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Issue 120

Copyright 2011-2013 All Rights Reserved.

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Is the Total Debt Servicing Ratio
Weighing Down the Property Market? Singapore Property News This Week Resale Property Transactions (August 21 August 27)



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Is the Total Debt Servicing Ratio Weighing Down the Property Market?
By Mr. Propwise
After shrugging off the cumulative pressure of seven rounds of cooling measures, the property market finally seems to be reeling under the weight of the MASs Total Debt Servicing Ratio (TDSR) framework, with two major condo launches over the post-HungryGhost weekend recording disappointing sales. Over 1,100 units launched but only ~200 sold Over 1,100 units combined were launched in the suburbs over the weekend in two projects but only around 200 were sold, which represents a low sell-through ratio.
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SINGAPORE PROPERTY WEEKLY Issue 120 The Glades, a 726-unit condo by Keppel Land and China Vanke near Tanah Merah MRT, was reported to have sold around just 80-plus units over the weekend with asking prices ranging from $1,300 to $1,600 psf. This is slow compared to the nearby Urban Vista, which sold around 350 units over its launch weekend back in March at a similar price level, and is currently more than 80% sold. Skywoods, a 420-unit condo project near the upcoming Hillview MRT, reportedly sold ~100 units over the weekend at around $1,300+ psf. The relatively slow sales could also be due to the higher pricing versus nearby developments such as Foresque and Eco Sanctuary. Developers likely to be more cautious going forward prices, with an estimated profit of around 20% over their breakeven costs. But if sales at launches continue to be tepid, developers will be forced to either cut prices on existing projects or to launch new projects more conservatively. Given the still fairly thick profit margins they are enjoying on projects, their focus could start shifting from profit to cashflow in the face of a deteriorating market.

Over the next few weeks more residential and commercial units will be launched into the market, so it remains to be seen how the market will perform and how developers in turn will react. Loan curbs demand have curtailed property

So far developers have not aggressively cut

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Analysts have estimated that the TDSR has shaven off around 20% off the maximum mortgage a buyer can take due to the 3.5% interest rate assumption.
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SINGAPORE PROPERTY WEEKLY Issue 120 Furthermore, weve also heard that banks are reducing the maximum mortgage quantum based on the number of credit cards the applicant has, so even if youre not using your credit limit, you could still be penalized just for holding a credit card. Worse still, mortgage approvals are now taking one to two weeks instead of the previous one to two days as banks require more detailed disclosures and due diligence, making buying a resale unit more perilous for buyers as the Option to Purchase is typically just fourteen days. A stay on new cooling measures for now? Given the initial signs of a cooling market, it is likely that no new measures will be announced in the near term. Even though the government has not officially termed the TDSR as a cooling measure, its impact
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seems to be more strongly felt than the previous rounds of cooling measures. Based on flash data from the Singapore Real Estate Exchange (SRX), Cash Over Valuations (COV) for resale HDB flats fell to $18,000 from $20,000 the month before, their lowest in over four years. This weakness in the HDB resale market is likely to feed into the private property market as upgraders are unable to sell their HDB flat at a good price and switch into a private property. Again, poor sales in two launches do not constitute a trend. Well have to wait and see how buyers react to the launches over the next couple of months to draw some firm conclusions. But they are certainly bad omens for the market, and as the Chinese say, calamities usually do not occur in isolation ().
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Singapore Property This Week

Developers trim prices for new private residential projects To adjust to the new market reality after the rollout of the Total Debt Servicing ratio (TDSR) in late June, developers have been trimming launch prices for new private residential projects . For example, the 445unit Thomson Three condo in Bright Hill Drive developed by UOL Group and Singapore Land, is now priced at a more realistic level of $1,350 to 1,400 psf, instead of $1,500 psf without TDSR. The showflat of the project will open this weekend and sales booking will start on Sept 20. The Skywoods project in the
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Dairy Farm area will also be released at $1,250 psf instead of $1,300 psf by TA Corpotation, Hock Lian Seng Holdings, King Wan Corporation and Far East Distillers. It is reported that with TDSR, buyers are more selective and sensitive to the total price quantum, making developers become more realistic in their pricing. TDSR was also reported to have the greatest impact among all cooling measures in the past four years. (Source: Business Times)
Court quashes Thomson View sale The High Court has quashed the proposed $590 million collective sale of Thomson View Condominium after its marketing agent was
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SINGAPORE PROPERTY WEEKLY Issue 120 found to have offered more than $548,000 of incentive payments to four owners to get a requisite 80 percent majority in bad faith. HSR International Realtors was found to have breached its duty to avoid any possible conflict of interest, and also breached its duty of transparency by not disclosing its incentive payments to the Collective Sales Committee and other owners. Hence, the four owners should not be counted in the requisite 80 percent majority for the sale to go through, and the plaintiffs were not even in a position to apply for court approval of the sale. However, the CSCs failure to extend the third public tender after the Upper Thomson MRT station was announced during the propertys tender period was found to be an error not amounted to bad faith. (Source: Business Times) Commercial Strong price support by directors in property sector stocks

As shown by Aug 26-30 filings on Singapore Exchange of rising purchases for the previous two weeks, there was strong price support by directors in the property sector last week with purchases in Tee Land, Singapore Land, Hong Fok Corporation and Oxley Holdings. A total of 30 companies had 57 purchases worth $25.75 million, while three other firms had four disposals worth $49.7 million. Sales were consistent with the previous weeks four firms, seven disposals and $4.85 million. Despite fewer shares bought by directors last week, buyback activity among listed firms were high with 17 companies posting 57 repurchases worth $16.9 million, which was consistent with the previous weeks 14 firms,
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SINGAPORE PROPERTY WEEKLY Issue 120 59 trades and $15.0 million. The chairman of Sino Grandness Food made a rare purchase after the stock fell 31 percent. As for the selling side, AusGroup experienced bearish signals as a non-executive director unloaded shares following a sharp fall in the companys earnings. As for the substantial shareholders front, Temasek Holdings recorded a rare purchase in Keppel Corporation. Matthew Funds recorded its first sale in Ascendas India Trust after it became a substantial shareholder in 2010. (Source: Business Times) Hotel 1929 on Keong Saik Road sold for $35m Hotel 1929 on Keong Saik Road was sold for $35 million, which translated to around $1.09 million per room for the freehold hotel. The four-storey property includes five adjoining
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shophouses of 3,281 sq ft with a built-up area of 13,900 sq ft. An entity controlled by hotelier-restauranteur Loh Lik Peng, founder of Unlisted Collection was the seller of the hotel. Mr Loh will still operate hotel 1929 and its in-house restaurant, Ember, while the hotels buyer was a company owned by Cheong Keng Hooi, whose family developed International Plaza in Tanjong Pagar. According to Mr Loh, the selling of Hotel 1929 was not planned when he was asked if his company would continue to sell its two other Singaporean hotels New Majestic Hotel on Bukit Pasoh Road and Wanderlust Hotel on Dickson Road in Little India. He said that Hotel 1929 is operating very well in terms of occupancy, and that he was simply approached by the buyer with an attractive offer at the optimal timing since the group had acquired the hotel for some time.
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SINGAPORE PROPERTY WEEKLY Issue 120 The sale of Hotel 1929 was brokered by Historical Land Pte Ltd, a boutique property agency specializing in shophouses. (Source: Business Times) Tat Hong to sell Gul Crescent site, secure new site in Tuas Tat Hong Holdings has announced that it would put Gul Crescent site up for sale of around $33 million, or $75 per sq ft on gross floor area to optimize its operations in Singapore, and it has secured a 16,100 sq m plot of industrial land in Tuas for a new site. Gul Crescent site was acquired in 1981 with a 30+30 year lease, sits on 29,384.5 sq m of land and has two single-storey high-clearance factories with office space, a canteen and a staff restroom. Tat Hong was reported to expect a gain on the divestment for the financial year ending March 31, 2014. As for now, Tat Hong operates from five other sites

in western Singapore. After the divestment, it

would centralize its operations in the Tuas area to raise land and operating efficiencies. (Source: Business Times)

Mall to come up at Hotel Windsor

The office-retail podium of the freehold Hotel Windsor, which was bought by Nobel Design, Lian Huat Group and 2E Capital, will be converted into a strata retail development for sale. The new Macpherson mall will have 80 plus retail units, 34 percent of which will be for F&B outlets and the rest are shops.

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Indicative prices will be from $3,500 to $6,000 per sq ft for the retail units sized between 260 sq ft and 3,000 sq ft. Absolute prices are

expected to start from $1.4 million for a 355sq-ft shop, with the majority of units between 550 sq ft and 800 sq ft. There will be six loft-in shop units at the ground level. The sales gallery was open this weekend and sales

expected to start towards the end of Sept,

2013. (Source: Business Times)

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Non-Landed Residential Resale Property Transactions for the Week of Aug 21 Aug 27
Postal District 3 3 4 4 5 5 9 9 9 9 9 9 10 10 10 10 11 12 12 13 14 15 15 15 15 Project Name MERAPRIME THE ANCHORAGE REFLECTIONS AT KEPPEL BAY CARIBBEAN AT KEPPEL BAY DOVER PARKVIEW CARABELLE PATERSON LINC MARTIN PLACE RESIDENCES THE IMPERIAL YONG AN PARK LANGSTON VILLE WILKIE 87 FOUR SEASONS PARK CUSCADEN ROYALE VALLEY PARK KELLOCK LODGE CHANCERY COURT THE MEZZO TREVISTA EURO-ASIA PARK KEMBANGAN COURT THE PALLADIUM COTE D'AZUR EBONY MANSIONS VILLA MARINA Area (sqft) 1,173 1,163 1,733 1,647 1,249 2,067 1,023 1,722 1,410 3,434 936 1,335 2,260 1,001 797 893 926 775 1,130 797 893 883 1,109 1,195 1,152 Transacted Price ($) 1,760,000 1,500,000 4,180,000 2,600,000 1,550,000 2,550,000 2,600,000 3,650,640 2,620,000 6,380,000 1,518,000 1,330,000 5,670,000 2,150,000 1,250,000 1,348,000 1,320,000 1,190,000 1,638,000 935,000 958,000 1,280,000 1,283,388 1,260,000 1,115,000 Price Tenure ($ psf) 1,500 99 1,290 FH 2,412 99 1,579 99 1,241 99 1,234 956 2,543 FH 2,120 FH 1,858 FH 1,858 FH 1,621 999 996 FH 2,508 FH 2,148 FH 1,569 999 1,509 FH 1,426 99 1,535 FH 1,449 99 1,174 FH 1,072 FH 1,450 FH 1,158 99 1,055 FH 968 99
Postal District 15 15 16 18 18 19 19 20 20 20 21 21 21 22 22 23 23 23 23 26 27 27 Area (sqft) BLU CORAL 2,077 LAGOON VIEW 1,647 LANDBAY CONDOMINIUM 1,023 CHANGI RISE CONDOMINIUM 1,130 SAVANNAH CONDOPARK 1,453 KOVAN RESIDENCES 1,259 CASA ROSA 1,098 GOLDENHILL PARK CONDOMINIUM 1,335 BISHAN 8 1,163 FAR HORIZON GARDENS 3,907 THE BLOSSOMVALE 1,356 MAPLEWOODS 1,485 SPRINGDALE CONDOMINIUM 1,259 THE MAYFAIR 893 PARC VISTA 1,259 MERAWOODS 1,345 CASHEW HEIGHTS CONDOMINIUM 1,658 HILLBROOKS 1,130 REGENT GROVE 1,173 SEASONS PARK 1,109 ORCHID PARK CONDOMINIUM 893 ORCHID PARK CONDOMINIUM 958 Project Name Transacted Price ($) 1,780,000 1,388,888 1,238,000 1,075,000 1,380,000 1,730,000 1,005,000 1,958,000 1,375,000 2,200,000 1,940,000 2,120,000 1,350,000 962,000 1,180,000 1,390,000 1,705,000 1,155,000 940,000 970,000 810,000 840,000 Price Tenure ($ psf) 857 FH 843 101 1,211 FH 951 99 950 99 1,374 99 915 99 1,467 FH 1,183 99 563 99 1,430 999 1,427 FH 1,072 999 1,077 99 937 99 1,033 999 1,029 999 1,022 FH 801 99 875 99 907 99 877 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. Page | 10

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