Академический Документы
Профессиональный Документы
Культура Документы
CONTENTS
p2 p6 p11 p15 p23
Have Industrial Property PricesSpiraled Out of Control? 4 Ways to Buy Property with No Money Down Does a 60 Years Leasehold Condominiums Make Sense? Singapore Property News This Week Resale Property Transactions
FROM THE
EDITOR
Welcome to the 76th edition of the Singapore Property Weekly. Hope you like it! Mr. Propwise
Advertise
Want to get your brand, product, service or property listing out to thousands of Singapore property investors at a very reasonable cost? Head over to www.propwise.sg/advertise/ to find out more.
Back to Contents
Page | 2
SINGAPORE PROPERTY WEEKLY Issue 76 Comparing industrial property prices with other segments PPI has risen at a much faster pace than the other property types, and has massively outperformed Office and Shop properties. Since 2009Q3, the Industrial PPI has grown by an astonishing 102.8%, versus just 34.9% for the residential PPI.
Figure 5.2.1a PPIs of various property segments From Figure 5.2.1a (courtesy of PropertyMarketInsights.com, an essential resource for property investors), we can see that since 2010, the once boring industrial
Back to Contents
And as the Rental Index for Industrial Property has only increased 39.3% over the
Page | 3
SINGAPORE PROPERTY WEEKLY Issue 76 same period, this suggests that: i. Yields for industrial property are compressing and ii. Theres likely some element of speculation in the industrial property market, i.e. the rise in industrial property prices were not mainly driven by strong end-user demand. Is industrial property now too expensive for industrialists? warehouse ($ PSF) From a median price perspective, in 2012Q3 factory and warehouse space sold for $606 and $768 psf respectively (Figure 5.5.2a). This was more than double what it cost just five to six years ago.
SINGAPORE PROPERTY WEEKLY Issue 76 Rentals have gone up as well, although not as much as prices. As of 2012Q3, the median rental of Factory and Warehouse space was fairly similar at $2.02 and $1.91 psf respectively (Figure 5.5.2c). Versus six years ago, this is an increase of around 60 percent. Has the profitability of our industrial companies and SMEs increased this much? More measures to control property prices on the way? industrial Weve previously written several articles about the industrial property market, including an explanation of the URA guidelines and a discussion on shoebox factories. Suffice to say that the continuing surge in industrial property prices has increased the policy risk for this sector. Measures to keep the minimum size of industrial units at 150 square meters and crackdowns on illegal usage of the space by non-industrial users could be just the beginning. Investors in shoebox industrial units will have to seriously ask themselves who the likely tenant for the property they have bought will be. Caveat emptor!
Given the relative stabilization of the residential property segment post six rounds of control measures since 2009, and the skyrocketing prices of industrial property, will this segment become the next target of government measures?
Back to Contents
Page | 5
Back to Contents
Page | 6
SINGAPORE PROPERTY WEEKLY Issue 76 Between early 2000 and 2005 in Singapore, to help support the local property market, the Loan-To-Value (LTV) was raised from 80% to 90%. The minimum cash requirement was also reduced from 10% to just 5%. In other words, anyone who bought properties during this low period would qualify as buying property with very little money down. However, government policies always change according to market conditions, and today, if one were to have an outstanding mortgage on an existing property, the Loan-To-Value is now just 60% for the second or greater loan, requiring a hefty 40% down payment. A $1 million property would require you to cough out $400,000. Thats one of the many reasons why, today, one would see many advertisements touting how anyone can buy properties with no money or little money down, just to lure
Back to Contents
investors to invest on assumptions of a low interest rate environment. So what are some of these No Money Down or Little Money Down deals and strategies? And are they even applicable for the ordinary investor? 1. Borrow money to pay the downpayment This first strategy would be for an investor to borrow the down-payment from friends, relatives, bank overdrafts, credit lines and even insurance policies with substantial cash value. One can even borrow from an existing private property which has appreciated significantly in value to obtain the cash for the second propertys down-payment. The risk is that unless the investor can ascertain for sure that the property invested is indeed a great property with very good cash flow to repay the debt leverage,
Page | 7
SINGAPORE PROPERTY WEEKLY Issue 76 the investor could get into serious debt obligations. 2. Co-Invest with other investors obligations should one partner go bankrupt or choose to default on the loan payments. 3. Co-Invest with other investors using Central Provident Fund (CPF) The third strategy is similar to the second strategy above the difference is in the use of ones CPF funds. Assuming that one investor does not qualify for a bank loan but has cash to support the down-payment and mortgage payments, and another investor is able to get a bank loan, but does not have sufficient cash to invest, then they may come together as partners. So the investor who does not have sufficient cash to invest can tap on the investor with cash, which becomes little or no money down for him in this case. The risks are similar to the second strategy using cash.
The second strategy involves an investor partnering others to buy a property together. If a property cost $1 million and the required LTV IS 80%, the down-payment excluding other upfront costs is $200,000. If there are four investors in a group, each investor need only come up $50,000.
The risk is that unless one can find a group of friends or associates who share very similar investment objectives and have proper legal documentation drafted, most often than not, many of these deals end up badly. For example, one of your co-investors may need to exit earlier than expected due to an urgent need for money, or even death of a partner. Or worse, all partners face equal legal
Back to Contents
Page | 8
SINGAPORE PROPERTY WEEKLY Issue 76 4. Buy overseas property with no money or little money down There are many overseas properties that can be bought for as low as $5,000 or even with no money down through special arrangements with the seller in that country. In the USA for example, there are many cheap properties one can buy and some can even be bought with no money down through a scheme called Seller Financing. It enables the buyer to own a property by having the seller pay for the down-payment. Buying a cheap overseas property has inherent risks and may not be suitable for most ordinary investors. Even experienced local investors are extremely wary of such properties what can a foreign investor who is unfamiliar with the foreign territory expect? Such shady properties are often located in
Back to Contents
bad crime-ridden areas, with low income tenants who cannot afford to pay rent. Or they come with hidden maintenance issues which can eat into an investors returns. There are crafty sellers who offload such properties to ignorant buyers and conceal many of the inherent risks of buying such properties. Even if its 100% financed, a bad property is a bad property! Quality properties in good locations rarely, if ever, have motivated sellers. Unfortunately, the gurus have made buying no money down more important than buying quality properties. How you finance the property isnt as important as buying a property that will be a sound, long term investment. In other words, buy only quality properties with investment value.
Page | 9
SINGAPORE PROPERTY WEEKLY Issue 76 Even if its 100% financed, a bad property is a bad property! As Warren Buffet puts it wisely, Its far better to buy a wonderful company at a fair price than a fair company at a wonderful price. And this applies to property investment as well. A smart investor will invest in enough education before entering into any investments. The return of your investments is dictated by the amount of education you have. Rather than aiming to buy properties with no or little money own, first focus on educating yourself thoroughly. The rest will follow. By guest contributor Gerald Tay, CEO and Chief Trainer at CREi Academy Group.
Back to Contents
Page | 10
SINGAPORE PROPERTY WEEKLY Issue 76 60 years leasehold condo in Singapore A 1.02 hectare residential site in Jurong Kechil comes with an unusual 60 years leasehold term. This is believed to be the first time a private housing site is being sold on such short tenure under the Government Land Sales (GLS). Developers have options for a 30, 45 or 60year lease period for the plot, the Urban Redevelopment Authority (URA) said. The development conditions for the site cap the maximum number of units at 203 units and can be built up to part five storeys and part eight storeys. Industry experts are expecting a top bid of between $200 to $250 per square foot (psf) per plot ratio (ppr) and a sale price of $550 to $600 psf. In comparison, freehold developments in the area go for about $1,000
Back to Contents
psf. The government has mentioned that it would explore offering residential sites with shorter leases to bring down the cost of home ownership in Singapore. Do shorter lease terms make sense? Maybe I am out of touch with the reality on the ground. Foreigners, new citizens, and younger Singaporeans are probably less concerned with shorter land leases. They might just want a home to live in for the shortterm, or to reap as much rental returns as possible. A project that is freehold or 999 years leasehold and selling at a premium might only be attractive to older Singaporeans. Now, if I were in my forties, I might consider buying a new private residential property with a 60 years lease if I could save 40% to 50%
Page | 12
SINGAPORE PROPERTY WEEKLY Issue 76 compared to buying a similar freehold or longer-lease property. This would only be for my personal residence, as the property could be hard to resell as its lease gets progressively shorter. I just have to pray that I do not live to be a hundred. However, would someone in his twenties or thirties buy a new private residential property that comes with a 60 years lease? By the time the project gets its Temporary Occupation Permit (TOP), the property would only have 55 years left to the lease... By guest contributor AK, an experienced investor who blogs at A Singaporean Stock Market Investor.
Back to Contents
Page | 13
Back to Contents
Page | 14
the ABSD on Chinese buyers which will increase the costs. Furthermore, the abolition of the Financial Investor Scheme, stricter immigration rules and a slowdown in Chinas economy also resulted in a fall in demand. Meanwhile, Malaysians, currently the top foreign buyers, bought a total of 1,394 units (mainly in Districts 19 and 18), a 7.5% fall from 2011. The interest in Singapore properties is likely due to its proximity and cultural similarity to Singapore as well as the perception that Singapore is safe for longterm investment. Purchases by Indonesians, who remained the third largest foreign buyers, saw a 25% decrease year-to-date to 942 units.
Page | 15
SINGAPORE PROPERTY WEEKLY Issue 76 The preference for District 9 remains, making them the largest foreign buyers to purchase homes in District 9, though there had been an increase in interest for District 19 as a result of new launches in Punggol. Likewise, the Indians retained their spot as the fourth largest foreign buyers with the 685 units purchased, despite the 22% fall from the units purchased in the whole of 2011. The US citizens, have replaced the UK citizens as the fifth largest foreign buyers with the 122 units purchases, a 15% increase from the 106 bought in the same period last year. This is likely because they are not subject to the ABSD as a result of the FTAs signed with their country, along with citizens of Switzerland, Liechtenstein, Norway and Iceland. Malaysians, Chinese citizens, Indonesians, Indians and US citizens are the top five
Back to Contents
largest foreign buyers with each taking up 25.3%, 21.7%, 17.8%, 15.2% and 2.7% of the 1,610 units sold in Q3 respectively. (Source: Business Times) Sentosa bungalow sets new record psf price of $3,214 A 99-year leasehold bungalow on Ocean Drive, Sentosa Cove is said to have been sold for $32.5 million or $3,214 psf based on its 10,111 sq ft land area, breaking the previous record of $2,989 psf. There had been a sudden increase in activity in Singapore's upscale waterfront housing district, accompanied by an increase in prices. However, this is not reflected in the caveats lodged, suggesting buyers have yet to exercise their options. (Source: Business Times)
Page | 16
SINGAPORE PROPERTY WEEKLY Issue 76 HDB resale prices climbed 2% in Q3 The HDB Resale Price Index (RPI) increased by 2% from Q2 to 197.9 in Q3, bringing the year-to-date increase to 3.9%. This increase is attributed to the relative lack of supply to meet demand. This also meant a 15-20% increase in median COV from Q2 to $30,000 in Q3. However, there was a 6% fallin resale transaction volume to 6,560 units. This could be due to record high prices of private properties leading to less incentive for HDB owners to sell and upgrade, or an increased demand from buyers unwilling or unable to wait for BTOs, second-time buyers as well as buyers ineligible for BTOs. While prices are expected to continue rising, to about 5-7% by end-2012, it should be at a fairly moderate pace especially with the record 27,000 BTO units launched this year. However, with the cap on home loan tenures, prices may fall instead as homeowners decide not to move,
Back to Contents
resulting in lower supply. (Source: Business Times) Heron Bay penthouse breaks EC record price at $1.774m The $1.774 million set for a 2,845 sq ft fivebedroom penthouse unit in Heron Bay broke the previous record of $1.61 million set last week by a 2,716-sq-ft double-storey penthouse at 1 Canberra in Yishun. The record prices are likely due to rising income, liquidity and the low interest rates, as well as an increased demand for larger and more luxurious penthouses from young and affluent buyers and HDB upgraders who had benefitted from the increased HDB resale prices. However, these prices are not indicative of the overall EC pricing since such transactions are rare given the size of the units. (Source: Business Times)
Page | 17
SINGAPORE PROPERTY WEEKLY Issue 76 Olive Road and Faber Drive bungalows sold for $26.1m and $10.38m respectively The first bungalow is a GCB at 27 Olive Road at Caldecott Hill Estate which was sold for $26.1 million or $1,114 psf based on its 23,423 sq ft land area. The buyers intend to redevelop it into a luxurious new bungalow. The second is located at an elevated site of 11,719 sq ft at Faber Drive which was sold for $10.38 million or $886 psf. It may be developed into two smaller detached houses. Despite the potential economic slowdown, it appeared that well-located GCBs are still in demand. possibly more to be lodged for recently signed deals, despite the recent cooling measures in the property market. These included a 15,450-sq-ft vacant freehold hilltop site at Swettenham Road which was sold for $21.98 million or $1,423 psf and a 15,094-sqft vacant plot at Jervois Hill for $25.8 million or $1,709 psf. Others include a six-bedroom Leedon Park bungalow with a pool sold for $33 million or $2,110 psf on its 15,640-sq-ft land area, a two-storey Olive Road bungalow sold for $26.1 million or $1,114 psf and a property at Kingsmead Road for $15.1 million or $1,776 psf on its 8,504-sq-ft land area. While some believe that these deals began before the introduction of the cooling measures and that there had been a slowdown in activity, others did not see any signs of a slowdown. Nevertheless, demand is expected to continue and drive an increase in transaction volumes.
Page | 18
SINGAPORE PROPERTY WEEKLY Issue 76 A total of 16 GCBs totalling $332 million have been sold in Q3, compared to 18 transactions at $359 million in Q2, bringing the year-todate total to 48 transactions at $1.04 billion. This is likely due to the spillover demand from the residential market, as well as demand from industrialists seeking to own their own premises which exerted an upward pressure on prices. The price index for multiple-user factory space grew 10.1% in Q3, compared to an 8.3% in Q3, driven by the demand for strata factory units. There had also been increase in transaction volume of these units, with 2,591 units transacted year-to-date, 95% of the 2,723 units transacted in the whole of 2011. The price index for multiple-user warehouses and the rental rates have slowed to a 2.3% and 1.2% increase respectively in Q3, compared to the 8.6% and 2.8% growth respectively in the previous quarter. This resulted in a rental rate growth of 6% year-todate, compared to 15.5% for 2011. Prices are likely to continue increasing, albeit at a more moderate 5-6% in Q4 though it will exceed the price increase registered in 2011.
Page | 19
Meanwhile, a 24,207-sq-ft freehold plot located in the Holland Rise GCB Area is up for sale via an expression-of-interest exercise. The property located 500 metres from Holland Village MRT Station and amenities in Holland V is asking for $1,300$1,500 psf. The exercise will close on Nov 22.
(Source: Business Times) Commercial
SINGAPORE PROPERTY WEEKLY Issue 76 Capital values of industrial property are likely to increase by 33-37%, with the rental index to increase by 7-10% for the whole of 2012. Meanwhile, prices of private residential properties rose by 0.6% in Q3, a slight increase from the 0.4% in Q2, driven by the 1.1% increase in landed private housing in Q3. This moderate increase reflects a much more stable market, especially since there is only 0.9% increase year-to-date. Prices of non-landed private property in the Outside Central Region saw a 1.0% increase in Q3, while the prices for Rest of Central Region and Core Central Region rose by 0.8% and 0.1% in Q3 respectively. (Source: Business Times) Bukit Timah Saddle Club site up for sale The Singapore Land Authority (SLA) is launching a 104,567.2 sq m site with a 2,202.3 sq m GFA at 51 Fairways Drive for sale by public tender. It is currently occupied by the Bukit Timah Saddle Club (BTSC) which leases only five hectares at $18,000 a month. The public tender is launched so that other interested parties wishing to run a saddle club can have a chance at bid for the site. The site will remain primarily for equestrian purposes with public riding made available. In addition, ancillary uses, such as restaurants and shops, cannot exceed GFA of 251 sq m. SLA is providing BTSC a six-month lease extension until June 30, 2013 so that disruption to BSTCs operation can be kept minimal if BSTC participates in the tender and is successful. The tender will close on Nov 20 at 11am. (Source: Business Times)
Back to Contents
Page | 20
SINGAPORE PROPERTY WEEKLY Issue 76 49,053 sq ft of freehold Delta House strata industrial space up for sale Two vacant strata units totalling 49,053 sq ft of freehold strata industrial space at Delta House in the Alexandra /Delta Road vicinity is up for sale with an asking price of almost $54 million or $1,100 psf via an expression of interest exercise. One unit occupies the entire 36,308 sq ft on the fourth level of the eightstorey building while the other occupies 12,745 sq ft on the third level. The building sits on an 88,537 sq ft plot zoned for residential use with a 2.1 plot ratio. It could be potentially redeveloped into a new condominium project with 170 1,000 sq ft units. The current property offers 82 surface carpark lots. (Source: Business Times) Three industrial plots released for sale by JTC one at Woodlands and two at Tuas The first is a 30-year leasehold site located off Woodlands Ave 10 next to Mapletree's Woodlands Spectrum I and II. While some expected the top bid to be in the range of $75-100 psf ppr as a result of the more affordable overall cost from its smaller size, others expect the top bid to be around $55$75 psf ppr because of its small size that does not allow it to be built into a flatted factory. It is expected to draw three to six bids, and could probably fetch $280-$290 psf if a new development is strata-titled and sold. The two sites at Tuas South Street 8 are the 32,674.9 sq ft Plot 8 and the 48,727.1 sq ft Plot 18. Both have a 1.0 GPR and a lease term of 22 years and seven months.
Back to Contents
Page | 21
SINGAPORE PROPERTY WEEKLY Issue 76 Plot 8 is expected to draw four to eight bids while Plot 18 is expected to draw 11to 18 bids since it is larger and located at the corner. Both are expected to achieve a top bid of $50-$78 psf ppr. (Source: Business Times) Freehold industrial building near Sims Drive up for sale
The freehold seven-story building near Sims drive is up for sale by public tender. It is asking for $33.8-36 million, or $564-601 psf ppr. The 23,936 sq ft rectangular plot zoned for Business 1 use has a 2.5 GPR. It is likely to be popular given the demand for light industrial space, and it is reasonably priced considering its excellent condition and its proximity to Aljunied MRT station. The tender will close on Nov 28 at 3 pm. (Source: Business Times)
Back to Contents
Page | 22
Non-Landed Residential Resale Property Transactions for the Week of Oct 17 Oct 23
Postal District 1 1 1 1 1 2 3 3 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 7 7 Project Name ONE SHENTON THE SAIL @ MARINA BAY ONE SHENTON PEOPLE'S PARK COMPLEX PEOPLE'S PARK COMPLEX ICON EMERALD PARK THE METROPOLITAN CONDOMINIUM SEASCAPE TURQUOISE THE AZURE MARINA COLLECTION MARINA COLLECTION DOVER PARKVIEW THE PARC CONDOMINIUM THE PARC CONDOMINIUM BLUE HORIZON REGENT PARK DOVER PARKVIEW THE INFINITI VARSITY PARK CONDOMINIUM VILLA DE WEST BAYVILLE CONDOMINIUM BURLINGTON SQUARE SUNSHINE PLAZA Area (sqft) 850 1,076 829 1,119 1,604 657 947 3,412 2,852 2,400 1,711 2,185 2,185 969 1,302 1,410 1,163 1,195 969 904 1,798 1,636 1,216 732 1,044 Transacted Price ($) 1,750,000 2,152,000 1,630,000 960,000 1,350,000 1,298,000 1,168,000 3,950,000 8,178,800 5,872,000 3,507,550 4,370,000 4,370,000 1,388,000 1,720,000 1,833,000 1,260,000 1,280,000 1,035,000 950,000 1,870,000 1,665,448 1,200,000 1,030,000 1,450,000 Price Tenure ($ psf) 2,058 99 1,999 99 1,967 99 858 99 842 99 1,977 99 1,233 99 1,158 99 2,867 99 2,446 99 2,049 99 2,000 99 2,000 99 1,433 99 1,321 FH 1,300 FH 1,084 99 1,071 99 1,068 99 1,051 FH 1,040 99 1,018 FH 987 FH 1,407 99 1,389 99 Postal District 7 7 8 9 9 9 9 9 9 9 9 9 9 9 9 9 10 10 10 10 10 10 10 10 10 Project Name BURLINGTON SQUARE BURLINGTON SQUARE KERRISDALE HELIOS RESIDENCES HELIOS RESIDENCES RIVERGATE RIVERIA GARDENS RIVERGATE THE EDGE ON CAIRNHILL CAIRNHILL CREST TRIBECA THE INSPIRA SAM KIANG MANSIONS 8 @ MOUNT SOPHIA ASPEN HEIGHTS ASPEN HEIGHTS ST REGIS RESIDENCES SINGAPORE LATITUDE THREE THREE ROBIN ZENITH ZENITH BOTANIC GARDENS MANSION SOMMERVILLE GRANDEUR THE MARBELLA ONE JERVOIS Area (sqft) 1,066 883 990 1,281 3,993 1,033 969 1,023 2,142 818 1,367 1,206 1,206 1,313 1,324 2,691 3,897 2,766 1,582 474 775 1,399 1,830 1,496 1,701 Transacted Price ($) 1,430,000 1,180,000 1,128,000 4,438,665 12,500,000 2,408,000 2,100,000 2,200,000 4,450,000 1,660,000 2,700,000 1,908,888 1,838,000 1,995,000 1,986,000 3,920,000 8,900,000 5,846,445 3,080,000 900,000 1,420,000 2,550,000 3,038,000 2,450,000 2,700,000 Price Tenure ($ psf) 1,342 99 1,337 99 1,139 99 3,465 FH 3,130 FH 2,330 FH 2,168 FH 2,151 FH 2,077 FH 2,029 FH 1,975 FH 1,583 FH 1,525 FH 1,519 103 1,500 999 1,457 999 2,284 999 2,113 FH 1,947 FH 1,900 999 1,832 999 1,822 FH 1,660 FH 1,637 FH 1,588 FH
Back to Contents
Page | 23
Back to Contents
Page | 24
Postal District 21 21 21 21 21 22 22 22 23 23 23 23 23 23 23 23 25 25 25 26 26 26 28
Project Name THE CASCADIA THE BLOSSOMVALE ENG KONG GREEN CLEMENTI PARK PARC PALAIS THE CENTRIS THE LAKESHORE PARC OASIS THE JADE CASHEW HEIGHTS CONDOMINIUM THE PETALS HILLVIEW REGENCY HILLVIEW REGENCY NORTHVALE PALM GARDENS REGENT GROVE CASABLANCA ROSEWOOD WOODGROVE CONDOMINIUM BULLION PARK BULLION PARK SEASONS PARK SELETAR SPRINGS CONDOMINIUM
Area (sqft) 990 904 840 2,368 1,238 1,066 1,109 1,227 1,345 1,658 1,259 904 1,109 1,270 1,216 1,475 893 1,173 1,668 1,238 1,259 1,044 1,335
Transacted Price ($) 1,590,000 1,388,000 870,000 2,380,000 1,210,000 1,218,888 1,110,000 1,175,000 1,346,000 1,638,000 1,230,000 850,000 1,000,000 960,000 886,000 1,068,000 785,000 900,000 1,188,000 1,318,000 1,180,000 950,000 1,060,000
Price Tenure ($ psf) 1,606 FH 1,535 999 1,036 FH 1,005 FH 977 FH 1,144 99 1,001 99 958 99 1,000 99 988 999 977 FH 940 99 902 99 756 99 728 99 724 99 879 99 767 99 712 99 1,065 FH 937 FH 910 99 794 99
NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.
Back to Contents
Page | 25