News Roundup

Our top Singapore and international property stories.

HDB resale volume up 27.8% amid price falls

Resale prices of HDB flats dipped 0.4 percent in the second quarter of 2015, from1.0 percent in the previous quarter. This was the eighth consecutive quarter ofdecline, according to latest data from the housing board.The lower prices may have lured buyers back to the HDB resale market astransaction volume climbed 27.8 percent from 4,135 units in Q1 2015 to 5,286last quarter.PropNex Realty CEO Mohamed Ismail said: The falling resale prices are due tothe potent combination of the governments measures to stabilise the public housingmarket, such as reducing the Mortgage Servicing Ratio (MSR) cap of 30 percent andthe maximum loan term of 25 years for HDB mortgage loans, the three-year wait fornew PRs before they can buy resale HDB flats, and allowing singles to buy two-roomBTO flats in non-mature estates.He also attributed the drop in prices to the increased Build-to-Order (BTO) supply.13,426 flats were offered for sale during the first half of 2015, of which 8,039 wereBTOs and 5,387 were balance flats.Looking ahead, Ismail predicts HDB resale prices to continue falling by aroundthree to four percent for full-year 2015, given the large influx of flat completions fromnext year and the continued enforcement of cooling measures.In addition, he expects the resale transaction volume to reach 19,000 to 20,000units due to lower asking prices, up from 17,318 transactions last year.

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Funeral services provider moves into property businessFuneral services provider Asia-Pacific Strategic Investments Limited (APSIL) plans toenter the real estate agency industry and as its core business.In a statement, the Malaysia-based company revealed that it is looking to acquireSingapore real estate brokerage Global Alliance Property (GAP) for $2.75 million. Thebrokerage was recently formed from the merger of two local players, MORE Propertyand Global Property Strategic Alliance (GPSA), with a combined base of around 800property agents.The company shared that the $2.75 million purchase price will be payable in twotranches, comprising $1.25 million in cash and $1.5 million in shares, within two monthsafter the completion of the GAP acquisition.Previously, APSIL had made two forays into the real estate agency business. The firstinvolved a proposal to acquire 100 percent of Century 21 Hong Kong Limited, thesub-franchisor that grants the Century 21 franchise to licensed real estate brokers in HongKong and Macau. Once completed, the acquisition will provide APSIL with access toCentury 21s retail networks, as well as its operating and marketing systems.

Looking ahead, Choo stated that the new core business will allow APSIL to benefitfrom a diversified global platform, moving it away from its single-country focus onMalaysia, and enabling it to explore exciting new opportunities for growth.

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MAS: Still too early to ease cooling measuresProperty developers and homeowners hoping that the cooling measures will berelaxed soon will have to wait longer after the Monetary Authority of Singapore (MAS)said easing the policies would be premature.In a recent report by Today Online, MAS managing director Ravi Menon said:Property prices have softened somewhat, but like I said last year, in the context ofthe price increase that had occurred 60 percent overthree years the softeningwe have seen is really not all that much. So, its still premature to consider removingany of the cooling measures that are in place.Century 21 chief executive Ku Swee Yong wasnt surprised by Menons comments.Based on the still-strong reaction from developers to Government Land Saletenders and the decent response to some of the new launches, this is probably notthe correct time to be easing curbs, he noted.Menons views mirror that of Deputy Prime Minister and Finance Minister TharmanShanmugaratnam and National Development Minister Khaw Boon Wan.

Last October, Tharman stated that prices have some distance to go in achievinga meaningful correction, while Mr Khaw mentioned it was not the right time toease the cooling measures, since there was still room for property pricesto moderate.

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Australian dollar falls below Singapore dollarThe Australian dollar weakened tobelow the S$1.00 level on Monday, 27July, falling below parity against theSingapore dollar for the first time since2009.According to Bloomberg data, theAustralian dollar was trading at 99Singapore cents at noon that day, notfar from just above S$1.00 across Asiathe previous week.The decline was attributed toslowing global demand for the countryscommodities exports in recent months.The Australian dollar has weakenedagainst its Singapore counterpart byabout eight percent since the start ofthe year, falling below parity for thefirst time in six years.Media reports quoted industryexperts who said the Australian dollarcould weaken further against the localcurrency over the coming months.

Aussie dollar

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Shunfu Ville

Shunfu Ville set to go en blocThe owners of Shunfu Ville (pictured) in Marymount Road have reportedly securedthe minimum consent required for the residential development to be launched forcollective sale.A former HUDC estate that was privatised, Shunfu Ville sits on a 409,000 sq ft sitewith a balance lease term of around 70 years, reported The Business Times.The site houses three 16-storey towers and three low-rise blocks, with unit sizesranging between 1,668 sq ft and 1,776 sq ft.

The en bloc sale of the 358-unit development is being marketed by JLL. Theowners controlling 80 percent of Shunfu Villes strata area and share value have agreedto the collective sale.

They are expected to receive over $700 million from the sale, which works out to aunit land price within the low $800 psf pprrange, inclusive of two payments to bemade by the buyer to the state.
One is a lease upgrading premium to top up the lease of the site to 99 years, whilethe other is a differential premium for developing a larger project on the site.

Zoned residential under the Urban Redevelopment Authoritys (URA) Master Plan2014, the Shunfu Ville site has a plot ratio of 2.8. This means a new project couldcomprise 1,280 units with an average size of 850 sq ft.

Based on its reserve price, the owners stand to gain over 50 percent morecompared to what they would have received from selling the units individually.

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Industrial rents, prices on a downtrend: JTC

Prices and rents of industrial properties in Singapore have continued to moderateamidst the higher supply of industrial land and space released by the government inthe past few years, according to JTCs quarterly market report for Q2 2015.

During the said period, island-wide prices of industrial premises fell by 0.7 percenton a quarterly basis, and 0.9 percent year-on-year.

At the same time, overall rents of industrial properties in Singapore dipped 0.7percent on a quarterly basis, and 2.7 percent from Q2 2014.

Rents for multi-user factories declined 1.2 percent from Q1 2015 and 3.1 percentyear-on-year. Rents for single-user factories feel 0.5 percent quarter-on-quarter, butposted a rise of 1.2 percent over the previous period last year.

Looking ahead, around 1.6 million sqm of industrial space is projected to enter themarket in 2H 2015, including 290,000 sqm of multi-user factory space.

By 2016, an additional 2.8 million sqm of industrial space is expected to comeon-stream, including 348,000 sqm of business park space and 710,000 sqm ofmulti-user factory space.

With the large supply pipeline, industrialists will have adequate space to expandtheir operations in the coming years, said JTC. However, the upcoming stock wouldsurpass the annual average demand of 1.1 million sqm in the last three years.

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Maldives relaxes rules on foreign land ownership

Despite concerns of military expansion by China, lawmakers in the Maldives(pictured) have ratified the island nations legislation to allow foreigners to own landin perpetuity.According to AsiaOne, with 70 members for and 14 against, the new law pavesthe way for foreigners investing over US$1 billion to own land, provided 70 percent of the area is reclaimed from the Indian Ocean.

The constitution prohibits foreigners from owning any part of Maldivian territory,allowing 99-year leases instead.Under the revisions, 10 percent of the Maldives existing 298 sq kmterritory willbe given to investors in order to develop more reclaimed land.

Maldives

Members of the opposition Maldivian Democratic Party (MDP) said the legislationwould give foreign parties unprecedented access to operate within the Maldives.Theparty was divided on the bill, with 10 in favour and 10 against.

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More calls to abolish DBSS
Some Members of Parliament (MPs) have renewed their calls for the Design, Buildand Sell Scheme (DBSS) to be abolished or tweaked, due to the gray area of accountability,as well as low public confidence in project quality.

In a recent report by Today Online, Bishan-Toa Payoh GRC MP Hri Kumar Nair wasquoted in a Facebook post as hoping the scheme would be permanently shelved. In2011, the building of new DBSS flats was suspended, following public outcry over thehigh prices at Centrale 8 in Tampines.

While he acknowledged the intent behind the scheme which is to bridge the gapbetween public and private housing he said confusion could have arisen over theobligations of the HDB. Because this is public housing, the expectation is that notonly will HDB oversee the development, its supposed to work with the developer toresolve all defects. And because there is such an expectation, there is also disappointmentwhen that does not happen.

This comes after several MPs aired their concerns in Parliament over the role ofHDB in resolving disputes relating to defects in DBSS projects. Some even questionedthe schemes future, prompting Minister of State for National Development DesmondLee to state that there is no need to rush into making a decision when market conditionsmay change.

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