Singapore Property Weekly Issue 92.pdf

7/29/2019 Singapore Property Weekly Issue 92.pdf

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Issue 92Copyright 2011-2012 www.Propwise.sg. All Rights Reserved.
http://www.propwise.sg/http://www.propwise.sg/


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ContributeDo you have articles and insights and articles that youd like to share

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CONTENTSp2 Ask Mr. Propwise#9 What is the Impact

of Income, Interest Rates and

Deposits on Property Prices?

p7 Property Buying Tip #6: Option Fees

p9 Singapore Property News This Week

p12 Resale Property Transactions

(February 6 February 8)

Welcome to the 92th edition of the

Singapore Property Weekly.

Im glad to announce that the 2012Q4

URA data has been updated for

PropertyMarketInsights.com members.

>> Click here to find out more


3/13

SINGAPORE PROPERTY WEEKLY Issue 92

Page | 2Back to Contents

By Mr. Propwise

I recently received the following email from a

reader ofPropwise.sg:

Dear Mr. Propwise,

Thank you for your weekly report. Youve

done a very sound analysis in putting housing

growth and property growth together in your

article 6.9m Population by 2030 Good or

Bad for Property?

If most people agree with your report,

property price in Singapore is likely to soften

within the next two years. And I think it will.

Ask Mr. Propwise#9 What is the Impact of Income,Interest Rates and Deposits on Property Prices?
http://propwise.sg/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://www.propwise.sg/6-9m-population-by-2030-good-or-bad-for-property/http://propwise.sg/http://propwise.sg/http://propwise.sg/


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The Straits Times recently reported that the

top 10% of earners have an average monthly

income of $11,552 per family member fo

year 2012. The annualized change, adjusted

for inflation, was 5.5% per annum (from 2002

- 2007), 2.7% per annum (from 2007-2011)

and 5.6% from 2011 to 2012. This works out

to be 4% per annum increase over the last

ten years for these top income earners. This

means the salary has increased by 41.7%

over the last ten years from 2003 to 2012.

If we look at property price increases, the

URA Private Residential Property Price Index

in 2002Q1 was about 115 points and in

2012Q4 was 211.9 points. Translated to

annual growth, it is 7% per annum over thelast ten years... a whopping 84% increase.

So, over the last ten years, salary increased

close to 42% while private property rose 84%.

The growth of salary has lagged property

price by two times.

I have the following questions and

comments:

1. Going forward, does this mean property

market prices are going to stabilize or

decline?

2. Is the property price upside potential

becoming less than the downside risk?

3. It probably needs a trigger mechanism to

cause property price to decline substantially.

Will it be interest rate rise? If so, it probably

has to be a steep rise to 2.5% or more within

a year.So far, there has been no major

economic recession or crisis since end 2008,

but I wouldn't rule it out within the next three

years....


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4. On the positive side, I understand

Singapore still has a lot of cash deposits

thatcould help support the property price

growth.I do not have the number at hand, but

it will be good to find out if it is still increasing.

Thank you very much for your weekly advice.

Your reports are definitely worth reading and

studying.

Best Regards

R. Tan

Hi R.,

Thanks for your well-researched comments. I

went back to take a look at the original report

from the Department of Statistics Singapore,

and the number that I thought was relevant

was the Total Household Income from Work,

which grew by 41.1% from 2007 to 2012, or

7.1% annualized.

Over this time period, the URA Property Price

Index grew by a cumulative 62.7% or 10.2%

annualized. So I think we can say that over

this time period property price growth

exceeded that of Total Household Income

from Work, which means that affordability has

deteriorated.

But do note that this only measures income

from work (i.e. employment and business

earnings). As the home ownership rate inSingapore was 90.1% in 2012 (according to

Singstat), that means that the net worth of

90% of the households here was growing at a

much quicker rate (itll be that 10.2%

magnified by the impact of leverage).

I believe that the combined impact of growing

income and wealth was very supportive of the

property market over this period (even taking

into account the glitch during the Global
http://www.singstat.gov.sg/pubn/papers/people/pp-s19.pdfhttp://www.singstat.gov.sg/stats/keyind.htmlhttp://www.singstat.gov.sg/stats/keyind.htmlhttp://www.singstat.gov.sg/stats/keyind.htmlhttp://www.singstat.gov.sg/stats/keyind.htmlhttp://www.singstat.gov.sg/stats/keyind.htmlhttp://www.singstat.gov.sg/stats/keyind.htmlhttp://www.singstat.gov.sg/stats/keyind.htmlhttp://www.singstat.gov.sg/pubn/papers/people/pp-s19.pdfhttp://www.singstat.gov.sg/pubn/papers/people/pp-s19.pdfhttp://www.singstat.gov.sg/pubn/papers/people/pp-s19.pdf


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Financial Crisis).

1. Looking at these growth rates doesnt give

us too much insight into the future of the

market. While nobody can forecast the futurewith any accuracy, I believe taking stock of

where we currently are in the cycle and

looking at factors thatll affect future demand

and supply is the best way to guide our

property decisions.

2. Based on the Property Market Cycle Mode

that I developed for

PropertyMarketInsights.com, as of 2012Q4

we are in the Late Bull stage of the market,

which certainly suggests that the risk-reward

for buying property is not great, i.e. thedownside is greater than the upside.

3. As Ive written before, for Singapore

property prices to fall, I believe well need to

see some sort of external shock (what I call a

black swan, using NassimTalebs

terminology) that will lead to an increase in

interest rates and/or unemployment rates.

The cause could be anything from rising

inflation rates, to a recession, to an epidemic.

Only then will see forced sellers and blood

on the street.

4. I went to the MAS website to download

some information on deposits in Singapore.

They are still growing as of 2012, but at a

slower pace. Certainly theres still a lot of

cash sitting in the bank waiting to be

deployed into some opportunities, so this

could cushion any fall in the property market.
http://propertymarketinsights.com/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://www.propwise.sg/7th-round-of-cooling-measures-the-anvil-to-smash-the-camels-back/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/


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Total Bank Deposits ($ million)

(Source: MAS)

Thanks for the great questions hope the

above has been helpful!

To Wisdom and Beyond,

Mr. Propwise

By Mr. Propwise, founder of Propwise.sg, a

Chartered Financial Analyst and resident real

estate analyst at PropertyMarketInsights.com,

a site to help property owners and investors

make profitable decisions in uncertain

times.Click here to learn more

SINGAPORE PROPERTY WEEKLY I 92
http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/http://propertymarketinsights.com/


8/13



Property Buying Tip #6: Option Fees

When buying from the Open or Resalemarket, a 1% Booking or Option Fee is

required upfront and you are given a period of

time, usually 14 days, to pay the balance 4%

to exercise the Option to Purchase (OTP). In

other words, you will need a minimum of 5%

cash to pay the option fees, with theremaining 15% to be paid in cash and/or CPF

(Ordinary Account) to complete the Option.

In the event you decide not to proceed with

the purchase and do not exercise the Option,

your 1% Option Fee will be forfeited by the

Seller. The Seller is free to sell the property to

another party when the Option expires.

SINGAPORE PROPERTY WEEKLY I 92


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When buying direct from the Developer,

typically for a New Launch or Under-

Construction Property, the booking fee to

issue the Option to Purchase (OTP) is 5% to

10% (typically 5%). Upon signing the Salesand Purchase (S&P) Agreement, the payment

would be 20% less the Booking Fee paid,

typically within 8 weeks. Thereafter, the

payment would be subject to the progress of

the construction.

In the event you decide not to proceed withthe purchase and do not endorse on the

Sales and Purchase Agreement, 25% of the

Option Fee will be forfeited by the Developer.

For example, if you have paid the 5% Option

Fee, then 25% of 5% = 1.25% of the

Purchase Price will be forfeited.

By Eileen Tan and Ui Wei Teck, property

investors and authors of Enjoying Mid-Life

Without Crisis. This tip and dozens more are

from theirbook.

http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://www.moneymatters.sg/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/http://aktive.com.sg/store/enjoying-mid-life-without-crisis/


10/13


Singapore Property This Week


Residential

Developers not optimistic about the

property market

With the latest round of cooling measures,

developers are now less optimistic about the

property market, as reflected in the Redas-

NUS Real Estate Sentiment Index (RESI)Current Sentiment Index, which fell from 5.1

in Q3 2012 to 4.6 in Q4 2012. The Future

Sentiment Index also fell from 4.7 in Q3 to 4.0

in Q4 while the Composite Sentiment Index

fell from 4.9 to 4.3. Specifically, the prime

residential sector fell to a current net balanceof -27% and a future net balance of -49%

from -8% and +2%, the suburban residential

sector has a current net balance was +10%

while future net balance fell from +6% in Q3

to -28% in Q4. Suburban retail andhotel/serviced apartments, on the other hand,

had current and future net balances of +14%

and +9% respectively. 48% of the survey

respondents also expect to see moderately

lower prices in the primary residential market,

with another 25% expecting stable prices andanother 28% expecting a moderate price

increase.

10% of the respondents (compared to an

earlier 23%) intended to launch substantially

more units. 43% (compared to 48% earlier)

expect moderately more launches, 28%

(unchanged) expect the launches to be at the

same level while 20% (4% earlier) expect

lesser units at new launches.



11/13



In addition, the level of interest in land sales

also fell, with 10% expressing moderately

greater interest in GLS (compared to an

earlier 32%) and another 38% expressing

moderately lesser interest (compared to 7%

earlier). Similarly, level of interest in en-bloc

sales also fell, with 35% (compared to 61%

before) expressing the same level of interest

and 45% (compared to 15% earlier)

expressing less interest.

(Source: Business Times)

Commercial

Six Samsung Hub units up for sale by

tender

These six strata unitswhich strata areas range

from 883 sq ft to 3,595 sq ft (a total of 13,132sq ft) are located on the17th floor of Samsung

Hub, a 999-year Grade A office development

on Church Street near Raffles Place. The

development consists of a 30-storey office

block with 299,753 sq ft strata area and a six-

storey podium with 178 carpark lots. Church

Street Holdings, the owner, will only sell if the

all or most of the units can be sold at $3,300-

3,500 psf.The tender will close on March 15.


San Centre at Chin Swee Road up inthe

collective sale market

The 12-storey San Centre, an office building

at Chin Swee Road, is asking for $115-125million or $872-948 per sq ft. It consists of

107 strata-titled office units and 80 carpark

lots sitting on 28,719 sq ft of land. The plot

ratio and total GFA are 4.59 and 131,895 sq ft

respectively.Having a good location (near

CBD, Chinatown and Robertson Quay and

Chinatown and Outram Park MRT stations), it

can be potentially redeveloped into a hotel, a

serviced apartments for expatriates and

medical tourists or an office building.



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The authorities would support the

redevelopment into a 20-storey hotel

development or a mixed residential and

commercial development, with at least 60%

for commercial use.The tender closes at2.30pm on March 25.


JTC change rules on land rentals

Under Sale-and-Leaseback Scheme, JTC

allows third-party facility providers to be itslessees by allowing an industrialist to sell its

completed facility to a third-party facility

provider such as a Reit, which would in turn

leases it back to the industrialist. These would

allow industrialists to offload assets and

lighten their balance sheets. However, under

the new rules, these third-party facility

providers have to pay an upfront land

premium (prevailing posted land price on

JTCs website,adjusted for the remaining

tenure of the current lease term) for the

remaining of the lease term; only buyers who

are industrialists can pay a monthly land

rental. Should there be a second term of

lease, the upfront premium will be determinedat the end of the first term. This new rulecould

mean a higher cost and a lower yield for

Reits, which may lead to less competition for

SMEs interested in buying their own

premises.

Another similar scheme is the Third PartyBuild-and-Lease Scheme, where a property

fund or developer builds a customised facility

for an end-user industrialist, to whom it leases

the building. While the developer can choose

between an upfront land premium or a

monthly land rental, a new buyer (if a third-party facility provider) can only pay an upfront

land premium for the balance of the current

lease term.




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Non-Landed Residential Resale Property Transactions for the Week of Feb 6 Feb 8

NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore LandAuthority. Typically, caveats are lodged at least 2-3 weeks after apurchaser signs an OTP, hence the lagged nature of the data.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

3 ALESSANDREA 1,001 1,390,000 1,389 FH

5 ISLAND VIEW 3,595 3,750,000 1,043 FH

9 THE LIGHT @ CAIRNHILL 1,518 3,570,000 2,352 FH

9 LUMA 743 1,605,000 2,161 FH

10 GLENTREES 1,345 1,820,888 1,353 999

11 ZEDGE 861 1,350,000 1,568 FH

12 PRESTIGE HEIGHTS 431 770,000 1,788 FH

15 THE SEAFRONT ON MEYER 1,604 2,300,000 1,434 FH

15 WATER PLACE 1,216 1,510,000 1,241 99

15 DUNMAN VIEW 1,249 1,325,000 1,061 99

15 MANDARIN GARDEN CONDOMINIUM 1,528 1,535,000 1,004 99

19 THE QUARTZ 1,066 1,150,000 1,079 99

20 GOLDENHILL PARK CONDOMINIUM 1,335 1,850,000 1,386 FH

20 BOONVIEW 1,292 1,560,000 1,208 FH

20 THE WINDSOR 1,572 1,500,000 954 FH
http://propertymarketinsights.com/

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