to other people. Or they can turn to Primespace, which says on its website that it guarantees repurchase of the shares “after a minimum commitment period (two years for most projects)… at fair market value less a re-marketing fee.”

The idea of pooling funds to invest in property is not new here — many friends and relatives already do it. But Primespace’s business is uncommon in that it lets strangers invest jointly in condominium units. It works like an unlisted property trust, which is more familiar to investors in countries such as Australia.

Primespace says its model allows those who “could not otherwise afford or choose to purchase” property to still invest in it. Property consultants BT spoke to agree this is an advantage, especially in light of the downturn. But they also point out the drawbacks of investing in such private vehicles. For instance, investors may not have much say over the management, leasing and maintenance of the apartments, and they may find it hard to trade their shares.
Trade with buyers and suppliers from around the world on Alibaba.com!

Market watchers also urge investors to do thorough research. “Reputation, years of related experience and the track record of the offering company is critical,” said Cushman & Wakefield Singapore managing director Donald Han. “Investors are depending on its capability and experience to generate maximum returns,” said Han.

Primespace’s website offers no details about its management. The firm is registered with the Accounting and Corporate Regulatory Authority and records show its director is Trisha Suresh, who could be 24.

The Consumers Association of Singapore (Case) executive director Seah Seng Choon said the investment model is not regulated and investors need to be cautious. For example, they should ensure that companies offering “fractional ownership” cannot sell more than the agreed number of shares.

Chesterton Suntec International research and consultancy director Colin Tan says there are more safeguards for investors in listed real estate investment trusts. Those invested in private vehicles “may have to resort to costly litigation if things don’t pan out the way they expected,” he says.

BT contacted Primespace to find out more about its business, but the firm declined to comment.

SOURCE: Business Times Singapore

“A number of older luxury condominium buildings are well managed and have always been kept in like-new condition. Units in these buildings can sustain their asset value despite the high levels of supply entering the market over the past few years, and have a higher potential to enjoy capital appreciation once the market picks up,” said Daonum Lilavivat, head of residential agency at Jones Lang LaSalle.

“The attitude of the condominium juristic person committee plays a vital role in determining how the building is managed. A committee with a forward-thinking outlook will not be reluctant to invest in property management, including the regular maintenance and improvement of common areas, communal facilities and all systems within the building,” she said.

Jones Lang LaSalle has seen continued interest in resale luxury condos particularly in well-managed buildings.

Findings from its recent market study indicate that newly completed or under-construction luxury condos in Bangkok’s central business district (CBD) are now offered for sale at Bt110,000 to Bt200,000 per square metre, while units in luxury buildings aged 10 years and older in the same area are available for sale at Bt55,000 to Bt90,000 per square metre.

“Discussions with our customers who purchased condominiums in older buildings show that aside from lower prices, most of the older buildings in the luxury segment offer relatively larger common space and full recreational facilities.

“In addition, some buyers prefer the more ‘cozy’ environment offered by older condominium buildings rather than the ‘hotel-like’ atmosphere in new buildings,” she said.

Buying resale luxury condos in the CBD for owner occupation now is a sound decision, as new supply pressures rents. Many owners find it difficult to let units as most tenants prefer newer buildings, and they are keen to divest their holdings.

Jones Lang LaSalle will soon launch a market study that provides an analysis of gross and net yields in the high-end Bangkok condo market.

Dan Tantisunthorn, head of research at the firm, said the average resale price and current borrowing rates have adjusted to a level resulting in a gross yield that would attract end-user buyers.

At these same price levels and assuming no vacancy, investors can earn a net yield above long-term “risk-free” rates, despite the yield on some of these, such as the recent government bond issue, rising.

Buyers can expect capital appreciation in the long term, as there are fewer sites available for new developments, while development costs of future projects are likely to rise.

But investors looking to buy resale units to let at this time must be extremely cautious.

“Aside from the downward pressure on rents because of strong competition and tenants’ preference for newer buildings, an investor may also have to make a big cash outlay to renovate a unit prior to putting it up for rent.”

By The Nation
Published on September 17, 2009

Singapore property fire checks

The management of these condominiums will have to engage a qualified professional engineer to certify that the estate’s fire safety systems are in good working condition.

They can then apply to the SCDF for a certificate, which has to be renewed every year.

This certification scheme used to apply only to commercial and industrial buildings such as shopping malls and factories.

Senior Minister of State for Law and Home Affairs Ho Peng Kee said in a speech yesterday to mark Civil Defence Day that private residential estates had become ‘more massive and complex’ in recent years.

Thus, it is necessary that fire safety systems will have to be properly maintained as well, he added.

In May, about 200 residents in Ava Tower, a condominium off Balestier Road, had to be evacuated when an eighth-floor unit caught fire. No one was injured and the blaze was put out within 10 minutes.

An SCDF spokesman said the new rules will affect large private residential buildings that are above 24m high, or roughly eight storeys high, and have basement facilities.

The affected estates must also be equipped with one or more of these fire safety systems: wet rising mains, sprinklers, smoke control systems and automatic fire alarm systems

PROPERTY developers were sticking to their prices yesterday following the Government’s announcement of a slew of measures designed to cool the market.

At two of Singapore’s more eagerly anticipated launches, The Interlace and Hundred Trees, developers said they did not foresee any need for price adjustments.

A spokesman for CapitaLand said it was holding prices at between $850 and $1,150 psf for The Interlace at the former Gillman Heights site.

She noted that less than 5 per cent of buyers at the developer’s other new property – The Wharf Residence, launched earlier this year – had opted for the interest absorption scheme (IAS) abolished by the Government on Monday.

The scheme, popular among investors and speculators, allowed buyers to put down a deposit and make no further payments until the property was completed.

City Developments Limited’s spokesman Gerry de Silva played down speculation among property agents that CDL’s upcoming Hundred Trees site would be priced under $950 psf, saying that no price had been set yet.

Mr de Silva said the government measures would ‘have minimal effect on our plans to launch Hundred Trees and other developments’.

He also cited the low take-up rate of IAS among purchasers.

Buyers and analysts hope the measures unveiled by the Government on Monday – which include the removal of the interest-only housing loans (IOL) and a return to a confirmed list for land sales – will help keep out speculators and allow prices to more accurately reflect real demand.

However, analysts such as Citi economist Kit Wei Zheng forecast that even with fewer speculators, demand is likely to remain strong and prices continue to rise, albeit at a slower pace.

He cited recovery in the economy and job market and a shortage of HDB flats as factors keeping up prices.

Prospective homebuyer Clarence Khoo, 36, said he hoped the new measures would help to soften prices, but admitted that it would not affect his decision to buy property as he was buying for the long term.

Another potential buyer, Mr Darien Tan, 32, who works in the marine industry, fears that property developers will continue to keep prices high.

He has been looking for a suitable condominium unit since returning from Australia last year.

ERA Asia Pacific associate director Eugene Lim said there were no hints of buyers opting to let their options on new properties lapse in anticipation of lower prices in the future.

But PropNex chief executive Mohamed Ismail believed that developers would exercise greater caution because overly pricey properties may turn off buyers.

Royal Bank of Scotland analyst Fera Wirawan believed sentiment may be dampened further if buyers anticipate more cooling measures.

She noted that other measures introduced in the past included limiting permanent residents to one property loan, imposing a stamp duty on sellers and introducing a tax on property gains

SOURCE: Straits Times

However, according to Jones Lang LaSalle, there are several factors that buyers need to consider when buying used luxury condominium units as divestment under the current market condition – where the levels of both old and new supply are high – can pose a big challenge.

“We have seen continued interest in used luxury condominiums offering relatively attractive prices, particularly in well-managed buildings. Some of these condominiums may be offered at prices as low as half of those commanded by units in newly completed buildings or under construction projects,” said Daonum Lilavivat, head of Residential Agency at Jones Lang LaSalle.

Findings from Jones Lang LaSalle’s recent market study indicate that newly completed or currently under construction luxury condominium units in Bangkok’s CBD are now offered for sale at prices ranging between Bt110,000 and Bt200,000 per sqm, whereas units in older luxury buildings (aged ten years and older) in the same area are available for sale at between Bt55,000 and Bt90,000 per sqm.

“Discussions with our customers who purchased condominiums in older buildings show that aside from lower prices, most of the older buildings in the luxury segment offer relatively larger common space and full recreational facilities. These amenities include large swimming pools, fitness/sauna rooms and tennis courts, which are not typically provided in many new condominium projects. In addition, some buyers prefer the more ‘cozy’ environment offered by older condominium buildings rather than the ‘hotel-like’ atmosphere in new buildings,” says Daonum.

Good time to buy for own occupation
Buying used luxury condominiums in the CBD for own occupation now is a sound decision, says Daonum. “The strong competition in the leasing market due to the rapid growth of new condominium supply has put downward pressure on rents. Many owners who bought condominiums for investment purposes many years ago may now find it difficult to let their units as most tenants prefer newer buildings. For this reason, these investors are keen to divest their holdings,”

She adds that many of these units offer attractive prices and good value for money for those who are looking to buy used condominiums for their own occupation.

Daonum’s view is supported by Jones Lang LaSalle’s new market study which provides an analysis of gross and net yields in the high-end Bangkok condominium market.

Dan Tantisunthorn, head of Research at Jones Lang LaSalle, says “In a study to be published shortly, we found that the average resale price and current borrowing rates have adjusted to a level resulting in a gross yield which would attract end-user buyers. At these same price levels and assuming no vacancy, investors can earn a net yield above long term ‘risk-free’ rates, despite the yield on some of these, such as the recent government bond issue, rising.”

Doanum believes buyers can expect a capital appreciation in the long term as there are less sites/land plots available for new developments, whilst development costs of future projects are likely to rise.

Nonetheless, investors looking to buy used units to let at this time must be very cautious, says Daonum. “Aside from the downward pressure on rents because of strong competition and tenants’ preference for newer buildings, an investor may also have to make a big cash outlay to renovate a unit prior to putting it up for rent.”

Quality of property management – a key factor to look at
Because of old age, the condition of some condominium buildings can deteriorate – so can their asset values. Therefore, apart from price and location, the quality of building/property management is another key factor that buyers must pay a lot of attention to.

“There are a number of older luxury condominium buildings that are well managed and have always been kept in a like-new condition. Units in these buildings are able to sustain their asset value despite the high levels of supply entering the market over the past few years, and have a higher potential to enjoy a capital appreciation once the market picks up,” says Daonum.

“The attitude of the condominium juristic person committee plays a vital role in determining how the building is managed. A committee with a forward-thinking outlook will not be reluctant to invest in property management, including the regular maintenance and improvement of common areas, communal facilities and all systems within the building,” Daonum says.

SOURCE: Property-report.com