Tuesday, 19 August, 2014 RESIDENTIAL MARKET Lease Buyback: Better, but limited take-up expected While letting owners of four-room Housing Board flats sell part of their lease back to the Government is a good move, it will probably appeal to only a small section of the population, said property experts and academics. They do not expect a spike in applications in response to this extension of the Lease Buyback Scheme, which was previously for three-room and smaller flats. Rather, the scheme will continue to have a limited appeal, they said - to low-income households who are short of retirement funds on the one hand, and savvier owners on the other. Under the scheme, flat owners sell part of their flats lease back to the HDB. The proceeds from selling the lease are used to top up owners Central Provident Fund (CPF) Retirement Accounts, for larger monthly payouts under the CPF Life scheme. The required top-up level is the Minimum Sum for those aged 70 and younger, and slightly less for older flat owners. The owners will receive the funds in excess of this as cash. Response has been lukewarm since the schemes launch in 2009. As of last month, just under 800 households have benefited. There is likely to be a better take-up than the current state of things, but we do not expect a surge, said ERA Realty key executive officer Eugene Lim. One obstacle to a wider take-up is the fear of outliving ones lease. Under the scheme, flat owners keep the next 30 years of their lease and sell the rest back to the HDB. The HDB has said that no elderly flat owner will be left homeless and that appropriate housing arrangements will be provided for flat owners who cannot pay for a lease extension. But it is unclear what this means and the big fear is that the flat owner will get chased out of his home, said experts. Another obstacle is cultural. Many Singaporeans wish to keep their flats so they can leave them for their children. This bequest motive is a very strong motivation, said National University of Singapore Associate Professor Chia Ngee Choon. It is thus the more open-minded, more educated or investment-savvy home owners who may be comfortable with this option. But investment-minded owners have other reasons to be reluctant. Flats under the scheme cannot be wholly sublet or resold, thus limiting their options. Subletting out the entire flat for rental income would probably derive greater returns compared to payouts by CPF Life. The median rent for a flat was $2,300 last month. About one in 10 flat owners above 55 either sublets a room or the entire flat for income, said the HDB. It added that the scheme is aimed at low-income owners with limited monetisation options, which is why it was not previously open to larger flats. Civil servant Lim Swee Leong, 59, owns a four-room flat and could qualify for the scheme when he retires. But he, too, sees it as being chiefly for the lower income. For me, its quite different because I dont need the money, said Mr Lim. There is the off chance that the scheme will generate a lot of demand, which would mean that the Government has to buy back many leases, which will cost it a tidy sum. But NUS Associate Professor Albert Tsui noted that the Government is buying an asset which it can resell or use as rental housing. You can see it as just a transaction. It should not be a big problem, said Prof Tsui. Source: The Straits Times – 19 August 2014 Jurong Lake area to be new draw for developers Developers are expected to take a keener interest in future state land tenders in Jurong Lake District - whether for residential, commercial or hotel projects. The buzz created from efforts for greenery attractions in the area is expected to give a fillip to home values there. Attention will be heightened further if a decision is made to house the future Kuala Lumpur-Singapore high-speed rail terminus in Jurong Gateway, said property consultants yesterday. They were giving their views on plans announced on Sunday night by Prime Minister Lee Hsien Loong to liven up Jurong Lake District. Existing property owners can look forward to one of the most liveable housing estates in Singapore outside the central and fringe areas. The changes will remove the stigma of an industrial township that Jurong was originally planned for. National Development Minister Khaw Boon Wan blogged yesterday: Since 2008, Jurong has made steady progress to be our largest regional centre, outside of the city. Jurong Lake Gardens, spanning over 70 hectares, will integrate the revitalised Jurong Lake Park (to be completed by 2017), as well as the Chinese and Japanese Gardens which are set to be spruced up, and not forgetting the new Science Centre, which will emerge next to the Chinese Garden MRT Station around 2020. Even though the overall conditions in the residential property market remain tepid, the buzz created could provide a minor boost to existing projects and help support prices and transaction volumes in the area. In the longer term, the development of Jurong Lake Gardens will enhance the living environment for residents, similar to the Bishan-Ang Mo Kio Park, and increase interest in the area. The plans are expected to fuel developers interest in a 99-year private housing site just above Jurong Lake - between The Lakeshore and Lakeville condos - that will be launched in December through the confirmed list of the Government Land Sales Programme. While the number of bids is expected to be high..bid prices are expected to be dampened by current market sentiment and confidence. Development sites for residential, commercial as well as integrated uses (eg office, retail and residential elements) are expected to whet developers appetite - if they are released over the next year or two. Source: Business Times – 19 August 2014 Muted bidding expected for Bishan, Sembawang sites The government yesterday released for sale two residential sites - one at Lorong Puntong off Sin Ming Avenue and another executive condo (EC) site at Sembawang Road-Canberra Link. Both are in the confirmed list, under which sites are launched according to schedule, regardless of demand. The Lorong Puntong site has a land area of 10,503 square metres and can yield a maximum gross floor area (GFA) of 22,056 sq m - about 280 homes. Consultants are divided on how the plot will do in the tender. The winning range is predicted at about S$620-680 psf per plot ratio (ppr). The limited upcoming supply of private residential-zoned land in the Sin Ming, Bright Hill and Bishan area, the Lorong Puntong site can be considered attractive. The fairly small site will likely attract small and medium-sized developers. However, a Bright Hill Drive site which sold for S$720 psf ppr in 2012 and has been developed into the Thomson Three condo. Given its 18 per cent winning margin (which hints at over-bidding), and taking into account loan caps and developers having had to trim prices for Bishan town centre projects such as Sky Vue and Sky Habitat, the Lorong Puntong site may receive more realistic interest. The Sembawang EC site is a large 28,746 sq m plot and has a maximum GFA of 60,366 sq m which can yield about 605 homes. Consultants expect lukewarm bidding to culminate in three to seven bids, with a winning offer of about S$300-330 psf ppr. Two nearby EC sites sold earlier - at Canberra Drive and Sembawang Avenue - make up a large supply pipeline that will challenge this latest site. Sales at the Skypark Residences EC at Sembawang Crescent have also been slow, with only three-fifths of its units sold since its launch in October. There is some sense of over-saturation of new private homes and ECs in the immediate vicinity within the far-flung Sembawang. The balance unsold units will be carried forward to 2015, so developers tendering for sites which will be launched from 2015 will factor in these risks of added sales competition. The tender for the Lorong Puntong site closes on Oct 8 while that for the Sembawang EC site ends on Sept 30. Source: Business Times – 19 August 2014 Business-leisure hub plans will boost home prices: Experts Ambitious new plans to make Jurong a business and leisure centre will likely boost home prices, property consultants told The Straits Times yesterday. Optimism about the area was lifted with the Sunday announcement that a new Jurong Lake Gardens will be developed in conjunction with other projects already under way nearby. A Science Centre will also be built and there is also a possibility that the terminal for the Singapore-Kuala Lumpur High Speed Rail will be in Jurong. The new plans underscore Jurongs development as the largest commercial hub outside the Central Business District (CBD), which has been going on apace for some years. That is similar to the premium paid in estates like Bishan with its major park and schools, and Queenstown, which is close to the CBD. Jurong rents could be pushed up by about 20 per cent over the next three years, partly because the Ng Teng Fong General Hospital is due to open in the middle of next year. That, in turn, should boost housing values. Lakeside, which along with Jurong Gateway forms the Jurong Lake District, has become a significantly private residential area. Most of the newly completed 99-year leasehold condominiums are priced about $1,000 per sq ft (psf), with more recent launches like Lakeville in May at about $1,300 psf. But the key game-changer is the possibility of the rail terminal. This would put it above other regional centres in Singapore. Tampines is near the airport, but thats not as direct as having a terminus regionally linking a capital city to another. Singapore Business Federation chief operating officer Victor Tay added: The longer-term prospect that the rail will cut across more than 10 Asean countries, linking to Guangxi in China, presents immense trade potential for businesses. Many will look to Jurong as a strategic gateway to Asean and China. Source: The Straits Times – 19 August 2014 HDB rents to stay depressed for rest of 2014 Lean times are here to stay for Housing Board landlords, with rentals likely to stay depressed for the rest of the year. Sluggish demand, arising from foreign labour curbs that have shrunk the pool of tenants, combined with a rising supply of HDB flats, will weigh on rental rates, said property analysts. Already, Singapore Real Estate Exchange data shows the HDB rental index has fallen 2.3 per cent since the start of the year, hitting a three-year low last month. The median rent was $2,300. This is only the beginning of a continued slowdown, said property analysts. ERA Realty key executive officer Eugene Lim expects a further 5 per cent to 6 per cent drop by the year end. Property agents said the problem is simply a lack of demand due to a shortage of tenants. Landlords are realistic as the market is not doing very well, said ERA Realty agent Noel Lu. Many have been adjusting their rentals downwards, said agents. The worst-affected areas are those without easy access to amenities such as public transport. However, demand in mature estates and those near MRT lines is continuing to hold up, said ERA agent Zola Tan. Tenants for units in such areas can be found within a month, as opposed to two to three months for less popular areas, he added. But although tenants can be found, rents have been falling. An executive apartment used to go for $2,700 or $2,800 a month; now, the rate is $2,500. The one bright spot is that falling rents have boosted activity in the market so far this year. There have been more rental deals in general, with 8,485 in the January to March period and 8,455 in the March to June period. This is up from an average of 7,580 a quarter last year and 6,780 a quarter in 2012. Woodlands, Jurong West and Tampines have seen the most rental transactions in the past month, based on an STProperty heat map using HDB data. One reason for the flurry of activity is that low rents have attracted more tenants. Landlords have had to offer low rents to compete for tenants, whose numbers have been affected by foreign labour curbs. The surfeit of flats for rent also means tenants can pick and choose. Nowadays, tenants can be fussy, said a 32-year-old safety officer who wanted to be known only as Mr Chandran. He has been trying to rent out his four-room flat near Ang Mo Kio MRT station, but has received just one call in the past fortnight. With more suburban condominiums due to be completed next year, competition will only rise. Current upgraders) have to quickly secure a tenant for their flat in case there are more flats put up for subletting. Falling rents in the private market are also putting pressure on HDB rents. Last month, non-landed private residential rents hit a 38-month low. Suburban condos both new and old are competing for tenants, with budgets of around $3,000, said ERAs Mr Lim. Source: The Straits Times – 19 August 2014
Posted on: Tue, 19 Aug 2014 16:54:48 +0000
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