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Seven sites already launched, as market rides on positive economic outlook

IT IS no surprise that optimism is flowing in the property market: The year has barely begun, but already seven collective sale sites have been launched.

And that is coming off a record year in 2005 when 37 collective sales of residential sites worth $2.09 billion were completed - more than double the deals and value achieved in 2004.

Ms Soon Su Lin, executive director of property consultancy CB Richard Ellis, said such sales will continue at the same pace as last year thanks to a good economic outlook.

Supply and demand tells the story: Sites sold en bloc last year generated a potential supply of 3,860 new homes, while overall, 8,955 new homes were sold last year.

‘So potential supply from the sites being sold en bloc is expected to meet good demand when they are ready for launch,’ said Ms Soon.

Home owners in collective sales typically get at least 30 to 50 per cent more than what they would have reaped from an individual sale. But the risk, said consultants, is that owners may have unrealistically high price expectations.

Typically, potential collective sale developments are more than 10 years old with rising maintenance costs.

Selling these sites require the consent of at least 80 per cent of the owners; those less than 10 years old need 90 per cent acceptance.

Because people looking to rent tend to migrate to new projects, owners of older projects find it harder to find tenants. And with maintenance costs rising, they may be keener on a collective sale, said DTZ Debenham Tie Leung director Tang Wei Leng.

But that does not mean everyone can cash in.

Prime sites in districts 9, 10 and 11 clearly have the best chances. The Cairnhill area appears to have the most potential sites, though projects in posh Ardmore, Draycott, Nassim, Leonie Hill and St Thomas Walk are also very popular, said Credo Real Estate executive director Tan Hong Boon.

‘Sites in Cairnhill are very sought-after and the success rate will be good if they are not over-priced,’ he said.

In general, most owners ask for about $800-$850 per square foot per plot ratio, though some want as much as $1,000 psf ppr, he said.

Still, the highest residential collective sale land price last year was only at $876 psf ppr - made by Wheelock Properties in September for The Habitat II in Ardmore Park.

Areas in Tanjong Katong Road, Meyer Road, Amber Road, East Cost Road and the Telok Kurau area also have good chances, said the head of investments at Jones Lang LaSalle, Mr Lui Seng Fatt.

The best candidates are developments of six storeys or less, with a small number of units or a large plot of land, said DTZ’s Ms Tang.

‘Those with facilities would have good rental value so the owners won’t be very motivated to sell,’ she said.

Credo Real Estate’s executive director, Mr Karamjit Singh, said: ‘The poorer the physical conditions, the better the chances.’

Surroundings also play a part. For instance, a low-rise development in an area with mostly high-rise projects could be a strong target, he said.

It could be tricky for mixed developments as shop owners may not want to sell. ‘The revenue they derive from the shops may be much better than the property’s value,’ said Ms Tang. ‘If they move out, they will lose the goodwill they have established over the years.’

Consultants said many former HUDC estates like Pine Grove, Gillman Heights and Farrer Court have expressed interest in selling collectively.

So have some owners of ageing private properties such as Grand Tower in Moulmein Rise, Eng Tai Mansions at St Thomas Walk, Peck Hay Mansion in Cairnhill and The Ardmore at Ardmore Park.

But getting enough owners to agree to a collective sale could take years. ‘It’s a waiting game,’ said Ms Tang.

A home owner Gerald sold his Parry Gardens home near Yio Chu Kang in 1993, even though a neighbour said there may be plans to sell en bloc.

‘I missed out on making money but the deal was only concluded in 2005! I would have had to wait for more than a decade,’ he said.

Source : Straits Times - 31 Jan 2006

Q I FOUND the article ‘The best thing you can leave behind’ (Sunday Times, Jan 22) very informative.

Can you please enlighten me on one aspect of a will document?

An executor/trustee is authorised to distribute the assets of the deceased.

Does my executor/trustee have to be someone who has access to my financial information?

Who is eligible to be an executor and trustee?

If this person is a friend, how can he/she legally instruct those concerned to distribute my assets?

A The executor/trustee is the person named in a will to be in charge of winding up the person’s financial affairs after death.

This means this person, who has to be above the age of 21, has to be responsible for taking care of property, paying bills and taxes, and ensuring that your assets are transferred to their new rightful owners.

In some cases, this person has to resolve disputes as well.

If there are minor beneficiaries - that is, people under the age of 21 - named in the will, there should be at least two executors who would be able to hold any assets, or invest them, or use any money for the benefit of the minors.

Even though most executors do not need special financial or legal knowledge, you still need to exercise care in choosing your executor.

While it is ideal to have someone who is familiar with your financial affairs, it is not mandatory.

The main requirements are common sense, conscientiousness, honesty and an ability to communicate with people.

If possible, name someone who lives close by and preferably not someone who spends most of his time out of the country.

That will facilitate the probate process and reduce delays.

Most people name their spouse or an adult child as their executor(s).

Many people select someone who will inherit a substantial amount of their property.

This makes sense because such a person is likely to do a conscientious job of managing your affairs after your death.

He or she may also know where your records are kept and understand why you want your property left as you have directed.

In any case, executors can - and usually do - hire lawyers, accountants, or other experts to assist them, and pay them from the assets of the estate.

Regardless of who you pick, make sure the person is willing and able to do the job.

It is best to discuss it with them before your will is finalised.

Bernard Lim Financial services director Prudential Assurance Singapore

Q I AM one of the beneficiaries of my late father’s estate. How can I check that the administrator or executor of the estate distributes the estate properly?

I have no access to the insurance policies my late father owned. I believe that some of these policies fall under Section 73 of the Conveyancing & Law of Property Act and, if this is the case, I shall be entitled to a share of the insurance payout.

The probate was completed last year. I did not receive any insurance payout.

I would be grateful for advice on how to proceed on the above.

A If you are one of the beneficiaries of your late father’s estate, you can apply to the court for access to the court files relating to the extraction of the Letter of Probate/Administration of your late father’s estate.

>From the court records, you can ascertain the extent of your beneficial interest as well as details of the Section 73 policies taken out by your late father.

As a beneficiary, you also have the right to call upon the executor - or the administrator if there is no will - to furnish accounts for your inspection.

Where no or insufficient accounts are furnished by the executor/administrator, the court may order proper accounts to be furnished to you.

An executor/administrator is personally liable to the beneficiaries for all breaches of trust that arose from his office - for example, misuse of the deceased’s assets as by converting to his own use, maladministration and/or negligence.

Lie Chin ChinPartner Lie Kee Pong Partnership

Q I BOUGHT my first HDB flat on the resale market with an HDB concessionary loan.

Do the Valuation Limit and Available Housing Withdrawal Limit apply to me?

A Yes. Both limits will apply to you in the following manner:

Valuation Limit - This is the lower of the purchase price or the value of the property at the time of purchase.

You may use all your CPF savings in your Ordinary Account towards the purchase and to service the housing loan up to the Valuation Limit of the flat.

Available Housing Withdrawal Limit - If your housing loan is still outstanding when your total CPF withdrawal for the flat has reached the Valuation Limit, you must first set aside the prevailing Minimum Sum cash component before you can use any excess in the Ordinary Account to pay the housing loan.

Savings in the Special Account - including the amount used for investment - and Ordinary Account can be used to meet the prevailing Minimum Sum cash component.

HDB flats financed with bank loans will be subject to a further limit which is the CPF Withdrawal Limit. This limit is the maximum amount of CPF one can use for the property.

Currently at 132 per cent of the Valuation Limit, it will gradually decrease to 120 per cent by 2008.

For more details on the three housing limits, please visit the CPF website at www.cpf.gov.sg

Chang Long KiatDirector (Housing and Health care)CPF Board

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

Source : Sunday Times - 29 Jan 2006

Last year’s 3.9% rise driven largely by luxury segment; mass housing market being held back by weak demand

PRIVATE home prices may have posted their biggest gains in over five years last year - but according to at least one top investment bank, it is too early to crack open the champagne bottle just yet.

The ‘modest pick-up’ in residential property values recently ‘appears to be fuelled more by hope than fundamentals’, Morgan Stanley declared in a research report.

The report was released three days ahead of the latest Urban Redevelopment Authority (URA) figures, out last Friday, which show that private home prices rose 3.9 per cent last year.

While some property analysts hailed this rise as a sign that the once-moribund property market is finally starting to pick up, the report by Morgan Stanley does not paint such a rosy picture.

Consultants such as Mrs Ong Choon Fah, the executive director of DTZ Debenham Tie Leung, believe rising home prices are evidence that the property market ‘has definitely turned the corner’.

However, the Morgan Stanley report noted that though home prices have indeed inched up over the past two years, the trend might not continue.

Gains in the immediate future could be checked by oversupply and a lack of demand given already high ownership rates, it warned.

Renewed interest in the property market appears to be confined to the luxury segment, and the rise in prices has been driven largely by this sector, Morgan Stanley pointed out.

It also warned that ‘further developments on that front could be sparse’ since foreigners, who make up a significant proportion of luxury home buyers, are snapping up high-end units precisely because they are limited in supply.

For the lower tiers of the housing market, factors such as excess supply and low rental yields ‘may temper value appreciation’ in housing prices here, said the report.

Condominiums are running at a higher-than-average vacancy rate of 10 per cent, thanks to condo stock rising 44 per cent in the past five years.

Exacerbating this situation is an expected increase in condominium supply this year of 26 per cent, half of which is already under construction.

This excess supply has helped depress rental yields, which collapsed during the 1997 Asian financial crisis and have remained low ever since.

Although the housing market has recovered slightly since then, with property values climbing 17 per cent, rental values have actually fallen by 8 per cent since 1997, said the report.

Demand is also being held back in the mass housing market because Singapore has one of the world’s highest home ownership levels. Currently, 93 per cent of Singaporeans own their own homes, a dramatic rise from only 29 per cent in 1970.

The high home-ownership level also means that Singaporeans as a whole are already highly geared. Housing debt here amounts to 63 per cent of gross domestic product, second only to Australia in the region, which gives Singaporeans less leeway to drive up housing demand.

Looking ahead, the report predicted ‘a measured broad-based appreciation in the property market, with the high-end landed sector enjoying a speculative spike’.

Source : Sunday Times - 29 Jan 2006

THE property market seems to have finally turned the corner with private home prices increasing 3.9 per cent last year, well up on the paltry 0.9 per cent rise in 2004.

Prices have now risen by 5.2 per cent since they hit rock bottom in the first quarter of 2004 but levels overall are still 34.8 per cent below the 1996 peak.

At least the trend is positive. The Urban Redevelopment Authority (URA) showed that prices in the last three months of 2005 rose 1.4 per cent, their biggest quarterly rise in more than five years.

But the recovery has been led by high-end homes while the mass market has yet to kick off though HDB resales are showing signs of life. HDB resale flat prices edged up 0.4 per cent in the fourth quarter after falling by 5.2 per cent in the preceding six months.

ERA Singapore’s assistant vice-president, Mr Eugene Lim, said HDB resale prices have not recovered as quickly as private homes because there is still an overhang of 9,000 unsold flats. Although overall resale volume is down, the resale volume of larger flats rose and could translate into more upgraders for mass market projects, he said.

Indeed, if the mass market projects planned for this year sell well, ‘we may then see a broad-based recovery’, said Knight Frank research director Nicholas Mak.

And while fourth-quarter sales of new homes fell, overall sales last year reflect ’spectacular growth’, he said. Developers sold 8,955 new homes, way above the 5,156 units in 2003 and 5,785 units in 2004. Mr Mak expects sales of up to 8,300 units this year.

‘The total number of unsold units, which hit a peak of 20,200 in early 2001, has fallen to 11,600 at end-2005, the lowest level since 2000,’ he said.

Also, 7,582 units were sold in the secondary market last year, up from 5,488 in 2004 and 4,794 in 2003.

Last year also saw more overseas buyers. Foreigners, including permanent residents, accounted for 31 per cent of buyers in the high-end segment, up from 27 per cent in 2004 and 25 per cent last year, said URA.

Overall, prices could climb by around 5 per cent this year, with luxury homes jumping by about 20 per cent, said CB Richard Ellis executive director Soon Su Lin.

Source : Straits Times - 28 Jan 2006

FUSIONPOLIS is set to become the icon for physical science research in Singapore, just like the Biopolis is for biomedical research.

When completed by end-2008, the $500-700 million complex, next to the Insead Asia campus at Ayer Rajah, will be the only science facility in the world integrated with a train station.

‘The purpose of building the Fusionpolis and the infrastructure, relocating all the institutes there, is really to provide the icon for physical sciences,’ said Agency for Science, Technology and Research (A*Star) chairman Philip Yeo. ‘With that facility, phase one and two, we should be able to attract bright young people, both locally and abroad, to come into physical sciences and engineering.’

Comprising two towers and a podium, phase one of the Fusionpolis project is expected to be completed by the middle of next year. It will have 1.2 million sq ft of space on 1.2 ha of land. According to developer JTC Corp, about 60 per cent of the space has been taken up, mainly by four public research institutes under A*Star’s Science and Engineering Research Council.

The complex, designed by renowned Japanese architect Kisho Kurokawa, is positioned to be the epicentre of the infocommunications technology and media industries. Like Biopolis, it boasts shared facilities including seminar rooms and production studios, and features satellite access, a roof-top swimming pool, service apartments and other amenities. With a capacity for 3,000-5,000 people, it will be linked to Biopolis by road and a shuttle service, facilitating interaction among researchers from both hubs.

‘So if you look at Biopolis and Fusionpolis, eventually, when they are fully developed, we are talking about 10,000 people here,’ said Mr Yeo. ‘Of which, more than half - probably two-thirds - are doctors, PhDs and specialists. It’s a very major investment.’

The project will be key to developing research expertise in physical sciences, which will be A*Star’s focus over the next five years. While Singapore has drawn a reasonable talent pool in biomedical research in the past five years, Mr Yeo reckons that there is plenty of room for improvement in the physical science area, which encompasses IT and engineering fields.

‘We need good engineering students to take up graduate studies and come into research, so that we can use that to upgrade our manufacturing sector,’ he said. ‘Our manufacturing sector cannot depend on just low-cost labour, low-cost inputs to sustain ourselves. The trick for Singapore is to push up the ladder . . . develop new products, create new products - intellectual property especially - as physical sciences become imperative.’

Source : Business Times - 28 Jan 2006