News - Real Estate and Property Investment Club

Smaller homes take lion’s share of sales

14 Sep 2009, 11:50 pm

Home-seekers have gotten hungrier for apartments in recent months but have yet to work up a hearty appetite for large units.

Across many property launches, studio apartments and two-beddersremain most popular, reflecting continued price sensitivity on the buyers’part. They are generally ’still not as ambitious’, says DMG & Partners property analyst Brandon Lee.

At NTUC Choice Homes’ Trevista in Toa Payoh where 550 units have been launched, the majority of units left are three and four-bedders. Many buyers went straight for the two-bedroom units when the project’s preview began some two weeks ago.

GuocoLand saw the same trend when it launched Sophia Residence in the Dhoby Ghaut area. ‘All one and two-bedders were snapped up as soon as they were launched,’ says a GuocoLand spokesman. The project also has three and four-bedroom units.

Anecdotal evidence also points to a preference for smaller homes at projects such as Viva and Ascentia Sky. In another instance, the 70-unit Airstream at St Michael’s Road – where most units measured 625 sq ft in size or smaller – sold out last month.

Aiding the trend, some developers caught sight of homeseekers’ shrinking pockets as the downturn came and reconfigured their projects to offer a bigger number of smaller units.
Although prices for smaller homes tend to be higher on a per square foot (psf) basis, they still work out to be lower in absolute terms. At Trevista, for example, prices of 4-bedders start from $850 psf or $1.448 million. But those of 2-bedders start from $880 psf or $770,000, drawing buyers wary of making huge financial commitments.

As Savills Residential director Phylicia Ang notes, many buyers in today’s market are first-time private home owners or HDB upgraders who have an ‘affordability threshold’.
Property consultancy DTZ’s recent analysis of caveats proves this further – as much as 78 per cent of private residential transactions in Q2 2009 involved apartments costing less than $1.5 million.

It has become more challenging to market larger units in such an environment. An agent who declined to be named says that penthouses are particularly hard to sell when most budgets stay below $1.5 million. His strategy is to promote them to foreign investors from countries such as Indonesia. Nonetheless, the market for larger apartments is far from dead. ‘Seasoned’ buyers or investors would still consider bigger units, says Ms Ang.

Keppel Land’s Madison Residences has attracted its share of buyers and is 65 per cent sold. The project comprises only three and four-bedders with sizes ranging from 1,464 sq ft to 4,047 sq ft, at an average price of about $1,700 psf on the interest absorption scheme (2 per cent more than the normal progressive payment scheme).

Keppel Land International general manager for marketing Albert Fooattributes this to the site’s prime freehold address and proximity to topschools and the upcoming Stevens MRT.
Unique features may also make larger units more attractive. GuocoLand says that four-bedroom units at Sophia Residence are ’selling very well’ because they can be rented out in two components – as studios and three-bedders with their own entrances.

Some expect larger units to gain favour in the next few months.
‘With the recovery of the economies, we could see more funds and institutional buyers forming the next wave of demand for the larger units in prime locations,’ says the GuocoLand spokesman.

DMG & Partners’ Mr Lee also expects more foreigners to enter the local property market as economies improve and the integrated resorts open, driving greater demand for larger units

Source : Business Times- 14th Sep 2009

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Genting Singapore in $1.6b cash call

10 Sep 2009, 10:33 pm

CASINO developer-operator Genting Singapore is turning to its shareholders to raise $1.63 billion in the second biggest rights issue here so far this year. Unveiling the major cash call yesterday, Genting said its $6.59 billion Resorts World at Sentosa (RWS) is ‘on track, both in terms of project costs and timing, for a soft opening in early 2010′.

The proceeds ‘will strengthen the company’s financials and put us in a strong position to tap strategic opportunities’, said Genting Singapore’smanaging director Justin Tan.

However, analysts suggest the funds will also come in handy after earlier cost overruns at the RWS, one of Singapore’s two integrated resorts. The company is offering shareholders one rights share for every five existing shares held at cost of 80 cents apiece. The offer price represents a 32.8 per cent discount to Tuesday’s closing price of $1.19 when it was last traded – a record high. The stock has rallied 70 per cent since the start of July.

This is the second time Genting has sought funds from shareholders in the past two years or so, after it raised about $2 billion in a rights issue in August 2007. Genting Singapore is a unit of Malaysian gaming giant Genting Berhad, which owns 54 per cent of Genting Singapore and has pledged to subscribe to one billion rights shares.

Mr Tan said support from banks had been very encouraging despite the uncertainty in the capital markets. About 60 per cent of the proceeds will be used to fund future acquisitions and investments. The funds may also be used to enter joint ventures, strategic collaborations or alliances ‘in areas related to its principal business in the leisure, hospitality and gaming sectors, as and when such opportunities arise’, it said in a statement to the Singapore Exchange.

The remaining funds will be used as working capital, which includes repayment of bank borrowings. The company probably took advantage of the sharp run-up in stock prices to get some money into the kitty,’ said OCBC Research analyst Carey Wong. ‘We see it as an insurance move to cover cost overruns of (RWS) and interest repayments of its huge debt and convertible bonds.’

There have long been concerns about cost overruns for the project. Genting has lifted cost estimates for the resort twice – in November 2007, the price tag for the resort was raised from $5.2 billion to $6 billion due to higher construction costs. Then in February this year, it raised the figure to $6.59 billion. The potential cash infusion of $1.63 billion will ease some pressure from interest payments, given that it is sitting on a $4 billion syndicated loan, analysts said.
Of Genting’s rights issue two years ago, about half, or some $1.19 billion, was used to finance the integrated resort. It also got a $4 billion syndicated credit facility in April last year to finance the resort.

Genting’s latest cash call came as something of a surprise, given that it said in its last statement that additional funding would come from operating cash flows when the complex opens next year. Genting Singapore, Britain’s No. 1 casino operator, may be looking to expand its Asian footprint. Market observers say potential investments on the radar could be Philippines’ Subic Bay, as well as in Macau.

Its parent, Genting Berhad, tumbled 30 Malaysian cents, or 4.18 per cent, to RM6.87 in Kuala Lumpur after the announcement.

Earlier in May, the Lim family which owns the Kuala Lumpur-listed flagship firm stunned the market by selling its entire 9 per cent stake in Genting Singapore for $615 million.
It was offloaded to institutions in a private placement at about 72 cents a share, representing a 16 per cent discount to the previous day’s closing price of 86.5 cents.

DBS Bank and CIMB Bank are arranging the offer. The issue will be fully underwritten by the two banks, as well as JPMorgan, RBS, CLSA, Deutsche Bank, HSBC and UBS.

The provisional allotments of rights shares may be accepted, and applications for excess rights shares may be made commencing from Sept 28 to Oct 12.

CapitaLand mounted the biggest rights issue so far this year, raising $1.84 billion in an offer announced in February.

Source : Straits Times – 10th Sep 2009

Don’t overlook mortgage insurance

10 Sep 2009, 10:32 pm

RECENTLY, my client Mr Wong called me for mortgage insurance advice. He had just bought a semi-detached house for close to $2 million. He took a loan of $1.2 million over 15 years, and was looking for a mortgage reducing term insurance that will pay off his mortgage in case of his death or total and permanent disability (TPD) while the loan is not fully paid.

Mr Wong told me that he will never forget the time that he and his younger siblings lost their family home when his father died of a heart attacksome 30 years ago, leaving his mother struggling to raise the four of them.

Certainly, he does not want this to happen to his homemaker wife and three children. ‘When I pass away, the last thing that I would want to put my family through is to also lose the roof over their heads,’ he said.

In Singapore, mortgage insurance is not made compulsory for privateproperty owners and those who are not using CPF to pay their monthly HDBhousing loan repayments. However, the Home Protection Scheme, or HPS, ismandatory for HDB/HUDC flat owners who service their mortgage loans with CPF funds.

Many private property owners baulk at mortgage insurance eitherbecause of inertia or misconception that it’s an unnecessary cost. Withoutmortgage insurance coverage, however, life could be a lot harder financiallyfor the family if things go wrong.

Over the past years, there have been newspaper reports on households having to surrender their private properties because the sole breadwinner passed away without mortgage insurance coverage. As such, I always advise my clients who own private properties to have mortgage insurance to protect their homes and families.

As the name implies, mortgage insurance safeguards your home and family against the unexpected, so that they will not be burdened with mortgage repayments or face the possibility of losing their home. It is available on a single or joint-life basis. If you and your spouse jointly own the home, you may want to consider a joint-life mortgage policy which pays out on the ‘first death’.

You can decide how long you want the policy to cover you, but most people have it to run concurrent with their mortgage.

The premium will increase with the mortgage size and the length of your term. In addition, age, gender and whether you smoke are big factors in determining how much you pay. Smokers pay a lot more than non-smokers, simply because they are more likely to make a claim. For example, based on the quotation from a local insurer, Mr Wong will need to pay around 40 per cent more if he were a smoker.

Most of the mortgage insurance plans are reducing coverage whereby the sum assured decreases annually and the rate of reduction depends on the mortgage interest rate and the policy term.

Some of the common benefits and features:

Total and permanent disability (TPD) coverage up to age70. The policyholder will receive the sum assured in instalments or a lump sum up to $2 million upon diagnosis of TPD;

Single or joint-life coverage is available for joint homeowners;
Premium payment termusually stops a few years before the end of policy term, while you continue to enjoy the coverage;

Option to add waiver of premium rider so all future premiums will be waived upon diagnosis of one of the 30 critical illnesses;

Mortgage insurance does not normally cover criticalillness, which means that in the event of a critical illness such as cancer,you will still need to pay the monthly mortgage repayments. Therefore, you may need to buy a separate policy for critical illness cover;

Most plans will not cover any disability caused by riot, civil commotion and terrorist activities.
Buying a home will likely be the largest undertaking you make in your lifetime, so protecting it should be a key part of your overall financial plan. Mortgage insurance will ensure that your dependants will not have the financial worry of trying to find the mortgage repayments or having to sell the property or downsizing in the event of your untimely death.

If you are looking for a mortgage insurance policy, do shop around as premium rates and features offered can vary greatly from insurer to insurer.

The writer is a Certified Financial Planner practitioner.The views expressed are his own

Source : Business Times – 10th Sep 2009

URA’s Serangoon Ave site likely to draw strong bids

10 Sep 2009, 10:31 pm

URBAN Redevelopment Authority yesterday launched the tender for a 99-year condo plot at Serangoon Ave 3. Market watchers expect top bids to be towards the upper band of the range of prices they predicted two weeks ago when URA first revealed it had received a successful application forthe site, which was in the reserve list.

The revision follows the strong showing at Tuesday’s state tender for a condo plot at Dakota Crescent, which drew 13 bids. URA said yesterday it has awarded the land parcel to UOL Development (Novena) Pte Ltd, which placed the highest bid of about $329 million or $508 per square foot per plot ratio (psf ppr).

URA also announced an Oct 7 closing date for the tender of the latest plot at Serangoon Ave 3, next to Lorong Chuan MRT Station and near Australian International School.

A fortnight ago, property consultants polled by BT generally predicted top bids for the plum site to be in the $350-450 psf ppr range, with resulting breakeven costs of about $700-850 psf and target selling prices of $800-1,100 psf on average.

Yesterday, DTZ executive director (consulting) Ong Choon Fah predicted the highest offer for the land parcel will probably be towards the $450 psf ppr mark.

Colliers International executive director (investment sales) Ho Eng Joo too is betting that the winning bid will be around the $400 psf ppr level, or the higher end of the $350-$400 psf ppr price band he predicted earlier.

However, most consultants said they are not expecting run-away prices for this site. Knight Frank chairman Tan Tiong Cheng points to greater competition from nearby existing private housing stock for a new condo on the Serangoon Ave 3 site compared with a new project on the Dakota site.

Also, a condo project in the Serangoon area will appeal more to families and therefore have a bigger proportion of larger units. This will also put a cap on the per square foot pricing that its developer will be able to charge buyers.

This is unlike UOL’s strategy for the Dakota plot, where at least half of the units will be smaller two-bedroom units, which will allow it to push for a higher psf selling price.

Next Thursday (Sept 17), URA will close the tender for another plot – a commercial and residential plot at the corner of Yio Chu Kang and Seletar roads. ‘Those who missed on the last couple of tenders will become sharper in their pricing for the next few land tenders,’ says Knight Frank’s Mr Tan.

Since July 20, the government has announced the successful trigger of four sites in the reserve list. The first, a condo plot at Chestnut Ave, was bought by Hong Leong Group for $280 psf ppr.
Market watchers expect developers to make successful applications for the release of further sites on the government’s reserve list for the current half.

‘The mass-market is where the confidence is right now; there are many developers who have not secured sites in this segment,’ says Credo Real Estate managing director Karamjit Singh.
Despite the government last week raising the ‘definite possibility’ that it will restart confirmed list land sales from first-half next year, property consultants believe some developers will still press on with making applications to release more sites from the H2 2009 reserve list.

‘If they like something on the current reserve list, why wait? After all, they don’t know what sites will be in the H1 2010 confirmed list,’ said DTZ’s SE Asia research head Chua Chor Hoon.
Confirmed list sites are launched according to scheduled dates; reserve list sites are released only upon successful application by a developer with an undertaking to offer a minimum acceptable price.

Some market watchers expect that when government restarts the confirmed list, it will be ‘very calibrated’.BT understands that developers continue to urge the government not to revive the confirmed list, arguing that the reserve list is working well. However, analysts point out that it takes a longer time for a reserve list site to make it to the market as someone first has to make a successful application. ‘If no one triggers a site, it can sit on the backburner,’ says DTZ’s Mrs Ong.

‘The confirmed list is pretty much in your face. There is greater certainty.It’s a faster time to market,’ she adds. ‘The psychological message thatthe government sends out by restarting the confirmed list – of ensuring therewill be sufficient supply of land for private housing development – can also be quite powerful.

Source : Business Times – 10th Sep 2009

Punggol Spectra launched by HDB

1 Sep 2009, 8:56 pm

THE Housing and Development Board yesterday launched Punggol Spectra under the build-to-order (BTO) system, following strong interest in the recent BTO project, Punggol Residences.
Punggol Spectra will offer 1,142 units, comprising 301 with two rooms, 285 units of three rooms and 556 with four rooms.

Located on Punggol Central, Punggol Spectra is within walking distance of Oasis LRT station and Tampines Expressway is just a short drive away, offering good connectivity to the rest of Singapore, HDB said. The precinct has commercial facilities such as shops, an eating house and a supermarket. The future Punggol Town Centre is minutes away. Educational institutions such as Horizon Primary School and Punggol Secondary School are also nearby.

Prices at Punggol Spectra range from $89,000 to $109,000 for the two-room flats, $151,000 to $179,000 for three-room flats and $234,000 to $293,000 for the four-room flats. These prices are lower than those for similar flats in the market, making them affordable for first-time buyers, HDB said.

Based on the income of flat applicants in the first half of this year, HDB expects first-time buyers will need to use only 20-26 per cent of their monthly household income to meet their housing loan commitment.

Source : Business Times – 1 Sep 2009

Koh Brothers wins $58.9m HDB contract

1 Sep 2009, 8:55 pm

CONSTRUCTION company Koh Brothers Group has clinched a $58.9 million contract from the Housing and Development Board (HDB) to build the second part of Punggol Waterway – a 4.2km waterway that will be connected to Sungei Punggol.

In January, Koh Brothers won a $144.6 million contract from the HDB for the construction of the first part of the waterway.

The latest contract brings Koh Brothers’ order book to more than $579 million.
Construction of the second part of the waterway is set to start this month and is expected to be completed by the end of next year. Other ancillary works are expected to be completed by the fourth quarter of 2011.

The latest deal is not expected to have a positive material impact on the group’s financial performance for the year ending Dec 31, 2009.

Chief executive Francis Koh said that the company will continue to pursue public infrastructure and government building projects over private construction projects.

‘Our past record shows that public projects carry more certainty in terms of payment compared with private projects,’ said Mr Koh.

Koh Brothers announced last month that net profit surged to $4.4 million in the first half of the year ended June 30, 2009, from $0.5 million for the corresponding period a year earlier. The improvement was on the back of a 17 per cent increase in revenue to $138.6 million.

The group attributed the higher revenue to the good performance of its construction and real estate divisions.

A construction, property development and specialist engineering solutions provider, Koh Brothers now has ‘more than 40 subsidiaries, joint-venture and associated companies spread over Singapore, China, Indonesia, Malaysia and Vietnam’.

Koh Brothers shares closed down 1.8 per cent yesterday at 27 cents

Source : Business Times – 1 Sep 2009

Indonesia ready to lease out islands

1 Sep 2009, 8:54 pm

JAKARTA: Foreigners cannot own land in Indonesia. However, to boost tourism, the local authorities are inviting them to lease available islands across the sprawling archipelago.
On Sunday, Mr Ismeth Abdullah, governor of Riau Islands province, said he welcomes overseas investors who wish to manage islands in his province.

Bordering Singapore and Malaysia, the province is made up of 1,795 islands, of which only 394 are inhabited.

Mr Ismeth told The Jakarta Post that the presence of foreign investments has raised revenues for the province. He cited the popular Nikoi Island resort, located 21/2 hours away from Singapore by ferry and speedboat.

The province’s Investment Coordinating Agency usually takes about a month to issue leasing permits to investors, in line with government regulations, he added.

Separately, the head of Gorontalo province’s Investment Coordinating Board told The Jakarta Globe that a Singapore-based investor was keen on leasing three islands off North Sulawesi that boast a panoramic view.

Mr Rustamrin Akuba said the provincial government was currently reviewing the proposal.
The two men’s comments came days after a ruckus erupted over an alleged advertisement on the Canadian website www.privateislandsonline.com offering to sell three islands off the coast of West Sumatra to foreigners. This was reported by local media, which said the website was hawking Macaroni, Siloinak and Kandui – part of a group of 70 islands known as the Mentawai islands – for between US$1.6 million (S$2.3 million) and US$8million.

Many Indonesians were up in arms over the reports, with legislators lambasting the government for its lax attention to the country’s assets.

West Sumatran governor Gamawan Fauzi denied last Thursday that any of the Mentawai islands were for sale. A website check also found that Macaroni, Siloinak and Kandui referred to resorts located on three different islands that are popular with surfers.

Mr Gamawan told reporters that the resorts were run by a partnership of local and foreign businessmen, but the management wanted to sell their shares now because of an ‘internal problem’.

Mr Aji Sularso, a director-general at the Maritime Affairs and Fisheries Ministry, confirmed that the islands were still owned by Indonesia, adding that it was not possible for foreigners to own islands.

‘It is not supported by any regulation,’ he told The Jakarta Post.

Indonesia’s estimated 17,000 islands hold vast potential for maritime tourism, from diving to surfing to beach resorts. Only 5,000, though, have been named to date. The government has said it will set aside six billion rupiah (S$858,000) to determine the exact number of islands and register them as the country’s assets with the United Nations.

While he did not elaborate, Mr Aji said he anticipated a loosening of regulations with regard to coastal areas and remote islands, so that those areas could be put to ‘better use’ for the community and local government.

He did point out, however, that the government was getting only 600 million rupiah in tourist receipts from the Mentawai region each year.

‘This amount is too small, since Mentawai has some of the most beautiful waves in the world, and these are worth much more than that.

Source : Straits Times – 1 Sep 2009

Buyers snap up flats at Trevista condo in Toa Payoh

30 Aug 2009, 10:26 am

320 of 590-unit project taken up; co-op to release more at weekend
IF it’s priced attractively, it still sells. Hungry home buyers yesterday bought around 320 units at the 590-unit Trevista condo in Toa Payoh.

By around 3pm yesterday, buyers were said to have snapped up some 190 of the total 210 units released in the first phase of the preview, resulting in developer NTUC Choice Homes Co-operative releasing a further 190 units in the early evening to satisfy demand. BT understands that the price was raised by about 2-3 per cent for the second batch from the initial phase’s average price of $898 per square foot (psf). However, some of the price gain also reflects the fact that units in the second batch are on higher floors and have better orientation.

While many people will baulk at this price for a 99-year leasehold project, what has been drawing buyers to Trevista is that the psf pricing is about 20 per cent lower than the closest competition from a comparable recently launched project – Far East Organization’s Centro Residences next to Ang Mo Kio Hub, which was released last month at an average price of $1,150 psf. However, Trevista’s units are generally bigger than Centro’s so in absolute dollar quantum per unit, the price difference between the two projects may be less.

The smallest units at Trevista – studios and apartments with one bedroom plus study – were the first to sell out yesterday. Some agents were seen armed with blank cheques from clients keen to secure the better units and who had given them authorisation to book units on their behalf.

Choice Homes CEO Margaret Goh had noted on Thursday that Trevista is the first private condo to be launched in the mature Toa Payoh estate since 1996. That was when City Developments Ltd launched the freehold Trellis Towers at an initial average price of $900 psf, according to newspaper reports at the time.

With 400 units or two-thirds of the total units in Trevista released by yesterday evening, Choice Homes stopped issuing queue numbers after 9pm and told those streaming into the showflat site to return the next day.

The co-op is expected to make further units available over the weekend to cater to demand. Trevista comprises a total of 590 units in three 39-storey towers. It is being marketed by CB Richard Ellis and ERA.

Developers sold 10,017 private homes in the first seven months of this year – more than double the 4,264 units in the whole of 2008 when home buying dried up due to the global financial crisis. The unexpectedly strong sales pick-up since February this year came about after developers cut prices. However, they have since been raising prices for some projects – and that has resulted in generally slower take-up.

Source : Business Times – 29 Aug 2009
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Property 101: prices can go down

30 Aug 2009, 10:25 am

Judging from the brisk sales at launches, it appears many Singaporeans have jumped on the runaway property bandwagon.

But before you get caught up in the sales pitches and showroom euphoria of property agents cheering as each unit is sold, industry players warn that you should step back, take a breath and think twice.

This, they say applies to both HDB upgraders as well as those looking for a second property to spruce up their financial portfolio. Here are a few pointers that ought to be at the back of your mind.

1. Do your sums

It may sound obvious but it is often forgotten. Consider upgrading only if there have been significant changes in your credit profile, say, a pay rise and if your appreciating assets are holding up, said PropNex chief Mohamed Ismail.

If you’re upgrading from HDB, think about your net proceeds and what you can put into a new property to reduce your loan. Work out how much you need to pay each month. Be prudent and do not over-leverage. Consider the repayment period. Banks typically limit loan repayments to about 40 per cent of your gross monthly income.

Make sure you factor in other debts, expenses and what you need to save.
“Buy a property that will not overstretch your finances while maintaining a lifestyle of your desire,” Mr Ismail said.

Choose your home loan carefully. Interest absorption schemes may seem attractive but you may typically end up paying 2-3 per cent more for the entire property.
If you plan to rent out the property, your monthly rental should ideally cover your mortgage instalments.

2. Location, location, location

As an owner-occupier, you should think about transport options. If you’re an average HDB dweller, you would do well to choose a property near an MRT station, said Mr Chris Koh, director at Dennis Wee Group.

If you’re looking for capital gains or renting out the property, proximity to a MRT station is even more important as tenants (the foreign ones in particular) are looking for convenient public transport options to take them round the island.

Also check out which direction the unit is facing and the project’s surroundings.

3. Maintenance and other BILLS

Consider how much you will need to furnish or renovate the new apartment, advised Dennis Wee Group’s Mr Koh. Also factor in maintenance charges each month – how much more you will be paying for service and conservancy, parking and other charges.

4. Plan your interim options

Your HDB property may fetch a tidy sum now, but what about in two years when your private property obtains its Temporary Occupation Permit. Unless you intend to keep your HDB flat for rental, you should consider whether you to sell now or later.

If you choose to sell now, you need to think about where you will live in the meantime and the costs you will incur.

5. Be mentally prepared

Be aware that property prices fluctuate and prices may not return to the level at which you bought the property.

“If you can sleep through that, have really no regrets, you like the property and lifestyle, then well and good,” said Ngee Ann Polytechnic real estate lecturer, Nicholas Mak. “But don’t put everything into a private property thinking that prices will only go in one direction – up.”

Source : Today – 29 Aug 2009
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Sub-sales triple in second quarter

30 Aug 2009, 10:23 am

The upbeat sentiment in the new private home market has lured out the sellers in the sub-sale market.

Sub-sales – the sale of uncompleted homes by their buyers – of non-landed private properties tripled to 1,200 units in the second quarter, according to a DTZ quarterly report.
This time, though, it is mainly the mass-market and mid-tier projects that are popular sub-sales. In 2007, it was the higher-end projects that found favour with buyers.
Also, the sellers are taking longer to sell their investment properties.

The DTZ study found that a few mass-market projects made their way to the Top 10 list of projects with the most sub-sales. These included Casa Merah, located near the Tanah Merah MRT Station, The Centris in Jurong West and The Quartz in Compassvale.

For instance, there were 54 sub-sales in Casa Merah in the second quarter, and the median sub-sale price rose from $658 psf in the first quarter to $734 psf in July and August.

The most popular sub-sale project in the second quarter was Rivergate, located at Robertson Quay.

The median price of its sub-sale units rose from $1,200 psf to $1,400 psf, and 105 of its 545 units changed hands in the second quarter alone. Prices have since risen further – deals done in July and August ranged from $1,400 to $1,880 psf, according to caveats lodged.
Two perennial favourites are The Sail @ Marina Bay and Icon, prime projects in the central locations of Marina Bay and Tanjong Pagar respectively.

Despite being launched between 2003 and 2005, they still remain popular in the sub-sale market. Their median prices rose 27 per cent and 17 per cent respectively from the last quarter.
Sub-sale buyers tend to be true investors, said HSR Property Group executive director Eric Cheng.

Upgraders, he said, prefer not to buy sub-sales as they do not wish to pay a premium. Those who do, however, find mass- to mid-tier market projects more affordable.

Analysts say that the higher number of sub-sales could be due to the many units that were completed this year.

Ms Chua Chor Hoon, DTZ’s head of South-east Asia research, says there is normally a high level of sub-sales for a project when it is nearing, or just after, completion.

‘In 2006, 6,250 units were completed. This year, 11,367 units are expected to be completed,’ she said.

Mr Cheng pointed out that projects sell out very quickly in today’s market, and some buyers who missed out on the chance of buying a unit do not mind paying a small premium to get a unit if the price is not too far away from the launch price.

These buyers often have compelling reasons, said Mr Cheng. They might have family living nearby, or even on the same unit level.

Despite the higher number of sub-sales now, the number of properties bought and sold within a short span of time is not as high as during 1996 or 2007, said Ms Chua.
‘The number and percentage of units bought and sold within a six-month period in the first half of the year is a lot less than those in 2007 and 1996,’ she said.

Citing data from Realis, she said 88 units were ‘flipped’ in the first half of this year, compared to 517 in 1996 and 835 in 2007.

Flipping occurs when someone buys a property and resells it quickly for a profit.
‘Buyers now tend not to buy another unit so quickly because they often have a choice of other surrounding units that are being sold as well,’ said Mr Cheng.

‘There are a lot of short-term investors who would like to resell for a profit, but might not be able to because they ask for too much. There are also a lot of launches coming up.

‘Market fundamentals are not that strong even though market sentiment is, and we might see a pull-back effect,’ he said

Source : Straits Times – 30 Aug 2009
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Park Hotel plans listing in 2011

24 Aug 2009, 12:44 pm

SINGAPORE-BASED Park Hotel Group has set its sights on listing in 2011, just in time for its 50th anniversary, although it is still mulling over the details.

‘We’re planning to list in 2011 either in Singapore or Hong Kong. We have to study the different criteria and policies the two stock exchanges are offering,’ director Allen Law told BT in an interview.

One issue that the group is still undecided on is whether to list as an equity or as a real estate investment trust (Reit). Other factors, such as how best to mitigate foreign exchange risk, will also come into play.

‘Looking at our portfolio, Singapore . . . contributes almost 40 per cent of our total revenue. In terms of trying to manage foreign exchange risk, Singapore would be a better choice,’ he pointed out, but then went on to add that Hong Kong offers better interest rates. ‘We have to see closer to the date. Quite a lot is driven by the structure of the stock exchange as well as the macro environment.’

The group’s portfolio currently includes eight hotels – three each in China and Singapore, one in Hong Kong and one in Japan.

It plans to grow its footprint in Japan and China, but also sees room for expansion in Singapore in the coming years.

‘This year, we’re eyeing a couple of potential acquisitions in Japan. Apart from Japan, we’re looking at China which has always been our key target market,’ he added.

And while all eight properties are currently owned and managed by the group, it also plans to branch out by taking on management contracts. In the short term, management contracts are expected to contribute 10 per cent of group revenue.

‘We are looking to further expand our presence not only through acquisition or development but also through management contracts. That will translate to a faster expansion,’ he said.
Meanwhile, though the first half of this year has proven to be a tough one for the hotel industry here, Mr Law is confident that the second half will be a stronger one.

‘Since June, we have seen very strong forward bookings for the second half of the year. We do forecast much stronger demand for the second half,’ he emphasised, adding that 65 per cent of revenue for this year should come from the second half.

Its Grand Park City Hall hotel has seen occupancy fall by 10-12 percentage points this year to the ‘high seventies’, while room rates have taken a 25 per cent dive.

However, the latest addition to the stable, Park Hotel Clarke Quay, which soft launched in May this year, is performing above expectations.

Its Park Hotel Orchard is currently undergoing an $80 million renovation and will be rebranded as the group’s flagship property, Grand Park Orchard, when it reopens in 2010. The Grand Park Orchard will also house a four-storey retail podium, Knightsbridge.

About half of Knightsbridge’s 83,000 square foot of space has been taken up so far, Mr Law said.

Source : Business Times – 24 Aug 2009

Property gains tax proposed because of earlier feedback

24 Aug 2009, 12:43 pm

The Finance Ministry said the property gains tax was proposed because of earlier feedback.
Speaking at a community event on Sunday, Second Finance Minister Lim Hwee Hua said certain property investors had wanted more certainty regarding the current rules.

Proposed changes to tax individuals who sell property before a four-year period were designed to shed some light on what defined a trader who sells property as a main source of income.
Public consultations were held, where more than 90 per cent of respondents said the system should be kept simple.

Property observers agreed with them, saying the current rules would avoid confusing sellers – which is critical in a recovering property market.

Analysts also said foreign investors are looking into Singapore as a potential market, so any adjustments to the tax regime may send them the wrong signal.

Mrs Lim said: “We wanted to give some certainty to a group of property owners. But it looks like there was some confusion and people were a little concerned about what the signals were. So based on the feedback, we decided that since that is not going to be well-understood, it is probably advisable to withdraw that proposal.”

For now, property sellers will continue to be judged on a case-by-case basis to determine if they should be taxed.

Source : Channel NewsAsia – 23 Aug 2009

Boom or bubble?

22 Aug 2009, 6:39 pm

Property prices appear to be on the rise again, but is the rebound sustainable?
ON A Monday night in the last week of July, commuters taking the train home to the eastern part of Singapore may have witnessed a small commotion at the Tanah Merah MRT station.
It was about 10pm, and a group of about 40 people who had formed a queue beside the station since late afternoon was being told to go home.

Apparently, they were queuing to be first in line when a new condominium – Optima@Tanah Merah – opened its doors for bookings. Except that it was not being launched the morning after, but on Friday morning. They were prepared to stand in line for three whole days to get first dibs.

Representatives from the developer TID, a tie-up between Hong Leong Group and Japan’s Mitsui Fudosan, implored the crowd to go home.

‘The queue will not be recognised. We will not sell anything until Friday morning,’ they said.
The crowd dispersed. But their desperation quickly became the talk of the town, and the clearest symbol yet of how unexpectedly hot the local property market has become.

Elsewhere around the world, many property markets are locked into a downward spiral. But the story is startlingly different in Singapore.

Last month, developers like TID sold a whopping 2,767 units of new private homes, smashing the record of 1,825 units set only in June.

These are numbers that have never been seen in Singapore – not even during the stratospheric heights of the 2007 property boom. In just two months this year, developers have sold 328 more homes than in the whole of last year.

In the midst of this buying frenzy, developers have begun raising their prices. Some have even dared to launch new units at record-high per sq ft (psf) prices.

Indeed, the classic signs of a boom are in place: weekend crowds at showflats, blank cheques handed to agents to secure prime units, and flyers flooding the mailbox of every home.
But this boom is different from the last one because of one very important reason: The 2006-07 boom coincided with a period of rapid economic expansion. Today, house prices are rising in the wake of Singapore’s deepest-ever recession, and at a time when the entire global economy is only just starting to recover from the shock of a financial crisis.

This has sparked a debate over whether the property boom is hopelessly out of sync with economic fundamentals.

The Government seems worried, and National Development Minister Mah Bow Tan has already suggested that an element of speculation may be involved in the current boom.
Politically, market watchers say the stakes are higher this time around for the Government, because it is the more accessible suburban projects rather than the posh condominiums that are breaking the records.

With the prospect of ordinary folk potentially getting burnt in a price crash, the million-dollar question is whether the current rebound in the market is a genuine recovery.
Or is it just another unsustainable bubble pumped up by hype?

The answer varies, depending on whom you talk to, of course.

Veteran property developer Kwek Leng Beng, chairman of real estate giant City Developments, thinks the market is not getting too frothy.

‘It should not be viewed as over-exuberant or extraordinary, bearing in mind that developers had put on hold many of their launches in 2008,’ he said at a recent press conference.
In other words, people could have wanted to buy new homes last year, but there was no supply in view of 2008’s lacklustre conditions.

Now that there are more launches in 2009, this pent-up demand for homes is being satisfied all at once, accounting partly for the record sales volume in recent months.

Prices are not unreasonably high, Mr Kwek added, noting that the low- and mid-tier markets have yet to recover since their peaks in 1996.

CBRE Research data shows that me-dian prices of

new non-landed homes reached $690 psf in the second quarter, compared with $749 psf at the 1996 peak, though the level surged to $800 psf last month.

Analysts also say that the demand is real, driven by buyers awash with liquidity.
People still have money saved from the bonuses of the boom years, and some may have profited from the stock market rally in April and May.

But investment options are few and far between, with savings interest rates near zero and the stock market now losing some steam.

‘After the Lehman Brothers structured products failure, property is also increasingly viewed as a safe investment alternative as its value will not drop to zero,’ says Ms Chua Chor Hoon, head of South-east Asia research at property consultancy DTZ.

At the same time, labour market resilience is helping. The job market gloom and doom prevalent at the start of the year has been replaced by guarded optimism as government stimulus spending has halted a large upswing in the number of jobless people.

‘No matter how much cash you have, if you think you’re going to lose your job in the next six months, you’re not going to invest in property,’ says Citigroup economist Kit Wei Zheng.
But with the economy looking up and the spectre of job losses fading, many feel there is no better time than now or place to park their money than in bricks and mortar.

After all, some see a bet on the property market as a bet on the long-term growth of Singapore as a global city.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, points out that 79,000 permanent residents and 21,000 citizens were added to the population last year.
And more will be added in the future as Singapore heads towards its target population of 6.5 million.

The buzz generated by the completion of the integrated resorts could hasten foreigner arrivals, say optimists.

Finally, some analysts note that this buying power in the market is being supported by younger home buyers who are coming up against a tight supply of Housing Board flats. This has the effect of hiking HDB prices and narrowing the price gap between public and private homes.
With home loan rates also near historic lows, cheap funding is another key factor driving the demand – combining with the other factors to make private property a very attractive and affordable proposition.

It is primarily because of these factors that most experts agree there is some real demand that justifies the higher prices and sales volumes in the market.

They say the current market should be seen against the backdrop of a market that was stuck in the doldrums only four or five months ago.

With buyers reluctant to commit, some developers had to slash prices by as much as 30 to 35 per cent early this year to generate interest in their projects.

Still, despite the resale and sub-sale markets moving ahead, experts say there remain a lot more over-optimistic sellers than there are buyers.
A collective sale frenzy, like the one that gripped the property market in 2006 and 2007, is also nowhere in sight.

‘What we are seeing is recovery phase activity,’ says Associate Professor Sing Tien Foo from the National University of Singapore’s real estate department. ‘It takes a while for a bubble to build up.’

DTZ’s Ms Chua notes: ‘A bubble means that prices are rising way too fast relative to GDP (gross domestic product) growth. So far, we have seen only one quarter of rising prices in the property market.’

But while many experts don’t see a bubble yet, it doesn’t mean that one won’t form, and what happens next will be very important.

Property consultant Nicholas Mak expects home prices to reach a plateau, with the lows seen earlier this year unlikely to be repeated.

‘Right now, prices may continue to run for a few months before stabilising. Ultimately, the market has to return to market fundamentals,’ he says.

The problem is that prices may not take that rational trajectory if buyers get carried away. Property consultants and developers have warned that demand is coming from those who missed out on the 2007 high-end boom.

Eyebrows have already been raised at the sort of prices buyers have been willing to pay for suburban properties.

Units at Centro Residences, which is next to Ang Mo Kio MRT station, sold for between $1,117 psf and $1,228 psf last month, a record for suburban homes in Singapore.

‘When there is fear or belief that prices are going to keep rising, and many speculators jump in in the hope of making capital gains over the next few years, prices could be driven up beyond fundamental levels like in 1996 and 2000,’ says Ms Chua.

‘The future’s a sure bet but what’s happening right now is beyond our wildest dreams. No one would have predicted the July sales figure,’ says Cushman & Wakefield managing director Donald Han.

‘We’ve seen price increases of 15 per cent on average since April. It seems too short, too fast a time… At some stage, prices should stabilise.’

One property expert, who declines to be named, thinks that for this to happen, buyers must do a serious reality check: ‘Every round of recovery, we see people getting carried away by the herd instinct. There’s a total disconnect with reality. It’s momentary madness.’

That is why economists and analysts recommend that home buyers sober up by reminding themselves of some hard economic truths before signing on the dotted line.

One such truth is that how the economy fares over the coming months will be a key indicator of the future of property prices. And on that, the jury is still out.

Although the economy surged 20.7 per cent between April and June compared to the first quarter, Trade and Industry Minister Lim Hng Kiang says it is too early to cheer.
Key markets like the United States and Europe have pulled out of recession but growth is likely to be anaemic for the next few years.

CIMB-GK economist Song Seng Wun says: ‘The global slowdown does seem to have stabilised, but a recovery could still be far away.

‘And while Asian growth may be holding steady, it may not be as strong as we are used to, as developed economies are not seeing the strong recovery.’
HSR Property Group executive director Eric Cheng points to another cold, hard truth: ample property supply.

There are still 62,350 uncompleted homes in the pipeline, according to Urban Redevelopment Authority data. Slightly less than half have been sold.

In particular, major developers are still holding back their large luxury launches because the foreign funds and investors who bought into the posh homes in districts 9, 10 and 11 have not returned in significant numbers.

‘The key is whether the price growth at this recovery stage can be sustained. It remains unclear who will pick up the prime homes,’ says Prof Sing.
Many buyers also seem to have ignored the fact that residential rents are still falling.

‘But Singapore has never been a yield-driven market like mature markets like Australia and the UK,’ concedes Credo Real Estate managing director Karamjit Singh. ‘The two key drivers here are owner-occupier demand and sentiment.’

Looking ahead, property commentators forecast a variety of outcomes for the months to come – from another slump to continued buoyancy.

Credo’s Mr Singh is looking at the recovery lasting up to 12 months before prices start to moderate as more launch-ready projects come onstream.

More bearish analysts like RBS’ Fera Wirawan say a mass market bubble has already formed. In an Aug 13 report, she predicted that the bubble will burst, sending residential prices plummeting by 10 to 20 per cent over the next 12 months.

Then, there is the wild card factor of the Government.
‘If queues continue to form and people continue to flip, then we may see some (government) intervention,’ says Mr Song.

Property experts say this could mean the re-introduction of outright land sales to boost supply, or the abolishment of the interest absorption scheme that allows buyers to defer paying the bulk of the purchase price until the development is completed.
But they also believe the Government will exercise extreme caution. Mr Song believes policymakers won’t want to prick the bubble too early as that may deflate the economy.
But he adds: ‘But if you let it simmer and build up, it will also be troublesome when it bursts.’
One expert, who does not wish to be identified, warns that if a crash were to come, ‘it may take us all by surprise’, just as the recovery did.

The best thing to do, advises Mr Song, is to exercise the same type of ‘extreme caution’ over the coming 12 months.

He says: ‘My take is that this recovery’s not going to be simple. Global growth is not going to rebound to the previous pace. We can show a couple of quarters of sharp rebound, but it is likely to slow after that…

‘Any bubble could well deflate on its own.’

Source : Straits Times – 22 Aug 2009
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More homes in the pipeline

22 Aug 2009, 6:37 pm

More than 40,000 units are due to come onto the market over the next few years
PROPERTY supply is not a problem, according to National Development Minister Mah Bow Tan. He believes that there are plenty of homes in the supply pipeline for Singaporeans, pointing out at a recent event that more than 40,000 units are due to come onto the market over the next three or four years.

The latest market data certainly supports his view. Figures from Savills Research and Consultancy point to a healthy stream of launches.

It says 5,753 units will become available in the second half of this year and 5,576 units next year. In 2011, 13,418 will be launched; 13,751 in 2012; and 11,058 in 2013.

Of those becoming available between this year and 2012, the bulk – 52 per cent – will be in prime districts 9, 10, 11 and 15, which analysts suggest is a direct consequence of the en bloc buying sprees in these districts in 2005 and 2006.

The rest will largely come from city-fringe developments at Sentosa and the new Marina Bay.
2009

OF THE 5,753 units becoming available in the second half of the year, most are mid-tier and mass-market units. They number 2,292 and 2,083 respectively.

These include 556 units in Casa Merah at Tanah Merah, 610 units in The Centris at Boon Lay and 338 units in Carabelle on the west coast.

But more than 90 per cent – 5,284 units – have already been sold, so Savills anticipates no oversupply situation this year.

2010

ANALYSTS have mixed views about the supply situation next year.
The 5,576 units available next year will be concentrated in prime areas, with 3,304 units up for grabs.

They include 428 units at Marina Bay Residences and 231 units at The Trillium along Kim Seng Road. Savills estimates about 75 per cent of the uncompleted units have been sold, leaving little room for oversupply.

Instead, the concern is insufficient supply given the drastic fall in supply numbers.
In the first quarter of last year, 17,545 units were projected for completion in 2010. The number tumbled to 8,538 in last year’s third quarter and continued downwards to 5,394 from the second quarter of this year, according to the Urban Redevelopment Authority.

But Ms Tay Huey Ying, director for research and advisory at Colliers International, feels the supply trend is in line with expected economic conditions, making a supply shortage an unlikely scenario.

‘While the worst may be over for Singapore’s economy, growth will remain slow for a few more quarters. Moreover, the major economies of the United States and European Union remain weak,’ she says.

‘Hence, Singapore’s expatriate population is largely expected to see only moderate growth in 2010.’

DTZ senior director and head of Southeast Asia research, Ms Chua Chor Hoon, adds that with the economy apparently on the mend, rent declines will begin to moderate and could bottom out in the first half of next year.

2011

2011 will bring an explosion in supply, particularly in the prime districts.
Some 13,418 units are slated to be completed during the year, Savills figures indicate.
About half, or 6,512 units, will be situated in the prime districts and 4,224 in the mid-tier districts.

Among the developments in the prime districts, Martin Place Residences in River Valley, for example, will offer 302 units. Scotts Square in Orchard will have 338 units and One Shenton in the Central Business District another 341 units.

About half of the 13,418 units have been sold, while the remainder are unsold or have yet to be launched.

The demand for uncompleted units between 2000 and 2008 has hovered at an average of 7,230 units per year.

With a high of almost twice this number becoming available in 2011, market watchers fear oversupply.

But some factors may help mitigate this.
Developers are likely to pace construction and launches in line with market needs; the Government’s move to suspend the sale of confirmed sites helps sustain demand; and, if the economy returns to growth in 2011, accompanying growth in the expatriate population will support demand for new homes.

One upside to any glut – if you are a tenant – is that new supply will keep rental increases down, says DTZ’s Ms Chua.

2012

THE 13,751 units to be completed in 2012 will further boost supply.
Some 6,414 units will be located in the prime districts and 4,774 from the mid-tier market. The rest will be for the mass market.

Mid-tier offerings include Soleil at Sinaran in Novena with 417 units, Rosewood Suites in Woodlands with 200 units, and The Arte@Thomson with 336 units.
Of these, 30 per cent of units planned and under construction have been sold.
These numbers are, however, subject to change with developers adjusting project timings to market conditions, says Ms Chua.

And Collier’s Ms Tay thinks a return of collective sale market fever could be a factor that moderates the net new supply coming on stream in 2011 and 2012.

2013

HOW the supply situation in 2013 will pan out is too far ahead to determine right now.

No change to property sales tax framework

22 Aug 2009, 6:36 pm

MOF drops proposed change aimed at giving certainty after public consultation exercise
THE government has decided not to change the current income tax framework with regard to individuals who sell their properties, a move that was welcomed by industry players including the Real Estate Developers’ Association of Singapore (Redas).

Under a proposal put up for public consultation, the Ministry of Finance (MOF) had suggested that individuals who sold their properties would be certain that the gains they made would not be subject to income tax if they had not sold any other properties in the preceding four years.
But this was seen by the market as an anti-speculation measure, as it means that those who sell more than one property within four years will not be exempt.

‘We remain believers of the idea that the government may be sending out a signal through this proposal to cool property transactions, especially in the high-end,’ said CIMB analyst Donald Chua in a note last month.

Keen to quell rumours about an anti-speculation drive, MOF then clarified that the proposal is unlikely to lead to more individuals being taxed. Rather, it offers greater clarity on whether gains will be taxed as it proposes a condition that would guarantee no tax: an individual who sells a property on or after Jan 1, 2010 will not be taxed on the gains if he has not sold any other property in the previous four years.

Currently, property sellers do not pay tax on gains unless the Inland Revenue Authority of Singapore (IRAS) sees them as traders and treats the gains as income. IRAS makes its decision on a case-by-case basis, considering factors such as why the properties were sold, how long the sellers owned them and how frequently the sellers transacted properties in the past.

MOF decided not to implement the change following the recent public consultation exercise.
The proposal was put up for feedback under the Income Tax Act public consultation exercise from June 22 to July 14. A total of 64 comments were received on the proposed relaxation of income tax treatment for individuals who sell their properties, and of these, 60 comments were not in support of the proposed change.

Among other things, feedback said that the proposed change could bias property purchase decisions towards investing in one bigger property, rather than numerous smaller properties. This is because certainty of non-taxation would be provided for disposal of one property within any four years, regardless of the property’s value.

Concern was also raised that the proposed change could create inadvertent uncertainty for individuals who sell more than one property within any four years – even though there was no change to the current income tax treatment for such cases.

‘The Ministry of Finance sees merits in these points raised in the public feedback to the proposed change,’ MOF said in a statement. It has therefore decided that it is, on balance, best to retain the current framework of income tax treatment for individuals who sell their properties.

Industry players welcomed MOF’s decision.

‘We welcome the Ministry of Finance’s decision not to change the current income tax framework for individuals who sell their properties,’ said a Redas spokeswoman. ‘Redas appreciates the government’s consultative approach and understanding of the industry’s concern on the matter.’
‘We welcome the positive news that the Ministry of Finance has listened to public feedback,’ said Owi Kek Hean, head of tax services at KPMG in Singapore. ‘The decision not to change the current income tax framework for individuals who sell their properties clearly demonstrates how the government takes differing views on-board in its formulation and changes proposed to Singapore tax policy.’

MOF also said that it has accepted for implementation 85 out of the 113 suggestions received on the draft Income Tax (Amendment) Bill 2009. The draft contains proposed legislation to put into effect the income tax changes announced in Budget 2009, as well as other changes arising from the periodic review of the income tax system.

Source : Business Times – 22 Aug 2009
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On the road to recovery

17 Aug 2009, 12:48 pm

Pauline GohManaging DirectorCB Richard Ellis Singapore

DESPITE an economy that’s still in negative territory, there has been significant demand for private residential housing. New home sales totalled 7,250 in the first half of 2009 – up 70.0 per cent from 4,264 sold in the whole of 2008.

Several factors combined to bring about this pick-up. Potential home-buyers who had substantial savings when the economy was booming from 2005-07 were priced out of the private residential market as prices rose too quickly. Now that prices have corrected – some 25 per cent from the peak in Q2 2008 – buyers are taking advantage of the opportunity to purchase. In addition, investors have switched their focus to property after losing faith in structured products during the debacle that affected big-name financial institutions last year.

Kelvin LumExecutive DirectorL C Development

GLOBAL market conditions remain challenging due to weak economic fundamentals. But there has been positive data signalling some form of recovery in Singapore. Positive signs are also showing up in the United States, with home prices there rising in May for the first time in three years. The fact of the matter is, economies are faring better than they were a year back.
Recent positive indicators have likely fuelled the rallies in the equity markets and lifted investor confidence. With borrowing costs and deposit rates at all-time lows, investors are looking to re-invest in the real estate market to obtain a better yield and to hedge against inflation.
The pick-up is evident in the mass to mid-market residential sectors. The commercial and luxury residential sectors remain relatively subdued. In a market such as this, positive sentiment makes all the difference. The sustainability of the pick-up, therefore, depends on continued investor confidence which, in turn, will be driven by economic news out of the US and major regional markets such as China.

Barring unforeseen circumstances, players will likely support the equity markets, which in turn will have an impact on the sustainability of the property market. Although Singapore’s economic well-being depends on the economies of its major trading partners, it is unlikely that a correction – if any – will be as acute as that seen in 2008.

Gary HarveyCEOiPac Wealth Management Asia

LIKE most investment markets, in the latter half of 2008, the Singapore residential property market may have overshot on the downside. Demand almost dried up as a result of the extremely poor economic outlook. Moving through 2009, Singapore has not truly seen the forced sales that many parts of the world have experienced. Nor did the forecast number of foreigners leaving materialise. These factors, combined with low interest rates and the willingness of banks to still lend, have led to the property market returning to a more realistic level.

For the rally to be sustained, investors should now start focusing on fundamentals. Vacancy rates, rental yields and an increase in foreign investment will need to improve for any recovery to be sustained. I believe speculators should be cautious as we are in a market that depends on global trade. Any sign that recovery is not gaining momentum would be a cause for concern.

Darren ThomsonPresident and Chief ExecutiveManulife (Singapore)ChairmanManulife Asset Management (Singapore)

WE are living in unusual times and should expect to see movements in markets that may make us feel uncomfortable. However, my experience of the Singapore property market is that it is somewhat erratic – which means that the unusual is usual.

Our market has a number of variables that others do not have to contend with. In particular, the proportion of foreign buyers and speculators may be disproportionate compared with other markets. And, of course, we have insufficient land.

Property is a popular asset class, and the imbalance of investor money – institutional and private – vis-a-vis the domestic home buyer market may be the key variable to analyse.
I have seen violent swings in the past four to five years in both directions. In particular, the speed of price movements can be quite remarkable. I have, therefore, conditioned myself to expect the unexpected.

The paradox is that I would become concerned if the property market became stable or less volatile. But that would be unusual, which is, er, usual?

Krishna RamachandraManaging DirectorArfat Selvam Alliance

THE recent accelerated pick-up in prices has boosted hopes that the property market may be over the worst. As prices had fallen rapidly, market activity picked up as more bargain-hunters – confident that prices did not have much further to fall – joined the fray. The frenzy simply perpetuated itself. And as lenders loosened their lending criteria, prices started rising further.
These factors, combined with pent-up demand in the past nine months, defines the irrational way in which the property market has risen so quickly. I believe the market is likely to sustain itself and perhaps ride on the performance of the stock market.

In addition, there will be pockets of property – those directly affected by the opening of the integrated resorts, for instance – that will keep on rising after prices generally stabilise.
I think government intervention at this point would be premature. The banks are still relatively tight with credit, and those who are coming out to play – institutions and investors – do not need interventionist measures to rein them in. There is no sizeable bubble to be concerned about right now. On the contrary, the rising property market engenders positivism, which even if slightly misguided, is to be encouraged.

Dora HoanGroup CEOBest World International

SEVERAL factors have triggered the current price boom. Low interest rates due to the weak global economy makes investing in properties quite tempting. Investors have also become extra-cautious about complex financial products. For this reason, many have bet on Singapore as the safest place to park their money by investing in property here.

To add to that, there are signs of economic recovery, the stockmarket rally, and the pending completion of major tourism infrastructure projects. Population increase is also a significant factor in a nation with limited land, where the aspiration of every family is home ownership.
However, we should be on the lookout for speculative buying. We do not have to go far back to know what happens when greed gets the upper hand. In view of this, the responsibility of market players is to steer clear of unwarranted speculation that could send prices soaring out of control. That would hurt the economy at a time when it is barely recovering from a slump.

Glenndle SimChief Executive OfficerMencast Holdings

THE recent pick-up in the property market can be attributed largely to two pools of buyers – foreigners who are attracted to Singapore and plan to set up homes here, and Singaporeans who are picking up properties to buffer against inflation, or who have liquidity after withdrawing from equities when the stock market was down last year.

Foreign buyers are drawn to Singapore not only because of its political and social stability but also the ease of settling down in a comfortable and cosmopolitan city with many facilities. The open economy makes it attractive for people to start businesses and to work here. And the multicultural environment of different races, religions and nationalities makes it easier for foreigners to be assimilated.

Locals and foreigners will likely be willing to pay a premium for properties here as long as Singapore continues to be an attractive place to live and work. Going forward, prices may stabilise, with some dips. But they are unlikely to crash.

Liu ChunlinCEOK&C Protective Technologies

THE property market seems to have moved in tandem with the stock market and commodity prices. The same question of whether it is sustainable applies to the stock market and the property market. I believe recent market movements may be running ahead of the economic upturn.

The little bits of good economic news from the stimulus efforts here and abroad, plus recent commodity price increases, have fanned this sentiment. From what I hear, there have also been some genuine property buyers moving in. Having waited, they are now afraid of higher prices.
While a bit of such sentiment is good to stoke optimism, I believe the focus in the coming months should be on re-structuring, consolidation and regaining productivity. After all, jobs are still being lost and companies are still digesting the structural changes and trying to regain output.
My concern is that a premature pick-up in the property market, especially if it becomes heady, will add to inflationary pressures, force a serious correction later on and divert the focus from productivity efforts.

Cathlyn LeyauManaging DirectorFIL Skin, Body & Spa Intelligence

OVER-SUPPLY and recession are causing developers to sell units at lower prices to attract buyers, which has catalysed the recent hype in the property market. The plain fact is the property market may not recover before the stock market does. It has long been noted that a recovery in the stock market precedes one in the property market, and there is always a lead-lag effect. Buyers snapping up homes in recent weeks may be jumping into the market way before it has hit rock bottom. The property market remains largely weak, even though recent sales have sparked a glimmer of hope. The big concern is that many people may jump the gun and mistake the pick-up in property market as the first sign of recovery. There are lots of opportunities to do things with your money, but the big danger is that you might end up locked up for a long time. The key for investors is patience. Do not be misled by false dawns.

Choe Peng SumCEOFrasers Hospitality

THERE has been a drop in real estate prices since the economic downturn in October last year. Hence, consumers who are on the hunt could be afraid to ‘miss the boat’ if they do not capitalise on some of the ‘good buys’ currently on offer. Unlike the past few years, however, I think that this time, consumers will tread with greater caution, and will not jump on the bandwagon. Further, the situation will be closely monitored and necessary action could be taken if the market gets too hot too fast.

Wee PiewCEOHG Metal Manufacturing

BEFORE the property bubble burst last year, the market was going from strength to strength fuelled by easy money and confidence that Singapore was re-inventing itself. Then came Bear Sterns, AIG and Lehman Brothers, which sent the property market, not just in Singapore but almost everywhere else, into a steep decline.

If there had not been a global meltdown last year, would Singapore’s property market have continued its run from 2007? I believe the answer is yes, because in the medium to longer term, Singapore’s re-invention story is still intact. I, therefore, believe the current pick-up in property prices is a continuation of the run from 2007. Yes, confidence has been badly bruised, but it is beginning to get back on its feet.

What is different now from 2007 is that while there has been a speculative element of late, buyers and investors remain cautious towards all investments – not just property – after the collapse of 2008. If you believe in the Singapore re-invention story, the property market will remain healthy, though hopefully at a less fanatic pace compared with 2007.

Another positive for the property market boils down to Economics 101. When you print money, inflation goes up and real assets go up. This is fundamental. So what have all the governments in the world been doing? Printing money. And not just printing money, but an unprecedented amount of it. A corollary is low interest rates, which I believe governments are likely to maintain for a while as economic recovery at this stage is still fragile.

All this means that property, like all other real assets, is likely to move up in price. We are already seeing this in many parts of Asia besides Singapore – for example, Hong Kong and China.

Tan Tiong ChengChairmanKnight Frank

THERE is a general feeling that we have seen the worst in the global, regional and local economies. This is reflected in the stockmarket rallies since March. The local residential property market, being sentiment driven, has followed suit. Buyers, local and foreign, sense that we are poised for price recovery, and developers are capitalising on the opportunity to embark on new launches and clear previously launched projects. This explains the market activity in the past five months.

Many will recall that sales fell off a cliff after the Lehman collapse. Today, that fear has largely dissipated. As long as the economic numbers show an improving situation, coupled with greater job opportunities and a low interest rate environment, a sustained recovery can be expected. The danger is over-zealous buying leading to over-zealous pricing that chokes the market.

David LeongManaging DirectorPeopleWorldwide Consulting

SINGAPORE’S liquidity-driven economy has propped up not only the Straits Times Index but all asset classes. The 52-week range is 1,455.47-2,843.57 – a doubling. The Singapore dollar remains strong and stable, and functions as a channel for financial intermediation from investors in Asia, Europe and the Middle East. Such a channel will give rise to volatile cross-border capital flows that typically are driven by factors or reasons unrelated to local economic fundamentals.
The sharp spike in demand for property can be mostly attributed to such fund flows from overseas. It is patently clear that the domestic economic weakness cannot spur such frivolous consumption.

Foreign capital inflows can be unpredictable and volatile. The property pick-up is unlikely to be sustainable if this is the major force supporting it.

Domestically, we are seeing more local investors taking strong positions in the hope of economic recovery in 2010. With a high take-up rate at new property launches, there is clearly a certain momentum. Snapping up risky assets is also fuelled by attractive interest rates.
The economic tide seems to have turned. It is not about pessimism in the air, but how strongly the tide will turn to lift everyone up for fresher air.

Roland MathysCEOJurong Cement

I THINK there are two fundamental forces at play:
~ People in Singapore have a lot of wealth they need to put at work and, in the long run, property is a safe bet in a country with limited land and a formal policy to increase population to six million;

~ People realise that the money-printing exercise happening all over the world will ultimately result in high inflation, if not hyper-inflation, and the only way to protect your wealth is to invest in real assets.

Lim Soon HockManaging DirectorPlan-B ICAG

I DO not believe the recent pick-up in the property market can be sustained. The recovery is more likely to be a ‘W’ shape, with a broad base and low vertex.

The recent rally is due to buyers who were bottom fishing, saw signs of pick-up, then panicked and made a bull run. These are also likely to be purchasers – locals and foreigners – who have access to loans or have cash on stand-by, and are taking advantage of more favourable prices.
I do not believe there are too many such people. Therefore, I do not believe the recovery can be sustained. My pessimism is largely due to the continuing global malaise. The world financial system remains unhealthy; global unemployment is on the rise, especially for PMETs; demand and consumption of goods and services is still weak and the global property market has yet to turn the corner. If there is one barometer of imminent economic recovery, it is the latter – the same factor that triggered the sub-prime crisis – that must pick up. Until then, in such an adverse environment, it is difficult to sustain a market rally, given that property purchases are big-ticket items.

Speculation thrives in such an environment, generally driven by the herd mentality. It needs to be kept in check to avoid a bubble that is completely out of step with the depressed state of the economy. In this regard, it is heartening to note that the government has sounded the alarm bells.

Pramod RatwaniPresident and Executive ChairmanConsilium Software

THE underlying economic reasons which caused the downfall of property prices remain. The recent increase is mainly due to speculation plus some genuine demand from first-time buyers who were waiting for property to cool. There is risk for people looking for investment gains if prices were to pull back due to lack of demand and over-supply of completed housing that will start hitting the market in the next few months. This is likely going to be a ‘W’-shaped recovery and people need to be cautious in spending their hard-earned money.

Loi Pek YenGroup CEOCWT

GREED and fear drive prices. Barely half a year ago, gloom dominated and fear led to panic selling by some. Now, with low housing loan rates, fear of perceived inflation and fear of missing the boat, prices are being chased up. At the same time, greed has resulted in speculators loading up on property to cash in on the ascent. Property prices are rising in other part of Asia too – not just in Singapore. The pick-up is likely to be sustained so long as lending rates remain low.

Tan Ka HuatManaging DirectorCEI Contract Manufacturing

THE property pick-up seems to be the result of convergence of several factors:
~ Direct correlation with the STI and other Asian stockmarket indices.~ Recent positive news on economic recovery.~ The relatively high savings and cash holdings of Singapore households.~ Expectations, coupled with bandwagon syndrome.

David LowCEOFuturistic Store Fixtures

IN comparison to the 2007 boom when saw prestige homes take centrestage, the recent spate of property sales is very much mass-market driven. The rush has been mainly triggered by low interest rates coupled with pent-up demand from those who did not capitalise on the last boom.
The pick-up will be sustained as long as long-term investment is pursued rather than speculation. Speculation is like a party – it can lead to a vicious hangover. And we are talking about mass-market buyers, so the negative effect can be alarming. So as long as prices do not escalate overnight, there should be no cause for concern.

Thomas Preben HansenCEORickers Maritime

LOWER property prices, excess liquidity and low interest rates are likely to have been key drivers in the recent property rebound. With the benefit of built-in inflation protection, the property investment proposition could make good sense in today’s uncertain times.

However, investors and banks should be careful not to commit to excessive leveraging, as near-term returns could be volatile. A backlog of launches equals a substantial amount of supply in the pipeline, which could add to pressure on rents. A combination of falling rents and higher interest rates could rapidly erode yields in the near term.

With Asia set to lead the world out of recession, and talk of an ‘Asian century’, we can expect to see an acceleration in foreign investment and in the number of people seeking a career in Asia, all of which, over medium to long term, should stimulate property prices in Singapore.

Stefanie Yuen ThioHead, CorporateTSMP Law Corporation

THE reason for the rally can be summed up in something a Generation Y-er said: ‘If this is the world’s worst recession ever, it ain’t so bad.’

I don’t think people have truly felt the harsh reality of the recession in Asia. Governments have been incredibly adept at going into damage control, pumping billions into the system, shoring up lending and helping businesses stave off retrenchment. These were necessary measures from an economic and confidence viewpoint. But they had the side-effect of insulating most of the population from the naked reality of the economic crisis we’re going through.

Talk to people on the street and you may find, as I have, that there are some who have not been able to find a job for a year, and others – mostly under 30 – whose spending patterns have hardly changed since the boom days of 2007.

Because many have been sheltered from the real effects of the global financial crisis, I think we may be living in what is another, potentially much larger, bubble. And while we had quick-acting governments to come charging in to save us from the last one, who can we look to for salvation when the governments’ rescue plans run out of ammunition?

I think it’s crucial that we work out what went wrong and put in place measures to try to prevent similar mistakes. This is the responsibility not just of national regulators but also global banks and professionals who form the backbone of so many corporate structures. It’s time we brought corporate social responsibility out of the charitable arena and into the boardroom.

Deb DuttaVice-President, Asia-PacificBrocade

THERE is a general perception that the real estate market has bottomed out. As a result, people are rushing in, which is boosting property prices. I don’t want to rain on the parade but I do not quite agree with this optimism, despite Singapore’s limited land supply.
Singapore’s reputation and the government’s efforts to make the island a regional educational hub attract foreign students, which supports the rental market somewhat. At the same time, we have low interest rates, which is motivating upgraders to buy property, putting a somewhat positive spin on the market.

None of the factors that have driven the global slowdown have changed markedly – anywhere in the world. And Singapore does not have the critical mass to set its own trend.
I am starting to see promising signs, but we are definitely not out of the woods.

Reto IsenringManaging DirectorVP Bank (Singapore)

THE current popularity of property can be attributed to its tangible nature. Many investors were burned or turned cautious after the Lehman collapse. The resulting lack of confidence in financial regulations has dented the appeal of mutual and hedge funds, currency options and commodities, etc. So a lot of savings/assets have been sitting idle in almost-zero yielding accounts for the past year. Property prices have also fallen reasonably in the last year.

All of this has created the perfect backdrop for a surge of investment in property, driving prices up more than 20 per cent in the past three to six months alone. It also appears that many property purchases are for investment rather than owner occupancy.

With the amount of liquidity available, prices can be sustained in the short term. But unless rental demand and yield remain strong, the longer-term outlook for property can be bleak.
Teng Yeow Heng MichaelManaging DirectorCorporate Turnaround Centre

THE recent pick-up in the property market is due to feel-good sentiment from the rise of the equity market. Funds are flowing into Asia again owing to fiscal stimulus injected by the various central banks a few months ago. Also, residents in Singapore who sold their homes previously in en bloc deals are looking for property to buy to occupy. Others are finding that the banks are offering very low interest rates on fixed deposits, and have decided it is better to park their money in property. Some are anticipating hyper-inflation in the years to come and are investing in property to hedge against this. Others are rushing into the fray so as not to miss the boat.

I do not think that this is a sustainable trend. The world is still in recession, though signs are indicating the worst may be over. It will take several years for things to get back to normal. Companies will continue to downsize even when the economy recovers, and when people lose their jobs they will have less appetite to invest in property.

Source : Business Times – 17 Aug 2009

A call for self-restraint

17 Aug 2009, 12:47 pm

WHEN National Development Minister Mah Bow Tan warned against property speculation recently, many – especially those in the real estate business – thought he was being a party pooper coming in to spoil the fun.

He had said: “Some of the practices and habits that you saw in the last property boom are beginning to come back, so I think we’ll have to be careful.”

The note of caution was appropriate and timely, given that we are still in the midst of a recession and headed for negative growth at year’s end, despite the strong comeback of the stock and property markets. And look at how crowds continue to throng showflats, sometimes days ahead of the launch.

Greed is back.

The Real Estate Developers Association of Singapore (Redas) was quick to downplay Mr Mah’s observations, saying: “In the current market, not all the property launches have been snapped up as reported in the media. Only a selected few launches have been highly successful for various reasons. This could also be a result of pent-up demand.”

But there are undoubtedly signs of some irrational exuberance creeping in, with prices of some properties, especially in the outlying areas, exceeding even the prices during the 2007 boom.
For instance, Optima at Tanah Merah, jointly developed by the Hong Leong Group and Japan’s Mitsui Fudosan, sold out its 297 units within three days of its launch at over $800 per square foot (psf) – a 19-per-cent premium to the nearby Casa Merah project launched during the 2007 boom.

Even more exuberance was displayed at the launch of Far East Organisation’s Centro Residences which, despite being a 99-year leasehold project of 329 units at Ang Moh Kio, saw prices of between $1,100 and $1,200 psf – almost what Sui Generis in the prime district of Balmoral Park went for.

While there are certainly genuine buyers, especially among Housing and Development Board upgraders and en bloc sale beneficiaries, there is little doubt that speculators are back with a vengeance. Just look at the classified advertisements for resale properties. Many of the flippers are said to be real estate agents.

For those so-called “specu-vestors” who put down money for properties that have yet to be completed, they are not going to get the benefits of rental income for some time to come. Which will be a problem if they run into cash flow problems.

Some of the blame for the current resurgence in the property market is being placed on the low deposit rates, meaning those with large cash hoards think they could be better off in the long run banking on capital gains from property investments than in putting their money in the bank.
Also fuelling the market are the low interest rates and easy terms that financial institutions are charging for housing loans. One local bank, for instance, is now offering fixed interest rates of 1.99 per cent per annum for three-year loans and 2.65 per cent per annum for five-year loans.
In the equity markets, the recent upturn in property prices has caused many analysts to take a bullish view on property stocks. However, an analyst from The Royal Bank of Scotland Asia Securities (Singapore) is taking a contrarian view and calling for a sell on most of them.

Not only does RBS find valuations of the property stocks rich, it also feels that sliding rental yields will drive down residential prices. It says that low interest rates are supporting unattractive rents and that the yields at well below 2 per cent per annum are “unsustainable”.
I agree.

Investors, especially speculators, should therefore exercise more caution and allow some air to be let out of the growing bubble before it reaches bursting point. Will the Government introduce a capital gains tax to temper the exuberance? I don’t think so.

But, in the first place, why allow the Government to take any restrictive measures when self restraint on the part of all participants in the real estate business would be a better solution?

Source : Today – 17 Aug 2009

Mass-market home prices ‘at 2007 peak’

17 Aug 2009, 12:46 pm

ANTI-SPECULATIVE measures, falling rental yields and ballooning supply may drive residential property prices down by about 20 per cent, says an analyst.

Sounding a contrarian view that runs against current sentiments, RBS Singapore analyst Fera Wirawan warned that prices of some segments of the market have risen to 2007 peaks amid a strong upswing in buying levels.

Based on her analysis, prices of mass-market homes, or low-end private properties, are now at peak October 2007 levels, while prices of mid-tier and high-end homes are just 8 per cent and 22 per cent off their peaks respectively.

With prices surging 16 per cent to 26 per cent in recent months, the residential property sector may have peaked, Ms Wirawan cautioned.

‘The residential sector recovery was initially driven by pent-up demand and cheap capital values, but we now see speculation in all residential segments, particularly the mass segment,’ she said.

Average selling prices (ASPs) at recent property launches are 30 per cent to 80 per cent above the ASPs of nearby projects. This is markedly higher than the historical average of 20 per cent.
‘Capital values have been rising in the face of falling rents and a full supply pipeline, a phenomenon we attribute to low average mortgage rates of 2 per cent.’

She noted that the strong residential volumes were triggered by Frasers Centrepoint’s launch of the mass market Caspian project at an affordable $580 per sq ft in February, which attracted a high take-up owing to pent-up demand in the mass residential segment.

The positive sentiment from the sale of Caspian units quickly filtered through to the mid-tier and high-end segments.

This frantic level of buying, in annualised terms, almost matched the record number of new homes sold by developers in 2007.

Property developers here sold more than 7,000 private homes in the first half of this year, double what they sold in the same period last year.

When annualised, sales are only 2 per cent short of the record 14,811 sold in the 2007 boom year.

The low-end segment performed the best in the first three months of this year, contributing 63 per cent of the 2,552 primary units sold.

The second quarter, however, saw a change, with 40 per cent of the 4,552 units sold represented by the mid-tier segment, followed by 31 per cent in the high-end segment.
The broad-based recovery has fuelled a sharp rally of property counters such as City Developments and SC Global Developments.

The Singapore FTSE ST Real Estate index, which tracks Singapore-listed property stocks, has doubled from its March lows.

With increasing speculation, worsening affordability, declining rental yields and plentiful supply in the property development pipeline, prices are likely to cool, said Ms Wirawan.

‘The Government is watching the market and could implement anti-speculative policies if speculation in the market goes on unabated,’ she said. ‘We expect prices to fall 10 per cent to 20 per cent in the residential sector over the next 12 months.’

National Development Minister Mah Bow Tan said last month that signs of speculation are re-emerging in the property market and stressed that the Government is monitoring the the situation closely. His comments came after speculative pricing practices began to emerge late last month, especially in the mass-market segment.

Ms Wirawan pointed to the sale of Centro Residences, a mass-market 99-year leasehold project located at Ang Mo Kio, which was sold at between $1,100 and 1,200 psf.

That price, she said, was close to the price of a bulk purchase of Sui Generis, located at Balmoral Park, a prime area, which sold for $1,260 psf.

Industry players generally agree that it is not sustainable to price low-end properties at about $1,000 psf.

The Government recently made cautionary statements owing to concerns that such homes may become unaffordable to the mass-market home-buyer.

The warning, however, appeared to have fallen on deaf ears as property launches continued to attract throngs of buyers, including many Housing Board upgraders, over the first two weekends of this month.

DMG & Partners Securities analyst Brandon Lee said that he expects ‘residential sales momentum to continue’, while OCBC Investment Research analyst Foo Sze Ming said demand in the mass-market segment was more sustainable.

Source : Straits Times – 17 Aug 2009

Dubai home prices drop further

11 Aug 2009, 1:05 pm

Dubai house prices fell by 24 per cent in the second quarter from the prior quarter but the pace of decline slowed, in line with improving global property markets, Landmark Advisory said on Sunday.

Prices fell less in the same period in Abu Dhabi, as the United Arab Emirates’ (UAE) capital, home to most of the country’s oil, continues to weather the global downturn better than its neighbour.

The average sale price for villas in Dubai fell 24 per cent while apartments declined 17 per cent, Landmark said.

Prices for villas and apartments fell 32 per cent and 23 per cent respectively in the first quarter from the fourth quarter, the firm said in its May report.

Dubai’s once-booming real estate sector has been hit hard by the global financial crisis, but the pick-up in more mature markets such as the United States and Britain is starting to cheer investors.

Prices in the US rose in May for the first time in three years while prices in Britain gained for a third month running in July.

House prices in Dubai are likely to stabilise by the fourth quarter, after falling 9 per cent in the second quarter from the previous quarter, Colliers International said last week.

Rents for villas in Dubai fell 19 per cent to 220,350 dirhams (S$86,480) in the second quarter, while apartment rents dropped 23 per cent to 129,900 dirhams, Landmark said.

Transaction volumes rose 25 per cent and 20 per cent respectively as more people relocated to Dubai from the neighbouring emirates of Abu Dhabi and Sharjah, it said.

In Abu Dhabi, sale prices fell by up to 11 per cent for apartments in the second quarter and 8 per cent for villas compared with the previous quarter, but prices are unlikely to suffer further significant declines, the report said.

The rate of decline also slowed as prices for both categories fell 20 per cent and 30 per cent respectively in the first quarter from the fourth quarter, Landmark said in May.
Rents for both apartments and villas fell by roughly 10 per cent in the second quarter, it said, adding average rents would likely fall significantly as more supply enters the market.
Seven emirates make up the UAE federation.

Landmark Advisory is part of real estate brokerage and consultancy Landmark Properties, which has offices in the UAE and London.

Source : Business Times – 11 Aug 2009

Fans of American architect saves The Last Wright

11 Aug 2009, 1:04 pm

Frank Lloyd Wright enthusiasts are claiming victory in their effort to restore the architect’s last standing hotel, a northern Iowa landmark that has fallen apart over the past few decades.
The Park Inn Hotel in Mason City, designed by Wright and completed in 1910, has been used as a hotel, apartments and even a strip club. It fell further into neglect while city officials searched unsuccessfully for a way to maintain the historic structure.

Now, a private group has taken over the effort.

‘It certainly has been an eyesore, it has had a very, very chequered history over the past 40-50 years,’ said Ann MacGregor, executive director of Wright on the Park Inc, the group behind a planned US$18 million restoration.

The hotel is the last remaining of six designed by Wright after the Imperial Hotel in Tokyo was demolished in 1968.

The Park Inn Hotel will have 20 suites when it reopens to the public in early 2011, Ms MacGregor said.

The restoration has caused discord in the city that was home to The Music Man creator Meredith Willson. His boyhood home has been made into a museum, and there’s a life-sized replica of The Music Man movie set in downtown Mason City.

Some wonder why the hotel designed by Wright, considered by many to be America’s greatest architect, hasn’t had the same support.

‘There are naysayers for this project . . . who don’t appreciate or understand the architectural, historical nature of this property,’ Ms MacGregor said. ‘They question what it will do for downtown Mason City.’

Market analysis shows that there is demand for such a tourist destination, and a hotel management company based in Fort Atkinson, Wisconsin, has been hired to ensure things operate smoothly, she said.

Former Mason City Mayor Jean Marinos, who serves as president of Wright on the Park’s board, also believes that the hotel would help economic development. The group plans to invite presidential candidates to the hotel during the Iowa caucuses and hopefully host a televised debate.

‘Five years from now, when this hotel is up and running, we’ll really have some great opportunities in the downtown for small businesses to come in,’ said Ms Marinos.
The hotel made national headlines in 2004 when the city council put an ad on eBay to sell it for US$10 million to anyone who promised to restore it. When that failed, Wright on the Park stepped in, and the city signed over the deed.

‘It wasn’t that they didn’t want (the restoration) done,’ Ms Marinos said, ‘it was just they didn’t want the city to do it.’

Wright enthusiasts have been in a race for funding. The state of Iowa came through with about US$8.2 million through its Vision Iowa programme, and various federal and state historic grants and donations will pay for much of the work. There’s only about US$2 million left to be raised.
‘I think we’ve moved mountains in a relatively short period of time,’ said Ms MacGregor.
Alaina Santizo, the programme manager for Vision Iowa, said that state officials believe that the project will draw tourists from across the country.

‘This historic gem will be restored to its original splendour, while providing modern amenities that will appeal to today’s travellers,’ she said.

Born in Richland Center, Wisconsin, Wright was part of the Prairie School, a residential architectural movement that started in Chicago and spread through the Midwest.

He came to Mason City in 1908 after two local lawyers hired him to build new law offices and sandwich them between a hotel and a bank for added revenue.

Wright also built a private residence in Mason City called the Stockman House that’s now a museum.

Bruce Pfeiffer, director of archives for the Frank Lloyd Wright Foundation in Scottsdale, Arizona, said that the Park Inn Hotel was interesting because it includes bank and law offices, but it’s been ‘very badly mutilated over the years’.

‘It’s such a remarkable building, it should definitely be preserved back into its original condition,’ he said. ‘I think a lot of people would be outraged if anybody ever thought of demolishing it.’
Film director Lucille Carra created a one-hour documentary called The Last Wright that is being released on DVD this month in North America and Australia. The film traces 100 years of the economic and social history in Mason City, with special attention to the hotel’s fate.