Sale of private homes to foreigners slips to 24%

(SINGAPORE) As foreigners retreated from the Singapore property market in the face of the global financial meltdown, their share of private home purchases eased to 24 per cent last year from the high of 26 per cent in 2007, according to DTZ's latest analysis of caveats.

Conversely, Singaporeans' share of the private home buying pie rose from 67 per cent in 2007 to 73 per cent in 2008, with companies making up the rest of the buying pool.

Giving a breakdown of the foreign buying pool, which includes permanent residents (PRs), DTZ said that non-PR foreigners accounted for 11 per cent of total caveats lodged for private homes last year, down from a 13 per cent share in 2007.

Singapore PRs' share held steady at 13 per cent, supported by the increase in the number of PRs in recent years.

Projects that drew the most Singapore PR buyers last year were chiefly in the mass-market segment such as Melville Park in Simei, Livia in Pasir Ris, The Lakeshore in Jurong Lake District and Clover by the Park in Bishan.

The most popular projects among non-PR foreigners were The Lakeshore, Citylights, Icon and Costa Del Sol.

Districts 9, 10, 15 and 16 were the most sought-after haunts of foreigners (including PRs) who bought private residential properties in Singapore last year. Districts 15 and 16 cover the East Coast area.

Malaysians pipped Indonesians to account for the lion's share, or 20 per cent of foreign buyers of private homes in 2008, followed by Indonesians (19 per cent), Indians (12 per cent) and mainland Chinese (11 per cent).

DTZ noted that in the fourth quarter of 2008, homes priced above $1 million accounted for 72 per cent of purchases by Indonesians, higher than a 41 per cent share of purchases by Malaysians.

The property consultancy firm's senior director (research) Chua Chor Hoon reckons that the proportion of foreign buying will stay low in the next 12 months as Singapore property loses some of its relative shine.

'Steeper currency declines in markets like Australia and UK have made property prices there look more attractive in comparison with Singapore. And investors will become more cautious as the global financial crisis deepens,' she said.

DTZ's analysis of caveats captured by the Urban Redevelopment Authority's Realis system also showed that the number of private home buyers who had HDB addresses fell in Q4 and the whole of 2008.

However the pace of decline was even faster among those with private addresses. As a result, HDB upgraders' contribution to private home purchases increased from 22 per cent in 2007 to 36 per cent in 2008 - the highest level in four years.

'In 2008, few investors and speculators, in particular those with private addresses, entered the market and launches of high-end projects were held back.

'On the other hand, there was a wider spread of projects in the suburbs launched at $1 million or below per unit, which are more affordable for HDB upgraders,' said Ms Chua.

In general, private homes in districts 15, 18 and 19 were most popular among HDB upgraders.

Projects with the highest number of developer sales to HDB upgraders in 2008 included Livia and Clover by the Park, while in the secondary market, the top-sellers to HDB upgraders were The Centris in Jurong West, Melville Park and Citylights.

Ms Chua reckons that HDB upgraders will continue to feature prominently in the private home buying pie going ahead. 'The focus this year will be on buying for own occupation rather than for investment or speculation; most HDB dwellers would fit the bill,' she said.

The Business Times - Kalpana Rashiwala

80 units of Simei condo sold

UOL Group and Kheng Leong yesterday sold more than 80 units of their new Simei condominium Double Bay Residences on the first day of its preview, the companies said.

Units at the 646-unit, 99-year leasehold project went for $600-650 per square foot (psf), UOL group chief operating officer Liam Wee Sin told BT.

UOL and Kheng Leong paid some $296 psf per plot ratio for the site in Jan 2008.

Mr Liam is upbeat about future take-up for the project as well. 'The response to the preview has been terrific and if the same momentum is sustained, we expect to sell at least 200 units by this weekend,' he said.

UOL released 250 units during yesterday's soft launch. The project will be officially launched on March 14.

Yesterday's transaction prices were slightly lower than the indicative prices that agents were giving out last week - which were in the range of $650-680 psf.

Mr Liam said that the $600-$650 selling price will be maintained: 'We are happy with the pricing and we have no intention of raising prices.'

One-bedroom apartments were priced at $420,000 to $480,000; two-bedders went for $570,000 to $620,000; three-bedders for $740,000 to $850,000; and four-bedroom units sold for $930,000 to $1.02 million.

Like with other recent launches, UOL is offering an interest absorption scheme to buyers, but this costs about 2 per cent more.

The project is expected to receive its temporary occupation permit in 2013.

Peter Ow, executive director for residential marketing at Knight Frank (which is marketing the project), said that most of the buyers were HDB upgraders. Units on higher floors were also proving to be more popular, he said.

Mr Liam pointed out that the last condo project in Simei was launched a decade ago.

'So we believe there's pent-up interest for condo living in the area,' he said, noting that there is latent demand from owners of HDB five-room and executive flats in Bedok, Pasir Ris, Punggol, Sengkang and Tampines.

UOL and Kheng Leong also said that apartments will be fitted with 'elegant finishings comparable to district 10 condos', which they expect will be a selling point.

Two-thirds of Double Bay Residences are taken up by four swimming pools and landscape features such as a five-storey high waterfall, an elevated jacuzzi and a sports deck.

UOL Group and Kheng Leong also sold six shop units within the project at $1,150 psf to a single buyer.

The Business Times - Uma Shankari

Er, what's an interest absorption scheme?

Where do you see this?
In property advertisements, brochures on developments and newspaper reports.

What does it mean?
This is a scheme that property developers offer in conjunction with banks at project launches.

It is similar to the deferred payment scheme, in that it allows you to defer the bulk of the purchase price until the project's temporary occupation permit period.

The big difference is that under the interest absorption scheme, you have to take a bank loan at the time of purchase. But the developer will absorb the interest payments on the loan until the project's completion.

The scheme may be offered at a premium. Some developers are now charging a 3 per cent premium over the buying price.

Why is it important?
This scheme allows genuine home buyers to commit to a purchase with just a small upfront payment.

More developers have been using this to help drive sales after the Government scrapped the deferred payment scheme in late 2007.

So you want to use the term? Just say...

'If I take up the interest absorption scheme, I won't have to worry about the monthly payments until the development is completed.'

The Straits Times - Joyce Teo

New flat prices to be adjusted

LAUNCH prices of new HDB flats could be cheaper if market prices start to fall.

Senior Minister of State for National Development Grace Fu said yesterday that the Housing Board is monitoring the market closely and will adjust new-flat prices accordingly.

'For every project that's launched, we will take the cue from the market, so for every batch that's coming up, if the current market has adjusted, we will adjust our selling price accordingly,' she said.

The Straits Times yesterday reported that resale flat prices have softened for specific types, such as five-roomers in areas like Punggol, to match the price of similar newly-launched flats.

Ms Fu assured home buyers yesterday that HDB will 'always price [the new flats] with the market price in mind'.

The Straits Times

Maybank makes fixed-rate mortgages cheaper

MAYBANK aims to counter the rising popularity of floating-rate home loans by making its fixed-rate loans cheaper.

It has cut rates on its three-year fixed-rate package, it said yesterday.

Home owners will now pay 1.6 per cent for the first year, 2.2 per cent for the second, 2.9 per cent for the third and 3.75 per cent thereafter.

The final rate is the bank's board rate and subject to change, but Maybank said it has not been adjusted since it was implemented in February 2007.

Previously, the package charged 3.58 per cent in each of the first three years and 3.75 per cent thereafter.

Although the promotion is being advertised as a refinancing package, Maybank said the special rates are also open to new home buyers, and apply to both HDB flats and private properties.

But there are some conditions: The loans cannot be for more than 70 per cent of the property's purchase price, and the rates apply only to completed homes that are owner-occupied.

Maybank's move comes as more people turn to floating-rate loans pegged to transparent indicators such as the Singapore Interbank Offered Rate (Sibor) and the Swap Offer Rate (SOR).

These rates have plunged recently, making floating-rate loans more attractive. Sibor touched 0.68 per cent last month. With a mark-up of 1.25 percentage points - as in one package offered by HSBC Bank - a Sibor-pegged mortgage rate would come up to 1.93 per cent.

An HSBC spokesman said yesterday that most of its home loan clients opt for Sibor-pegged packages as 'they like the transparency these loans offer'.

Maybank does not offer Sibor-pegged loans, though it has floating-rate loans.

Its consumer banking head Helen Neo said Sibor is already close to 10-year lows and there is no guarantee it will continue the downward trend. She noted that rates can fluctuate by as much as 3per cent over three-year periods.

She said: 'We are confident people will welcome the peace of mind that fixed-rate packages can offer, particularly in times of such volatility.'

The Straits Times - Fiona Chan

Punggol resale flats close the price gap

PRICES of resale HDB flats in Punggol have fallen in recent weeks to the point where they are now around the same level as new ones launched barely two months ago.

Normally new flats are markedly cheaper than resale ones as the Housing Board 'deeply discounts' their price to prevailing market values as a form of subsidy to first-time home buyers.

But the worsening recession, fragile job market and weak property sector have closed this 'discount gap' to virtually nothing in some cases, making resale homes as attractive as new ones.

This is a reversal of the trend during the pre-crisis property boom which saw first-timers flock to HDB for new flats when they found themselves priced out of the resale market.

Experts also point to weaker demand for premium, five-room flat types, which has led to a drop in prices.

The HDB's website this week showed that the range of resale prices for such five-roomers in Punggol had dipped, from $375,000 to $462,000 in December to about $350,000 to $440,000 last month.

Out of 36 five-room transactions in February, a majority of 29 were priced below $400,000.

This puts them in a similar price range as new five-roomers launched at Punggol Regalia in December at $342,000 to $428,000, and Punggol Arcadia in November at $356,000 to $416,000.

Even prices at the lower end for Punggol's premium four-roomers have fallen from around $338,000 in December to $306,000 last month.

First-timers eligible for housing grants that may reach as much as $70,000 could now be paying much less for a resale flat than a new one.

This could prompt some cost-conscious buyers in the queue for new flats in Punggol to drop out and buy resale ones, said ERA Asia-Pacific's associate director, Mr Eugene Lim.

Analysts say the dip in prices has come as home buyers are less likely to pay a premium, or cash-over-valuation, for a flat amid a deepening recession where every quarter sees fresh layoffs.

When HDB launched the Punggol flats late last year, the prices were also based on earlier, higher-priced transactions so it was 'inevitable' for new and resale flat prices to have some overlap.

A similar scenario was seen in the 1998 Asian financial crisis when new flat prices were 'outdated' quickly due to a downturn in the property market, said PropNex chief executive Mohamed Ismail.

One such area was Jurong, where some first-time buyers eventually discovered they paid more for a new flat than for some resale flats, he said.

It is difficult to compare that situation to Punggol now as the latest projects launched have a premium price due to their attractive location near Punggol MRT station and proximity to the town centre.

Punggol also has long-term potential due to plans to transform it into Singapore's first waterfront public housing estate, added Mr Ismail.

Chesterton Suntec International's head of research and consultancy, Mr Colin Tan, pointed out that, unlike private developers, the HDB does not have the luxury of flexibility to adjust prices according to the market immediately.

'Once they've launched, the price is fixed. So there'll always be a lag effect,' he said.

One outcome might be that if the projects do not sell out, the HDB will take back surplus flats and relaunch them at a more attractive price later, he said.

Engineer Tang Zhi Wei,who is in the queue to buy a flat at Punggol Regalia, said the prices of resale flats are starting to look very attractive.

'I'd be tempted to drop out and get a resale flat if time was important and I couldn't wait,' said Mr Tang, 26.

But while it seems he is no longer getting a 'deep discount' for a new flat, he will still buy one as it is 'new and the location is good'.

The HDB has stated previously that it follows the market and adjusts prices accordingly.

In the aftermath of the Asian financial crisis when the property market suffered a severe downturn, new flats in Sengkang, for example, cost up to 30 per cent lower in 2005 than when they were first offered for sale in 1997 to 1998.

The Straits Times - Jessica Cheam

Downturn, downsize

IN TOUGH times, small is beautiful.

That seems to be the new theme among some developers who are tearing up plans for yet-to-be-launched projects and going back to the drawing board.

They are looking at reconfiguring their residential projects to offer smaller units than planned, so that they would be more affordable for cautious buyers.

This is a major reversal from the boom times when big units were very popular.

In its recent results statement, Sing Holdings said it is reconfiguring the unit sizes and layout of its prime Cairnhill Road project, The Laurels, to adapt to market demand.

'The plan is to have more one- to two-bedroom units,' said managing director Lee Sze Hao. 'Now, I have to be careful with the affordability factor.' He would offer 'luxury at a affordable price'.

Wheelock Properties said in its results statement that it is reviewing building plans of its Ardmore 3 project in view of the poor market.

A UOL Group spokesman said as part of its ongoing product development pro-

cess, it is considering resizing the units of its Green Meadows project in Upper Thomson to make them more affordable.

The impetus for this emerging trend includes the recent stunning sell-out of the Alexis project, which showed that small, affordable units sell. Of its 293 units, 114 units are one-bedders of just 366 sq ft to 527 sq ft.

Before its launch, developer ECPrime said it had adjusted the mix so that a larger number of the units would be smaller and therefore more affordable. Prices started from $450,000 for the one-bedders to about $650,000 for two-bedders.

It was only in 2005 and 2006 that developers were busy looking at building spacious units to cater to the rich. By late 2006, the bigger flats had attracted such strong interest that they were fetching higher prices on a per sq ft basis than smaller units. Traditionally, the bigger the unit, the lower the psf price.

In 2006, Lippo Realty executive director Thio Gim Hock banked on selling fairly big units at its 91-unit Newton One development. It was a success. 'When the market is good, people go for big units,' he said. Now, he has moved fast to reconfigure the units at the posh project on the prime Angullia Park site, where The Parisian used to be. It will now have two units per floor, instead of one unit per floor.

'Last year, we changed our plans. We want to keep it affordable,' said Mr Thio, now chief executive and group managing director of Overseas Union Enterprise. 'We foresaw that the market will go for smaller units.'

In the original plan, the 27 units ranged in size from more than 4,000 sq ft to 5,000 sq ft. Now, there will be 50-odd units from around 2,500 sq ft to 3,000 sq ft, he said.

Mr Lee said he started reviewing plans for The Laurels late last year. It will be several more months before the approvals come in and it is ready for launch.

'Things have changed. It is better to change from business class to economy class now. It is important to build something the market can absorb,' he said.

'Gone are the days when these people just walk in and pay you $7, $10 million. Unit sizes have to be scaled down but still remain at a comfortable level.'

The original plan was for The Laurels to have 150 units, many of them three- to four-bedders. Now, it will have about 290 units.

More developers may follow suit, given the downturn. Said DTZ executive director Ong Choon Fah: 'People look at the lump sum now. The perception is that there is a smaller capital outlay.'

Mr Lee and Mr Thio both believe developers still able to reconfigure project layout and unit sizes will want to do so now.

Added Knight Frank executive director Peter Ow: 'If the developers have not started selling or building their projects, it would make sense for them to look at resizing the units to make them more affordable, provided it does not affect their planning approvals.

Mr Tai Lee Siang, president of the Singapore Institute of Architects, said: 'If poor economic conditions persist, the trend is likely to be downsizing of units to make them more affordable. The other trend may be the no-frills approach, where units are made simpler and cheaper to build - thus lowering costs.'

The Straits Times - Joyce Teo, Property Correspondent

'Flippers' back at condo launches

Speculators were among buyers at the recent sell-out sale of all 293 units at Alexis @ Alexandra, a newly launched condominium.

Another project, Caspian, in Jurong, sold around 515 of its 712 units at about the same time.

'For sale' ads followed both launches last month - but sub-sale buyers are not rushing in.

Yesterday, there was no huge crowd, but a steady stream of more than 300 people turned up at the launch of developer Hiap Hoe's The Beverly in Toh Tuck Road.

Its spokesman did not say how sales went for the 31 apartments that were released in the 118-unit development at an average of $750 per sq ft.

Property agents reported signs of attempted 'flipping' - quick profit sales from having bought at the developer's price - but they also said few sub-sale buyers were biting.

They noted that in the case of Alexis and Caspian, shortly after they were launched, ads for subsales began to appear.

An agent who declined to be named said about 10 per cent of Alexis' 293 units were being flipped.

Property agents cited the relatively low pricing as reasons for buyers wanting to do a flip. Prices for Caspian apartments started at $580 psf, while those at Alexis @ Alexandra were priced on average at $850 to $1,100 psf.

In addition, property agent K.L. Goh, who is marketing two sub-sale units at Alexis, said: 'Although the market is bad, Alexis is located near Queenstown MRT station and is highly sought after.'

The owners of a two-bedroom apartment are asking for $880,000, up from the $760,000 they paid for it.

Property agent Leslie Yap, who is helping a buyer market a two-bedroom apartment at Caspian for about $580,000, said: 'She bought it at $527,400 and even if she can make a little profit, I think it's quite good in such a short time.'

Meanwhile, agents said the response from sub-sale buyers was still rather cautious. Mr Yap said last Friday that he had received only one call that day for the Caspian unit.

'Even though this is a very popular project, the response is still very bad and it may be difficult for buyers to make a profit right now,' he said.

The Straits Times - Shuli Sudderuddin

Property market starting to stir

Thanks to the mini-buzz created by two new successful launches - Caspian in Jurong and Alexis @ Alexandra - a few developers have decided to release their projects for sale.

It is an improvement, even if it is just a slight one, from the very sombre mood a month ago, when market watchers were expecting the lull in the market to continue.

Over the weekend, TG Development launched 30 units of the freehold, 102-unit St Patrick's Residences in St Patrick's Road in the East.

On average, prices start at around $675 per sq ft (psf) for a two-bedroom unit and rise to about $900 psf for a four-bedroom penthouse.

Unit sizes range from 1,152 sq ft for the two-bedroom units to 3,423sqft for the four-bedroom penthouses. Some three-bedroom units can cost just under $1 million.

The interest absorption scheme, which allows buyers - if they take a loan from the start - to defer making any payments beyond the initial down payment until the project is completed, is offered at a 3 per cent premium.

Marketing agent Savills said the condominium offers quality furnishings and fittings usually associated with prime projects, and that a few units have been sold since the preview a week ago.

Near Upper Bukit Timah, Hiap Hoe has launched The Beverly, its 118-unit condo in Toh Tuck Road.

Each unit is served by a private lift. Prices start at $648 psf; the average price is $750 psf. This means that the total price per unit should start from just below $1 million.

Unit sizes range from 1,120 sq ft for the two-bedders to 4,187 sq ft for the four-bedders. There are also double-storey penthouses from 2,099 sq ft to 3,757 sq ft. Hiap Hoe is not offering the interest absorption scheme.

Other projects expected this month include Double Bay Residences in Simei, The Arte in Thomson, Domus in Irrawaddy Road and an 18-storey project in River Valley.

These are in the mass- to mid-market categories that, unlike the high-end segment, are still attracting buyers.

New home sales in January had plunged to a new low as developers and buyers kept to the sidelines.

The two new projects that sold very well about two to three weeks ago - Caspian and Alexis - helped revive the market mood to a certain extent.

The Caspian showflat was packed during the preview, when 300 out of 712 units were sold at average prices starting from $580 psf. So far, more than 500 units have been sold.

The 293 Alexis units were all sold at $950 psf to $1,250 psf, but the absolute prices were reasonable, given that most units are small.

At a results briefing last Thursday, City Developments' Kwek Leng Joo cited the good take-up at the two projects as proof that there is still demand.

'The good response to recent launches is true,' he said.

Still, the stock market and buying sentiment remain weak.

Ms Phylicia Ang, director of Savills Residential, said: 'The affordability threshold is key at this point. In the current market, it is important to price projects at an attractive level to attract buyers.'

The UOL group should start selling the 646-unit Double Bay Residences near the Simei MRT station soon. It declined to give pricing details of the 99-year leasehold condo until the launch, but there is talk that prices will be around $650 psf to $680 psf.

The one-bedders start at 538 sq ft, the two-bedroom units from 915sq ft, while the big units can go up to 3,703 sq ft.

Along Thomson Road, The Arte is expected to be released for preview sale by the middle of the month.

Property agents have advertised the preview of the 336-unit, freehold condo at prices starting at more than $950 psf.

About half of the project, or 164 units, are three-bedroom units from 1,399 sq ft to 1,625 sq ft. Another 100 units are 1,873 sq ft four-bedders.

There are also advertisements for the preview of the 18-storey, 67-unit project in River Valley, which offers the interest absorption scheme. It has mostly small units - 32 are 635 sq ft apartments and 30 are 1,044 sq ft units.

A Chinese developer, Lakeview Developments, may also push out its 104-unit Domus this month.

High-end launches will likely be few and far between this year, as current demand is coming only from owner-occupiers or very small investors, according to a developer.

There should be more mass- to mid-market projects coming up in the next few months. These could include projects like the 99-year leasehold Ascentia Sky next to the Redhill MRT station. It offers two- to four-bedroom units from approximately 1,000 sq ft to 1,800 sq ft.

The Straits Times - Joyce Teo, Property Correspondent