Issue 147

Copyright 2011-2013 www.Propwise.sg. All Rights Reserved.

CONTENTS
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Real Estate Crowdfunding A Growing Trend?
Singapore Property News This Week Resale Property Transactions (February 26 March 4)

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 147

Real Estate Crowdfunding A Growing Trend?

By Getty Goh & Dr SehHuanKiat (Guest Contributors) In the recent Budget Speech, Singapores Finance Minister Tharman Shanmugaratnam commented that the government was studying the potential of equity crowdfunding. To the casual observer, this may appear to be just another way for start-ups to secure funding. In reality, the benefits of such a policy, if introduced, could have far reaching economic and social benefits. Although I cannot speak for the other sectors, perhaps I can share my take on how crowdfunding can potentially change Singapore as well as the regions real estate landscape.

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SINGAPORE PROPERTY WEEKLY Issue 147 A bit of background on crowdfunding Crowdfunding is defined as the pooling of funds via the Internet to support projects initiated by individuals or companies. The crowdfunding movement started to take off in the US, with the Federal government passing legislative acts to promote economic growth. This was done via the Jumpstart Our Business Startups Act (also known as the JOBS Act), which was intended to encourage funding of US small businesses by easing various securities regulations. Specifically, this meant that small companies were now able to raise more funds by having more shareholders, without having to list on the stock exchange. In Singapore, there is presently no similar legislation. Based on the Companies Act, the maximum number of shareholders a private limited company can have in Singapore is 50.If companies wish to have more
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shareholders, they would either have to find some legal way to work around the current regulations or be listed on the stock exchange as a public company.

So how can crowdfunding benefit the real estate sector?

Unlike other types of business, property development tends to be more capital intensive. While it could cost just several hundred thousand dollars to get most businesses off the ground, it would typically cost several million dollars to kickstart a development project. Most aspiring property developers would have some seed capital to buy the land and get the project started. However, they often require additional funds to keep the project going. This is especially true for countries where construction loans for foreign developers are not available. In those instances, where can these developers turn to for the funds they need?
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SINGAPORE PROPERTY WEEKLY Issue 147 Although approaching banks for such financing needs may seem like the obvious choice, these financial institutions are typically not interested in deals that are less than S$5million, as the fees from making those loans may not be commensurate with the effort. Another possible funding avenue could be from wealthy individuals. However, even if they find the project attractive, many of them would not be keen to take the huge financial risk of investing several million dollars in a single project. Hence, many aspiring property developers currently face difficulties in realising their projects that is where real estate crowdfunding comes in. How does real estate benefit stakeholders? crowdfunding real estate crowdfunding platform results in several benefits for the various stakeholders. Developers are able to raise the funds they need to push ahead with projects and some of these developments could bring opportunities to improve the wellbeing of members within that community. Also, through these platforms, developers will be able to proceed with projects in burgeoning regions (i.e. Myanmar, Cambodia, Thailand, etc.) where construction loans are not readily available On the funders end, these crowdfunding sites help make the real estate markets more transparent. The most immediate benefit to users would beto give them access to opportunities that were once reserved for banks, funds and wealthy individuals. Apart from that, by aggregating different likeminded individuals to partake in the same deal, each crowdfunder would have to come
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Pooling different like-minded individuals together to support viable projects through a

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SINGAPORE PROPERTY WEEKLY Issue 147 up with less capital (often just several thousand dollars) to take advantage of the good returns that some developers offer. These crowdfunders can also spread their risks by not putting all their eggs in one basket as they do not have to invest in whole units, unlike regular real estate investments. Being in an online environment, users can do their research by using interactive online property tools to understand the overseas markets before making a decision. Users can also exchange notes with other crowdfunders to do cross- references about a particular developer or project. When these developers know that their reputation is at stake, some of them would definitely think twice before putting up a dud deal. Teething Issues Gaining user confidence Having listed some of the benefits of real estate crowdfunding, it is important to highlight that such sites are not without risks.
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Having been around for only the last 2 to 3 years, the crowdfunding industry is still in the infancy stage. One of the common concerns relating to crowdfunding is the lack of recourse should the project fail to materialise. Interestingly, this is actually less of an issue for real estate crowdfunding as there is usually some form of asset (i.e. land title) that crowdfunders can stake a claim to. Apart from that, another issue that has to be overcome is the scepticism that some users could have. Many people are not comfortable with the anonymity of the opportunity providers and would prefer to meet with the developers before considering funding their projects, especially if they are doing it for the first time. This is especially important for real estate crowdfunding, as the funding amounts can be substantial. Therefore, having offline contact is an important step to gaining user confidence.
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SINGAPORE PROPERTY WEEKLY Issue 147 Is there a demand crowdfunding? for real estate 20,000 secondary contacts) within the first 6 months. More thanS$12million worth of deals were also shortlisted and put on the site, with many more turned away. As a whole, even though this may not appear to be much, it validated the business process and suggests that more can be achieved in time to come. Apart from that, we are also seeing keen interest in the inaugural Expo for Property Investing and Crowdfunding (EPIC)that CoAssets is putting together. This is the first time that a real estate crowdfunding event is being organised in South East Asia. Real estate crowdfunding is gaining traction in the region. Conclusion This article just scratches the surface of the topic of real estate crowdfunding and there are definitely other risks as well as issues not highlighted.
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At present, it is still too early to say if there is sustained demand for real estate crowdfunding. However, based on what we have seen on CoAssets, areal estate crowdfunding platform my company operates, we have observed a growing trend. As there is currently no legislation that is similar to the JOBS act in Singapore, CoAssets is simply a targeted leads generation site that connects opportunity providers (i.e. developers, bulk sellers, etc) and users. Akin to any regular property site, we do not get involved in the deal and any arrangement is directly between the stakeholders. Based on this approach, the crowdfunding platform grew from 200 to more than 1,300 engaged users (with a reach of more than
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SINGAPORE PROPERTY WEEKLY Issue 147 Despite my apparent bullish view towards real estate crowdfunding, the reality is that only time will tell how this will pay out. Nonetheless, when you put all the considerations together, crowdfunding is definitely an area for the government and industry stakeholders to explore further as the pros outweigh the cons. The true potential behind real estate crowdfunding, if correctly executed, will be the ease in channelling resources from one region to another, in support of financially viable or socially beneficial projects. And the full potential can only be achieved if there is more clarity in the crowdfunding regulations. Mr Getty Goh has a Masters in Real Estate from the National University of Singapore (NUS) and heis the CEO of CoAssets.com, South East Asias first crowdfunding website. Mr Goh is also a director with Ascendant
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Assets Pte Ltd, a real estate research consultancy and think tank. Dr Seh Huan Kiathas a PhD from Massachusetts Institute of Technology (MIT) and he is the CTO ofCoAssets.com.

SINGAPORE PROPERTY WEEKLY Issue 147

Singapore Property This Week

Residential
Procedure for resale HDB transactions to be changed The procedure for reporting resale Housing Development Board (HDB) transactions has been changed to shift the focus from cashover-valuation (COV) to market prices. Buyers now are required to get the option to purchase (OTP) before asking for a valuation from HDB who will not accept such requests from sellers. Thus, instead of focusing on the COV, buyers and sellers will negotiate resale prices based on the latest transacted prices. Buyers now also have 21, instead of 14, calendar days to exercise their obtained OTP. Daily prices of resale transaction will also be
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posted on HDB InfoWeb every day, instead of every fortnight, after they are registered. (Source: Business Times) Non-landed resale home volume remains low Due to cooling measures and the Total Debt Servicing Ratio framework, non-landed private home resale volume remained low at a levels not seen since the 2008 global financial crisis. According to flash figures released by the Singapore Real Estate Exchange (SRX), resale volume decreased 18.5 percent month-on-month, standing at 242 transactions in February; and decreased 22.2 percent year-on-year, from 311 deals in

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SINGAPORE PROPERTY WEEKLY Issue 147 February 2013. Resale prices also went down 2 percent, which was seen as a natural pullback from unsustainable price increases of the previous months. (Source: Business Times) EL Development wins top bid for Yishun condo site With an offer of $278.8 million or $450.06psfppr, EL Development has won over four other bids for the Yishun Avenue 9 site. This price exceeds the expected price of $380-$431 psfppr, and makes a historical high for a Yishun residential non-landed government land sales site compared with the previous record of $405.53 psfppr for another Yishun sitein August 2010. Ong Teck Hui, the national director for research and consultancy at Jones Lang LaSalle, said that this winning bid is in fact the lowest price for Outside Central Region. (Source: Business Times) Productive technologies developers margins will not hit

According to some analysts, productive technologies adopted by developers for Government Land Sale (GLS) properties are unlikely to hit their margins despite increasing costs. Regina Lim, head of Singapore equity research and ASEAN property research at Standard Chartered, said that with more developers adopting prefab components, costs might decline, while it is expected that land bids by developers may slow down due to higher construction costs. Switching costs for technology and manpower upgrades are said to be passed to developers through their tender pricing. (Source: Business Times)
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SINGAPORE PROPERTY WEEKLY Issue 147 Three adjoining freehold properties up for sale Three adjoining freehold properties along Queen's Road and Duke's Road with a combined land area of 25,425sqft are now up for sale with an estimated price of more than $45 million or $1,430 psfppr under marketing agent Knight Frank. It has a plot ratio of 1.4, and can yield a maximum permissible gross floor area of 35,595 sqft with an expected development charge of $5.8 million. (Source: Business Times) Far East Organisation Centre awarded Sentosa hotel site tender Far East Organization Centre, a member of Far East Organization (FEO), was reported to have won a hotel site tender on Sentosa to develop a cluster of conserved buildings and their repurposing into hotels. The site is planned by FEO to be called The Outpost
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with two hotels of 700 rooms. The Artillery Avenue site, however, has been gazetted for conservation, so FEO has to take heritage and conservation requirements into consideration during its development process. (Source: Business Times) Commercial Silicon revealed Valley-inspired LaunchPad

JTC LaunchPad @ one-north, considered as Singapores startup valley inspired by Silicon Valley, was revealed to comprise three adjoining buildings in Buona Vista (one new, one repurposed and the startup hub Block 71), several cafes and food points, sport facilities, and indoor and outdoor collaborative spaces the same facilities as Google and Facebook in Silicon Valley. The startup community in one-north, thus, is expected to increase to reach 500 startups with 2,000
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SINGAPORE PROPERTY WEEKLY Issue 147 entrepreneurs, or even 800 startups and 3,200 entrepreneurs. Exploit Technologies, Joyful Frog Digital Incubator, SingTel Innov8 Ventures and NUS Enterprise are reported to be interested in being part of LaunchPad. Iconic projects coming up A group of iconic integrated mixed development projects with a value of more than $15 billion are reported to be coming up, which will enhance Singapores luxury residential property landscape. The group includes collaborations between Temasek Holdings and KhazanahNasional for the Marina One and DUO developments. Malaysian tycoon Quek Leng Chans GuocoLand is also developing TanjongPagar Centre with the tallest residences in Singapore Clermont Residence at 290 m high. A joint venture between City Developments and Malaysian group IOI is also springing up to include two towers.
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Capitol Theatre, Capitol Building and Stamford House are being integrated into the Capitol Singapore project. Another project with 39 exclusive residences including Eden Residences Capitol will also be available soon. Such iconic residential projects are expected to generate monetary value, attract foreign investors and attract global high net worth talents to reside in Singapore. (Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 147

Non-Landed Residential Resale Property Transactions for the Week of Feb 26 Mar 4

Postal District 5 5 5 5 9 9 9 10 10 11 11 11 12 12 14 14 15 15 15 15 16 16

Project Name THE ROCHESTER THE PARC CONDOMINIUM DOVER PARKVIEW FABER CREST PATERSON RESIDENCE LEONIE SUITES WATERFORD RESIDENCE PALM SPRING SECOND AVENUE JUNCTION PARK INFINIA AT WEE NAM ADAM PARK CONDOMINIUM ADAM PARK CONDOMINIUM THE TIER THE TIER DAKOTA RESIDENCES THE SUNNY SPRING THE VIEW @ MEYER BUTTERWORTH 8 ST PATRICK'S LOFT LAGOON VIEW BLEU @ EAST COAST BAYSHORE PARK

Area Transacted Price Tenure (sqft) Price ($) ($ psf) 840 1,150,000 1,370 99 1,302 1,660,000 1,275 FH 936 1,100,000 1,175 99 2,067 1,680,000 813 99 1,496 3,100,500 2,072 FH 936 1,900,000 2,029 99 1,399 1,890,000 1,351 999 2,659 3,980,000 1,497 FH 1,668 2,150,000 1,289 FH 1,464 2,750,000 1,879 FH 1,389 1,815,000 1,307 FH 2,336 2,160,000 925 FH 549 830,000 1,512 FH 538 760,000 1,412 FH 1,313 1,690,000 1,287 99 1,195 1,100,000 921 FH 1,690 2,750,000 1,627 FH 1,313 1,598,000 1,217 FH 1,259 1,380,000 1,096 FH 1,647 1,210,000 735 101 1,173 1,398,000 1,192 FH 1,173 1,300,000 1,108 99

Postal District 17 18 18 19 19 19 20 20 21 22 22 22 23 27

Project Name DAHLIA PARK CONDOMINIUM CHANGI RISE CONDOMINIUM TROPICAL SPRING KOVAN 81 REGENTVILLE RIVERVALE CREST RAFFLESIA CONDOMINIUM RAFFLESIA CONDOMINIUM GARDENVISTA THE MAYFAIR THE MAYFAIR IVORY HEIGHTS THE WARREN SELETARIS

Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,292 1,100,000 852 FH 1,259 1,050,000 834 99 2,271 1,810,000 797 99 1,076 1,035,000 962 999 1,152 910,000 790 99 1,216 930,000 765 99 1,302 1,450,000 1,113 99 1,216 1,295,000 1,065 99 1,130 1,486,888 1,316 99 893 888,000 994 99 1,055 1,045,000 991 99 1,701 1,230,000 723 100 1,475 1,200,000 814 99 1,389 990,000 713 FH

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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