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

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

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.

Singapore property

Property prices are at a record high in Singapore, which was the top-scoring Asian city in Mercer’s 2010 Quality of Living survey. Photo: David Noton Photography / Alamy
Private residential property prices rose 5.2 per cent in the second quarter to the highest level since the government began the index in 1975, the Urban Redevelopment Authority has said.
Prices rose 5.6 per cent in the first quarter, bouncing back strongly after diving 25 per cent in the 12 months to mid-2009. This means there has been an overall 10.8 per cent price increase in the last two quarters alone.

Singapore’s low crime rate, good schools and low taxes mean that expatriates and investors are increasingly attracted to the property market.
The city-state often ranks highly in expatriate quality of life surveys. In Mercer’s 2010 Quality of Living survey, it was ranked as the 28th best city to live out of 221 cities, making it the top-scoring Asian city.
The quantity of houses sold has also increased. According to property consultants CBRE, around 8,300 new homes were sold in the first half of 2010, which acounts for 56.5 per cent of the 14,688 new homes sold in 2009.
They said that the properties which sold well in the second quarter were mostly in the low- to mid-tier price range.
Alvin Tan, director of residential sales for Savills’ Singapore’s office said: “A firmer economic recovery, a robust GDP growth, and optimism surrounding the two new [casino] integrated resorts could be possible factors that continue to draw buyers into the market, lending support for the current prices.
“Barring any external shocks, prices may continue to trend upwards but at a more sustainable pace for the overall market. For the high-end segment in particular, prices may rise by five to eight per cent over the next six months and could possibly surpass the previous peak in early 2011.”
Singapore has sought to slow price gains by implementing a series of measures to discourage short-term speculative investment in property.
Earlier this year the government imposed a one per cent to three per cent tax on residential properties sold within one year of purchase and lowered the loan-to-value limit to 80 per cent from 90 per cent on loans for private housing.
Officials have also promised to release more government land this year for real estate development.
Gross domestic product grew a record 15.5 per cent in the first quarter from a year earlier, and DBS Bank said it expects a 16 per cent expansion in the second quarter.
Peter Evans, sales director at property consultants Forbes Le Brock, said that Singapore’s high prices had also been driven by its small size, which restricted the amount of development possible. “Investing in Singapore, despite its high prices, is therefore a good opportunity, as there will be a more limited supply of land in the future.”
He advised people looking for property in Asia to use a good English-speaking lawyer, and to make sure they carried out diligent research into the developer.
According to Mr Tan, 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).

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.”

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.

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.