Singapore Property Weekly Issue 5

8/6/2019 Singapore Property Weekly Issue 5

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Issue 5 | www.Propwise.sg


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SINGAPORE PROPERTY WEEKLY Issue 5

Copyright 2011 www.Propwise.sg. All Rights Reserved.

Page | 1

Welcome to the fifth edition of the Singapore Property

Weekly. We hope youve been enjoying it so far. Let us

know what else youd like to see we welcome allfeedback!

To wisdom and beyond,

Mr. Propwise

Contribute

Do you have articles and insights and articles thatyoud like to share with tens of thousands of

readers interested in the Singapore property

market? Send them to us at [email protected]

,

and if theyre good enough, well publish them

here, on our blog and even on Yahoo! News.

Advertise

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property listing out to tens of thousands of

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Contents

Singapore Property This Week Pg 2

Will Interest Rates Go Up Soon? Pg 8

Survey Results Who Reads the

Singapore Property Weekly? Pg 11
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Page | 2

Singapore Property This Week

Residential News

Q2 property investment sales likely to drop

to $7.3 billion: SavillsTotal property investment sales decreased from

approximately $8.3 billion in Q1 to possibly $7.3

billion in Q2. Deals that involved GLS sites,

however, increased by 38% to $4.2 billion in Q2.

The top 3 investment sales transactions in Q2 to

date are a $969 million sale of a Jurong Gateway

site, $585.6 million sale of a Paya Lebar

commercial plot, and $543 million sale of a private

housing site at Bendemeer Road. Savills is positive

that investment sales will improve in Q3 due to

fresh capital from investors.

Top Global unit bought Braddell Park at $85

million; Brookvale Park up for collective sale

with asking price of $550 millionA Top Global unit purchased Braddell Park, a

freehold 45-unit apartment with 91,360 sq ft land

area, at $665 psf ppr ($85 million). The site can

achieve a GFA of up to 137,060 sq ft. Over at

Sunset Way, the 373,000 sq ft Brookvale Park is up

for collective sale with a stated price (inclusive of

an estimated $16.77 million DC) of $550 million or

$950 psf ppr. According to CB Richard Ellis, the unit

land price (inclusive of an estimated $35.4 million

DC) is only $892 psf ppr if the developer utilizes

the 10% bonus balcony allowance completely
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Page | 3

Centrale 8 will cost up to $778,000: Sim Lian

GroupFlats at Centrale 8, a public housing project

developed by Sim Lian Group under DBSS, will cost

up to $778,000; this amount is lower than theinitial stated top price of $880,000. Three-room

flats will start from $389,000 to $445,000, four-

room flats will start from $511,000 to $592,000,

and five-room flats will start from $685,000 to

$778,000. The developer has taken into account

the resale prices of nearby HDB flats, nearby

amenities and current economic progress beforecoming up with the prices.

77 Robinson Road up for sale; tenders for

plot in Potong Pasir and Serangoon Garden

Way launchedGiven a NLA of 294,859 sq ft, 77 Robinson Road

can fetch up to $678 million if it is sold at $2,300psf of NLA. The site has a remaining 82-year lease

and sits on a 32,435 sq ft site. Also, URA launched

tenders for a condo site beside Potong Pasir MRT

station and a 305,711 sq ft landed housing plot at

Serangoon Garden Way. Credo Real Estate

predicted that top bids for the Potong Pasir site,

which can house 330 residential units, will fall

between $500 to $600 psf ppr. SLP Internationalpredicts that top bids for the Serangoon Garden

Way site will be approximately $480 to $520 psf of

land area and a total land price that exceeds $100

million (or $320 psf of gross site area).

Cheung Kong (Holdings) Ltd will launch its

361-unit Thomson Grand in July at startingprice of $1,400 psfCheung Kong (Holdings) Ltd will launch its 99-year

leasehold Thomson Grand, which occupies a

224,402 sq ft site, in July. Thomson Grand is made

up of nine high-rise towers that house 339

apartments and 22 strata terrace units; 30% of the

total units are two-bedroom units of 904 to 1,044sq ft, 47% are three-bedroom units of 1,346 to

1,421 sq ft, and 23% are four-bedroom units,

garden units,


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Copyright 2011 www.Propwise.sg. All Rights Reserved. Page | 4

penthouses and strata terrace houses. In the first

phrase, around 50 units priced at least $1,400 psf

will be allotted.

Tulip Garden up for en bloc sale again;Balmoral Condo sold for $141 million in en

bloc saleAt Farrer Road, Tulip Garden is up for en bloc sale

again after its previous failed attempt. Credo Real

Estate advised the owners to reduce the reserve

price from $650 million previously to $600 million.

This will then decrease the effective land cost to$1,118 psf ppr, given that a $23 million DC is paid

and the 10% space allowed for balconies is

maximized. Over at Balmoral Road, Balmoral

Condo fetched $141 million ($1,546 psf ppr) in its

en bloc sale. Owners will receive around $2.85

million to $3.26 million each.

$461 psf ppr top bid for West Coast site falls

below market expectationsThe top bid of $461 psf ppr ($175.78 million) for a

residential site in West Coast was below market

expectations of $495 to $580 psf ppr. The top bid,

which was submitted by Far East Organization, was

only 1.1% higher than Centurion REs bid of $456

psf ppr. Despite that, there were 12 developersbidding for the site. Collier International estimated

a breakeven cost between $800 to $840 psf ppr

and an average selling price between $900 to $940

psf, while Credo Real Estate estimated a breakeven

cost of $850 psf and an estimated average selling

price of $1,000 psf. Savills believes that developer

can breakeven by selling only 73% of the NLA.

Minister Khaw urged people to understand

what shoebox units are before buying

themApart from asking analysts to analyse each

category of housing products separately, Minister

Khaw also urged people to weigh the pros andcons of shoebox units (apartments below 500 sq

ft) carefully and understand what they are getting

into before purchasing.


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He noticed the annual take-up for shoebox units

increased from 300 to 1,900 units (or 6% to 12% of

developers sales) from 2008 to 2010. Khaw

assumed that Singaporeans usually buy these units

for investment purposes and to rent them out.However analysts are uncertain if shoebox units

can still draw high rentals since supply for such

units will rise from 1,100 to 3,800 units by 2014.

Sales for private homes increased

significantly from 4,264 units in 2008 to

14,688 units in 2009Market is expecting the sales for private houses in

2011 to be 14,000 to 16,000 units after observing

a significant increase in sales since 2008. Sales of

private houses increased from 4,264 units in 2008

to 14,688 units in 2009 and 16,292 units in 2010.

Till end of May 2011, 7,000 private homes were

already sold. Despite government coolingmeasures, land prices continued to rise due to low

interest rate, strong confidence in the property

market, and Singaporeans desire to upgrade their

properties.

Commercial News

Office and retail sectors are better choices than

housing market

Cheung Kong Holdings mentioned that office andretail sectors are better choices for investment as

compared to the housing market. Unlike the

housing market, office and retail sectors are less

likely to be affected by government policies. Also,

demand for commercial space is likely to rise due

to strong economic growth.

Oxley Holding has top offer of $43.4 million for

Irving Place site

The top offer of $43.4 million ($343 psf ppr) by

Oxley Holdings for a 0.34 ha industrial site at Irving

Place was much higher than the market

expectation of $200 to $270 psf ppr. The top bid

exceeded the second highest bid of $41.3 million

($327 psf ppr) by only 5%, while the lowest bid

was $21 million ($166 psf ppr). ). Colliers

International mentioned that the developers

confidence in Singapore


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economy and industrial market can be seen from

the 15 bids that the Irving Place site attracted.

Oxley plans to develop the site into something

similar to Oxley Bizhub, which consists of industrial

and commercial strata-titled units.

Strong growth for prime retail rentalsDue to high demand and low supply, retail rentals

in the Orchard Road belt increased 0.5% quarter-

on-quarter to a monthly $40 psf in Q2 2011, while

retail rentals in other city areas increased 0.6%

quarter-on-quarter to a monthly $24.05 psf. Incontrast, prime suburban retail space rentals

remained unchanged quarter-on-quarter at $33.70

psf per month. Overall, DTZ mentioned that rentals

are expected to increase moderately in 2011 with

an approximate 2% increase for rents in Orchard

Road and Scott Road and below 1% in the

suburban areas.

URA sales condition for site at Gambas Ave:

site must be developed for Business 1 use

The successful bidder for the 2.1 hectare industrial

site between Gambas Avenue and Gambas

Crescent must develop the site for Business 1 use,

according to the sales conditions URA announced

yesterday. The 60-year leasehold site has a gross

plot ratio of 2.5 and a maximum GFA of 576,600 sqft. Analysts anticipate keen interest in the site due

to rising rents. CB Richard Ellis also mentioned that

some investors prefer industrial properties over

residential because capital values for industrial

properties increase faster than rental values.
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S G O O


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Will Interest Rates Go Up Soon?

By Mr. Propwise

Many people are concerned that the current low

interest rate environment in Singapore could end by

the end of this year, driving up the cost of mortgages

and putting pressure on the property market. In this

article we take a look at how interest rates in

Singapore are determined, and where they are likely

to head for the rest of the year and beyond.

How are interest rates determined?In a 1999 paper titled Interbank Interest Rate

Determination in Singapore and its Linkages to

Deposit and Prime Rates, staff of the Monetary

Authority of Singapore (MAS), the central bank,

found that only changes in US interest rates or

market expectations of future movements in the

exchange rate have a significant impact on the

domestic interbank rate.



SINGAPORE PROPERTY WEEKLY I 5


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But other analysts have found that the SIBOR has

historically been positively correlated to the

movement of the bank loan to deposit ratio, even

after controlling for the impact of US interest rates.

his means that if bank loans grow faster than

deposits, SIBOR tends to head upwards.

So to summarize, exactly how interest rates in

Singapore are determined is a controversial topic

and there is no simple formula! But we know there

are three significant factors that will influence it: 1)

US interest rates 2) Market expectations of the

Singapore Dollar exchange rate (will it appreciate

or depreciate?) and 3) Demand and supply for

loans and deposits in Singapore.

So where are interest rates heading?Hong Kong mortgage rates have already risen by as

much as 1% over the past three months, driven by

tight liquidity in the banking system as the growth

of loans have outpaced the growth of deposits.

Will interest rates in Singapore also head upwards

due to the demand-supply dynamics in the local

banking system, even if US interest rates stay low

for now?

In a similar situation to Hong Kong, loans have

been growing faster than deposits, with loan

growth till April of 21.9% versus deposit growth of

12.7%. If the gap between the growth of loans and

deposits continues, this will increase the

bargaining power of local banks and increase the

probability of a higher SIBOR and also interest rate

spread above SIBOR for mortgages.

But Hong Kong has its own specific dynamics

there has been a growing shift into Renminbi from

Hong Kong Dollar deposits, which has been absent

in Singapore as the MAS has let the Singapore

Dollar appreciate against the US dollar, whereas

the Hong Kong Dollar is pegged to it. In fact, theSingapore Dollar has even appreciated against the

Renminbi over the last two years!

SINGAPORE PROPERTY WEEKLY I 5


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But if the MAS decides to slow the appreciation of

the Singapore Dollar, we could start to see higher

interest rates.

lso, the Singapore governments recent moves to

dampen speculation in the property sector could

lead to both fewer transactions and thus mortgage

olume, and also a lower mortgage per transaction

(as the Loan To Valuation limit has been lowered

for investment properties). This means that loan

growth might start to weaken, while deposit

growth remains healthy despite the low rates as

people prefer to park their money in a strong

currency.

s for where US interest rates are headed, it is

anybodys guess. But Singapores Asian neighbors

China and India have already been raising rates in

an effort to combat rising inflation. If inflation

starts becoming an issue in the US, and

policymakers have confidence in the strength of

the economy, then interest rate hikes could come

sooner than expected.

While we do not expect a large spike in interest

rates anytime soon, they certainly cant go much

lower, and borrowers should be prepared for

scenarios where they start moving higher. For

homebuyers, this means that you should not

assume that interest rates will always remain this

low, and to plan your finances so that you will still

be able to meet your mortgage payments even if

interest rates rise.

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Survey Results Who Reads the Singapore Property

Weekly?

By Mr. Propwise

Last week we sent out a short survey to our

members thanks to all who participated and

congratulations to the lucky three who won a free

copy of the Secrets of Singapore Property Gurus.

Weve compiled the results and found some of the

following data fascinating.

We were surprised that 65% of our readers are men

perhaps guys are more interested in investing?

80% of our reader are aged 34 and above. That

makes sense you usually need to take some time

after starting work to accumulate enough funds tobuy a property, and then a couple more years before

you look to get an investment property.



Male

65%

Female

35%

Gender of our readers

18-24

1%

25-34

18%

35-44

47%

45-54

29%

55+

5%

Age of our readers

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6%

17%

11%

35%

24%

8%

0% 5% 10% 15% 20% 25% 30% 35% 40%

$0-$23,999

$24,000-$47,999

$48,000-$71,999

$72,000-$119,999

$120,000-$239,999

$240,000 and above

Annual household income of our readers

66% of our readers have a household income of

$72,000 and above, suggesting that the average

Propwise.sg member makes a lot more money than

the median Singaporean household! Thats good

news, because having a high income makes it much

easier for you to buy and support a secondproperty, and thus benefit from the potential

ealth creation from property investment. Knowing

this, we will also start to write more on property

investment topics in the future.

You guys are smart folk! 62% of our readers have a

bachelors degree or above. Of course, it doesnt

mean that youre dumb if you dont have a

degree. Street smarts are actually much more

valuable than school smarts, and especially so when

it comes to property investing.

7%

7%

58%

28%

0% 10% 20% 30% 40% 50% 60% 70%

Other office worker

Director/Senior Manager/C-level

executive

Professional/Manager

Self-employed/Entrepreneur

Career of our readers

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65% of you identified yourself as either a

Professional/Manager or a Director/Senior

Manager/C-level executive. That ties in well with the

household income and education data. What I found

surprising was that 28% of you are self-

employed/entrepreneurs kudos as Im a big fan of

entrepreneurship and know how tough it can be.

14%

16%

47%

15%

8%

0% 10% 20% 30% 40% 50%

Secondary school

Polytechnic/Junior college

Bachelors Degree

Post-Graduate Degree

Other

Education level of our readers

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82% of you already own property and 96% of you

are interested in property investment. As

mentioned previously, now that we have a clearer

idea of what youre interested in, we will start torite more on property investment topics.

Good to know that our decision to create a weekly

PDF magazine for you was the right one as 93% of

you prefer to read the Singapore Property Weekly

as a PDF as opposed to going to the website and

reading the posts there. For the 7% who preferreading the posts, we do put up most of the articles

in the magazine on our site, but there is usually a

delay of a few days.

Yes

96%

No

4%

Readers who are interested

in property investment

Yes

82%

No

18%

Readers who own property

7%

93%

How you prefer to read the Singapore

Property Weekly

I prefer to go to the website to and read the posts there

I prefer to read the Singapore Property Weekly as a PDF magazine



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We went down the very unconventional route of

formatting our e-magazine in the landscape format

(and having larger than normal font), as we figuredthat would make it easier for people to read it on

their computer or tablet (e.g. iPad) screens. Seems

like the majority (69%) of you like it, but a large

number (31%) of you still prefer the traditional A4

portrait page format.

If thats because you prefer to print out the

magazine to read it, heres a quick tip: you can

print two slides on one page and itll be just right

to read in portrait format and also save you some

paper and ink. If there are specific difficulties you

are having reading the magazine do let us know

and well try and resolve them in future issues.

To sum up our readers are largely high income,well educated people who are interested in

property investing. Well keep that in mind as we

come up with new content for you. Also, if youre a

property agent or run a business and would like to

reach our members, head over to

www.propwise.sg/advertise/ to check out the

many affordable ways you can do so.

Till next week!

69%

31%

Which page format you prefer

I prefer the "Powerpoint slide" format

I prefer an A4 portrait page format

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Singapore Property Weekly Issue 5

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