July 28, 2008
Private equity real estate funds in Asia still booming They raised more cash this year and helped stave off property slump
By Grace Ng
THE global financial turmoil has deflated the private equity boom in Asia but regional real estate buy-out funds are still going strong.
Private equity real estate funds - many holding Asian assets - raised 32 per cent more cash in the first half than in the same period a year ago.
This contrasts with Asian private equity funds, which have seen the amount of funds raised slump 21.5 per cent in the first half of this year to US$19.2 billion (S$26.1 billion), according to Asia Venture Capital Journal.
Private equity funds typically invest in private companies or take control of listed firms. Private equity real estate funds invest in property and may get involved in development through joint ventures with local players.
Recent data suggests that the funds are sufficiently cashed up to keep investing in regional markets, including Singapore, and so help stave off a severe property slump, said some analysts.
In the first five months of this year, 13 new Asia-focused private equity property funds were set up and raised a combined US$13 billion, said research firm Private Equity Intelligence (Prequin).
For the full year, Prequin said 78 funds are looking to raise US$81 billion for Asian property investments.
Property funds were particularly active in Singapore in the first half of last year, but the market has since quietened, noted Mr Nicholas Mak, Knight Frank's director of research and consultancy.
The funds helped drive up prices in high-end residential property as well as certain commercial segments. They also bought tens of units - or even whole buildings - at bulk discount prices, said a Singapore-based fund manager.
There had been some concern that the credit crunch and the slowing property market here would prompt such funds to cash in their investments, and so bring down prices further, he noted.
But these fears look unfounded as the recent fund-raising numbers suggest that private equity real estate funds are not suffering from a drastic drop in liquidity.
'Real estate private equity is still going pretty strong,' said Mr Mark Pawley, chief executive of Singapore-based private equity firm Oxley Capital. He noted that Singapore was a 'hot market last year' for private equity players, and certain funds may still allocate fresh funds here - albeit much less than last year.
For instance, two new Asia-focused entities - the US$3.9 billion fund raised by Macquarie Bank unit MGPA and Keppel Land's US$1.2 billion fund - will allocate part of their portfolios to Singapore.
Oxley Capital is still looking at some opportunities for relatively 'small deals' in residential units here.
It will also help to grow the portfolio of the Cambridge Industrial Trust (CIT), an industrial property Reit. Oxley has a stake in the manager of CIT.
However, some funds may exit their Singapore investments if they have hit their profit targets or they may shift their focus and strategy to other markets such as Australia, Japan and Vietnam, said Mr Pawley.
Funds are looking to snap up so-called 'distressed assets' - properties whose prices have plummeted as their developers may have encountered financial difficulties - in these markets, which have been affected by a housing slump.
Kim Eng analyst Wilson Liew noted that volatile markets have prompted some Singapore property players to raise funds from institutional rather than retail investors.
Fraser & Neave's unit Frasers Hospitality, for instance, has said that it is not the right time to list a real estate investment trust (Reit). Instead, it is tying up with private equity players to buy serviced residences.
This year, CapitaLand raised US$1 billion for its Raffles City fund focused on property in China cities, and a further 500 million yuan (S$100 million) for the Citic CapitaLand Business Park fund.
Other Singapore-based players involved in real estate private equity include ARA and Pacific Star.
Monday, July 28, 2008
Saturday, July 26, 2008
Straits Times: Sharp drop in growth of private home prices
July 26, 2008
Sharp drop in growth of private home prices HDB resale flats, however, do well, strengthening in value
By Fiona Chan, Property Reporter
Prices peaked and rental growth braked sharply between April and June, with property consultants forecasting the beginning of a decline.
But Housing Board resale flats defied the trend and continued to strengthen in value as sales grew amid strong demand for cheaper homes.
Private home prices inched up just 0.17 per cent in the quarter - the least in four years and well below the 3.8 per cent in the first quarter.
The minuscule rise, announced by the Urban Redevelopment Authority (URA) yesterday, was even below the 0.4 per cent increase the agency had predicted at the beginning of this month.
This is the first time that the official figure has come in lower than forecast, 'a strong indication that home prices are finally softening', said Ms Tay Huey Ying, director of research and consultancy at Colliers International.
Prices are being dragged down by stubbornly gloomy market sentiment, stemming from the slowing global economy, high inflation and erratic stock market, say experts.
Developers have started to price projects more 'realistically' and individual home sellers are accepting lower offers, leading to an overall moderation of prices, according to Mr Li Hiaw Ho, executive director of CBRE Research.
In prime districts, prices of luxury homes dipped for the first time in four years after a spectacular climb of almost 70 per cent since 2005.
'This is the first fall since the start of the property boom in 2004 and could be the turning point in the price trend,' said Mr Nicholas Mak, Knight Frank's director of research and consultancy.
City-fringe and suburban homes barely fared better, with prices rising below 1 per cent in the second quarter.
Growth in home rents also halved in the second quarter to just 2.5 per cent, the lowest in two years. This could be due to fewer expatriates coming in as well as landlords starting to lower their asking rentals, said Mr Mak.
CBRE's Mr Li predicts an 'inevitable' correction in prices 'to the tune of 5 per cent to 10 per cent' in the second half of the year.
But Ms Tay from Colliers believes Singapore's mid-term prospects remain positive on the back of the two integrated resorts. This will 'hold prices steady and ensure they do not fall by more than 3 per cent in the third quarter', she said.
Still, caution prevails amid a large chunk of unsold homes waiting in the pipeline. Developers are sitting on some 12,500 new homes that are ready for launch, said URA.
Hopeful homebuyer Timothy Gan, 27, was cheered by the news that prices may fall. 'I'm waiting for their prices to fall so I can get married,' said the civil servant.
Prices and rentals of offices also grew more slowly in the quarter, as firms eased pressure on office supply by moving out of the central areas.
The bright spot is the HDB resale market, where prices keep rising due to higher valuations and strong demand from upgraders, downgraders and permanent residents, said Mr Eugene Lim, assistant vice-president of property agency ERA Asia-Pacific.
Resale deals jumped 22 per cent to 7,760 transactions in the second quarter, boosted by more sales of bigger flats. A quarter of all flats sold between April and June were five-room and executive flats, said Mr Lim.
Sharp drop in growth of private home prices HDB resale flats, however, do well, strengthening in value
By Fiona Chan, Property Reporter
Prices peaked and rental growth braked sharply between April and June, with property consultants forecasting the beginning of a decline.
But Housing Board resale flats defied the trend and continued to strengthen in value as sales grew amid strong demand for cheaper homes.
Private home prices inched up just 0.17 per cent in the quarter - the least in four years and well below the 3.8 per cent in the first quarter.
The minuscule rise, announced by the Urban Redevelopment Authority (URA) yesterday, was even below the 0.4 per cent increase the agency had predicted at the beginning of this month.
This is the first time that the official figure has come in lower than forecast, 'a strong indication that home prices are finally softening', said Ms Tay Huey Ying, director of research and consultancy at Colliers International.
Prices are being dragged down by stubbornly gloomy market sentiment, stemming from the slowing global economy, high inflation and erratic stock market, say experts.
Developers have started to price projects more 'realistically' and individual home sellers are accepting lower offers, leading to an overall moderation of prices, according to Mr Li Hiaw Ho, executive director of CBRE Research.
In prime districts, prices of luxury homes dipped for the first time in four years after a spectacular climb of almost 70 per cent since 2005.
'This is the first fall since the start of the property boom in 2004 and could be the turning point in the price trend,' said Mr Nicholas Mak, Knight Frank's director of research and consultancy.
City-fringe and suburban homes barely fared better, with prices rising below 1 per cent in the second quarter.
Growth in home rents also halved in the second quarter to just 2.5 per cent, the lowest in two years. This could be due to fewer expatriates coming in as well as landlords starting to lower their asking rentals, said Mr Mak.
CBRE's Mr Li predicts an 'inevitable' correction in prices 'to the tune of 5 per cent to 10 per cent' in the second half of the year.
But Ms Tay from Colliers believes Singapore's mid-term prospects remain positive on the back of the two integrated resorts. This will 'hold prices steady and ensure they do not fall by more than 3 per cent in the third quarter', she said.
Still, caution prevails amid a large chunk of unsold homes waiting in the pipeline. Developers are sitting on some 12,500 new homes that are ready for launch, said URA.
Hopeful homebuyer Timothy Gan, 27, was cheered by the news that prices may fall. 'I'm waiting for their prices to fall so I can get married,' said the civil servant.
Prices and rentals of offices also grew more slowly in the quarter, as firms eased pressure on office supply by moving out of the central areas.
The bright spot is the HDB resale market, where prices keep rising due to higher valuations and strong demand from upgraders, downgraders and permanent residents, said Mr Eugene Lim, assistant vice-president of property agency ERA Asia-Pacific.
Resale deals jumped 22 per cent to 7,760 transactions in the second quarter, boosted by more sales of bigger flats. A quarter of all flats sold between April and June were five-room and executive flats, said Mr Lim.
Friday, July 18, 2008
Business Times: Rents, prices in central, prime areas may drop
Rents, prices in central, prime areas may drop
JLL predicts up to 4.5% dip in typical prime district rents
By EMILYN YAP
RENTS and resale prices of housing in the central and prime districts could be hit this year and next depending on the crunch in the US market, says Jones Lang LaSalle (JLL).
In the worst case scenario, the real estate consultancy firm projects a 3.5 to 4.5 per cent drop in rents in the typical prime districts by year-end. 'Compared to recent rental rises, this remains a relatively small decline,' said JLL's managing director in South-east Asia and Singapore, Chris Fossick. The central districts could experience a bigger 5 to 7 per cent drop in rents in 2009.
The anticipated completion of some 15,000 units between 2008 and 2009 is likely to cause rents to ease, as new islandwide supply is likely to surpass the average 10-year take up of 6,600-6,800 units, JLL said in a statement yesterday. Most completed supply could appear in the central districts.
Average resale prices in the central districts could ease about one per cent by 2009, while prices in the luxury prime districts could dive 11-13 per cent.
Mr Fossick referred to the forecasts as 'more of a worst-case scenario' should the US market not pick up soon. He said that sentiment will improve once US housing shows signs of recovery. Singapore's fundamentals are attractive to investors and demand will return when uncertainty clears, he added.
Investors might then realise that 'there is less supply now than we thought there was' - and prices may rise again.
Taking a medium to longer-term view, Mr Fossick said: 'We are seeing a dramatic fall in potential future supply in Singapore due to a stall in collective sales.'
JLL said that there were only two transactions worth $55.3 million in the first half of this year, compared with 51 deals worth $9.33 billion in the same period last year.
Mr Fossick said that there is also less supply from the confirmed list of the Government Land Sales Programme for the second half of the year.
Prime districts are already seeing slightly weaker rents as expatriates with lower housing budgets move to non-prime areas. JLL data showed that in the first half of the year, luxury prime rents fell one per cent and typical prime rents dropped 2 per cent.
Properties in the central districts in turn became more popular for leasing. Average rents there rose 11 per cent and surpassed those of typical prime properties for the first time in H1 this year.
JLL data also showed average resale prices softening in some areas. Luxury prime property prices eased 4.9 per cent to $2,595 per square foot (psf) in the first half of the year, while central district prices eased 0.5 per cent to $1,020 psf.
The shift of rental demand from the prime to central districts has sustained investor interest in central district property, according to JLL.
The mass market stood out with 3 per cent growth in resale prices to around $690 psf in H1, and JLL projected that prices could stay at this level in 2009.
JLL predicts up to 4.5% dip in typical prime district rents
By EMILYN YAP
RENTS and resale prices of housing in the central and prime districts could be hit this year and next depending on the crunch in the US market, says Jones Lang LaSalle (JLL).
In the worst case scenario, the real estate consultancy firm projects a 3.5 to 4.5 per cent drop in rents in the typical prime districts by year-end. 'Compared to recent rental rises, this remains a relatively small decline,' said JLL's managing director in South-east Asia and Singapore, Chris Fossick. The central districts could experience a bigger 5 to 7 per cent drop in rents in 2009.
The anticipated completion of some 15,000 units between 2008 and 2009 is likely to cause rents to ease, as new islandwide supply is likely to surpass the average 10-year take up of 6,600-6,800 units, JLL said in a statement yesterday. Most completed supply could appear in the central districts.
Average resale prices in the central districts could ease about one per cent by 2009, while prices in the luxury prime districts could dive 11-13 per cent.
Mr Fossick referred to the forecasts as 'more of a worst-case scenario' should the US market not pick up soon. He said that sentiment will improve once US housing shows signs of recovery. Singapore's fundamentals are attractive to investors and demand will return when uncertainty clears, he added.
Investors might then realise that 'there is less supply now than we thought there was' - and prices may rise again.
Taking a medium to longer-term view, Mr Fossick said: 'We are seeing a dramatic fall in potential future supply in Singapore due to a stall in collective sales.'
JLL said that there were only two transactions worth $55.3 million in the first half of this year, compared with 51 deals worth $9.33 billion in the same period last year.
Mr Fossick said that there is also less supply from the confirmed list of the Government Land Sales Programme for the second half of the year.
Prime districts are already seeing slightly weaker rents as expatriates with lower housing budgets move to non-prime areas. JLL data showed that in the first half of the year, luxury prime rents fell one per cent and typical prime rents dropped 2 per cent.
Properties in the central districts in turn became more popular for leasing. Average rents there rose 11 per cent and surpassed those of typical prime properties for the first time in H1 this year.
JLL data also showed average resale prices softening in some areas. Luxury prime property prices eased 4.9 per cent to $2,595 per square foot (psf) in the first half of the year, while central district prices eased 0.5 per cent to $1,020 psf.
The shift of rental demand from the prime to central districts has sustained investor interest in central district property, according to JLL.
The mass market stood out with 3 per cent growth in resale prices to around $690 psf in H1, and JLL projected that prices could stay at this level in 2009.
Sunday, July 6, 2008
Sunday Times: Scouting for resale home bargains as prices weaken
Scouting for resale home bargains as prices weaken
The best buys seem to be at the higher end, with prices holding steady in the mass-market segment
By Joyce Teo, Property Correspondent
Homebuyers seem to be happy waiting on the sidelines for noticeable price declines.
Because of the uncertainty about the economy, fewer completed homes have been sold in the resale market so far this year than in the previous six months.
To date, around 4,000 resale transactions have been recorded, says CBRE Research. In contrast, more than 20,000 resale homes (excluding collective sales) changed hands last year, a record year for such deals.
Already, prices of some of these homes have fallen, though many sellers are still reluctant to lower prices.
The good news is that more sellers, particularly those of high-end homes, are expected to sell at lower prices if the current mood does not lift.
'The current downward adjustment of home prices is seen only in certain projects and certain locations,' said CBRE Research executive director Li Hiaw Ho. 'But it may become broad-based if the subdued sentiment persists and sales volume remains low.'
DTZ says that, with high inflation compounding the expected slowdown in the global economy, prices of new and resale homes are set to correct further.
* High-end and mid-tier deals
According to URA Realis data generated by CBRE Research, over the period from the beginning of last year to the first half of this year, the most resale deals were done in districts 10, 15, 16, 19 and 23.
District 15 - made up of the East Coast, Katong and Tanjong Rhu areas - seems to be the most popular with Singaporeans, who snapped up 2,200 resale homes.
In contrast, district 10 - which includes Orchard Road, Tanglin, Holland Road and Bukit Timah - has seen resale prices drop fairly significantly.
'Generally, sellers are lowering their asking prices, but not all are selling below market,' said Colliers International's director for research and advisory, Ms Tay Huey Ying.
Those likely to sell below market - or below the peak prices seen last year - are the ones with high-end or mid-tier properties, she said.
* Suburban resale homes
District 19 - which includes areas such as Hougang, Upper Paya Lebar and Upper Serangoon - has chalked up the highest proportion of Singapore buyers.
Since the start of last year, 81 per cent of the resale properties in this district have been taken up by local buyers.
Prices have even risen, albeit marginally, so far this year.
Ms Tay said the resale market can be divided into two categories. The first covers those properties whose values have been chased up significantly by speculators, new launches nearby or attempts to go en bloc.
'These properties would be more likely to decline in price,' she said.
The second category covers projects that were left behind last year and might be undervalued as a result.
These are mostly suburban, mass-market properties whose prices are likely to remain stable or even rise slightly, said Ms Tay.
* Doing your homework
There are always bargains to be had in the resale market, but buyers should do their homework before committing to one, said Chesterton International's head of research and consultancy, Mr Colin Tan.
If the unit is too old, leaking pipes and worn-out electrical wiring could be a problem, he said.
'Before buying a really old resale unit, you should work out the cost of replacement and incorporate that into your offer price,' he noted.
For very old units, buyers should check to see whether the development has been well-maintained, as well as whether major upgrading works have been carried out in the past 10 years, added Mr Tan. Otherwise, they should check whether the sinking funds are healthy, that is, whether enough money has been set aside for major works.
As sellers of resale units are typically individuals, they are usually more flexible than, say, a big developer, say property agents. Buyers can look out for units that have been on the market for a while, they say.
Still, an investor who wants to earn rental income right away should look for a resale property with a combination of attributes such as a prime location, a sea view, condo facilities, amenities, recreational facilities and proximity to an MRT station, advised Mr Li.
The best buys seem to be at the higher end, with prices holding steady in the mass-market segment
By Joyce Teo, Property Correspondent
Homebuyers seem to be happy waiting on the sidelines for noticeable price declines.
Because of the uncertainty about the economy, fewer completed homes have been sold in the resale market so far this year than in the previous six months.
To date, around 4,000 resale transactions have been recorded, says CBRE Research. In contrast, more than 20,000 resale homes (excluding collective sales) changed hands last year, a record year for such deals.
Already, prices of some of these homes have fallen, though many sellers are still reluctant to lower prices.
The good news is that more sellers, particularly those of high-end homes, are expected to sell at lower prices if the current mood does not lift.
'The current downward adjustment of home prices is seen only in certain projects and certain locations,' said CBRE Research executive director Li Hiaw Ho. 'But it may become broad-based if the subdued sentiment persists and sales volume remains low.'
DTZ says that, with high inflation compounding the expected slowdown in the global economy, prices of new and resale homes are set to correct further.
* High-end and mid-tier deals
According to URA Realis data generated by CBRE Research, over the period from the beginning of last year to the first half of this year, the most resale deals were done in districts 10, 15, 16, 19 and 23.
District 15 - made up of the East Coast, Katong and Tanjong Rhu areas - seems to be the most popular with Singaporeans, who snapped up 2,200 resale homes.
In contrast, district 10 - which includes Orchard Road, Tanglin, Holland Road and Bukit Timah - has seen resale prices drop fairly significantly.
'Generally, sellers are lowering their asking prices, but not all are selling below market,' said Colliers International's director for research and advisory, Ms Tay Huey Ying.
Those likely to sell below market - or below the peak prices seen last year - are the ones with high-end or mid-tier properties, she said.
* Suburban resale homes
District 19 - which includes areas such as Hougang, Upper Paya Lebar and Upper Serangoon - has chalked up the highest proportion of Singapore buyers.
Since the start of last year, 81 per cent of the resale properties in this district have been taken up by local buyers.
Prices have even risen, albeit marginally, so far this year.
Ms Tay said the resale market can be divided into two categories. The first covers those properties whose values have been chased up significantly by speculators, new launches nearby or attempts to go en bloc.
'These properties would be more likely to decline in price,' she said.
The second category covers projects that were left behind last year and might be undervalued as a result.
These are mostly suburban, mass-market properties whose prices are likely to remain stable or even rise slightly, said Ms Tay.
* Doing your homework
There are always bargains to be had in the resale market, but buyers should do their homework before committing to one, said Chesterton International's head of research and consultancy, Mr Colin Tan.
If the unit is too old, leaking pipes and worn-out electrical wiring could be a problem, he said.
'Before buying a really old resale unit, you should work out the cost of replacement and incorporate that into your offer price,' he noted.
For very old units, buyers should check to see whether the development has been well-maintained, as well as whether major upgrading works have been carried out in the past 10 years, added Mr Tan. Otherwise, they should check whether the sinking funds are healthy, that is, whether enough money has been set aside for major works.
As sellers of resale units are typically individuals, they are usually more flexible than, say, a big developer, say property agents. Buyers can look out for units that have been on the market for a while, they say.
Still, an investor who wants to earn rental income right away should look for a resale property with a combination of attributes such as a prime location, a sea view, condo facilities, amenities, recreational facilities and proximity to an MRT station, advised Mr Li.
Wednesday, July 2, 2008
Straits Times: Private home prices may have peaked
Private home prices may have peaked URA estimates show mere 0.4% rise between April and June, the lowest growth in 4 years
By Fiona Chan, Property Reporter
GROWTH in private home prices ground to a halt in the second quarter, dragged down by dismal market sentiment and a poor showing in the luxury segment.
But things were cheerier among cheaper homes, with prices of suburban condominiums and HDB resale flats continuing to climb.
Private home prices inched up 0.4 per cent between April and last month, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.
This is the smallest rise in about four years and a stark drop from the 3.7 per cent rise recorded in the first three months of the year.
On the supply side, there were 67,700 private residential units as at the first quarter, of which 56,500 are expected to be completed between this year and 2011. Some 42,700 units, or 63 per cent, in the pipeline are unsold.
Experts were divided on whether the market has peaked. While home sales have been in the doldrums since late last year, recent launches - at lowered prices - have been encouraging.
Some consultancies, like DTZ Debenham Tie Leung, predicted that private home prices are 'set for further corrections' with bigger developers likely to follow in the footsteps of smaller ones and cut prices to move sales.
Prices will come under pressure from two other factors - speculators dumping units and more homes coming on the market as construction ends, DTZ added.
Its analysis of selected projects showed that prime freehold flats actually fell in price by 4.7 per cent in the second quarter while values of suburban and landed homes were unchanged.
Ms Chua Chor Hoon, DTZ's senior director of research, said: 'This is just the beginning of a decline. Prime properties have started to come down and while the mass market is still holding, we're no longer seeing increases.'
URA data showed that condos in the prime central region led the slowdown in the second quarter, with prices creeping up just 0.2 per cent. City-fringe home prices rose 0.7 per cent while those of suburban condos increased by 1.3 per cent.
The star performer was the HDB resale market, where prices climbed 4.4 per cent - more than the 3.7 per cent growth in the first quarter.
Mr Colin Tan, head of research and consultancy at Chesterton International, said the demand for HDB flats was likely boosted by too-high prices of private homes.
But the private home market 'has probably peaked and prices will come down, if not in the next month, then in the following months', he added.
Mr Nicholas Mak, Knight Frank's director of research and consultancy, added: 'If sales volumes don't pick up much and if the United States posts very weak economic growth, we could see a price decline by December.'
But other consultants painted a brighter picture.
CBRE Research executive director Li Hiaw Ho noted that 1,200 to 1,400 new homes were sold between April and last month, almost double the 762 sold between January and March.
Most of the projects that sold well were mid-tier or mass market condos, with average prices between $775 per sq ft (psf) and $1,225 psf, he said.
'Despite prices softening a little, volume has improved in the last four weeks and this might encourage more developers to launch products.' This could boost transactions in the next two quarters, which may lead to a strengthening of prices, Mr Li added.
Dr Chua Yang Liang, Jones Lang LaSalle's head of South-east Asia research, was more cautious. 'Demand remains favourable in the suburbs, thanks to strong economic growth and a rise in average wages in the first quarter,' he said. But the market is expected to 'continue to swing from month to month till we see a clear stability in either volume or price level'.
By Fiona Chan, Property Reporter
GROWTH in private home prices ground to a halt in the second quarter, dragged down by dismal market sentiment and a poor showing in the luxury segment.
But things were cheerier among cheaper homes, with prices of suburban condominiums and HDB resale flats continuing to climb.
Private home prices inched up 0.4 per cent between April and last month, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.
This is the smallest rise in about four years and a stark drop from the 3.7 per cent rise recorded in the first three months of the year.
On the supply side, there were 67,700 private residential units as at the first quarter, of which 56,500 are expected to be completed between this year and 2011. Some 42,700 units, or 63 per cent, in the pipeline are unsold.
Experts were divided on whether the market has peaked. While home sales have been in the doldrums since late last year, recent launches - at lowered prices - have been encouraging.
Some consultancies, like DTZ Debenham Tie Leung, predicted that private home prices are 'set for further corrections' with bigger developers likely to follow in the footsteps of smaller ones and cut prices to move sales.
Prices will come under pressure from two other factors - speculators dumping units and more homes coming on the market as construction ends, DTZ added.
Its analysis of selected projects showed that prime freehold flats actually fell in price by 4.7 per cent in the second quarter while values of suburban and landed homes were unchanged.
Ms Chua Chor Hoon, DTZ's senior director of research, said: 'This is just the beginning of a decline. Prime properties have started to come down and while the mass market is still holding, we're no longer seeing increases.'
URA data showed that condos in the prime central region led the slowdown in the second quarter, with prices creeping up just 0.2 per cent. City-fringe home prices rose 0.7 per cent while those of suburban condos increased by 1.3 per cent.
The star performer was the HDB resale market, where prices climbed 4.4 per cent - more than the 3.7 per cent growth in the first quarter.
Mr Colin Tan, head of research and consultancy at Chesterton International, said the demand for HDB flats was likely boosted by too-high prices of private homes.
But the private home market 'has probably peaked and prices will come down, if not in the next month, then in the following months', he added.
Mr Nicholas Mak, Knight Frank's director of research and consultancy, added: 'If sales volumes don't pick up much and if the United States posts very weak economic growth, we could see a price decline by December.'
But other consultants painted a brighter picture.
CBRE Research executive director Li Hiaw Ho noted that 1,200 to 1,400 new homes were sold between April and last month, almost double the 762 sold between January and March.
Most of the projects that sold well were mid-tier or mass market condos, with average prices between $775 per sq ft (psf) and $1,225 psf, he said.
'Despite prices softening a little, volume has improved in the last four weeks and this might encourage more developers to launch products.' This could boost transactions in the next two quarters, which may lead to a strengthening of prices, Mr Li added.
Dr Chua Yang Liang, Jones Lang LaSalle's head of South-east Asia research, was more cautious. 'Demand remains favourable in the suburbs, thanks to strong economic growth and a rise in average wages in the first quarter,' he said. But the market is expected to 'continue to swing from month to month till we see a clear stability in either volume or price level'.
Saturday, June 28, 2008
Straits Times Forum: What determines market value of property?
What determines market value of property?
I REFER to Mr Patrick Tan's letter, 'Valuation the culprit in artificially inflating HDB flat prices' (June 17).
The market value of a property is the estimated amount for which it should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing where both parties acted knowledgably, prudently and without compulsion. It is not a situation of a willing buyer and an unwilling seller where the terms of purchase are favourable to the buyer. Nor is it a situation of an unwilling buyer and a willing seller where the terms of sale are favourable to the seller.
The transacted prices of comparable properties are generally the best evidence of the market value for standard properties like HDB flats. In the case of HDB flats, cash top-up is part of the price of the property sold and the transaction price is therefore a legitimate piece of evidence to rely on when valuing a property. The valuer's job is to interpret the market, not make the market. The market is the final arbiter of what is an appropriate valuation. It is neutral as to affordability issues. The market itself will eventually adjust downwards if buyers deem the cash top-up excessive and refrain from transacting.
Valuers have to examine the micro and macro factors of the particular segment of the real estate market, together with the economy sentiment. Such factors will include demand and supply of the various micro residential markets, and legislation and policies pertaining to the particular real estate segment.
Factors affecting the private and the HDB residential market may be slightly different, and thus the property market cycle of each real estate segment is never identical.
This also accounts for the difference in values of a property in different timeframes and different values for similar properties in different locations.
Janet Han (Ms)
Secretariat
Singapore Institute of Surveyors and Valuers
I REFER to Mr Patrick Tan's letter, 'Valuation the culprit in artificially inflating HDB flat prices' (June 17).
The market value of a property is the estimated amount for which it should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing where both parties acted knowledgably, prudently and without compulsion. It is not a situation of a willing buyer and an unwilling seller where the terms of purchase are favourable to the buyer. Nor is it a situation of an unwilling buyer and a willing seller where the terms of sale are favourable to the seller.
The transacted prices of comparable properties are generally the best evidence of the market value for standard properties like HDB flats. In the case of HDB flats, cash top-up is part of the price of the property sold and the transaction price is therefore a legitimate piece of evidence to rely on when valuing a property. The valuer's job is to interpret the market, not make the market. The market is the final arbiter of what is an appropriate valuation. It is neutral as to affordability issues. The market itself will eventually adjust downwards if buyers deem the cash top-up excessive and refrain from transacting.
Valuers have to examine the micro and macro factors of the particular segment of the real estate market, together with the economy sentiment. Such factors will include demand and supply of the various micro residential markets, and legislation and policies pertaining to the particular real estate segment.
Factors affecting the private and the HDB residential market may be slightly different, and thus the property market cycle of each real estate segment is never identical.
This also accounts for the difference in values of a property in different timeframes and different values for similar properties in different locations.
Janet Han (Ms)
Secretariat
Singapore Institute of Surveyors and Valuers
Tuesday, June 24, 2008
Business Times: Singapore property market approaching peak: report
Singapore property market approaching peak: report
By UMA SHANKARI
SINGAPORE is still a safe haven for property investments but a market peak is approaching, Pacific Star says in a recent report.
The Singapore-based property group is most bullish on the retail sector here, recommending that investors add to investments in that segment. The residential and office sectors, on the other hand, are rated 'neutral'.
In the same vein, OCBC Investment Research reiterated its 'neutral' view on the residential sector here in a June 12 report.
According to Pacific Star, the retail market here is tightening. Vacancy rates have fallen to levels not seen since 1993 and rents continue to climb slowly, with an increase of one per cent in Q1 this year, after a 0.6 per cent rise in Q4 2007.
Retail spending is expected to increase in line with growing tourism and rising incomes.
'Marketing agents report that Orchard Central and Ion Orchard, two prime (upcoming) shopping centres in Orchard Road, are attracting strong rental enquiries from retailers that currently do not operate in Singapore,' Pacific Star's report said. 'Rents at Ion are expected to significantly surpass current prime retail rents.'
For the office sector, the current demand-supply imbalance is expected to support rents till 2009, said Pacific Star. 'Office demand is still firm with leasing agents lamenting the lack of available space rather than a lack of enquiries, although the number of enquiries would have fallen somewhat.'
But an above-normal supply of office space will put pressure on rents from 2010, even if growing demand from the services sector prevents any excessive correction, it said.
In the residential segment, Pacific Star expects the current stupor to continue, as there are few catalysts for the rest of 2008. It believes prices and transaction volumes will continue to soften for the rest of the year.
However, the initial catalysts for recovery are expected in 2009, when Singapore's economic growth is expected to exceed that of 2008, according to Pacific Star.
The recovery will be fuelled by immigration and higher incomes that will make it more affordable for Singaporeans to buy mid and high-end private homes, it said.
In a report on the residential market here, OCBC sounded a warning, saying past trends point towards another price correction over the next few quarters.
On the other hand, interest in mass market properties should come back, said OCBC.
'Given that only five projects with total of 1,139 units are expected to be launched in the outside central region between Q2 2008 and Q3 2008, this should ease concerns of oversupply and drive the take-up rate higher over the next few quarters,' analyst Foo Sze Ming noted.
By UMA SHANKARI
SINGAPORE is still a safe haven for property investments but a market peak is approaching, Pacific Star says in a recent report.
The Singapore-based property group is most bullish on the retail sector here, recommending that investors add to investments in that segment. The residential and office sectors, on the other hand, are rated 'neutral'.
In the same vein, OCBC Investment Research reiterated its 'neutral' view on the residential sector here in a June 12 report.
According to Pacific Star, the retail market here is tightening. Vacancy rates have fallen to levels not seen since 1993 and rents continue to climb slowly, with an increase of one per cent in Q1 this year, after a 0.6 per cent rise in Q4 2007.
Retail spending is expected to increase in line with growing tourism and rising incomes.
'Marketing agents report that Orchard Central and Ion Orchard, two prime (upcoming) shopping centres in Orchard Road, are attracting strong rental enquiries from retailers that currently do not operate in Singapore,' Pacific Star's report said. 'Rents at Ion are expected to significantly surpass current prime retail rents.'
For the office sector, the current demand-supply imbalance is expected to support rents till 2009, said Pacific Star. 'Office demand is still firm with leasing agents lamenting the lack of available space rather than a lack of enquiries, although the number of enquiries would have fallen somewhat.'
But an above-normal supply of office space will put pressure on rents from 2010, even if growing demand from the services sector prevents any excessive correction, it said.
In the residential segment, Pacific Star expects the current stupor to continue, as there are few catalysts for the rest of 2008. It believes prices and transaction volumes will continue to soften for the rest of the year.
However, the initial catalysts for recovery are expected in 2009, when Singapore's economic growth is expected to exceed that of 2008, according to Pacific Star.
The recovery will be fuelled by immigration and higher incomes that will make it more affordable for Singaporeans to buy mid and high-end private homes, it said.
In a report on the residential market here, OCBC sounded a warning, saying past trends point towards another price correction over the next few quarters.
On the other hand, interest in mass market properties should come back, said OCBC.
'Given that only five projects with total of 1,139 units are expected to be launched in the outside central region between Q2 2008 and Q3 2008, this should ease concerns of oversupply and drive the take-up rate higher over the next few quarters,' analyst Foo Sze Ming noted.
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