Market Talk: CapitaLand

Below is an excerpt from
Straits Times: No shoebox flats for CapitaLand
By Cheryl Lim published on MON, JAN 10, 2011.

"At CapitaLand Residential Singapore, chief executive Wong Heang Fine noted that changing market dynamics would inevitably lead to smaller homes, but he stressed that the firm would not build flats under 500 sq ft. He said its focus for the year ahead would be on replenishing its land bank.

It has 2,500 launch-ready homes that have yet to be released for sale. It will launch 1,700 units this year, with the majority entering the market over the next three months.

At d'Leedon, more units will be released this year - 750 - with the first batch being rolled out this week. The remaining 390 units at The Interlace will be released soon after, followed by 55 luxury homes at The Nassim. Some of the 500 units set aside for the new development at the Bedok Town Centre site will also be launched this year, during the second or third quarter.

In addition, the 64 homes from the Urban Resort project at Cairnhill Road will come on stream this year. Units at both Urban Resort and The Nassim will be sold through private appointments.

Mr Liew indicated that CapitaLand had its eye on several collective-sale sites. He said it was also keen on residential sites - on both the confirmed and reserved lists - offered as part of the first half of this year's Government Land Sales programme.

Sites at the city fringe or near MRT stations would be high on CapitaLand's wish list.

Still, Mr Wong and Mr Liew agreed that even though CapitaLand's balance sheet was healthy enough to allow it to bid for all the sites it was interested in, it would do so with 'disciplined aggression'.

CapitaLand predicts that home prices are likely to increase by 5 to 10 per cent this year, with those in the high-end segment rising by 10 to 15 per cent.

Its optimism with regard to this segment has spurred it to market projects such as The Interlace in China and India.

It does not believe government measures will be introduced to curb foreign interest in the high-end market.

'Singapore is a very open economy. If we start to have such restrictions, it would destroy the image we have of being an open economy,' said Mr Liew."

Straits Times: Luxury homes reeling in buyers at attractive prices

By Esther Teo

The property boom has still not lifted luxury home prices back to their 2007 levels, although units in up market projects are attracting buyers.

It is far from a bargain-basement situation but developers are having to keep their expectations in check, and having to offer attractive prices.

Take Bukit Sembawang's Paterson Suites, which was completed in the third quarter. There were 41 new units sold at a median price of $2,661 per sq ft (psf) last month.

In July a 2,164 sq ft flat went for $7 million - or $3,232 psf.

Yet in July 2007, five units were sold at a median price of $3,369 psf.

The Straits Times understands that 38 of the 41 units were sold to a handful of private investors, mostly foreigners. Each bought several units and received a slight discount.

Three units of Hasetrale Holdings' 8 Napier in Napier Road fetched a median price of $3,348 psf last month. In 2007, some flats went at close to $4,000 psf. 

In 2007, Macquarie Global Property Advisors paid $136 million for 19 units at 8 Napier at an average price of $3,550 psf.

Experts said luxury home prices are about 5 per cent shy of their 2007 peak.

Colliers International's director of research and advisory, Ms Tay Huey Ying, said that if prices continue to strengthen, even at a moderate pace, developers will be encouraged to gradually off load more units.

'But this will probably not be on a massive scale because developers are conscious of the strength of the high-end market and are likely to space out their launches evenly and in small volumes,' she added.

Some investors have also opted to buy landed homes instead, as the limited supply of such property means the sector is more resilient to volatility.

Experts added that while it is still early days, there could be increasing pressure on developers to lower prices should the high-end segment continue to languish below its peak - both in terms of price and volume.

Jones Lang LaSalle's head of research for South-east Asia, Dr Chua Yang Liang, said smaller developers with reduced holding power and completed projects on hand would be most affected.

Larger developers could always lease out unsold units, he added.

Urban Redevelopment Authority data for private home sales last month showed that 213 homes in the core city centre region were sold, out of 338 launched - the highest number launched for the segment since March.

This brought total home sales in the city centre this year to 3,741 out of 3,867 units launched as of the end of last month.

These numbers are in line with last year's 3,825 units for the entire year but short of 2007's 5,454 units sold.

CNA: Private home sales up in November

Private home sales up in November

Dec 15

SINGAPORE: Private home sales in November rebounded about 80 percent on-month to hit 1,909 units - the second highest in 11 months.

That brings the total number of homes sold so far this year, to 15,025, surpassing the 2007 sales record of 14,811 units.

The surge in November sales comes just three months after the government introduced its latest round of measures to cool the property market.

Lakefront Residences in Jurong was the most popular property selling over 437 units at $1,075 per square foot last month.

Coming in second was Waterview in Tampines, which sold 376 units at $903 per square foot, while Spottiswoode Residences followed with 258 units sold at $1,853 per square foot.

This buying fever in November caught many analysts by surprise.

Tay Huey Ying, Director (Research and Advisory), Colliers International, said: "It just goes to show or prove that a lot of investors are still viewing property as a safe place to park their wealth in spite of the high exposure to policy risks.

And I think another driving factor for November's high sales volume could also be foreign purchases, diverted from the HDB resale market, as well as from Hong Kong and China, in light of their recent property curbs.

With high sales volume, with feverish buying fever, there is bound to be some upward pressure on prices although the ramped up government land sales programme could put a check on the rate of price growth.

If what is driving the November sales happens to be foreign purchases, who may not be too bothered about potential launches, potential supply, then I think it does warrant certain further measures to cool the buying fever."

Industry watchers say the government may end up introducing another harsher set of cooling measures, such as a tax on profits from property sales in the next few months.

Colin Tan, Head (Research and Consultancy), Chesterton Suntec International, said: "What's going to happen if the buying doesn't stop and while we may not feel the impact now, but the consequences may come maybe a year or two later and it can be pretty adverse.

We'll have a lot of units up for rental, then the rentals could collapse especially when there's a lot vested buying.

The worse is of course when rentals come down, and holding cost go up as well, so that will reduce the yield and when yield is miserable, some investors may opt to sell or are forced to sell and that may start a domino effect."

Analysts say the latest figures also show that properties with strong branding and good locations remain the most attractive.

Although the November statistics came as a surprise, many believe the number for December will come back down as developers launch fewer properties over Christmas and New Year.

For the month of December, property watchers expect between 800 and 1,300 units to be sold. - CNA/wk/ch

Singapore's Economy to Expand 4% to 6% in 2011

The economy will continue to expand next year; extending an expansion that has already prompted the central bank to allow the currency to rise to a record to damp inflationary pressures.

Won't rising exchange rates coupled with already rock-bottom interest rates accelerate asset price inflation?

A stronger Singapore Dollar might curb imported inflation but will also dampen exports & tourism. The Singapore Dollar has gained about 8 percent against the U.S. dollar this year, and closed at a record S$1.2835 on Nov. 4.

Property Market Update

October 2010 primary private sales market volume was up 16% month on month to 1,058 units compared to last month's 911 units - a rather strong recovery. Strong sales of 529 units of Executive Condominiums (EC) units contributed to the total primary market sales of 1,587 units in October. The strong sales were despite the Singapore government’s recent property cooling measures – suggesting HDB upgraders' demand could be stronger than expected.

Sales are again weighted to the Outside Central Region (OCR), though sales in Core Central Region (CCR) picked up to 21% of all new sales - driven mainly by two projects: The Glyndebourne and Suites at Orchard. Aborted sales options returned fell to 29 units from 65 units compared to the previous month, signaling less uncertainty in the market outlook. Sentiment certainly has improved markedly since the new measures were announced.

New sales since the beginning of this year now stands at 13,860 compared to 14,688 in 2009.

Recently launched projects in November like KeppelLand's Lakefront Residences (mass market:; average selling price of $1,020 psf) and UOL's Spottiswoode Residences (mid-market; average selling price of $1,700 psf) are witnessing healthy demand. However, pricing appears to be flat to marginally positive for new launches, and secondary market volumes are down by an anecdotal 25%.

Looking ahead, sales volumes could hold up but price growth is likely to remain muted. Also, it is likely that the government will continue to push out more land supply to cater to this demand - which will cap rhe mass market residential price growth. More onerous demand-side measures might be on the cards if prices rise sharply. The high-end residential market, which has been rather muted this year, will start to show more signs of life going forward and into 2011.

The next wave

Straits Times: Hot money flood 'could trigger more property curbs here'

By Aaron Low

The flood of hot money unleashed by the United States' latest round of monetary easing runs the risk of inflating a Singapore property bubble and increases the chances of further property dampening measures, analysts warned yesterday.

Regional markets - already awash with liquidity from advanced economies seeking better returns in Asia - are expected to be on the receiving end of a large slice of the US$600 billion (S$770 billion) injected by the US Federal Reserve last week.

A Citigroup report noted that loan growth had already been rising and the stock market had seen a flurry of activity, with trading volumes higher and a surge of new listings, even before the latest round of easing was announced.

And Dr Chua Hak Bin, economist at Bank of America-Merrill Lynch, is among a growing number of experts concerned that the low interest rate environment is combining with the flow of liquidity to form 'the right conditions for a bubble to form'.

'It's too early to say if there is indeed a bubble, but the conditions are right,' he said.

Analysts are highlighting property as the asset area most likely to be impacted by these large flows, with the market boosted in two ways.

The more direct route is via foreign funds buying into property directly, pushing prices up.

The other is by flows pushing down interest rates and allowing people to borrow more to buy property.

'Property is probably the most interest-rate-sensitive sector there is and Asians are fanatical about property,' said DBS economist David Carbon.

In August, the Government announced a series of measures to curb property speculation, but Prime Minister Lee Hsien Loong said last week that the Government was still carefully watching the market.

Citigroup economist Kit Wei Zheng said that concern over how much households are borrowing to finance their homes and 'political pressures ahead of general election' could lead to more cooling measures.

'Amid flush liquidity and low interest rates, further administrative tightening measures on property are likely if transaction volumes or prices re-accelerate,' he said.

Dr Chua Yang Liang, head of research at real estate firm Jones Lang LaSalle in Singapore, said such curbs would most likely kick in only if the mass market segment overheats.

He noted that the August measures were primarily aimed at the Housing Board market and mass market condominiums, whereas liquidity from the latest round of quantitative easing - or QE2 as it is termed - is likely to focus more on high-end private market properties.

'A key indicator is how fast prices in the mass market segment will rise. A sustainable rate is 1 to 2 per cent a quarter,' he said.

If the housing market does look in danger of overheating, the Government has a range of weapons to call on, he said.

They include increasing the cash down payment needed to buy property, higher stamp duty, and a more drastic capital gains tax.

GCB owners cashing in

Straits Times: Bought: $20m in June 2009, Sold: $37m in Oct 2009

By Esther Teo

Good-class bungalow owners are cashing in on rocketing property prices.

A CB Richard Ellis (CBRE) analysis of Urban Redevelopment Authority (URA) Realis caveats shows that good-class bungalows are netting bumper profits for owners who have seen average per sq ft (psf) prices rise almost 30 per cent over the past year.

Several have taken to buying and selling their good-class bungalows within a period of less than two years.

At least seven good-class bungalows bought since May last year have been sold within 18 months of purchase, with four sold within a year, with a profit of as much as 85 per cent over the purchase price.

This massive gain was seen by a 40,677 sq ft good-class bungalow property on Ridout Road near the Holland area, translating to a $17 million gain within a four-month span.

At least one home, on Nassim Road, has even been sold five times within the past six years - soaring from $9.8 million in 2005 to $43.5 million this year.

It sold at $1,800 psf in April this year - almost 4.5 times the $405 psf it was sold for in February 2005. The 24,186 sq ft property had changed hands at $620 psf in August 2006, $760 psf in December the same year, followed by $1,000 psf in June 2007.

Experts said that good-class bungalows have turned out to be one of this year's star investment propositions.

URA data shows that non-landed home prices inched up 1.6 per cent in the third quarter, while prices of detached homes rose 8.4 per cent over the same period.

CBRE said that while the 109 good-class bungalow sales last year had been transacted at $831 psf on average, the 86 transactions this year to September, which totalled $1.6 billion, were done at an average of $1,055 psf - a 27 per cent surge over the previous year.

This increase is one of the steepest over the last 15 years, said Cushman and Wakefield's senior manager of Asia-Pacific research, Mr Ong Kah Seng.

He noted that the keen buying interest in good-class bungalows was being driven by limited supply, making it the safest buy for a home buyer not limited by affordability.

'(Even with) developers' concerted efforts to brand condominiums with innovative concepts, the product is fairly homogeneous...On the other hand, buyers of good-class bungalows, in addition to being proud owners of the land, will be able to highly customise their homes to be materially different from another,' he said.

Mr Douglas Wong, CBRE director of luxury homes, said that the approximately 2,400 good-class bungalows, which can be found in 39 prime gazetted areas such as Nassim, Dalvey and Tanglin, are owned by only about 1,000 individuals.

These owners are usually ultra-high net worth Singaporeans, who are mostly professionals, businessmen or entrepreneurs, he said.

'Many of the buyers might have purchased their homes with the intention of long-term investment, but when the market moves, they might seize the opportunity to make some profits instead,' he added.

Mr Alexs Chua, managing director of property agency AC MacGyver, a specialist in landed homes, said that about 20 per cent of homes sold last year have been put on the market again, although many owners may just be testing the market.

He expects prices to rise another 10 per cent by March next year.

But CBRE's Mr Wong reports that demand had slowed in the third quarter, when 19 good-class bungalows were sold compared to 36 in the second quarter and 31 in the first quarter.

'This could be attributed partly to cautious sentiments and partly to the widening price gap between good-class bungalow owners' expectations and buyers' offers,' he said.

However, he expects the market to achieve about 100 to 120 transactions amounting to about $1.8 billion this year.

Typically, only Singapore citizens can own a good-class bungalow, but permanent residents may obtain permission to buy small bungalows with land areas of about 15,000 sq ft.