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

Private residential property prices rose 5.2 percent in the April-to-June period to the highest level since the government began the index in 1975, the Urban Redevelopment Authority said Thursday.

Prices leapt 5.6 percent in the first quarter and 7.4 percent in the fourth, bouncing back strongly after diving 25 percent in the 12 months to mid-2009.

Singapore’s low crime rate, good schools and low personal and corporate taxes have helped the island rank near the top of expatriate global quality-of-life surveys and attracted investors to the residential and office property markets. Singapore opened its first two casino-resorts this year, boosting tourist visits.

Singapore has sought to slow price gains by implementing a series of measures this year to discourage short-term speculative investment in property.

The government earlier this year imposed a 1 percent to 3 percent tax on residential properties sold within one year of purchase and lowered the loan-to-value limit to 80 percent from 90 percent on loans for private housing. Officials have also pledged to release more government land this year for real estate development to help boost housing supply.

Policymakers throughout Asia have grappled with balancing low interest rates to spur economic growth and the danger that cheap credit can fuel asset bubbles.

Investor confidence in Singapore has been bolstered by a soaring economy in the first half, led by a surge in manufacturing. Gross domestic product grew a record 15.5 percent in the first quarter from a year earlier, and DBS Bank said it expects a 16 percent expansion in the second quarter.

DBS raised its 2010 growth forecast Wednesday to 13 percent from 10.3 percent and expects the manufacturing sector to grew 50 percent in the second quarter.

However, prime homes hit a new price high, and price rises for suburban homes grew at a much faster rate, property consultancy DTZ said. Suburban resale condominium and apartment prices leapt by 4 percent for the quarter ending June 30, from the first quarter, to yet another new high.

DTZ said resale prices of leasehold suburban homes climbed 4 percent quarter-on-quarter to SG$648 (US$465) per square feet, compared with the 2.1 percent rise in the first quarter. The 2007 peak for these homes was at SG$615 per square feet.

Figures from the Singapore Institute of Surveyors and Valuers (SISV) show that there were only 899 caveats lodged for condominiums in the first three weeks of May compared with 3,060 in April.

And although new condominium projects are still doing well, property agents said homes sales in the secondary or resale market have dropped by up to 20% recently.

According to the Dennis Wee Group buyers are becoming more cautious. ‘Instead of seeing a 30% increase in transactions as in the month before, I only saw a marginal 3.5% increase,’ said Chris Koh, director at Dennis Wee Properties.

‘A lot of buyers are pulling their handbrakes. What they feel today is that the seller is asking for too high a price and they are adopting a sit and wait attitude,’ he added.

Figures from SISV showed sales falling across various districts as of the middle of last month. The prime districts of 9, 10 and 11 saw a massive 76% drop, while the downtown city area saw the sharpest decline of 88%.

It is also taking longer to close a transaction, according to ECG Property. A deal that used to take about 45 days is now up to 80 days.

Analysts expect the market correction to last between three and six months and some said home prices could fall by an average of 3 to 5%. Some banks may simply not lend at current asking prices, according to Eric Cheng, chief executive officer of ECG Property.

‘That also shows that these prices could be a speculation price instead of a true reflection price. I think the market is going through a slight correction,’ he said.

Analysts said prices may also be capped by more land supply due to be released by the Government. Other risk factors include volatile stock markets and the European debt crisis.

After the launch of its first residential project in 2007 called Jia, a 22-unit seven-storey apartment block, SDB is moving forward with its second property development, Gilstead Two at Gilstead Road near Newton MRT station.

The project, with a gross development value (GDV) of S$200mil (RM470.95mil), comprises 110 units in a 34-storey tower.

Unlike Jia, which offers larger unit sizes (two and three-bedroom units of between 1,200 sq ft to 1,600 sq ft), Gilstead Two offers much smaller units (Type A is 904 sq ft while Type B is 775 sq ft).

It is believed that Gilstead Two has received positive response; 33 of the 40 units released for private viewing recently were snapped up at prices ranging from S$1,900 per sq ft to S$2,300 per sq ft. The project is expected to be completed by 2014.

SDB managing director Teh Lip Kim tells StarBizWeek that the property market in Singapore is buoyant, like other financial hubs throughout the globe.

“Property prices there went down in 2008 by as much as 30% in certain areas but has picked up again to pre-crisis levels since the start of the second quarter of 2010,” she says.

SDB also has a parcel of land in Singapore, located in Ballestier Road that it plans to develop and launch by the end of the financial year (March 31, 2011).

“We are currently coming up with the concept for this development,” she says. SDB has picked Singapore as a sweet spot for its developments due to several reasons.

“It is close by, so it’s easy to keep track on the progress of the developments. Singapore is the financial hub of this region and the market is open and competitive. It is relatively easy to do business there, approvals are easily obtained once all the conditions are met,” says Teh. In fact, she says submissions for approvals are made on-line and approvals are also obtained on-line, making it a very efficient process.

On the contribution of the group’s projects in Singapore to its earnings, Teh says it is not significant at the moment but should pick-up due to the Gilstead Two development.

Gilstead Two

The group also has several projects in the pipeline in Malaysia to be launched soon. This includes 20Trees West, a low density bungalow development in Melawati which comprises 48 units of three-storey bungalows with swimming pools. The size of the homes range from 6,200 sq ft upward.

Teh says SDB also has a new condominium project located in a quiet enclave along Jalan Ampang, close to the British High Commission.

The development is called Dedaun and it comprises 38 units of spacious homes in a 10-storey building. “These homes measure about 3,200 sq ft, and have been designed with the sublime feel of homes in the 1970s,” says Teh.

On the outlook of Malaysia’s property market this year, Teh says it has definitely improved.

“Our launch of the second phase of Five Stones (a high-end condominium in Petaling Jaya) was very well received. The GDV for Five Stones is RM420mil and we have achieved 97% of the GDV. So things are definitely moving in the right direction,” she says.

On the company’s market focus, Teh says all its developments have been high-end projects.

“This ties in with our development concepts which focus on smaller scale, more private developments. For the moment, we will continue to focus on this type of products,” she says.

“We would like to focus on developing here (Malaysia) and in Singapore for now. However, we will look into other countries if the opportunity arises and when the time is right,” says Teh.

SDB began way back in 1962 when it was incorporated as Selangor Dredging Ltd. In 1964, the company changed its name to Selangor Dredging Bhd upon listing on the main board of the Kuala Lumpur Stock Exchange.

For over two decades, the company’s sole business was tin mining, operating two dredges in Dengkil.

In the early 1980s, SDB began to put in motion a plan for diversification. This led to the company’s involvement in various activities including hardware manufacturing and retail manufacturing of tyre rims for national car Proton and Perodua.

In 1985, Wisma Selangor Dredging, the company’s first property was completed and in 1997, SDB’s hotel property was completed. After a period of consolidation, which was completed in 2004, SDB is now fully a property company, principally involved in hotel, property management and leasing and property development.

Property Market Correction?

Tell-tale signs include a plateau in home prices and a drop in transaction volumes.

The Singapore Institute of Surveyors and Valuers said there were 899 caveats lodged for condominiums in the first three weeks of May.

This compares with 3,060 for the whole of April.

New condominium projects are still doing well. But property agents said home sales in the secondary or resale market have dropped by up to 20 per cent recently.

Dennis Wee Group said buyers are becoming more cautious, going by sales figures in May.

Chris Koh, director, Dennis Wee Properties, said: “Instead of seeing a 30 per cent increase in transactions as the month before, I only saw a marginal 3.5 per cent increase. A lot of buyers are pulling their handbrake, what they feel today is that the seller is asking for too high a price, and if I am not in a hurry, why not sit and wait.”

Industry data from the Singapore Institute of Surveyors and Valuers showed sales falling across various districts as of mid-May.

The prime districts of 9, 10 and 11 recorded a 76 per cent drop, while the downtown city area saw the sharpest decline of 88 per cent.

Analysts also expect transaction volumes to fall by 5 to 10 per cent due to the upcoming World Cup season, which begins on June 11.

Meanwhile, ECG Property said it now takes longer to close a transaction. It was about 45 days before, but it takes up to 80 days now.

Industry players expect the market correction to last between three and six months, and some said home prices could trend down by 3 to 5 per cent on average during this period.

Eric Cheng, CEO, ECG Property, said: “Some of these prices are over book keeping value, whereby some banks may not even match some of the asking price today. That also shows that these prices could be a speculation price instead of a true reflection price. I think the market is going through a slight correction.”

Analysts said prices may also be capped by more land supply due to be released by the government.

Other risk factors include volatile stock markets and the European debt crisis. – CNA/ms

The 43-storey, four-tower development in Thomson Lane made news in January 2007 when all its 273 units were sold within 30 hours of the soft launch.

“It is a testament to SPH’s growing versatility, dynamism and willingness to seek out opportunities to create shareholder value,” Dr Tan said at the completion ceremony last night.

At the time of the soft launch, Sky@eleven units achieved an average price of $975 per square foot (psf), with the priciest unit going at $1,200 psf.

According to transactions recorded in April, the average price has since appreciated to $1,330 psf, while the highest price now stands at $1,400 psf.

The properties include units that range in size from 1,851 sq ft for a three bedroom-plus study unit, to 2,820 sq ft for a four-bedroom unit. There are also eight duplex penthouses that range from 3,757 sq ft to 5,597 sq ft in size.

Sky@eleven is SPH’s maiden condo project. Developed by Times Development, a subsidiary fully owned by SPH, it is designed by DP Architects and received its temporary occupation permit last month.

Apart from Sky@eleven, SPH’s other property developments have also performed well, Dr Tan said.

“Paragon, our prime retail-and-office complex in the heart of Orchard Road, completed its $82-million renovation and facelift recently, and boasts a new facade now. It is currently enjoying a 100 per cent tenancy rate,” he said.

The recently acquired Clementi Mall, to open early next year, has also been added to SPH’s property portfolio.

The five-storey mall, located next to Clementi MRT station in Clementi Avenue 3, is a joint venture between SPH, NTUC Income and FairPrice.

SPH, which owns national broadsheets The Straits Times and Lianhe Zaobao, is now in its 26th year. It has a diversified portfolio that includes magazines, web portals, broadcasting stations, events management and outdoor advertising.

Mr Seow Choke Meng, executive director of Times Development, described residential property development as a “third leg” for SPH, after its media products and mall-management business.

“Property development is part of our core portfolio now,” he said. “We’re constantly looking out for residential sites that can deliver promising returns.”

Property Market

Show flats and previews, which have resembled crowded scenes during a sale, have grown quiet because many property developers in the country have delayed their project launches. However, there is no denying that market confidence in Singapore is suffering from a huge dent.

Compared to a very positive April, feedback from many real estate agents described May as a total washout.

One property agent, who closed six deals in the secondary market in April, drew zero for the whole month of May. Agents said that some of their colleagues, who normally guard their ongoing deals fiercely, are now willing to co-broke.

Apartment owners are now getting more unsolicited calls asking them if they are willing to sell their units, especially those who bought their properties over the last six months. For them, the scare tactics of some property agents begin.

Property owners, particularly those who are known to be active sellers, are urged to sell their properties before the property market begins to cool down. The “scare-tactics” move by most property agents are taking effect, giving the jitters to several owners.

It is a nervous property market now in Singapore, especially for those who are highly geared. But amid the “scare tactic” moves by property agents, real estate developers are continuously bidding for higher prices for land sites.

In the most recent public tender, a 99-year leasehold condo site located at Upper Serangoon Road near to the Potong Pasir MRT station had received the second highest bid ever recorded in Singapore’s Rest of Central region.

This trend can only mean two things, either property developers have a different view on the market condition or they are just confident that they can transfer ownership of the units to investors before the price correction in the market takes place.

Either way, this does not sound good for genuine homebuyers.

If the property market remains down in May and June, prices cannot come down in the second quarter due to very low sales. At most, property prices will remain at a level seen in April.

Buyers in a property showroom

But agents are not to “twist the information and use them as scare tactics on customers”.

The email added that agents should “never use overly strong words like the market is going to crash”.

This follows a story carried by MediaCorp on May 31 that some agents are employing “scare tactics” to close deals.

Emails forwarded to MediaCorp earlier, detailed how some agents are using the government’s recent land sales as a bargaining tool to lower client expectations of property prices.

One agent disclosed that a deal was closed after telling the client that the “market is going to crash”.

ERA said it has investigated the alleged complaint.

It found that the transaction was sealed at market price, fully supported by a bank valuation.

The property firm added that no scare tactics were involved.

As such, no disciplinary action will be taken against the agent.

Singapore Real Estate

Dr Steven Choo, chief executive officer of the Real Estate Developers” Association of Singapore, said: “It is testimony to the outstanding quality real estate that our members consistently create and a ringing endorsement of Singapore’s presence as a global city of distinction in urban design and development.”

His comments come in response to four Singapore real estate developers winning awards at this year’s Fiabci Prix d’ Excellence Competition, which are reportedly considered to be the “Olympics” of the international property industry.

The Sail at Marina Bay by City Developments clinched the top spot in the residential high rise category, while the Far East Organisation won accolades in the office and specialised projects categories.

Similarly, UOL Group and Keppel Land also won two awards for their structures.

While the Singapore property market appears to be flourishing, Professor at Tsinghua University and adviser with the Chinese central bank’s monetary policy committee Li Daokui recently noted the Chinese real estate sector is currently facing “fundamental” problems.

SOURCE: Cityscapeintelligence.com