CEA to further raise industry standards

Not resting on its laurels, the Council for Estate Agencies (CEA) will continue to take further steps to raise industry standards and protect consumers, Minister for National Development Khaw Boon Wan posted in his blog yesterday.

He stated that improvements will continue to be made via four main fronts: fine tuning the Estate Agency Work Regulations, improving industry development, promoting consumer education while continuing to address the industry's overall concerns.

CEA has also managed to close more than 75 per cent of complaints received thus far, issuing numerous letters of advice and warnings, and resorting to legal action in certain cases.

Acknowledging the council's achievements since its inception in October 2010, Mr Khaw maintained a modest tone and posted: 'We had a good one year, but it is only the first step. Let us now build on this foundation.'

For instance, he highlighted that a review of the CEA-Dispute Resolution Mechanism is currently ongoing to see how the Small Claims Tribunals can be incorporated to better facilitate resolution matters.

As at Jan 1 this year, the CEA had licensed a total of 1,487 estate agents - comprising companies registered to carry out work of a real estate nature - and 30,577 salespersons - the professionals who guide consumers around property viewings.

Notably, the industry was able to attract fresh blood with 2,733 new salespersons registered last year, out of which 81 per cent of the pool possessed tertiary education - a considerable jump from the 53 per cent reflected in the existing population of salespersons.

Comparatively, the CEA issued licences to 1,559 estate agents and registered 34,301 salespersons last year. Out of which, 73 or 4.6 per cent of the former and 3,724 or 10.9 per cent of the latter indicated that they wished to discontinue with their estate agency work in 2012.

Said Purnima Shantilal, director of CEA: 'From industry feedback, we understand that the salespersons who did not wish to continue with their registration were part-timers who are concentrating on their full-time jobs or had found a full-time job.'

Ms Shantilal also added that other reasons for departure included family commitments and taking a break from the industry.

Currently, registered salespersons are required to comply with the continuing professional development (CPD) scheme implemented on April 1 last year by undergoing six hours of training within 12 months to keep in touch with the latest shifts in policies and procedures pertaining to real estate transactions.

However, the current mandatory six training hours may not stay that way for long as CEA has indicated that that number might be increased in the continual effort to raise the industry's standards.

Source: Business Times – 31 January 2012

Over 90% of units sold in Watertown picked up by S'poreans

 

http://www.fareast.com.sg/FEOCorp.Web/index.aspx?page=home-prop-info&prop=342

Initial evidence suggests that the additional buyer's stamp duty (ABSD) may have succeeded in cooling foreign buying.

More than 90 per cent of the over 550 units sold so far for Watertown condo in Punggol have been taken up by Singaporeans. This is down from a share of about 80 per cent for Singaporean buyers in other surburban condos - or 'transurban' condos as developer Far East Organization likes to call them - that were launched by the property giant last year, such as The Tennery above the Ten Mile Junction LRT Station in Bukit Panjang, The Greenwich in Seletar Hills and euHabitat at Jalan Eunos.

Singaporean buyers have also accounted for about 80 per cent of buyers at The Hillier next to the upcoming Hillview MRT Station on the Downtown Line, which was previewed last month after the Dec 7 announcement of the introduction of the ABSD - although options to buyers were issued only from Jan 1 this year.

A source reckons that foreigners and permanent residents may be drawn to the Hillview location given its proximity to the Bukit Timah area and good schools which many well-heeled PRs in particular would be familiar with.

From Dec 8, 2011, foreigners pay 10 per cent ABSD on any residential property purchase in Singapore. Permanent residents pay 3 per cent ABSD on their second and subsequent residential property while Singaporeans pay the same ABSD rate on their third and subsequent residential property.

As for Watertown, which Far East is developing jointly with Frasers Centrepoint and Japan's Sekisui House, about half of the buyers are from District 19 (Sengkang, Hougang, Punggol and Serangoon) and two thirds are residing in public housing flats. 'Interestingly, some of our buyers are purchasing the units at Watertown for their weekend/holiday homes and also for retirement. Many are also buying for their children as well,' said Far East's chief operating officer, property sales, Chia Boon Kuah.

Explaining the strong sustained sales momentum for Watertown, which went on the market last Wednesday, Mr Chia pointed to the project's uniqueness. 'It's a one-of-its-kind mixed use development that offers waterfront living integrated with a mall (Waterway Point) and the Punggol MRT Station.'

He also points to the strong appeal of homes in mixed-use developments, which was also seen in The Tennery, Greenwich and The Hillier.

Another selling point for Watertown, which will have 992 residential units, is the expertise of Far East's partners in the project - Frasers Centrepoint in retail mall operations and Sekisui in innovative green construction technology - adding to the brand equity of Watertown, said Mr Chia.

Source: Business Times – 26 January 2012

Hot property: Mixed-use developments

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AN ENTHUSIASTIC response by home buyers to the newly launched Watertown in Punggol Central has provided yet more evidence of a sure-fire winning formula for developers.

Even in subdued market conditions, buyers seem to flock to large mixed-use developments which include state-of- the-art shopping options.

If the residential and mall development is linked to an MRT station, as with Watertown, chances are that house hunters and investors will show up in droves.

At Watertown, buyers bucked the trend of recent slow sales elsewhere by snapping up more than 230 units in the first two days of preview at the 992-unit project - 55 per cent of which were small units under 700 sq ft.

Prices were also raised by between 3 per cent and 5 per cent from the average of about $1,080 psf when the project first previewed on Wednesday.

And the rapid buying came despite the showflat being ready only yesterday evening. This prompted its developer to move its official launch, originally planned for next week, to today.

The $1.6 billion project is being jointly developed by Far East Organization, Frasers Centrepoint and Japanese firm Sekisui House. It will be integrated with a mall of 370,000 sq ft of net lettable shop space and a Shaw Theatres Imax cinema.

It is one of the largest projects to be launched in recent years. Only a handful of others, such as the 1,715-unit d'Leedon in Leedon Heights and 1,145-unit The Minton in Hougang, have had more units.

The same winning formula worked a treat at CapitaLand's 583-unit Bedok Residences, launched in November.

The project attracted brisk sales, despite setting a benchmark price of $1,350 psf. A hefty 350 units were moved within the first day of launch.

Bedok Residences, in Bedok Town Centre, is part of an integrated development of homes, a shopping mall and a transport hub linked to Bedok MRT station.

The Ion Orchard mall and The Orchard Residences, built on top of Orchard MRT station, have also seen a good response. The project's apartments, launched in 2007, are more than 90 per cent sold and have fetched prices of up to $4,799 psf.

GuocoLand also paid $1.7 billion for a site in Tanjong Pagar in February last year that it plans to turn into a major commercial, hotel and residential development. These will all be linked to the MRT station via a basement with the project expected to be completed by 2016.

Experts say mixed-developments seamlessly linked to MRT stations have taken off in recent years and are popular, as they are regarded as highly rentable.

More of these developments can be expected as the MRT rail network expands, allowing the Government to push out more such sites.

Developers realise they have hit on a working formula, as each segment can leverage on the others. There's more demand than supply for such mixed-use projects now, allowing developers to push up psf prices.

Such integrated projects could be geared more towards investors who are looking to lease out the homes at higher rents.

Some people might shun these projects as there is the clutter and complexity of the retail mall below. But investors might be keen to lease out the units at higher rentals to tenants or expats who do not own cars.

Far East chief executive Philip Ng had noted at the unveiling of Watertown earlier this week that large mixed-use developments are becoming more common as the Government has been putting more of these sites on sale.

'As you can see from the land tenders, developers do recognise a lot of value and recognise that home buyers want to be in mixed-use developments integrated with the community and high connectivity.

'The last few years in Singapore have seen tremendous success in mixed-use developments like Bedok Residences, and also smaller ones like Greenwich Village, Hillier... and Frasers' Compass Point.'

Mr Ng said such developments do very well, too, in cities like Hong Kong, Tokyo, London, New York and Paris.

Source: The Straits Times – 20 January 2012

Showflat not ready, but buyers lap up Watertown

HOME buyers, undeterred by recent tough market cooling measures, turned up in strong numbers at the preview of Watertown in Punggol Central yesterday.

Far East Organization said more than 160 units out of the 250 units launched were snapped up, with Singaporeans making up more than 90 per cent of buyers.

The enthusiastic response means that the official launch, originally scheduled for next week, will now be brought forward to tomorrow.

Industry analysts say developers seem eager to push out projects quickly, possibly before more uncertainty emerges.

In the case of Watertown, the developers bought the site for the 992-unit project less than a year ago and have yet to finish the showflat.

But agents had been fielding inquiries on the mixed-use development even before the authorities' approval for the launch had been given, sources say.

They say at least 100 buyers were ready to hand over cheques on Tuesday. But building plan approvals were issued yesterday and only then could agents collect cheques and grant options to purchase last evening.

The $1.6 billion project is being jointly developed by Far East, Frasers Centrepoint and Japanese firm Sekisui House. It will be integrated with a mall of 370,000 sq ft of net lettable shop space and a Shaw Theatres Imax cinema.

Developers had earlier said that prices will start from $1,080 per sq ft (psf), which they said included a discount.

Even so, the development will still set a benchmark in Punggol, trumping Sim Lian Group's A Treasure Trove, priced at $866 psf at its launch last September.

Buyers were unfazed at picking units off the plan as the showflat is not yet up.

Key attractions are the waterfront location and the fact that the project is integrated with Punggol MRT station, experts say. Recent mixed-use launches like Bedok Residences have also seen robust sales and benchmark pricing at a median of $1,359 psf.

Developers are pushing out projects as quickly as possible before more uncertainty hits the market.

Especially in the Punggol area, developers face increasing competition as the Government has pushed out a lot of land there.

It typically takes a year or more for integrated projects of this size to be launch-ready. Thus, the 11-month turnaround for the site, bought in February last year, was fairly quick.

The Dec 7 cooling measures included an extra stamp duty of 10 per cent on all home buys by foreigners. Some analysts tip price falls of 10 per cent to 20 per cent this year.

Separately, Sekisui House said it will tap its network of retailers to introduce new-to-market brands and concepts from Japan into the upcoming mall.

Source: The Straits Times – 19 January 2012

Far East: Cooling steps may need tweaking

THE recent property cooling measures might have to be fine-tuned, depending on how persistently sales volumes drop, according to Far East Organization chief executive Philip Ng.

He told a briefing yesterday that the 10 per cent additional buyer's stamp duty for foreigners is 'a very big number'.

He also said that the measures had led Far East and its partners to drop the prices for the upcoming launch of its Watertown project in Punggol Central.

Foreigners, the main target of the new cooling policies, have shown less interest in the project than at launches before the measures, noted Mr Ng.

He said the measures may eventually need to be tweaked.

'Indeed, there could be some calibration or tiering perhaps, but that's something that has to be discussed with good data between developers and policymakers.

'At this point, it's pretty early days and you can see that there was already a drop in December,' he said, referring to the 63 per cent plunge in new private homes sales last month.

He added that the policy should be allowed to run for a while to gauge if the sales decline is persistent before deciding if the policy needs calibrating.

Mr Ng made his comments at a briefing on the upcoming Watertown launch.

The 992-unit estate has a development cost of more than $1.6 billion and is being jointly developed by Far East, Frasers Centrepoint and Japanese firm Sekisui House. It will be integrated with a mall of 370,000 sq ft of net lettable shop space and a Shaw Theatres Imax cinema.

Prices have been cut by 5 per cent to 8 per cent in response to the cooling measures.

The first 250 units will be sold at a starting price of $1,080 per sq ft (psf) after the discount and are expected to go on the market next week.

Even with the price reduction, the development will still be the priciest project in Punggol, trumping Sim Lian Group's A Treasure Trove, which was priced at $866 psf at its launch last September.

Watertown will consist of suites, 'small office, home office' (Soho) apartments, sky patios and residences. About 55 per cent of the units will be less than 700 sq ft.

Mr Ng said: 'We're reflecting the trends of major global cities like Hong Kong, Tokyo, London and Paris. They do have a sizable amount of small units in their stock... Most of our sales of small units have been quite well-received.'

He expects foreigners to account for less than 10 per cent of Watertown's sales.

Mr Lim Ee Seng, chief executive of Frasers Centrepoint, did not give the briefing his forecasts on how the residential market might pan out but alluded to land tenders that closed after the cooling measures were imposed on Dec 7 as a gauge of sentiment.

Bids for these tenders were between 10 per cent and 20 per cent lower than those for nearby sites tendered earlier.

Source: The Straits Times – 18 January 2012

ABSD: Questions that beg for answers

IT IS more than a month since the introduction of the additional buyer's stamp duty (ABSD). I am still scratching my head on the whys.

Some buyers have held back their decisions thinking that perhaps prices might fall while others have stepped away for now because their cash-on-cash returns drop if they have to pay the ABSD. We have also read about buyers not exercising their options for Bedok Residences, Archipelago and The Palette.

On the flip side, some sellers have withdrawn their intentions to sell their residential investments because they would not be able to reinvest their cash into another residential unit without having to incur the ABSD.

The secondary market, already quiet in 2011, will be reduced to a whimper in 2012. The number of units sold by developers is also expected to be lower, as some investors wait out for lower prices or look for alternative sectors to invest into.

In explaining the rationale for the ABSD, Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance and Manpower, said in a Dec 7, 2011, press release: 'We have always had open markets and must keep them that way. However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low. The additional buyer's stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road.'

Minister of State for Manpower and National Development Tan Chuan-Jin reiterated at the Redas 52nd Anniversary Dinner on Dec 27, 2011: 'Given volatile equity markets and a worsening economic situation in Europe, our small property market is attractive to foreign funds. The latest measure is a targeted and measured move to moderate such investment demand in order to avoid the need for a major correction down the road.'

The need for moderating investment inflow seems to contradict several tenets that have brought Singapore its success. The last I checked, on the Economic Development Board's website, Singapore held a string of accolades including the top spot 'for having the most open economy for international trade and investment', as ranked by the Global Enabling Trade Report 2010 published by the World Economic Forum.

Now, where and what are the sources of 'investment flows into our property market' and 'foreign funds'? And what is the exact cause for concern to the government that this lopsided ABSD is applied to foreign investors specifically targeting the residential segment and not any other asset classes? Furthermore, there were certain exclusions and permutations which now add complexity to our otherwise rather simple and clear tax system.

We begin by looking at foreigners' purchase of residential units with caveats filed in 2011. Do note that we are limited to the data provided by the Urban Redevelopment Authority's Realis (Real Estate Information System). For purposes of this article, I have assumed that permanent residents (PRs) who purchased homes in Singapore are neither a source of 'foreign funds' nor inward investment flow. Although we know there are PRs who are active in their home countries and who have invested in Singapore's residential properties, let us take it that these PRs' monies are considered local. We narrow our focus on the transactions by foreigners and by companies.

Foreign purchasers

With Singapore's push to develop its trust and fund management services capabilities, the bulk of residential transactions under company name are due to foreign purchasers. Our experience shows that Singaporean investors purchasing properties through companies are few and far between but foreigners, especially those who are planning their wealth transfer in Singapore, are more amenable to invest in properties via trusts, foundations, offshore companies or Singapore entities. There were also foreign private equity funds that invest into Singapore's residential properties such as the collective investments made through the private banks on behalf of their clients.

In 2011, foreigners accounted for 4,939 transactions (or 17.3 per cent of the total for that year) while company-registered purchases accounted for 704 units (2.4 per cent). In comparison, the number of units purchased by foreigners in 2007 was slightly higher at 5,038 (13.1 per cent) while company transactions were much higher at 2,681 units (7.0 per cent). The recent sharp drop in company transactions was caused by government policies restricting the loan-to-value ratio for residential properties purchased under company names and a pullout of real estate funds post-Lehman crisis, for example Wachovia, Citadel. With the introduction of 10 per cent ABSD for residential units purchased under company name, we can expect the numbers to drop further in 2012.

Note that 5,038 residential units (13 per cent of total units) were purchased by foreigners in 2007 at a time when the foreigner population was 1.005 million (22 per cent of total population) while in 2011, foreigners purchased 4,939 units (17 per cent of total units) and the foreigner population is 1.394 million (27 per cent of total population). Foreigner population in our midst increased 39 per cent between 2011 and 2007 but yet the number of units purchased by foreigners remained steady despite a small increase in percentage terms.

There is no easy way of correlating these data points as there are foreigners who purchased homes in Singapore and who do not live in Singapore. On another hand, foreigner population includes those on dependent passes, student passes, etc.

In order to address the concern about funds inflow, we need to examine the dollar value of residential purchases made by foreigners.

In absolute value terms, foreigners accounted for $10.2 billion of investments into the residential segment in 2007. Adding on the value of transactions made by companies, the total is $18.2 billion. In contrast, against a weak external environment, the investment inflow by foreigners in 2011 accounted for $8.5 billion while company transactions accounted for $1.9 billion. The total is less than $10.4 billion. In fact, the total in 2010 was higher at $12.7 billion (foreigner and company).

Elsewhere in the Singapore real estate scene, funds also flowed into office and retail segments as well as en bloc sales of residential projects. In 2007, $11 billion worth of block deals were inked in the office and retail segments versus $7 billion in 2011. En bloc sales of residential projects totalled $12 billion in 2007 versus the paltry tally of under $3 billion for 2011. Those tracking the market since the 2007 peak will remember that the bulk of these transactions was due to foreign funds and insurance companies.

Developers from Malaysia and China also featured strongly in the en bloc and Government Land Sales arena.

We saw a lot more foreign monies buying into Singapore in 2007 than in 2010 or in 2011. In terms of the number of residential units, 2007 also saw more purchases by foreigners and companies than in 2010 or in 2011.

The analysis generated more questions than answers. Were we similarly concerned about foreign investment inflow in 2007 as compared to now? What is the current stock of residential properties owned by foreigners and is foreign ownership growing at a pace that we should be concerned?

Where is the evidence for foreign money that is anticipated to flow in? Will the total value surpass the $20-40 billion that we saw in 2007? Should we be concerned that the foreign monies may disrupt other real estate segments such as industrial or office?

Should we be concerned that foreign monies may come in strongly on other asset classes - debt, equities, etc? Why did we not curb foreign purchasers with other methods, for example limiting the loan-to-value ratio for their second-home purchase? Are we making Singapore less of a home for the high-skilled foreign families, say biotech researchers, who have been contributing to our economy and now want to buy a home for themselves to settle down for the long term?

Will we maintain our position in the eyes of international investors?

Source: Business Times – 13 January 2012

Ideas CNY Closure

- Jason Synn Tan

Potong Pasir HUDC blocks set to go private

 THE three blocks of HUDC flats in Potong Pasir are now a step closer to being privatised.

At the end of a three-day, weekend drive to collect signatures, about 150 households out of the 175 in Blocks 110, 111 and 112 Potong Pasir Avenue 1 had signed on the dotted line, signalling their support.

This 85 per cent support level exceeds the minimum 75 per cent required by the Government for privatisation to go ahead. With this development, the only HUDC estate on the island that has not been given the go-ahead for privatisation is Braddell View.

Privatisation makes HUDC residents the owners of their units and the common property, which gives them better control over the running of their estate.

The residents each have to pay a set sum, including legal and survey fees, for this. After privatisation, an HUDC estate will, for example, no longer fall under Housing Board (HDB) regulations, such as those governing the seeking of approval before sub-letting a unit.

The cost of privatisation is capped at $30,000 per flat in Hougang and Potong Pasir, with the Government absorbing the difference if it exceeds this.

There are 18 HUDC or Housing & Urban Development Company estates in all, located in places such as Bishan, Farrer Road and Pine Grove. They were introduced in 1974 to meet the demand for homes by middle-income households priced out of private property, and phased out in 1987 when more housing choices were introduced.

Source: The Straits Times – 9 January 2012