Unlikely to have Significant Drop in Property Prices

Channel News Asia: Significant drop in property prices unlikely: analysts

Jan 27

SINGAPORE : The recent government cooling measures in Singapore's property market will bring down sales volume, but not to the extent of causing a significant fall in prices.

According to a report by DTZ Research, sales volume is expected to fall as short-term speculators will be weeded out by the hefty seller's stamp duty of up to 16 per cent within the first year of purchase.

However, the property consultancy said not all investors will withdraw from the market.

Some may find the 4 per cent stamp duty by the fourth year of sale to be surmountable and shift their focus to buying uncompleted units with completion dates three to four years later.

DTZ's Executive Director for Residential, Margaret Thean said landed homes, small apartments and high-end apartments will be less affected by the measures. That's because small units with their low price quantum will continue to attract investors with spare cash or singles wanting their own units.

Thean added that the 4-year seller's stamp duty will have little impact on landed homes as most purchase them for long-term owner-occupation.

Meanwhile, high-end apartments will likely continue to see foreign interest.

DTZ added that prices in 2011 are expected to be largely stable with a decline of not more than 5 per cent.

This is underpinned by economic growth, low interest rates, strong holding power of developers, the appreciation of the Singapore dollar and inflow of foreign purchasers due to the property market clampdown in mainland China and Hong Kong.

The property consultancy does not rule out the possibility of more government measures should demand remain at a high level after a period of cooling-off.

The report also noted other challenges in the form of a spike in the number of completed units in a few years' time as the government is putting out a record high amount of units through the public housing and government land sales programmes.

There is also uncertainty over the strength of recovery of the major western economies.

If they recover well, interest rates will move up and reduce the affordability of mortgage payments.

On the other hand, if they continue to languish, this will have an effect on the Singapore economy and optimism in the property market eventually.

With the residential market facing numerous challenges, DTZ said investors are likely to take the extra effort to identify opportunities in other property sectors and alternative investment products.

Banker Influx to Lift Luxury Home Rents in Hong Kong

Jan. 21 (Bloomberg) -- Sarah Cheung was bracing for a rent increase on her apartment in Hong Kong's Happy Valley district ahead of the expiration of her lease this month. She still wasn't prepared when her landlord demanded 43 percent more.

"We've looked around and this is still one of the better deals, even after the raise" to HK$40,000 ($4,890) a month, the first increase in five years, said Cheung, a 45-year-old businesswoman who lives with her husband and two daughters in a 1,250 square foot apartment that overlooks the Happy Valley racecourse.

Rents of Hong Kong luxury homes, classified as those of at least 100 square meters (1,076 square feet), are growing faster than in London, fuelling lease increases in the broader market, fanning inflation and hampering government efforts to cool housing prices. Hong Kong luxury rents may jump as much as 15 percent this year after a 13 percent gain in 2010, according to property brokers Savills Plc and Jones Lang LaSalle Inc.

HSBC Holdings Plc and Standard Chartered Plc are among companies boosting hiring to tap record equity sales in Hong Kong and demand for wealth management. The number of registered financial professionals in the city rose to a record 38,304 in the third quarter, according to the Securities and Futures Commission.

"As the large financial firms expand, they pull in more people who then normally get accommodated at the luxury end," said Simon Smith, Hong Kong-based head of research at Savills. The occupancy rate of apartments used typically by companies for short-term stays "is extremely high at the moment and that's a good indicator because that's the first stop for people moving into the market."

Housing Allowance

Housing allowances for senior executives in the financial industry moving to Hong Kong can range from HK$80,000 to HK$150,000 a month, according to Matthew Hill, a managing director based in the city for Ambition Group Ltd., an Australian-listed recruiting firm. That compares with Hong Kong's median monthly household income of HK$18,100.

The strong luxury rental market is helping drive up overall rents in the city and fueling inflation, said Irina Fan, an economist at Hang Seng Bank Ltd. in Hong Kong. Rising private- sector rents helped the city's inflation rate increase 2.9 percent in November from a year earlier, the biggest gain in three months.

"We're seeing an overall increase in rent; it's not just limited to the luxury market," said Fan. "This is certainly adding to pressure on inflation."

'Skill Shortage'

That may become a deterrent for businesses trying to lure employees to the southern Chinese city with a population of more than 7 million, said Ambition Group's Hill.

"Rising rents certainly will have an impact and will be an increasing factor when businesses are deciding on relocating an executive and their family," he said. "This could become a problem as there is an increasing skills shortage of senior local executives for certain roles and there continues to be a need for many businesses to hire from overseas."

Still, Hong Kong companies increased hiring of senior management executives from overseas by about 20 percent in the past year, said Hill.

"We didn't expect the skill shortage we're experiencing in Hong Kong to come about so quickly," Hill said. "Demand is outstripping supply."

HSBC, Hong Kong's biggest bank by deposits and customers, plans to add 200 people to its small-to-medium enterprise unit in the city, it said in October. London-based Standard Chartered in February 2010 announced plans to hire 500 employees for its local wealth management business.

Rental Yields

Hong Kong's home prices have surged more than 50 percent in the past 24 months, powered by interest rates at a two-decade low, an expanding economy and an influx of buyers from China. That prompted the government to impose additional property transaction taxes and raise mortgage requirements to cool price gains.

Hong Kong overall home prices have risen 21.6 percent from the beginning of 2010 to Jan. 9, according to an index compiled by Centaline Property Agency Ltd., the city's biggest closely held realtor.

Rental yields haven't kept pace with the rapid price gains. The yield for luxury residential properties has stayed below 3 percent since July 2009, according to figures compiled by Seattle-based Colliers International. That's the lowest since at least 1994, Colliers said. The total return for the city's benchmark Hang Seng Index was 8.6 percent last year.

"For luxury residential rents, this will be a year of catching up," said Hong Kong-based Simon Lo, director of research at Colliers. "We've seen price outperforming rents by quite a big margin since the property market began recovering from the global credit crisis."

Similar sized apartments in Cheung's neighborhood, near the Causeway Bay district, home to the world's second-most expensive shopping spot, normally command monthly rents of more than HK$45,000, said Kelvin Yuen, a senior sales manager at a Happy Valley branch of Midland Holdings Ltd., the city's biggest realtor by market value.

'Hottest Areas'

Bankers tend to live on the Peak, the city's most expensive district, or Midlevels, both within a 20 minute drive of the Central business district. They also favor Island South, along some of Hong Kong Island's most popular beaches and home to Hong Kong International School, which teaches a U.S. curriculum, and the American Club.

Average luxury residential prices on the Peak rose 8.8 percent in the fourth quarter from a year earlier to HK$22,182 ($2,850) a square foot, according to data compiled by property consultant Knight Frank LLP. That compares with the 1,531 pounds ($2,446) in London and $2,101 in New York's Manhattan.

Prime central London residential rents may gain 7 percent in 2011, according to Savills.

Suburbs favored by expatriates will be Hong Kong's "hottest areas," said Steven Hui, manager for real estate and tenancy management at Crown Relocations, which advises and services multinational companies on staff movements.

"Some of the buildings in these areas right now have zero vacancy which is extremely rare in my 16 year experience" in the industry, said Hui.

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

Adapted from http://www.bloomberg.com

Just sold! Nassim Park Residences

Nassim Park Residences - just sold #02-01! Balance 4 units from $3800 psf*. Come view before it is all sold out!! Viewing strictly by appointment only.

* price is an indication only, the developer/owner reserve the right to change the price with prior notice

BULLETIN: China's economy grows 10.3% in 2010, above 10.2% forecast; Dec. consumer inflation +4.6%.

For more information, go to MarketWatch www.marketwatch.com

Pricier new launches ahead

Business Times: More developers see higher prices for new home launches
By EMILYN YAP

Developers' outlook for the property sector turned rosier in the fourth quarter last year, with a larger proportion of them predicting higher prices for new residential launches.

Preliminary findings from the Real Estate Sentiment Index (RESI) point to improved sentiment from the third quarter, when the industry was still coming to terms with the impact of property market cooling measures introduced on Aug 30.

Based on survey responses so far, the Current Sentiment Index stood at 5.6 in Q4, up from 4.8 in Q3. For this category, respondents rate overall Singapore real estate market conditions now compared with six months ago.

The Future Sentiment Index - where respondents rate overall property market conditions over the next six months - rose to 5.7 in Q4 from 4.8 in Q3.

While the index readings rose in Q4, they did not surpass the levels seen in Q1 and Q2.

Developers were also asked for their take on the primary residential market, and a majority of the respondents thought more launches and moderate price increases were possible.

In Q4, 60 per cent of respondents believed that unit prices would be moderately higher. In Q3, just 12 per cent thought so.
Spottiswoode Residences, Waterview and Robinson Suites were some which reported strong sales.

Some industry watchers also reckoned that the sector's confidence grew as the impact of the tightening measures became clearer.

A Hong Leong spokesman told BT: 'While we took a cautious outlook immediately following the August 2010 cooling measures, buyer demand continued to remain strong for the group's various projects.' Low interest rates and liquidity in the market contributed to the demand, he said.

In the ongoing Q4 RESI survey, 69 per cent of respondents identified demand-side measures from the government as a potential risk to market sentiment.

Although this proportion is less than Q3's 83 per cent, it is still big enough to make state intervention the second most feared risk.

A possible slowdown in the global economy was the industry's top worry - 70 per cent of respondents said in Q4 that this was a potential risk. This is markedly higher than the 56 per cent a quarter ago.

(This is only an excerpt, for the full article please subscribe at http://businesstimes.com.sg)

Market Talk: CapitaLand

Below is an excerpt from
Straits Times: No shoebox flats for CapitaLand
By Cheryl Lim published on MON, JAN 10, 2011.

"At CapitaLand Residential Singapore, chief executive Wong Heang Fine noted that changing market dynamics would inevitably lead to smaller homes, but he stressed that the firm would not build flats under 500 sq ft. He said its focus for the year ahead would be on replenishing its land bank.

It has 2,500 launch-ready homes that have yet to be released for sale. It will launch 1,700 units this year, with the majority entering the market over the next three months.

At d'Leedon, more units will be released this year - 750 - with the first batch being rolled out this week. The remaining 390 units at The Interlace will be released soon after, followed by 55 luxury homes at The Nassim. Some of the 500 units set aside for the new development at the Bedok Town Centre site will also be launched this year, during the second or third quarter.

In addition, the 64 homes from the Urban Resort project at Cairnhill Road will come on stream this year. Units at both Urban Resort and The Nassim will be sold through private appointments.

Mr Liew indicated that CapitaLand had its eye on several collective-sale sites. He said it was also keen on residential sites - on both the confirmed and reserved lists - offered as part of the first half of this year's Government Land Sales programme.

Sites at the city fringe or near MRT stations would be high on CapitaLand's wish list.

Still, Mr Wong and Mr Liew agreed that even though CapitaLand's balance sheet was healthy enough to allow it to bid for all the sites it was interested in, it would do so with 'disciplined aggression'.

CapitaLand predicts that home prices are likely to increase by 5 to 10 per cent this year, with those in the high-end segment rising by 10 to 15 per cent.

Its optimism with regard to this segment has spurred it to market projects such as The Interlace in China and India.

It does not believe government measures will be introduced to curb foreign interest in the high-end market.

'Singapore is a very open economy. If we start to have such restrictions, it would destroy the image we have of being an open economy,' said Mr Liew."