Issue 142

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CONTENTS
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6 Reasons Why Property Curbs Should NOT Be Removed Singapore Property News This Week Resale Property Transactions (January 22 January 28)

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 142

6 Reasons Why Property Curbs Should NOT Be Removed

By Gerald Tay (guest contributor) There have been recent calls to the government asking to relax some of its property-cooling measures as demand for real estate wanes. MrGetty Goh, director at Ascendant Assets voiced his view on this, speaking at a Business Outlook Forum recently. He said the government should consider repealing the Seller Stamp Duty (SSD) for residential properties introduced in January 2011, because sellers who are keen to dispose their properties may find themselves tied down by it. Many people I have met who want you to invest in property dont care two hoots if you
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SINGAPORE PROPERTY WEEKLY Issue 142 make money or not, as long as they profit from your investment. And the same group of people are now calling for property curbs to be removed because of a so-call lacklustre property market. Mr Getty Goh is one of the few respected voices I listen to among the many industry players, and therefore I believe he does not fall into the category of those Please invest in property so WE can get rich group. His view on relaxing some property rules may be a personal view of his own and not for profit interests. Here are six reasons why property curbs should NOT be removed today at least till a correction happens. 1. Its too early Private home prices registered their first drop in seven quarters in the October-December
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period, falling 0.9 percent quarter-on-quarter. Meanwhile, public housing prices posted their second consecutive quarterly drop, down 1.5 percent - the worst reading in eight years. Unwinding existing tightening policies for property simply because of a slight drop? This may be too premature as prices in both private homes and public housing are still very much elevated. For the government to roll back its policies that took four years to have an impact, a major correction has to happen. And I believe the government will continue its stand on existing measures till that happens. 2. The market is not ready psychologically Market psychology plays a huge part in rising asset prices and Singapores economy was resting more and more on asset based inflation supported by cheap liquidity in
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SINGAPORE PROPERTY WEEKLY Issue 142 recent years. Credit growth and bank financing drive up asset prices, causing lenders and borrowers to believe that even more credit growth is both safe and desirable. The last four years of rapid property price escalation has been played out, not by real estate or economic fundamentals, but simply because everyone believes in the fallacy of an illusionary demand/supply dominated by the market psychology of lemmings following the crowd. An even more vicious inflationary cycle will happen. If the government begins to unwind its policies, buyers want to buy, sellers want to sell, banks want to lend, developers see demand and want to buy more land and build more, the government sells and releases more land the whole cycle will turn
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on itself. This will cause more supply in future and if theres a correction, the results will be distastrous to the economy. 3. Still plenty of liquidity Even with the recent Fed tapering, the world is still awash with cash and developed-market interest rates are close to zero. Liquidity factors still have the ability to push real estate markets to new highs and to crazy overvaluation. The dire consequences and outcome of removing Sellers Stamp Duties (SSD) and other property measures in a bullish real estate market is unthinkable. 4. Gamblers dont deserve sympathy On the removal of the Sellers Stamp Duty (SSD), Mr Getty Goh explained this move
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SINGAPORE PROPERTY WEEKLY Issue 142 would help property owners offload their properties. He said, These owners in the event that they own two or three properties, giving rising interest rates and their inability to do a refinancing because of the Total Debt Servicing Ratio (TDSR), may be compelled to slash their prices to offload their property. This could snowball into a longer term problem when sellers flood the market after the Seller Stamp Duty expires in four years time, precipitating a crash in prices. Should we protect the interest of these property buyers whose finances are not built on solid foundations? The owners who buy and sell properties hoping to make a quick buck in a bullish market, either during a sub-sale or when the property T.O.Ps is gaming the property
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market like a casino. When the Sellers Stamp Duty and other property measures were implemented, they got stuck and hope for some form of salvation. Removal of SSD by the government will only send a negative message to more speculators that flipping in a bullish market is the right thing to do.

An analogy to the above:

Should we remove all casino regulations to help more gamblers gamble? Should we extend credit to gamblers to help them recover when they incur bad gambling debts? Will the casinos in Singapore go under because a bunch of gamblers lost money? Professional gamblers understand risk and protect the downsides to prevent losses
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SINGAPORE PROPERTY WEEKLY Issue 142 before they step into a casino. Shrewd property buyers are the same. The only downside protection ignorant gamblers have is buy and pray. So let them pray for now. 5. Higher Cost Singaporeans of Living for Most in both private residential and HDB. Though most of the property measures are targeted to the private residential market, rising land prices have collateral effects on the HDB BTO market as well. Shouldnt the implementation of property measures to curb rising prices be meant for the majority of Singaporeans to afford and buy a decent home at decent prices? Or should the removal of the SSD and other property measures be meant to protect property speculators, and those with vested interests? Conservative investors can also help support the vibrancy of a stable property market when investing with decent yields. Todays yields have been molested by current the indecent high prices.

Removal of property measures at current bullish levels will cause a further spike in land prices (See Reason 2), adding inflation to all asset prices. And this may result in a higher cost of living for most Singaporeans. 6. Protect Genuine Home Buyers and Conservative Investors If Sellers Stamp Duty (SSD) and other property measures are removed at current point, property prices may continue to rise given the above reasons. This certainly does not bode well for many genuine home buyers
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SINGAPORE PROPERTY WEEKLY Issue 142 Moving Forward On the contrary, more cooling measures are needed as prices have not come down to acceptable and reasonable levels. Removing property curbs is supposed to allow more sellers and buyers to come into the market, but in todays climate where prices are still adamantly high, will only add oil to the fire. Historically, property curbs are removed whenever there is a major price correction. This removal and correction will bode well for many genuine buyers and investors. Property prices climb up by the escalator and come down by the lift. A combination of rising interest rates and increased supply in the market could trigger a correction in 2014 to 2015, according to Barclays. The bank estimates home prices will fall 5 percent this year and between 5 and 15 percent next year and maybe more. For genuine buyers and investors, my advice to you is be patient and avoid buying with the lemmings, as the next eventual major correction may just be around the corner. Debt and leverage caused the 2008 crisis and now debt and leverage are greater than at any point in history. History always repeats itself and this will end in tears. As for the speculators, their turn is soon over.

By guest contributor Gerald Tay, CEO of CREI Academy Group, who exposes widelyheld property investment myths that have proven highly ineffective in creating wealth, and prevent a comfortable retirement for the ordinary investor.

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SINGAPORE PROPERTY WEEKLY Issue 142

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SINGAPORE PROPERTY WEEKLY Issue 142

Singapore Property This Week

Residential
Optimistic Fernvale outlook for Riverbank @ servicing ratio (TDSR), underlying demand to upgrade is strong. (Source: Business Times) Savills: private property prices to rise by 2% The global real estate services provider Savills has forecast that overall prices of private property could increase by 2 percent in 2014, contrary to market expectations of decreasing prices which are not supported by the facts. In fact, Alan Cheong, the senior director at Savills Research, Singapore, said that many mass-market and mid-tier projects are in the hands of strong developers, who are unlikely to lower prices below comparable

Sale of units at UOL Group's 99-year leasehold 555-unit private condominium Riverbank @ Fernvale will begin next week. The average price indication is slightly over $1,000 psf. Prices of a 495 sq ft one-bedroom unit start from $476,000, or around $962 psf. A 947 sq ft three-bedroom unit starts from $878,000 or $927 psf. UOL Groups property president Liam Wee Sin remains optimistic about buyer response, despite falling resale prices recently. Mr Liam says that their pricing is realistic because the tender bid last year was $489 psf ppr, and with the total debt
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SINGAPORE PROPERTY WEEKLY Issue 142 benchmarks just to clear their stock. (Source: Business Times) Property sector hopes for the curbs to be tweaked or removed Property players are reported to hope that some of the cooling measures introduced the total debt servicing ratio (TDSR) and additional buyers' stamp duty (ABSD) - might be tweaked or even rolled back. Donald Han, managing director at Chesterton Singapore said that such measures could be loosened up because they have had the desired results. In addition, sub-sales and foreigners' participation rates are now at a new low compared to two years ago thanks to the sellers' stamp duty (SSD) and ABSD, while the TDSR framework has significant influence on escalating property prices and transaction volumes. (Source: Business Times)
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Redas-NUS index sends mixed signals The latest Real Estate Sentiment Index (RESI) survey, developed by the Real Estate Developers' Association of Singapore (Redas) and the National University of Singapore, shows that the Composite Sentiment Index capturing the overall market sentiment of property developers increased to 4.0 in Q4 2013, from 3.9 in Q3 2013. Similarly, the Future Sentiment Index reached 4.0 from 3.9. However, 62 percent of the developers surveyed anticipate a moderate decrease in residential property prices in the next six months, compared with 51.3 percent in Q3 2013. Ku Swee Yong, chief executive of property consultancy Century21, said that such mixed signals in the survey reflect market uncertainties. (Source: Business Times)

SINGAPORE PROPERTY WEEKLY Issue 142 Resale flat COV hits 2009 crisis low mark Median cash-over-valuation (COV) premiums for Housing and Development Board (HDB) resale units decreased from $5,000 in December 2013 to $3,000 January 2014 similar to the previous low in the Global Financial Crisis in June 2009. Eight out of the 28 HDB towns saw zero or negative median COV. Nicholas Mak, executive director at SLP International, said that HDB resale prices are stabilizing, and need to be read in light of the low transaction volumes in the same period which could translate to a wide range of COV figures. The flash report by the Singapore Real Estate Exchange (SRX) shows that Sengkang and Punggol had negative overall COVs in January; while Bishan, Geylang, Jurong West, Sembawang, Woodlands, and Yishun recorded zero overall median COV. Ong Kah Seng, director at R'ST Research, expects that prices may fall about 5 percent in
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the first half of this year, despite a small increase of 0.3 percent in January 2014. (Source: Business Times)

Commercial
Anson House up for sale Anson Houses current owner, CBRE Global Investors, is reported to have put the 13storey office block up for sale with an indicative pricing of $175-180 million, or $2,292-2,357 psf on net lettable area (NLA) of 76,362 sq ft. 20 percent of the building, which is on a site with about 82 years of remaining lease, is currently vacant, which suits potential occupier who seeks to partly occupy the building as well as provision for signage and naming rights. The average passing rent is about $8 psf per month with recent rent standing at $8.50-$9.50 psf per month. (Source: Business Times)
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SINGAPORE PROPERTY WEEKLY Issue 142 Westgate Tower back on the leasing market Westgate Tower, the 20-storey office block next to Jurong East MRT Station, is back on the leasing market. A Sun Venture-Low Keng Huat (LKH) consortium has appointed Jones Lang LaSalle (JLL) and CBRE as joint sole leasing agents. Just last month, Sun VentureLKH was granted options to buy the office tower at $579.4 million, or $1,900 psf, from the developers of the Westgate mixeddevelopment project CapitaLand, CapitaMalls Asia and CapitaMall Trust. Sun Venture managing director Alvin Teo said that the new owners' asking rent is around $6.50 psf, compared with the previous ownerss indicating office rents of $8 psf a month. (Source: Business Times) Tuas South long-lease industrial site for sale A long-lease 34,189 sq ft industrial site in 17 Tuas South Street 5 has been launched for sale by Expression of Interest for $8.9 million. The site has a two-storey building with production and storage space, a mezzanine office with a GFA of approximately 39,795 sq ft. The lease tenure is about 45 years. Nicholas Ng, local director of investments at Jones Lang LaSalle the sites exclusive marketing agent, said factories with lease tenures of more than 40 years are rare, and that this site would be attractive to industrialists with huge upfront costs or leases expiring in the next few years. (Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 142

Non-Landed Residential Resale Property Transactions for the Week of Jan 22 Jan 28

Postal District 4 5 8 8 10 10 10 10 10 10 11 14 14 15 15 15 16 16 16 17 20 20

Project Name CARIBBEAN AT KEPPEL BAY REGENT PARK KERRISDALE KENTISH GREEN 8 NAPIER 8 NAPIER GOODWOOD GARDENS THE MONTANA GALLOP GABLES CASA JERVOIS STRATA STARVILLE ASTOR PEBBLE BAY CELESTIA RIVEREDGE COSTA DEL SOL CHANGI GREEN EAST MEADOWS COASTAL BREEZE RESIDENCES SIN MING PLAZA FAR HORIZON GARDENS

Area (sqft) 2,583 1,152 1,485 1,076 2,777 2,777 1,044 775 2,842 1,227 1,066 1,270 1,119 1,894 646 1,593 1,755 904 1,216 1,173 1,593 1,389

Transacted Price ($) 2,715,000 1,295,000 1,700,000 1,070,000 8,608,700 8,391,300 2,125,000 1,533,690 4,800,000 1,925,000 1,750,000 1,220,000 1,000,000 2,620,000 855,000 2,060,000 2,550,000 988,000 1,200,000 1,080,000 1,755,000 1,100,000

Price Tenure ($ psf) 1,051 99 1,124 99 1,144 99 994 99 3,100 FH 3,022 FH 2,035 FH 1,979 FH 1,689 FH 1,569 FH 1,642 FH 961 FH 893 99 1,383 99 1,324 FH 1,293 99 1,453 99 1,093 FH 987 99 920 99 1,102 FH 792 99

Postal District 21 21 23 23 23 25 25 25 26

Project Name 1 KING ALBERT PARK BEAUTY WORLD CENTRE THE MADEIRA PARKVIEW APARTMENTS PARKVIEW APARTMENTS CASABLANCA CASABLANCA THE WOODGROVE FOREST HILLS CONDOMINIUM

Area (sqft) 1,012 1,873 936 1,087 2,002 936 1,184 893 1,894

Transacted Price Tenure Price ($) ($ psf) 1,385,000 1,369 FH 1,615,000 862 99 970,000 1,036 99 850,000 782 99 1,200,000 599 99 900,000 961 99 1,018,000 860 99 755,000 845 99 1,395,000 736 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.

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