Property Market Direction - February'09 Issue by Gian Sam

Property

MARKET

DIRECTION

FREE Quarterly Magazine by Sam Gian The Independent Real Estate Sales Consultant in association with

www.update.sg MICA permit 239/06/2008 Issued in February 2009 by

Bottom of the Pandora Box In this February 2009 issue – Market Update – Does Budget 2009 help the property market? Worst year for Primary Sale market HDB resale – should be a plain sailing year Analysis of Price Trend and Market Behaviours Policy Updates – Additional CPF housing grant enhanced Sam Gian’s FREE “Six-Month Market Projection” Seminar will be held on 11th March 2009 & 12th March 2009 from 9.30am to 1.00pm at HDB Hub Auditorium.[Details inside] Also look out for Sam’s FREE “Rookies’ Survival Course” specially catered for New & Inexperienced agents in this Recession!

Table of contents

Singapore Property Market Review

Editor Sam Gian www.update.sg

Two cents’ worth: Desperate measures for desperate Times [page 3]

Market Update (1) Is Singapore Budget 2009 any good for the property market? [page 6] (2) Is the housing crisis anywhere near its end?

This magazine is titled: “Bottom of the Pandora Box” because the unfolding of the current global crisis in mid-2007 was like the opening of the Pandora box, from where all ills and evils were released into the human world. Fortunately, the mythical tale ended with a positive twist, that is, the last thing that lied at the bottom of the Pandora Box was HOPE for Mankind. Therefore, I call on you not to lose HOPE, for beneath every crisis in the human society lies a story; and every story has a moral; and every moral tells us to obey balance, moderation and harmony in the universe. Everything has an opposite side to it and every action causes a reaction. We now know what caused the financial crisis in the US. It was because money was too easy to be had – without needing the virtue of an honest labour or enterprise. And when the journey to wealth was short-cut, and when success becomes too easy to be had, people lose sight of the need for balance, moderation, and harmony in their life. In these times of turmoil, let us not forget that ‘good things’ and ‘bad things’ co-exist, and are constantly trying to find the balance between them. It is always during bad times that we ascertain our core values. In fact, bad recession always provides great opportunities for us to improve ourselves tremendously. With each day the recession goes deeper, our service will become better and, as people, we become more considerate and compassionate. If there is more havoc in the world tomorrow, our mind will become clearer and sharper because we have been using it more intensively, quizzically and critically. I am sure if the market were to worsen, we will grow even stronger because we will work harder and acquire more skills and techniques to get the best results we desire. I am sure we will never become poorer due to the on-going crisis, but quite the contrary, we will become more pro-active, constructive and creative due to the crisis.

[page 8]

(3) Where is the private home market heading? [page 11]

(4) How long will home rent hold? [page 15] (5) Should be plain sailing for HDB resale

market in 2009 [page 17] (6) HDB resale price may ease due to recession [page 19]

(7) Long festivals dwarfed HDB resale figures in

January 2009 [page 23] Issues in the News (8) Developer prepared to use the Stick [page 24]

(9)

Developers thinking laterally [page 25]

Tips on Selling (10) How to save costs without cutting effectiveness – by Jacob Tay [page 26] (11) Top 20 Best Selling Condos [page 28] (12) Ice breaking techniques – by Sean Fong [page 29]

(13) How to be an Effective Negotiator [page 31]

Policy Update (14) More money for heartlanders to own flats [page 33]

(15) Plot size control for Cluster Housing [page 34]

FREE Quarterly Magazine issued by

Sponsored by

Sam Gian Independent real estate sales Consultant

in association with

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

1|Page

Singapore Property Market Review

Selling Real Estate in a Recession Selling Real Estate in 2009 will be like walking through a jungle rigged with landmines. You must watch every step you take. To walk out of the jungle safely, you must stay light, know how to create simple devises, and conserve energy and limited resources. A road map certainly helps; but taking the jungle survival course to prepare yourself is a MUST.

Rookies’ Survival Course Sam Gian will be organising the following FREE training courses for new and inexperienced agents so as to equip them with the basic selling skills to survive the economic downturn. The topics include the following:

How to PREPARE a Listing for Effective Marketing and Closing How to EDUCATE Customers on the Correct Price

Who need to attend – those who are: inexperienced don’t know ‘what to say’ to your prospects don’t know ‘how to convince’ your customers don’t know how to get a listing sold effectively Date: April 2009 (Exact Dates To be Confirmed) Venue: HDB Hub Training Room Keep a Look-out for more details soon! A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

2|Page

Singapore Property Market Review

Two cents’ worth

Desperate measures for desperate times It’s time to roll up sleeves and paddle In July 2007, I warned that “we are near a crisis of an epic proportion”. At the time of writing this article, the debates are still raging in Parliament as to how the custodians can better refine the act of drawing on the country’s past reserves. The grim fact is that, for the first time in Singapore’s history, the ruling government of the world’s most compulsive ‘personal account’ savers has decided that the current recession, which is only at its onset, is bad enough to justify the ‘last resort’. When a supermodel of corporate prudence thinks that the situation is bad, it must be darn bad. The fact that the Singapore government has to resort to such a desperate measure at the first instance, with such swiftness and boldness, speaks volume of the magnitude of the crisis that is about to hit town. It also means that whatever that is visible now is only the tip of the iceberg. A bear who names himself ‘OX’

As it is, the year that just went past us was best to be forgotten, if you are a property seller – big or small immaterial. New home units can’t sell – in fact, 2008 was the worst year in two decades for the primary home sale market [Full article at pages 11 to 12]. Neither did the secondary sale market perform any better when compared with recent years’ records [Full article at pages 13 to 14]. Even the usually reliable HDB resale flat segment is showing some weariness of late and demand for resale flats has receded since the final quarter (Q4) of 2008. [Full article at pages 19 to 22], However, on the whole, the HDB resale flat segment holds the largest promises for 2009, due to the increase in state subsidises for

low- to middle-income households [Full article at page 33]

Asset deflation is on

Barely a month into 2009, property prices and rents have either already fallen or begun their downward slide across the board, with highend luxury home segment taking the reluctant leadership. In fact, it was the luxury home segment that led the market bull-run in 2007, breaking records month after month with impunities. The ‘late blooming’ industrial segment was the last to fall prey to the recession. It still rose at impressive rate in the first half of 2008 but stepped on the banana skin in the final quarter (Q4) of last year. In the final analysis, no one is sparred in the worst economic downward spiral ever to hit Singapore. Though the recession is still far from being fullblown, we have seen traces of the panic experienced during the 2003 SARS epidemic – restaurants were empty, taxi queues lined the streets, and people conserved their cash. Nowadays, people become more religious, or at least, prayed more times a day. But back in 2003, the economy in the richer nations was booming and their thirst for Asian imports was insatiable. In fact, the US and the European Union (EU) were the ‘white knights’ who sucked in most of the Asian exports and in the process pulling every Asian economy out of the recession quickly. But, not this time. The erstwhile ‘white knights’ are turning pale through massive haemorrhage in their respective domestic economy. Major corporations in the richer nations are critically ill and are in dire need of massive injection of liquidity from their respective governments, which have also lost the plot themselves.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

3|Page

Singapore Property Market Review

The awakening or the awaiting Dragon? The much touted theory that China and India would pull the rest of the developing countries in Asia out of the recession seems to have lost its currency. The emerging economic powerhouses are faltering without the high demand from the US and EU. The talk about Asia being ‘de-coupled’ from the US economy is fundamentally flawed as most Asian exporters are neither far-sighted, nor motivated enough to sell to their own domestic market. Asia looks set to go down as a consequence of the global financial vicious cycle. With the US fast becoming a ‘cashless’ society and the nation of big spenders staring at a lifetime of debts, no Asian exporters can expect to export their way out of this recession, until and unless the richer nations can put their acts together sooner rather than later. In short, we all are in deep trouble, at least for the whole of 2009. There seems no way to escape a deep and painful recession with no Uncle Sam, The Last Samurai, or the Awakening Dragon to rescue us. Every nation on this Planet Earth will be suffering in equal misery. Consequent change in Buying behaviours

In a crisis of such magnitude, people’s value, needs, and priorities will change as their immediate financial future becomes hazy. People are now more concerned about their basic livelihood – forget about pay rise, forget about promotion – just try to keep the job. People are more frugal, prudent and restrained – no more cooking courses in exotic locations. Many more will switch to cheaper substitutes in everything they consume, even the daily essentials such as the newspapers.

Maybe they will also cancel their daily newspaper subscription and switch to on-line news. The monthly subscription of one set of newspaper in Singapore e.g. The Straits Times, Business Times, or Zao Bao, is between $23.00 and $25.00; and a typical household may subscribe to two sets (plus news magazines such as Times or The Economist) and that would cost up to more than $50.00 a month. In bad times such as now, I am sure many of them will cancel the subscriptions and switch to FREE internet news and on-line newspapers. Likewise, when it comes to buying of a home for themselves, the search process may be permanently changed – now that the Internet offers so much more quality leads on property listings 24/7 absolutely free of charge. Such behavioural change in prospective home buyers may turn out to be the most critical difference being made to a real estate agent’s marketing plan and costs. [Page 26 on Tips on Advertising – by an industry veteran, Mr Jacob Tay] Fewer risk-takers and speculators

Most importantly, people are less likely to take any kind of investment risks in this precarious economic climate. They don’t even trust the banks anymore. This more or less explains why even the mass market new condos are not moving, despite the goodies being dangled by the developers to entice them to come to the show flats [Full article at page 25]. Speculators who are stuck with new home units which they bought under the Deferred Payment Scheme (DPS) are now at their wit’s end as the completion dates of many new condominiums draw closer. Some of those who have tried in vain to offload their units may entertain the thought of walking away from the sale contract. But, the developers have already sounded the ‘war cries’ – “if you walk away, we will sue”. ([Full article at page 24]

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

4|Page

Singapore Property Market Review

A time-bomb is ticking in this segment. Things may get ugly in the ‘knock-out’ round.

I have the following answers to the questions: NO – more people will switch to FREE online

On the other hand, potential condo buyers ‘outside the ring’ are not prepared to join the fray at the current price point and uncertain environment. Many of them understand the tremendous opportunities awaiting them. The equation is becoming clearer each day, the more the ‘fire sales’, the cheaper will be the sale price.

The waiting game is on.

Why rush and be cramped in a crowded train, when you can travel in comfort and style and pay the same price? Patience is a great virtue in times of need.

Acclimatise to the new realities As it is, January 2009 was a month of more glooms with more wage earners receiving the pink slips – certainly not red packets for Chinese New Year. Ironically, those who still have to slog are fearful of having free time at the office.

property portal. NO – buyers will no longer make hasty

decisions as they are more careful with their spending nowadays. NO – the bear market is here to stay; and you

will need to take longer time to market a listing and put in more efforts to persuade buyers to buy it. Lastly, on the question of PRICE, I believe the market is still trying to find the right balance and the price equilibrium. A house is still everybody’s ultimate priority – crisis or no crisis. People are just disoriented right now and their irrational behaviours are symptoms of the fears for the unknown they feel inside. Our customers need time to adjust their own value system so as to be able to make sense of what is going on around them as well as at the property market; and they need time to acclimatise to the new realities that things will never be the same again.

The lost herd will return. They will find their way eventually.

Are the very people who fear losing their jobs really in danger of losing them? Well, the numbers from the government do not add up very well. [Full article at page 10]. Given such an economic backdrop, would prospective home buyers react to the conventional advertisements that worked so well for you during the 2007 Bull Run? Would they still make hasty decisions at the slight prodding of the real estate agents like they did during the Bull Run? Are there still chances of agents getting their director to buy a listing and then flip it two days later for $250,000 in profit? Is it a question over price or are people delaying, or worse, shelving their home ownership plans altogether?

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

5|Page

Singapore Property Market Review

Market Update

Singapore Budget 2009 Any good for the property market? [Question]: Will Budget 2009 revive the property market bull? [Sam Gian]: The short answer is NO – it will not. And here are the long answers.

In the past, they are required to sell all the units in their project within two years of completion and are not allowed to rent out unsold units.

There weren’t any demand-side goodies

The very obvious absentees in the Budget are the recent demands made by developers, including all the demand-side boosters, such as suspension of stamp fees and the reinstatement of Deferred Payment Scheme which was singularly blamed for stoking the speculative fervour in 2007. Let’s look at what was installed for the property market by the Finance Minister.

The measure is to provide the developers with greater flexibility in building and selling their developments according to market conditions. This will enable the developers to better cope with the downturn. Moreover, all property owners and firms will also benefit from the Inland Revenue Authority of Singapore's bringing forward of its assessment on property taxes this year. All are supply-side initiatives

There will be a two-year deferment of property tax for land approved for development. Property developers who bought government land sites and foreign developers who own private residential land in Singapore are given a one-year extension, beyond the normal six years before they commence development. Property developers, including foreign ones with Qualifying Certificates, are allowed to resell the land or dispose of their interest in it before Jan 21 next year. Before the 2009 budget, they were not allowed to resell the sites. Foreign property developers are given two more years to dispose of the units and they can also rent out unsold apartments for up to four years.

The Budget builds on the supply-side measure which took effect last October, i.e. suspension of the sale of state land through the confirmed list until June 2009. Developers’ long wish-list snubbed

In fact, before the budget day, developers in Singapore had clamoured for the reinstatement of the deferment of stamp duty payment for projects under development, the reintroduction of the deferred payment scheme (DPS) with more safeguards being built in, and a temporary cut or suspension of stamp duty. The developers even suggested changing the investment criteria for Economic Development Board's Global Investor Programme for foreigners to be considered for Permanent Resident (PR) status, by allowing a higher quantum for property purchase. (Since July 2005, a foreigner can be considered for PR status if he invests at least $2 million in business set-ups, other investment vehicles, and/or private residential properties, with up

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

6|Page

Singapore Property Market Review

to half of the investment allowed in private residential properties.) Calling any artificial measures to create demand ‘pointless’, the government stood firm on its priority of saving jobs at this critical time and set aside the developers’ requests. When will the demand boosters come?

When the job market improves and the allround economic situation looks more hopeful, says the government, without giving any specifics. However, it is very clear that the government is unusually panicky this time round, perhaps because more white-collar jobs are on the line and household income across the island is expected to fall drastically. In fact, there are still much to be done to revive the property market. For one, the hefty Development Charge (DC) is still artificially high with the DC rate at 70% of the market value. Reverting the DC rate to its original 50% would help restore the incentive developers may need when redeveloping old buildings and help the government to prevent city slumps being formed in the pristine citystate. Conclusion Most importantly, for the property market to be revived, people’s confidence must first be restored. There is no point stimulating demand for private properties when the general public are fearful of losing their jobs. It seems that the road to recovery will be a long and tortuous one.

Property Tax Rebates brings much needed relief

Having said that the 2009 Budget won’t bring back the market rally, another measure in the new Budget will definitely help small businesses, who are real estate agents’ customers. There will be a 40% property tax rebate for landlords of industrial and commercial properties. This is to improve Singapore’s economic competitiveness and help to reduce business costs for everybody. CapitaLand was the first to announce a corresponding cut in rents, bringing the much needed relief and feelings of goodwill among its tenants. All home owners also benefit from the 40% property tax rebate for owner-occupied residential properties for 2009. This tax incentive aims to help Singapore at large to cope with the worst economic recession in decades. Right now, owners of self-occupied homes pay a property tax which is equivalent to 4% of the property's net annual value. From year of assessment 2010 onwards, owners who own higher-value homes (homes with a net annual value* of more than $150,000) or secondary residences need not pay income tax on the net annual value of their property. *The net annual value of a property is an estimate of how much the property will fetch on the rental market, less related expenses.

Sam Gian’s take: Say what you like about the Budget, I think it shows a lot of spine. A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

7|Page

Singapore Property Market Review

Market Update

Is the crisis anywhere near its end? Let’s examine the symptoms It’s a longer cycle this time It’s too late to say the ‘we should’ve accepted the offer’; and too early to tell when property prices will return to their ‘original’ level.

It is anybody’s guess as to when the foreign investors will come back to buy with a vengeance. Consumer confidence in US must return first

Many agents-cum-investors have asked me whether they should hold on to their investments for 5 to 6 years for the prices to come back to the level they had bought the properties so as to recoup their investment costs. I know what they want to hear is ‘Yes you should’ because they are going to burn a big hole in their pocket if they sell now. But the truth is that I do not see any solid evidence to suggest that this is a short cyclical phenomenon; and I do not think the property market, at this critical juncture, works in this way anymore.

On a larger picture, the global financial woes must be healed first before the property prices can stem the slide and come back to normal health. With such reckoning, as long as the US economy (and thus the entire world’s) is still in disarray, the housing crisis will continue to worsen. This time round the cycle will be longer because of the deeper recession.

The reason is because property developers have scaled back many development projects and save them for better times. For projects that have already been launched, many developers are adopting the strategy of keeping the choice units and marketing only the average ones that are either on the lower floor levels or without good views – in the hope of recouping their losses when home price recovers. Any price increase will be neutralised

This means that whenever home prices recover a notch, the developers will make the better units available for sale as ‘new units.’ This will directly pose a challenge to older second-hand units. Moreover, with the supply glut of over 40,000 new condos/apartments in the pipeline, and an average annual take-up rate of around 8,000 units in normal times, the tug-of-war between the developers and second-hand condo sellers may drag on for at least five years – bearing in mind that foreign investors have been sidelined and are now licking their own wounds.

While waiting for the ‘spinning to end’, why not read to improve yourselves

As the American politics is very complicated for a Singaporean, who is used to one-party rule for 44 years, I believe it is easier to explain things if we just try to look at the symptoms, rather than trying to analyse the root causes. By this, I mean if the American consumers are spending again, whether buying houses, car, or Starbuck coffee, consumer confidence will soon be restored; and the rest of the world will be confident to spend again. Only then can we begin talking about economic recovery. For this, I would look directly at the home sales figure in the US, much like taking the body temperature

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

8|Page

Singapore Property Market Review

of a patient, to see whether the symptoms have subsided. Unsold inventory still swells

A recent January 2009 report by the National Association of Realtors (NAR) in the United States showed that, as of December 2008, the inventory of existing homes in the US was 3.68 million units. A month earlier, the unsold units were higher at 4.16 million. It means that the swelling has subsided somewhat, but still remains at a high level and warrants close monitoring. The current inventory level translates to 9.3 months of supply. It means what otherwise took weeks to sell now takes 9.3 months to offload.

Long and agonising wait for a qualified buyer to give a decent offer

According to a US Census Bureau report dated 3 February 2009, in Q4 2008 alone, a total of 130.8 million housing units, including 2.23 million empty homes, were on the resale market. In all, a total of 19 million US houses are left vacant at the end of 2008, including properties for sale and for rent. Vacant homes in the fourth quarter (Q4) 2008 jumped by 6.7% from the same period a year ago. There may be some alleviation of the swelling of unsold inventories but it was due to two negative factors.

Firstly, fierce mortgagee sales are responsible for the reduced inventories, particularly in the West where lower prices are helping pull in new buyers. By itself, this is not a very good news as it exacerbates problems faced by existing home sellers. Secondly, the lowest mortgage rates in decades also contributed to better home sale. As of the third week of January 2009, interest rates on the 30-year fixed-rate mortgage averaged 5.12%, nearly 1% point lower than in late November, according to Freddie Mac. Home prices are still in the valley

On the whole, that home prices are still falling in the US (which means asset depreciation) and the NAR report showed that the median national home price fell 15.3% from 2007 earlier to US$175,400, the largest decline since the association began tracking sale prices in 1968. The price fall is probably the largest since the Great Depression, Home prices in the US are now at the lowest in six years and are still falling. It is bad news for desperate home sellers as it still takes threequarters of a year to sell a house. Other indicators are equally grim

About 598,000 jobs in the United States were lost in January 2009 as the world leader entered the second year of recession. On top of that, there will be 241,749 planned layoffs in the same month. That will be the second highest record next to the 248,475 planned job cuts in January 2002. On 6 February 2009, the US Labour Department announced the record-breaking unemployment rate of 7.5% from last December's 16-year high of 7.2%. The service sector was the worst hit with 279,000 jobs lost in January 2009, after 415,000 in December 2008. A record spending slump has inflicted heavy losses on retail business operators and before consumer

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

9|Page

Singapore Property Market Review

confidence returns, more businesses will be closing shops. The US Commerce Department says that the recession is projected to deepen after the world's largest economy shrank last quarter by 3.8% - the worst contraction since 1982. Downward spiral still severe

As unemployment rate continues to climb, more and more home owners are unable to meet the mortgage repayments, causing more foreclosures which in turn further depresses home prices. It is the worst downward spiral since the Great Depression. While the Obama administration is considering government guarantees for home loans to thwart soaring rate of foreclosures that are flooring US property values, more home owners with negative mortgages are simply walking away from their properties. [See ‘Developers prepared to use the stick’ at Page 24]

The Ministry of Manpower (MOM) expected the layoffs to reach the 30,000 levels seen in previous recessions, like the 1998 Asian financial crisis. The number of new jobs creation may not reach 2008’s level of 227,200 new jobs. This is because most of the new jobs were created in the first half of 2008 and the situation worsened when the crisis in US worsened in the second half of last year.

Singapore GDP contract 12.5% in Q4 In the meantime, Singapore’s economy contracted by 12.5% in the fourth quarter (Q4) of 2008 against the previous quarter; and it was the largest quarterly decline ever reported. The export-oriented manufacturing sector lost 8,300 jobs which amounted to about threefifths of total retrenchments. The services sector laid off 4,900, most of them were in financial services who were retrenched in Q4 2008. Retrenchments are expected to rise throughout 2009 as global demand continues to stay weak.

Job losses in 2009 will be phenomenal Net job losses may reach 34,000 in 2009, exceeding the 20,000 to 25,000 net jobs lost in previous recession years in 2001 and 1998.

16,000 lost jobs last year in Singapore Back home in Singapore, dark clouds have gathered over the horizon and a rain storm is brewing. The jobless rate in 2008 was the highest in five years with 16,000 workers retrenched. Out of these, 13,400 were retrenched and the remaining 2,600 were contract workers whose contracts were not renewed.

In December 2008, Singapore's unemployment rate rose to 2.6%, up from the 2.2% in September 2008. When only citizens and permanent residents are taken in the calculation, the corresponding rates were even worse at 3.7% and 3.3% respectively. It seems a lot of people will get wet without the umbrella.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

10 | P a g e

Singapore Property Market Review

Market Update

Where is the Private Home Market heading? The Unrequited Love of Supply and Demand in 2009 “I have this funny feeling that Demand does not want to marry Supply after they made love in 2007. I don’t think he ever loves her at all. If not, why would Demand always avoid Supply whenever she speaks of meeting again?” if the real estate market is a romance movie, this is what the audience may say. This is the time everybody tries to keep their jobs – including property analysts and consultants who have also fallen on bad times. God knows which one will lose his or her job for predicting the wrong thing. So, to play it safe, the vast majority of property consultants are placing their bets on the private home prices falling a further 10% to 20% in the full year of 2009. That is really not a difficult guess, considering their own incipient fears. Home prices took a tumble in Q4 2008

The January 2009 Urban Redevelopment Authority (URA) data confirms that the private home prices continued to fall in the final quarter (Q4) of 2008, losing a further 6.1%. The slump is on top of a 2.4% fall in Q3 2008, which was the first decline in over four years – in stark contrast to the spectacular bull-run in 2007 with home prices rising 31.2% for the whole year. In Q4 2008, homes in prime districts fell the most – by 6.5%; while suburban home prices dropped 5.9%. The slump in suburban home prices coincided with price rise in HDB resale flats in the same period, indicating general cautiousness among wage earners who may have opted for the safety of subsidised housing in these difficult times.

New Home Market the worst hit

The loss of buying confidence was clearly shown in the new home market. For the whole of 2008, only 4,584 new home units (see table at the next page) were sold – which is about 31% of the record 14,811 private home units sold in 2007. The 2008 sales figure is the lowest in a decade – worse than the previous low of 5,156 and 5,520 units in the last two recessions in 2003 and 1998 respectively. In terms of supply, the developers launched a total of 6,114 units in 2008, down 56% from a record 14,016 a year ago. The sales in 2008 were also significantly lower than the annual 10-year average (1998-2007) of 8,200 units. Within the new home segment, upmarket luxury homes are the worst hit this time round after almost two years of boom. However, the segment is now widely expected to experience higher ratio of distressed sale in 2009. Most buyers are looking at prices at least 20% below Q3 2008 levels before they are willing to commit to a luxury home. Some property experts predicted developers may sell 5,000-6,000 units in 2009, as the take-up rate may get a boost by more goodies dangled by the developers and cheaper prices. Unsold Inventory is actually much higher

According to data compiled by URA, the total cumulative new home units launched in 2008 were 32,516. Of these units, 28,365 units have been sold. The success rate was 87.23% of all unit launched. Let’s dissect the numbers and match them with the timeline to ascertain how the market has evolved from the onset of the global recession in early 2008.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

11 | P a g e

Singapore Property Market Review

Of the total 28,365 units that have been sold, 14,811 units were sold in 2007, and another 4,584 units in 2008. That means 8,970 units were sold in 2006 and earlier. This shows that the main bulk of the 28,365 units were sold before the October 2008 worldwide stock market crash. In fact, in the final quarter of 2008, only 680 new home units were sold, comprising 112 units in October 2008, 192 units in November 2008 and 376 units in December 2008. The low figures show that the buying mood has been adversely affected by the global financial woes. When compared with the sales figure in the preceding months, the quantum of the fall in transaction volume is startling and it is also a faithful reflection of the topsy-turvy in the global financial market. Quarters 2008 Q1 Q2 Q3 Q4 Total

New units sold 795 1,516 1,593 680 4,584

Besides, the total number of units in all the projects that have been launched so far is 45,335, which means only about 72% of the total units have been launched in the market. And that puts the actual unsold inventory much higher at 16,970 units. Supply of new home units in the pipeline

According to URA, the total supply of new home units in the pipeline is 64,982 uncompleted units.

will not aggravate the current supply-demand constraints. At the end of the day, we are still staring at a high unsold inventory of 18,266 new home units that will be completed and ready for occupancy in this year and next. And when the 25,148 units eventually join the fray, they will dilute whatever price gains in the future. Unsold inventory for luxury condo rose

Official data shows that only 1,096 caveats were lodged against luxury apartments/condos in prime districts 9 and 10 in 2008. This represents 19% and 32% of sales done in 2007 and 2006 respectively. According to a recent CBRE report in January 2009, about 55% of units in luxury projects launched by developers between 2007 and 2008 remained unsold at the close of the misery year of 2008. The number of apartments sold for more than $10 million dropped to 82 last year from 143 in 2007. As such, there was also a corresponding fall in prices for the luxury properties. Average launch price fell to $2,000 to $2,600 psf in in the final quarter (Q4) of 2008 from $2,000 to $4,000 psf in Q4 2007. Average resale prices of luxury apartments/condos had dropped to about $2,000 to $2,400 psf of strata area in Q4 2008 from $2,000-3,300 psf in 2007.

Of these, 43,414 units remain unsold, including 3,880 units that had been launched for sale by developers and 14,386 units which had the prerequisite conditions for sale and could be launched for sale immediately. The remaining 25,148 units are allowed to be deferred to much later dates, and hopefully,

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

12 | P a g e

Singapore Property Market Review

Secondary Market huffed and puffed

The secondary market took a slightly longer time to chill in 2008; however, chill it did. This is because prospective buyers in general started to take cover after the October worldwide stock market crashes. For the whole of last year, only about 7,400 to 7,600 resale deals were done, compared with 20,985 transactions in 2007. As such, most experts reckon that there will be a further 10% to 20% decline in prices this year in the benchmark index.

Landed home sales lost momentum

The worldwide stock market crash on 10 October 2008 seems to be the watershed of property market in Singapore. Since October 2008, the buying mood became more circumspect. The total sales of landed homes in Q4 2008 were 184 houses, compared with 869 houses in the same period a year ago. This represents a fall in sales volume of around 79%. Table [1] – Landed property transactions in 2008 2008 Detached Semi-D Terrace Total

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

34 20 18 21 31 17 21 9 15

47 38 37 39 56 39 41 33 40

116 101 119 107 108 114 115 91 88

197 159 174 167 195 170 177 119 143

Source of information: SISVRealink Table [2] – Landed property transactions in 2007 2007 Detached Semi-D Terrace Total

Jan Feb Mar Apr

83 55 59 105

106 110 130 168

188 194 213 317

377 359 402 590

May Jun Jul Aug Sept Oct Nov Dec

128 106 123 70 38 48 52 31

211 213 184 116 57 88 83 56

439 374 382 258 160 230 177 104

778 693 689 444 255 366 312 191

Prices of landed properties fell by 4.8% in Q4 2008, compared with the decrease of 1.9% in Q3. Prices of detached, semi-detached and terrace houses fell by 5.3%, 3.9% and 4.7% respectively in Q4 2008. For the year 2008 as a whole, prices of detached, semi-detached and terrace houses fell by 3.1%, 1.0% and 1.7% respectively.

Sub-sale sellers appear edgy

Likewise, sub-sale deals also fell from the height of 4,863 units in 2007 to between 1,600 and 1,650 units in 2008. According to Savills’ recent report in February 2009, sub-sale deals of new home units at some popular projects were transacted at close to the average launched prices. At some prime projects which are still under construction, many units were even sub-sold recently at below their launch prices. Sub-sale prices may be at touching distance of launch prices of 2006. Savills says that units at 11 developments that were launched between 2006 and 2008 have come down to below their launch levels. For example, Duchess Residences in Bukit Timah, which was launched in 2007 at an average launch price of $1,825 per square foot (psf), had a couple of sub-sale deals that were done at an average of $1,675 psf. A 1,604 sq ft home at Duchess Residences was recently advertised for sale at $1,500 psf – way below the original launch price.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

13 | P a g e

Singapore Property Market Review

Two recent sub-sale deals done in January 2009 at Park Infinia at Wee Nam in Lincoln Road were at $1,180 psf for a 969 sq ft unit and $1,061 psf for a 1,442sq ft unit, which are more than 20% cheaper than the average subsale prices of between $1,500 and $1,600 psf achieved in 2008. Sellers of new condominium units are also appearing to be edgy of late, judging by the level of asking prices in the classified advertisements. For example, a unit at The Orchard Residences was advertised for sale at $2,600 psf, compared with the highest transacted price of $4,750 psf in February 2008. A seller at One Shenton in Shenton Way asked for $888 psf, compared with its launch price of between $1,500 to more than $2,000 psf in early 2007.

(a) So far this year, pre-lease agreements by tenants for office space to be available in 2009 and 2010 are estimated to be only 30%. (b) A total of 10.7 million sq ft of office space will be available by 2013 - of which 15% of the space or 2.7 million sq ft will be ready by 2010. (c) Demand, which averaged about 2 million sq ft a year in the past two years, is expected to fall by more than half, and possibly to just 500,000 sq ft a year. Prime office rents may fall from a high of $14.20 per sq ft a month in December 2008 to $12 psf a month in 2009 and further to $8 psf in 2010 â&#x20AC;&#x201C; in the meantime, prime office vacancy rates are set to go up by easily more than 10%. Office vacancy will shoot from mid 2009

Sellers at The Sea View at Amber Road are asking for slightly over $1,000 psf, compared with the sub-sale prices of around $1,200 psf to $1,500 psf earlier. The fall in sub-sale prices will no doubt further compound the problems faced by the developers, who are trying to lure back buyers into the show units with more carrots. It seems that the worst has yet to come for the private residential market. No respite in sight for falling office rents

Office rents in prime districts, which have already shown signs of weariness recently, could dive due to a huge stock of office space that is rising amid tough times and rising job losses. Singapore is being hit hard by the falling foreign direct investment as the small economy relies heavily on foreign participation in its economy. An international consultancy put the expected rent fall to as much as 40% of 2008 rent by 2010 due to the following reasons:

With more new supply of office space coming on stream in 2009 and 2010, the vacancy rate will rise, and this will have a negative implication for office rents. In all, about 1.7 million sq ft of new offices are slated for completion this year and they include 71 Robinson Road, the Straits Trading Building redevelopment, Tampines Grande and an extension to 78 Shenton Way. In 2010, another 2.8 million sq ft of new office space will be added into the stock, followed by a further 2.5 million sq ft in 2011. A market observer pointed out that Just this year alone there may be some 500,000 sq ft of office space without takers, due to the corporate shake-up which is taking place throughout the globe. In the mean time, the migration of backroom operations of the major financial institutions, such as banks, from the Central Business District (CBD) to lower cost areas continues.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

14 | P a g e

Singapore Property Market Review

Market Update

How long will home rents hold?

2009 should be a tough year for the landlords in general.

Worries of mass departure of tenants Home rents continue to fall

Table Comparison of rents between Q2 and Q4 2008

District

Project Name

2008

Icon

Queens

Central Green

The Anchorage

4 5

Caribbean at Keppel Bay Heritage View

Valley Park

Aspen Heights

Cairnhill Crest

Firstly, supply of new home will more than meet the dwindling demand. URA data shows that 7,012 private homes will be completed next year; while 13,686 units will be ready for occupation in 2011.

Duchess Crest

Astrid Meadows

Tanglin Park

Ardmore Park

Secondly, the number of permanent residents leaving Singapore to seek greener pasture may go up when the negative effect of the on-going financial crisis start to bite.

Cote D’Azur

Costa Rhu

16 16

Aquarius By The Park The Bayshore

Below are samples of rents collected 35 popular condo projects across Singapore between Q2 of 2008 and Q4 2008 respectively. The study shows that rents have fallen generally between 60 cents and 80 cents per square foot per month (psf pm), which can work out to be more than $1,500 per unit, depending on the floor area.

Bayshore Park

Costa del Sol

Eastpoint Green

Melville Park

Chiltern Park

Kovan Melody

Signature Park

Gardenvista

The Lakeshore

Parc Oasis

Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4

According to data by the Urban Redevelopment Authority (URA), private home rents fell 5.3% in the fourth quarter (Q4) of 2008, after a marginal 0.9% decline in Q3 2008. Non-landed homes in prime districts recorded the largest drop of 6.1% with mass-market homes down 4.3%. However, private home rents rose 2% last year, though it is apparent that they have reached the plateau.

Drops in rentals are expected in 2009 due to two main reasons.

The rent fall was not severe as many might have expected due to the slew of bad news recently. However, the slight downward adjustment shown in the URA statistics may be due to ‘time lag’ in uploading the data and also the absence of information on ‘break-lease’ cases.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

Median $psfpm 6.79 6.69 4.52 4.17 3.87 3.41 3.40 2.91 6.39 5.72 3.87 3.61 4.15 3.86 4.32 3.76 6.43 5.96 4.09 3.52 4.74 4.00 5.15 4.65 6.96 6.15 4.13 3.76 3.21 2.92 2.65 2.48 2.96 2.79 3.26 2.93 3.80 3.46 2.72 2.53 2.38 2.25 2.19 2.35 3.76 3.15 2.34 2.34 4.53 3.64 4.22 3.75 2.82 2.47

15 | P a g e

Singapore Property Market Review

The Warren

The Jade

Casablanca

Bullion Park

Seasons Park

Orchid Park

Serenity Park

Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4

2.79 2.59 3.59 3.40 2.81 2.40 2.37 2.51 2.32 2.25 2.20 2.22 2.09 4.23

Mass departure of 100,000 foreigners and PRs who lose jobs in downturn

This is indeed a very bad news for landlords in general.

A recent research paper on the Singapore job market released by Credit Suisse in January 2009 forecast that about 50,000 foreigners and permanent residents (PRs) working in the service sector will lose their jobs and another 50,000 next year. The consultancy went on to make a bold prediction that the mass departures of these economic migrants will cut Singapore’s population by 4%, lugging the residential property market along the way.

In construction, 30,000 jobs filled by foreigners and PRs are estimated to be lost in 2010, a 40.9% loss of jobs that were created from 2004 to Q3 2008. As such, the earlier prediction that the two Integrated Resorts (IRs) will boost Singapore’s economy may not come true; but the advent of the IRs may ease the job crunch as 30,000 new jobs, primarily in the service sector, will be created.

Almost half of the 164,400 foreigners and PRs working in the manufacturing sector will be gone by end of 2010, beginning with 50,000 this year and another 20,000 in 2010, as the consumers in the richer nations begin what may be a long austerity drive, or the ‘de-leveraging’ process, in the aftermath of the financial tsunami.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

16 | P a g e

Singapore Property Market Review

Market Update

Should be plain sailing for HDB resale market in 2009 Forecast of HDB resale price trend Prices of HDB Resale Flats to be Uneven in 2009 – though generally firm

According to HDB's Resale Price Index released on 23 January 2009, prices of HDB resale flats rose 1.4% in the fourth quarter (Q4) of 2008 over the preceding quarter. However, the quantum of the growth in Q4 was smaller than in Q3 2008 which registered a much stronger 4.2% price rise. It was also the first time price growth has dipped below 3% in six months. This may be a sign of things to come. In fact, after hitting the all-time high in November 2008, prices of HDB resale flats appear to be easing in January 2009. Moreover, the market mood turned cautious at the beginning of the new year after a slew of bad news hit the airwave. With the highest number of white-collar layoffs in almost a decade, prospective buyers are more circumspect. The overall prices of HDB resale flats may start to ease from the first quarter of 2009 onwards. Some experts even predict that the overall HDB resale prices will drop five to 10% in the full year. The factors that are likely to thwart price growth this year include: the softening of market valuation prices, (which often act as a guide price for buyers), due to the lower Cash-over-Valuation portion; [See article at Page 18] the falling rents for approval units under ‘whole-flat subletting’ due to higher supply and declining demand, in the wake of high corporate layoffs and mass departure of permanent residents. [See article at Page 16]

Demand for resale flats started to weaken in Q4 2008, where only 6,186 resale transactions were registered. In Q3 2008 there were 8,110 resale transactions. The number of resale deals for the whole year was 28,419, which represents a 3% dip from the transactions in 2007. However, as the public housing segment is a broad ship, comprising different flat types for the various different population segments, the factors affecting resale prices can be varied. Factors supporting demand for smaller flats On the other hand, the strong base of potential buyers, particularly for three– to four–room flats will provide the underlying support in the HDB resale market. With the enhancements made to the Additional Housing Grant (AHG), more middle income households will qualify for state subsidises when buying their first public flats. To encourage more lower- and middle-income citizen households to own their first flat, the government has approved an additional $10,000 for the AHG, bringing the maximum grant to $40,000. In addition, the income ceiling for qualification for the AHG has been raised to $5,000 monthly. Ironically, the worsening economic climate will create more demands for subsidised flats as more potential homeowners will opt for financial prudence in a time of great difficulties. Factors supporting demand for larger flats However, the argument may not apply to the larger flat segment which may suffer from the ‘crowding out’ effect when more mass market condominiums join the fray with more

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

17 | P a g e

Singapore Property Market Review

affordable price tag – if the recession persists beyond middle of 2009. In fact, barely two months ago, five-room flats were still asking for very high prices; but in January 2009, sellers of bigger flats were content with prices that are par with the HDB market valuation price or even lower than that.

HDB Resale Market Entering a New ‘Low Cash-Over-Valuation’ cycle According to the latest HDB data, the median cash-over-valuation (COV) portion for all HDB estates had fallen by 21% to $15,000 in the fourth quarter (Q4) of 2008, compared with a 4.5% to 5% decline in the previous three quarters. COV portion of an HDB resale flat deal is the cash amount over and above the market valuation price determined by an independent appraiser. It acts as a barometer of the overall resale price trend. When the COV falls, so will the overall resale prices.

In fact, larger flats suffer the largest fall by quantum in Q4 when compared Q3. For example, COV for 5-room and executive flats fell by $6,000 each. Table [1] – COV for all flat types in 2008

2008

3room

4room

5room

E-flat Overall

Q1 Q2 Q3 Q4

$18K $18K $19K $15K

$22K $20K $20K $15K

$25K $20K $17K $11K

$30K $23K $18K $12K

$21K $20K $19K $15K

In fact, COV for larger flats continues its downtrend in January 2009.

New valuation prices will be lower

It appears that the downward trend has been set as the supply of larger resale flats appear to be higher than the number of willing buyers. The market valuation prices may fall as a consequent as all valuers, when appraising the value of a resale flat, adopt the comparative valuation method. This means that most of the existing resale flat listings on the open market which were appraised earlier would have higher market valuation. Conversely, most of the new listings will come with lower market valuation prices, which make them more attractive to buyers. Resale prices overheated during boom years

In some popular heartland estates, such as Tiong Bahru and Queenstown, the resale prices have gone beyond acceptable threshold for potential homeowners of modest means. Their values had appreciated by leaps and bounds during the ‘en bloc sale’ craze between mid2007 and early 2008. As such, flats sellers in these areas are now asking for lower COV. For example, the median COV for five-room flats in Bukit Merah, which reached $61,000 in Q3 2007, has fallen to $10,000 in Q4 2008. Overall, the COV for five-room flats registered a 35% fall to $11,000 in Q4 2008, from $17,000 in Q3 2008. However, the fall in the COV of four-room flats was smaller at 25%, due to stronger demand for smaller flats.

Some 5-room flats and executive flats are even asking for ‘at or below’ valuation price. This means that the purchaser need not fork out any cash, except the deposit of up to $5,000 which must be paid in cash, if the purchaser is qualified to enjoy the HDB’s subsidised loan. For purchasers who are using private bank loans, they need to pay the first 5% downpayment, which includes the deposit of $5,000, in cash.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

18 | P a g e

Singapore Property Market Review

Market Update

HDB resale prices may ease due to crisis Smaller flats in strong demand [Question]: Many real estate agents have complained that HDB resale flats are harder to sell now and the cash-over-valuation (COV) portion are coming down. Is the party for HDB resale boom OVER? [Sam Gian]: As I said in the previous issue of

this magazine, it is anybody’s guess how the HDB resale market will pan out in the on-going recession. But, the HDB resale market has just received a massive boost from the new initiative to increase the maximum Additional Housing Grant from $30,000 to $40,000 and to allow household with total income of $5,000 to take advantage of the assistance scheme. I have followed up on a case study which I did last year on the HDB resale price trend. The January 2009 figures are just in and let’s compare the figures and see if the worries are unfounded.

Case study on Price trend of 3-room flats across the heartlands

Table [2] – Price trend of 3-room flats in the Central area - Geylang / Eunos Estate

Period

Lowest Highest Median Jan 06 123 283.5 155 Jul 06 129 280 152 Jan 07 117 280 165 Jul 07 126.5 301 188 Jan 08 141 352 199 Jul 08 155 382 226 Jan 09 177 330 216.8 Note: Median price was a fraction down, but the lowest price had gone up to all time high. Table [3] - Price trend of 3-room flats in the North East area – Hougang estate

Period

Transacted prices (‘000)

Lowest Highest Median Jan 06 123 242 171 Jul 06 133 278 177 Jan 07 132 252 176 Jul 07 146 292 202 Jan 08 158 375 225 Jul 08 200 429 260 Jan 09 185 430.8 267 Note: Prices went up marginally despite deepening crisis

Transacted prices (‘000)

Lowest Highest Median Jan 06 125 183.8 155 Jul 06 135 188 152 Jan 07 130 188 153 Jul 07 123 208 170 Jan 08 145 232 190 Jul 08 185 256 210 Jan 09 180.5 268 230.5 Note: Median price went up significantly despite deepening crisis Table [4] - Price trend of 3-room flats in the North Western area – Choa Chu Kang estate

Period Table [1] – Price trend of 3-room flats in the Central area - Bt Merah Estate

Transacted prices (‘000)

Lowest Highest Median Jan 06 154 156 155 Jul 06 135 158 152 Jan 07 139 154 153 Jul 07 140 170 153 Jan 08 165 191 178 Jul 08 176 206 195 Jan 09 205 205 205 Note: Prices went up – interestingly, there were only two 3-room flats transacted – signalling low supply. Table [5] - Price trend of 3-room flats in the North area – Woodlands estate

Period Jan 06 Jul 06 Jan 07

Transacted prices (‘000) Lowest 100 110 110

Highest 177 176 171

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

Median 150 138 135

19 | P a g e

Singapore Property Market Review

Jul 07 130 188 152 Jan 08 135 198.5 160 Jul 08 156 232.5 178 Jan 09 172 235 197.5 Note: Median price went up significantly in one of the largest working-class estate.

Finding of case study on 3-room flats

Smaller flats are often in high demand during difficult times, as they are cheaper to maintain and to buy. As the recession deepens and more people are laid off, the demand for such flats is set to increase. As smaller flats are often in short supply, resale prices will stay firm throughout the year.

Case study on Price trend of 4-room flats across the heartlands Table [6] – Price trend of 4-room flats in the Central area - Bt Merah Estate

Period

Transacted prices (‘000)

Lowest Highest Median Jan 06 140 250 210 Jul 06 168 272.5 223 Jan 07 178 278 235 Jul 07 180 300 233 Jan 08 170 347 267.8 Jul 08 205 420 298 Jan 09 240 386 310 Note: Lowest price went up significantly to hit all-time high while median price is also at alltime high Table [9] – Price trend of 4-room flats in the North Western area – Choa Chu Kang estate

Period

Transacted prices (‘000)

Lowest Highest Median Jan 06 155 288 220 Jul 06 180 293.888 226 Jan 07 171 299 227 Jul 07 155 300 231.888 Jan 08 190 339 258 Jul 08 235 378 287 Jan 09 200 347 306 Note: Median price of 4-room flats in CCK is now at all-time high

Transacted prices (‘000)

Lowest Highest Median Jan 06 203 390 303.5 Jul 06 228 430 320 Jan 07 230 423 348 Jul 07 252 490 380 Jan 08 288 540 438 Jul 08 262 560 425 Jan 09 315 585 387.5 Note: Median price came down marginally, but the highest price shot to all-time high in January 09. Table [7] – Price trend of 4-room flats in the Central area – Geylang / Eunos Estate

Period

Table [8] – Price trend of 4-room flats in the North East area – Hougang estate

Transacted prices (‘000)

Lowest Highest Median Jan 06 162 350 268 Jul 06 178.5 345 252 Jan 07 188 378 282 Jul 07 215 408 340 Jan 08 223 460 355 Jul 08 205 515 355 Jan 09 252 495 317.5 Note: Median price is significantly lower, but lowest price is now at all-time high

Table [10] – Price trend of 4-room flats in the North area – Woodlands estate

Period

Transacted prices (‘000)

Lowest Highest Median Jan 06 155 257 218 Jul 06 150 255 217 Jan 07 160 263 220 Jul 07 166 278 226 Jan 08 178 308 248 Jul 08 176 333 266 Jan 09 225 333.8 284.5 Note: 4-room flat prices in Woodlands are also at all-time high

Finding of case study on 4-room flats

The crisis actually exacerbated the demand for 4-room flats in matured heartland estates. Despite the festive season where the overall HDB resale transactions were down, the demand for 3-room and 4-room flats were actually up, albeit marginally.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

20 | P a g e

Singapore Property Market Review

Case study on Price trend of 5room and Executive flats across the heartlands Table [11] – Price trend of 5-room flats in the Central area - Bt Merah Estate

Period

Transacted prices (‘000)

Lowest Highest Median Jan 06 330 490 362 Jul 06 252 505 420 Jan 07 320 531 446 Jul 07 350 565 465 Jan 08 445 680 609 Jul 08 477 678 590 Jan 09 480 610 530 Note: While the highest and median prices have come down significantly, the lowest price is now at all-time high Table [12] – Price trend of 5-room flats in the Central area – Geylang / Eunos Estate

Period

Table [13] – Price trend of 5-room flats in the North East area – Hougang estate

Transacted prices (‘000)

Lowest Highest Median Jan 06 215 378 285 Jul 06 240 355 285 Jan 07 236 390 302 Jul 07 256 432 318.5 Jan 08 250 460 340 Jul 08 280 460 384 Jan 09 330 410 384.4 Note: The lowest price is at all-time high, but the highest price has come down from $460K. Table [14] – Price trend of 5-room flats in the North Western area – Choa Chu Kang estate

Period Jan 06 Jul 06 Jan 07

Table [15] – Price trend of 5-room flats in the North area – Woodlands estate

Period

Transacted prices (‘000)

Lowest Highest Median Jan 06 229 324.5 275 Jul 06 208 298 271 Jan 07 227 308 272 Jul 07 228 315 279 Jan 08 200 356 305 Jul 08 263 378 327 Jan 09 280 395 341.75 Note: The prices of 5-room flat are at all-time high in Woodlands

Transacted prices (‘000)

Lowest Highest Median Jan 06 284 475 355 Jul 06 265 489 375 Jan 07 278 482 405 Jul 07 257 535 430 Jan 08 320 750.888 565 Jul 08 415 655 550 Jan 09 385 475 449.4 Note: The highest price in the central area has come down significantly to 2006 level as the bull-run prices were unsustainable today

Period

Jul 07 215 355 285 Jan 08 239 445 315 Jul 08 255 465 350 Jan 09 274.9 455 360 Note: The lowest price is at all-time high, but the highest price has eased. Median price is also at all-time high.

Transacted prices (‘000) Lowest 183 215 235

Highest 333 337 363

Median 275 270 280

Case study on Price trend of Executive flats across the heartlands Table [16] – Price trend of Executive flats in the Central area – Geylang / Eunos Estate

Period Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09

Transacted prices (‘000) Lowest 343 355 315 350 390 0 0

Highest 408 432 405 460 485 0 0

Median 401 368 372 360 402 0 0

Table [17] - Price trend of Executive flats in the Central area – Hougang Estate

Period

Transacted prices (‘000)

Lowest Highest Median Jan 06 305 408 328 Jul 06 320 373 338 Jan 07 317 455 367 Jul 07 310 510 365 Jan 08 399 540 445 Jul 08 390 575 478 Jan 09 430 520 476 Note: The lowest price is at all-time high but the median price is marginally lower. Table [18] – Price trend of Executive flats in the Central area – Choa Chu Kang Estate

Period

Transacted prices (‘000) Lowest

Highest

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

Median

21 | P a g e

Singapore Property Market Review

Jan 06 312 375 342 Jul 06 310 535 365 Jan 07 293 383 328 Jul 07 315 450 350 Jan 08 307 450 385 Jul 08 340 520 420 Jan 09 396.6 458 421.5 Note: The lowest and median prices are at alltime high. Table [19] – Price trend of Executive flats in the Central area – Woodlands Estate

Period

Transacted prices (‘000)

Lowest Highest Median Jan 06 318 400 360 Jul 06 300 390 337 Jan 07 283 400 330 Jul 07 308 400 344 Jan 08 325 452 368 Jul 08 382 458 410 Jan 09 383 490 419 Note: All the prices are at all-time high in Woodlands.

Finding of case study on larger flats

Except flats located nearer to the Central Business District (CBD), HDB resale prices in sub-urban areas are still holding firm – though the quantum of the price increases has clearly narrowed, due to the uncertain times ahead. The sample areas chosen for this case study are popular estates and have traditionally enjoyed very good demand.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

22 | P a g e

Singapore Property Market Review

Market Update

Long festivals dwarfed HDB resale figures in Jan 09 Resale pattern a norm for years In fact, it has been a norm for HDB resale transactions to be slightly lower during the traditional festive seasons, such as Christmas and Chinese New Year (CNY). This is because of the lack of urgency for the contracting parties to rush for legal completion. A closer look at the previous year’s pattern confirms that resale transactions tend to be reduced during these months. For example, Table [1] below shows that in the Christmas month of 2007, the resale transactions were 1,954 deals, sandwiched between two high transactions of 2,340 deals in November 2007 and 2,306 deals in January 2008. Likewise, in the CNY month in the following February, the resale transactions were 1,958 deals, much lower than the 2,313 deals transacted in January 2007.

Table [2] –Comparison of monthly total HDB resale transactions from January 2008 to January 2009

Months January 08 February 08 March 08 April 08 May 08 June 08 July 08 August 08 September 08 October 08 November 08 December 08 January 09

Total Transactions 2,306 2,044 2,150 2,339 2,179 2,258 2,456 2,186 2,494 2,389 2,432 2,036 1994

Source of info – HDB inforweb

Transaction pattern in 2007/2008

Table [1] –Comparison of monthly total HDB resale transactions from January to November 2007

Months January 07 February 07 March 07 April 07 May 07 June 07 July 07 August 07 September 07 October 07 November 07 December 07 January 08

Total Transactions 2,313 1,958 1,217 2,089 2,184 2,250 2,385 2,553 2,385 2,463 2,340 1,954 2,306

Table [2] below shows that in the Christmas month of 2008, the resale transactions were 2,036, which was 396 deals fewer than the previous month’s 2,432 deals. The CNY month in February 2008 also saw fewer resale transactions at 2,044 deals.

3,000 2,500 2,000 1,500 1,000 500 0

2007

2008

As such, the low transactions of January 2009, which coincided with the CNY, should not be taken with alarm. With the economy worsening by the months and the increased state subsidises for first time flat buyers, HDB resale transactions should flourish in 2009.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

23 | P a g e

Singapore Property Market Review

News in Issue

Developers prepared to use the stick Right now the carrots are out In view of the worsening economic outlook and following reports on recent market murmurings that some property buyers might seek legal loopholes to wriggle out of sale contracts with developers, the Real Estate Developers' Association of Singapore (REDAS) recently reminded buyers that they cannot unilaterally rescind their sales contracts and return their units. Property consultants and lawyers interviewed by the press echoed REDAS’ view that the Sale and Purchase (S&P) Agreement, once signed is a binding contract. Financial qualification of some is suspect

There have been murmurings on the ground that many speculators, who might not be financially qualified but had taken advantage of the defunct Deferred Payment Scheme (DPS) in 2006 and 2007, are now having cold feet as the completion date of the units approaches and the bulk of the payment is due. Official figures say that 10,450 buyers of uncompleted private homes had bought their units under the DPS, which allows buyers to pay just 20% up front for an uncompleted home and the rest upon completion. Nobody is the wiser as to how many of these buyers actually had the resources to complete the deals. With the rapid cooling of the new home market and the pervasive fears of corporate layoffs still engulfing the entire global economy, developers are naturally worried that there might be high rate of defaults. And what particularly spooks the developers is the fact that many buyers seem to be under the impression that they could simply let the developers forfeit the 20% down-payment and return the units they bought – without facing any consequences.

Rules of Options and contracts are different

Under Singapore's Housing Developers (Control and Licensing) Act, a buyer can walk away from an Option to Purchase, which means the Right to Buy, and lose 25% of the 5% booking fee. However, once the Option has been exercised, a bind contract is formed, and there will be no ‘walking away’ without consequences. The rules say that a buyer needs the developer’s consent to repudiate the S&P or to assign it to a subsequent buyer, an arrangement commonly known as sub-sale. However, while sub-sales are common, annulments of S&P Agreement are rare. The S&P Agreement spells out clearly that if the unit is forfeited, the developer has the right to resell it, and keep 20% of the purchase price as well as the interest from all unpaid instalments.

Developer’s right to SUE Though not specified in the S&P Agreement, the developer has the right to sue the defaulting party, obtain judgment and compel the party to pay. If the developer eventually sold the property at a price lower than the original price, he has the right to sue for the shortfall. A good example is the judgement obtained by Marco Polo Developments, now known as Wheelock Properties (Singapore), against a group of Indonesian buyers of Ardmore Park who defaulted on the progress payments due to the 1997 Asian financial crisis. The High Court ordered the buyers to pay the progress payments and complete the deal, though the defendants claimed hardship during the crisis. The rationale behind the awarding of ‘specific performance’ in favour of the developer was that if buyers were allowed to walk away during crisis, the floodgate would be opened.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

24 | P a g e

Singapore Property Market Review

Market Update

2008. The developer managed to sell nine Developers thinking Laterally units at an average of $1,002 psf in December

When the chips are down, everybody becomes creative Royalty treatments for buyers

If you are a genuine property buyer today, expect treatments that were previously reserved only for the royalties. If you get anything less than royally, simply hop on to the next show room. The Sunday Times reported on 25 January 2009 that eight out of 10 new property developments recently waived Stamp Duty* as a perk for buyers. According to the same paper, some potential buyers were even offered discounts of up to 10% off the list prices of the property without having to ask for them. Cash handouts for early birds

Other developers are luring home seekers with cash giveaways, such as Red Packet of more than $12,000 for early birds. For example, in late January 2009, Far East Organisation offered $12,888 hongbao incentives for the first eight buyers of its Lakeshore and Hillview Regency condominiums in the west side of Singapore. Likewise, in a joint project with Fraser Centrepoint at Waterfront Waves condominium in Bedok Reservoir, there were similar cash incentives. In 1998, developers offered free Nissan Sunny cars with certificates of entitlement, three years of free maintenance fee, furniture vouchers of up to $8,000, free interior decoration services, and the list goes on. Some developers have offered the more effective strategy of outright price cut. For example, developer AG Capital slashed the asking prices for the 56-unit The Aristo@Amber at Amber Road from around $1,651 per sq ft (psf) in July 2008 to $932 psf in December

2008. So far, the 56-unit condo project has only 9 units unsold. Other than price reduction, some developers are also exercising their lateral thinking by offering to swop smaller and/or cheaper units with existing buyers who seek to reduce their financial commitments. Others, such as Far East Organisation, will help buyers find tenants to lease their units to generate cash flow, once the units are ready for occupancy. Most developers are adopting creative financing schemes that imitate the now defunct deferred payment scheme (scrapped in October 2007) in bid to offload more unsold units. For example, buyers of Roxy Homes' Nova 88 need not pay any progress payment during the construction period until notice of vacant possession is issued by the developer. In the interim, the developers will absorb the bank interests. The difference between such imitation scheme and the old DPS is that the buyers must first be qualified for a bank loan. A market watcher estimated that up to 90% of projects launched in recent months offer some variation of this scheme *Stamp duty is a tax on the sale contract that buyers have to pay upfront in cash within two weeks of exercising the Option to Purchase. It amounts to about 3% of the transacted price of a property, e.g. for a $1 million property, the tax is $24,600. Though the buyers can utilise their Central Provident Fund savings to foot the tax, it can only be done as reimbursement; in other words, the tax must be paid upfront in cash first.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

25 | P a g e

Singapore Property Market Review

Tips on Internet Advertising

How to save costs without cutting effectiveness Go on-line marketing [Sam Gian] In this issue, I invited Jacob Tay, the founder and MD of Singapore’s leading multiple listing system (MLS) firm, Info-Tool Pte Ltd, to share with us some useful tips on ‘cost savings’ in advertising during this recession. But just who is Jacob Tay? Mr Jacob Tay earned the nickname “Mr Info Tool” as he is the founder and managing director of the front-running multiple listing system (MLS) portal, Info-Tool Pte Ltd in Singapore. Almost 99.99% of all real estate agents practicing in Singapore are using his MLS on a daily basis. I swore by it when I was an agent; and my track records speak for themselves.

has survived the fierce challenges thrown at him by his many fanciful competitors, many of whom had by now perished under the weight of heavy operation costs. In fact, if one were to go by the attrition rate in the property portal business, by merely being around after so many crises is a huge success by itself. What more, Jacob’s vehicle progresses with time; and now his MLS has more advanced technologies to offer at even lower costs than before. I do not know of any other MLS providers who have more experience and credentials than Jacob Tay. As such, I believe the industry veteran is worth listening to.

Simply put, Jacob’s system helped me, as well as thousands of other professional agents, to realize our financial dreams. Jacob founded the company 17 years ago when real estate agents were still relying on the primitive ‘555’ note books to record their business leads, transaction records, and other information vital to their well-being. Through his MLS, Jacob brought the latest information technology and ‘tremendous progress’ to those agents and the industry at large. And throughout the many crises, including the Asian Currency Crisis (1997-1998), Dot.com bust (2000), September 11 (2001), SARS epidemic (2003), the vast majority of real estate agents, including myself, depended on Jacob’s MLS to achieve maximum sales results at the minimal costs. As someone who creates the tools for us to operate our business and prosper, he always has the right solutions to the problems, especially in times of need. Jacob has been a material witness to the ‘upsand-downs’ and ‘boom-and-bust’ of the real estate market over almost two decades; and he

Mr Jacob Tay (Left) showing off the CNBC award for “Best Property Portal”; your truly sharing the joy.

How to be Continuously Successful in Real Estate sales even during Recession by Mr Jacob Tay It is every realtor’s target to continually close as many deals as possible in both good and bad times, with the biggest fears coming in the form of scanty listings, not closing deals and high expenses. The largest expense for a realtor comes from ADVERTISING – no doubt about it.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

26 | P a g e

Singapore Property Market Review

Print advertisements could set a realtor back by S$500 to S$5,000 per month and they can take up anything between 10% and 200% of a realtor’s monthly income. It is not uncommon to see realtors being taken to the Small Claim Tribunal for unpaid advertisement fees, especially during times like this. So how can you contain expenses while effectively advertising your properties and making money at the same time?

much cheaper alternative. A regular 3-line print advertisement, would cost you S$33, for a typical realtor, this could amount to between few thousands to S$60,000 per annum. On the other hand, 10 advertisements on the Internet only costs less than S$1 per day, amounting up to S$360 per annum; for you this means a massive savings of S$586,000 per year. During a recession, such an amount can save more than 100 poor families. Having more flexibility and greater control

The answer is the Internet. It surpasses many natural business barriers, such as distance, timing and getting to be acquainted with many people within a very short time. And to succeed in real estate sales, you need a huge audience who can connect to you at their own convenience, regardless of how far away they are from you. Reaching a newspapers

much

wider

audience

than

You can reach a much wider audience using the Internet. While newspaper circulations only reach local readers, the Internet is able to reach users worldwide. In Singapore alone, there are more than 1,000,000 internet users (Business Times, 21 July 2008). According to D’zire Media, in Singapore, newspapers only reach about 381,000 readers. The Internet is fast becoming the most preferred medium because it is fast, convenient and available 24/7. There are many property portals out there but what constitutes a good property portal may not apply to all. An effective and successful property portal comprises quality listings from a large pool of realtors (built over more than a decade), has high traffic from serious property hunters, and high quality content such as market information, photos, directories and more. One such portal is iProperty.com. Saving more money than advertising in the newspapers

Compared to print advertisements such as newspaper classifieds, the Internet is also a

Most property portal allows users to upload property photos and videos, provide in-depth details and descriptions, and add satellite maps. Realtors can also put up as many photos as they like at no additional cost. Realtors can also have complete control over their listings, such as updating existing listing information, posting new listings, adding photos editing and re-editing at any time and from anywhere – even when the users are overseas. The Internet has become an increasingly critical and effective tool for agents to market their listings and to prosper – more so when the current crisis deepens. In fact, with many speculators stuck in the mud, the only qualified prospects might well be from the Internet Generation, who are now in their mid-20s to late 30s. These are people who source for the cheap air tickets online, purchase second-hand LV bags from e-Bay, and Skype with their loved ones overseas everyday. Would they pay for newspapers just to read the classified advertisements for property leads, especially during bad times like this? I don’t think so. It is a huge part of their daily existence to surf the Internet for information on almost every single thing that matters to them. Why should the search process for a house be any different? You can reach Mr Jacob Tay or his other MLS consultants at Tel: 6255-4411 / email: sg.info@iproperty.com; or visit his office at #08-01 HDB HUB East Wing, Toa Payoh Lor 6

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

27 | P a g e

Singapore Property Market Review

Tips on Selling

The Best 20 Selling Condos in Singapore All Districts The reasons for researching into the Best Selling condos in Singapore is to assist real estate agents, especially new rookies, to identify the ‘sure winners’ in property sales. This is because a condo project that is sellable is also ‘rentable’. And remember this: “the best selling projects remain ‘best selling’ for very many years”. So, new agents do not need to reinvent the wheel by doing their own research. Then time can be better invested by doing more ground works. The list that I have put up will help the agents to make informed decisions when they are considering whether or not to ‘let go’ of listings that are sapping their limited resources and energies. In this uncertain period, the agents will do well if they know how to conserve their limited capitals and use precious time wisely. District

A friend’s house may be easy to sell last year; but the same house might not receive the kind of attention it received last year. While the friend remains highly motivated to sell the property, the few right questions for the agent to ask include: (1) Would any buyer pay the price that the seller is asking, considering all the attributes of the property? (2) Even if the property seller is willing to lower the asking price slightly, given the keen competition, is this condo a ‘sure winner’? If the condo that you are marketing is not in the following list, you may want to cancel the exclusive contract and let your competitors try their luck. Here are the statistics:

Project Name

Low

High

Median

The Sail @ Marina Bay

508,024

15,462,750

1,258,024

Icon

389,380

2,600,000

838,000

Queens

300,000

2,100,000

1,130,000

Varsity Park

525,000

1,820,000

878,566

City Square Residents

389,840

1,507,000

750,000

Citylights

371,130

3,800,000

826,980

Parc Emily

494,000

2,300,000

930,200

Viz at Holland

595,000

2,730,000

989,880

Park Infinia at Wee Nam

860,000

3,700,000

1,705,000

The Esta

759,780

2,680,000

1,118,025

The Sea View

395,640

3,958,000

1,520,000

One Amber

531,760

3,502,900

1,021,020

The Bayshore

170,000

1,800,000

755,000

Aquarius By The Park

132,000

1,260,000

612,000

Costa Del Sol

300,000

12,000,000

1,357,000

Rio Vista

580,000

1,225,000

710,000

Regentville

490,000

885,000

550,000

Parc Vista

290,000

855,000

600,000

Parc Oasis

480,000

968,000

750,000

Lakeshore

739,360

1,399,000

836,000

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

28 | P a g e

Singapore Property Market Review

Tips on Selling

Ice-breaking techniques in Networking factors like the visual How to direct conversation to real estate topics by Sean Fong

This illustration was a real occurrence when Sean attending an obligatory 1-day seminar for reservist national servicemen. Sean mingled with his fellow reservists and below is what he recalls saying.

appeal of the property and the snob appeal, if any, that may be associated with the name of the development or its address. Group

Yes, it is very true. Even though Singapore is so small, convenience is still the key when we choose our house. What else should we look out for?

Agent

Other attributes like age of the property and tenure will also factor in the decision; and of course, such a purchase will also be made with a long-term view for capital appreciation either through sale in the open market or through a collective sale (en-bloc) deal, when the property becomes very old, say 30 to 40 years old.

Part One: Identify cues to start a conversation at the opportune moment in a group discussion Group

Right now with the economy heading toward a decline, everybody is fearful of the unpredictable future. Nobody wants to take any risk whatsoever to make any investments in the stock market, or speculate in properties.

Agent

Sirs, I wonder why you feel that way? Perhaps this situation holds true regarding investor confidence in the stock markets, funds and other financial instruments, but people can still make pretty good investments in private property.

Group

Oh, is that so? Why did you say that?

Agent

The question is not why. Instead, ask: which properties to invest in? Firstly, we need to understand that the underlying principles for the purchase of properties for your own use (owner-occupied) and for investment. For owner-occupied properties, there are usually a mix of emotional and economic factors. Buying decisions will be based on personal preferences for the attributes of the properties for enjoyment, like facilities and amenities, proximity to amenities like schools, supermarkets, etc, and also cosmetic

Group

30 to 40 years will be too long to wait. What about shorter term investments? What should we look out for?

Agent

For such investment properties, you should focus on strategic attributes that generates returns on investment (ROI). The most important factors are the calculation of rental yield (rental income level), and level of capital appreciation either through sale in the open market or through a collective sale (en-bloc) opportunity. Thereafter, you must also consider other attributes like location, age of property, tenure, proximity to MRT stations and conveniences, etc. In fact, in this current climate, there will be more good properties up for grabs at lower prices than ever before.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

29 | P a g e

Singapore Property Market Review

Part Two: Introduce yourself as a real estate agent

Part Three: Conclude with an invitation to contact you for more information and advice.

Group

You speak as though you did some measure of analysis on the property market specifically or have made property investments before. Are you a banker, or fund manager handling portfolios in real estate investments?

Group

This is good. We now have an expert on property investments on board our fraternity. Do keep us up to date regularly on the current market situation for private properties. Also identify good properties for us to consider buying – what’s hot and what’s not.

Agent

None of those. I’m a real estate agent - joined the industry as a rookie about a decade ago, and it evolved into my expertise and profession.

Agent

Sure. Please keep my name card for your reference (takes out prepared name cards with full contact information and hands it out). At the same time, may I have your name cards as well, so that I can regularly email my updates and enewsletters to all of you for your reading pleasure.

Group

Of course. You are a useful contact to have, as every one of us needs to buy and sell our own houses, as well as purchase additional properties for investment.

Agent

Good foresight on your part. Property investments are the most effective hedges against inflation for the long term – there’s no asset like it. Please feel free to call me anytime. I’ll be happy to assist you.

Group

Okay, thank you. We’ll call you soon, and also remember to email us your e-newsletters and updates.

Agent

Definitely.

Group

Agent

Most real estate agents we have come into contact with function merely as marketers, matchmakers, and paperwork completers. You speak as though you are seasoned researcher and experienced consultant. Thank you for your kind comments. I constantly keep track of current market data and official statistics of sale and rental transactions. I look at property statistics everyday and try to base my opinions on facts, not mere guesses, and this has helped my clients make informed decisions.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

30 | P a g e

Singapore Property Market Review

Tips on Selling

How to become an Effective Negotiator Back to basic manners [Question]: Sam, can you give us some practical tips on how to become a good negotiator?

feeling and appeal for compassion. And I believe that we can achieve many things through others’ superior feelings of importance.

[Sam Gian]: First of all, as a person we tend to

take for granted simple diplomacy, courtesy, social niceties, and good manners when we are communicating with our friends, associates and customers. Being nice is the first fundamental to good communication skills and it is vital when we negotiate in the course of our business. [1] Basic manners are the key to open doors

For salespersons who have mistaken negotiation skills as something lofty or need to be acquired at high cost, just look at the basic manners that our parents and teachers had tried in vain to impart to us since we were very young. And before anyone rediscovers the basics, they cannot expect to have a good mastery and success in the sale profession. [2] Smile a lot of smiles

Another obvious and simple way to negotiate with your customers is to start negotiation in a polite and friendly manner and give them plenty of real, sincere, and heart warming smiles. Your smile is a messenger of your good will. Like Dale Carnegie says: ‘a smile can bring a good price in a market place’. A smile can disarm your opponent and the subsequent negotiation will be easier and not tougher. [3] Make your customers feel important

An appearance of deference or `in awe of your customer’ gives them a sense of power over us and we could then work on the superiority

A ‘please help me’ appeal can often soften an obnoxious giant. A top producer once told me: ‘I sell by not selling’. He explained that he had been able to resist using any of the negotiation techniques and ploys taught to him, but instead chose to focus on satisfying the genuine needs and wants of his customers. ‘I don’t hide’ was his philosophy and he prefers an open and frank approach by simply asking his customers to accept the offers he brought. [4] Build friendship first and business later

Always try to build friendship first before you attempt to discuss business. It is always easier to talk with friends than with strangers. Likewise, it is easier to build rapport when you talk about things that are of mutual interest. Only when your friends are comfortable with you will you be able to point out how both side can enlarge the commonalities and extract mutually beneficial results. And sometimes, the real estate agents may have to provide a lot of ‘free service’ first to enhance that friendship. [5] Choice of words is a critical factor

Words can move, heal, or destroy people. The most direct way to influence a person is to communicate with them using positive words and show a lot of warmth and sensitivity. Do not seek to influence them using negative words or behaviours, such as threats or insults. If you resort to threats, blackmail, or trickery, your customers will betray you at the first opportunity.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

31 | P a g e

Singapore Property Market Review

The power of words to heal or destroy cannot be emphasised enough. Saying ‘you are so kind’ or ‘you are so fat’ has equal strength to make people happy or upset and these words can be said by the same person when he chooses to be kind or cruel. Anthony Robbins says: “realise now the power that your words command if you simply choose them wisely.” In extreme times like now when many of our friends, family members and customers are fearful of losing their jobs and family wellbeing, we have to always consider the words we are about to say, so as not to hurt their fragile feelings. It is a good policy to mentally ‘audit’ the words you intend to use and delay the speech; rather than shoot the mouth and regret later. In today’s climate of fear, I would suggest you use the following words when you talk about houses to buyers and sellers: Family Benefits Opportunity Duty Wise Protect Guarantee

Proven Value Right Profit Prudent Help Love

Healthy Save / Safe Advantage Deserve Requirement Secure Comfort

[6] Ascertain deadline is equally important

Most of the deals are closed at the eleventh hours and some even after the deadline has been extended a few times. However, as a rule, always establish the deadline with our customers or co-brokers by which the objectives must be met. This is a good way to ascertain the motivation level of your customer. You will realise that when there is no deadline, it will be tough to secure a commitment.

Taboos in Negotiation

I would also like to add the ‘don’ts’ in negotiation; in other words, if you want to lose a deal, do the following: Brag about yourself when you speak to your customers. You must not at any single moment show off your wealth or praise yourself because that will cause envious anger from your customers. If you hear your customer say: “you must have made a lot of money already’, you will have to stop talking about yourself. It means the customer thinks that you are bragging. Show your anger with someone in front of your customers. Even though it might not be your customers at whom the anger is directed, it is a very bad form to display negative emotion in front of innocent customers. Find fault with others, e.g. a co-broking agent or a property owners. Sometimes, agents commit the worst sin in real estate sales, that is, try to impress a customer by finding faults with another. No matter what the objective is, do not show that you are a trouble-maker. Being dismissive to customers’ suggestions. Even if you know that the suggestions had been tried and did not work, you must deliberate on them and promise to check facts again. Rude to anybody, e.g. being rude to waiters and waitresses, toilet cleaners, foreign workers, etc. Blame others, such as your company, your manager, your customers or the economy. The moment you try to assign blames to others, you expose as much of your own weakness and irresponsibility. In this respect, you must remember what Confucius says: “do not do onto others what you do not want others to do onto you”.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

32 | P a g e

Singapore Property Market Review

Policy Update

More money for heartlanders to own flats CPF Additional Housing Grants go up More housing grant for buyers of public flats

The government has expanded the coverage of the CPF Additional Housing Grants for firsttime home buyers. This is part of the relief programme in the government’s latest Budget for 2009.

Average Monthly Gross Household Income for the past two years

AHG Amount Eligible for Applicants who Applicants who booked a flat booked a flat on or after 24 on or after 22 Aug 07 Jan 09

$1,500 or less

$30,000

$40,000

$1,500 – $2,000

$25,000

$35,000

The income ceiling for first-time home buyers

$2,001 – $2,500

$20,000

$30,000

qualifying for the additional grant is now

$2,501 – $3,000

$15,000

$25,000

$3,001 – $3,500

$10,000

$20,000

$3,501 – $4,000

$5,000

$15,000

$4,001 – $4,500

–

$10,000

$4,501 – $5,000

–

$5,000

$5,000 a month, instead of the previous

$4,000. At the same time, the grant's maximum amount has been raised from $30,000 to $40,000. The Finance Minister said the total number of households benefiting from HDB's additional housing grant scheme will now be boosted to 8,000 annually. The enhanced CPF Housing Grant scheme is to ensure that public housing remains affordable to first-time home owners. The enhancement will double the estimated cost of the scheme to about $150 million per year. In other words, the additional housing grant which originally aimed at the low-income group is now being extended to the lower middle-income group.

Expect Good Take-up rate for additional grant

With the on-going economic recession and the looming uncertainties in the job market, it is believed that more prospective homeowners will take advantage of the additional funding to own their first home. When the Prime Minister announced the first version of the AHG on 24 August 2007, and set the income ceiling at $4,000, he explained then that close to 50% of the total Singaporean households will qualify for the additional grants. With the further enhancements, more Singaporean households will qualify; and this will be a timely relief at such difficult times.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

33 | P a g e

Singapore Property Market Review

Policy Update

Plot size control for Clustering Housing New rule takes effect in February 2009 Background information

Cluster housing, which was first introduced in 1993, are landed housing with strata titles and common facilities, e.g. swimming pool, club house, tennis court etc. They are allowed within Designated Landed Housing Areas â&#x20AC;&#x201C; where only landed houses are allowed to be built. There are altogether 58 such areas in Singapore. Houses not situated in a designated area can be redeveloped into apartments. The original plot size control for cluster housing as comparable to other conventional landed housing was lifted in 2001 by the authority to give the industry greater flexibility in design and to promote self-regulation. However, a 2007 Focus group feedback claimed that clustering housing in landed housing areas have contributed to traffic congestion due to the lack of plot size control. To ensure that such developments will have densities that are more comparable with the surrounding landed housing, URA has reintroduced the plot size control with effect from 3 February 2009. Limit total number of units in a project

The maximum number of allowable units in strata landed housing developments will be capped based on a minimum plot size per unit for the respective conventional landed housing form. The minimum plot size control for the relevant landed housing form includes

400sq m for Bungalows; 200 sq m for semi-detached houses; 150sq m for terrace houses.

No restrictions on plot size for individual units

There will still be no restrictions imposed on the minimum plot size and plot width for individual units, as long as the number of units is within the allowable limit based on the minimum plot size control of the specific landed housing form. What it actually means is that if the average number of strata terrace homes on a 16,000 sq m site is 106, the developer can decide the plot size allocated to individual homes, as long as the total number of strata terrace homes is equal or less than 106. Use Terrace houses as illustration

For example, if the total site area of a new cluster home project is 16,000 sq m, and the developer intends to build only strata terrace houses in the project, then the allowable units of strata terrace houses in the new project will be 106, being the quotient obtained by dividing 16,000 sq m by 150 sq m (which is the minimum plot size allowed for conventional terrace houses).

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

34 | P a g e

Keep a date with Sam Gian’s upcoming FREE Seminar Singapore Property Market Review

Where is the Market Heading? Due to overwhelming demand, Sam will be conducting the same seminar on two consecutive days – please pick Only One Date.

11 March 2009 (Wed) 9.30am to 1.00pm 12 March 2009 (Thu) 9.30 am to 1.00pm

Venue:

HDB HUB AUDITORIUM

Free tickets will be available for collection from 4 March onwards at iProperty office at #08-01 HDB HUB East Wing Seminars are Organised by

Sam’s Free Magazines / Free Monthly Reports / Free Seminars / Free workshops are being funded by the sales of his BOOKs. If you Support Professionalism, tell your friends about how Sam’s Books can help improve their selling skills and their sales income.

And Ask Them to BUY Sam Gian’s Books.

A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

35 | P a g e

Singapore Property Market Review

Advanced Selling PSYCHOLOGY

How to double your income In a Recession Guarantees instant results - ensures the fastest route to Succeed in the Real Estate Brokerage Business by equipping you with the latest mental revolution in Sale.

Lesson plan – Day 1 (10am – 4pm) 1. What is an ‘Agent’s Market’ (How to become a Pricing Leader in the market) 2. Psychology of a Sale Champion (The mindset of a consultant – hard selling vs soft selling) 3. How to use Market News to win in any kind of Market (Psychology in News – the different arrangements of market news) 4. Turning ‘thought process’ and changing customer’s mindset (How to turn every adverse situation to agent’s advantage)

Lesson plan – Day 2 (10am – 4pm) 5. The Sun Tze Art of War – (The Psychology of Smart Closing – how to choose a winning battle and close doubly fast) 6. Cultivating Agent’s big match temperament – (Reading the game from a conceptual perspective – turning active income to passive ) 7. The Mechanism of a Pricing Report (How to short-cut the closing process without gimmicks) 8. The integration process of the sales champion (Integrating all vital components of real estate sales into the agent’s skills)

Sam Gian is the writer of SIX highly acclaimed books on real estate selling skills. He also provides FREE Monthly Real Estate Market Updates via his website www.update.sg Sam’s teaching provides the Critical Winning-edge needed by salespersons to beat their competitors and outsmart today’s more sophisticated customers. Many salespersons who have attended Sam Gian’s programmes have tripled their income as they are now able to close effectively & quickly, and get paid a higher commission [one of the course participants in Sam Gian’s Advance Selling Psychology in February 2008 earned more than $250,000 in commission in one closing after the course].

Sign up early to enjoy the Early Bird Price of $299.00 Call Ruth at 9187 8072 A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]

36 | P a g e