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SINGAPORE PROPERTY WEEKLY – Issue 9

From the Editor
Welcome to the ninth edition of the Singapore Property Weekly. We added property transactions in the last issue, sorted by district. We hope they help you in keeping track of the market! Mr. Propwise

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Contents
Singapore Property This Week When is the Best Time to Buy a New BTO Flat? Non-Landed Residential Resale Property Transactions for the Week of July 2-8 Pg 2
Pg 5

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SINGAPORE PROPERTY WEEKLY – Issue 9

Singapore Property This Week
Residential News
HDB increased launches of BTO flats to increase applicant’s chance: Minister Khaw An increase in BTO flats launches will increase an applicant’s chance of securing a unit as application rate is lowered, said Minister Khaw as he announced that HDB will be launching more new flats and the next launch will be in September. HDB data showed that a successful applicant, who participated in BTO exercises between January to March 2011, stood a higher chance of choosing a flat in a BTO project when there were fewer applicants. Also, increasing launches of BTO flats will increase second-timers chances of getting their flats as second-timers’ chances to select decreased when more first-time applicants apply for a particular BTO flat. By increasing BTO launches, Minister Khaw also aim to stablise housing prices and offer more choices to applicants. Seven BTO projects drew a total of 11,548 for 3,556 flats on offer HDB received a total of 11,548 bids for the 3,556 flats offered under seven BTO projects in Bukit Panjang, Jurong West, Sengkang, Tampiness, and Yishun. The 149 studio apartments on offered at the Golden Carnation project in Tampiness attracted 531 applications, while 590 four-room flats in Bukit Panjang attracted 1,505 bids. Over at Sengkang, there were 645 bids for 168 threeroom flats, 2,933 bids for 944 four-room flats, and 2,277 bids for 717 five-room flats. At the Yishun Natura project, 140 four-room flats attracted over 1,010 applications and 112 fiveroom flats attracted 655 bids. At the Golden

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SINGAPORE PROPERTY WEEKLY – Issue 9
Orchid Project in Jurong West, the 232 studio apartments on offer drew 340 bids. Resale flat prices increased 3.1% in Q2, up from the 1.6% rise in Q1 HDB’s data showed that price of resale flats increased 3.1% quarter-on-quarter in Q2, up from the 1.6% hike in Q1. Due to strong demand and limited supply, the resale flat market has been strong. There were 6,581 resale transactions made in Q2, an increase of about 6% from Q1, and the price growth in Q2 was also beyond the official flash estimate of a 2.9% hike. However, ERA Realty Network noticed that transactions were lower in Q2 as compared to the past when around 8,000 transactions could be achieved. En bloc sales, especially for those above $100 million, slowed; successful selling rate decreased from 65% in whole of 2010 to 51% in H1 2011 Data from Credo Real Estate revealed that the successful selling rate for plots put up for enbloc sales decreased from 65% in the whole of 2010 to 51% in H1 2011. As compared to the whole of 2010 where only 11 sites valued at $100 million and above were up for sale, 26 sites above $100 million were up for sale in H1 2011. Out of these 26 sites, only six sites which were priced below $300 million were sold; this made the success rate to be 23.1%, lower than the 27.3% last year. However, the successful selling rate for plots below $50 million was 87% in H1 2011, more than the 76% for 2010. PRs only own 3.5% of landed residential properties in Singapore: Minister Shanmugam Law Minister Shanmugam disclosed that only 3.5% of landed residential properties in Singapore, which includes the Sentosa Cove properties, are owned by PRs.He mentioned that properties in

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SINGAPORE PROPERTY WEEKLY – Issue 9
Sentosa Cove are open to foreigners who are not PRs because Sentosa Cove properties are planned to target and attract famous, wealthy, and influential people to come to Singapore. Mr. Shanmugam reiterated that Singaporeans will always be the top priority when it comes to purchasing landed residential property, given the scarcity of such housing. Private house subsales increased 10.6% in Q2 The number of private houses sold in the subsale market increased 10.6% quarter-onquarter in Q2 2011, to 712 units. Despite that, this rate of increase was lower than a near 27% increase in the 4,562 new private houses that developers sold. Savills mentioned that the higher SSD launched in January has allowed genuine buyers to have access to units in the primary market directly. Based on Savills’ analysis of caveats captured by URA Realis, the resale segment saw a 17.5% quarter-on-quarter increase to 4,144 units in Q2 2011.

Commercial
Several projects gained provisional permission (PP) from URA In Q2, several industrial and residential projects island-wide gained PP from URA. One of them is a Tuan Sing unit in CBD that had received PP to carry out a development consisting of 23,530 sq metres GFA of offices and 380 sq metres of retail space on Robinson Road. Similarly on Robinson Road, Oxley Consortium Pte Ltd also gained PP to redevelop The Corporate Office into a project that consists of 12,280 sq metres of offices and 2,770 sq metres of shops. Furthermore, some project sites sold under GLS also gained PP from URA between April to June. One of them is the 497-unit Boathouse Residences condo project.

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SINGAPORE PROPERTY WEEKLY – Issue 9

When is the Best Time to Buy a New BTO Flat?
By Getty Goh In one of my previous blogs, I wrote about why I thought HDB flats could be made cheaper for first time buyers. Serendipitously, the DBSS debacle occurred shortly after my blog was published and the public outcry over the S$880,000 price tag for a new DBSS flat seemed to reinforce the point that many Singaporeans are presently frustrated at how expensive public housing has become. In view of that, I thought it would be timely for me to write a blog to explore the pricing mechanism for new BTO flats and talk about when would be a good time to buy new flats. Once again, I must qualify and state that this is not intended to disparage the Ministries that are tackling this issue. It is always easier for people to poke holes at existing policies
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SINGAPORE PROPERTY WEEKLY – Issue 9
than to come up with a workable plan. So this article is not intended to poke holes at the policies we currently have in place, but simply to provide a different perspective. In addition, I would like to highlight that there is not much historical data available from HDB on new BTO flats, thus much of my conclusions are drawn from circumstantial and anecdotal evidence extracted from press releases, annual reports, etc. With that said, here goes… Pegging new BTO prices to resale HDB prices HDB does not officially reveal how new HDB flats are priced. However, from time to time, we are able to get a sense of how the pricing mechanism works from interviews and press releases from the relevant stakeholders. In a recent Straits Times article dated 18 Jul 11, Minister of National Development, Mr Khaw Boon Wan shared that “the prices of HDB's new flats are typically pegged to prevailing resale prices but are discounted.” As opposed to fixing new flat prices or even tagging them to things like median income, pegging new flats to resale flat prices seems like a logical thing to do as it offers a like-to-like comparison. While there is no doubt that the government has complete control over how new flats are being priced, one would expect the authorities to also have some influence over the HDB resale market for the pricing mechanism cited by the Minister to work. Allow me to illustrate. Assuming the government wants to lower new flat prices without tweaking the housing grants and land cost, it can do so by launching more BTO flats. By flooding the market with excess supply, we should, in theory, expect resale flat prices to drop as well (due to the overall increase in public housing supply). Since new flats are pegged to prevailing resale prices (at a discount), HDB would then be able to
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SINGAPORE PROPERTY WEEKLY – Issue 9
lower new flat prices correspondingly. Conversely, if the government wants to increase new BTO prices, it could do the direct opposite and limit the supply of new BTO flats. While this may seem to be a fairly round-about approach, it is plausible as it allows HDB to indirectly set new BTO prices by influencing the overall resale market price without varying the other essential factors (e.g. HDB housing grant and land cost). In the ideal world, the situation painted in the preceding paragraph would proceed like clockwork and new BTO prices can be controlled by simply adjusting supply of new units being released into the market. Alas, the resale HDB market does not behave like that in reality. Based on a comparison between the URA and HDB resale index, it was found that the HDB resale market and the private property market behaved very similarly. This is clearly seen from the high correlation of 88.4% as well as the 2 markets moving almost in tandem with each other (see Figure 1). In other words, even though HDB can launch record number of BTO units, it would likely have little impact on resale prices as there are larger economic forces at work. In view of that, it does not come as a surprise that the COV continues to remain high despite HDB launching many new BTO projects in the recent months.

Figure 1: Comparing URA and HDB price trends (1990Q1 to 2011Q1)
250 200 150 100 50 0
1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1

200 180 160 140 120 100 80 60 40 20 0

URA PPPI

HDB Resale Index

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SINGAPORE PROPERTY WEEKLY – Issue 9
The risks of pegging new flats to resale market prices Conceptually, the private property market has always been known to be volatile and susceptible to market fluctuations. Volatility in that market segment arises from fewer restrictions, until quite recently, to buy or sell a private residential unit. Moreover, the acquisition of land for private residential developments is done either through competitive bidding via the Government Land Sales (GLS) scheme or the en-bloc process, which are affected by prevailing market conditions. Therefore, by pegging new BTO prices to the resale market, which is highly correlated to the private property market, are we not exposing many of our first time home owners to similar market risks? At this point, I must concede that what I have written is purely postulation on my end and I could be totally wrong. However, given the lack of HDB data, there is really no way for me to confirm or refute HDB’s pricing strategy for new BTO flats. Nonetheless, if the private residential market is anything to go by, the principle of pegging new HDB flat to market prices may have considerable risks. In 1996, at the peak of the 1990s property boom, there were about 15,000 non-landed residential transactions (based on caveats lodged). As at 2009 (before the recent boom), about 41% of the 15,000 had sold their units off while the rest were still holding on to their units. Of the 41% who had sold their properties, about 78% sold it for a loss. So what does this mean to you? Ultimately, by pegging new BTO prices to the resale market, new flats are not insulated from the cyclical effects of the property market. Just like resale HDB or even private properties, you could be overpaying for your new flat when the economy is doing well.

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SINGAPORE PROPERTY WEEKLY – Issue 9
On the other hand, this finding seems to suggest that an ideal time to buy a new HDB is when the overall property market is depressed. Whether or not public housing should be heavily subsidised and sold at a fixed price is really beyond the scope of this blog. Nonetheless, if you think it is fair for a statutory board to increase prices of public housing during a hot property market, you may wish to ask those who are presently priced out of the market and let me know what they think. By Getty Goh, Director of Ascendant Assets, a real estate research and investment consultancy firm. Getty has a MSc (Real Estate) and BSc (Building) from the National University of Singapore.

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SINGAPORE PROPERTY WEEKLY – Issue 9
Non-Landed Residential Resale Property Transactions for the Week of July 2-8
Postal District 3 4 4 5 5 5 5 5 5 7 8 8 8 8 9 9 9 9 9 9 9 9 9 10 10 Project Name RIVER PLACE CARIBBEAN AT KEPPEL BAY CARIBBEAN AT KEPPEL BAY THE PARC CONDOMINIUM BOTANNIA DOVER PARKVIEW THE STELLAR CARABELLE DOVER PARKVIEW BURLINGTON SQUARE CITY SQUARE RESIDENCES CITYLIGHTS CITYLIGHTS MERA SPRINGS URBANA RIVERGATE YONG AN PARK PARC EMILY WATERMARK ROBERTSON QUAY ROBERTSON 100 WATERMARK ROBERTSON QUAY UE SQUARE GAMBIER COURT GALLOP GREEN THE TWINS Area (sqft) 1,302 872 1,647 1,518 1,302 1,249 2,207 1,292 1,518 840 570 893 1,313 1,044 1,012 1,539 3,434 1,012 904 1,152 1,733 850 1,485 3,218 2,260 Transacted Price ($ Price ($) psf) 1,600,000 1,228 1,482,400 1,700 2,500,000 1,518 1,810,000 1,193 1,393,000 1,070 1,246,800 999 2,150,000 974 1,250,000 968 1,180,000 777 1,134,000 1,351 975,000 1,709 1,320,000 1,477 1,641,250 1,250 1,278,000 1,224 2,104,960 2,080 3,060,000 1,988 6,000,000 1,747 1,730,000 1,710 1,536,800 1,700 1,930,000 1,676 2,838,654 1,638 1,160,000 1,364 1,600,000 1,077 5,953,300 1,850 3,850,000 1,703 Postal District 10 10 10 10 11 11 11 11 12 12 14 14 14 14 14 15 15 15 15 15 15 15 15 15 15 Project Name THE MARBELLA BELMOND GREEN HOLLAND HILL LODGE GLENTREES GLOUCESTER MANSIONS THE LINC NINETEEN SHELFORD ROAD NINETEEN SHELFORD ROAD BOON TECK VIEW AVA TOWERS THE WATERINA BLOSSOM VIEW ASTON MANSIONS CRYSTAL MANSIONS SIN CHUAN GARDEN AALTO AALTO PEBBLE BAY ONE AMBER PEBBLE BAY THE MAKENA PEBBLE BAY THE SEA VIEW VERTIS COTE D'AZUR Area (sqft) 1,076 1,066 538 1,345 883 1,281 635 753 19,472 1,281 1,130 1,033 1,012 1,259 1,389 1,959 2,024 2,745 570 2,626 1,744 1,894 1,410 667 1,313 Transacted Price ($ Price ($) psf) 1,726,000 1,603 1,703,000 1,598 700,000 1,301 1,749,800 1,300 1,378,000 1,561 1,850,000 1,444 870,000 1,370 975,000 1,294 21,750,000 1,117 970,000 757 1,130,000 1,000 810,000 784 785,000 776 738,000 586 800,000 576 3,660,000 1,868 3,470,000 1,715 4,500,000 1,639 905,000 1,586 3,815,000 1,453 2,450,000 1,405 2,650,000 1,399 1,932,500 1,370 900,000 1,349 1,615,000 1,230

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SINGAPORE PROPERTY WEEKLY – Issue 9
Postal District 15 15 15 15 15 15 15 15 15 16 16 16 16 16 16 16 17 18 18 18 18 18 18 19 19 19 19 19 20 Project Name TANJONG RIA CONDOMINIUM THE AMARELLE COSTA RHU SPRING @ KATONG CHELSEA LODGE HUA XIN COURT CRESCENDO PARK MARSHALL LODGE VILLA MARINA COSTA DEL SOL CASA MERAH PARBURY HILL CONDOMINIUM EAST MEADOWS LAGUNA GREEN PALMWOODS SUNHAVEN CARISSA PARK CONDOMINIUM TROPICAL SPRING EASTPOINT GREEN THE TROPICA MELVILLE PARK ELIAS GREEN TAMPINES COURT CHERRYHILL ROSYTH RESIDENCE RIO VISTA RIO VISTA NOUVELLE PARK THE GARDENS AT BISHAN Area (sqft) 614 1,152 1,765 1,087 861 1,970 1,302 1,776 1,679 1,313 1,572 904 1,485 1,055 1,184 1,389 1,324 1,335 1,130 1,518 1,066 1,518 1,690 1,023 1,033 1,249 1,798 1,410 2,411 Transacted Price ($ Price ($) psf) 723,900 1,180 1,355,000 1,176 1,980,000 1,122 1,120,000 1,030 870,000 1,010 1,920,000 975 1,200,000 921 1,430,000 805 1,338,000 797 1,733,160 1,320 1,710,000 1,088 900,000 995 1,450,000 976 963,000 913 860,000 726 995,000 717 1,150,000 869 1,170,888 877 925,000 818 1,180,000 777 808,000 758 890,000 586 955,000 565 941,800 921 888,000 859 945,000 757 1,275,000 709 998,000 708 1,750,000 726
Postal District 20 20 21 21 21 21 21 21 22 22 22 23 23 23 25 26 27 27 Project Name SIN MING PLAZA FAR HORIZON GARDENS THE NEXUS FREESIA WOODS BUKIT REGENCY THE RAINTREE PARC PALAIS SHERWOOD CONDOMINIUM LAKEHOLMZ PARC VISTA PARC OASIS THE JADE HILLVIEW 128 GUILIN VIEW WOODGROVE CONDOMINIUM BULLION PARK EUPHONY GARDENS SELETARIS Area (sqft) 1,475 1,152 1,055 1,421 1,421 1,292 1,313 1,292 1,238 1,259 1,227 1,012 1,044 1,238 2,153 1,259 1,044 1,636 Transacted Price ($ Price ($) psf) 1,010,000 685 780,000 677 1,440,000 1,365 1,650,000 1,161 1,380,000 971 1,150,000 890 1,138,880 867 1,050,000 813 1,020,000 824 1,016,888 807 976,000 795 938,000 927 885,000 848 965,000 780 1,350,000 627 1,020,000 810 770,000 737 1,170,000 715

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 9

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SINGAPORE PROPERTY WEEKLY – Issue 9

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