CBRE, Savills open new offices

PROPERTY firm CB Richard Ellis (CBRE) is set to open its office in Koh Samui, Thailand, while its competitor Savills officially opened its office in Dalian, China, yesterday. CBRE’s office opens tomorrow.

The group, which already has offices in Bangkok and Phuket, said in a press statement yesterday that the move was in response to growing investor demand, and the number of quality developments on the market.

The Koh Samui office will offer a full range of services, including residential sales, investment and land services, research and consulting, and valuation services.

It will be supported by CBRE’s regional offices in Asia and will be part of a larger business plan to roll out a high-end luxury properties platform.

Separately, integrated property services provider Savills yesterday launched its Dalian office, bringing the group’s total number of offices in China to eight, with staff strength estimated at 3,000.

Earlier this year, Savills also opened offices in Tianjin and Chengdu. Savills Dalian offers full agency services, including residential sales, commercial and retail leasing, property management, research, development and consultancy, and valuation.

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Source: The Business Times

District 19 – home of property investors

(SINGAPORE) It may not top Singapore’s wealth charts, but Hougang has plenty of property investors – or speculators. District 19, which includes Serangoon Gardens, Hougang and Punggol, has the highest number of borrowers with multiple property loans, at 3,263.

According to data from Credit Bureau Singapore (CBS), which analysed loans and looked at where borrowers live, investors are defined as people with two home loans and more. They live all over Singapore and are not confined to the rich districts of 10 and 11 or 15.

In fact District 9, which includes Orchard, Cairnhill and River Valley, has only 716 borrowers with at least two home loans. This is much lower than districts 16, 18, 20, 22 and 23, each of which has between 2,000 and 2,700 borrowers with more than one loan.

People with multiple home loans totalled 38,520 in June – a 64 per cent jump from 12 months earlier.

And District 19 took the top prize in this category – at 3,263. CBS general manager Mark Rowley said this could be due to the number of property launches in the area, although the data would include residents who have bought elsewhere.

CBS gets its property loan data from 10 financial institutions, eight banks and two finance companies.

They are ABN Amro Bank, CitiBank, DBS Bank, HSBC, Maybank, OCBC, Standard Chartered Bank, United Overseas Bank, Hong Leong Finance and Sing Investments & Finance.

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Source: The Business Times

New rule may result in lumpy property earnings

(SINGAPORE) A new accounting interpretation standard being proposed will require property developers to recognise revenue from their projects only on completion and not in phases.

Developers are said to be resisting the proposed change in accounting standard which, they say, will result in greater fluctuations in earnings reported by listed property companies.

The new standard is put forward by the Council on Corporate Disclosure and Governance (CCDG) which adopted it from the UK-based International Accounting Standards Board. The CCDG sets accounting standards in Singapore.

The Institute of Certified Public Accountants of Singapore vice-president Ernest Kan said: ‘This will cause earnings of property companies to be more erratic.’

‘Currently, if I started an 18-month project in January, and I complete two-thirds of the project this year, the 2007 financial statement looks nice because I can recognise two-thirds of the revenue and profit.

‘But under the new standard, there will be nothing to show for it in the 2007 financial statements, but next year when the project is completed there will be a sudden surge of revenue and profit which is recognised.’

The proposed change aims to standardise accounting practices among real estate developers for sales of units such as apartments before construction is complete.

Hiap Hoe executive director Cindy Lim said: ‘Financial accounting should reflect the business and economic value generated by companies.’

‘If we were to recognise revenue only upon the completion of a property, it would not be a fair reflection of a company’s performance. Commercially speaking, revenue would have already been generated once the property is sold – even if it is only half completed.’

And the chief financial officer of a listed property developer said: ‘Most developers would prefer the status quo because we don’t want gyrations in earnings.

‘Besides, home buyers here make progressive payments based on completion, and risks are passed on to them accordingly, so developers should be allowed to recognise revenue.’

Dr Kan said the change could be implemented as soon as the financial year beginning on or after Jan 1 next year.

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Source: The Business Times

Boom resonates in home loan numbers

(SINGAPORE) For thousands in Singapore, a single home – or a single loan – is no longer enough.

Riding the property boom, with its promise of huge gains, the number of people with multiple home loans soared to 38,520 in June this year.

This represented a 64 per cent jump from 12 months ago. In June 2006, the number of people with two home loans or more stood at just 23,541, according to the Credit Bureau (Singapore) Pte Ltd (CBS), which released data on property loans for the first time yesterday.

In tandem with rising property prices, new home loan applications surged to 17,323 in May. If the past 30 months are a benchmark, then the average month sees just 10,000 new home loan applications.

Also, over the past two-and-a-half years, an average of 4,000 applications have been approved each month. But in May, a total of 4,856 applications were approved, suggesting that while banks had stepped up the pace of approvals, the applications had flooded in even faster.

June saw 4,794 approvals against 16,017 applications. The breather that the property market then took was echoed in the number of new loan applications, which fell to 13,870 in August.

Property loan approvals increased 12 per cent in June 2007 to 50,514 from a year ago.

Explaining the relatively low rate of approvals compared to the applications flowing in, Mark Rowley, CBS general manager, ventured that people making ‘multiple applications’ could have something to do with it – as could the credit policy of banks.

And while there has been some anecdotal evidence of banks tightening credit, he said it was too early to say if the low rate of approval was a result of that.

CBS said the data, which have been compiled over the 30 past months and used to develop a property loan index, show a hunger for credit to finance properties under the current property boom.

The index showing credit hunger climbed to a high in May, 71 per cent above the baseline or 17,323 new loan applications. Single-day sellouts at various property launches also repeatedly made the headlines.

Home loan approvals jumped 23 per cent in May to 4,856. In April, the number stood at just 3,967.

The good news is that along with the relentless climb in property prices, the delinquency rate, or the proportion of borrowers behind with their home loan instalments, is falling.

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Source: The Business Times

HDB launches design, build and sell site at Ang Mo Kio

THE Housing and Development Board has launched a third Design, Build and Sell Scheme (DBSS) site for sale. The latest site, which is at Ang Mo Kio Street 52, is the second to be launched for sale this year. The site area is 16,789.1 sq m (180,716 sq ft), with an allowable gross floor area of 58,761.85 sq m (632,506 sq ft). It is close to the Ang Mo Kio town centre with its MRT station, bus interchange and the AMK Hub.

Noting the attractive location of the new site, Savills Singapore director of marketing and business development Ku Swee Yong said that he believes the site could fetch between $110 million and $125 million or about $170 to $200 per square foot per plot ratio (psf ppr).

The development is targeted at HDB upgraders or en bloc sale downgraders, and Mr Ku said that he expects a good take-up because the stock of vacant HDB flats has fallen of late.

CBRE Research estimated that the site can yield more than 500 units. CBRE added: ‘Given the established residential environment in Ang Mo Kio, together with the known popularity of DBSS units, we expect a good response from mid-sized developers and joint venture of contractors and developers.’

Upon building completion, the successful developer will hand over the entire development site to the HDB for lease administration, and to the Town Council for maintenance of the common areas and car parks.

For the full report, please visit www.asia1.com.sg

Source: The Business Times

Property boom far from over: Kwek Leng Beng

CITY Developments executive chairman Kwek Leng Beng believes that the property boom here is far from over, despite the current financial market turmoil.

‘The boom actually just started in 2005, and if you’re thinking of a relapse, I don’t think that is possible,’ he told chief executives yesterday at the Forbes Global CEO Conference.

‘Sub-prime has to some extent affected Singapore … there’s a psychological fear of what will happen.’

But ‘our banks are still lending a lot of money’, Mr Kwek noted. ‘They’re a little bit more cautious, but we have plenty of liquidity.

‘The banking and financial systems here are very well controlled … they are well regulated and the central bank has taken action to pre-empt crises like what you’ve seen in sub-prime.’

He said that, after adjusting for inflation, high-end residential property prices have risen only about 10 per cent in real terms from their lowest level over the past decade, ‘which is not alarming’.

He said: ‘My advice is, look at it realistically – crisis means opportunity. I’m a bottom-fisher, I like to go in when the market is bad.

‘I believe there’s still a lot of upside. The mid-end is still 19 per cent below the peak of ‘96.’

In addition, he said Singapore had introduced a lot of initiatives over the past 10 years to attract foreigners to live and work here, which has fuelled demand for property.

‘You may say it’s very dull, but we are going to have the integrated resorts, Formula One, and a host of other events that will make Singapore an exciting city to live, work and play.’

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Source: The Business Times

Big fall in Hungry Ghost month auctions this year

OF the 131 properties put up for sale by auction during this year’s Hungry Ghost month, just 10 were sold – for a total value of $9.56 million – new data from property firm Colliers International shows.

This figure is one of the lowest seen in the past 10 years. The Hungry Ghost month was from Aug 13 to Sept 10 this year.

Colliers attributed the low sales volume to the current property market condition, factors affecting the world economy and new government policies – rather than buyers holding back their purchases during the Hungry Ghost month.

‘Given the good property market performance, many sellers have raised their expectations and upped their asking price; this is especially so for properties with en bloc potential,’ said Grace Ng, Colliers’ auctioneer. ‘This, coupled with the newly announced rules governing en bloc sales as well as the stockmarket turmoil amidst the US sub-prime woes, has caused a slowdown in the market as buyers took a cautious stand.’

Colliers also said that the total number of repossessed properties seen at auction sale during the Hungry Ghost month this year was only 43 – the lowest figure since 1998.

‘This decline is largely due to the buoyant economy and robust property market,’ the firm said. ‘Owners who faced difficulties servicing their loans were able to dispose of their properties in the open market before their bank or financial institution had a chance to repossess their properties.’

Colliers’ data shows that this year, some 88 properties were put up by owners for auction sale during the period.

This is the second highest number registered in a decade after 2006.

‘The continued high number of owners choosing auction to dispose of their properties indicates that the market is maturing, with an increasing number of property owners becoming less mindful of conventional taboos,’ Ms Ng said.

For the full report, please visit www.asia1.com.sg 

Source: The Business Times

Q3 may see slowdown in private home sales

(SINGAPORE) Private home sales are expected to slow this quarter – the result of the twin effects of the US sub-prime woes which made the headlines in August and the just-ended Hungry Ghost month.

But the pace of activity is expected to pick up again as developers step up launches and confidence recovers, say property market watchers.

Fresh price benchmarks may still be set for projects offering compelling propositions, but developers are likely to tread carefully before upping prices.

CB Richard Ellis (CBRE) estimates that the total number of new private homes sold by developers in the primary market during Q3 will be 3,500-4,000 units including sales from ongoing projects. This is lower than the 5,129 units sold in Q2 and 4,783 units transacted in Q1 this year.

Activity also decelerated in the secondary market in Q3. ‘Whereas the first and second quarters saw resale volumes of 4,645 units and 6,514 units respectively, it is likely that Q3 figures will be lower, probably in the region of 4,000 to 4,500 units,’ CBRE executive director Li Hiaw Ho says.

‘Anecdotal evidence suggests that subsale activities have been muted as investors become more cautious,’ Mr Li added. Subsales as a percentage of total private housing sales are likely to fall below the 7.4 per cent and 9.7 per cent in Q1 and Q2, he predicts.

But the current slowdown in activity is not such a bad thing, says DTZ Debenham Tie Leung executive director Ong Choon Fah.

‘The market has been going up quite dramatically. It’s good that people step back and evaluate their positions before moving on. This window also creates an opportunity for people to enter the market. When the market is so hot, everytime you put in an offer at the seller’s asking price, he raises his price,’ she says.

Ong Chong Hua, executive director of Ho Bee Investment, also describes the current slowdown as ‘a healthy consolidation after a robust period of growth in sales volumes as well as prices’.

‘Activity will start picking up slowly and I think confidence will come back, as developers start launching more projects. Buyers will be cautious but underlying demand is still strong. The share market seems to have consolidated and strong economic fundamentals are still in place for Singapore and the Asian region,’ he said.

Among the projects expected to be released soon are MCL Land’s Hillcrest Villas cluster terrace homes along Dunearn Road, Ho Bee’s Turquoise condo at Sentosa Cove, Bukit Sembawang’s Paterson Suites and SC Global’s Hilltops in so said to have Cairnhill. CapitaLand is albegun selling Latitude at Jalan Mutiara at around $2,800 per square foot on average.

Projects that are slated for launch in Q4 include Lippo’s condo on Sentosa Cove, Ritz-Carlton Residences at Cairnhill, and the second phase of Marina Bay Financial Centre.

Ho Bee’s Mr Ong said: ‘Developers will definitely be more cautious in moving up prices and trying to set benchmarks all the time. They will test the waters.

‘But I don’t think anybody will cut prices because fundamentals are still strong. There’s still a shortage of homes, with a lot of those who sold their homes in en bloc sales looking for replacement properties.’

For the full report, please visit www.asia1.com.sg 

Source: The Business Times

Ang Mo Kio condo site sets record

(SINGAPORE) A plum condominium site in the heart of Ang Mo Kio has set a new record for suburban land prices, fetching some $601 per square foot per plot ratio (psf ppr).

And when the project is eventually launched, it could set a record for private home prices outside the central areas, analysts said.

Yesterday, HDB said that Far East Organization put in the top bid for the 0.6-ha mass market condo site at Ang Mo Kio Avenue 8. The developer beat 13 other bidders with its bullish offer of $202.9 million – which works out to $601 psf ppr .

‘The price is probably the highest paid for a suburban site in recent years,’ said Donald Han, managing director of property firm Cushman & Wakefield.

Far East’s break-even cost for the site is now estimated to be in the region of $900-$1,000 psf, which means that units in the project could eventually be launched at $1,100-$1,200 psf – a record for private home prices in the suburbs.

‘If Far East can achieve prices of around $1,200 psf for the project, then yes, it will be a record for the suburban areas,’ said Ku Swee Yong, Savills Singapore’s director of marketing and business development.

By comparison, units in other projects in the vicinity – albeit in less attractive locations – are mostly going for around $400-$600 psf. Far East also beat out other big names such as CapitaLand, Hong Leong Group and Frasers Centrepoint.

Experts said that the high prices and large number of bids signalled that developers had confidence in the strengthening suburban residential market – notwithstanding the US sub-prime mortgage fears that rattled stock markets here.

The plot also drew strong interest due to its good location. It is situated right next to Ang Mo Kio MRT station, and is just 15 minutes away from Orchard by train.

Units in the project could be sought-after by HDB upgraders in the Bishan and Toa Payoh estates – where HDB resale prices command a premium – as well as Ang Mo Kio itself, Mr Li said.

In addition, the project may also prove to be attractive to private homeowners in Serangoon and the Thomson/Upper Thomson Road areas, he added.

For the full report, please visit www.asia1.com.sg 

Source: The Business Times

Shui On to double China land bank

(SINGAPORE) Chinese developer Shui On Land will double its land bank in China over the next three years from 12 million square metres, said its founder and chairman yesterday. ‘China’s property market is still strong despite the macroeconomic controls by the government. Market demand is tremendous because the economy is growing,’ said Vincent Lo.

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Source: The Business Times