Property news round up 8 July 2018

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New peak in Singapore private home prices expected by the end of 2018

IT TOOK 15 quarters of market corrections to bring private residential prices down by 11.6 per cent in the second quarter of 2017, but it may take only five to six quarters of market recovery to bring prices back up if the current momentum holds.

Analysts are expecting a new peak in private home prices by the end of this year as developers roll out new launches on land they have acquired at significantly higher prices.

Flash estimates from the Urban Redevelopment Authority (URA) on Monday showed that private home prices rose for the fourth straight quarter, up 3.4 per cent in the second quarter after a 3.9 per cent increase in the first quarter.

Strata Titles Board issues stop order for Cairnhill Mansions en bloc sale

A SECOND collective sale attempt in a week has come up against a speed hump: the Strata Titles Board (STB) on Monday issued a stop order on the en bloc sale bid by Cairnhill Mansions, which could send this case to court.

The Business Times has learned that the owner of the penthouse unit, the only owner who filed an objection to the collective sale bid by the 61-unit Cairnhill Road development, has refused to withdraw her objection to the method of apportionment of the sales proceeds – and this, after two rounds of mediation on May 28 and June 18.

The issuance of the stop order puts an end to mediation, and gives the collective sales committee (CSC) 14 days to apply to the High Court to approve the sale.

PropNex gains 10% on trading debut

SHARES of homegrown property service group PropNex Realty on Monday closed 10 per cent higher on the company’s trading debut on the mainboard, as PropNex becomes the second real estate brokerage to be listed on the local bourse after Apac Realty.

The stock opened at 68.5 Singapore cents apiece on the Singapore Exchange, with the opening price representing a 5.38 per cent premium over the counter’s initial public offering (IPO) price of 65 Singapore cents.

The stock reached an intraday high of 72 Singapore cents on Monday, before closing at 71.5 Singapore cents, up 10 per cent. Some 8.46 million shares changed hands, making it one of the most heavily traded counters for the day.

PropNex says BT report isn’t inaccurate

PROPNEX Realty, the largest real estate agency in Singapore that made its trading debut on Monday, has clarified that the “inaccuracies” that it had referred to in response to an article in The Business Times on its IPO prospectus was “not in relation to the article in itself”.

“This was in relation to certain feedback attributed to observers and members of the public that were cited in the said articles. This was not in relation to The Business Times article in itself,” it said.

“We apologise for this misunderstanding and regret any inconvenience caused.”

Aussie home prices slide for 9th month in June

HOME prices across Australia’s major cities slipped for a ninth straight month in June as tighter lending standards stifled investment demand in Sydney and Melbourne, a trend that seems unlikely to reverse any time soon.

Property consultant CoreLogic said on Monday its index of home prices for the combined capital cities fell 0.3 per cent in June, after a 0.1 per cent dip in May.

That left capital city prices down 1.6 per cent for the year.

Regional prices fared a little better with annual growth of 2.2 per cent, leaving prices for the combined markets down 0.8 per cent in June last year.

HDB resale prices fall 1.5% in Q2 from a year ago

HOUSING Board resale flat prices fell 1.5 per cent in the second quarter in 2018 from a year ago, according to latest flash estimates released on Monday.

Compared with the first quarter of this year, second-quarter resale prices rose slightly by 0.1 per cent.

HDB also said that as the HDB resale market continues to stabilise, the agency will cut the supply of Build-to-Order (BTO) flats this year slightly, from 17,000 to about 16,000 flats. The board added that in the first half of this year, it offered 11,373 flats for sale. This comprised 7,634 BTO flats, as well as 3,739 balance flats offered in the Sales of Balance Flats and Re-offer of Balance Flats exercises.

Takeda’s new HQ flaunts global ambition

EMBEDDED in the sleek metallic and cypress interior of Takeda Pharmaceutical Co’s new global headquarters in Tokyo are stylised Japanese characters for words like life, water and light.

Melding futuristic design with traditional Japanese elements highlights the balancing act facing chief executive officer Christophe Weber: showing he can honour the 237-year-old drugmaker’s Japanese heritage as he tries to complete the biggest deal in Takeda’s history – the US$62 billion takeover of Shire Plc.

“He’s very quick to say they’re still a Japanese company, but at the same time making a point to say they’re not Japanese because they have a very international, global executive team,” said John W Carlson, chair of the health-care committee at the American Chamber of Commerce in Japan.

Top China villa developer Greentown asks staff to speed up cash inflow

CHINA’S top high-end developer Greentown China Holdings asked its staff to accelerate cash inflows “on all fronts” and speed up sales, according to memos seen by Bloomberg, amid escalating regulatory scrutiny of the sector.

The Hangzhou-based builder urged faster sales, redoubled efforts to collect accounts receivable and called for strict control over payments, according to the memos. Moves to speed up sales include shifting those originally scheduled in 2019 to this year, provided that the projects are unhindered by pre-sales pricing restrictions.

Chinese developers have become more reliant than ever on their own project sales for funds after regulators moved to further restrict financing to the sector and escalated a campaign to cool property prices. That has left developers exposed to market swings and the whims of local officials, who can cap apartment prices when issuing pre-sales licences for new residential projects.

Hong Leong Group bags Hillview Rise GLS site for S$460m

THE Hong Leong Group has clinched the 154,000 sq ft Hillview Rise residential site with a top bid of S$460 million – thanks in part to its proposed innovative construction methods and management with a focus on productivity.

Intrepid Investments and Garden Estates, subsidiaries of Hong Leong Holdings and Hong Realty respectively, submitted the top bid among a shortlist of six proposals for the 99-year site. Based on a 430,879 sq ft gross floor area, the price works out to about S$1,067 psf per plot ratio.

The government land sales (GLS) tender drew nine concept proposals from eight tenderers under a dual-envelope system, with Hong Leong Group’s listed developer City Developments Ltd (CDL) linking up with CapitaLand to submit two separate proposals.

Two small condos launched for collective sale

TWO small condominiums suitable as sites for boutique developments were launched for collective sale on Tuesday, adding to the growing list of sites in the private en bloc market looking for a buyer.

One is Jansen Mansion, a 12-unit development near Kovan MRT station, and the other is Blossom Mansions, a development with 20 units in Lorong 37 Geylang. The owners are asking for S$22 million and S$32.8 million respectively.

Marketing agent Huttons Asia noted that, given their small size, both sites are suitable for boutique developers and contractors.

Manhattan homebuyers driving hard bargains as supply swells

IN his hunt for an apartment on Manhattan’s Upper West Side, Hal Walker found the perfect one-bedroom in an Art Deco building across from Central Park. It had languished on the market for almost six months.

Walker bid US$30,000 below the US$865,000 asking price, then refused the seller’s counteroffer. Yet he’s moving in next week.

“Would you lose sleep tonight if you lost this apartment?” Mr Walker recalled his broker asking. “I said no.”

Manhattan homebuyers are getting bolder these days, demanding bargains or walking away from deals in a market where inventory is swelling.

European tourist cities hit back as Airbnb turns 10

FACING competition from Airbnb, which will celebrate a decade this summer, top European attractions such as Paris, Amsterdam, Berlin and Barcelona are out to revamp their own offerings.

The move is to keep rental prices in check yet keep supply healthy as Airbnb continues to be a thorn in the side of hoteliers, 10 years on from its Aug 11, 2008 debut as Airbed & Breakfast.

After several false starts, the Web-based phenomenon emerged in the public glare of that year’s Democratic National Convention in Denver to offer a competitive alternative to a “saturated” hotel market and, as one of its co-founders said, “a way to make a few bucks”.

Hungary to drop lower VAT rate on new homes

HUNGARY will drop a reduced value-added tax rate on new homes at the end of 2019 as planned, Finance Minister Mihaly Varga told broadcaster InfoRadio late on Tuesday, addressing speculation that the government could extend the measure.

The 5 per cent VAT rate, in effect since 2016, has fuelled a housing boom in Budapest not seen since before the 2008 global financial crisis and helped boost Hungary’s economic growth rate to around 4 per cent.

The upswing in house prices and mortgage lending has opened a new chapter for Hungary’s banks after years of deleveraging.

Manhattan’s spring market offered sellers few bright spots

SPRINGTIME in Manhattan was far from sunny for home sellers, as inventory increased, prices continued to decline and sales volume dropped to its lowest level in nine years, according to new market reports.

Real estate agents pointed to rising mortgage interest rates and uncertainty surrounding the federal tax overhaul that went into effect late last year. The result was a widening gap between buyers and sellers, who often hit an impasse on price.

There were 2,629 closed sales in the second quarter – a nearly 17 per cent drop from the same period last year, according to a new Douglas Elliman report. That is the lowest number of spring sales since 2009, when the market was stifled by the recession, said Jonathan Miller, the real estate appraiser who prepared the report.

IMF urges NZ govt to reconsider ban on foreign home buyers

THE International Monetary Fund (IMF) called on New Zealand to reconsider a controversial plan to ban foreigners from buying residential property, warning the move could discourage foreign direct investment necessary to build new homes.

The IMF offered an upbeat view on New Zealand’s economic outlook despite a recent slew of soft data, and said the housing market was on course for a soft landing as price gains moderated.

The Labour-led coalition government won September’s election with a pledge to clamp down on soaring housing prices and reduce high rates of homelessness, partly by banning foreign buyers.

Fresh property cooling measures spark last-minute buying frenzy

HOMEBUYERS thronged the Park Colonial show suites on Thursday night to put down deposits for units as the developer hastily launched sales ahead of a planned July 14 launch date.

The scenario was similar at the sales offices of Riverfront Residences, the launch date for which was to have been this weekend, and also Stirling Residences, originally slated to be launched on July 14.

This drama played out barely an hour after the government announced fresh adjustments to the Additional Buyer’s Stamp Duty (ABSD) rates and Loan-to-Value (LTV) limits on residential property purchases.

The changes kick in on July 6.

Property curbs: Ahead of the curve but too much?

THE government has deemed it fit to curb the steep rise in private home prices in recent quarters with a surprise tightening of cooling measures on Thursday. The tough measures shocked many and also raised the pertinent question – why use a sledgehammer on a market that may be showing signs of finding its own equilibrium?

With effect from July 6, the additional buyer’s stamp duty (ABSD) will be raised by 5 percentage points for Singapore citizens and permanent residents buying a second, third or subsequent residential property, as well as foreigners buying any residential property.

The rate for entities buying any residential property will go up by 10 percentage points. Developers buying residential properties for development will also have to fork out another 5 per cent non-remittable ABSD on purchases from Friday onwards. At the same time, the loan-to-value (LTV) limits will be tightened by 5 percentage points for all housing loans granted by financial institutions, with effect from Friday.

Mapletree Logistics in S$778m warehouse deal with HNA subsidiary

MAPLETREE Logistics Trust is strengthening its presence in Singapore with the acquisition of five modern, ramp-up logistics properties here from Hong Kong-listed CWT International for about S$778.3 million.

CWT International is the subsidiary of debt-strapped Chinese conglomerate HNA Group.

The sum includes the purchase price of S$730 million, and the estimated upfront land premium for the balance lease terms payable to JTC Corporation of S$48.3 million. In addition to this, there will be acquisition fees payable to Mapletree Logistics Trust Management (MLTM) of S$3.7 million, as well as stamp duties, professional and other fees totalling S$23.9 million.

SingPost, US-based bike company in logistics and warehousing tie-up

SINGAPORE Post (SingPost) has inked a three-year logistics and warehousing contract with premium global bicycle brand, Specialized Bicycle Components.

Under the tie-up, Specialized will shift its regional warehousing operations from Hong Kong to Tampines Logistics Park, making SingPost its South-east Asian logistics and warehouse partner. SingPost will handle warehousing and sea freight for bicycles and equipment, as well as last mile deliveries and returns from Singapore and Malaysia.

SingPost’s head of group sales, Sara Gerdner Kalle, said: “Our warehousing and delivery solutions will ensure that cyclists in the region have faster and easier access to Specialized bicycles and products, so they can pursue their passions with peace of mind.”

Pricey Vancouver housing market weakens

VANCOUVER’S housing market showed continued signs of weakness in June, as affordability worries curb demand from buyers.

Sales were down 14 per cent compared with May, the first monthly decline since January when tougher federal mortgage rules took effect, according to a report Wednesday by the Real Estate Board of Greater Vancouver. The number of transactions was 29 per cent below the 10-year average for the month of June, the group said. Adjusting for seasonality, sales fell by about 5 per cent to the lowest since 2013, according to Bloomberg calculations.

The figures add to evidence Canada’s hottest housing markets are cooling after price gains that topped 30 per cent early last year led governments to step in with tougher regulations, including a mortgage stress test. While prices remain robust, the slump in sales is fuelling a rise in unsold inventories that could act as a drag on home values down the line.

HDB resale prices in June down 0.3% from May, SRX Property data shows

RESALE prices of Housing Board flats fell 0.3 per cent last month from May, according to flash data released by real estate portal SRX Property on Thursday.

The data also showed that prices fell by 1.9 per cent from the same month last year, and by 13.3 per cent since the peak in April 2013.

Price declines for mature and non-mature flats were relatively similar, at 0.2 per cent and 0.4 per cent respectively.

HK’s empty-home tax may not cool prices: analysts

HONG Kong’s plan to tax unsold new apartments may have little effect on the city’s red-hot housing market.

The levy was announced last Friday by Chief Executive Carrie Lam as part of a broader effort aimed at boosting supply in the world’s least affordable property market.

Yet analysts from Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co say the latest move won’t dent soaring prices.

Taming Hong Kong’s soaring home prices has been one of the biggest challenges for the city’s lawmakers, who have unveiled a series of measures in recent years to cool the market. But those measures have fallen short as demand has surged ahead of a chronic under-supply of homes, helping propel a more than 50 per cent increase in prices over the past five years.

MAS warning of ‘euphoria’ puts Singapore property market on notice

SINGAPORE’s hot property market has been put on notice. For the second time in eight months, the central bank is warning of a bubble building up and cautioning developers, banks and home buyers to proceed with care.

Property observers say the warnings are a reality check that the government will step in if the market overheats.

The latest reminder came from Ravi Menon, Monetary Authority of Singapore (MAS) managing director, who noted the “euphoria” in the Singapore property market. In December, Mr Menon’s deputy, Ong Chong Tee, had warned of “excessive exuberance” in the property market as well as risks from rising land prices and a possible oversupply of housing stock.

Horizon Towers back on collective sale market with S$1.1b reserve price

IN 2009, the S$500 million collective sale bid of Horizon Towers fell apart following a rancorous dispute among the owners, and the Court of Appeal’s finding that the sales process was improperly handled.

Now, the 211-unit development in prime district 9 is back on the market – this time, asking for more than twice that price.

This could well be the first billion-dollar deal in the current en bloc upcycle if the sale goes through, and the largest high-rise residential redevelopment offering in the Orchard Road area in at least two decades.

Loh Lik Peng sells Wanderlust Hotel

WANDERLUST Hotel along Dickson Road in the Little India Conservation Area, is changing hands.

A company linked to Loh Lik Peng, founder of hotel and restaurant group Unlisted Collection, is selling the freehold four-storey conserved building for S$37 million. The building, which has a built-up area of about 15,000-16,000 sq ft, is on a 4,634 sq ft site. The buyer is 8M Real Estate, a Singapore-based privately-held property investment company.

Following the completion of the transaction in a few months, Mr Loh’s Unlisted Collection will continue operating the 29-room hotel, which also has a restaurant on the ground floor.

Real estate bad loans set to go up, says China state researcher

SIGNS of pressure on China’s property market are deepening, with a report saying that soured loans from the industry could put “significant stress” on banks and a state researcher warning of accumulating risks in a sector that underpins the economy.

The value of bad loans from the real estate industry will increase by at least 20 per cent this year, China Orient Asset Management Co said in its latest annual survey.

The property market will see an “increasing correction” under heavier restrictions, leading to a rise in the non-performing loan ratio for the sector to about 1.5 per cent, according to the survey.

No rationale for tough cooling measures: Redas

THE government’s latest measures to cool the private residential market drew a sharp response from the Real Estate Developers Association of Singapore (Redas).

In a statement on Friday, Redas said there is no rationale for the tough measures, including the new non-remittable additional buyer’s stamp duty (ABSD) of 5 per cent on developers’ purchase of residential properties for development.

The property market is in the early stages of a recovery and the recovery is in line with economic fundamentals, it asserted.

“The property market should be allowed time to find its own course and reach a sustained equilibrium,” said Redas.

Over 1,000 condo units sold in one night as buyers race the clock

IN JUST one night, over a thousand units were sold in three condominium projects, which were launched in knee-jerk reaction to the announced changes to the additional buyer’s stamp duty (ABSD) and loan-to-value (LTV) limits.

Some 510 units at the 1,472-unit Riverfront Residences in Hougang were sold at an average S$1,200 per square foot (psf) – a level said to be just marginally above its breakeven price. The project sits on the former Rio Casa HUDC site, which was acquired in May last year by a consortium led by Oxley Holdings for S$706 per square foot per plot ratio.

Another condominium project, Park Colonial in the Woodleigh area, moved 310 of its 805 units at an average S$1,730 psf – above estimated breakeven price of S$1,600 psf. This project is jointly developed by Chip Eng Seng’s property arm CEL Development, Heeton Holdings and KSH Holdings.

Property stocks in deep freeze after cooling measures

PROPERTY stocks and financials took a hammering on Friday as news broke the night before of the government hiking additional buyer’s stamp duty (ABSD) and tightening mortgages.

As at Friday’s close, share prices swam in a sea of red, with research houses cutting ratings for stocks under their coverage. CapitaLand, the largest developer by market cap, ended the day nearly six per cent down to S$2.99, a level it last closed at on December 2016.

Oxley Holdings’s stock fell to a level last seen in January 2017, losing 15.85 per cent to end at 34.5 Singapore cents. City Developments (CityDev) also saw one of the steepest drops, shedding S$1.75, or 15.61 per cent to end at S$9.46. Meanwhile, UOL’s counter retreated 13.55 per cent or S$1.05 to close at S$6.70.

En bloc fever set to be tamed, big sites at greatest risk: analysts

PROPERTY consultants generally do not expect the latest property cooling measures to bring the current en bloc cycle to a complete halt, though things will slow down drastically.

The hike in residential land acquisition costs for developers will clip the prices they are willing to pay for land. Home buying demand will also take a beating due to higher additional buyer’s stamp duty (ABSD) rates and lower loan-to-value (LTV) limits.

Ian Loh, executive director and head of investment and capital markets at Knight Frank, said: “Developers face higher transaction costs. The selling prices for their projects are unlikely to go up, while construction costs are not easing. So land prices have to come down.”

Slower growth in home loans expected from cooling measures

HOME buyers will be hit hard by the latest property cooling measures since the lower borrowing limits require them to stump up a lot more cash, say bankers.

With the new set of cooling measures comprising a reduced loan-to-value (LTV) limit and increased additional buyer stamp duty (ABSD), new property buyers will require more cash/CPF funds for their downpayments, said Tok Geok Peng, DBS Bank head of secured lending.

“For instance, based on a S$1.5 million property price, the now-lower LTV will increase the cash/CPF outlay by S$75,000, which could be a considerable amount and pose a deterrent for some property buyers,” said Ms Tok on Friday.

Trade tensions, rising interest rates ‘likely triggered property tightening’

IN THE face of rising external risks, Singapore policymakers may have chosen to introduce the latest round of property cooling measures sooner rather than later, say economists.

“The main thing is being very pre-emptive,” said UOB economist Francis Tan, adding that cooling the market now could help reduce any future volatility.

Thursday’s announcement of higher additional buyer’s stamp duty rates and stricter loan-to-value limits on residential property purchases came as a surprise to the industry.