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RENTS of private homes continued to rise strongly between July and September.

They jumped 8 per cent to 10 per cent islandwide over the previous three months, estimated property consultancy Knight Frank.

This was on top of a record 10.4 per cent growth in the second quarter, added Mr Nicholas Mak, Knight Frank’s director of research and consultancy.

Rents in the Woodlands and Mandai area saw some of the highest growth rates in the third quarter. They surged between 25 per cent and 30 per cent, largely because of the draw of the Singapore American School in the area, said Mr Mak.

‘This is an indication that although expatriates are concerned with rising housing rentals and costs, they are still willing to pay a premium to stay near international schools in Singapore,’ he added.

For the last three months of the year, Mr Mak expects rents to rise slightly less, by 5 per cent to 10 per cent. This would bring full-year rental growth to between 30 per cent and 40 per cent, he said.

Knight Frank added that market activity is expected to pick up in the last quarter, as developers step up launches to meet year-end targets.

Another 3,500 to 4,500 units are likely to be launched for sale, and home prices for the whole year are expected to grow by up to 25 per cent.

Source : Straits Times - 27 Sep 2007

Effective deployment of funds can boost the capital appreciation and rental yield of an estate, says JORDAN NEO

IT IS an important mandate of the management council to keep watch over the expenditure of their estate, ensuring that funds are sensibly ploughed into areas which best meet the estate’s needs.

For example, should the money in your sinking fund for the year be used for lobby upgrading, or should it be used to build a state-of-the-art swimming pool? When the council is clear about long-term plans and its objectives (ie, functional over aesthetic), as well as the impact of certain major works on the estate’s value, decision-making becomes much more painless and effective. The situation whereby too much money is spent on some areas with not enough left over for others can then be avoided.

Clearly-defined plan

The council, with help from the managing agent (MA), also has the responsibility of devising a well-planned budget for the year, phasing various works by importance and collecting appropriate amounts for the maintenance and sinking funds to carry out these works.

Defects management is one area where council members must learn how to discern appropriate professional advice, knowing their likely orientation. An inexperienced council serving their first term often feels pressured to go all out. Over time, such actions can often do more harm than good. From our experience, the hefty amounts spent on futile lawsuits could have been better used to enhance the estate’s ambience and facilities.

Having said that, council members must be careful not to save money at the expense of the well-being of the estate. It is unwise to keep appointing different MAs in favour of the cheapest one, sacrificing the familiarity of the estate gained by the previous MA. Saving a few hundred dollars each month might look like a lot, but it is a negligible savings in the context of a budget for larger estates.

Similarly, experience tells us that it is often a short-sighted move to be stingy about the condominium manager’s salary, when he has the right skills to contribute to the estate. The returns of managing your estate effectively can outweigh the few hundred dollars saved per year many times over.

Council members would also do well by working with better established MAs who, by virtue of their portfolio size, are in the position to negotiate for better value through initiatives such as contractor accreditation, bulk purchase and so on. For example, Knight Frank Estate Management (KFEM) has in place panels of carefully selected and accredited contractors, subject to reassessment every year. Such value-added support for the council could help prevent instances where certain contractors are awarded jobs by certain council members ‘by default’, even if their pricing and workmanship are not necessarily above par.

Sinking fund for en bloc estates

We would caution owners not to stop maintaining their sinking fund unless they are certain that their collective sales is likely to go through and that there are sufficient funds for essential works before vacating the estate.

Even for estates which have just secured a collective sale, money from the sinking fund should still be spent on repair works pertaining to the safety, health and convenience of the residents, where necessary.

As there are usually one to two more years to go before the estate would be vacated, it would be unwise to ignore issues such as loose window grilles, faulty water tanks etc, in the hope that nothing major will happen before the developer takes over. On the other hand, it would certainly be pointless to spend money on further enhancing the estate aesthetically.

Under current rules, owners should not expect to collect back the sinking fund, though there have been some instances of developers redistributing the remaining sinking fund to subsidiary proprietors according to their share value. However, that would depend on the agreement between the buyers and the sellers before the closure of the deal. However, amendments to the law, which have yet to come into effect, would have money from the sinking fund returned to owners.

Source : Business Times - 27 Sep 2007

The number of new private homes sold by developers in the first nine months of this year is expected to total 13,900, according to property consultant Knight Frank. This will exceed the 11,147 new units sold by developers in the whole of last year.

Knight Frank said developers continued to exhibit confidence in the property market by releasing several new residential projects into the market.

However, it expects new home sales in the third quarter to show a slowdown due to the US housing credit crisis.

It estimates the total number of new private homes sold by developers in the third quarter to come in close to about 4,000 units, down 24 per cent from the second quarter.

Nonetheless, Knight Frank said demand in the primary market in the third quarter is still one of the strongest in the past ten years.

It noted that projects such as M21, The Parc Condominium and The Rochester were launched and sold out within that same quarter.

Overall prices for private residential properties are estimated to have grown by seven to 12 per cent quarter-on-quarter in the three months to September. - CNA/vm

Source : Channel NewsAsia - 26 Sept 2007

En bloc sales slow after introduction of new rules by govt.

The Real Estate Developers’ Association of Singapore (Redas) yesterday said that it expects ‘double-digit’ price growth in the mass market over the next 12 months.

‘The mass market hasn’t been very active and the base is low,’ said Chia Ngiang Hong, Redas’ first vice-president. ‘It will probably play a bit of catch-up with the high-end segment. So I believe it is going to be double-digit (price growth) for the next 12 months.’

Mr Chia is also the general manager of City Developments, one of Singapore’s largest developers.

Developers and analysts agreed with him.

‘Mass-market home prices will go up in line with higher costs of building materials, labour and land prices,’ said Margaret Goh, chief executive of NTUC Choice Homes.

Yesterday was Redas’ annual Mid-Autumn Festival celebration.

Kicking off the event, Redas president - and SC Global chief executive - Simon Cheong called for more good local and international schools in Singapore.

‘One of the most important conditions for expats to stay in Singapore, I am told, is education,’ he said. ‘In short, no good education, no good future, no global city, no good real estate market.’

Education Minister Tharman Shanmugaratnam was the guest of honour at the event.

Mr Cheong also told reporters that collective sales in Singapore are slowing after the government recently introduced new rules governing such sales.

‘In the process of digesting all these new rules, there will obviously be a pause . . . It will probably slow down the supply of en bloc land,’ Mr Cheong said.

Sales could also be slowing as homeowners who cannot find replacement properties might be reluctant to sell, he said.

But Mr Cheong expects the prices fetched by en bloc sites to keep climbing as more owners will have to be enticed to sign up for a collective sale.

Developers are already anticipating more difficulty in getting prime land and expect to pay higher prices going forward, he said.

Mr Cheong also said that developers could be holding back launching new properties because changes to the en bloc legislation means that supply of new prime land sites could be harder to come by.

Source : Business Times - 26 Sep 2007

Calls come amid growing number of complaints lodged against agents.

A SHARPLY rising tide of consumer complaints against property agents has emerged in recent data, amid a spike in property sales in the current market boom.

Complaints include claims of misrepresentation and a failure to explain contract terms and conditions fully, the consumer watchdog, the Consumers Association of Singapore (Case), said.

This has led to renewed calls by Case for a stronger industry watchdog to regulate the sector.

Case, together with the Institute of Estate Agents (IEA), is seeking the mandatory licensing of property agents in Singapore.

In the interim, IEA yesterday launched a new ‘practising certificate’ to all its members, aimed at boosting their credibility and giving homebuyers and sellers more confidence in agents’ professionalism.

The IEA represents about 900 property agents in Singapore. Its president, Mr Jeff Foo, said mandatory regulation for estate agents was overdue, especially given the current property market’s bullishness.

The IEA practising certificate will have the identification number of the agent who, as a member, is bound to adhere to the organisation’s strict guidelines and code of conduct.

Case president Yeo Guat Kwang said yesterday at a public forum held by the IEA, that agents should be licensed individually. He said Case and IEA will ‘push the message to the relevant authorities’.

Complaints lodged against estate agents have almost doubled in the last two years. Case received 991 complaints last year, up from 672 in 2005, and 469 in 2004.

So far this year, 557 complaints have been made.

Mr Yeo said some complainants claimed that unexplained contract clauses were added by the agents, such as changing the level of commission that had been agreed upon.

Mr Yeo, an MP for Aljunied GRC, also said that Case and IEA are already in talks to introduce more regulatory measures.

This could be in the form of a standardised proficiency test that every agent has to pass before being allowed to operate, he said.

Currently, there is no mandatory qualification or licence requirement for housing agents. To operate, an agent has to join a licensed property agency, whose licence is issued by the Inland Revenue Authority of Singapore.

Mr Yeo told The Straits Times: ‘Even taxi drivers have to fulfil certain criteria before they can operate. What more for property agents, who deal with the hard-earned life savings of Singaporeans.’

Even if rogue agents were sacked, they could join another agency because of the lack of a central body to regulate these agents, he added.

Mr Yeo said IEA’s new initiative was a good way to encourage self-regulation, and encouraged consumers to choose agents with such recognition.

To boost membership numbers, the IEA also announced a new tie-up with NTUC yesterday, which enables IEA members to enjoy social benefits under the NTUC.

NTUC’s secretary-general, Mr Lim Swee Say, who was at the signing of the memorandum of understanding yesterday, said that through IEA, NTUC can now extend its membership to agents.

He said this was another step closer towards the labour movement’s 2011 vision of an all-inclusive membership for workers of all backgrounds.

Source : Straits Times - 26 Sep 2007