Issue 34

Copyright 2011-2012 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2 p5
Singapore Property News This Week
Should You Buy Completed or Under Development Properties?

FROM THE

EDITOR

Welcome to the 34th edition of the Singapore Property Weekly. Hope you like it!

p15 Resale Property Transactions

(December 24 December 30)

Mr. Propwise

p16 Singapore Property Classifieds #23

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SINGAPORE PROPERTY WEEKLY Issue 34

Singapore Property This Week

Residential
Freehold Royalville and Ming Arcade up for sale again, with lower asking prices
174,176 sq ft residential Royalville located on Bukit Timah Road is asking $320 million to $370 million, lower than its earlier asking price of $370 million to $400 million. This is about $1,312 psf ppr, or $1,197 psf ppr if it takes into account the additional 10% balcony space and the $1.16 million development charge. The gross plot ratio is 1.4, and can be built up to five storeys. Ming Arcade, a commercial development located near Orchard Road, is asking for $120 million or $2,180 psf ppr, lower than the earlier $130 million or $2,360 psf ppr. The site with a 55,046 sq ft gross floor area consists of 88 commercial or retail strata units ranging from 140 sq ft to 620 sq ft. Zoned commercial, the site with a 4.2 gross plot ratio can be redeveloped into a 20-storey high development for office and retail purposes or for hotel and mixed commercial and residential uses, provided approval is granted. The tender will close at 2.30pm on Feb 15 for the former 3pm on Feb 16 for the latter.

Freehold Asia Gardens and Jade Towers up for collective sale

92,412 sq ft Jade Towers located along Lew Lian Vale, is asking of $108.8 million to $110.8 million or $826 to $841 psf ppr.

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SINGAPORE PROPERTY WEEKLY Issue 34 With its fairly rectangular configuration, it could be reconfigured to a GFA of 131,702 sq ft which can support 101 1,200 sq ft apartment units. 84-unit Asia Gardens located on Everton Road is asking for $302.6 million to $307.7 million or $1,500 to $1,525 psf ppr. Zoned 'residential', the 72,059 sq ft site has a 2.8 plot ratio and 201,765 sq ft GFA. The tenders close at 3pm on Feb 16 and 29 respectively. Most PRs owning HDB flats occupy the flats they own Owners are expected to occupy their flats unless they have legitimate reasons for not being able to do so, in which case they may seek approval to sublet their flats. After 3 years they have to reapply if they want to continue to sublet their flat. Tepid bidding with lower top bid at Bartley residential plot The 99-year leasehold private condo site located near Bartley MRT Station drew five bids with a top bid of $388.1 million or $495.01 psf ppr, 20.2% lower than that of a nearby 99-year leasehold site sold last year, which drew eight bids. Both bids were won by a Hong Leong Holdings, City Developments and TID consortium, which had probably bid to prevent the prices for its upcoming launch of its project on the previous site from being undercut.

95% of permanent residents (PR) who own a flat also occupy the flat. This was revealed in an answer to Mr Ang Hin Kee, Member of Parliament (MP) for Ang Mo Kio GRCs question as to whether PRs have to occupy the HDB flats that they own.
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SINGAPORE PROPERTY WEEKLY Issue 34 Bartley Residences, built on the earlier site, will consist of 702 units with one to four bedrooms and an average price of $1,200 psf. By winning the bid at the latest site, not only can the developer prevent its prices from being undercut, it will also be able to spread its breakeven costs between the two sites and establish its standing in the region. The breakeven cost for the new site is estimated to be $880 to $1,000 psf. The difference between the two sites winning bids was predicted to be 5-10%, but it turned out to be higher, possibly because of the poor economic outlook and the recent measures. Another reason could be that the new site is less attractive, being situated near Bartley Secondary School, SPCA and the Gurkha Cantonment rather than being next to the MRT station and located near a landed housing estate.
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The tepid bidding trend is expected to continue, but attractive sites may draw more and higher bids.

3,923 new flats offered in first BTO launch of the year

HDB is offering 3,923 new flats out of the total of 25,000 build-to-order (BTO) units it planned to offer in 2012 in its launch of five new BTO projects in Choa Chu Kang, Punggol, Sengkang and Tampines. There are plans to offer 4,110 more new flats for sale in Bedok, Bukit Batok, Bukit Panjang, Bukit Timah, Clementi, Geylang and Toa Payoh two months later. While the flats may see decent take-up particularly for flats in Tampines and Choa Chu Kang, buyers might choose to wait for the next launch where flats launched will be located in more attractive mature estates.
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SINGAPORE PROPERTY WEEKLY Issue 34 Nonetheless, the prices for the flats are attractive, with prices of four-room flats starting from $277,000 (inclusive of CPF housing grants) at the two Tampines projects Tampines Alcoves and Tampines GreenTerrace, compared to $450,000 for a resale flat in the same location. $408m top bid for 99-year leasehold 262,828.6 sq ft condominium site in Clementi The site with a 2.8 maximum plot ratio and a potential space of 735,920.1 sq ft and yield of 685 units located along Jalan Lempeng attracted eight bids, with the highest of $554.41 psf ppr from Multi Wealth (Singapore) Pte Ltd. The interest in the site was expected since there has not been any condominium project launches in Clementi for years and there will likely be demand for private
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residential units in the area. Another reason for the interest would be its proximity to the Clementi MRT station, bus interchange and amenities in the town centre. Breakeven cost and selling price for the site is expected to be $950 and $1,000 psf and $1,200 to $1,300 psf respectively. Far East had sold 309 of 411 released units of The Hillier 75% or 309 of the 411 released units of The Hillier located at Hillview Avenue has been sold, 90% of which were sold to Singaporeans and permanent residents who mostly are already living in the Hillview and Upper Bukit Timah region. The units in the 99-year leasehold 528 Soho style units were sold at an average of $1,200 psf, and will have access to a retail podium called HillV2 integrated in the development.
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SINGAPORE PROPERTY WEEKLY Issue 34 Confirmed tenants in the 33-unit (ranging from 311 sq ft to 8,887 sq ft), two-storey 55,500 sq ft HillV2 include Market Place, Dean & Deluca and Cold Stone Creamery. 60% of the units will be for food and beverage. Commercial Good sales for strata office and industrial units 99-year leasehold 13-storey Paya Lebar Square, an office and retail development located next to Paya Lebar MRT Station has sold 60 of its office units to a 50-50 division of investors and end-users at an average price of $1,700 psf. The buyers are all Singapore companies. It has released a total of 200 of its 550 units so far until its official launch in February. The units include 79 484-sq ft units, 335 units ranging from 501 sq ft - 1,000 sq ft,
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120 units ranging from 1,001-1,500 sq ft and 22 units above 1,500 sq ft. The 13-storey building will consist of office strata units on levels 4 - 13, with the carpark on levels 2 3, and a retail podium from the basement to the second level. Decisions on the retail podium have not been made the developer could sell it to a single buyer, sell it in strata units and lease it out.

12-storey freehold Eldix, an industrial development located at 11 Mandai Estate has sold almost 20 strata industrial units at an average price of $470 psf to Singapore entities that are mainly end-users, though some are investors. The developer, EL Development, will occupy a flatted factory unit on the 12th floor, leaving 167 1,389 sq ft to 1,862 sq ft units on the first 11 levels to be sold and the first level for a staff canteen.

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SINGAPORE PROPERTY WEEKLY Issue 34

Should You Buy Completed or Under Development Properties?

By Calvin Yeo (reproduced with permission from his blog www.investinpassiveincome.com) A constantly debated topic in Real Estate has always been whether one should buy completed or under development properties. The answer is: it depends on your need and situation. I for one have done both and I would like to share my experience. Frankly, I dislike buying under construction properties nowadays as I hate waiting a long time before I start seeing any Real Returns. However, I will still go through the Pros and Cons of each.

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SINGAPORE PROPERTY WEEKLY Issue 34 Pros of Properties Buying Underdevelopment 2. Ease of Financing Developers usually work with Panel Banks to secure financing for their buyers. As such, valuation is usually not required for these properties as the banks have already accepted the valuation of the developers pricing. Banks may also come up with innovative schemes like No Payment Down or minimal down payment required for certain developments. 3. Low Payment Upfront As described earlier, a combination of Free Stamp Duty and Legal Fees basically reduce transaction costs. Coupled with low down payment schemes, the down payment can be pretty low.

1. Developer Freebies Developers often give freebies like Free Stamp Duty, Free Legal Fees, Rebates and others. There are also developments where the Developer absorbs the interest during the construction period, known as Interest Absorption Scheme/Deferred Payment Scheme. In some lesser known developments, Developers may also give out Rental Guarantees for a number of years to attract investors. However, the Developers normally have already priced these incentives into the pricing, so its not usually that great a deal after all.

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SINGAPORE PROPERTY WEEKLY Issue 34 Its one of the cheapest options to purchase a property. 4. Brand New completed. Its a real risk in countries such as Malaysia where any Tom, Dick and Harry can become a developer. For larger, well known developers the risk of the project getting abandoned is less likely. In this case, the risk may be delays in delivering the completed property. 2. Unable to See the Final Product

Buying an under development project means getting a brand new property when you receive the keys. For some people, its a psychological comfort that the house is brand new and much cleaner than one which has been lived in before. There will also be minimal hassles with repairs and maintenance since it would be covered by the developer during the Defects Free period.
Cons of Buying Properties Under Development

1. Risk of Abandoned Projects and Delays The most basic risk is that the development gets delayed or worse still never gets

Developers are known to furnish showrooms with the most expensive materials, furniture and fixtures which may not be in the actual unit. Showrooms also employ many visual tricks like walls of mirrors, breaking down doors and divisions to make the space appear larger than it actually is. The site plan may also be somewhat different, so the layout of certain rooms may not be as ideal as you expected.

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SINGAPORE PROPERTY WEEKLY Issue 34 Also, standing at the ground floor of the showroom, its difficult to imagine what your view would look like; the last thing you want is to see a cemetery right from your living room (it happened to a friend of mine before). 3. Long Waiting Time The standard length of time to completion is anywhere from 2 years to 4 years, so its a long wait. If your development does not offer a Deferred Payment Scheme, you will have to make interest payments for the Progressive Payments of the project. In addition to the opportunity costs of the downpayment locked in during those years, the holding costs could be quite sizeable. The money could have been invested in low risk stocks/bonds for 34% return per year. 4. Market Uncertainty For investors, the market can be very unpredictable. 2 to 4 years is a long time and anything can happen when you get the keys. Should there be a downturn during that time, you could be in for a tough time. Those who are hit particularly hard by this are speculators who just buy with the aim of flipping for a gain upon completion. A hot market inevitably draws in a lot of speculators who do not have the ability to hold the units and they may be forced to sell at low prices, lowering market values for the property.

5. Higher Prices Than Resale Properties

In recent years, new properties are almost always priced above currently available resale properties in the same area.

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SINGAPORE PROPERTY WEEKLY Issue 34 I am sure you have heard all the factors, inflation, rise in construction costs, rise in material costs, higher land cost, new design blah blah blah. There may be some truth in them, but its up to you to decide if the developers are overpricing their projects. 6. Rental Yields Uncertain Sales people will always quote unreasonably high rental yields and always boast the rentability of the project to expats or students. Investors for some reason have a constant fascination with either expats or the student rental market so the sales people will always try to touch on these factors. It is important to note that half of the things sales people say are exaggerations so I would never take them too seriously. Do your own research on how certain these units are likely to rent and the probable rental rate.
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Pros of Buying Completed Properties 1. What You See Is What You Get You will be able to see the actual unit before you commit to purchasing it the exact layout, quality of furnishing, view, who the neighbours are, occupants of the development, surrounding amenities and more. All these factors are critical factors to the rentability of your unit, so its great to be able to see them, reducing your risk considerably. 2. Cheaper than New Properties Resales properties are not always old and dilapidated. In fact, some are newly completed! In my opinion, those new completed properties usually represent a good buy especially if the price is still below the launch prices of new projects.
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SINGAPORE PROPERTY WEEKLY Issue 34 3. Instant Rental Once the transaction is completed, you will be able to rent out the unit for income instantly. Better yet, if the purchase comes with a rental agreement, it saves you the agent costs and searching costs. This is another very important factor, getting Instant Returns once you actually own the unit instead of having to wait. 4. Ability to Calculate Rental Yield Even if the actual unit is not rented out, it is quite easy to derive an approximate rental based on other units rented in the same project. The ability to calculate rental yield is an important determinant of whether the price you are paying for the property is reasonable. The higher the rental yield, the better the price is. Cons of Buying Completed Properties 1. Higher Transaction Costs and Cash Outlay In a resale, the buyer often has to pay for all the transaction costs upfront such as Stamp Duty, Legal Fees, Financing Fees, Valuation etc. and more. Furthermore, the downpayment will have to be paid in full in a relatively short timeframe of 3 to 6 months. The cash outlay is normally much higher when you buy a completed property. 2. Difficulty In Getting Valuations In some cases of hot properties, it may be difficult to get banks to match current asking prices since valuation prices are normally based on historical. If you believe in the potential of the property, you have to either shop around, push banks to increase their valuations or even
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SINGAPORE PROPERTY WEEKLY Issue 34 top up the difference in cash. Again, having the cash on hand is critical in such situations. You can always refinance the property to get the cash out after the valuers have caught up with the new valuation. 3. Repair and Renovation Costs Buying a resale property normally means having to do some repairs and renovations. Depending on the state of the property and age of the furnishings, the costs can be either minor cosmetic touch ups or astronomical for those with structural defects. It is therefore important to get an expert to check on potential defects especially if you are buying an old house. Then again, there are many who have made good money by buying old houses, renovating them and flipping for a good profit. After going through all the Pros and Cons, you should have a good idea of the differences between both options. I personally prefer buying Completed Properties, but for some people Under Development Properties may be a better choice. Calvin Yeo is the founder of the Making Passive Income blog. He graduated with a Business Major in Finance and Accounting and spent a few years working in an investment bank. The knowledge from his studies and working experience serve as a good base for him to grasp the ideas for passive income generation.

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SINGAPORE PROPERTY WEEKLY Issue 34

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SINGAPORE PROPERTY WEEKLY Issue 34

Non-Landed Residential Resale Property Transactions for the Week of Dec 24 Dec 30
Postal District 4 4 4 4 9 9 10 10 11 11 11 11 12 12 12 12 14 14 15 15 15 15 15 Project Name MARINA COLLECTION MARINA COLLECTION MARINA COLLECTION CARIBBEAN AT KEPPEL BAY THE CLAYMORE LANGSTON VILLE THE TRESOR DUCHESS CREST NEWTON 18 THOMSON EURO-ASIA NINETEEN SHELFORD ROAD DUNEARN LODGE THE MARQUE @ IRRAWADDY PARC HAVEN BALESTIER PLAZA MOONSTONE RESIDENCES SIMS GREEN MORO MANSIONS THE SEA VIEW THE ESTA D'ECOSIA FORTUNE SPRING ESPIRA SPRING Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,873 5,338,050 2,850 99 2,099 5,877,200 2,800 99 2,099 5,877,200 2,800 99 1,335 2,150,000 1,611 99 3,348 8,500,000 2,539 FH 936 1,120,000 1,196 999 1,927 3,600,000 1,868 999 1,345 1,710,000 1,271 99 614 1,070,000 1,744 FH 1,130 1,850,000 1,637 FH 635 868,000 1,367 FH 1,098 880,000 802 99 883 1,100,000 1,246 FH 1,475 1,700,000 1,153 FH 1,367 1,280,000 936 FH 1,238 1,128,000 911 FH 990 870,000 879 99 936 750,000 801 FH 1,647 2,250,000 1,366 FH 1,345 1,772,000 1,317 FH 1,604 1,680,000 1,047 FH 1,163 1,050,000 903 FH 2,099 1,800,000 858 FH

Postal District 15 17 17 17 19 20 20 21 21 21 21 22 23 23 27

Project Name SHEBA LODGE DAHLIA PARK CONDOMINIUM LIGHTHOUSE BALLOTA PARK CONDOMINIUM JANSEN MANSIONS GOLDENHILL PARK CONDOMINIUM THE WINDSOR THE HILLSIDE THE RAINTREE THE RAINTREE SIGNATURE PARK THE CENTRIS PARKVIEW APARTMENTS MAYSPRINGS ORCHID PARK CONDOMINIUM

Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,141 830,000 727 FH 1,281 1,000,000 781 FH 1,195 860,000 720 99 1,442 960,000 666 FH 1,259 920,000 731 999 1,313 1,500,000 1,142 FH 1,539 1,460,000 949 FH 1,313 1,286,000 979 FH 1,270 1,215,000 957 99 1,335 1,241,550 930 99 1,421 1,260,000 887 FH 1,066 1,360,000 1,276 99 926 680,000 735 99 1,335 970,000 727 99 1,141 797,000 699 99

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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SINGAPORE PROPERTY WEEKLY Issue 34

Singapore Property Classifieds #23

For Sale Soho@Central, #09- ,soho1/w loft/635sf/vacant/mgt fee $975/quart/ask $2280psf/avail for rent 5.5$K(neg). Call S.Ganesh 91732881 for viewing! For Rent Luma/New/1153sf/3br+balcony/8F/rent $5,500(low asking)/partial/nego/also avail for sale $2000psf neg/Call S.Ganesh 91732881 for viewing!

Off@Central,#19-/3246sf(apx),tnted/rent 25k/maint $2,268pm/ask $2950psf neg. View of Marina Bay Sands. Call S.Ganesh 91732881 for viewing!

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