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Table of Contents Market Update
Editor Sam Gian www.update.sg
(1) High-end home sales frizzled in Q4 2009 [Page 4 - 8]
(2) Vintage harvest of TOP new homes in
2010/11 The past year was a bizarre but surprisingly good year for most real estate agents – ‘bizarre’ for the property rally amidst the nagging economic pains of a recession year; while ‘good’ for the resultant swelling of most agents’ wallets. Otherwise, 2009 was a forgettable year for many others. Not that any agents were complaining about the unexpected but certainly not unwelcomed harvest, but the true impact of the global financial tsunami – which nearly crippled the entire world economy in 2008 – may have been slow in arriving from the epic centre. And so, instead of rejoicing the fragile recovery, a little conservatism at this point may be the best policy. After all, any little complications can still despatch the economy back to the high-dependency ward. At our end, it has once again proven beyond doubts that real estate brokering is a recession-proof business due to the unique characteristics of the products being inherently price-elastic. So, there is always a one-third chance of buyers ‘getting it wrong’, which would lead to eventual off-loading. And there is another one-third chance of ‘getting it right’ which may prompt a quick profit-taking. Finally, there is yet another one-third chance of the investors renting out the properties in the interim for one reason or another. That means, for every deal done, two more are WAITING to be struck. Speaking of which, the ‘W’ word may become the most appropriate word to describe this year. Early signs have suggested a ‘flatter and slower’ year for agents compared with last year. Plus, there will be a host of new government regulations to be complied with. The final sum could mean a more strenuous market environment where business opportunities are more likely to be like ‘hidden treasures’ rather than low-hanging fruits. When every other customer is WAITING for the good time to materialise, the agents will have to dig deep. As such, only he who is authentic and creative will know how to eke a living this year.
[Page 9 - 11]
(3) A year of great expectation for landlords [page 12 - 15]
(4) More land banking options for developers [page 15 - 17]
(5) When freehold owners sell only 99-year lease [page 17 - 19]
Letter of RETRACTION and APOLOGY to Singapore Accredited Estate Agencies Limited
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2010 shall be a year of THE CROUCHING TIGERS. A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]
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LETTER OF RETRACTION AND APOLOGY Date:
4 November 2009
TO WHOM IT MAY CONCERN Dear Sir/Madam LETTER OF RETRACTION AND APOLOGY
1. We, Sam Gian (NRIC No S1623182G) and Heng Uei Duan t/a Worldview Development Consultant (NRIC No S1654028E) admit that we have made various libelous and/or disparaging allegations (henceforth referred to as ‘the Allegations’) against the Singapore Accredited Estate Agencies Ltd (henceforth referred to as ‘SAEA Ltd’), its Chief Executive Officer Dr Tan Tee Khoon (henceforth referred to as ‘Dr Tan’) and its former Executive Committee Chairman Dr Lim Lan Yuan (henceforth referred to as Dr Lim) vide the article entitled ‘Open Letter to the New Government Regulatory Body for Real Estate Agents in Singapore’ which was published in the September 2009 issue of ‘Property Market Direction’ magazine (henceforth referred to as ‘the Magazine’) 2. We confirm that SAEA Ltd is a credible accreditation body and both Dr Tan and Dr Lim are persons of integrity and honesty, who have not acted unethically or in conflict of interest. We accept that the Allegations made by us against SAEA Ltd, Dr Tan and Dr Lim are 3. wrongful, groundless and untrue, and we unreservedly apologise to SAEA Ltd, Dr Tan and Dr Lim and unconditionally withdraw and retract all of the Allegations. 4. We undertake not to repeat any of the Allegations and not to further publish these and other similar allegations concerning SAEA Ltd, Dr Tan and Dr Lim. 5. (a) (b) (c)
We further undertake to publish this Letter of Retraction and Apology on the next quarterly issue of Property Market Direction in January 2010 to ensure that the issue of Property Market Direction of January 2010 is uploaded on the website www.update.sg and contains this Letter to upload and display this Letter on the website www.updates.sg until 31st December 2009
6. We also agree to pay SAEA Ltd, Dr Tan and Dr Lim a sum of S$15,000 (all in) as damages and costs. Yours faithfully
Mr Sam Gian Madam Heng Uei Duan t/a Worldview Development Consultant
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Market Update
High-end home sales frizzled in Q4 2009 Investors braced for further intervention According to data gathered from the Urban Redevelopment Authority (URA), there were a total of 814 condo/apartment transactions in the posh District 10 in the third quarter (Q3) of 2009, out of which 86 top end deals exceeded $5 million in absolute price quantum. There were 33 similar top end transactions in D10 in Q2 2009 but only 6 in Q1 2009. So the stage appeared set for a glorious upswing in the high-end home segment but that was not to be. The glitters of the high-end home sales toned down in the final quarter of the year, ending with a modest 424 transactions of condo/apartments in D10 with only 46 deals exceeding $5 million in absolute sale prices. Compared with the 86 top end deals in the preceding quarter, that is a drastic 47.9% drop in the D10 sales volume in Q4 2009. The abrupt loss of sales volume in Q4 2009 may be caused by the surprised November statement by the Monetary Authority of Singapore (MAS) that ‘further action may be needed to cool the market’ if the withdrawal of the Interest Absorption Scheme (IAS) and the Interest Only Loan (IOL) proved insufficient.
This case study seeks to determine the price movements in the posh districts of D9 and D10 in the second half of 2009 to verify the extend the earlier warning shot fired by the central bank has altered the course of events in the high-end home market in Singapore; and whether the claim of ‘foreigners coming’ can be substantiated.
[Traditionally, foreign participation in Singapore’s real estate concentrates in the prime areas and involves mostly high-end homes with dearer price tag.]
QUIET UPSWING IN D10 UNSUSTAINABLE IN Q4 2009
DISTRICT 10 IN OCTOBER 2009 There were a total of 155 condo/apartment transactions in D10 in October 2009, out of which 20 of them exceeded $5 million in absolute sale price. [Table 1] Table [1] – 20 condos exceeded $5 mil in absolute sale price in OCTOBER 2009 in D10 Floor Floor Price Rate D10 Project Name Area ($ mil) (sq ft) (psf) 1
Nassim Pk Res.
3,477
3,480
12.1
2
Nassim Pk Res.
3,466
2,856
9.9
3
Ardmore Pk
2,885
3,189
9.2
4
Ardmore Pk
2,885
3,051
8.8
5
The Ladyhill
3,843
2,082
8.0
6
Volari
3,950
1,811
7.15
7
Nassim 9
3,423
1,987
6.8
8
Grange Res
2,583
2,632
6.8
9
The Orchard Res.
1,808
3,399
6.14
10
Nassim Mansion
2,852
2,086
5.95
11
The Trizon
4,994
1,141
5.7
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12
Grange Res
2,583
2,090
5.4
5
Ardmore Pk
2,885
2,617
7.55
13
Madison Res.
3,218
1,669
5.37
6
Honolulu Tower
5,823
1,202
7.0
14
Ardmore II
2,024
2,650
5.36
7
The Orchard Res.
2,174
3,100
6.74
15
Ardmore II
2,024
2,634
5.33
8
Gallop Green
3,907
1,640
6.4
16
Astrid Meadows
3,800
1,382
5.25
9
Regency Pk
3,649
1,727
6.3
17
The Orange Grove
2,336
2,199
5.13
10
Gallop Green
3,229
1,700
5.49
18
Nassim Jade
2,260
2,212
5.0
11
Gallop Green
3,218
1,700
5.4
19
Four Seasons Pk
2,260
2,212
5.0
20
Parc Stevens
2,949
1,695
5.0
Source of data: URA website
Among the 20 top end transactions, eight (08) of them crossed the $2,500 psf psychological threshold. [Table 1-A] Table [1-A] – Eight transactions exceeded the $2,500 psf psychological threshold in OCTOBER 2009 in D10 Floor Floor Price Rate D10 Project Name Area ($ mil) (sq ft) (psf)
Source of data: URA website
Though the highest sale price breached the $4,000 psf ceiling, the quantity of transactions that crossed the psychological barrier of $2,500 psf was two shy of the previous month’s figure at only six deals in November 2009. [Table 2-A] Table [2-A] – Six transactions exceeded the $2,500 psf psychological threshold in NOVEMBER 2009 in D10 Floor Floor Price Rate D10 Project Name Area ($ mil) (sq ft) (psf)
1
Nassim Pk Res.
3,477
3,480
12.1
2
The Orchard Res.
1,808
3,399
6.14
1
Boulevard Vue
8,051
4,150
33.4
3
Ardmore Pk
2,885
3,189
9.2
2
Nassim Pk Res.
6,803
3,234
22.0
4
Ardmore Pk
2,885
3,051
8.8
3
The Orchard Res.
2,174
3,100
6.74
5
Nassim Pk Res.
3,466
2,856
9.9
4
Ardmore Pk
2,885
3,051
8.8
6
Ardmore II
2,024
2,650
5.36
5
Nassim Pk Res.
3,466
2,885
10.0
7
Ardmore II
2,024
2,634
5.33
6
Ardmore Pk
2,885
2,617
7.55
8
Grange Res
2,583
2,632
6.8
Source of data: URA website
Source of data: URA website
DISTRICT 10 IN DECEMBER 2009 DISTRICT 10 IN NOVEMBER 2009 The condo/apartment transactions in D10 in November 2009 began to show sign of weariness and the month ended with 142 transactions, out of which 11 of them exceeded $5 million mark. [Table 2]
In December 2009, the condo/apartment transactions in District 10 disappointed with 127 deals, though 15 luxury home units (which is four more than November) were sold at prices exceeding $5 million in absolute quantum. [Table 3]
Table [2] – Eleven condos exceeded $5 mil in absolute sale price in NOVEMBER 2009 in D10 Floor Floor Price Rate D10 Project Name Area ($ mil) (sq ft) (psf)
Table [3] – 15 condos exceeded $5 mil in absolute sale price in DECEMBER 2009 in D10 Floor Floor Price Rate D10 Project Name Area ($ mil) (sq ft) (psf)
1 2 3 4
Boulevard Vue Nassim Pk Res. Nassim Pk Res. Ardmore Pk
8,051 6,803 3,466 2,885
4,150 3,234 2,885 3,051
33.4
1
Nassim Pk Res.
5,231
2,485
13.0
22.0
2
Nassim Pk Res.
3,175
3,304
10.4
10.0
3
St Regis Res.
3,757
2,609
9.8
8.8
4
Ardmore Pk
2,885
2,773
8.0
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5
Beaufort on Nassim
3,671
2,030
7.45
6
Grange Res
2,852
2,542
7.25
7
Draycott Eight
2,863
2,445
7.0
8
Beverly Hill
3,778
1,800
6.8
9
Regency Pk
3,649
1,658
6.05
10
The Orchard Res.
1,808
3,318
6.0
11
Latitude
2,788
2,035
5.67
12
Regency Pk
3,175
1,685
5.35
13
The Grange
2,293
2,299
5.27
14
Latitude
2,680
1,867
5.0
15
Ardmore II
2,024
2,471
5.0
The evidence points to an increasingly cautious buying mood with both prices and sales volume gradually softening.
Source of data: URA website
The quantity of transactions that crossed the psychological barrier of $2,500 psf continued to be subdued and it came down to five deals in December 2009. [Table 3-A] Table [3-A] – Five transactions exceeded the $2,500 psf psychological threshold in DECEMBER 2009 in D10 Project Name
Floor Area (sq ft)
Floor Rate (psf)
Price ($ mil)
1
The Orchard Res.
1,808
3,318
6.0
2
Nassim Pk Res.
3,175
3,304
10.4
3
Ardmore Pk
2,885
2,773
8.0
4
St Regis Res.
3,757
2,609
9.8
5
Grange Res
2,852
2,542
7.25
D10
Source of data: URA website FINDING: HIGH-END HOME BUYERS MORE CAUTIOUS
The case study uncovers the following: i.e. as we approached the end of year, fewer transactions breached the psychological barrier of $2,500 psf.
For example, in October 2009, 5.16% of the 155 transactions in D10 crossed the $2,500 psf psychological threshold. But the percentage was down to 4.22% (of 142 transactions) in November 2009, and 3.93% (of 127 transactions) in December 2009.
Next, let’s look at the relevant numbers in District 9. DISTRICT 9 TRANSACTIONS SOFTENED IN Q4 2009
The same abrupt deceleration seen in District 10 was mirrored in District 9 over the same three-month period in Q4 2009. In fact, the 297 total condo/apartment transactions in D9 in the final quarter of 2009 was a massive 68.3% drop in sale volume when compared with the 938 total transactions in the same district in the preceding quarter. Likewise, there was a 50% drop in the sales volume of private homes in the top end price bracket of $5 million and above. Altogether, there were 21 transactions that exceeded the $5 million sale price in Q4 2009, compared with 43 in Q3 2009. Only 10 of those deals in the top end price bracket crossed the psychological barrier of $2,500 psf in Q4 2009, and that was half the feat compared with the previous quarter. Let’s now look at the details.
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DISTRICT 09 IN OCTOBER 2009
Out of the 119 condo/apartment transactions in District 09 in October 2009, only seven (07) of them exceeded $5 million in absolute sale price; and none of the transactions crossed the psychological barrier of $2,500 psf in unit price. [Table 4] Table [4] – Seven condos exceeded $5 mil in absolute sale price in OCTOBER 2009 in D9 Floor Floor Price Rate D9 Project Name Area ($ mil) (sq ft) (psf) 1
Belle Vue Res
5,425
1,627
8.83
2
Belle Vue Res
4,004
1,647
6.59
3
Belle Vue Res
3,897
1,647
6.42
4
Skypark
2,648
2,300
6.09
5
Belle Vue Res
3,520
1,609
5.66
6
Belle Vue Res
3,477
1,496
5.2
7
Alba
2,067
2,450
5.06
Out of the same 110 transactions done in District 09 in November 2009, six (06) crossed the psychological threshold of $2,500 psf. [Table 5-A] Table [5-A] – Six transactions exceeded the $2,500 psf psychological threshold in NOVEMBER 2009 in D9 Floor Floor Price Rate D9 Project Name Area ($ mil) (sq ft) (psf) 1
The Tate Res
1,894
2,799
8.9
2
The Tate Res
3,208
2,775
8.6
3
The Tate Res
3,208
2,681
8.38
4
Hilltop
807
2,676
7.39
5
The Tate Res
2,185
2,581
6.35
6
The Claymore
3,348
2,503
6.0
Source of data: URA website
Source of data: URA website
DISTRICT 09 IN NOVEMBER 2009
In November 2009, there were a total of 110 condo/apartment transactions in District 09, out of which 10 exceeded $5 million in absolute sale price. [Table 5] Table [5] – Ten condos exceeded $5 mil in absolute sale price in NOVEMBER 2009 in D9 Floor Floor Price Rate D9 Project Name Area ($ mil) (sq ft) (psf)
DISTRICT 09 IN DECEMBER 2009
Probably affected by the festive season, the slide in the sales volume was more pronounced in December 2009 with only 68 transactions concluded in D09, out of which only four deals exceeded $5 million in absolute sale price. [Table 6]
1
The Tate Res
3,208
2,775
8.9
2
The Tate Res
3,208
2,681
8.6
3
The Claymore
3,348
2,503
8.38
4
One Devonshire
4,876
1,517
7.39
5
3,907
1,625
6.35
6
The Light @ Cairnhill Paterson Res
3,843
1,561
6.0
7
The Tate Res
2,185
2,581
5.64
1
Rivergate
3,724
1,550
5.77
8
The Edge On Cairnhill The Tate Res
3,175
1,700
5.39
2
Orchard Scotts
2,282
2,402
5.48
5.3
3
Alba
2,250
2,387
5.37
5.27
4
The Tate Res
1,894
2,639
5.0
9 10
One Devonshire
Source of data: URA website
1,894 2,756
2,799 1,912
Table [6] – Four condos exceeded $5 mil in absolute sale price in DECEMBER 2009 in D9 Floor Floor Price Rate D9 Project Name Area ($ mil) (sq ft) (psf)
Source of data: URA website
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Three (03) units at The Tate Residence were transacted at slightly higher than the $2,500 psf psychological barrier. [Table 6-A] Table [6-A] – Three transactions exceeded the $2,500 psf psychological threshold in DECEMBER 2009 in D9 Floor Floor Price Rate D9 Project Name Area ($ mil) (sq ft) (psf) 1
The Tate Res
1,894
2,639
5.0
2
The Tate Res
1,894
2,599
4.92
3
The Tate Res
1,894
2,534
4.8
Source of data: URA website FINDING: HIGH-END HOME BUYERS MORE CAUTIOUS
Secondly,
buyers remain price sensitive and are keeping their purchases below the psychological barrier of $2,500 psf.
It appears there had been a lot of wishing thinking going on about the state of the high-end market before the opening of the two Integrated Resorts. The media has certainly done a good job in hyping up the global attention. But as far as the sales figures have shown, nobody is jostling to buy anything yet – not when the future is still blurry.
The finding in D9 is consistent with the earlier finding in D10, i.e. fewer transactions breached the psychological barrier of $2,500 psf as we approached year end. For example, none of the D9 transactions crossed the $2,500 psf psychological barrier in October 2009. And when they did, the percentage was down to 4.41% (of 68 transactions) in December 2009 from 5.45% (of 110 transactions) in November 2009. WHAT DOES THE TREND IN THE HIGH-END MARKET TELL US?
A couple of messages need to be decoded from the sales numbers gathered in this case study:
Firstly, contrary to the media hype,
buying mood in the prime district has turned cautious since the onset of Q4 2009. If there were any ‘foreigners buying’ in the posh areas, they must have gone about it surreptitiously – not in a manner where the massive sales figures could bulge out of the URA caveat records.
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Market Update
Vintage harvest of TOP new homes in 2010/11 Sub-sale of TOP units a better bet this year Here are some compelling reasons why sub-sale of TOP projects will be a safer bet than selling new home units this year. 2010 A VINTAGE YEAR FOR FREEHOLD TOP PROJECTS
This case study shows that among the 41 condo projects that will be ready for vacant possession in 2010, 18 of them (or roughly 44%) are well placed in prime locations including Districts 9, 10, 11, the Marina Bay and Sentosa Cove. And out of the 18 prime projects, 15 of them (or 83.4%) are of the coveted Freehold status. [See Table 7 for details of projects]
Likewise in 2011, from among the 23 quality condo projects to be ready for occupancy, 14 of them (or roughly 61%) are in the prime districts, with none of them being 99-year leasehold projects. [See Table 8 for details of projects]
In all, the next two years will see a total of 69 quality projects (those beyond District
15 are not included in this case study) ready for occupancy, and among them 56 projects or 80% of them will boast of the highest prestige of freehold tenure. As such, owners of such ‘soon-to-be’ completed units will undoubtedly have the upper hand over the majority of leasehold projects that were sold in last year’s property rally. HISTORIC LOW INTEREST RATE A BIG HELP TO INVESTORS
The received wisdom today calls for the investors to get their feet wet while bank interest rates are still at their historical valley so as to enjoy the fruit of passive income made possible by the unprecedented low costs of capital; rather than waiting for the interest rates to eventually rise when the economy gets better. The same argument has converted many prospective buyers into believing that real estate investments are the best hedge against inflation. While there are no obvious flaws in the optimistic assessment of the current market, it is not to say that there are no inherent risks in property investments. But before we discuss the risks, here are some useful information on the candidates for sub-sales in this year and next. [Table 7] Table [7] – Condos projects likely to receive the Temporary Occupation Permit (TOP) in 2010 SR
Old Code
1 2 3
01 01 03
PROJECT NAME
Marina Bay Residences One Shenton The Metropolitan
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TENURE
99-yr 99-yr 99-yr
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4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
03 04 05 05 05 08 08 09 09 09 09 09 10 10 10 10 10 10 11 11 11 11 12 12 14 14 15 15 15 15 15 15
The Regency @Tiong Bahru Turquoise Botannia Cystal Heights One-North Residences Citigate Residence Kent Residences Cairnhill Residences Luma Rhapsody on Mt Elizabeth Scotts Square The Trillium Ardmore II Cuscaden Residences Orange Grove Residences The Ford@Holland The Orange Grove Sixth Avenue Residences Hillcrest Villa Pavilion 11 At Novena The Axis Sky@Eleven The Centrio The Riverine By The Park Dakota Residences The Amarelle Cantiz@Rambai Espira Residence Espira Spring Esta Ruby One Amber Palm Galleria
FH 99-yr 956-yr FH 99-yr FH FH FH FH FH FH FH FH FH FH FH FH FH FH FH FH FH FH FH 99-yr FH FH FH FH FH FH FH
36 37 38 39 40 41
15 15 15 15 16 16
Palm Vista The Espira The Montage Tierra Vue Bleu @ East Coast Casa Merah
FH FH FH FH FH 99-yr
Table [8] – Condos projects likely to receive the Temporary Occupation Permit (TOP) in 2011 SR
Old Code
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
02 04 05 05 08 09 09 09 09 09 09 09 10 10 10 10 10 10 11 13 15 15 15
PROJECT NAME
TENURE
The Clift Reflections @ Keppel Bay Carabelle The Parc Condo Oxford Suites City Vista Residence Helio Residences Martin Place Residences Parc Centennial The Lumos The MarQ on Paterson Hill Waterford Residence Duchess Residences Grange Infinite Latitude One Jervois Shanghai One Waterfall Gardens MonteBleu Parc Mondrian Blu Coral Park Seabreeze The Seafront On Meyer
99-Yr 99-Yr 956-Yr FH FH FH FH FH FH FH FH 999-Yr 999-Yr FH FH FH FH FH FH FH FH FH FH
WORST CASE SCENARIO
However, there is a flip side to the same coin. Luckily, it is not at all bad for the man in the middle – the real estate agents. Since the 2008 market dip, there have been some signs of incipient fears that some of the condo units which were purchased under the now-defunct Deferred Payment Scheme (DPS) at the height of the 2007 bull-run may be up for distressed sales due to the increasingly A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]
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cautious banks. Some speculators may have their attempts at bank financing snubbed at these tentative moments. Financial institutions in developed countries, including China, are being warned by their central bank to tighten credit risk management to prevent a runaway asset bubble. Some buyers who had back in 2007 taken advantage of the DPS may find themselves at the receiving end with the banks becoming more cautious after MAS had raised the alarm in November 2009. The worst case scenario depicts a sudden collapse of the market confidence in Singapore after a few high profile defaults a.k.a. the Dubai World fashion. BEST CASE SCENARIO
However, many property investors seem to have firmly subscribed to the best case scenario which forecasts that property prices will continue to rise by 3% to 5% in 2010, if not higher, because of the impending opening of the two Integrated Resorts.
for vacant possession uncertainties ahead.
and
the
And the best case scenario seems to be gathering currency at this moment as many housing developers are prepared to roll out the high-end projects that they had shelved in 2009 in anticipation of the better times ahead. LOOKING OVER THE HORIZON
Buoyed by the renewed optimism, housing developers are lining up more projects located in districts 9, 10 and 11 as well as in Sentosa Cove and Marina Bay for launch in the first half of 2010. A 228-unit condo in Sentosa Quayside and a 151-unit Seascape will be launched in Sentosa Cove. In District 9, a 20-unit 42 Stevens was launched in mid-January 2010 at an average price of $1,900 per sq ft (psf). In District 10, 8 Nassim Hill has been launched at $3,100 psf on average in midJanuary 2010. A 229-unit The Laurels and the 64-unit Urban Resort Condo will be launched in the Cairnhill area. Other projects will be in the vicinity of Ardmore Park, Emerald Hill Road, Handy Road, Thomson Road, Holland Residences, The Holland Collection, Emerald Hill Residences and a condo project along West Coast Crescent.
However, regardless of how the scenarios pan out, this should be good news for real estate agents as the sub-sale volume should be much higher than last year due to the record number of new units ready
CDL and Hong Leong Group will commence construction on sites they bought in Chestnut Avenue in 2009. Two other GLS sites, Dakota Crescent and Serangoon Avenue 3 will be launched in the second half of 2010.
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Market Update
A year of great expectation for landlords But likely to fight tooth & nail for tenants
2009 Private Condo/Apt Rent Review
Table [9] shows locations where tenants had to pay higher median rents in November 2009 compared with January 2009. [Table 9]
Median rent is used as it is the amount of rent any prospective tenant is most likely to pay in a normal market situation.
Median RENT ($ )
The methodology used here is to compare the November 2009 median rent recorded in a particular location with the January median rent there to determine the performance.
Contract Date in 2009
harvest of TOP new homes in 2010/11 at preceding page]
A total of 77 locations, comprising about 100 typical ‘hot spots’ favoured by expatriate tenants in Singapore have been selected from the URA REALIS rental records for analysis.
Project Name (Only the well known projects in that location are shown)
Table [9] – 29 out of the 77 selected locations saw median rent RISING
District / location
The objective of this case study is to assist in the projection of the market condition for the next 3 to 6 months, by way of ascertaining whether private home prices will continue to climb due to increasing demand for use, or will they dip due to the availability of more than 10,000 new quality condo units at various locations from this year onwards. [See article ‘Vintage
1
[D1] MARINA BOULEVARD
THE SAIL @ MARINA BAY
2
[D3] JLN MEMBINA
CENTRAL GREEN
3
[D3] ALEXANDRA RD
THE ANCHORAGE/ ALESSANDREA
4
[D4] KEPPEL BAY DR
CARIBBEAN @ KEPPEL BAY
NOV 5.96 JAN 5.79
5
[D8] JELLICOE RD
CITYLIGHTS
NOV JAN
6
[D9] LEONIE HILL RD
LEONIE HILL RESIDENCES
NOV 2.62 JAN 2.59
7
[D10] ORCHARD BLVD
WESTWOOD APT
NOV 2.42 JAN 2.24
8
[D11] DUNEARN RD
DUNEARN GDN / LODGE
NOV 3.46 JAN 3.04
[D11] EVELYN RD
RESIDENCES@ EVELYN / SETIA RESIDENCES etc
NOV
4.8
9
JAN
4.53
10
[D11] ARCADIA RD
THE ARCADIA
NOV 2.88 JAN 2.85
11
[D12] AVA RD
AVA TOWERS
NOV 2.33 JAN 2.19
12
[D14] GEYLANG AVE 2
13
[D15] AMBER GDNS
NOV 4.95 FEB
4.27
NOV 3.38 JAN 3.17 NOV 2.89 JAN
2.83
4.5 4.32
NOV 2.49 EAST
SIMSVILLE
JAN
2.42
AMBER PK / THE NOV 2.68 ESTA / VERTIS JAN 1.82
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[D16] TANAH MERAH KECHIL RD
EAST MEADOWS NOV 2.64 / TANAH MERAH JAN 2.56 MANSIONS
15
[D16] UPP CHANGI RD EAST
NOV 2.11 CHANGI CT / CHANGI GREEN JAN 2.06
16
[D16] BAYSHORE RD
BAYSHORE PK / NOV 2.68 COSTA DEL SOL JAN 2.67 / THE BAYSHORE
17
[D17] MARIAM WAY
BALLOTA PK
18
[D18] SIMEI RISE
CHANGI RISE / NOV SAVANNAH JAN
19
[D19] LORONG CHUAN
CHUAN PK
NOV 2.05 JAN 1.97
20
[D19] SENGKANG SQ
COMPASS HGHTS
NOV 2.57 JAN 2.3
21
[D19] KOVAN RD
KOVAN MELODY NOV 2.99 / KOVAN LODGE JAN 2.65
22
[D19] HG ST 92
REGENTVILLE
NOV 2.25 JAN 2.13
23
[D20] AMK CTR 3
GRANDEUR 8
NOV JAN
24
[D21] TOH TUCK RD
SIGNATURE PARK
NOV 2.04 JAN 2
25
[D21] PINE GROVE
PINE GROVE
NOV 2.55 JAN 2.44
26
[D22] JURONG EAST
PARC OASIS
NOV 2.44 JAN 2.42
27
[D23] BT BATOK EAST
REGENT HGHTS
NOV 2.19 JAN 2.14
28
[D23] BT BATOK CTR
THE JADE
NOV 3.51 JAN 3.1
[D26] LENTOR LOOP
BULLION PK
NOV 1.93 JAN 1.56 2.5 2.42
Next, let’s look at locations where median rents have FALLEN. [Table 10]
Median RENT ($ )
Contract Date in 2009
Project Name (Only the well known projects in that location are shown)
Table [10] – 46 out of the 77 selected locations saw median rent FALLING
District / location
2.7 2.67
In short, not many landlords are jumping for joy.
1
[D2] GOPENG ST
ICON
NOV 5.83 JAN 6.32
2
[D3] INDUS RD
EMERALD PK
NOV 2.97 JAN 3.32
3
[D3] STIRLING RD
QUEENS
NOV 3.68 JAN 3.91
The above statistics show median rent in 29 (or 37.66%) of the 77 selected locations rising marginally over the 11-month period.
4
[D5] DOVER RISE
DOVER PARKVIEW
NOV JAN
5
[D9] RIVER VALLEY RD
ASPEN HGHTS / NOV 3.32 VALLEY PK / JAN 3.51 YONG AN PK
Except for The Sail @ Marina Bay where the median rent had risen 68 cents psf per month which represents a 15.9% jump in the median rent, other landlords are enjoying only small comfort with marginal increases in their rental income.
6
[D9] SCOTTS RD
SCOTTS 28
NOV 4.39 JAN 4.74
7
[D9] CLAYMORE RD
THE CLAYMORE
NOV 4.34 JAN 4.69
8
[D9] JLN RUMBIA
THE IMPERIAL
NOV 5.37 JAN 5.75
9
[D10]
DRAYCOTT 8
NOV 4.36
29
NOV 2.52 JAN 2.21
FINDINGS # 1 – PRIVATE HOME RENTS FIRM BUT NO JUBILATION EXPECTED
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DRAYCOTT PK
JAN
6.79
NOV 5.24 JAN 5.6
JLN SEMPADAN
JAN
2.57
31
[D16] BEDOK RESERVOIR VIEW
AQUARIS BY THE NOV 2.29 PARK / JAN 2.32 BAYWATER
32
[D17] FLORA DR
CARISSA PK / NOV 1.95 FERRARIA PK JAN 2.12
33
[D20] BISHAN ST 21
BISHAN 8
34
[D20] SIN MING WALK
THE GARDENS NOV 1.97 @ BISHAN JAN 2.38
35
[D21] BUKIT DR
THE RAINTREE
NOV 3.73 JAN 4.21
36
[D21] HINDHEDE WALK
NOV 5.43 JAN 5.79
SOUTHAVEN I / NOV 2.12 II / SPRINGDALE JAN 2.24
37
[D22] JURONG WEST
LAKESHORE
5.24
38
LAKEHOLMZ PARC VISTA
LA SUISSE I / II
NOV 2.21 JAN 2.37
[D22] CORPORATION RD
39
[D23] CASHEW RD
[D11] TREVOSE CRES
THE TREVOSE
NOV 3.06 JAN 4.56
CASHEW HGHTS NOV 1.78 / THE ESPA JAN 1.82
40
[D23] DAIRY FARM RD
DAIRY ESTATE
19
[D12] KIM KEAT LANE
CALARASI
NOV 2.41 JAN 2.82
41
[D23] BT BATOK ST 52
GUILIN VIEW
20
[D12] MOONSTONE LANE
MOONSTONE RES / M. VIEW
42
[D25] ROSEWOOD DR
ROSEWOOD / NOV 2.37 CASABLANCA JAN 2.4
21
[D12] LO 1 TOA PAYOH
OLEANDER NOV 2.83 TOWERS / JAN 3.07 TRELLIS TOWERS
43
[D26] YIO CHU KANG RD
NOV SEASONS PK / THE CALROSE JAN
44
AVON PK
[D27] YISHUN ST 81
ORCHID PK
22
[D13] YOUNGBERG TERRACE
NOV 2.04 JAN 2.18
45
SELETARIS
[D13] LEICESTER RD
[D27] SEMBAWANG RD
NOV 1.88 JAN 2.13
ONE LEICESTER
46
NOV 1.92 JAN 2.25
ASTORIA PK
NOV 2.73 JAN 2.84
SELETAR SPRINGS
24
[D14] LOR MYDIN
[D28] GERALD DR
25
[D14] JLN KEMBANGAN
THE TRUMPS
NOV 2.67 JAN 3.82
26
[D15] RHU CROSS
COSTA RHU
NOV 2.55 JAN 2.71
27
[D15] FERNWOOD TERRACE
FERNWOOD TERRACE TOWERS
28
[D15] SIGLAP RD
MANDARIN GDN
29
[D15] TG RHU RD
PARKSHORE / NOV 2.76 PEBBLE BAY / SANTUARY JAN 2.93 GREEN
30
[D15]
VILLA MARINA
10
[D10] ARDMORE PK
ARDMORE PK
11
[D10] CORONATION RD WEST
ASTRID MEADOWS
12
[D10] NASSIM RD
NASSIM PK / NOV 5.31 NASSIM JAN 6.24 REGENCY
[D10] EWE BOON RD
PALM SPRING / NOV 2.82 EWE BOON JAN 3.17 REGENT
14
[D10] RIDLEY PK
TANGLIN PK
15
[D10] WILBY RD
THE TESSARINA
16
[D11] NEWTON RD
AMARYLLIS VILLE NOV / ELMIRA HGHT / JAN NEWTON 18
17
[D11] SWISS VIEW
18
13
23
NOV 3.58 JAN
4.26
4
NOV 2.57 JAN
3.19
AUG
1.77
JAN
2.14
NOV 2.27 JAN 2.83
NOV 2.94 JAN 3.19
NOV 3.12 JAN 3.48
NOV 3.47 JAN 3.54 /
NOV 2.43 JAN
2.48
FARM NOV 1.83 JAN 1.96 NOV 2.37 JAN 2.39
2.2 2.28
NOV 1.65 /
JAN
2.68
NOV 2.38 JAN 2.63
NOV 2.34
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FINDINGS # 2 – RENT FALL UNEVENLY WITH PRIME HOMES HEAVILY HIT
The above statistics show median rent in 46 (or 59.8%) of the 77 selected locations falling over the 11-month period. Rent falls were uneven in different locations. For example, in District 2, the November median rent for Icon fell 7.8% or 49 cents from $6.32 psf/pm in January 2009 to $5.83 psf/pm in November 2009.
LOOKING OVER THE HORIZON
In the months ahead, there is unlikely to be any wild jubilation as the findings of an earlier study on the ready supply of quality new homes this year confirms that private landlords will be having a keen competition among themselves due to the advent of more than 10,000 new homes.
In District 10, the fall is heavier with the monthly median rent of Draycott Park falling 35.8% or $2.43 psf/pm. The November median rent there is $4.36 psf per month, while it was $6.79 psf per month in January 2009. In District 11 Trevose Crescent, the monthly median lost 32.9% or $1.50 psf per month in absolute term from $4.56 psf/pm in January 2009 to $3.06 psf/pm in November. In other outlaying areas rents fall moderately within the 6% to 12% range, for example, in Rhu Cross the November median rent lost 5.9% or 16 cents psf/pm; while in Sembawang Road, the November median rent lost 11.8% or 25 cents. Only 3 out of the 77 selected locations saw median rents remaining unchanged and they are D19 Serangoon Avenue 3 with popular projects like Chiltern Park, Springbloom and the Sunnydale; District 23 with project like The Warren; and District 27 with projects like Yishun Emerald and Sapphire. It is not surprising to see median rent in Yishun stagnating because at $1.12 psf per month, there is no more room for any downward adjustments.
• MARKET UPDATE
MORE LAND-BANKING OPTIONS FOR DEVELOPERS Land sale activities warm up “When there is somebody who wants to BUY it, there will be somebody who will SELL it.” This is how I look at the Government Land Sale (GLS) Program Reserve List which may well be likened to a thermostat to ensure no big fluctuation of temperatures.
Of late, a few previously dormant sites were triggered off for public tenders after certain developers had put in their commitment to bid for the sites in the tender. The renewed interests for new government land sites are probably due to the perceived improvement in the market sentiment.
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ON SALE AGAIN – TEN MILE JUNCTION SITE
The first GLS site up for tender in 2010 is a 1.56 ha mixed commercial/residential site at the junction of Choa Chu Kang Road and Woodlands Road and it comes with the Ten Mile Junction complex sitting on it. The commercial space has a gross floor area (GFA) of around 121,191 sq ft on the first two levels, while an LRT station occupies the third level.
Development Board (HDB) in December 2009 unexpectedly received 32 bids. The winning bid was $38.5 million or $253.69 psf of land area. Other bidders include a joint venture between Hoi Hup Realty and Sunway Developments (about $38 million), ACT Nobel Homes ($35.12 million) and CEL Development ($32.345 million). SENGKANG RESIDENTIAL SITE UP FOR SALE
In fact, in April 2008 a bid of $61m or $162 psf ppr put in by an obscure developer for the same site was rejected by URA which later withdrew the site altogether. Various property experts reckon that the site is worth more than $130 million. RESIDENTIAL SITE AT BARTLEY ROAD PUT ON RESERVE LIST
The plot is 182,973 sq ft and has a maximum allowable gross floor area of 548,920 sq ft. It can yield about 450 units of 1,200 sq ft.
A 99-year leasehold residential plot along Bartley Road/Lorong How Sun is now on sale. It is near a residential estate next to the Bartley MRT. It has a site area of about 2.21 ha and can generate a maximum gross floor area (GFA) of 61,865 sq metres. The land parcel, which is located between Bartley Road and Lorong How Sun, was first unveiled during the GLS programme for the second half of this year. WESTWOOD LANDED OVERWHELMED
PROPERTY
A 99-year leasehold residential site at the junction of Sengkang West Avenue and Fernvale Link has been triggered for sale from the reserve list. A developer has committed to pay at least $70 million, or $128 per sq ft of gross floor area.
SITE
A 99-year leasehold landed housing sites at Westwood Avenue in Jurong West put up for tender by the Housing and
Other than the government land sale programme, private collective sales appear to be warming up as well. In December 2009, the first and only collective sale deal was struck. Dragon Mansion was successfully sold to RoxyPacific for $100.8 million or $863 psf ppr – almost $20 million off the original asking price of $120 million. MAYFAIR GARDENS COLLECTIVE SALE
Mayfair Gardens, in Rifle Range Road, is up for en bloc sale. The asking price starts from $210 million, excluding a further $40 million as *differential premium for the
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topping up the site's lease to 99 years. With the additional tax payable, the unit sale price will work out to be at least $857 per sq ft per plot ratio (psf ppr). The 124-unit Mayfair Gardens has a remaining lease of about 72 years. The land area is 208,475 sq ft, with a gross plot ratio of 1.4. The site is next to other private residential projects and near Bukit Timah Plaza and Beauty World Plaza.
*Differential premium (DP) is a form of tax land owner pays the state for lifting of state restrictions. In this case, the DP is to pay for the topping up of the state lease to its full 99-year term. GREEN LODGE COLLECTIVE SALE
Freehold Green Lodge at Toh Tuck Road has been put up for collective sale - the second residential site to be marketed en bloc this year.
Plaza and Bukit Timah Plaza, and will be close to the upcoming Beauty World MRT station.
• MARKET UPDATE
When freehold owners sell only 99-year lease Are buyers being short-changed? Units at the former Rose Garden in Katong are now being sold with a 103-year leasehold period, even though the land tenure is freehold which means the land ownership is ‘forever’. The leasehold project is now known as The Shore Residence. The rare move of selling the units for only 103-year lease term despite the freehold land tenure means that the developer, Far East Organisation (FEO) will have to price the project at slightly lower prices than its other freehold projects.
There will be a $9.5 million development charge payable, bringing the unit selling price to $683 per sq ft per plot ratio (psf ppr).
Actually, the ultimate prize that the largest private property developer in Singapore is coveting is the reversionary right* of the land which, when the time arrives, will allow the developer/landowner to reap huge financial rewards again, e.g. to be paid again for agreeing to extend the lease period or for outright sale of the entire freehold tenure.
Green Lodge currently comprises 80 units ranging from 1,679-2,110 sq ft in size. There is potential to redevelop the site to house around 211 units with an average size of 1,000 sq ft. The average selling price of the new development is expected to be at least $1,250 psf.
In fact, FEO had purchased the old freehold Katong project via a collective sale in 2006 for $169.8 million or $423 psf of potential gross floor area. By comparison, this was much cheaper than the $600 psf ppr FEO paid for the Ang Mo Kio site where Centro Residences now is.
Green Lodge is located among other private residential estates, including Rainbow Gardens which was also sold en bloc in 2007. It is also near Beauty World
*Reversionary right refers to the right to repossess land in the future. When a 99year lease expires, the land must be reverted to the freehold owner.
The freehold estate has a land area of 151,075 sq ft and a plot ratio of 1.4. The owners are asking for $135 million.
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PRIVATE FIRMS HAVE ADVANTAGE OF SUCH LONG TERM ARRANGEMENT
While FEO cannot realise the full potential of the site now, by retaining the freehold tenure it will ultimately have the upper hand in the negotiation of a possible collective sale many years later. Alternatively, FEO can buy back the project and redevelop it again. This is perhaps one of the benefits of remaining a privately owned firm where the patriarch can make decisions now to benefit many future generations.
reversionary right for the entire 99-year lease period, and will get to repossess the land at the end of the 99-year term. EXAMPLE #2 & #3
FEO also owns two cluster housing projects - Cabana and The Greenwood on freehold land with 103-year leases. The 119-unit Cabana is in Sunrise Terrace, near Yio Chu Kang MRT station, while the 54-unit The Greenwood is in Greenwood Avenue in District 11. EXAMPLE #4
EXAMPLE #1
In Singapore, leasing out lands for a ‘long but definite’ term of 99 years instead of selling the entire freehold tenure outright is not without precedents. FEO itself has done it before and other lesser known outfits are also known to have done it, such as MUIS, a Malay-Muslim self-help group in Singapore which owns the freehold rights over Chancery Residence at Chancery Lane in District 11. In 2005, MUIS’ development arm Warees Development Pte Ltd launched and developed the 40-unit cluster housing project at Chancery Lane. The project is now being owned by 40 subsidiary proprietors of the strata-titled landed housing project for a 99-year term commencing 2004. While the 40 subsidiary proprietors are listed as the ‘lessees’ in the strata title, MUIS being the freehold owner is listed as the ‘land proprietor’ in the same title. In the interim, the 40 subsidiary proprietors are considered the legal owners and are entitled to the exclusive rights of possession, enjoyment, and disposition. MUIS in turn holds the
In 1991, City Developments bought the former Grange Road residence of the American Ambassador for a 99-year term and developed the site into the present Spring Grove condo. Prior to that, the United States government bought the freehold land in 1950 and sold the same land to CDL on a 99-year lease commencing 1991. Upon expiry of the 99-year lease, CDL will have to return the land to the US government – lock, stock, barrel - without any charges. EXAMPLE #5
On 6 August 2009, The Straits Times reported that an 86,402 square foot plot at No 162 Tagore Avenue, within the Teachers Housing Estate, was put on sale with an indicative price of $15 million. The freehold land was offered for sale on a 99-year leasehold tenure by the Singapore Teachers' Union, which will continue to hold the freehold interest in the property, and of course, the reversionary right. However, it is not known whether the sale was successful.
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FEO HAS ADVANTAGE IN COLLECTIVE SALE NEGOTIATIONS
FUTURE
In the FEO’s case, when the land on which The Shore Residence sits is ultimately ripe for collective sale again, it will be FEO and not the government which will have the final say in the negotiation. Being the freeholder, FEO has a few options, including granting a lease top-up (which will entitle it to collect a premium payment from the buyer), buying back the land, or sell the freehold tenure altogether. THE END-GAME OF ALL CONDO INVESTMENTS IS COLLECTIVE SALE
Actually, this is a win-win situation for both the freeholder and the 99-year leasehold owners because by the time the condo project is at ripe old age of say 40 to 50 years old, the property would have suffered from all sorts of obsolescence including functional as well as economic obsolescence. This is because any housing project of such grand old age will be too expensive and impractical to maintain on a day-today basis – the repair costs would be high and the rental value low. As such, it will become economically obsolete for the owners to hold on to an investment that drains their financial resources, such as on recurring repairs. FREEHOLD LAND DEPRECIATE
VALUE
DOES
NOT
On the other hand, the underlying land value is being upheld and even enhanced by the presence of newer housing projects in the nearby areas that collect higher rents. As such, housing developers are often motivated to buy over old estates and redevelop the land into new
apartments so as to enjoy higher rents subsequently. RENT DETERMINES SALE PRICE
At the end of the day, it is the rents being collected at similar properties in the same locality that supports and upholds the land value of ageing properties. While old units in old condos cannot command high rents due to its obsolescence, a brand new condo with brand units in its place will be able to. The difference between the two values (i.e. the future rental return and the current low value) will attract housing developers to make the move to buy over every single unit in an old housing estate so as to own the land. COLLECTIVE SALE DEFINED
When all or the vast majority of owners in a private housing estate put up their respective units for sale to one single buyer so that the buyer can own the land, the sale is called Collective Sale. As such, regardless of the tenure (whether it is freehold or leasehold), each and every condo/apartment owner will be able to reap the ultimate return in a collective sale. In this case of FEO, for as long as it continues to lease the freehold site for 99year leasehold tenure and keep the reversionary right, it will be able to reap the financial rewards again and again every 40 to 50 years when the collective sale opportunities arise. At least in theory, that is.
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