Complete Property Market Updates of Singapore

I REFER to the letter, ‘Time to regulate property agents’ (ST, July 11), by Mr Teo Cheng Peow.

We understand the writer’s concern, which is shared by other members of the public who have expressed similar views.

The approach we have taken to assist in resolving many of the problems involving unprofessional real-estate agent conduct is through the Singapore Accredited Estate Agencies (SAEA) Scheme. The SAEA was formed by a group of industry professionals with support from relevant government agencies in November 2005 to accredit both property agents and agencies with the view to raising professionalism and competence in the industry.

The SAEA seeks to ensure that by the end of next year, all agents under the scheme would pass the Common Examinations for House Agents (CEHA) and become accredited agents. However, the scheme may take some time to be accepted by the industry.

Accredited agencies and their respective agents adhere to a Code of Practice and Code of Conduct & Ethics. Disciplinary action will be taken against the agencies and their agents for any breach or non-compliance with the code of ethics. The Code of Practice, Code of Conduct & Ethics and a list of accredited agencies are on our website (www.saea.org.sg). A search can be made on the website to find out whether an agency or agent is accredited.

SAEA does not condone the practice of agents avoiding co-broking in order to secure the full fees from a buyer or seller.

We strongly urge potential buyers/sellers, and landlords/tenants to support the SAEA Scheme. We provide consumers with objective guidance, and will act in the best interests of both the industry and the public.

Manisah Jalil (Ms)

Secretariat

Singapore Accredited Estate Agencies

Source: The Straits Times, 31 July 2007

By Azhar Ghani, Indonesia Bureau Chief

JAKARTA - TYCOONS who built their fortunes on the tobacco industry headed Indonesia’s latest rich list, claiming the top two positions.

Topping the list of 150 wealthiest Indonesians, compiled by Indonesian business monthly GlobeAsia, was the family behind the Djarum Group.

Headed by 66-year-old Budi Hartono, its fortune was put at US$4.2 billion (S$6.32 billion).

While Djarum is the third- largest clove-cigarette producer in Indonesia, the Hartonos’ ascent came on the back of gains unrelated to the tobacco business.

The family officially controls 46 per cent of Indonesia’s largest private bank, Bank Central Asia (BCA).

Its initial investment of US$500 million in 2002 has grown to US$3 billion this month - riding a 70 per cent rise in BCA’s share price over the past 11/2 years.

The Hartonos dethroned the family of the man who topped the country’s rich list last year - paper and pulp tycoon Sukanto Tanoto.

Last year’s list was compiled by Forbes, but GlobeAsia said its list is similar, as the same criteria and methods of data compilation were used.

Also, the team behind Forbes’ list did the GlobeAsia rankings this year.

Mr Sukanto Tanoto, 57, the founder and chief executive of industrial group RGM International, a US$6 billion company headquartered in Singapore, is now at No.6. His family’s fortune is listed as US$1.3 billion, down from last year’s Forbes figure of US$2.8 billion.

Moving up two places from No.4 last year on GlobeAsia’s list is the family of Mr Rachman Halim, 60. He heads Gudang Garam, one of Indonesia’s leading cigarette companies and among the largest listed companies on the Jakarta bourse. The family is worth US$3.5 billion.

Mr Eka Tjipta Widjaja and family, at US$3.1 billion, is in third place - the same position they occupied last year.

Mr Widjaja, 84, is the founder and chairman of privately- held Sinar Mas Group, which includes Singapore mainboard- listed Asia Food and Properties. He is also the father of Singapore businessman and investor Oei Hong Leong.

At No.4 is the Salim clan of Indonesia’s largest conglomerate Salim Group, which is worth US$2.8 billion.

Indonesian Vice-President Jusuf Kalla, who came in at No.36 last year, was way down the list this year, at No.83.

Source: The Straits Times, 31 July 2007

PUBLISHING company Eastern Holdings, which ventured into property development three years ago, has bought a 10,888 sq ft freehold plot in Grove Drive for $12.5 million.

The price for the plot - which is near Ghim Moh Road - works out to $1,148 per sq ft of potential gross floor area.

Eastern said the move into property has allowed the company to ride on Singapore’s booming property market for growth.

Its chairman and managing director, Mr Stephen Tay, said yesterday: ‘This is the beginning of a new era of growth for Eastern, brought about by the robust demand for residential and commercial spaces.’

Eastern had earlier secured an option to buy an adjacent plot for $10.3 million and now plans to amalgamate the two sites.

Together, the combined plots at 81 and 83 Grove Drive offer a total gross floor area of 42,837 sq ft.

In a statement yesterday, the group said it is still discussing specific plans for the sites but may develop cluster bungalows or cluster semi-detached houses.

Eastern entered the property business in 2004 when the property market showed the first tentative hints of recovery.

It was a way for the company to diversify and add growth to its revenue streams beyond publishing, it said.

Today, the group - which publishes magazine titles such as Motherhood, Teens and Motoring - has a property portfolio of commercial, industrial and residential properties.

Source: The Straits Times, 31 July 2007

Pacific Mansions sought $2,400 psf; Rivershire asked for $2,200 psf

RECENT high-profile collective sales of Pacific Mansions and Rivershire have both failed to attract bids from developers willing to match the prices being sought by owners at the two River Valley condominiums.

Marketing consultants of both sites, however, are understood to be negotiating with ‘interested parties’ to see if they can at least achieve the reserve price - ranging from 10 per cent to 20 per cent below the asking price.

Asking prices at the two condominiums were optimistically priced at the very top end of market levels.

The current collective sale record stands at $2,338 per sq ft (psf) of potential gross floor area at The Ardmore in the prestigious Ardmore area.

Owners at the 45-year-old Pacific Mansions in River Valley Close, however, asked for even more - about $2,400 psf of potential gross floor area. This placed its total price at $1.18 billion.

Although the property market is booming, the perception is that the asking price for Pacific Mansions is high and unachievable for now, said a source.

Rivershire in the Leonie Hill area was put up for sale in late June at $348 million, or a hefty $2,200 psf of potential gross floor area.

The recent hike in development charge has no impact on the sites, as no such charge is payable for both sites.

There is talk that the Pacific Mansions’ tender had attracted a few expressions of interest but no firm bids.

Mr Steven Ming, director of investment sales at Savills Singapore, which is marketing Pacific Mansions, only said: ‘We have received interest, and we are in discussions with the interested parties.’

Knight Frank, which is marketing Rivershire, is also believed to be in talks with keen parties.

Nearby, owners of the 99-year leasehold Grangeford Apartments, who had asked for $2,016 psf of potential gross floor area, also failed to get what they had asked for.

The best they got was an offer from Overseas Union Enterprise - believed to be around $1,820 psf - subject to approval by owners controlling 80 per cent of the property’s share values.

The deal is likely to be sealed soon. CB Richard Ellis, which is marketing the site, said it is waiting for lawyers to confirm the approval level.

The absence of finalised deals for these condos has not stopped others from hitting the market at relatively high prices.

These include Trendale Tower in the Cairnhill Road area, which was relaunched for sale in late July at $2,477 psf of potential gross area. Its earlier asking price in May, when it was put up for sale via an expression of interest exercise, was at $2,200 psf of gross floor area.

Recently, City Towers in Bukit Timah Road was also relaunched for sale at a revised asking price of $2,100 psf of potential gross floor area.

Property consultants say the residential market is still rosy, though some collective sales may stall as the owners’ asking prices are far beyond what the market is currently willing to pay.

‘It really depends on the site’s potential,’ said one.

Source: The Straits Times, 31 July 2007

By Erica Tay

IT MAY be a champagne economy, but blistering growth is creating ’supply bottlenecks’ that are pushing up costs and putting competitiveness at risk.

These words of caution come from a Citigroup study centring on a shortage of office and residential space and tighter labour supply in Singapore.

Citigroup economist Chua Hak Bin said that if the Government’s moves to ease supply do not address these ‘bottlenecks’ quickly enough, tighter fiscal and monetary policies may be needed.

‘The concern is that escalating costs and limited slack could also hurt competitiveness and constrain growth, particularly against Hong Kong,’ said Dr Chua, who noted that the Hong Kong dollar has fallen by about 13 per cent against the Singapore dollar over the last two years.

The report cited Mercer’s latest cost of living index, which placed Singapore as the 14th most expensive city for expatriates, up from 46th in 2004.

The private residential rental index here has soared by 31 per cent year-on-year, while the office rental index has rocketed by 46 per cent.

Private residential occupancy, meanwhile, is at 95.1 per cent, higher than the previous peak of 94.3 per cent in December 1995, the report noted.

Policies to ease real estate supply by releasing land may need time to materialise, Dr Chua said, as he raised the issue of whether the authorities will need to ‘tame excessively strong demand conditions either through tighter monetary or fiscal policies, in the interim’.

Source: The Straits Times, 31 July 2007

PROPERTY giant CapitaLand is going shopping in India and China - for malls.

The developer said yesterday that it is setting up two new property funds worth US$1.2 billion (S$1.81 billion) to buy retail assets in the two most populous countries in the world.

Each fund will be worth US$600 million. CapitaLand will take a stake of about 40 per cent in CapitaRetail India Development Fund and 45 per cent in CapitaRetail China Development Fund II.

This brings CapitaLand’s equity stake in both funds to about US$510 million. The remaining stakes in the funds are expected to go to insurance firms, pension funds and corporations.

Both funds will invest in malls that are under development. The Indian fund will close in September, while the China one will close in October.

CapitaLand’s Indian fund is the group’s second retail-related move in the country, after it partnered India’s largest retailer Pantaloon in April last year.

They tied up to manage malls and to set up and manage property funds that develop or own malls in India.

Since then, CapitaLand has identified several retail investment opportunities in India. The new fund will allow it to grow its retail presence in India over time.

But CapitaLand added that it was too early to disclose which specific malls it was looking at.

As for China, the new retail fund is CapitaLand’s third in the country, after CapitaRetail China Development Fund I and CapitaRetail China Incubator Fund.

All three funds could feed into CapitaLand’s China mall trust. While the incubator fund focuses on completed malls, the other two funds will be used for projects still being developed.

Already, the funds in CapitaRetail China Development Fund I - also US$600 million in size - are 90 per cent committed, the developer said.

That is why a second fund is needed to invest in the pipeline of malls coming from CapitaLand’s recent joint ventures in China, such as its tie-up with China Vanke this month.

CapitaLand Retail chief executive Pua Seck Guan said the funds have already received overwhelming indications of interest. He is confident that the closing of the funds will be ‘a resounding success’.

‘Professionally managed organised retail concepts are relatively lacking in China and India, where we have identified immense opportunities,’ he added.

CapitaLand owns or manages more than 70 malls in 28 Chinese cities, and is looking to replicate its China strategy in India.

Source: The Straits Times, 31 July 2007

It will give out more data on prices and ramp up supply of homes and offices By Jessica Cheam

THE Government is not hitting the brakes on the roaring property market, but it is keeping a sharp eye on soaring prices and the office squeeze.

This assurance came yesterday from National Deve- lopment Minister Mah Bow Tan, who said the Government was more inclined towards applying a light touch.

It will depend on ‘non-interventionist’ measures like providing more information to the public on prices and rents while ramping up the supply of homes and offices.

The Government sees this shortage of space - which has resulted in rising home and office rents - as a short-term problem that is best tackled with like-minded measures.

‘We don’t want to use long-term solutions to try to solve short-term problems. If you do that, you might create problems in the long run,’ said Mr Mah.

He added that the Government will look into releasing temporary premises as a way of helping the supply side of the equation.

The HDB is also rolling out a pilot project to lease 120 vacated flats under the Selective En-bloc Redeve- lopment Scheme for terms of one or two years, depending on public response.

A ‘few thousand units’ would be available to help tide the market over the interim period before long- term supply kicks in with the completion of new residential projects, said Mr Mah.

Another initiative announced recently involved the launch of ‘transitional’ office sites by the Urban Redevelopment Authority (URA), which can be built on quickly.

The other weapon in the Government’s approach is to provide buyers and sellers with information - a lot more of it, and data that is more up to date.

Such data is seen as particularly important, given the headlines that rising prices have commanded of late.

Figures by the URA last week showed private home prices climbed 8.3 per cent in the April to June quarter, while the Housing Board revealed that resale prices for flats jumped 3 per cent in the same period.

Both increases are the highest in almost a decade.

Mr Mah maintains that in such an environment, providing useful data can clear the air for buyers and sellers.

He said he preferred to ‘let the market forces work’, but for them to work effectively, ‘there must be sufficient information’.

A wealth of information on sale prices and rent levels for both residential and HDB homes, HDB resale prices and offices has already been released and made available online.

It allows buyers and sellers to get a better handle on how the market is moving in particular areas.

Mr Mah cautioned the public to ‘make a distinction’ between data analysis reports or projections by property analysts and the hard facts provided by the authorities.

‘You can have many different reports, but you should take URA and HDB reports as a snapshot of what is really happening on the ground,’ he said.

Mr Mah added that he was confident that with these measures - comprehensive data and temporary supply - ‘we will be able to moderate the prices’.

Mr Mah was speaking on the sidelines of a Ministry of National Development joint scholarship presentation ceremony, where 36 awards were given out.

This is the first time the ministry’s agencies - such as the National Parks Board, HDB and URA - have award their scholarships in a single ceremony.

Source: The Straits Times, 31 July 2007

By Imelda Saad, Correspondent

THE Government will depend on ‘non-interventionist measures’ to cool the red hot property market.

National Development Minister Mah Bow Tan said the Government’s twin approach is to give out more information and push up supply.

Speaking to the media just three days after the release of Singapore’s first comprehensive data on housing prices, Mr Mah also said ‘there’s no reason to be alarmed.’

Referring to sub-sale figures, he said: ‘If you look at the numbers, it’s quite a distance away from what we have in the mid 90s, particularly in 1996.’

The minister also declined to say if the government will introduce more measures to cool the property sector.

‘I think we try to avoid interfering in the market if we can and that’s the reason why we continue to depend on broad dissemination of information even sometimes persuading various parties to come up with more accurate information and then collating them and getting URA and HDB to push out this info in a very timely and very comprehensive manner,’ he said.

Mr Mah added long term measures are already in place.

There will be sufficient supply to meet housing demands over the next three to five years.

In June, the Ministry of National Development (MND) announced the biggest Government Land Sales (GLS) Programme with enough land for about 8,000 private homes.

Another 56,182 housing units are in the pipeline. Of which 30,158 units have not been sold. These units are expected to be ready between the end of this year and 2010

‘The long term measures are very well in hand and we know that there’s going to be enough supply in the next 3 to 5 years. I think that’s a fact and nobody disputes that. It’s really what happens in the short term.

‘I think there’s a lot of excitement and maybe a little bit of panic in the short term - maybe next month, 6 months, one year’, said Mr Mah.

This is where measures like releasing vacated flats under the Selective En Bloc Redevelopment Scheme or Sers will help.

120 such flats in Tiong Bahru will be released for short term rental.

The flats, which are built in the 50s, will be spruced up by the Managing Agents, tasked with renting out the flat.

‘The Managing Agent will do some renovations, touch up, repairs and do some short term rental for one or two years. It’s not going to make a big dent in the market but it will test the market,’ Mr Mah explained.

If response to these flats is good, up to 5,000 more units can be added to the supply over the next there years.

Mr Mah said he’s confident that by pushing out information and increasing housing supply, property prices will be moderated.

He said the latest data released last Friday showed that although prices have gone up across the board, rates remain ‘affordable’.

‘The government will keep an eye on the situation to make sure we remain competitive,’ he said.

Source: The Straits Times, 30 July 2007

By Vince Chong, Hong Kong Correspondent

IT’S a common refrain from property agents these days, but one that irks flat-hunter Shen Man Yan.

‘Better view that apartment soon or risk losing it to someone else,’ they would advise Ms Shen, a 31-year-old lawyer who is looking for a flat in Happy Valley, a prime district for professionals and expatriates.

‘I don’t know if that’s a marketing ploy, or if the market is really that hot, but I hate it when I hear that,’ she said.

Analysts say it is a combination of both factors, with housing rents for professionals and expatriates here now among the priciest, if not the priciest, in the world.

Add that to similar double-digit rental increases over the past year for office space - bolstered by the promise of more mainland investment funds - and the city’s property industry looks pretty rosy.

A recent report by human-resource specialist ECA International showed that the cost of renting an expatriate apartment in Hong Kong is the world’s highest, at an average of US$8,592 (S$13,000) a month.

The figure was 17 per cent higher than for Tokyo, which ranked second, and 150 per cent over that in 15th-placed Singapore.

According to Mr Lee Quane, ECA general manager in Hong Kong, apartment rents in executive districts such as the Mid-levels and Happy Valley have jumped 25 per cent over the past two years.

The main reason for the spike is a limited supply of homes in the top districts.

A similar situation exists in the office space market, where a 17-year-low vacancy rate is pushing up prices in the prime Central district on Hong Kong Island.

US giant Morgan Stanley, for one, is said to be considering moving some operations from its Central address - traditionally de rigueur for the financial services trade - to less expensive Kowloon on the other side of Victoria Harbour.

Rents in the Kowloon hub of Tsim Sha Tsui average about HK$30 (S$5.80) per sq ft (psf) to HK$40 psf - less than half of the HK$90-HK$100 psf in Central.

For now, such increases in housing and office rents are hardly denting Hong Kong’s ability to attract investors. The city’s gross domestic product is expected to grow by 5.5 per cent this year.

One reason, noted Ms Karen Choi, research head of property firm Vigers, is that the average cost, while high, remains about 10 per cent off the peak in 1997 before the economy was ravaged by the Asian financial crisis and 2003 Sars outbreak.

‘Also, prices everywhere from Singapore to Shanghai are rising too,’ she told The Straits Times.

Said Mr Quane: ‘In the future, more companies will certainly consider moving to Shanghai, where housing costs are 50 per cent lower.

‘But then, tax rates there may also run as high as 45 per cent, which could prove just as costly for firms that pay taxes for their employees.’

The next logical option, he added, would be Singapore, which shares Hong Kong’s attractive tax regime but not its physical and political intimacy with China.

‘Hong Kong remains, for now, worthwhile for the large multinationals despite high property rents,’ Mr Quane concluded.

Source: The Straits Times, 30 July 2007

By Ravi Velloor, India Bureau Chief

NEW DELHI - EIGHTEEN months ago, when Mumbai real estate consultant Sanjeet Narain made arrangements for the British Broadcasting Corp’s new office in the city’s Bandra Kurla Complex (BKC), the rent was 120 rupees (S$4.50) per sq ft.

These days, the going rate for office space at BKC, as Mumbai’s emerging financial district is called, ranges from 350-400 rupees psf.

‘Demand is ever growing. Everyone seems to want to be here in Mumbai - whether you are into logistics, telecoms or any other business you can think of,’ said Mr Narain, managing director of Narains Corp, a top real estate firm in India’s business capital.

‘Right now, I am just helping to place a Swiss chocolate-maker in Andheri East,’ he says, referring to a less fashionable suburb further away. ‘Andheri rents now have reached where BKC was less than two years ago.’

Indeed, a recent lease for Droege & Co Singapore was fixed at 100 rupees psf for the 2,000 sq ft of space the consultancy hired.

As India’s economy expands at a steady 9 per cent on average, global firms are arriving to cash in on the boom, running headlong into established Indian players intent on expanding their operations.

While the housing market has softened, thanks to the central bank’s interest rate hikes, demand for quality office space shows no signs of abating. The result has been escalating rentals. The capital value of Mumbai’s office buildings rose 123 per cent last year, outpacing Singapore, according to a recent report by Jones Lang LaSalle.

Such property escalations are bound to affect business, even in a red-hot economy like India’s.

Many firms have moved out of Mumbai to locations where offices are cheaper and travel times shorter. Retailing, for instance, is increasingly based out of cities such as Bangalore or Hyderabad.

‘Cost escalations are taking place across all asset classes,’ said Mr Sameer Wagle, associate director of the investment management arm of Mumbai-based IL&FS, an infrastructure leasing and finance company. ‘But real estate is the hottest because of the Indian mentality to invest in fixed assets.’

Even so, he says, the lure of the billion-strong Indian market is so strong that most companies take the rental costs in their stride.

‘It is the shortage of talent that is their bigger headache because of rising salary costs,’ he added.

Still, some parts of India are beginning to register small declines.

In Gurgaon, on New Delhi’s western suburbs, which has become a fashionable location for back-offices of multinationals and upper-class residences, office rentals have cooled in recent months.

‘Thanks to a whole lot of new malls and office buildings, you can buy good quality office space for about 12,000 rupees psf, down from 15,000 rupees a few months ago,’ said chief executive Rajeev Sharma of New Delhi real estate firm Alpha Estates.

In Mumbai, the government is trying to change the Urban Land Ceiling Act of 1976 that limits the land available for development. According to Chief Minister Vilasrao Deshmukh of Maharashtra state, as much as 500 ha may be freed up for office buildings.

But for now, space is so tight that vacancy in the central business district area was at a record low of 2.1 per cent in the first quarter of the year.

Source: The Straits Times, 30 July 2007