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Issue 41

Copyright 2011-2012 All Rights Reserved.

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Singapore Property News This Week Singapore Property Market Outlook



Welcome to the 41st edition of the Singapore Property Weekly. Hope you like it! Mr. Propwise

for 2012 and 2013

p14 Resale Property Transactions

(February 15 February 21)

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Singapore Property This Week

A slew of projects awaiting their launches The slew of projects waiting to be launched include both residential and office projects. near the Botanic Gardens MRT Station. They are expected to be launched in end-June and end-September this year. 62-unit cluster housing Greenwood Mews located in the Bukit Timah, 416-unit Hillsta condo in Choa Chu Kang, and Palm Isles condo at Flora Drive in the Upper Changi area are also waiting in the wings. Meanwhile, office projects would include PS100, a mixed hotel-strata office project developed by Far East Organisation located at Peck Seah Street near Tanjong Pagar MRT Station. The 27-storey tower comprises 314room Oasia Downtown Hotel for its hotel component and 100 units of 402 - 507 sq ft

First up for the residential projects is Tuan Sing's Seletar Park Residence located in Seletar. The 99-year leasehold 276-unit, fivestorey condominium development consists of 93 one-bedroom, 113 two-bedroom, 46 threebedroom and 24 four-bedroom units to be sold at around $1,244 to $1,512 psf. Other upcoming projects by Tuan Sing include a 99year leasehold 312-unit condominium project next to Potong Pasir MRT Station and a freehold 63-unit low rise development located
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SINGAPORE PROPERTY WEEKLY Issue 41 strata office units with a higher-than-usual five-metre floor-to-floor height spanning from levels seven to eleven. It is to be completed in 2013. Mass-market sector bounces back from ABSD decline According to NUS' Singapore Residential Price Index (SRPI), prices of completed The overall SRPI fell by 0.4%, showing the effects of the 25% fall in sales volume of the secondary market in 2011 and the 27% fall in the secondary market for property in the Central region, where ABSD hits the hardest, given that there are more foreign buyers in this region. Average DC rates for non-landed

properties in the Central Region declined by

1.9% in the past month and prices of small apartments (up to 506 sq ft) declined by 1% from December. This reflects the effect of ABSD in the Central Region where buyers tend to be foreign-based or companies or investors. On the hand, the sub-index for Non-Central Region (excluding small apartments) increased by 1% on a month-onmonth basis in January.

residential use has been lowered by 3%

This is the first cut since September 2009 and the first cut since the increase of 12.2% in the previous revision. The average was derived from a combination of both decrements and increments of DC rates for different locations. The highest decrements of 14.3% were from the geographical sectors that include covering Punggol; Braddell/Bartley/Upper Aljunied;

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SINGAPORE PROPERTY WEEKLY Issue 41 and Bishan/ Kovan. The DC rates for Pasir Ris/Loyang, Seletar and Tuas/Choa Chu Kang has also been lowered by 13.2%, 11.1% and 10.8% respectively. DC rates for prime locations Ardmore/ Draycott, Orchard, Cairnhill, Tanglin/Cuscaden, One Tree Hill, Leonie, Oxley, Sentosa Cove and Orchard has also been lowered by up to 6.9%. 66 of the 118 geographical sectors have their DC rates unchanged. The average DC rates for commercial and hotel uses, however, have been raised by 6% and 15% respectively. For commercial use, the rates for 60 sectors (including Raffle Place, Marina Centre and Marina Bay) remained unchanged while the rates for the other 58 sectors increasing by 4.2% to 51%, with the highest increment of 51.5% from the geographical sector that comprises Seletar
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and Sengkang West Avenue. The rates for the sectors covering Punggol, Bukit Batok /Petir Road increased by 36.4% while the rates for the sectors covering Tuas/Choa Chu Kang/ Jurong and Sembawang/ Woodlands are seeing increments of 33.3%. For hotel use, all geographical sectors except for two saw an increase in the DC rates, with the highest of 29% in the sector including Pasir Ris/Loyang, and 28.6% in the Alexandra sector and its surrounding areas. The Orchard and Singapore River areas and some parts of the financial district saw the smallest increase of 7.1%. The rates for industrial use and landed residential use remained unchanged. In addition, the revision also included community and sports and fitness buildings
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SINGAPORE PROPERTY WEEKLY Issue 41 under use group E which covers 'place of worship, community building, educational and institutional uses, government building' to differentiate these facilities from similar facilities for commercial use, which goes under group A. Bungalow on Sentosa Cove sold for a record $39m A seafronting bungalow at Cove Drive in Sentosa cove was sold for a record of $39 million, breaking the previous record of $36 million for a bungalow on Paradise Island. The price translates to $2,448 psf based on the 15,929 sq ft land area on which the bungalow with five bedrooms, a spacious living area and an entertainment room is built on. After the initial decline in demand for bungalows as a result of the ABSD, the market has since picked up, including property in Sentosa Cove.
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Upper Serangoon EC site closes with 7 bids, top bid at $303 psf ppr The 133,388.4 sq ft site at Upper Serangoon has a plot ratio of 3.5 and is expected to yield 435 units. It attracted 7 bids, with the top bid of $303 psf ppr from Ho Lee Group and Evia Real Estate Management. The estimated break-even cost is between $550 to $650 psf, with an estimated selling price between $670 and $720 psf. If awarded the tender, the plan is to build around 400 units of various sizes and to launch it in late March. Commercial

Fall in rents for CBD Grade A office space in Q4 2011

From Q3 to Q4 2011, the rental rates for CBD Grade A office space fell by 1.6% to $8.93 psf per month, resulting in a year-onyear growth of 13% compared to 2010s
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SINGAPORE PROPERTY WEEKLY Issue 41 24.5%. Despite the expected further decline of rents by around 10-15%, analysts are optimistic given that firms are expected to retain their offices in Singapore to take advantage of Asias growth. Competitive bidding expected for Tai Seng industrial site under reserve list The 58-year leasehold 1.18-hectare industrial site with a maximum permissible gross plot ratio of 3.5 is located at Tai Seng Street next to Tai Seng MRT station, the reason for its attractiveness to developers. However, this location would also mean that developers cannot strata sub-divide the development in the first 10 years after the project is completed, leading to it fetching a potential $250 to $260 psf ppr, 25% less than what it could have fetch before the implementation of this regulation.
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Located in the centre of the Paya Lebar iPark, a lifestyle park, the mixed use development will likely have a basement leading to Tai Seng MRT station and 28% of its floor area for retail and food & beverage purposes. Given its attractiveness, this site is likely to be triggered for sale.


Singapore Property Market Outlook for 2012 and 2013

By Dennis Ng
In 2011, buyers from China are the biggest group of foreign property buyers in Singapore. But if you are counting on foreigners to continue buying properties in Singapore in 2012 and 2013, I am afraid to say that you may be disappointed. The following factors are worthy of our consideration when studying the prospects of the property market in the next two years. Factors that determine property market Singapores

Since interest rates are at a historical low now, it can only go up from here, and not

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SINGAPORE PROPERTY WEEKLY Issue 41 down. In fact, interest rates on home loans can shoot up to 3% to 4%. In my opinion, this could probably take place in 2013 when US interest rates start to climb due to the threat of rising inflation. In the next two years, more than 30,000 condominium units will be completed. With a huge supply of new condominiums, do you think rental rates would go up or down? So when rental rates indeed go down and interest rates go up, would this make property investments more attractive or less attractive? With rental yield now at 3% to 4%, what would the revised rental yield be when rental rates drop? Would some properties go from yielding positive cashflow, where monthly rental income exceeds monthly housing loan installment, to having a negative cashflow?
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In addition, HDB built 8,000 units in 2008. But in 2011 and 2012, HDB is going to build 25,000 units in each year, totaling 50,000 units in the span of two years. With supply of both condominiums and HDB flats expected to surge in the next two years, coupled with an economic slowdown as a result of the next global financial crisis, do you not think that the demand for properties would drop? Singapore aside, given that the US and Europe, each constituting 23% of the global economy, are likely to experience an economic slowdown in 2012, the rest of the world seems to be headed for another recession. And when that happens, would a global recession, coupled with global sovereign debt problems, especially in the Euro zone and US, not trigger a global financial crisis?
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SINGAPORE PROPERTY WEEKLY Issue 41 By considering all the above using an upside / downside analysis, do you think Singapores property market presents more upside potential or downside risks? And what will your decision be as to whether you should invest in condominiums now? We should not just look at Singapores property market alone fall as well. So, with the latest land sales in Hong Kong fetching prices that are below market expectations, could this be a possible sign that the Hong Kong property market is beginning to go downhill? As it is, Hong Kongs governmentwhich is boosting the supply of land to try and curb a more than 70% surge in home prices since early 2009has already sold two sites in August 2011 that missed estimates as home price gains have stalled. This is due to concerns that the economy is sliding into recession. Hang Seng Index (HSI) also fell 23% since its November 2010 peak to below 18,000 points in September 2011. According to figures released by Hong Kong Land Registry, August 2011 home transactions experienced the biggest drop
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Apart from casting our sights on the local economic situation, we must also track closely the activities in Hong Kong. Why is this so? Well, this is because Singapore and Hong Kong are always closely linked in terms of property market trends and movements.
With respect to this, most market players have the impression that property prices in Singapore are slightly lower than prices in Hong Kong. So if Hong Kongs property prices fall, Singapores property prices might
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SINGAPORE PROPERTY WEEKLY Issue 41 since February 2009. An index tracking home prices, compiled by Centaline, fell in June and Julythe first consecutive monthly drop since December 2008. Vincent Lo, chairman of Shui On Land Ltd. had reportedly said, The last few weeks, the property market has come down a little and transactions have virtually stopped. Echoing similar sentiments, Yu Kam-hung, a Hong Kong-based senior managing director for valuation and advisory services in Greater China at CB Richard Ellis Group Inc. said, Property prices will start to decline soon and we are likely to see that in the rest of the year. He reportedly added that Prices will trend down by about 10% in the next two years and I dont rule out the chance that they may fall as much as 20% in the worst case scenario.
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In 2011, buyers from China are the biggest group of foreign property buyers in Singapore. But if you are counting on foreigners to continue buying properties in Singapore in 2012 and 2013, I am afraid to say that you may be disappointed. As it is, I am beginning to hear from some Chinese business owners that there is increasing difficulty for them to obtain loans in China. And some of them already know of friends who are starting to have cashflow problems in China. So if China business owners have cashflow problems, do you think they will have the ability or willingness to continue snapping up properties in Singapore in 2012 and 2013? Probably not. In my opinion, the global financial crisis has already started, but most people just do not feel it yet. In fact, they would not find anything
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SINGAPORE PROPERTY WEEKLY Issue 41 amiss until things become very ugly. When that happens, market sentiments can make a 180 degree flip within a very short time. Many people, especially the middle-class Singaporeans are still happily buying properties. That said, my millionaire mentors and I are least interested in buying properties, especially condominiums, because the proposition simply failed our rule that upside must be at least double the potential downside. But it must be said that I could always be wrong. When it comes to investing, we cannot afford to be overly confident. We must be mindful of the possibility of being wrong. So even if property prices rise instead of fall, I would only make less money by not buying more properties now, which is fine by me. Personally, the number one investment question that I always ask is, What if Im wrong, will I be financially okay? Next, I would do a simple upside / downside analysis and only invest when the upside is at least double the downside. While these two investment rules may seem too simple to be true for some people, they have indeed helped me made millions of dollars and prevented me from suffering substantial losses thus far. In this respect, it seems like I am able to see the future not because I have some supernatural abilities, but because I train myself to be logical and rational when analysing information and drawing my own conclusions.

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SINGAPORE PROPERTY WEEKLY Issue 41 In my books and seminars, I share this thought process that I personally go through, before making any investment. Since this thought process is made based on hard facts, anyone can arrive at the same conclusion by going through this process, unless he or she already has a biased view of the market. And if you think that instead of investing in condominiums, you would be better off investing in commercial properties, as some seminar trainers are now advocating, do think again. Recently, I spoke with two multimillionaires who specialize in investing into commercial properties. And they shared with me that the upside / downside is not working in the investors favor. In fact, they are also not considering buying more commercial properties, but may sell if the price is attractive enough. I also have a friend who bought a commercial property near Tai Seng MRT station in 2010, where its location is obviously rather convenient. The propertys temporary occupation permit (TOP) was in May 2011, but even after a few months, he still has not found a tenant. This is in spite of the theoretical rental yield of about 5% to 6% based on current property prices.

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SINGAPORE PROPERTY WEEKLY Issue 41 With all above information provided, you should be in a position to decide for yourself the prospect of Singapores property market. At all times, do remember that hope is not an investment strategy. Every investment can only be taken into consideration after doing your homework. Only after doing your research based on the available information, would you be able to take a calculated risk. By Dennis Ng, Director of Leverage Holding and Master Your Finance. Abridged from his latest book, What Your School Never Taught You About Money. For a limited time our readers can buy the hardcopy book at just $23 including free delivery (within Singapore), more than 20% off the usual price of $28.90. Click here to get it now

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Non-Landed Residential Resale Property Transactions for the Week of Feb 15 Feb 21
Postal District 1 4 5 8 8 9 10 10 10 10 10 11 11 11 11 12 12 13 13 15 15 15 Area (sqft) 1,270 2,024 2,174 570 1,259 915 1,625 3,272 926 1,313 1,313 1,033 872 3,735 1,345 807 1,184 1,195 1,690 2,400 1,141 1,798 Transacted Price ($) 1,422,400 3,350,000 2,080,000 920,000 1,050,000 1,763,000 3,100,000 5,380,000 1,420,000 1,830,000 1,650,000 1,530,000 1,269,000 4,800,000 1,575,888 860,000 1,090,000 1,400,000 1,620,000 3,268,000 1,500,000 2,330,000 Price Tenure ($ psf) 1,120 99 1,655 99 957 FH 1,613 FH 834 FH 1,927 FH 1,907 FH 1,644 999 1,534 FH 1,394 FH 1,256 FH 1,481 FH 1,455 FH 1,285 99 1,171 FH 1,065 FH 921 FH 1,172 FH 959 FH 1,361 FH 1,315 FH 1,296 FH Postal District 15 15 15 15 15 15 16 16 16 17 17 18 18 18 19 19 19 19 21 21 21 21 Area (sqft) 1,658 1,615 1,130 1,055 1,216 1,173 1,227 926 2,390 646 1,098 1,259 1,238 1,302 560 1,292 1,636 1,012 1,023 1,550 1,378 1,948 Transacted Price ($) 1,923,280 1,823,820 1,060,000 910,000 975,000 880,000 1,290,000 928,000 1,430,000 740,000 868,000 1,065,000 1,001,000 870,000 780,000 1,305,000 1,408,000 725,000 1,355,000 1,461,000 990,000 1,180,000 Price Tenure ($ psf) 1,160 FH 1,130 FH 938 FH 863 FH 802 99 750 FH 1,051 99 1,002 99 598 99 1,146 FH 791 FH 846 99 809 99 668 99 1,394 FH 1,010 99 861 99 717 99 1,325 FH 943 FH 719 99 606 99



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Postal District 22 22 22 23 23 23 23 23 25 26 27 28


Area (sqft) 1,324 1,507 1,302 732 1,528 936 1,615 1,335 1,184 1,066 1,249 1,270

Transacted Price ($) 1,425,000 1,200,000 941,888 748,000 1,530,000 720,000 1,210,000 710,000 960,000 838,000 775,000 900,000

Price Tenure ($ psf) 1,076 99 796 99 723 99 1,022 FH 1,001 999 769 FH 749 99 532 99 811 99 786 99 621 99 709 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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