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Early numbers show Q4 private property deals at $2.9b, nowhere near Q3’s $15.6b

Weakening market sentiment could have a bigger impact on property sales if early numbers for the Q4 2007 transactions are anything to go by.

In a preliminary analysis of caveats lodged by DTZ Debenham Tie Leung (DTZ), the value of all private property transactions for Q4 to date is about $2.9 billion.

This figure does not represent the full fourth quarter. There is also a time lag between a transaction and the lodgement of a caveat. Still, doubling or even tripling this figure will not bring it close to Q3’s figure of $15.6 billion and Q2’s record breaking figure of $24.2 billion.

DTZ executive director Ong Choon Fah also pointed out that apart from the continuing effects of the US sub-prime crisis, the property market was also jolted by the withdrawal of the deferred payment scheme in October. ‘It made people understand that there were risks involved,’ she added.

Signs of poorer market conditions were already apparent in the third quarter. In DTZ’s analysis for Q3, transactions for all private homes fell 36 per cent to 8,416 units. But this was attributed to seasonal market activity marked by the Hungry Ghost Month, as well as the reduced number of developer launches.

Mrs Ong believes that fewer launches in Q4 could be the culprit if sales do fall.

According to its report, the number of developer sales in Q3 reflected a 41 per cent quarter-on-quarter (q-o-q) drop to just 1,956 transactions with developers apparently monitoring the market for possible sub-prime impact.

Now, well into the fourth quarter, new launches still appear to be on hold. Mrs Ong believes that there are ‘genuine buyers’ in the market but developers could nevertheless be choosing to take their time to decide on pricing, or, launch developments in phases to test the market.

But she said that there is no evidence that developers or sellers are prepared to accept lower prices. ‘Prices are still inching up even though the activity level has dropped,’ she added.

Mrs Ong said that the recent strong performance of the private residential market has allowed many developers to accumulate financial reserves and most are not in need of immediate revenue. ‘Developers don’t feel the need to launch immediately. They can still launch next year, while some may even be considering waiting until the opening of the integrated resorts creates more buzz,’ she added.

The number of transactions in Q3 was bolstered by the high number of deals in the secondary market which saw 6,434 homes change hands. This represents a q-o-q drop of 34 per cent, but the decrease is of a lesser magnitude compared with that of developer sales.

And although collective sales slowed in Q3, DTZ says apartments in the secondary market in the prime districts continued to perform, largely due to price increases.

The number of secondary market apartments sold in Q3 fell 33 per cent q-o-q to about 5,300 units with foreigners accounting for 1,590 or 30 per cent of these transactions. DTZ noted that this was among the highest since 1995. The strength of the secondary market was partly due to the buoyant leasing market which also encouraged foreigners to buy homes ready for immediate occupancy.

Bucking the downward trend of all category of buyers were corporate or institutional buyers.

In Q3, transactions attributed to companies actually rose by 11 per cent with 958 homes changing hands. DTZ said this was the largest number of units purchased in a quarter.

Apart from the reported acquisition of a block at Costa Del Sol by the Ong Beng Seng family, DTZ highlighted the sale of 49 out of 58 units in Duchess Crest, registered as company transactions. DTZ executive director (residential) Margaret Thean added that unlike the bulk sale at Costa Del Sol, the Duchess Crest transactions were not done by a single company either.

She added: ‘This reflects that foreign investors and property funds still have confidence in the Singapore market.’ Ms Thean also said: ‘With the sub-prime crisis in the US, some of these funds may also be increasingly looking outside the US to invest.’

Source : Business Times - 3 Dec 2007

IN THE end, the wish of the eldest of three feuding brothers - a clean break - prevailed.

Still solvent family firms worth more than $100 million will be wound up, on a High Court judge’s orders.

A liquidator, appointed to do this, will use the proceeds to pay off $34 million in debts. The brothers - two doctors and an architect - will then get their due shares.

In her judgment published last Tuesday, Justice Judith Prakash noted that the brothers could not get along with each other and had their own ideas about how ‘the companies and the family fortunes should be dealt with’.

The rift had ‘translated into fractures in the companies’ and a logjam over the debts.

Patriarch and property investor Chow Cho Poon, who died a decade ago, had set up three companies which held 29 properties in Singapore, Malaysia and Hong Kong valued in 2005 at over $100 million.

The properties include Chow House in Robinson Road, an office building described as the ‘jewel in the crown’ in court papers.

His wife made each of their three sons directors of all three companies, hoping they could work together.

But now, five years after her death in 2002, the feud has led to legal wrangles.

All three siblings, now in their 60s, live in Hong Kong.

Eldest sibling Chow Kwok Chi through Senior Counsel Jimmy Yim of Drew & Napier sought to wind up the companies so that the brothers could make a clean break from one another.

He pointed out that as long as the companies exist, their father’s estate would remain unadministered because of the unpaid $34 million debt.

Second brother Chow Kwok-Chuen opposed the move. He argued through lawyer Ang Cheng Hock from Allen & Gledhill that Kwok Chi had not alleged any loss of confidence or lack of probity in his conduct in relation to the running of the companies.

Youngest brother Kwok Ching also contested the suit, arguing through lawyer Peter Low from Colin Ng & Partners that if there was to be a winding up, the reason should be his siblings’ alleged ‘oppressive conduct’.

Justice Prakash said in view of the ‘litigation history’ and ‘the complex nature of the relationships among the brothers, it did not make sense for this court to stand aside and allow the situation to deteriorate further’.

The judge apparently broke new legal ground in ordering the winding up of firms that were not insolvent.

‘The desire for a clean break is not an established ground for a winding up application. It is a concept found in matrimonial matters rather than in commercial ones.

‘In a case like this, however, where the dispute may be considered as springing from domestic relations, it may have some place,’ said Justice Prakash.

Source : Straits Times - 3 Dec 2007

Experts say the selling process for houses is trickier than for condos.

COLLECTIVE sales were all the rage for a large part of this year - but few were for landed homes.

They are not the easiest of deals to close, but DTZ Debenham Tie Leung managed it two weeks ago when it brokered the sale of 15 houses in the Balestier area for $61 million, a record price for the area.

The houses lined both sides of a road, which was also proposed as part of the sale. The entire area will give a sizeable combined site of 32,978 sq ft.

But such large tracts with a high redevelopment potential are hard to come by, say property consultants.

Also, for landed homes to go en bloc, every owner must agree to the sale. This is unlike strata-titled condominiums, where a collective sale requires the consent of up to only 90 per cent of the owners.

Getting 100 per cent approval for landed homes, as consultants will tell you, is not easy.

‘The risk is there because you need to have contiguous support,’ said Savills Singapore’s director of investment, Mr Steven Ming. ‘You may work on a row of houses only to find that one or two houses in the middle refuse to sell.’

Another dampener is that many landed sites come with a development potential of only 1.4 times their size. This means that they cannot be redeveloped into large properties, limiting a developer’s potential profit.

Even if a large development is allowed, the developer would likely need to pay a large fee to the Government in order to proceed.

‘This takes out some of the gains for the owners,’ said an industry observer, ‘and, thus, it is often not worthwhile for consultants to work on the sale.’ Hence, some of these sales are done by individuals or small-time developers, he said.

Mr Michael French, the managing director of Asia Premier Property Consultants, says it is sometimes easier to sell landed homes en bloc because there are simply fewer owners to deal with than in a condo.

But some owners just refuse to sell. Homemaker S. Tan, who lives in a semi-detached house in Telok Kurau, says she has been approached by agents asking her and her three neighbours to sell collectively.

She is not keen, unless all her neighbours agree. ‘We like this place… It is convenient for my children.’

Replacement cost is also an issue. ‘Even if they pay a bit higher, we can’t buy another house with the same location and size,’ she added.

In Prome Road is an example of what happens when not everyone agrees to sell. A row of houses has been sold en bloc, but a few others will be left standing.

An 80-year-old retired teacher who lives in a three-storey terrace house with her family is staying put.

She did not participate in the August collective sale of a stretch of old, single-storey houses in the street because she did not think the apportionment of proceeds was fair. ‘I paid a lot of money to build this house. It’s much bigger inside, so we should get more money than the rest,’ she said.

When confronted with owners such as these, developers tend to build around or next to these houses. That can leave a single house standing, incongruously, next to a five-storey development.

Source : Straits Times - 3 Dec 2007

THE refurbished Parkroyal Hotel on Kitchener Road made its debut last Wednesday, following a year-long, $25 million facelift.

Formerly known as New Park Hotel, the 21-storey building saw all its 532 rooms and suites undergo a dramatic makeover.

‘This extensive makeover puts us in the deluxe category of hotels, upgrading us from a three-star property to a magnificent hotel of four-star standard,’ said Mr Felix Yeo, the general manager of the hotel, which he dubbed the ‘Grand Hyatt of Little India’.

The hotel, a stone’s throw away from the heart of Little India, has also shifted its positioning. It now targets corporate travellers instead of holidaymakers.

For example, Indian clients used to make up about 40 per cent of its guests; of these, most were leisure travellers. After the rebranding, the proportion has dropped to about 27 per cent, and most of these clients are now corporate travellers.

Numerous efforts have been taken to boost the hotel’s image and elevate its positioning. Aside from the contemporary decor, it has an exclusive Orchid Club aimed at business executives.

The top three floors of the hotel are reserved for such members. Orchid Club rooms - which cost almost 50 per cent more than standard rooms - are plusher and come with extra facilities like wireless broadband Internet.

This extensive overhaul does not come cheap for travellers.

Standard room rates have approximately doubled, compared with the rates two years ago.

The Parkroyal chain of hotels is owned by United Overseas Land’s mainboard-listed hotel arm, Hotel Plaza. It has another Parkroyal hotel at Beach Road, which underwent a $8.1 million refurbishment that was completed at the end of last year.

Source : Straits Times - 3 Dec 2007

Finance Ministry’s estimated quote may dash hopes of unit owners hoping to seal en bloc deal.

RESIDENTS at Neptune Court may have to bury their dreams of reaping a windfall of up to $2.4 million each from a collective sale.

The Ministry of Finance, which owns the land the estate sits on, has estimated that the cost of privatising it is $144 million.

That means the 752 apartment owners at the leafy Marine Parade estate with sweeping sea views will have to fork out about $191,000 each.

But residents of HUDC estates need pay only $25,000 to $30,000 to the HDB to privatise their estates.

The huge difference has prompted many residents to ask how the ministry came up with the $144 million sum.

One resident in his 70s, who declined to be named, said: ‘I don’t know why the ministry has to sell the land at such an expensive price when HDB can do it for so much less.’

The ministry said its estimate was derived by comparing ‘the capitalised value of the annual net rents at Neptune Court with those of a comparable private condominium’.

This means it took into account the enhanced value of the privatised Neptune Court, said Credo managing director Karamjit Singh.

‘There are various valuation principles which can be adopted by the valuer. (Those) adopted by the ministry and HDB seem to be different,’ he added.

When HUDC estates are privatised, residents pay mostly for the cost of common areas such as the carpark and landscape.

The Sunday Times understands that HUDC estates and Neptune Court were sold under different schemes, and comparisons could be unfair.

Neptune Court is on a site of about 780,000 sq ft, about three times the size of Chancery Court, a privatised HUDC estate in Dunearn Road.

The huge ministry estimate has come as a blow for Neptune Court residents who were keen on selling.

A retired civil servant in his 60s told The Sunday Times: ‘I’m a pensioner, I don’t have that much money!’

Retired civil servant Michael Chia, 67, has the $191,000 but is in a dilemma: ‘I’m afraid if I pay for the privatisation, the en bloc will not go through. On the other hand, I’m also afraid the Government will one day claim our estate and give me a replacement flat elsewhere.’

But others are relieved.

A 74-year-old housewife, who has been living at Neptune Court for more than 35 years, said: ‘I was so happy when I heard the ministry is asking for so much money. Maybe now, most residents will no longer want to privatise and go for an en bloc.’

Source : Straits Times - 2 Dec 2007