Follow the Sine to Singapore Property Prices

MALAYSIAN conglomerate DRB-Hicom has announced plans to commence work on a 485ha property project in Johor by the middle of this year, adding to the large number of developments already there.

Its proposed development comes amid clear signs of weakening property sales in the southern state and the possibility of an overhang because of the number of developments in the pipeline to capitalise on Iskandar Malaysia's prospects.

According to Johor Real Estate and Housing Developers Association (Rehda) branch chairman, Simon Heng, a four-day property exhibition in November netted RM256 million (S$105 million), significantly lower than the RM384 million chalked up in a similar expo in May 2011 or another in November 2010 of RM331 million.

'Hopefully our members are ready to brace the hard times and should carefully plan their launches to avoid a property overhang,' he was quoted by local daily The Star as saying earlier this week.

Because of the completion of a number of key infrastructure projects, the economic zone of Iskandar is projected to hit a tipping point this year, five to six years after it was launched as a future engine of growth.

With land in the capital city of Kuala Lumpur and most of the popular areas of Selangor already mostly developed, a growing number of developers have converged on Iskandar, especially in two core zones - Nusajaya and Medini - which are located a stone's throw from Singapore.

Nusajaya and Medini have been accorded special development incentives which include a waiver of bumiputra housing quotas. For developers, this means they do not have to allocate some 40 per cent of their units to bumiputra buyers as is required of other residential projects in the state.

They are also not obliged to extend a discount - usually of 5-7 per cent - to bumiputra purchasers.

Luxury home builders including E&O, Sunway and UEM Land have major developments in the pipeline which are scheduled to commence at the end of this year or early 2013.

Most are aimed at foreign purchasers such as Singaporeans because the much stronger Sing dollar makes such homes more within reach. A recent ruling by the Singapore government making it more expensive for foreigners in the city-state and for residents that own multiple units to buy a home could also increase the appeal of Johor real estate.

DRB-Hicom has indicated its Glenmarie Heights project - a 10-year project with a gross development of RM8 billion located in the Senai-Skudai area within Iskandar's northern region - will be aimed more at the mass market. It plans to build double-storey terrace houses and cluster homes in the first and second phase.

Rehda's Mr Heng believes the demand for affordable residential properties is still good because there are many first home buyers. Because of the uncertain economic climate, he cautions developers against being overly ambitious when launching new projects this year.

Source: Business Times © Singapore Press Holdings Ltd. Reprinted with permission.

FIRST Real Estate Investment Trust (First Reit) saw its distribution per unit (DPU) for the fourth quarter ended Dec 31, rise to 1.93 Singapore cents, up 121.8 per cent in the previous corresponding quarter.

This was helped by other gains relating to the distribution of a portion of the total gain on divestment of its Adam Road property of about $8.7 million, which was sold in Q1 last year to Fortis Global Healthcare.

The DPU is payable Feb 29.

The amount distributable rose 122.9 per cent to $12.12 million for the fourth quarter. Meanwhile, gross revenue rose 82 per cent to $13.93 million while net property income also rose 82.2 per cent to $13.77 million.

Results were lifted partly by maiden contributions from its three new properties: Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang in Indonesia, and South Korea's Sarang Hospital.

On a full-year basis, the Trust posted a DPU of 7.01 Singapore cents, as compared to 6.63 cents a year ago. Due to the effect of the rights issue and acquisitions made in Dec 2010, full-year 2011 DPU is not comparable to 2010 DPU.

For the full fiscal year, the amount distributable gained 105.8 per cent to $43.93 million.

Gross revenue rose 78.4 per cent to $54.01 million while net property income also rose 78.9 per cent to $53.44 million for the full year.

Earnings per unit were 3.39 cents for 4QFY11 and 8.15 cents for FY11.

As at Dec 28 last year, the total value of First Reit's investment properties rose from $612.8 million to $618 million, following the acquisition of Sarang Hospital and the divestment of the Adam Road property.

Going forward, manager of First Reit, Bowsprit Capital Corporation, said it expects Indonesia to remain a key focus, and it sees strong potential as Indonesia's consumption growth continues to grow, which invariably will increase the demand for quality healthcare services.

'We have been in discussions with our sponsor PT Lippo Karawaci Tbk to acquire some of its upcoming properties on which we have a right of first refusal,' said Bowsprit's CEO Ronnie Tan.

On the Singapore front, Bowsprit said the nation's ageing population and current 'bed shortage' will continue to drive the demand for more nursing homes and community hospitals.

As part of its asset enhancement strategy for its properties, the Trust is adding a new five-storey extension block at The Lentor Residence, which is slated for completion in the second half of 2012.

First Reit shares closed at 77 cents yesterday, up half a cent.

Source: Business Times © Singapore Press Holdings Ltd. Reprinted with permission.

AN EXECUTIVE condominium (EC) project with 670 flats has been launched in Tampines Central 7.

The Tampines Trilliant will comprise 12 blocks with three- and four-bedroom units and penthouses. There will also be three-bedders with a utility room at the 99-year leasehold development.

Prices start from $682,000 for an 872 sq ft three-bedder - that's about $782 per sq ft (psf) - and from $971,000 for a 1,302 sq ft four-bedroom unit, which works out to $745 psf.

The Tampines Trilliant is near several expressways and the Tampines MRT station and bus interchange. An upcoming Downtown Line 3 interchange will be less than a five-minute walk from the new project, which is being developed by the Sim Lian Group.

The Tampines 1, Tampines Mall and Century Square shopping centres are nearby, as are amenities such as Bedok Reservoir Park and East Coast Park.

Online applications for the project, which is expected to get its temporary occupation permit in March 2015, start today and close next Tuesday.

EC projects combine elements of private and public housing and often come with premium furnishings and facilities. Demand picked up last year after the income ceiling for buyers was raised to $12,000.

The Tampines Trilliant is the area's third EC project, after The Eden and Arc at Tampines.

Analysts have predicted that EC projects in Tampines will remain popular, given its success as a regional hub and the large catchment of potential buyers and upgraders.

Sim Lian is also developing Waterview, Centrale 8 and The Premiere in the area.

There was a row last year when five-bedroom units at Centrale 8 were priced at a seemingly exorbitant $880,000. Prices were later lowered to $778,000.

More than half the 452 units at Sim Lian's Parc Vera project in Hougang have been sold, while about 700 of the 882 homes at its A Treasure Trove development in Punggol have been snapped up.

FOREIGNERS are not the only ones who will have to shell out the hefty new stamp duty on home purchases; the billion-dollar trust industry is also feeling the pinch.

The additional 10 per cent duty introduced on Dec 8 also applies to corporate entities such as trusts and experts fear the industry is already being affected.

People setting up a trust with a company as trustee must now fork out an additional 10 per cent - on top of the existing 3 per cent stamp duty - of the market value of a home if it is placed under the trust's assets.

This is regardless of whether the beneficiaries are locals or foreigners.

Before the measures were imposed, the duty would have been just 3 per cent.

A trust is a private legal arrangement where the ownership of someone's assets - property, shares or cash, for example - is transferred to a trust company to look after and benefit a third party. They are usually established for succession planning purposes or to prevent creditors from making claims if financial trouble arises.

Lawyers say the new measures have hit Singapore's reputation as a fast emerging trust centre with 'billions' in assets under management.

KhattarWong managing partner Gurbachan Singh noted that Singapore is a growing trust centre where many rich individuals have their wealth managed.

But a few of his law firm's clients have held back on setting up trusts since the Dec 8 property measures came in while others are making enquiries about how the new measures might affect them, he told The Straits Times.

'On one hand we're promoting ourselves as a trust centre, on the other hand we have got measures that are intended to cool the market but unintentionally, it is also affecting the trust industry or people's ability to settle properties into a trust as part of their trust planning or succession planning,' Mr Singh said.

He added that the additional 10 per cent duty is 'punitive' and while it may solve the housing issues, a more holistic approach - taking into account the impact on other sectors - is also important.

'It's to me a major concern from the trust industry's point of view that it has had a negative or adverse impact on Singapore's position as a formidable trust centre,' he said.

However, he emphasised that Singapore will continue to be a trust centre for non-real estate assets unaffected by the new stamp duty such as bonds, securities and equities.

Ms Ban Su-Mei, a partner at the firm's tax and private client department, added that the existing 3 per cent stamp duty had already caused some clients to have second thoughts about setting up trusts. The additional 10 per cent will only serve as a further deterrent.

Only trusts with residential properties in Singapore as part of their assets are affected. Overseas homes placed in trusts managed here will not be subject to the additional stamp duty.

While the measures are clearly affecting the market, the extent remains unknown given the short period in which they have been in place.

But Mr Singh, who is also a member of Britain's Society of Trust and Estate Practitioners (Step), said the industry is likely to go through the Step branch here or the Singapore Trustees Association to give policymakers feedback on the impact the measures are having.

esthert@sph.com.sg

SUPERMARKET chain FairPrice plans to open another six supermarkets and a hypermarket this year.

One of the new supermarkets will open in Punggol, the company revealed yesterday, and the 10th FairPrice Finest store - which carries a range of gourmet products - will open at Amara Shopping Centre in Tanjong Pagar.

And the chain's fifth hypermarket will open by April at the commercial complex UE BizHub East in Changi Business Park.

FairPrice currently has 106 stores in Singapore.

Shoppers can also look forward to faster checkout as it rolls out more self-service checkouts in its stores.

The chain is taking its expansion overseas too, with its first hypermarket in Vietnam slated to open this year.

The project is part of a joint venture with the Saigon Union of Trading Co-operatives, which owns and operates a chain of Co-op Mart supermarkets in Vietnam.

This partnership will open a new income stream for FairPrice and widen its source of supply. In turn, customers in Singapore will enjoy more choices.

FairPrice chairman Ng Ser Miang announced the new developments to reporters yesterday.

He said the expansion is driven by the company's need to meet increasing consumer demand and further enhance its accessibility.

To cope with the increasing business volume and future growth plans, the group will build a new headquarters that will include a distribution centre and an office complex housing all its departments.

More details of the project will be released later.

Given its expansion strategy and the manpower shortage that retailers face, FairPrice is enhancing its productivity with more self-service checkout counters and electronic shelf labelling, Mr Ng said.

The electronic shelf labelling system replaces paper tags with digital ones, and saves nearly 50 man-hours per month. Prices are downloaded from a central pricing system at the headquarters.

The system, launched last year in four stores, will be implemented in new and renovated outlets.

Self-service checkouts, which eliminate the need for cashiers to scan and bag customers' groceries, are currently found in five outlets including the store at nex shopping mall in Serangoon Central. They will be added to at least two more outlets this year.

Mr Colin Tan, head of research at real estate consultancy Chesterton Suntec International, said: 'The supermarket industry is very competitive, bordering on cut-throat, and the only way to survive is to grab market share by increasing the number of outlets.'

Ms Sarah Lim, senior retail lecturer at Singapore Polytechnic's business school, welcomed the introduction of more self-checkout counters.

She said: 'Customers with fewer purchases can easily check out their items themselves without having to wait in long queues to make payment.'

lijie@sph.com.sg

Plans of other supermarket chains

OTHER supermarket chains are also looking to expand and improve their stores and productivity.

Cold Storage, which has 44 outlets, will open four new branches in the first half of this year, including one at Changi Airport Terminal 1 and a speciality store, which stocks gourmet products, at Hong Heng Mansion in Sembawang Road.

Also in the pipeline is a seventh Market Place supermarket at the hillV2 shopping mall in the Hillview area, which is slated to open next year.

Cold Storage and Market Place are both part of the Dairy Farm group of retail stores.

Supermarket chain Sheng Siong, which has electronic shelf labelling at 20 of its 25 stores, will continue to roll out the system in future stores as well as outlets that are being upgraded or renovated.