Follow the Sine to Singapore Property Prices

THE collective sale scene is seeing more launches but prices are certainly not going through the roof, as the Melrose Court and Maison Royale cases show.

The Melrose Court sale was signed and sealed last week, but at a level below the asking price, while the Maison Royale condo is again up for offers after coming up short in 2008.

Owners at freehold Maison Royale in Newton are now asking for $48 million for the 20-unit estate - down from the asking price of $50 million two years ago.

The 2008 tender closed without attracting a bid above the reserve price.

The new asking price works out to about $1,220 per sq ft per plot ratio (psf ppr). Owners could reap about $2.2 million to $2.59 million each, depending on unit sizes.

Marketing agent Urban Front Real Estate said the owners have obtained 80 per cent approval. It said the signature-collecting process started last month and the slightly lower asking price is just a marketing strategy to entice developers.

The site can be redeveloped into a project with 40 units averaging 988 sq ft, said Urban Front.

'This is a small plot and it is freehold, so the risk for developers is small,' said associate director Victor Tng. He added that interest rates are low and developers are running low on their land banks.

'The recent measures would have a short-term impact on the market and may not affect developers' interest in good collective sale sites,' Mr Tng said.

Meanwhile, freehold Melrose Court was offloaded last week for $44 million - below the $48 million asking price but about 5 per cent to 10 per cent above the reserve, said Colliers International, which brokered the sale.

The land price for the site off Balestier Road works out to about $665 psf ppr, including an approximate development charge of $277,235 based on a gross plot ratio of 2.8.

The buyer is Melrose Land, formed by a group of investors. The sale is subject to the approval of the Strata Titles Board.

If it goes through, each owner will reap gross proceeds from $1.129 million to $2.261 million, depending on unit sizes, said Colliers International.

Its executive director of investment sales, Mr Ho Eng Joo, said the cooling measures announced on Monday will not affect price expectations for en bloc deals as owners cannot revise their reserve price during the sale process, but they could affect the sentiment of some potential buyers.

Nevertheless, 'buying land is different from buying a completed product because it takes several months to a year or more for a development site to be launched for sale', said Mr Ho. 'By then, market conditions might have changed.'

joyceteo@sph.com.sg

VETERAN residential property consultant Peter Ow is retiring from Knight Frank at the end of this year.

The 55-year-old hopes to go on a long break before deciding what to do next, he told BT yesterday. 'I'd like to take things easier and spend more time holidaying and golfing.

'I've been with Knight Frank for the past 23 years and in the real estate business for a total 30 years . . . This will be the first time I can take a really long holiday. All along because of the job, it's been very difficult to plan holidays as I have to wait till the very last minute, to make sure there are no property launches, to be very sure.'

While he has not thought through about what he would like to do upon returning from his holiday, Mr Ow reckons that he's likely to go into 'semi-retirement' and may set up his own residential consultancy and work at his own pace.

'The residential agency business has changed so much in the past 20 years or so. In the old days, you advertised and buyers came to you. Nowadays, it's a lot harder to sell properties - as you have to go out to find buyers, and persuade them to buy your property. It's so competitive; firstly, there are a lot of properties and the agents' population has grown over the years, especially during the boom years.'

Mr Ow welcomes the government's move to set up the Council of Estate Agencies, a regulatory body tasked to regulate property agents. 'It will boost professionalism. Opportunists and part-time agents who're in the trade only during good times will be edged out,' he said.

Replacing Mr Ow as head of residential at Knight Frank will be Wendy Tang, who is in her early 40s. She rejoined the company at the beginning of this year after a 10-year hiatus. However, Mr Ow's post as managing director (residential services) will remain vacant for now.

Praising Mr Ow's achievements, Knight Frank chairman Tan Tiong Cheng said: 'I recruited Peter in October 1987, when he was 32, as a manager in the residential department. Over the years, he has built up the residential agency business from a small team of five to 33 full-time staff as well as 1,300 associates today.'

Prior to joining Knight Frank, Mr Ow had been with the Urban Redevelopment Authority, CB Richard Ellis and even teamed up with a few friends - including Danny Yeo, who is now group managing director at Knight Frank - to set up a valuation agency.

 Mr Ow's successor, Ms Tang, joined Knight Frank in 1997 as senior manager in the residential department, but left in 2000 for Genome Institute of Singapore, where she was deputy director of corporate services. Four years later, she joined a Malaysian developer before heading back to Singapore in 2007 to work at Alpha Investment Partner, where she was assistant director, portfolio/asset management. She rejoined Knight Frank in January this year as director of residential.

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

PEOPLE who own a home overseas will still have to comply with the tough new rules on property ownership if they want to buy an HDB resale flat.

The clarification yesterday came amid uncertainty over who might or might not be exempt from the rules announced on Monday.

The new regulations state that if you buy an HDB resale flat you must dispose of any additional private property within six months of the HDB purchase.

That rule also applies to people who own homes offshore, according to the HDB yesterday. This means an overseas property must be sold within six months of buying an HDB resale flat.

And an owner of a non-subsidised HDB flat who has yet to meet his minimum occupation period (MOP) of five years will also not be allowed to buy a private property locally or abroad.

How new financing rules affect owners of homes offshore was also made clearer yesterday.

Under the revised regulations, a buyer with a mortgage on a local property must stump up a downpayment of 30 per cent when buying an additional property. This is up from 20 per cent previously.

And at least 10 per cent of this deposit must be in cash - up from 5 per cent before - with the rest coming from his Central Provident Fund (CPF) accounts.

But the Monetary Authority of Singapore (MAS) said that a buyer with a home loan for an overseas property will not be subject to these financing rules if buying an additional property here.

However, the MAS said it 'expect(s) financial institutions to take into account the borrower's outstanding loans when making their credit assessment'.

Industry players say that the new rules effectively delineate the HDB resale market as 'public housing', reserved for those whose HDB flat will be their only property, whether here or abroad.

They will also put pressure on permanent residents (PRs) who might own a home in their native country to choose where they want to be based permanently.

PRs make up about one in five resale flat buyers, and some Singaporeans have blamed the influx of PRs in recent years for the soaring prices of these homes.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said the new rules were similar to an income ceiling.  'Basically, it seems to be saying: If you can afford to own a private property then you don't deserve to own an HDB flat,' he said.

While the new rules are aimed at keeping HDB flats for owner occupiers and not for investment purposes, Mr Tan felt that exceptions should be made for genuine cases such as retirees looking to monetise their overseas assets through renting out an offshore property.

But enforcement and implementing penalties for those who flout the rules would be a challenge, say experts.

Mr Steven Tan, executive director of residential at OrangeTee agency, said enforcement would be difficult when buyers pay for overseas property all in cash.

He added that the new rules could be an extension of an existing one that prevents owners of build-to-order flats and executive condominiums from buying private property during the five-year MOP.

Ms Flora Lam, 32, a PR from Malaysia, said the rules had placed her in a tough spot as she would now have to sell her Malaysian home if she wanted to buy a resale flat. 'I feel like I have to decide now where I want to be based and it's a tough call to make. Maybe I'll continue renting before I make up my mind,' she said.

esthert@sph.com.sg

HOME owners wanting to move and hoping for an 80 per cent loan on a new property will now have to produce evidence that they have sold their existing home.

The proof must come in the form of a signed sale and purchase agreement and a certificate showing that the buyer of their current property has already paid the stamp duty for the deal, said the Monetary Authority of Singapore (MAS) yesterday.

The Government unveiled on Monday a range of measures designed to dampen property speculation, including tighter lending rules for home owners with existing mortgages looking to buy another property.  

They will now have to fund a 30 per cent downpayment for the new property, up from 20 per cent previously, and can borrow up to only 70 per cent of the value, down from 80 per cent.

The moves prompted questions from many home owners unsure whether they would qualify for 80 per cent financing if they intended to sell their existing property - or were in the process of doing so - and move into a new one.

The MAS clarified yesterday that borrowers who have sold their existing homes, but are still in the process of completing the sale, will still qualify for an 80 per cent loan provided they have supporting evidence of the sale.

For private property, this includes a signed sale and purchase agreement and a certificate from the Inland Revenue Authority of Singapore (Iras) showing that stamp duty has been paid by the buyer of the existing home.

For HDB flats, the MAS requires an approval letter from the Housing Board to the seller within two weeks from the date of the first sales appointment.

The home owner should also provide additional information, such as a letter from the bank providing the current housing loan, stating that the borrower will discharge his outstanding loan by the time the property sale is completed.

Industry analysts predicted yesterday that the stricter lending rules will mean lengthier negotiations between buyers and sellers.

PropNex chief executive Mohamed Ismail said that while it usually takes about 12 weeks for a sale to be completed, sellers may now negotiate for 14 to 16 weeks.

'This gives them time to look for a new home, get a loan and move out of their property,' he said.

HDB home owners are required to move out of their existing home upon completion of its sale, usually eight weeks after the first sales appointment.

But sellers may negotiate mutual agreements with buyers that allow them to stay beyond the sale completion date as a condition for selling the flat, said a 40-year-old property agent who declined to be named.

Banks that The Straits Times spoke to yesterday said they had been sent a new set of home loan rules by the MAS.

A circular issued on Tuesday by the MAS stipulated that banks had to 'conduct comprehensive checks' on borrowers with credit bureaus and the HDB.

OCBC Bank head of consumer secured lending Phang Lah Hwa confirmed that the bank could offer 80 per cent financing 'to genuine home buyers who have sold their existing homes... provided these customers can show evidence of the sale of the existing property at the point of loan application'.

Home owner Ming Fang Goh, 30, who is looking for an investment property, has mixed feelings about the new rules, but thinks they could be a 'blessing in disguise'.

'If the cooling measures help to bring prices down by 10 per cent, then even with a 30 per cent downpayment, some investment homes could become more affordable.'

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A PRIME site in Bedok New Town slated for a retail and residential development has drawn a bumper bid from two units of South-east Asia's biggest developer.

A 50:50 joint venture between CapitaLand Residential Singapore and CapitaMalls Asia lodged an offer of $788.89 million for the land, or nearly $841 per sq ft per plot ratio (psf ppr).

Its offer was well above analyst tips and 21 per cent above the second-highest bid of $650.89 million from a joint venture between Singapore Press Holdings' Moon Holdings and United Engineers' UED Capital Venture.

Analysts had expected bids of $500 to $700 psf ppr. The 24,902 sq m site, which attracted nine bids, is next to an MRT station and will be integrated with a new bus interchange.

A CapitaLand spokesman said its development will comprise about 500 apartments above a shopping mall and would have direct access to the Bedok MRT station and the upcoming bus interchange.

Property experts noted that the site is rare and that there is a lack of retail mall space in the mature town of Bedok.

CBRE Research's executive director, Mr Li Hiaw Ho, said the site allows for a mall with a net lettable area of up to 250,000 sq ft.  

Average retail rents for a suburban mall on this land could be $16 to $18 psf a month on a stabilised basis while condo units could possibly sell for above $1,000 psf, he said.

JOYCE TEO