Real Estate Radar

To Tax Or Not to Tax

2009-07-10T11:05:00.002+08:00

It seemed pretty confusing to pty owners & investors after a proposed change on taxing profits from pty sales was reported. It generated enough concerns to send pty stocks down and ytd, MOF (Ministry of Finance) has to come out to clear the air.

Generally, gains from pty sale is not taxable as it is a capital gain, unless a person is deemed to be a trader. This sometimes creates confusion to pty owners who are not sure if they would be taxed.

The proposed change is to provide certainty to owners who sell only 1 pty within a 4yr period. However, it does not mean those who have sold >1 pty within the 4yr period will automatically be taxed. IRAS will assess based on the facts and circumstances of each case.

* MOF-Tax , ST-Tax , IRAS-PtyTrader *

No Go for Bungalow

2009-07-10T09:09:00.000+08:00

A couple went to High Court after URA rejected their application to convert a semi-D hse into a bungalow. The court dismissed their appeal and referred to a 2002 URA order that imposed restrictions on the redevelopment of semi-D hse.

The couple's hse sits on a 419 sqm plot, but the hse which it is attached to, has only 244.5 sqm of land. Thus their redevelopment would lead to a lop-sided hse which the 2002 circular was drafted to prevent such anomaly. Therefore the adjoining semi-D must also be on a >=400 sqm land and width of >=10m such that it can be developed into another detached hse, only then the bungalow will be allowed to erect.

* AsiaOne-Bungalow *

Tracking S'pore 2009 Economy - 1Q09 GDP

2009-07-02T09:11:00.000+08:00

(1) GDP
1Q09 (qtr-qtr): -14.6%
1Q09 (yr-yr): -10.1% (LastQ: -4.2%)
2008: 1.1% (2007: 7.8%)
2009 Forecast: -9 to -6% (Revised fr: -5 to -2%)

(2) CPI
(A) Mth-Mth
May 09: 0.6%
Apr 09: -1.1%
Mar 09: -0.4%

(B) Yr-Yr
May 09: -0.3%
Apr 09: -0.7%
Mar 09: 1.6%

(C)
2008: 6.5%
1st 5mths of 2009: 1.1%

(3) Employment
1Q09p: -1.0k
4Q08: 21.3k
3Q08: 55.7k
2008: 227.2k (LastYr: 234.9k)

(4) Redundancies
- Retrenchment & Contract Workers
1Q09p: 12,600
4Q08: 9,410
3Q08: 3,180
2008p: 13,400 (LastYr: 7,675)

(5) Unemployment
1Q09p: 3.2%
4Q08: 2.5%
3Q08: 2.3%
2008: 2.3% (LastYr: 2.1%)

(6) Others
Apr09: Total trade -28.5%
Mar09: Industrial Production Index -33.9%
Mar09: Retail Sales -7.3%

* MTI-GDP *
* StatSing: CPI03 , CPI04, CPI05 *
* MOM-Employment *

Fall In Grade A Office Rents

2009-03-05T11:14:00.004+08:00

A report done by CBRE Research showed tt S'pore office rents in 4Q08 (yr-yr) had the sharpest fall in Asia. Her vacancy rate had also gone up to 0.9% fr 0.2% a yr ago. However, some tenants whose leases tt were committed 3 - 4yrs ago could still face with higher rents upon renewal this yr.

4Q08 (yr-yr) Grade A Office Rental:
SGP: -14%
Tokyo: -13.4%
HK: -13.2%
Hanoi: 25.6%
KL: 19.3%
Seoul: 9.5%

* Asia1-Office *

Beware of Indemnity Clause

2009-03-03T17:50:00.005+08:00

Case 1:
Some developers are getting the original buyers to sign a Letter of Authority with an indemnity clause that the original buyers will be liable for breaches by their sub-purchasers, including payments for pty tax and maintenance fees.

However, the Housing Controller said tt this was against rule 16 of the Housing Developers Rules, which requires a developer to enter into fresh S&P with the sub-purchasers on the same terms and obligations as the original buyers. Thus the sub-purchasers will be in a direct contractual relationship with the developer and releases the original buyers from their obligations.

Case 2:
Some developers are offering Interest Absorption Scheme (IAS) to attract buyers. Such scheme is similar to the Deferred Payment Scheme tt was scrapped by Govt last yr, except tt buyers need to secure home loans and developers will pay the interest until TOP.

But the scheme comes with an indemnity clause tt shd the developer fail to pay interest to the bank, buyers will have to make the payment and their credit standing will also be affected. Experts think tt such risks are low bcos the developer's reputation is at stake, and the amt of interest is negligible to the overall project cost.

* CNA-S&P , CNA-IAS *

More Condo Launches Coming

2009-03-03T13:00:00.008+08:00

With 2 successful launches, Caspian @Jurong & Alexis @Alexandra, another 102-unit FH project, St Patrick's Residences @St Patrick's Rd and 118-unit project, The Beverly @Toh Tuck Rd were launched.

On ave, the price of St Pat Residences was abt $675 psf for a 1,152 sf 2BR unit and abt $900 psf for a 3,423 sf 4BR penthouse. Some 3BR cost just <$1m. Interest absorption scheme (IAS) was offered at a 3% permium.

Over at The Beverly, ave price was abt $750 psf. Unit sizes range fr 1,120 sf for 2BR to 4,187 sf for 4BR, and 2,099 - 2,757 sf for 2-storey penthouses. IAS was not offered.

More projects are expected to launch soon: Double Bay Residences @Simei, The Arte @Thomson, Domus @Irrawaddy, Ascentia Sky @Redhill and The Mercury @River Valley.

* AsiaOne-Launch *

*****

Seems tt S'poreans are either vy rich or optimistic ... ... long queues at NATAS fair, and buying big ticket item like condo; while Citibank, AIG are requesting for more $$$, and stocks plunged to many-yrs lows.

And still got pple so brave doing flipping ... ... * AsiaOne-Flippers *.

Mar09 DC Rates Revision

2009-02-28T08:33:00.000+08:00

wef 1 Mar 09, 4 grps will have lower DC rates:
~ Grp A (Commercial): -4%
~ Grp B2 (Res - NL): -15% (LastRev: -6%)
~ Grp C (Hotel, Hospital): -10%
~ Grp I (Biz zone commercial use): -4%

The rest remains unchanged.

* URA-DC , URA-Grouping , URA-DCRates *

Before You Leap ... ...

2009-02-22T15:22:00.001+08:00

As pty prices continue to fall, some banks are disbursing a smaller loan amount to borrowers, and buyers will have to either top-up the diff or pay a 1-1.5% penalty for backing out the bank loan. This is because formal valuation lags behind indicative valuation, and when prices continue to drop, it will result in a lower valuation on a pty.

Some banks are also staying clear fr some developments such as The Sail and Sentosa Cove due to large variations in valuation. A Citigroup report showed that prices of high-end pty had dropped by abt 35% fr a yr ago, and could further drop by 30-40% this yr.

* AsiaOne-Valuation *

KL Luxury Condo Price Dived

2009-02-22T14:09:00.000+08:00

Prices of luxury condos in KLCC area hv dived amid economic downturn, and as foreigners cash out.

Top KLCC apartment used to sell around RM3k psf (S$1,254 psf) during the peak. Now, most projects are selling abt RM1+k psf in the secondary mkt, except for some premium units which developers are asking abt RM2k psf.

* AsiaOne-KLCondo *

Strong Interest in Caspian

2009-02-09T18:23:00.004+08:00

Caspian, by Frasers Centrepoint, attracted very strong interest at its preview last wk. This is the 1st major condo launch tis yr.

Located beside Lakeside MRT, the 712unit LH condo was priced at $580 psf for the 1st batch of 250 units. Subsequent 100 units with better facing were sold at $600 psf. Buyers who opted for interest absorption scheme hv to pay 3% more on the purchase px.

Nearby condos like Lakeholmz and Lakeshore are commanding at $564 - $626 psf and $750 psf respectively. The Centris at Boon Lay MRT was transacted at ard $550 psf last mth.

* ST-Caspian , AsisOne-Caspian , Frasers-Caspian *

Prime Projects Near Ave Launch Prices

2009-02-09T17:41:00.005+08:00

A study by Savills S'pore showed tt recent economy downturn has led to a handful of uncompleted prime residential pty sold at prices below or near to their ave launch levels.

For projects launched in 2005, transacted prices remained well above their ave launch prices. But not so for those launched in 2006 - 2008.

Projects falling below launch levels (Non-landed in D1, 4, 9, 10, 11):

* ST-Prime *

HDB Lease Buyback Scheme

2009-02-07T13:24:00.000+08:00

wef 1 Mar 09, HDB will accept application for Lease Buyback Scheme (LBS) - HDB will buy back the tail-end of the lease, leaving the elderly with a non-transferable 30yrs lease.

Eligibility:
- Singaporean
- Age of youngest lessee is >= 62yrs old
- Household income <= $3k
- <= 3Rm flat, with outstanding mortgage <= $5k
- Hv not owned >= 4Rm flat or pte pty
- Hv only enjoyed 1 housing subsidy
- Hv owned the flat for >= 5yrs

Equity Unlocked:
- Value of flat depends on (1) mkt value, and (2) length of the remaining lease.
- Govt subsidy of $10k.

Payout:
- $5k lump sum
- Remainder will be used to purchase an annuity fr CPF to provide mthly stream of income for life. The amt of mthly income depends on the equity unlocked (minus $5k), the age and gender of the lessee(s).

If the elderly passes away b4 30yrs is up, his fmy will get a pro-rated refund. And if he lives beyond 30yrs, HDB will also ensure a roof over his head.

* HDB-Leaseback , Asia1-Leaseback *

4Q08 Real Estate Data

2009-01-23T16:18:00.010+08:00

Prices:
(A) Pte Residential:
Qtr-Qtr: -6.1% (LastQ: -2.4%)
Yr-Yr: -4.7% (LastYr: 31.2%)
- (i) Non-landed: -6.3% (LastQ: -2.5%)
- (ii) Landed: -5.3% (LastQ: -1.9%)

(B) Commercial
- (i) Office:
Qtr-Qtr: -4.9% (LastQ: -3.9%)
Yr-Yr: -7.0% (LastYr: 32.6%)
- (ii) Shop:
Qtr-Qtr: -4.8% (LastQ: -0.3%)
Yr-Yr: -1.9% (LastYr: 13.2%)

(C) Industrial: -6.5% (LastQ: 0.9%)

Rental:
(A) Pte Residential:
Qtr-Qtr: -5.3% (LastQ: -0.9%)
Yr-Yr: 2.0% (LastYr: 41.2%)

(B) Commercial :
- (i) Office:
Qtr-Qtr: -6.5% (LastQ: -0.8%)
Yr-Yr: 5.8% (LastYr: 56.1%)
- (ii) Shop:
Qtr-Qtr: -0.6% (LastQ: -0.6%)

(C) Industrial: -3.7% (LastQ: 0.1%)

Supply:
(A) Pte Residential:
- (i) Uncompleted: 64,982 units (LastQ: 66,422)
- (ii) Unsold: 43,414 uncompleted units (LastQ: 42,918)
- (ii) Launches: 706 uncompleted units (LastQ: 2,244)
[Newton Edge @Makeway Ave, RV Suites @River Valley Rd, Rosewood Suites @Rosewood Dr]
- (iii) Sold: 407 uncompleted (LastQ: 1,452) units and 12 completed (LastQ: 106) units
- (iv) Sub-sales: 203=12.8% of all sales (LastQ: 492=11.5%)
- (v) TOP: 2,651 (LastQ: 2,195)
[City Square Residences @Kitchener Link, The Esta @Amber Gdns, The Infiniti @West Coast Pk]
- (vi) Vacancy rate: 6.1% (LastQ: 5.8%)

(B) Commercial
- (i) Office: 1,386k sqm GFA (LastQ: 1,407k sqm), Vacancy rate: 8.8% (LastQ: 8.2%)
- (ii) Shop: 678k sqm GFA (LastQ: 731k sqm), Vacancy rate: 6.2% (LastQ: 6.3%)

(C) Industrial
- (i) Total supply: 4.55m sqm GFA (LastQ: 4.80m sqm)
- (ii) Vacancy rate: 6.6% (LastQ: 6.6%)

HDB
- RPI: 1.4% (LastQ: 4.2%)
- Resale Transaction: -24% (Qtr-Qtr), -3% (Yr-Yr)
- Median COV: -$4k

* URA-RealEst , URA-PPIyr , URA-RentalYr , URA-Chart1 , URA-Chart2 *
* HDB-RealEst , HDB-Prices , HDB-COV , HDB-Rental , HDB-Chart *

Budget 2009 - Property Market

2009-01-23T09:28:00.008+08:00

Measures tt affect the pty mkt:

1) For Developers:
- Allowing 1yr extension of project completion period.
- Allowing re-assignment of Govt sale sites & pte land owned by foreign developers.
- Giving QC holders <=4yrs (fr date of issue of TOP) to dispose of all pte residential units in the development.
- Allowing QC holders to rent out unsold private residential units for a max of 4yrs (fr date of issue of TOP or date of application, whichever is later).
- Allowing up to 2yrs of pty tax deferral for land approved for development.

2) For Pty Owners:
- 40% pty tax rebate for owner-occupied residential properties.
- 40% pty tax rebate for commercial & industrial properties.
- Exemption of <=$150k of Net Annual Value for one owner-occupied residential pty.
- Deferment of increase in assessment rate for hotel rms.
- Additional CPF Housing Grant (AHG) for 1st time home-buyers: Max quantum will be increased fr $30k to $40k, and the household income ceiling will be increased fr $4k to $5k.

* Budget 2009 , URA - Dev , IRAS - Tax *

2008 SGP Economy Report Bk

2009-01-21T21:20:00.005+08:00

(1) GDP
4Q08 (yr-yr): -4.2% (LastQ: 0.0%)
2008: 1.1% (2007: 7.8%)
2009 Forecast: -5 to -2% (Revised fr: -2 to 1%)

(2) CPI
(A) Mth-Mth
Oct: 1.0% (Last mth: No change)
Nov: -0.2%
Dec: -0.6%

(B) Yr-Yr
Oct: 6.4% (Last mth: 6.5%)
Nov: 5.5%
Dec: 4.3%

(C) 2008: 6.5%

(3) Employment
4Q08: 26.9k (LastQ: 55.7k)
2008: 227.2k (LastYr: 234.9k)

(4) Retrenchment
4Q08 Prelim: 7k (LastQ: 2,346)
2008 Prelim: 13,400 (LastYr: 7,675)

(5) Unemployment
4Q08: 2.6% (LastQ: 2.2%)
2008: 2.3%(LastYr: 2.1%)

* MTI-GDP *
* StatSing: CPI10, CPI11, CPI12 *
* MOM-Employment *

Lower Price or Goodies for New Condo

2009-01-06T18:09:00.010+08:00

Soft Launch/Pte Preview:
(1) Balestier area, FH, ~$1k psf
Nova 48 @Prome Rd, 48units
Nova 88 @Bhamo Rd, 88units

(2) Alexandra area, FH, ~$900 - $1k psf
Alexis @Alexandra Rd, 293units

(3) Mhd Sultan area, 999yrs, ~$1.5k psf
Vivace @Tong Watt Rd, 85units

On Discount/Offer Goodies:
(1) Lucida @Suffolk Rd, FH, 62units
~$1.2k psf (was $1.6k psf early 2008)

(2) Mountbatten Suites @Mountbatten, FH, 32units
~$900 psf (was $1.1k psf), offering stamp duty absorption

(3) Woodsville 28 @Potong Pasir area, 99yrs, 110units
~$850 psf, offering renovation vouchers.

* AsiaOne-Prices *

Prices of Thailand Luxury Condo to Slide

2008-12-11T23:26:00.006+08:00

As global economy heading south, analysts predict tt Thailand's luxury condo prices would fall by 10 - 20% in 1H09, despite being relatively cheap (abt 100k - 150k baht psm = S$4,3k - 6.5k psm) than S'pore/HK.

The luxury condo mkt deps on overseas investors as local Thai buyers prefer luxury detached hse to condo. Thai law forbids foreigners from buying land, but allows them to own up to 49% of the saleable space in a condo.

* AsiaOne-ThaiPty *

Not Looking Good - HK Property

2008-12-10T23:45:00.000+08:00

A Reuters' poll showed tt HK & S'pore apartment prices were expected to drop abt 20% by the end of 2009.

In HK, banks are asking for 30 - 40% down payment instead of the usual 10%, leading to even fewer buyers and thus sellers are disposing their properties at 30% discounts.

HK pty transactions hit a 17-yr low in Nov, down 87% in value a yr ago.

* AsiaOne - HKPty *

1H09 Govt Land Sales

2008-12-05T15:57:00.000+08:00

1H09 Govt Land Sales (GLS) Programme would only consist of sites in the Reserve List. Of the 38 sites fr this list, 37 sites were actually carried over fr the Reserve List and 1 fr Confirmed List in 2H08. No new sites will be added.

The 38 sites potentially yield:
(A) 7,920 pte residential units
(B) 512k sqm GFA of comercial space
(C) 5,160 hotel rooms

Outside the GLS Programme, the supply of sites includes:
(A) 40k sqm GFA of commercial space
- (i) 14k sqm GFA fr One-North
- (ii) 5k sqm GFA fr vacant state buildings
- (iii) Retail facilities at Sentosa, parks and MRT
(B) 240 hotel rooms
(C) No supply of pte residential units

* URA-GLS , AsiaOne-GLS *

3Q08 Economy Performance

2008-11-22T14:53:00.002+08:00

(1) GDP
3Q08 (yr-yr): -0.6% (LastQ: 2.3%)
2008 Forecast: 2.5%
2009 Forecast: -1 to 2%

(2) CPI
(A) Mth-Mth
Jul: 1.2%
Aug: 0.2%
Sep: No change

(B) Yr-Yr
Jul: 6.5%
Aug: 6.4%
Sep: 6.7%

(C) 1st 9mths: 6.9%

(3) Employment
3Q08: 57.8k (LastQ: 71.4k)

(4) Retrenchment
3Q08: 2k (LastQ: 1,798)

(5) Unemployment
3Q08: 2.2% (LastQ: 2.2%)

* MTI-GDP *
* StatSing: CPI7, CPI8, CPI9 *
* MOM-Employment *

Lower Density for Strata Landed Homes

2008-11-03T22:53:00.002+08:00

URA is reinstating an old rule to strata-titled landed homes, aka cluster homes, as developers tend to cram as many homes onto a plot as possible, leading to congestion problem and affecting quality of the living environment.

wef 3 Feb 09, a cap to limit the number of allowable units in strata landed housing will be re-introduced. This will be based on a min plot size/unit which is similar to conventional landed homes. Thus developers will have to build fewer strata landed units, but each unit can be bigger in size.

A comparison of the # of units on 10k sqm b4 and after the change of rules:
Strata terrace: 80 vs 66 (20% bigger in size)
Strata semi-D: 72 vs 50 (45% bigger in size)
Strata bungalow: 60 vs 25 (2.4x bigger in size)

Strata-bungalows and semi-D may eventually disappear as such houses are bigger and thus less affordable. Typically these homes cost 10 - 20% less than conventional landed homes under current rules.

* URA-Strata , AsiaOne-Strata *

50% Discount?

2008-10-31T12:19:00.000+08:00

The owner bought the 3.3k sf hse in 2006 at US$90m. However, as mkt continues to fall, the hse near Victoria Peak, one of the most prestigious addresses in Hong Kong, was sold at HK$76m which was less than half its asking price of HK$190m.

Analysts are expecting a 30% drop in prices for the city's high-end properties as banks tighten mortgage policies.

* AsiaOne-HK *

High-end Projects Hardest Hit

2008-10-30T12:36:00.003+08:00

A DTZ report showed tt prices of some high-end projects launched in 2006 & 2007 have started to dip in 3Q07 and are now 4 - 26% lower than their highs.

Based on a low caveat of abt 10 transactions/project, Oceanfront @Sentosa Cove dived 26.4%, whereas Scotts Sq fell by 3.6% only.

Knight Frank's in-house data indicated abt 12% fall in prices for luxury properties in prime districts since early 2008. The drop is more than the expected 10%.

Official data for the core central region in 3Q08 showed a dip of only 2.7% bcos it takes into account all properties.

Banks used to give up to 80% loan to investors in 2006 & 2007. But now, this amount has reduced to 60 - 70%. With more projects going TOP soon, investors may want to sell their properties fast and drive the prices even lower. But most agents have yet to see fire sales.

Source: DTZ

* AsiaOne - High-end *

3Q08 Real Estate Data

2008-10-25T11:40:00.017+08:00

Prices:
(A) Pte Residential: -2.4% (LastQ: 0.2%)
- (i) Non-landed: -2.5% (LastQ: 0.1%)
- (ii) Landed: -1.9% (LastQ: 0.6%)
(B) Commercial
- (i) Office: -3.9% (LastQ: 0.7%)
- (ii) Shop: -0.3% (LastQ: 0.7%)
(C) Industrial: 0.9% (LastQ: 4.1%)

Rental:
(A) Pte Residential: -0.9% (LastQ: 2.5%)
(B) Commercial
- (i) Office: -0.8% (LastQ: 6.3%)
- (ii) Shop: -0.6% (LastQ: 5.2%)
(C) Industrial: 0.1% (LastQ: 2.3%)

Supply:
(A) Pte Residential:
- (i) Uncompleted: 66,422 units (LastQ: 67,569)
- (ii) Unsold: 42,918 uncompleted units
- (ii) Launches: 2,244 uncompleted units (LastQ: 1,814)
[Livia @Pasir Ris, Clover by the Park @Bishan, Beacon Hts @Mar Thoma Rd]
- (iii) Sold: 1,452 uncompleted and 106 completed units
- (iv) Sub-sales: 492=11.5% of all sales (LastQ: 518=12%)
- (v) TOP: 2,195
[The Sail @Marina Bay, The Cosmopolitan @Kim Seng Rd]
- (vi) Vacancy rate: 5.8% (LastQ: 6.1%)

(B) Commercial
- (i) Office: 1,407k sqm GFA (LastQ: 1,334k sqm), Vacancy rate: 8.2% (LastQ: 7.8%)
- (ii) Shop: 731k sqm GFA (LastQ: 668k sqm), Vacancy rate: 6.3% (LastQ: 6.3%)

(C) Industrial
- (i) Total supply: 4.80m sqm GFA
- (ii) Vacancy rate: 6.6% (LastQ: 6.9%)

Source: URA

HDB
- RPI: 4.2% (LastQ: 4.5%)

Source: HDB

* URA-RealEst , HDB-ResalePx , HDB-COV , HDB-Rental *

Troubled US Homes

2008-10-22T11:06:00.003+08:00

More and more Americans' homes are worth less than the mortgages that they have taken, and may threaten the US economy with another wave of foreclosures and bankruptcies.

This number has increased from 6.6m homeowners last yr to abt 12m now, and is expected to increase with home prices continue to fall. If these houses go into foreclosure, the oversupply of homes will delay housing mkt recovery and add pressure on banks.

Many people got into trouble when they refinanced their mortgages when property values rose, to pull out cash to support their lifestyles; and now with a mortgage worth more than their homes, some choose to walk away and return their keys to the banks.

For those who bought US homes in early 2003, nearly 1 in 3 now have -ve equity; and nearly half of the buyers in 2006 are under water now.

* ST-US Mortgages *