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Issue 94

Copyright 2011-2012 All Rights Reserved.

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HDB New Flat Prices to Fall by 30%? Property Buying Tip #10: Co-Ownership Singapore Property News This Week Resale Property Transactions (February 20 February 26)



Welcome to the 94th edition of the Singapore Property Weekly.


Im glad to announce that the 2012Q4 URA data has been updated for members. >> Click here to find out more <<
Hope you like it! Mr. Propwise

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HDB New Flat Prices to Fall by 30%?

By Mr. Propwise In a recent parliamentary speech, Minister Khaw Boon Wan suggested that his Ministry is looking at ways to bring Build-To-Order (BTO) flat pricing in non-mature estates down to four years of salary, where it was before the current property bull market started more than six years ago, down from the current 5.5 times. The media has suggested that this means a potential fall of 30% for BTO prices, which would be disastrous for both HDB resale flat and mass market private property prices.

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SINGAPORE PROPERTY WEEKLY Issue 94 New flat prices unlikely to fall by 30% on an apples-to-apples basis However, I believe such an outcome is very unlikely to happen. First, it is unclear what combination of household income base and flat type Minister Khaw is referring to. Even currently, most households earning the median household income can afford 4-room BTO flats in nonmature estates. Over the last two years, there has been a gradual de-linking of BTO prices from the resale market by increasing subsidies and keeping BTO prices stable even as resale prices rise. Now almost all HDB first-timers buy new flats instead of resale flats, reflecting the current attractive pricing of BTO flats, at least on a relative basis. Also, the characteristics of such cheaper flats could be different from the current HDB flats.
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They could be smaller, have shorter leases or be located in less desirable estates. Thus it would not be an apples-to-apples comparison.

We should not forget that home ownership has crossed 90% in Singapore, one of the highest levels in the world. Policies that are implemented will have to avoid negatively impacting the majority of Singaporeans who already own a home. Thus while drastic policies such as reinstating a pre-1971 rule that HDB flats can only be sold back to the Housing Board have been suggested, I believe that they are highly unlikely. I also believe that its unlikely that we will see new BTO launches of flats at prices that are 30% lower than those of recent neighboring launches. Imagine the angry outcry from those who had previously bought! The whole point of these changes to the housing policy
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SINGAPORE PROPERTY WEEKLY Issue 94 is to placate angry Singaporeans, and not piss off the silent majority who already own property. Deflating the property bubble Instead, the governments focus is on controlling the property market and preventing prices from rising further to create (or more accurately, inflate) a property bubble. Even the media has been admonished for their role in highlighting resale flats that go for record high prices. One way the government hopes to cool the market is by increasing supply. Minister Khaw announced that 25,000 BTO flats would be launched in 2013, a slight increase from the 23,000 previously announced by the HDB in January. Compared to the roughly 25,000 in 2011 and 27,000 in 2012, the pipeline of BTO flats in 2013 has been kept stable, higher
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than the 15,000 or so marriages each year, in order to clear the demand backlog. There is also the hope that the large upcoming supply of homes 30,000 units to be completed this year, 50,000 in 2014, 54,000 in 2015 and 63,000 in 2016 will help to moderate price and rental increases. Minister Khaw also pointed out that as Singapores years of high GDP and wage growth in the 7% to 10% range are over, property prices (and especially HDB flat prices) are unlikely to rise as quickly in the future as they have done so as in the past. But is the property market out of control? The problem is that property prices in Singapore are not being driven by purely fundamental factors such as wage growth, but also by the sustained low interest rate environment which the government has no
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SINGAPORE PROPERTY WEEKLY Issue 94 control over due to Singapores monetary policy. The affordability of property is a function of not just property prices and income, but also by the cost of financing (i.e. mortgage rates). Add to that Singapores open economy and attractiveness to foreigners as a place to park their wealth (due to factors such as the low tax rates, stability, strong Singapore dollar etc), and the result is the continuing strong demand for property. Thus despite seven (!) rounds of property cooling measures since September 2009 (and various tweaks such as those announced in the Budget 2013), both volumes and price growth have remained strong. If we really think about that, we can only come to two conclusions. First, government policy on the housing
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market is reactive and incremental they watch the data on housing prices and volumes and try to put in place incremental policies to try and control the future direction of the market. Second, the measures have not been terribly effective transaction volumes in the past few years have been much higher than previously, and prices have grown strongly (the URA Property Price Index has risen by 37% since 2009Q3). So either the government simply cannot do much to control the market, or they have severely underestimated the demand for property and have introduced measures that are too weak to tame the animal spirits in the market. More cooling measures on the way? The market seems to just shrug off each new round of measures, while developers and
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SINGAPORE PROPERTY WEEKLY Issue 94 agents introduce gimmicks (such as ABSD rebates, furniture vouchers and other forms of hidden discounting) and play on buyer psychology (e.g. using the 6.9 million population target) to drum up demand for new launches, which remains strong. I believe that the strong property market despite the multiple rounds of cooling measures has now almost become an embarrassment to the government, and thus the risk of a new draconian set of property measures is significant. If we make it to the tenth round of cooling measures and the property market is still going strong, would the cooling measures become just a joke? So every time prices and/or volumes make a new high, brace yourself!

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Property Buying Tip #10: Co-Ownership

In Singapore, there are two forms of coownership for residential property. (1) Joint Tenancy [right to survivorship] Two or more parties have rights to the land as if they were a single owner. It also implies the right to survivorship i.e. when one party dies, his or her share automatically passes on to the other parties, over-riding any disposition by a Will or the rules on intestacy, and the process continues until the sole survivor becomes the absolute owner. (2) Tenancy-In-Common survivorship] [no right of but words of severance are used in the grant to show their intention to hold separate (even if they are equal) shares in the land.As such, if you are the sole owner or having a Tenancy-In-Common Ownership, it is important to have a Will indicating the property distribution. When you buy a property with your friends and/or relatives, besides discussing on the shares, it is also vital to determine the exit strategy of the investment property prior to entering into a co-ownership contract. By Eileen Tan and Ui Wei Teck, property investors and authors of Enjoying Mid-Life Without Crisis. This tip and dozens more are from their book.

Unlike joint tenancy, interests in this form of co-ownership contain no right of survivorship, where land is held by two or more persons
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Singapore Property This Week

Slew of launches expected in March With a slew of launches expected in March, sales figure for the month is expected to be strong. The launches expected include The Trilinq in Clementi, Sennett Residence in Potong Pasir, Urban Vista in Tanah Merah, Bartley Ridge and Kingsford.Hillview Peak; all are 99-year leasehold projects. The Trilling, which is located near The Clementi Mall and Clementi MRT Station, will offer 200-250 of its 755 units for the initial phase at an early-bird average price of about $1,400-1,500 psf after discounts. There will be two 36-storey towers with an attic, and a 33-storey block housing 112 one-bedroom units (538-603 sq ft), 192 two-bedroom units, 346 three-bedroom units, 94 four-bedroom units and 11 penthouses (2,573- 4,456 sq ft), some of which offer a double-volume, sixmetre floor-to-ceiling height in either the living room or the master bedroom. Facilities include a tennis court and three swimming pools. Meanwhile, Sennett Residence near Potong Pasir MRT station is expected to be launched at an average price of $1,400 psf, with the absolute prices starting from $700,000 for a 485-sq- ft one-bedroom unit and ending at $5-6 million for the most expensive penthouse.
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SINGAPORE PROPERTY WEEKLY Issue 94 It offers a total of 332 residential and three shop units in four blocks linked by a sky terrace which will house a 50-metre infinity pool and a sky-gym. Sizes of the one, two, three and four-bedroom apartments and duplex penthouses will range from 485 sq ft to 4,252 sq ft. Also expected for a March launch are the 582-unit Urban Vista in Tanah Merah (expected average price of $1,300-1,400 psf), 868-unit Bartley Ridge near Bartley MRT Station ($1,300 psf) and Kingsford.Hillview Peak, which has around 500 units named. (Source: Business Times) Public housing policies under review to bring down BTO prices To ensure the affordability of public housing, the housing policy would need to be reviewed with the changing demographics and
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economy in mind. In addition to cooling measures such as increasing the BTO flat supply from 23,000 to 25,000 flats, HDB will also be looking into designing alternative housing options. Meanwhile, first-timer singles aged 35 and above who earn up to $5,000 per month will be able to buy new two-room flats directly from the HDB with effect from the July BTO exercise, with the first BTO exercise in Sengkang. They will get to choose between 35-sq-m and 45-sq-m flats in non-mature estates. Other changes announced also include the extension of the Parenthood Priority Scheme to pregnant mothers with effect from the May BTO launch. This will be further extended to cover those already married but without children next year. The Parenthood Provisional Housing Scheme, previously only
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SINGAPORE PROPERTY WEEKLY Issue 94 an option for first-timer married couples with a child, will be extended to married HDB firsttimers without children. Second-timers intending to downgrade will also benefit from the increased quota for two-room and threeroom flats in non-mature estates doubled from 15% to 30%. Of the 30%, 5% will be reserved for divorcees or widows with below 16 years. The debarment period from subsidised flats for divorcees will also be shortened from five years to three years. In addition to building more studio apartments, a new Studio Apartment Priority Scheme (SAPS) where half of the supply of studio apartments will be set aside for seniors who apply for one near their current flat or near where their children live will be introduced. This will replace both the Ageingin-Place Priority Scheme, and the Married Child Priority Scheme.
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Measures to prevent growth of foreigner enclaves in some HDB blocks such as a cap on approvals for all new and renewal of HDB tenancy agreements, involving non-citizens, to one-and-a-half years will also be introduced. (Source: Business Times) Freehold Kovan Lodge collective sale market back on the

After an unsuccessful earlier attempt, Kovan Lodge, a freehold four-storey development with 16 apartments of 1,200 sq ft to 1,800 sq ft has been put up for collective sale by tender again, with an asking price of under $30 million or around $790 psf of potential GFA with no development charge. This is lower than the earlier asking price of $31.5 million. Zoned for residential use, the 27,090 sq ft site has a 1.4 GPR. Buyers of Koan
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SINGAPORE PROPERTY WEEKLY Issue 94 lodge may be able to buy an adjoining 505 sq ft plot of state land. The tender will close on March 26. (Source: Business Times) Freehold residential project the Maisons in Braddell to be launched by months end The Maisons consist of the twin residences R Maison and E Maison are are expected to be priced at around $1,350-1,450 psf, 10-15% from what was originally planned in response to the recent hike in ABSD rates. There will be a total of 175 units in the project, ranging from 570 sq ft for a one-bedroom apartment to 2,357 sq ft for a two-storey penthouse. (Source: Business Times) Steady sales at Sennett Residence brisk; less so at The Trilinq Despite the similar average pricing of $1,400$1,500 psf, the sales of Sennett Residence
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near Potong Pasir MRT and The Trilinq at Clementi showed a marked difference as a result of their locations. 332-unit Sennett Residence near Potong Pasir MRT station had sold 175 units at an average price of $1,450 psf after upfront discounts of 10% plus 8%. Units sold include a 2,600 sq ft penthouse and a 3,600 sq ft penthouse at $3.5 million and $5.2 million respectively. Absolute prices start from $734,000 for a 485 sq ft one-bedroom unit. On the other hand, 755-unit Trilinq at Clementi is said to have sold around 85 units of its 200 released units at an average price of $1,400-$1,500 psf. The prices for each unit vary from $1,200 psf to $1,800 psf depending on whether the units have void space which would usually mean a lower psf price. 38% of the units offer a double-volume, six-metre floor-to-ceiling height. One reason for the slower sales is the plan to sell the project over
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SINGAPORE PROPERTY WEEKLY Issue 94 its construction period rather than selling all within a month and another is that they only process options only for buyers who were physically present. The lowest absolute price was $855,000 for a 538 sq ft one-bedroom unit and the lowest absolute price for a 1,518sq-ft unit four-bedroom unit with void space was $1.82 million. (Source: Business Times) Freehold Ultra Mansion sold in collective sale for $149.13 m 13-storey Ultra Mansion which sits on a 45,512 sq ft site at 4, Derbyshire Road near Novena MRT station, has been sold for $149.13 million or $1,170 psf of potential GFA with no development charge payable. Zoned for residential use, the site has a 2.8 plot ratio and 140,000 sq ft potential GFA, including a 10% bonus gross floor area allowance, which can generate 170 one- and two-bedroom
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units ranging from 600 sq ft to 900 sq ft each. (Source: Business Times) Commercial

2HR at 2 Havelock Road sold to Guthrie at $283m

Seven-storey commercial building 2HR which sits on a 54,560 sq ft site with a remaining lease of about 69 years has been sold at $282.88 million, or $1,626 psf based on its current NLA of 173,912 sq ft (36,992 sq ft retail and 136,920 sq ft offices). Located near Clarke Quay MRT station and the future Chinatown MRT station on the Downtown Line, the building offers 95 basement carpark lots. It offers a net yield of 3.2% based on its current average monthly rental of about $6 psf. Outline approval for redevelopment into a 12-storey hotel has been given.

(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 94 Steady sales for 99-year SBF Centers small offices; sales slower for medical suites 60% of the 196 small strata office units (5901,500 sq ft) on the 10th to 28th levels on the 10th to 28th levels at SBF Center at Robinson Road/Cecil Street near Tanjong Pagar MRT Station is said to have been released, of which most of which have been sold. The units are said to be priced at $3,200 psf after 100 of them had been sold. It is believed that the top-three levels consisting of whole-floor office units of 10,850 sq ft have yet to be released. Four strata retail units at freehold Queensway Shopping Centre up for sale The four retail strata units totalling 10,388 sq ft in size is asking for at least $32 million or $3,080 psf. The four units include the streetfacing second-floor 2,734-sq-ft unit currently leased to McDonald's and three adjacent units on the third-floor totalling 7,654 sq ft that are leased to Sports Link. The monthly rental of $50,000 would mean a nearly 2% net yield based on the price of $32 million. The four units make up 11% of the share value in the overall development which includes apartments. While the sellers prefer to sell to a single buyer, they are open to selling in two lots (one on second-floor, another on the third) if it brings in more profit. The expression-of-interest exercise will closes on April 2.

On the other hand, sales for the 48 medical suites (680-1,300 sq ft) located on Levels 3 to 5 and priced at $3,800-$4,000 psf are slower. This could be due to the lack of an existing hospital or key medical facility nearby.
(Source: Business Times)
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(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 94 Freehold Ibis Novena sold for $150m The 241-room Ibis Novena at Irrawaddy Road has been sold for $150 million or $622,000 per room. This will mean substantial profits for the owner, the Kum family, which bought it at $118 million less than two years ago. While the hotel faced competition from two new hotels in the area - the 405-room Days Hotel Singapore and the the 384-room Ramada Singapore, both at Zhongshan Park, the buyer, Alpha Investment will gain from the fact that the hotel is managed by the wellestablished Accor group and the resilience of such three-star hotels in weathering market cycles. (Source: Business Times)

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Non-Landed Residential Resale Property Transactions for the Week of Feb 20 Feb 26
Postal District 5 5 5 5 9 9 10 10 10 10 10 10 10 12 12 13 15 15 15 15 15 15 15 16 Project Name PARC IMPERIAL THE GRANDHILL HERITAGE VIEW PASIR PANJANG COURT LEONIE PARC VIEW THE INSPIRA ARDMORE PARK GALLOP GREEN GALLOP GREEN LATITUDE SOMMERVILLE PARK BALMORAL HEIGHTS BOTANIKA THE ARTE THE CALLISTA D' ALMIRA ONE AMBER THE SEAFRONT ON MEYER THE ESTA CASERO @ DUNMAN ARTHUR MANSIONS AQUENE STILLZ RESIDENCE COSTA DEL SOL Area Transacted Price Tenure (sqft) Price ($) ($ psf) 388 698,000 1,801 FH 926 1,313,000 1,418 FH 1,195 1,440,000 1,205 99 1,378 1,280,000 929 FH 2,013 4,850,000 2,409 FH 1,259 2,168,888 1,722 FH 2,885 10,500,000 3,640 FH 3,692 7,310,160 1,980 FH 3,563 7,054,740 1,980 FH 2,788 5,322,500 1,909 FH 1,948 3,200,000 1,642 FH 1,163 1,885,000 1,621 FH 2,605 4,200,000 1,612 FH 1,399 1,835,000 1,311 FH 1,109 1,080,000 974 999 947 1,130,000 1,193 FH 1,335 2,020,000 1,513 FH 1,066 1,600,000 1,501 FH 1,345 1,860,000 1,382 FH 646 875,000 1,355 FH 1,227 1,650,000 1,345 FH 753 935,000 1,241 FH 1,012 1,110,000 1,097 FH 1,475 1,965,000 1,333 99

Postal District 16 16 16 17 20 21 21 21 21 23 23 28


Area Transacted Price Tenure (sqft) Price ($) ($ psf) 732 700,000 956 FH 1,528 1,460,000 955 99 1,345 1,253,500 932 99 1,302 1,130,000 868 FH 1,335 1,850,000 1,386 FH 1,701 3,146,850 1,850 FH 581 1,068,000 1,837 FH 1,722 2,910,000 1,690 FH 1,023 970,000 949 FH 915 825,500 902 99 1,259 1,018,888 809 99 1,324 1,280,000 967 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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