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At least 60% of GFA must be zoned for office space: URA

A 99-YEAR-LEASEHOLD ‘white’ site at Marina View, launched for sale yesterday by public tender, could fetch as much as $1.6 billion, analysts reckon.

The site, which can be developed for a range of uses, was released by the Urban Redevelopment Authority (URA) - and could sell for $900-$1,300 per square foot per plot ratio (psf ppr), adding up to $1.1-$1.6 billion.

‘Right now, prime office space in the central business district, even that with a 99-year lease, is selling for a high price,’ said Donald Han, managing director of Cushman & Wakefield. ‘This site can sell for $1,300 psf ppr.’

The tender for the new site - which URA terms parcel B at Marina View - closes on Nov 13. Market watchers expect bidders to take a cue from an adjacent site offered by URA. The tender for that site - parcel A at Marina View - closes on Sept 19. It is expected to fetch about $1,100 psf ppr.

The latest site is expected to attract keen interest as office rents in Singapore look set to keep climbing amid a supply crunch.

‘This site could attract four to eight bids from major developers, investment funds and joint ventures of developers and investment funds,’ said Knight Frank’s director for research & consultancy Nicholas Mak. ‘It would also attract foreign property players.’

The site is about 0.9 of a hectare, has a gross plot ratio of 13 and can yield a maximum gross floor area (GFA) of 1.2 million sq ft.

Land that is zoned ‘white’ can be put to various uses including hotel, retail, office and residential space. But this site comes with a URA requirement that at least 60 per cent of the maximum GFA be office space. URA said this is to help meet demand for prime office space.

The successful developer will also need to set aside at least another 25 per cent of GFA for hotel use, yielding about 550 hotel rooms.

‘This is to contribute to the supply of hotel rooms to meet the expected increase in demand arising from the Singapore Tourism Board’s target of attracting 17 million visitors by 2015,’ URA said.

The remaining 15 per cent of the GFA can be used for any other permitted purpose. If it is used for residential units, the space could yield 190 to 200 apartments and several large penthouses, said MrMak.

URA hopes the project that goes up on the site will help create a critical mass of office space and hotel rooms in the Marina Bay area, so the precinct becomes an international business and financial hub.

The site will be connected to surrounding developments One Raffles Quay, Marina Bay Financial Centre and the future development One Shenton, URA said.

Source : Business Times - 1 Aug 2007

The Singapore property market ‘became 2007’s hottest global market with prime capital values increasing by 50 per cent (in the first half) fuelled by astounding rental growth and yield compression’. So said Jones Lang LaSalle on July 20.

Despite this phenomenal appreciation of our property market and amidst signs of speculation, our Minister for National Development, Mah Bow Tan, was yesterday quoted as saying that the government would try to avoid interfering in the market.

Instead of urging a degree of caution as Minister Mentor Lee Kuan Yew did early last month, it would appear that by his comments our National Development Minister is stoking the roaring property market.

In February this year, the Department of Statistics released a paper, Key Household Income Trends 2006. In that paper, it was shown that the top 10 per cent of households in Singapore had an average household income of $174,330 per year or $14,528 per month.

Assuming that mortgage payments should be no more than 35 per cent of income, the top 10 per cent of Singapore households can only afford to borrow $833,000 based on a 19-year mortgage at an interest rate of 4 per cent.

If the top 10 per cent of our households can only afford to borrow $833,000, how does one come to terms with the current roaring property market where private properties are now transacting at multiples of millions of dollars and where even selective HDB flats are going at more than $700,000?

At the rate that private property prices are increasing or just based on today’s prices, would our young Singaporeans ever have a chance to own private properties? Or, should we agree with what Mr Mah said, ‘I’m not talking about the multimillion-dollar apartments in the central area. I think those people can take care of themselves.’

Unfortunately, multimillion-dollar apartments and landed properties are no longer confined to the central area.

Adrian Ho Kim Lee

Source : Business Times - 1 Aug 2007

Despite Govt’s reassurance, sector still wary about steps it might take

The Government’s assurances on Monday that it is not inclined to cool the property sector for now has gone some way to soothe market jitters.

But it has not eliminated the uncertainty in the air over eventual government action, say industry watchers.

In fact, some add that the latest comments may be seen as mixed signals that could lead to confusion and volatility in the market.

National Development Minister Mah Bow Tan said on Monday that the Government would not intervene in the sector and would ‘let market forces work’ instead.

‘We will try to avoid interfering…if we can,’ he said.

Some property consultants see this as a guarantee that the Government will not step in to calm the market, at least for the time being.

‘I think we are safe for now until the next set of Urban Redevelopment Authority price statistics comes out in October,’ said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Indeed, property stocks rallied yesterday after Mr Mah’s comments. City Developments gained 60 cents to close at $15.20, while United Overseas Land and GuocoLand were up 10 cents each at $5.40 and $5.15 respectively.

But not all property experts were convinced that the Government’s words should be taken at face value.

‘It did say it would lay off cooling measures for now but I think in reality it is leaving the door open,’ said Citigroup economist Chua Hak Bin. ‘I think the measures aren’t so far away.’

Some analysts noted there had been little warning before the Government raised development charges (DC) two weeks ago, a move that caught the market by surprise and sent investors into a tizzy.

Although the actual impact of the hikes was minimal, the market pulled back as it tried feverishly to guess the Government’s next step.

But one analyst, who declined to be named, suggested that the pullback was actually good for the market.

‘After the DC hikes, the market sat up and started to worry, which generally meant people moderated their expectations,’ he said.

‘That was good because we need moderate, sustainable growth.’

He added that ‘just the perception of potential intervention itself is a very strong soft measure. That’s what we need now’.

Mr Mah also said on Monday that the current tightness of home and office space is a short-term problem, and the Government would not ‘use long-term solutions to try to solve short-term problems’.

But analysts found it difficult to determine what exactly ’short-term’ and ‘long- term’ solutions might translate into.

On the one hand, most short-term steps, such as transitional sites and temporary homes for lease, have already been used and may impact only certain segments of the market, they said.

Yet long-term solutions such as changing the masterplan to intensify land use will have little immediate effect.

The measures that most concern market watchers fall somewhere in between. They include changes to deferred payment schemes for homes and capital gains taxes - both could apply immediately and have long-term consequences, making it hard to decide which category they fall into.

‘When it comes down to it, anything that can be introduced immediately and removed the next day can be seen as a short-term solution,’ noted CIMB-GK economist Song Seng Wun.

Source : Straits Times - 1 Aug 2007

The recent en-bloc fever that has swept Singapore by storm has affected both supporters of en-bloc sales and those who are against in a rather significant manner.

On paper, it seems that any person who disposes of his older property in an en-bloc sale gets a significant amount of cash which is able to tide them through the years to come.

These packages seem attractive but, on a deeper analysis of the wonderful gift that this en-bloc fervour brings, it turns out to look more like a Trojan horse.

Firstly, many of these properties that are involved in an en-bloc sale are 20-30 years old. For an average Singaporean to buy his first private property, he may need to work for an average of 10 years before he is able to afford the first downpayment of his property, his dream home.

Considering the time in which an average Singaporean takes to pay for his housing, it takes around 20 years to achieve that aim. By then, this average Singaporean will be close to retirement and waiting to enjoy life. However, if his property undergoes the en-bloc process, he loses his roof and he does not have the means to earn the cash needed to get a new property of substantial size.

But wait, some people will say, we are getting millions from the en-bloc sale. Surely we can make use of this cash to get a better property.

Once again, this is great fallacy.

Firstly, the cash does not come immediately, so you will not get the property that you have been eyeing for at the current price.

Based on the rising trend of property prices, chances of you getting a similar property to that you have lost is slim.

Furthermore, if a developer is willing to part with billions to purchase your property, wouldn’t he charge you more when he rebuilds a new one over your old area?

How can we then purchase a property that is in the same area or of equal standing to that we have lost? This is basic common sense which does not require an economics degree to arrive at.

As the Minister Mentor stated, property and rental prices have to stay competitive in order to attract foreign investments. Collective sales totally contradicts this notion. Furthermore, it has been reported that Singapore’s housing prices are among the highest in the world. How is this contributing to our competitiveness?

Well, some people will say, you can downgrade to a HDB flat and enjoy the extra liquidity that comes with an en-bloc sale. True, but how much liquidity do we really get? With the rising prices of HDB flats and hidden costs in the en-bloc package, do we really get what we perceived we could? Furthermore, if one is staying at a good location now, does it warrant to uproot oneself to the suburbs for pittance? I am not so sure.

Lastly, we are talking about going green and conserving the environment nowadays. Does the tearing down of buildings and rebuilding of new ones so frequently serve to protect the land we love and the air we breathe? I am not so sure.

Let not our short-term greed ruin the future of our children. The world is tough enough for them as it is. We need not make it harder.

Lau Cher Chye
 
Source : Straits Times - 1 Aug 2007

RECENTLY the Government sought the views of the public (twice) through its Working Committee (WC) to give clarity/equity to en-bloc sales (EBS).

There are also a number of court cases on EBS.

The Strata Titles Board (STB) members who rule on EBS matters are volunteers. I think it is appropriate that a judge take charge of the STB to give confidence, guidance and consistency in STB’s rulings.

One thorny/disturbing issue is the Apportionment of Price in an EBS.

The Singapore Institute of Surveyors (SIV) recommends three methods and/or a combination of the three.

The prevailing method is to use a combination of the shares value (SV) and built-in area (PSF) methods.

This is generally acceptable when the types and sizes of the properties are uniform. However, injustices happen when various types of properties and different sizes are involved and, worse still, disproportionate SV.

The Commissioner of Land, in apportioning SV in the early days, obviously had in mind maintenance charges and matters pertaining to the common property and voting rights in condo living and not EBS. Hence the use of SV apportionment is called into question when it is used for EBS price apportionment.

It is misconceived and misplaced .

By way of illustration, is it not absurd that by using the SV method - even on a 50 per cent (or higher) apportionment - a townhouse more than four times the size of a studio flat is given only 5 SV and the studio 3?

This leads to great conflict and unhappiness especially when the majority insists SV be the major component in price apportionment. An oppression of the minority arises needing the court’s intervention.

Is it not the market’s norm that property is sold and bought on PSF basis?

Have you ever seen property bought and sold or advertised on SV basis?

Does it not make more sense and would it not create less conflict if the PSF method were to be used for the built-in area and the SV method, if at all applicable, be confined to the common area?

It does not hold water to argue that a smaller area commands a higher value; in fact, a quick glance at the property ads will show that the opposite is equally true.

Also, would it not be ideal that EBS be handled by an independent (non-resident) official sales tribunal (if feasible) to do away with all the vested and conflict of interests of the sale committees and also to ensure fairness and transparency?

There should also be a qualified tribunal to look into apportionment of price issues and make fair and equitable rulings and not leave it to estate agents and sales committees members to decide.

They are hardly qualified or impartial enough to make price apportionment decisions.

Richard Chia Chee Keong
 
Source : Straits Times - 1 Aug 2007