Singapore Property - Dissecting supply and Deferred Payment Scheme (DPS) risks

Total supply pipeline has eased 13% to 64,494 units from 1Q08.While completions this year will hit a six-year high of 11,102 units,next year’s expected 5,952 is a 15-year low and below historicalaverage. We expect some could be brought forward from 2011.

If we consider total housing supply including public housing,average supply of 24,000 during 2008-12 is 45% lower than the10-year historical average. This does not look excessive versusthe annual average 24,000 household formations (marriages).

9,000 uncompleted units are estimated to be still under DPS, ofwhich 35% is in CCR (prime), bulk in FY09-10. We believe the1,141 CCR DPS units this year have lower default risks as currentprices are not far from launch prices; key risk would be the 1,270CCR DPS units in 2010 that had been sold at peak prices.



Click here for more Useful Information

New Condo Launch - Rosewood Suites at Woodlands

Rosewood Suites is a 99yr leasehold, a low-rise development with only 5-storey. Resort Lifestyle Living comes with only 200 units. TOP on Dec 2012. Condo would be situated on Rosewood Drive (District 25). About 10 mins walk to Woodlands MRT, Causeway Point, Woodlands Regional Centre. Prices estimated from $5XX psf.


Full Condo facilities includes:
• Swimming Pool - 50m lap pool
• Wading Pool
• Waterfall Pool
• Jacuzzi
• Sauna
• Children Playground
• Gymnasium
• Tennis Court
• BBQ
• Meeting Rooms
• Basement / Open-Space Parking
. Security 24hr


Click here for more New Projects

May home sales close to previous peak

URA released May new home sales: New units sold were close to the previous peak of 1,700+ units for a single month in Aug 07, at 1,668 units.

This is the fourth consecutive month that monthly new home sales had exceeded 1,000 units. Caspian was the first project to be released in early 1Q09 at substantially reduced prices which drew in strong demand. Since then, interest in properties has changed dramatically to provide what must be the biggest window for developers to clear stocks in years. While we remain sceptical of the sustainability of demand and speed of recovery in the sector, we would like to look at positives from this set of data.

Demand spilling over to prime districts; high-end units seen to be moving. Compared with the previous few months, demand was more evenly split between Outside Central Region (OCR), Rest of Central Region (RCR) and Core Central Region (CCR). Most of the demand generated in the CCR came from The Wharf (ASP: S$1,186psf, 140 units) and Martin Place Residences (ASP S$1,423psf, 186 units). These have been priced at 25-30% below peak or initial launch prices, deemed as good value by buyers. There was a 5-7% increase in achieved prices in May. An encouraging sign is that these units are not shoe-sized units, with 2-3 bedders at an average 1,100-1,400sf. Bellevue, a high-end development by Wing Tai with an average size of more than 1,300sf, also benefited from decent sales in May (23 units sold at ASP of S$1,649psf).

Inventory draw-down a very good sign. We like the fact that the volume spurt in the last few months has cut down developers’ inventories meaningfully. On our numbers, we estimate that total unsold stock had fallen from 42,000+ sf at end-1Q09 to 39,600+ sf in May. This number has the potential to fall to 35,000+ sf by end-2009, approaching 2006 levels, as developers clear stock more aggressively in the months to come. This 35,000sf would reflect 4-4.5 years of average annual demand vs. 5.5 years of slack six months ago.

Low interest rates, IAS and price discounts fuelling buyers. First-year interest rates average 1.5-2% from most banks, based on the current 3-month SIBOR of 60+bp. Coupled with the Interest Absorption Scheme (IAS), many buyers are finding it easy to commit to a property today. However, the risks come if interest rates begin to rise with the quality of jobs and pay likely to deteriorate. Leasing activity remains weak, which would put pressure on the asset values of in-coming supply in the next year.



Click here for more Property News

Singapore's total population up 5.5% grew to 4.84m in 2008

The number of population is greatly related to the housing demand in Singapore. Due to the rules on HDB, only married couples or single Singaporean with age > 35 can buy a HDB. The demand on the private condo will rely partly on the foreigner or single non Singaporean.

Singapore continues to face the long-term challenge of low fertility and an ageing population, according to its latest population report. But the record number of foreign residents in the country has helped grow the total population to 4.84 million in 2008 - an increase of 5.5 per cent over the previous year. Foreigners now make up about 25 per cent of the total population.

On the marriage and parenthood front, the numbers show slightly more couples tying the knot last year - up 2.6 per cent to 24,596. But the number of singles continues to grow and couples are marrying later. Over the past decade, the median age for first marriages went up from 28 to 29 years for men and 25 to 27 years for women. The proportion of singles among the 30 to 34 age group surged by some 7 percentage points for both men and women. The total fertility rate is 1.28, which is way below the replacement level of 2.1 for over 30 years now.

Back to basic economic figures. The Department of Statistics said that retail sales suffered their biggest drop of 11.7% year-on-year in April since 1999 as shoppers cut back on big ticket items, such as cars and furniture, amid the country's worst recession, after falling consecutively with February down 5.5% and March down 7.3%.

The Singapore Government also said it revised upwards its 1Q2009 unemployment rate to 3.3% . Jobless rate was 2.5% in December 2008. The goverment also expects its economy to shrink up to 9% this year.

Looking back, these are not pretty numbers. They reflect a weakness in consumption and confidence, as well as suffering personal incomes. With unemployment up and big ticket items sales down, why does property sales number so impressive in May?

One possible reason is that the people at the lower-mid and lower strata of the society (which make up a big proportion of the population) are more affected by the recession while the minority higher-mid and upper strata of the society can still effortlessly afford to buy a few private apartments for own stay or investment.

Not forgetting the wealthy foreigners from nearby countries like Indonesia, Malaysia, India and China, who still have hoards of cash to buy more properties when developers lower their asking prices.

One question to ask ? if high unemployment and falling income remain with no sight of real or weak global recovery, can the wealthy ones still able to absorb the up and coming 25,000 new apartments flooding the property market till 2011 ?!? Well, I think .......


Click here for more Property News

Sales of new private homes up 37% on-month in May

Sales of uncompleted private homes climbed 37 per cent on-month in May, here is the data:

May: 1,668
Apr: 1,214
2009 up to date: 5,526
2008 full year: 4,435
2007 full year: 14,811

Home sales in the mid-tier market picked up pace in May. The developments that sold the most units last month were Martin Place, The Wharf, The Arte and The Mezzo. These four projects, which are in the prime districts and the city fringe areas, made up more than 30 per cent of the sales. The median price for these developments ranged between S$903 and S$1,423 per square foot.

Projects that had a median price of less than S$900 per square foot made up 45.9 per cent of the total units sold. To read more at CNA.


Click here for more Property News

Potential new launches Private Resident Projects

With the recent success of mass to mid market projects YTD, sentiments have turned positive for the overall Singapore property market. Riding on the initial wave of revived interest, we believe developers will be looking to move up the market and start launching their mid to high end projects which have previously been held off. Of the potential upcoming new launches, we estimate more than half will be in the mid to high end (Core Central Region) segment. This compares to less than 10% of the projects which were launched YTD in the Core Central Region.

Developers like Fraser Centrepoint, UOL and Far East were the first to launch their projects early this year when the market was still extremely weak. Having a substantial landbank with mass market projects in the pipeline, these first movers tested the market with selected developments targeting HDB upgraders. Post the initial run up, we expect some mid-cap developers like Allgreen, Ho Bee and Wing Tai to play catch up and will begin to launch their projects in the mid to high end segment.

We have seen strong new sales since February, holding up above the 1200 units level. Given the continued success of recent launches, we expect new sales to remain strong. With a boost in sentiments driven by the primary market, we are seeing transaction volumes in the secondary market also trending upwards. For 2Q09 (to date) 1,400 secondary transaction have been recorded which is already above the total secondary transaction volumes for the 1Q09. We forecast volumes in 2Q09 to be stronger QoQ and to sustain above the mean of 4,200 units. In past cycles reversion above mean of transaction volumes is one of the key trends which precedes pricing growth.

We expect positive pricing growth in the near term supported by positive net absorption in 2010 given the moderated supply outlook. We expect new supply of 5,200 units (from 18,000 units previously). However, we believe the market will sideline or trend downwards post 2010 as supply return to the system. Currently, we are expecting more than 12,000 and 14,000 units due for completion in 2011 and 2012 respectively. Given the aggressive new launches by developers hoping to catch the rebound in the market, the issue of excess supply to hit the market will limit further pricing upside post 2010.

Click here for more New Projects

High and Luxury Property Sales picking up

According to the Business times, The Orchard Residences, The Hamilton Scotts and Boulevard Vue have seen units sold at above $2,500 psf with a few units exceeding $3,000 psf in The Orchard Residences. At the Orchard Residences, five units were sold at prices ranging from $2,700 psf for a 10th floor unit to $3,300 psf for an apartment on level 33. According to the developer, there was interest from both locals and foreigners at prices were similar to March/April 2007 launch levels. Nearby at Boulevard Vue Far East Organization sold an eighth-floor unit for $2,600 psf or nearly $12 million last month to a Singapore permanent resident on normal progress payment scheme (31% below the developer's expected price of $3,800 psf in first half last year). Over at Hamilton Scotts a 2,756 sqf unit was sold for $2,600 psf or about $7m to a Singaporean buyer on normal progress payment terms (20% below the expected price of $3,200 psf in August last year).

The rising number of transactions at property auctions, and the high number of bids for a hotel site reconfirms that the market is warming up, and bargain-hunting is in full swing. We take this to be a firmer indication of the return of buyer confidence to the market.

Property auction deals in May outpace whole of 1Q09. The Business Times reported that deals done at property auctions (for private residential assets) hit S$18.5m in May alone, higher than the S$17.9m for the whole of 1Q09. Deals done YTD amount to S$47.7m. Owner sales accounted for 44 of the 59 properties put up for auction. Eight of the 15 transactions were mortgagee sales. However, a surge in the number of repossessed properties has not been seen yet as financial institutions are trying to help owners by giving them the opportunity to sell the properties in the market.

Short Street hotel site receives 14 valid bids. The top bid of S$15.5m (S$353 psf ppr) came from Fragrance Group, 76% higher than the trigger price of S$808m (S$201 psf ppr). The number of bids for the 99-year leasehold site is one of the highest received for a Government Land Sales tender. The offer is deemed attractive because the site area is relatively small and construction costs are expected to decline this year. The site has a maximum GFA of 43,885 sf, and is located near the upcoming Rochor MRT station and the Bugis area.


Click here for more Property News

Apartments that allow you to park your car in balcony

Private lift to your house door step may not be something new, but how about car park at your balcony? Well, this is a pretty new concept, basically your car will take the lift, and stop right in front of your house, at the balcony. So it is like landed property, just that your car is now in the middle of the air. Lets take a look at the artist impression.

Luxury house will soon come to your way, just depend on how much you willing to spend.

Click here for more Useful Information

Deferred Payment Scheme (DPS)

Under the DPS, buyers can purchase uncompleted residential properties by paying 10 to 20 percent downpayment to the developer. The remaining 80 to 90 percent of the purchase price has to be paid only when the temporary occupation permits of the properties are issued. This scheme was introduced in October 1997 and withdrawn in October 2007. Given the fall in property prices, we are concerned about buyers who have purchased properties under the DPS.

There were 10,450 units under the DPS as at 30 November 2008. Of these units, 4,560 units (43.6 percent) were expected to be completed in 2009, 2,540 (24.3 percent) in 2010 and 1,934 (18.5 percent) in 2011. We will first focus on the 4,560 units in 2009. As construction of private properties normally take about three years, it is most likely that the 4,560 units were bought at 2006 prices. In 2006, the URA residential property price index went up by 9.8 percent. The 2,540 units to be completed in 2010 would have been bought at 2007 prices, when the URA price index went up by a hefty 28.1 percent. We believe that those who bought at 2006 prices will still be able to make a small, if any, profit when completion occurs in 2009. However, those who bought in 2007 and later will encounter losses as the prices had risen by huge amounts and price correction would take place in 2009.

Furthermore, banks are tightening credit and buyers may have difficulties securing loans. Therefore buyers, who are unable to obtain loans, may have to sell their properties at lower prices in the open market or forfeit their downpayments and return the properties to the developers. The developers would have to sell their properties at much lower prices to entice buyers as the downturn in the property market continues. This supply of properties from the DPS will add further pressure to the falling property prices.

Response from the government. Due to the economic uncertainties, in December 2008, the government announced that no new sites will be added to the Government Land Sales (GLS) Programme for the first half (1H) of 2009. Moreover, it has reduced the supply of commercial space and will not have new supply of private residential units from government agencies, outside the GLS Programme, for 1H 2009.

We feel that the measures are timely as the response to the GLS Programme has been poor for 2008. This will not add to the supply of land in the market and further depress prices.


Click here for more Useful Information

New Launch of District 9 Residences at Killiney

We would like to bring your attention to an excellent 10 storey development with only exclusive 68 units just 5 mins walk to Somerset MRT station and Orchard Road. The show flat is located at 147 Killiney Road (the former Killiney apartment near the junction of Killiney Road and Devonshire Road)

Residences @ Killiney has a total of 68 units including 2, 3, 4 bedrooms and Penthouses. And every unit comes with private lift making it very exclusive as compared to many developments. Development facade is very fresh and modern with very good facilities. The very highly sought after limited Killiney location of this development, is definitely a plus point whether for own stay or for investment purpose. This project possess excellent high upside gain potential.

* Located in Super Prime District 9, Excellent Location
* Best Freehold Investment, Low quantum. Fantastic layout.
* Exclusive, Prestigious and Glamorous Singapore Urban City Living
* Quiet and Cosy in the heart of the City and without HDB in sight (Rare)
* Convenient, walking distance to Orchard Shopping Belt
* Hundreds of amenities within 1 km vicinity
* Paranomic View of district 9 and Orchard
* Highly sought after address in Singapore
* Outside ERP Gantry Restricted Zone
* Near Everywhere in the City
* 5 mins walk to Somerset MRT
* Mins walk to Orchard Shopping Belt
* Near SMU and many international institutions
* 3 to 5 Bus Stop to Clarke Quay, Chinatown, Boat Quay and Diamaru
* 5 mins drive to future Marina IR, Singapore Flyer and CBD
* Quality Finishes and Branded Appliances with every unit
* Very High Capital Appreciation and Rental Yield
* Interest Absorption Scheme by Developer

Registration: http://www.propertylaunch.sg/
Brochure: http://www.assetomgt.com/realty/download/KillineyBrochure.pdf


Click here for more New Projects

Want to own a Hilton?

Of course is not Paris Hilton, but a 5-class Hilton hotel star liked private residences. You are invited to the exclusive launch of Hilton Surfers Paradise Hotel & Residences, a luxury development in Gold Coast, Australia. The Hilton Surfers Paradise Hotel and Residences is a unique concept in apartment living, combining private residences with the comforts and amenities of a five-star hotel.

From the leisurely 42 kilometres of pristine beach to the famous casino just minutes away, the Hilton Surfers Paradise Hotel and Residences puts you within one of Australia's most desirable locations, perfectly positioned to take advantage of everything the Gold Coast has to offer.

Boulevard Tower - Sold out
Orchid Tower - Final Release. Now selling.
Comprises 57 levels of two, three & four bedroom residences, sub penthouses, exclusive penthouses.

Click on the link at the top to register for the preview. 

Click here for more Oversea Projects

Property Sales momentum going strong + RiverGate TOP

According to news reported yesterday, property devlopers have sold around 1,200 private home units in May, comparable to the 1,207 units sold in April. They have started raising the prices for several mass-market and mid/upper segment projects by lowering the discounts from the 2007 peak levels. The developers are also firming up plans for more mass/mid market launches/re-launches in the coming months. The recent soft re-launch of freehold Shelford 23 in the Bukit Timah area by Hoi Hup Realty was well received with nearly half of the units sold at an ASP of S$1,250 psf.

The continued sales momentum would help in firming up the base formation and in improving the home buying sentiment further, leading to a more sustainable recovery. We expect the demand and supply dynamics in the mass and mid tier segments to remain favourable over the next three years. Also, the supply shortage of Public Housing is supportive of private mass market.

Payment has been collected for 98 per cent of the 542 condo units sold at CapitaLand's RiverGate project since Temporary Occupation Permit (TOP) was obtained in March, the developer said yesterday. Payment collection for the remaining 2 per cent, or 11 sold units, is ongoing, and the buyers have been served notice to pay up. The 11 units were 'all sold separately to individual buyers under the deferred payment scheme (DPS)', a CapitaLand spokeswoman said. More than 90 per cent of the 542 RiverGate units sold were under DPS, she added. CapitaLand developed the 545-unit freehold condo in the Robertson Quay area through a 50:50 joint venture with Hwa Hong Corporation.

Asked what CapitaLand will do regarding the 11 buyers that have not paid up, the spokeswoman said: 'For genuine homebuyers who may face difficulties meeting the payment obligations, we will address these on a case-by-case basis. We will see how we can lend our assistance within the constraints of the obligations under the securitisation structure.' The progress payments and deferred payment receivables for sold units were securitised through special purpose vehicle Okeanos Investment Corporation, which in January 2007 issued US$477 million ($731 million) of floating rate notes due 2011. With the proceeds collected for RiverGate so far, the US$477 million of notes are expected to be fully redeemed by the expected maturity date in June 2009, CapitaLand said in a statement.


Click here for more Property News

Developers sell close to 1,200 homes in May

Business Times reports that developers sold an estimated 1,200 private home units in May, according to market watchers. This is comparable to the 1,207 units they sold in April, based on official Urban Redevelopment Authority (URA) numbers.

Frasers Centrepoint sold a total 294 units in May - comprising:
- 186 units at Martin Place Residences at Kim Yam Road,
- 46 at Caspian in the Jurong Lake District,
- 22 units at Woodsville 28,
- and 40 homes at Waterfront Waves.

Frasers Centrepoint is developing Waterfront Waves, near Bedok Reservoir, jointly with Far East Organization. The latter sold a total of 165 units (inclusive of Waterfront Waves) last month.

City Developments reported total sales of 138 units (of which 97 units came from The Arte at Thomson and 36 units from Livia in Pasir Ris) in May.

CapitaLand also achieved brisk sales for The Wharf Residence at Tong Watt Road.

EL Development also found buyers for a total of 74 units last month (comprising Parc Centennial at Kampong Java Road and Rosewood Suites in Woodlands).

Soilbuild is understood to have sold close to :
- 90 units at The Mezzo in the Balestier location.
- 30 units were seen for Kovan Residences and
- 21 units at BelleRive in Bukit Timah.

According to official government numbers, developers sold:
- 1,332 private homes in February,
- 1,220 units in March and
- 1,207 units in April,
- 1,200 units in May (estimate).


Click here for more Property News