Singapore is Asia's most liveable city

SINGAPORE has risen six places in a global ranking of cities with the highest quality of living, overtaking cities such as Paris in France and Honolulu and San Francisco in the United States.

At 26th place, the Republic also surpassed all its Asian neighbours to be the region's best performer in the latest Worldwide Quality of Living Survey by human resource consultancy Mercer.

As the icing on the cake, Singapore also topped Mercer's list of cities with the best infrastructure in the world. It proved superior in various areas, including electricity and water supply, telephone and mail services, public transport, traffic congestion and range of international flights from local airports.

Although it is often taken for granted, infrastructure 'has a significant effect on the quality of living experienced by expatriates', said Ms Cathy Loose, Mercer's Asia Pacific global mobility leader.

The development of Marina Bay and Sentosa Cove as new waterfront living areas appear to have boosted Singapore's position in the rankings.

'Singapore already has excellent housing, but now its new ocean-front and seafront living options have allowed the ranking to move even higher,' said Mr Derrick Kon, Mercer's Singapore global mobility leader.

He added that the 'high-quality houses and apartments' that are available for rent and the 'excellent selection of appliances and furniture' for residents definitely helped elevate Singapore's quality of life.

The other factor that contributed to Singapore's higher ranking is the presence of 'many good schools' in the city, said Mr Kon.

'Singapore has always had a lot of good schools and international schools, but now there are also more private schools offering university degrees,' he said.

'If expatriates come here with their children, this is one area they would be looking at, and in Singapore they would have a lot of options, with international programmes and university programmes.'

Singapore's strong position in quality of life rankings such as these could stand the nation in good stead in the current financial crisis, said Mr Mark Ellwood, managing director of Robert Walters, another human resource consultancy.

With companies looking to cut costs, many are reducing the number of international assignments and localising their expat compensation packages where possible, which means not giving out the 'hardship' allowances or benefits that are offered to expats who have to live in cities with a lower quality of life.

'There is perhaps less of an argument these days that Singapore is a hardship posting, so you don't have to give many expat benefits in terms of additional bells and whistles,' said Mr Ellwood.

Singapore is the only Asian city on the top 100 list that managed to increase its ranking this year, with the rest largely maintaining their previous positions.

China's capital, Beijing, moved up three places from 116 to 113 due to public transport improvements stemming from the Olympic Games last year, but Bangkok in Thailand and Mumbai in India both dropped in the rankings amid worsened stability and security.

Globally, the Austrian city of Vienna overtook Switzerland's Zurich to boast the best quality of life this year. European cities continued to dominate the top positions in the ranking, amid a sprinkling of Canadian and American cities.

Mercer publishes this list annually to help multinational companies determine an appropriate amount of compensation for expatriates sent to work in difficult locations.

The Straits Times - Fiona Chan

Developers meet valuers in search for common ground

Developers last week held a meeting with valuers amid recent complaints in some quarters that conservative valuations have derailed some home sale deals as potential buyers could not secure the required loan quantum from banks.

BT understands that the valuers disagreed with the developers that their valuations had been too conservative, and that it was the banks that were just not lending.

'Generally, if there are transactions, we'll match (with valuations). It's the banks that are more cautious about lending to certain profiles of borrowers like investors, especially if they are foreigners,' a valuer told BT.

The valuers also raised issues that they had been facing in recent months, such as a dearth of comparable transactions, and explained the methods that they use to arrive at valuations in such situations.

'We explained that some banks require valuers to look at three comparable transactions, and how we generally do not take into account outlier transactions that may perhaps reflect 'depressed' prices,' another valuer said.

Sources say that the meeting was amicable, drawing more than 20 valuers and heads of property consulting groups and the executive committee members of the Real Estate Developers Association of Singapore led by its president, Simon Cheong.

When contacted, a Redas spokesman said: 'We wanted to better understand issues that valuers may have in their day-to-day valuation and what else the profession may need from developers to enable them to give (as) updated and relevant (a) valuation as possible.

'The discussions were general in nature and discrepancies in valuations in some instances were highlighted and analysed. Valuers shared with us some of the constraints they are facing such as the lack of or insufficient comparable sales data and other issues.

'The session was fruitful as it helped us understand one another better and we agreed to look into areas where communication and interaction could be improved upon.'

A property consultant told BT that he found it odd that the same banks that were willing to give a 75 per cent or 80 per cent loan on a high-end residential unit when it was priced at $2,000 psf (thus assuming an exposure for about $1,500 to $1,600 psf) are now reluctant to give even 50 or 60 per cent loan when the property is going for a much lower price of $1,200 psf (which works out to $600-720 psf exposure for the bank).

'It's particularly difficult for foreign buyers, even PRs in some instances, to get loans for investment properties. Banks are more willing to lend to Singaporeans buying residential properties for owner occupation.

'Some of the bigger banks should take the lead and be more proactive in lending to property buyers, not just for entry-level but also luxury homes, given that spot prices have already come off about 40 per cent.'

Agreeing, another valuer said: 'We provide the valuations. It's up to the banks whether they want to lend, and how much. It's a commercial decision for them.'

Giving his take on the challenges facing the profession, a senior valuer said: 'We have to be as level headed as possible and (assign) a sensible value. Valuers play a very important role in the financial system and economy, as we're marking everybody's asset values.'

This was the first time Redas has met valuers as a group, at least in recent years, and this follows its maiden meeting in November with analysts in stockbroking research houses covering the sector.

Redas also holds regular dialogues with government agencies such as Urban Redevelopment Authority, and Building and Construction Authority. 'Such dialogues provide learning opportunities for Redas and promote better understanding across the industry leading to a healthy property market,' the association's spokesman added.

The Business Times - Kalpana Rashiwala

Premium for HDB resale flats in sharp fall

BUYERS are increasingly reluctant to pay a premium for HDB flats, going by fast-falling cash-over-valuation (COV) figures from the Housing & Development Board yesterday. The median COV for resale transactions dived a stunning 73 per cent from $15,000 in Q4 2008 to $4,000 in Q1 2009.

In fact, the median COVs for five-room and executive flats were both zero dollars in Q1 2009. Just a quarter ago, buyers paid median cash amounts of $11,000 and $12,000 on top of valuation for five-room and executive flats respectively.

'The sharp drop in COVs is due to increasing public resistance to paying above what are already higher valuations,' said PropNex chief executive officer Mohamed Ismail.

According to HDB, the proportion of flats that changed hands above valuation fell in Q1 2009 to 62 per cent of all resale transactions, from 85 per cent in Q4 2008.

ERA Asia-Pacific noted that more higher-value HDB resale flats are being sold below valuation - for $30,000 to $50,000 less in some cases. 'In coming quarters, we are likely to see more and more larger flats sold at or below valuation as the harsh economic conditions hit home,' said ERA associate director Eugene Lim.

Stricter loan-to-value ratios could have contributed to the trend. 'Banks are becoming more conservative and there have been cases where buyers are offered only 70 per cent loans instead of the usual 80 per cent,' Mr Lim said.

The cooling economy has also turned some home-seekers away from five-room to four-room flats, he noted. And as a result, prices of larger flats may face downward pressure.

On the whole, HDB's resale price index slid 0.8 per cent in Q1 2009 from Q4 2008, shrinking more than the flash estimate of minus 0.6 per cent released early this month. This is the first time the index has shrunk after growing more than 30 per cent over nine straight quarters.

Property consultants expect resale HDB flat prices to drop 5-10 per cent for the whole year, with larger flats accounting for more of the fall.

Nevertheless, 'we do not expect the decrease in HDB resale prices to dent upgrader demand for private property, because the rate of price fall of HDB resale flats is still smaller than that of private homes,' said Knight Frank's director of consultancy & research Nicholas Mak.

Three to four-room flats should enjoy greater demand, consultants reckon. As PropNex's Mr Mohamed observed, buyers are still willing to pay COV for these flats.

HDB data also shows a rising proportion of resale flat applications involving smaller flats.

Three- and four-room flats accounted for 69.8 per cent of applications in Q1 2009, compared with 67 per cent in Q4 2008.

There were 6,446 resale transactions in Q1 2009, 4.2 per cent more than in the preceding quarter. 'HDB resale transactions typically increase when times are bad,' said ERA's Mr Lim.

But with HDB building more new flats, some demand may shift, he added.

HDB said yesterday that it plans to launch another 2,400 build-to-order flats over the next six months, of which about 1,000 will be three-room and smaller flats.

The Business Times - Emilyn Yap

The worst may be yet to come

IS THE worst over? Investors seem to think it is. Confidence that the crisis is winding down has been mounting. But the right answer to the question depends on what 'worst' is meant. Appropriate replies include: probably, yes but so what, not yet, probably not, and let's hope so.

The worst of the credit squeeze is probably over. True, loan losses are still increasing. But the official aid is massive: minimal policy interest rates, ample liquidity supplies, capital injections and implicit loan guarantees.

The aid from above has helped push dollar interbank borrowing rates down in the last six weeks. The cost of insuring against corporate failure in the credit default swap market has also fallen by 0.5-0.7 percentage points to about 1.9 and 1.6 per cent annually for the main US and European investment grade CDS indexes. Improving bank credit has contributed to this trend. Better credit all round means more loans will be refinanced, so fewer companies will go under than would otherwise be the case.

The big official liquidity push also gives investors more cash to put into the markets. The additional buying power may account for some of the sharp increase in oil and equity prices. There have also been tentative signs of revival in the junk bond and IPO markets. To some extent, the mood is following the money.

It may be due to government help or it may just be the passage of time, but another worst that has probably passed is in the pace of economic decline. The huge sudden drop in activity after the collapse of Lehman Brothers last September has already become something of a business legend. If the decline had continued at that pace, economies would be back to the Stone Age in a few decades.

It's not going to be that bad. Globally, exports are down 30 per cent since last July, according to Lombard Street Research. But the pace of decline is moderating. Similarly, US housing starts, which have declined by 75 per cent since the 2006 peak, may have reached their low.

The balance of indicators still suggests GDP is falling in most developed economies, but at a much less dramatic rate than a few months ago. When the economy is only declining at a moderate pace, some measures typically suggest that growth is returning - the much talked-about 'green shoots' - but more show further decline. That seems to the case now.

Inventories complicate the picture. A sharp decline in global demand led to an even sharper reduction of inventories as retailers and manufacturers cut back. As the inventories are rebuilt, production will most likely pick up faster than consumption.

So yes, all in all the economy isn't shrinking as rapidly as it was. But so what? It's still shrinking. On that yardstick, therefore, the worst isn't yet over.

Now look at another measure of 'worst': unemployment. Even when growth does return, recovery is likely to be anaemic. It will take time to absorb the excesses built up during the credit boom, from houses in the US to too many Chinese factories making cheap goods.

What's more, it's not as if all that private-sector debt has gone away. The rise in savings rates in the US and elsewhere isn't going to be a one-quarter wonder. This means that the peak in unemployment could easily be two years away.

And will that then be the end of the pain? Probably not. The crisis will leave government balance sheets shot to pieces. The best case scenario is that the authorities manage to suck all their fiscal and monetary stimulus out of the economy safely once economic growth has bottomed out. Then all that the world will suffer is high taxes and slow growth.

But there is a risk that this outcome proves too unpopular and that the authorities instead take the current fad for 'quantitative easing' to the extreme - and just print money to finance their deficits. The outcome would then be inflation.

An inflationary outburst might even lead to another sort of financial crisis - a loss of confidence in key currencies. That could be worse than anything seen up to now.

Can such a dire outcome be avoided? Let's hope so.

The Business Times - Edward Hadas

Secondary market buzzes as prices fall

(SINGAPORE) The pick-up in private home sales by developers has spilled over to the secondary market. Falling prices are greasing the flow.

Caveats have been lodged for 1,063 private homes in the resale market in the first three months of this year, up 11.7 per cent from the preceding quarter. In the subsale market, 384 caveats were lodged in Q1 2009, reflecting a 44.4 per cent increase from the Q4 2008 figure, according to Savills's analysis of caveats captured by the Urban Redevelopment Authority's Realis system.

Resales and subsales refer to secondary market transactions. Subsales involve projects that have yet to obtain Certificate of Statutory Completion while resales relate to projects that have received CSC. CSC is typically obtained anywhere from three to 12 months after the project receives Temporary Occupation Permit (TOP).

The average prices of resale and subsale transactions at the most popular projects in Q1 2009 were generally lower than in the preceding quarter as well as the same period last year.

City Square Residences, the most popular subsale project in the first three months of this year with 41 units, saw an average price of $804 psf, down 5 per cent from the $845 average subsale price in Q4 2008 and 15 per cent below the $947 psf average subsale price seen in Q1 2008.

Average prices for 11 of the 12 most popular subsale projects in Q1 this year fell between one and 14 per cent from the preceding quarter. The exception was Clementiwoods Condo, where eight subsale deals were done at an average of $664 psf in Q1, some 5 per cent higher than in the previous quarter but down 7 per cent from the same period a year ago.

Compared with Q1 last year, average prices for all 12 top-selling subsale projects in Q1 2009 fell between 4 per cent (Centris) and 36 per cent (The Cosmopolitan).

As for resale transactions, the 11 hottest developments saw quarter-on-quarter price declines ranging from 4 per cent (for The Lakeshore) to 19 per cent (Bayshore Park) in Q1. The Lakeshore was the most popular resale project in the first quarter, with 27 units changing hands, followed by Costa del Sol, with 11 units.

Savills Singapore head of research Priya Sengupta noted that the 11 most popular resale projects in Q1 were all in the mass and mid-tier sectors. 'Amid the economic uncertainties, affordability remains a key consideration for home buyers/investors; 100 of the 113 deals in the 11 most popular resale projects in Q1 were at below $1 million,' she said.

Resale activity for high-end projects was limited. 'This could be attributed to the price disparity between sellers and buyers as the latter expect further downward price adjustment in the near future, as well as the stricter home loan criteria in terms of loan-to-value ratio, especially for investors,' Ms Sengupta said.

Mass and mid-tier projects also saw more subsale transactions than high-end projects. Much of the subsales activity in Q1 surrounded projects that have either received TOP recently or are close to receiving it. For instance, City Square Residences, The Esta, The Sail Marina Bay, The Cosmopolitan and Rivergate have received TOP in 2008/2009, while One Amber and The Centris will get TOP soon, Savills said.

Market watchers said that this could be because many specuvestors who bought on deferred payment schemes (DPS) may be inclined to offload their units as the TOP date approaches, when they have to pay up the bulk of the purchase price to developers.

However, CB Richard Ellis executive director Joseph Tan pointed out that regardless of whether buyers opted for DPS, private housing projects are typically a hive of activity around the time they receive TOP, drawing buyers who want to move in themselves or to rent out immediately.

He also attributed the increase in subsale and resale transactions in Q1 to 'prices being at fairly reasonable levels now', with the stock market rally improving sentiment.

Mr Tan said that whether the buzz in the secondary market continues will depend on the stockmarket. 'So long as the Straits Times Index remains fairly stable, it will give comfort to investors that the property market is close to bottoming out, given the price correction in the past 12-15 months,' he added.

According to DTZ's figures, which are based on resale prices, the average freehold luxury condo and apartment price of $1,880 psf in Q1 this year marks about a one-third drop from the peak of $2,800 psf in late 2007/early 2008.

The most expensive subsale deal (in terms of psf price) in Q1 this year was a 29th floor unit at Orchard Residences that changed hands for $2,579 psf. In absolute dollar quantum, the most expensive subsale deal was an 11th floor apartment at The Tate Residences at Claymore Road, which sold for $5.93 million ($1,850 psf).

As for resale transactions, the top grossers were a 10th floor apartment at Richmond Park at Bideford Road which sold for $2,199 psf and a 25th floor unit at Four Seasons Park at Cuscaden Walk that fetched $6.5 million ($1,701 psf)

The Business Times - Kalpana Rashiwala