The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 9th December 2016

Top Story

Recovery in private home sales seen spilling over to new year
A mild recovery in private residential transactions could spill over into 2017 – though this comes, ironically, against a backdrop of falling rents and rising vacancies.  This paradox arises mainly from pent-up demand from buyers who have delayed their purchasing decision since the cooling measures of 2013, property consultants said.  But the state of the economy and its impact on the labour market is a wild card. The uncertainty has clouded the reading on price directions for next year; analysts expect private home prices to slip further by as much as 3 per cent or to rise by as much as 2 per cent through 2017.

Singapore Economy

S’pore economy could expand 2.3% in 2017: Deutsche Bank
The Singapore economy could expand 2.3 per cent year on year in 2017, with a further rise to 3 per cent in 2018, said Deutsche Bank in a report this week. Still, it cautioned that “such a growth increment (is) hardly any reason to cheer about” given the country’s steady deceleration over the last few years.  Indeed, while the German bank’s 2017 growth projection stands within the government’s 1-3 per cent forecast range – and is in fact above 2016’s official estimate of 1-1.5 per cent growth – it is far below the 5.3 per cent average growth in the preceding decade (2000-2009).  Said the bank: “A 1-3 per cent expansion rate for another three years only implies that Singapore is stuck in a low-growth environment, where domestic sentiment, productivity, and inflationary pressures are weak.

Singapore-Hong Kong rivalry gets a new twist with fintech
Tax benefits, government help and easy access to regional markets led Joe Seunghyun Cho to choose Singapore as the headquarters for his six financial technology (fintech) companies, rather than base them in the rival hub of Hong Kong or his native South Korea.  “We are quite impressed by government agencies here,” said Mr Cho, whose Marvelstone Group is developing a mobile payments platform and invests in other fintech firms. Singapore authorities introduced him to tax advantages and connected his firm to potential partners. 

Lessons from history on low-rate environments
The current prolonged low-interest-rate environment has been cause for concern for equity investors. But, according to Schroder Investment Management in Singapore (Schroders), history has witnessed this phenomenon before.  And it can, to an extent, teach us how our equity markets will behave now.  In its latest Talking Point report, Schroders’ head of research and analytics, Duncan Lamont, examined the historical impact of low interest rates on equity markets.

Singapore Real Estate

HDB resale prices up 0.2% in November from October: SRX
Resale prices of Housing & Development Board (HDB) flats rose 0.2 per cent in November 2016 compared to a month ago, the SRX Property Price Index on Thursday showed. Prices for all HDB flats except executive units were up.  From a year ago, prices have fallen 0.7 per cent. Prices are also down 11.3 per cent since the peak in April 2013.  Resale volume fell 5.3 per cent in November 2016 from a month ago to 1,585 units. On a year-on-year basis, resale volume increased by 7.1 per cent.

Fewer HDB flats resold in November but at higher prices
HDB resale prices rose a slight 0.2 per cent in November compared to October this year, driven by a 0.8 per cent price increase in mature estates, versus a 0.3 per cent dip in non-mature estates.  But resale volume fell in November. According to HDB resale data compiled by SRX Property, some 1,585 flats were resold in November 2016, representing a 5.3 per cent drop from 1,673 transacted units in October.  On a year-on-year comparison, the trend is reversed. Resale prices have fallen 0.7 per cent from November 2015, while transactions have increased by 7.1 per cent compared to 1,480 units resold in November 2015.

Local developers still keen to replenish land bank
Developers are seeing a challenging outlook ahead for the private residential market but many are still keen to replenish their land bank, albeit in a selective fashion.  Sim Lian Group, which sold the most number of residential units among developers this year, is actively looking at both the government land sales (GLS) programme and enbloc properties to replenish its land bank, its executive director Kuik Sing Beng told The Business Times.  The recently privatised construction cum development group sold over 1,000 units in the first 11 months of this year during which it launched two executive condominiums (ECs); it had 267 unsold units left in its inventory.

More sites for private homes may be released
The Government is preparing for its next land sales exercise against a backdrop of bullish bids for sites and a declining stock of unsold private homes.  This could nudge it to release more plots in this exercise – after a spell of trimming supply to a muted market, analysts said.  Land tenders this year have mostly been competitive, with some developers tabling aggressive bids to replenish their land banks.  “In order to keep land prices from over-escalating, in particular for executive condominiums (ECs) and private homes, the Government could release more sites for the first half of 2017,” said Ms Alice Tan, head of consultancy and research at Knight Frank.

Manulife said to be doing due diligence on PWC Building
PWC Building at 8 Cross Street could be in the early stages of a potential sale.  BT understands that insurer Manulife has been selected to do exclusive due diligence for the purchase of the 28-storey building, which has a net lettable area (NLA) of 355,704 sq ft.  PWC Building, which is owned by DBS, is on a site with a balance lease term of 78.5 years. The price is expected to be more than S$700 million. According to information in DBS’s 2015 annual report, PWC Building was independently valued at S$711 million at the end of last year; this works out to S$1,999 psf on NLA.

National Aerated Water sells Serangoon Road site to Malaysia developer
Malaysia-listed developer Selangor Dredging is buying a freehold site in Serangoon Road from National Aerated Water Company for $47 million.  The plot at 1177 Serangoon Road has a two-storey art-deco-styled industrial building on the site.  National Aerated Water Company, which was known for its distributorship of soda pops such as Sinalco and Kickapoo Joy Juice, operated a bottled soft drinks factory there until operations ceased in the 1990s.

Capital recycling trend continues for S’pore-listed industrial Reits
Despite the lacklustre outlook on property capital values, industrial S-Reits (Singapore-listed real estate investment trusts) have still managed to divest some of their non-core assets at decent valuations, OCBC Investment Research said yesterday.  On Monday, Sabana Reit announced its proposal to divest its 218 Pandan Loop property for a sum of S$14.8 million, which is 9.6 per cent above its acquisition price of S$13.5 million and 13.8 per cent above its book value of S$13 million as at June 30, the research house noted.  Other Reits that have recently divested their assets include Cambridge Industrial Trust (CIT) and Ascendas Reit. CIT completed the divestment of its 2 Ubi View property on Oct 31 for a total consideration of S$10.5 million, translating into premiums of 6 per cent and 40 per cent to the book value and purchase price, respectively.

1,500 families gain from raised HDB income caps
More than 1,500 households benefited from adjustments in housing policy last year that allowed them to buy new subsidised flats, or resale flats using grants, the Housing Board said yesterday.  These were households that could not buy new or resale flats before, as their earnings exceeded the previous income ceiling of $10,000 for families and $5,000 for singles.  HDB raised the ceiling to $12,000 for families and $6,000 for singles in August last year to adjust for rising incomes, which allowed higher-income households to buy public flats.

Middleman economy thrives in property market
Some critics of the Internet and other disruptive technologies warn that technology will replace the middleman.  Artificial intelligence will replace lawyers, bankers, stockbrokers, real estate agents, and even doctors. A computer will argue before the High Court, negotiate the sale of a company, advise clients on a property transaction, and perform open heart surgery.

Plan to save wildlife at site marked for housing
To save rare animals in a forested area in Lentor, the Urban Redevelopment Authority (URA) has for the first time embarked on a novel wildlife management plan.  The 30ha plot designated for private housing is being gradually cleared so that animals are herded to nearby green areas, such as the Central Catchment Nature Reserve.  “The goal of the plan is to guide wildlife towards the neighbouring forested areas for relocation, and ensure that none remains before the land is cleared,” said Mr Alvin Tang, senior civil engineer from the URA’s development coordination department.

Companies’ Brief

Banyan Tree strikes strategic partnership with AccorHotels
Resort operator Banyan Tree Holdings has inked a strategic partnership with hotel group AccorHotels that comes at a time of consolidation within the industry.  Banyan Tree said on Thursday that both parties have entered into a heads of agreement for their long-term partnershiip. AccorHotels will invest an initial S$24 million in a mandatory convertible debenture that on conversion will give it an approximately 5 per cent stake in Banyan Tree. AccorHotels, which has a portfolio of hotels that include Singapore’s Raffles Hotel, has an option to purchase another stake of about 5 per cent.  Shares in Banyan Tree surged four cents, or 10.1 per cent, to S$0.435 on Thursday on the news.

Views, Reviews & Forum

Seamless end-to-end workflow needed to lift Singapore retail
Amid the weak economic outlook and downbeat consumer sentiment, the slew of closures and consolidations in Singapore’s retail landscape has led to further soul-searching within the industry. The pursuit of fresh solutions has become more pressing, as the S$44 billion sector remains an important engine of growth and source of employment.  Disruptive change has been highlighted as a key challenge for Singapore firms – in particular the rise of e-commerce and its impact on brick-and-mortar stores.

Carparks in DBSS developments not privately owned
Flats built under the Design, Build and Sell Scheme (DBSS) are designed, built and sold by private developers, and form part of public housing (“DBSS owners should not be charged for carpark use“; Dec 2).  In a DBSS development, the developer purchases the residential component of the land and, thereafter, builds and sells the residential units to buyers.

Town councils should reclaim responsibility for lift maintenance from contractors
Following the decentralisation of estate maintenance, it has been difficult for individual town councils to enjoy the Housing and Development Board’s (HDB) previous economies of scale in lift maintenance.  The HDB was able to employ a team of mechanical and electrical technicians to test lifts, ensure that lift contractors do robust preventive maintenance and troubleshoot problems. Now, town councils must depend on their contractors’ expertise in lift maintenance.

Global Economy & Global Real Estate

New York expands use of hotels amid surge in homeless population

Manhattan’s apartment landlords prop up market with incentives

Airbnb backs off fight with governments, offers policy suggestions

UK house prices rise as supply fails to match demand growth

Most foreign firms owning London property use tax havens

Beijing may ease foreign investment limits in some sectors

China trade strong in November as global demand picks up

Additional Articles of Interest – Local & Overseas Real Estate

Local & Overseas Real Estate – Full Article

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