Private home owners paid highest COV in Q4: Khaw

PRIVATE property owners paid the highest median cash over valuation (COV) amount for resale HDB flats in the last quarter of 2011, National Development Minister Khaw Boon Wan said yesterday.

Writing in his blog under the heading 'Who Bids High?', Mr Khaw revealed that private property owners paid the highest median COV of $45,000 in the fourth quarter of 2011.

Second-timers paid $34,000, first-timers paid $33,000, permanent residents $32,000, and singles paid the lowest median COV of $31,000, according to Mr Khaw's data.

The issue of high COVs - which is the cash premiums paid to the seller above a flat's valuation - was raised in Parliament on Jan 16. Mr Khaw said then that former private property owners make up the buyer segment that is pushing up the COV, not permanent residents.

He released more data to support his point yesterday.

'We monitor HDB resale prices and publish them for information of potential buyers and sellers. Transparency helps make the market run better,' Mr Khaw wrote in his blog.

In response, property analysts said that data on the number and types of flats purchased by the respective groups would give a better understanding of the causes of high COVs.

For example, private property owners could be buying larger flats (such as four-room and five-room flats) and therefore the COV paid is higher in absolute terms.

On the other hand, singles, who usually buy smaller HDB flats, are likely to pay a smaller COV for the smaller units.

HDB resale prices have been rising since 2002, while the information provided was only for Q4 2011. This snapshot of information is hardly enough to explain which group of buyers is contributing to the rise in COV.

ERA Realty Network's key executive officer Eugene Lim similarly noted that the data released by Mr Khaw is general and not flat-type specific. But it does show that private property owners are the ones paying higher COVs, he said.

'As private property prices are at an all-time high now, those that have cashed out would have easily made significant profits. So they have the capacity to pay higher COVs, especially for the larger flats that they usually buy (five-room or executive). The other group consists of those that have made profits from en-bloc sales,' Mr Lim said.

Source: Business Times – 19 January 2012

Kovan residential site draws top bid of $194.6m

Suburban sites continue to receive keen interest in spite of market cooling measures and the wider economic uncertainty.

Yesterday's tender closing for the prime residential site at Kovan Road/Simon Road garnered 11 bids, of which a consortium comprising Hoi Hup Realty, Investment Focus, and Oriental Worldwide Investments emerged the top bidder.

Its bid of $194.6 million translates to about $507 per square foot per plot ratio (psf ppr).
The top bid is roughly in line with recent tenders for residential sites in Clementi ($554 psf ppr) and Mt Vernon ($495 psf ppr).

This appears to be the current land price range for good suburban residential sites.

The site, which has a 99-year lease period, has an area of about 1.7 hectares, and a gross floor area (GFA) of about 384,142 square feet.

The healthy list of bidders from this and recent tenders show that developers are confident, and that their balance sheets are strong enough to weather through concerns that the ABSD (additional buyer's stamp duty) will lead to abject market conditions. The project's estimated breakeven cost is about $980 psf.

The keen contest shows that attractively located sites will continue to draw strong participation from developers despite the uncertain market conditions.

The breakeven for the site could be between $900 and $1,000 psf. The developer could be looking to sell at a price range between $1,100 and $1,300 psf.

According to a spokesman from Hoi Hup, the consortium intends build a condominium comprising fewer than 400 units. They include a mix of Soho-style units and townhouses.

The project should be launched later this year.

The tender's second highest bidder was a group made up by Frasers Centrepoint's FCL Topaz, F E Lakeside and Sekisui House Singapore. Their bid of $192.8 million translates to some $502 psf ppr.

Another analyst expects units on the site to fetch between $1,100 and $1,200 psf, citing the location's strong attributes.

The site is less than five minutes walk to Kovan MRT station on the North- East Line. It is surrounded by an established landed housing estate and low-rise apartments or shophouses.

Kovan Melody and Kovan Residences are also situated nearby. Shopping and retail outlets are available at Heartland Mall-Kovan and Hougang HDB estate.

There has been no new major condominium launched in the Kovan area since the launch of Kovan Residence in June 2008. After the sale of this site, there is also an absence of another major condominium development site near the Kovan MRT station.

Other bidders included UOL unit, United Ventures Development, which placed a bid of $180.8 million ($436 psf ppr), and Mezzo Development, which submitted the lowest bid of $128 million ($333 psf ppr).

Source: Business Times – 19 January 2012

Showflat not ready, but buyers lap up Watertown

HOME buyers, undeterred by recent tough market cooling measures, turned up in strong numbers at the preview of Watertown in Punggol Central yesterday.

Far East Organization said more than 160 units out of the 250 units launched were snapped up, with Singaporeans making up more than 90 per cent of buyers.

The enthusiastic response means that the official launch, originally scheduled for next week, will now be brought forward to tomorrow.

Industry analysts say developers seem eager to push out projects quickly, possibly before more uncertainty emerges.

In the case of Watertown, the developers bought the site for the 992-unit project less than a year ago and have yet to finish the showflat.

But agents had been fielding inquiries on the mixed-use development even before the authorities' approval for the launch had been given, sources say.

They say at least 100 buyers were ready to hand over cheques on Tuesday. But building plan approvals were issued yesterday and only then could agents collect cheques and grant options to purchase last evening.

The $1.6 billion project is being jointly developed by Far East, Frasers Centrepoint and Japanese firm Sekisui House. It will be integrated with a mall of 370,000 sq ft of net lettable shop space and a Shaw Theatres Imax cinema.

Developers had earlier said that prices will start from $1,080 per sq ft (psf), which they said included a discount.

Even so, the development will still set a benchmark in Punggol, trumping Sim Lian Group's A Treasure Trove, priced at $866 psf at its launch last September.

Buyers were unfazed at picking units off the plan as the showflat is not yet up.

Key attractions are the waterfront location and the fact that the project is integrated with Punggol MRT station, experts say. Recent mixed-use launches like Bedok Residences have also seen robust sales and benchmark pricing at a median of $1,359 psf.

Developers are pushing out projects as quickly as possible before more uncertainty hits the market.

Especially in the Punggol area, developers face increasing competition as the Government has pushed out a lot of land there.

It typically takes a year or more for integrated projects of this size to be launch-ready. Thus, the 11-month turnaround for the site, bought in February last year, was fairly quick.

The Dec 7 cooling measures included an extra stamp duty of 10 per cent on all home buys by foreigners. Some analysts tip price falls of 10 per cent to 20 per cent this year.

Separately, Sekisui House said it will tap its network of retailers to introduce new-to-market brands and concepts from Japan into the upcoming mall.

Source: The Straits Times – 19 January 2012

Far East: Cooling steps may need tweaking

THE recent property cooling measures might have to be fine-tuned, depending on how persistently sales volumes drop, according to Far East Organization chief executive Philip Ng.

He told a briefing yesterday that the 10 per cent additional buyer's stamp duty for foreigners is 'a very big number'.

He also said that the measures had led Far East and its partners to drop the prices for the upcoming launch of its Watertown project in Punggol Central.

Foreigners, the main target of the new cooling policies, have shown less interest in the project than at launches before the measures, noted Mr Ng.

He said the measures may eventually need to be tweaked.

'Indeed, there could be some calibration or tiering perhaps, but that's something that has to be discussed with good data between developers and policymakers.

'At this point, it's pretty early days and you can see that there was already a drop in December,' he said, referring to the 63 per cent plunge in new private homes sales last month.

He added that the policy should be allowed to run for a while to gauge if the sales decline is persistent before deciding if the policy needs calibrating.

Mr Ng made his comments at a briefing on the upcoming Watertown launch.

The 992-unit estate has a development cost of more than $1.6 billion and is being jointly developed by Far East, Frasers Centrepoint and Japanese firm Sekisui House. It will be integrated with a mall of 370,000 sq ft of net lettable shop space and a Shaw Theatres Imax cinema.

Prices have been cut by 5 per cent to 8 per cent in response to the cooling measures.
The first 250 units will be sold at a starting price of $1,080 per sq ft (psf) after the discount and are expected to go on the market next week.

Even with the price reduction, the development will still be the priciest project in Punggol, trumping Sim Lian Group's A Treasure Trove, which was priced at $866 psf at its launch last September.

Watertown will consist of suites, 'small office, home office' (Soho) apartments, sky patios and residences. About 55 per cent of the units will be less than 700 sq ft.

Mr Ng said: 'We're reflecting the trends of major global cities like Hong Kong, Tokyo, London and Paris. They do have a sizable amount of small units in their stock... Most of our sales of small units have been quite well-received.'

He expects foreigners to account for less than 10 per cent of Watertown's sales.

Mr Lim Ee Seng, chief executive of Frasers Centrepoint, did not give the briefing his forecasts on how the residential market might pan out but alluded to land tenders that closed after the cooling measures were imposed on Dec 7 as a gauge of sentiment.

Bids for these tenders were between 10 per cent and 20 per cent lower than those for nearby sites tendered earlier.

Source: The Straits Times – 18 January 2012

Balloting rules for BTO flats set to change

THE Housing Board may soon change its balloting system for new flats, with second-time home buyers likely to benefit.

National Development Minister Khaw Boon Wan said yesterday that he hopes to announce changes to the HDB's build-to-order (BTO) balloting rules for the next sales launch in March.

The Housing Board's first BTO project for the year was launched earlier this month and offered 4,000 new homes across Tampines, Choa Chu Kang, Punggol and Sengkang. The launch closed yesterday, with an application rate of 1.5 first-timers for every flat available.

Mr Khaw wrote in his 'Housing Matters' blog that this rate was 'not surprising', and was similar to the subscription rate of 1.6 seen in the HDB's November BTO launch.

'Both are good rates; they mean that practically all will get a chance to choose a unit,' he said.
As of yesterday, the HDB had received 9,593 applications for the 3,633 flats offered, excluding studio apartments.

'Our goal to help young couples get their first homes is coming true. We can now move on to better help the second-timers,' Mr Khaw added.

The application rate for second-timers for the January BTO launch is 23.9, compared to 25.9 in the November one.

In a previous post in November, Mr Khaw had hinted that 'once we have cleared the first-timer queue, we can help the second-timers more'.

The BTO scheme provides the main supply of new homes in public housing, which covers about 80 per cent of the population.

Currently, 95 per cent of flats launched are set aside for first-time buyers, and the remaining 5 per cent are for second-time home buyers.

If such changes were to happen, they would be timely for the market.

Going by recent application rates - which have been below two for every flat in the past two launches - the market has stabilised, especially in the demand from first- timers.

This is a clear indication that government efforts in increasing new home supply are working, and a lot of first-time home buyers who weren't successful previously are now getting homes.

If the HDB continues building at the current pace, there will be an increased supply in the market which first-timers may no longer be able to absorb.

So it's fair and timely, for example, to increase the number of flats for second-timers since demand is still very high in that segment.

The HDB plans to roll out 4,110 new flats in March in Bedok, Bukit Batok, Bukit Panjang, Bukit Timah, Clementi, Geylang and Toa Payoh - part of the supply of 25,000 new homes for the year.

Source: The Straits Times – 18 January 2012

Private home sales slide in December

PRIVATE home sales in Singapore sank to a two-year low last month, as tough cooling measures and the weak economic outlook took their toll.

Still, the sudden slump was not enough to prevent total sales for the year hitting a new record of nearly 19,000.

Developers sold only 670 homes last December, including executive condominiums (ECs), possibly setting the tone for a more sombre market this year.

The last time monthly sales fell below the 670-unit level was in December 2009, when only 481 units were sold.

Last month's figure was well down from the 1,855 units sold in November, although sales tend to fall in December due to the Christmas and school holidays.

Last year saw a record 18,920 units sold - eclipsing the all-time high of 17,344 units in 2010, according to data from the Urban Redevelopment Authority released yesterday.

Excluding ECs - an increasingly popular public-private housing hybrid - new private home sales totalled 16,027 units last year, narrowly missing 2010's record of 16,292 homes by 265 units.

Experts say the Dec 7 cooling measures, which include an additional buyer's stamp duty of 10 per cent on all foreign home purchases, led to a knee-jerk reaction in the market.

Home buyers are adopting a wait- and-see approach in assessing the market and are holding off on purchases in anticipation of possible price falls, they add.

ERA Realty key executive officer Eugene Lim said the drop in monthly new home sales in December was expected, as buyers needed time to assess the impact of the 'major policy change'.

Developers are likely to hold back on major new private launches for now, with only EC projects going ahead, he added.

For some projects launched earlier last year, buyers backed out of purchases and returned units to developers.

These include CapitaLand's 583-unit Bedok Residences, with 31 units returned; City Developments' 892-unit The Palette in Pasir Ris, with eight units returned; and the Sim Lian Group's 452-unit Parc Vera in Hougang, with six units returned.

The Straits Times understands that the UOL Group's 577-unit Archipelago in Bedok Reservoir Road, launched early last month, had 17 units returned.

This could be in response to the new measures, as buyers chose to forfeit a quarter of their option fee in anticipation of a price decline in the future.

While low interest rates would keep supporting home buying this year, the slowing economy would likely hit job prospects and salary growth. This would dampen buyers' confidence.

Additionally, the imposition of the additional buyer's stamp duty will shave off some level of buying demand, particularly from foreigners. All these could drag down demand further, as prospective purchasers continue to adopt a cautious stance and hold out for possible price declines. Take-up for new homes could potentially drop to between 9,000 and 11,000 units (this year).

Demand is expected to continue to moderate, with estimated sales of 7,500 to 10,000 homes this year at the current pace of demand.

Prices are also expected to take a beating, with experts generally predicting corrections of between 5 and 15 per cent.

Prices of prime homes could fall by 10 to 15 per cent, while mass-market homes could slide by 5 to 10 per cent.

However, landed home prices will likely moderate by less than 5 per cent, since foreigners are generally not allowed to buy, and supply is limited.

Another analyst suggests that prices could fall by up to 8 per cent this year.

Experts also highlighted the popularity of ECs last year, as first-time home buyers and HDB upgraders snapped up 2,893 such units - 15 per cent of the private market. ECs were reintroduced to the market in 2010, after a five-year hiatus.

However, while EC demand is expected to remain strong for the first half, it might soften if mass-market home prices fall, and the price gap between that and resale HDB flats narrows.

Last month's take-up was again largely in the mass-market segment, with 79 per cent of sales in suburban areas. Only 108 homes were sold on the city fringe, while 35 units in the city centre found buyers.

Top-selling projects last month include Archipelago, with 103 units going at a median price of $1,118 per sq ft (psf), and The Nautical in Sembawang Road, with 84 units at a median price of $882 psf.

Source: The Straits Times – 17 January 2012

'Cash-rich owners' pushing up HDB resale prices

DO NOT unfairly blame permanent residents (PRs) for pushing up the prices of HDB resale flats, National Development Minister Khaw Boon Wan urged Singaporeans yesterday.

He revealed that the buyers jacking up cash premiums for such homes were actually local private-property owners.

He was responding to a question in Parliament from Mr Zaqy Mohamad (Chua Chu Kang GRC), who asked if the Housing Board would consider limiting the sale of resale three-room and smaller flats to only lower-income Singaporeans.

Mr Zaqy told the House there was a common perception that the large proportion of PRs in the market had created competition, and that they had an influence on the cash premiums paid to the seller above a flat's valuation, known as cash-over-valuation (COV).

He said the COV for resale three-room flats was higher than those of four- and five-room resale units and that had priced some buyers out.

The HDB's latest data for the third quarter of last year showed that the median COV for three-room flats across the island ranged from $27,900 to $34,000.

The median COV was higher for four- and five-room flats - from $33,000 to $66,000 across the island.

Mr Khaw acknowledged the perception Mr Zaqy had referred to but said he often looked at the breakdown of prices in the resale market and the data was 'quite distinct'.

'Typically, the PRs pay the lower COVs... among the groups, the higher COVs are often by private-property owners, or former private-property owners... especially the en bloc owners or residents, probably with a lot of cash and still need a roof... They are the ones who bid up the COV,' he said.

'So let us not unfairly blame a particular group for causing higher prices in the resale market,' he added.

Mr Khaw said Singapore had to be fair to PRs too: 'They come here, they make a contribution to the economy and they need to live too. So offering them... the opportunity to buy a resale flat to stay... is a fair proposition.'

HDB resale flat prices have reached record highs in recent years, fuelling unhappiness among buyers unable to afford the asking amounts.

Mr Khaw noted that, in the last two or three years, prices had shot up due to an imbalance of supply and demand.

'All my efforts in the last seven months are to precisely attack this problem, and I think there are some initial results, so please be patient, the market will stabilise in due course,' he said.

Since taking over in May, Mr Khaw has directed the HDB to offer more new flats and in locations across the island, including mature estates. Recently, the board also raised the monthly income ceiling for new flats from $8,000 to $10,000 so more first-time buyers can get new flats.

Analysts said such moves had helped to ease some demand in the resale market.

Mr Khaw noted that the HDB imposed an income ceiling for new two- and three-room flats but not for resale units.

'Doing so will deprive flat owners of the full market value of their flats. We think this is not advisable,' he said.

He added that the HDB would try to exercise compassion where it could on the resale levy, paid by a second-time home buyer to the HDB to ensure a fair distribution of housing subsidies.

MPs Intan Azura Mokhtar (Ang Mo Kio GRC), Cedric Foo (Pioneer) and Zainudin Nordin (Bishan-Toa Payoh GRC) had noted that some families found it tough to pay this levy and asked if the HDB would consider waiving or reducing it for lower-income families buying their second subsidised HDB flat.

Mr Khaw said he was familiar with the concern and the HDB would 'assist where we can but, inevitably, cases differ from each other, so we really need to look at each individual case on its own merit'.

As for letting such families pay the levy - usually required in cash upfront - by monthly instalments or through the Central Provident Fund (CPF), he added that, in some cases, the HDB had included the levy in the price for the second subsidised flat so buyers could use both CPF as well as their housing loan to pay for it.

Source: The Straits Times – 17 January 2012