Hot US real estate a potential red flag: Fed’s Rosengren

The run-up in U.S. real estate prices could potentially amplify any future economic downturn, a Federal Reserve official said on Tuesday, urging regulators globally to consider tools beyond interest rates that could help cool the sector.

A sharp downturn in U.S. residential and commercial property prices in 2007 and 2008 rocked banks that were highly leveraged in the sector, sparking the global financial crisis and deep recession. With the economic recovery now well under way, bank holdings of commercial and apartment mortgages rose 9 percent and 12 percent, respectively, in the past year.

Eric Rosengren, president of the Boston Fed and an influential financial regulator at the U.S. central bank, said the “sharp” rise in apartment prices in particular may signal financial instabilities that interest rates, which are only gradually rising, may not be able to contain.

“Because real estate holdings are widespread, and the monetary and macroprudential tools for handling valuation concerns are somewhat limited, I believe we must acknowledge that the commercial real estate sector has the potential to amplify whatever problems may emerge when we at some point face an economic downturn,” Rosengren said in prepared remarks for delivery to a banking supervision conference in Bali, Indonesia.

He noted that real estate has repeatedly played a big role in episodes of financial instability, and that prices are now outpacing growth in building owners’ operating income.

Since equilibrium interest rates – the Fed’s traditional tool to guide the economy – could remain lower than decades past, Rosengren said, “this would require a greater emphasis on macroprudential tools if valuations became a source of concern.”

Such tools include rules and restrictions on bank holdings. “It is prudent to keep a healthy, ongoing focus on the sufficiency of these tools and their ongoing enhancement,” he added.

Source : Channel NewsAsia – 22 Mar 2017

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5 ideas floated to give Kallang River a facelift

Five broad key ideas to rejuvenate Kallang River were introduced on Wednesday (Mar 29), when the Urban Redevelopment Authority (URA) launched the A River Runs Through It exhibition.

The exhibition is a call for public feedback and ideas on a preliminary conceptual plan to rejuvenate the Kallang River, and revitalise the areas around the river, and was officiated by National Development Minister Lawrence Wong, the URA press release said.

According to the agency, the Kallang River is Singapore’s longest natural river. There are now about 800,000 people living within 2km of the river and, in the next 20 years, there is potential to inject around another 100,000 housing units in the area, it added.

As such, the Government is proposing the following:

1. Activate the waterfront, and enhance Kallang Basin as a sports and recreational venue
One idea being developed for implementation is an eventual stream, cascading waters and rain gardens between Bishan Road and Braddell Road. Studies are being carried out to see if more facilities are needed at the area around the Sports Hub to strengthen it as an inclusive sports and recreational precinct.

2. Inject new waterfront housing developments in park-like settings and renew old industrial estates
Kampong Bugis and Kallang Distripark are primed for the development of quality green residential neighbourhoods, and the Kallang Industrial Estate has the potential to be renewed into a mixed-use precinct with new industrial developments.

3. Enhance accessibility by providing a seamless active mobility route along Kallang River between Bishan and city centre
The exhibition presents some ideas to overcome major obstacles along the river bank, such as new underpasses and a cycling bridge across the Pan Island Expressway.

4. Enrich the biodiversity of Kallang River
Current habitats along the river can be complemented with the naturalisation of more stretches of the waterway, and wider green setbacks, to allow biodiversity to flourish even more, URA proposed.

5. Celebrate and incorporate the river’s rich heritage
The public will be invited to help capture the memories and heritage associated with the river to enrich future development plans, said URA.

The agency is calling on the public to share their feedback on ideas to revitalise the river, and will also be inviting grassroots and residents living along the river and other shareholders to the exhibition for their views.

The ideas and proposals will be exhibited at The URA Centre Atrium from Mar 29 to May 2, 9am to 6pm, Mondays to Fridays, it said.

Source : Channel NewsAsia – 29 Mar 2017

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Singapore world’s most expensive city for expats for 4th year running: Survey

For the fourth consecutive year, Singapore has been ranked the world’s most expensive city for expatriates to live in, in a survey by the Economist Intelligence Unit (EIU).

The Worldwide Cost of Living 2017 report listed five Asian cities in its top six, including Hong Kong, Tokyo, Osaka and Seoul. The exception was Switzerland’s Zurich, which was ranked third.

Geneva, Paris, New York and Copenhagen completed the top 10.

The report is meant to help companies calculate relocation costs for expatriate staff, and compares more than 400 individual prices across 160 products and services.

These include food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs.

The 2017 survey found that Singapore is still the most expensive city to buy and maintain a car, and the second-priciest destination to buy clothes.

In terms of food and drink, the cost of living in Singapore is on a par with Shanghai, while Seoul, Tokyo and Osaka are the three most expensive places in the world to buy staple goods, the EIU said, adding that in Seoul, topping up a grocery basket is almost 50 per cent more expensive than in New York.

The South Korean capital, which was ranked as low as 50th just seven years ago, now occupies sixth place, the report noted.

Source : Channel NewsAsia – 21 Mar 2017

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Braddell View becomes last HUDC estate to be privatised

The last of Singapore’s Housing and Urban Development Company (HUDC) estates has been privatised, it was announced on Friday (Mar 17).

Braddell View estate has obtained the required 75 per cent majority support from flat owners to proceed with the privatisation, said the Housing and Development Board (HDB) in a press release.

With effect from Friday, it will be converted into a strata-titled estate under the Land Titles (Strata) Act, which means it will no longer be governed by the HUDC Housing Estates Act.

Braddell View, which comprises 918 flats and two shops, is the largest among 18 estates that were introduced by the then Housing and Urban Development Company in the 1970s and 1980s for middle-income families.

In 1995, it was announced that HUDC estates could be privatised, as part of the Government’s effort to meet the rising aspirations of Singaporeans to own private housing. It also gives flat owners greater control over the management and maintenance of their estate.

HDB said that with the privatisation of Braddell View, individual owners in the estate will own their respective strata units as well as the common property as tenants-in-common.

It added that “as provided under the Land Titles (Strata) Act, the existing Management Committee assumes the role of the council of the Management Corporation, and the committee members are deemed to have been elected as the council members”.

Braddell View was the last such estate to be offered privatisation as amendments to the HUDC Housing Estates Act needed to be made for residents to have that option.

This is because the estate was built in two phases, in two land parcels with two land expiration dates. Residents will need to top up the lease tenure of the land parcel with the shorter lease to align it with the longer one.

The amendments to the Act, which were passed in 2012, allowed the Braddell View body corporate to levy contributions on the flat owners in order to pay HDB the lease top-up premium, as well as determine how much of the premium each flat owner has to pay.

HDB said that a total of 7,731 dwelling units have now been privatised, marking the closure of the Government’s privatisation programme for HUDC estates.

Source : Channel NewsAsia – 17 Mar 2017

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New private home sales more than doubled in February

Demand for new private homes more than doubled in February, with 977 units sold by developers compared with the 382 units sold in January, according to figures by the Urban Redevelopment Authority (URA) on Wednesday (Mar 15).

Compared to figures a year earlier, the 977 units sold is more than triple that of the 303 units sold last February.

Including executive condominiums (ECs), a total of 1,306 units were sold last month. The 329 ECs sold is an 81 per cent jump from the 182 units sold in January.

There were 550 new units launched by property developers last month, which is more than the 108 in January, and the majority came from The Clement Canopy and Parc Riviera in the Clementi and West Coast region of Singapore.

Mr Eugene Lim, key executive officer at ERA Realty Network, said the figures represented a “good start” to the year and activity from buyers can be expected to persist.

He noted that developer figures are expected to receive a bump in March for both EC and private home segments due to the launch of Grandeur Park Residences, Park Place Residences At PLQ and iNz Residence, and new sales in March will probably range between 1,100 and 1,300 units.

“Investors, especially, will be on the lookout as the minimum holding period to avoid paying Seller’s Stamp Duty has been shortened to three years. As the construction period for new projects typically take around three years, buyers will have the flexibility of reselling the unit when the projects obtain their Temporary Occupation Permits,” Mr Lim said.

“Those looking to rent out their units are also likely to prefer uncompleted projects as they can buy time over the construction period to wait out the current downturn in the private residential rental market.”

He expects the positive buying sentiment to continue until the June school holidays, “when things could tone down a little”.

Source : Channel NewsAsia – 15 Mar 2017

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Singapore ranked best place to live in Asia for expats: Mercer’s survey

Singapore was ranked as the best place to live in Asia for expatriates and 25th best in the world in the 19th Quality of Living survey by consulting firm Mercer’s released on Tuesday (Mar 14).

Vienna, Austria’s grand capital on the Danube river, was ranked first for the eighth year in a row, while Baghdad is again considered the worst place to live.

Two Japanese cities, Tokyo and Kobe, were the next highest-ranked Asian cities after Singapore at 47th and 50th globally. Hong Kong came in at 71st place, Kuala Lumpur 86th, Shanghai 102nd, Bangkok 131st, Manila 135th and Jakarta 143rd.

The survey also includes a city infrastructure ranking that assesses each city’s supply of electricity, drinking water, telephone and mail services, and public transportation as well as traffic congestion and the range of international flights available from local airports. Singapore topped the list ahead of Frankfurt and Munich, while Baghdad and Port au Prince ranked last.

City infrastructure plays an important role when multinationals decide where to establish locations abroad and send expatriate workers, Mercer’s said in a press release.

“Easy access to transportation, reliable electricity, and drinkable water are all important considerations when determining hardship allowances based on differences between a given assignee’s home and host locations,” it said.

The survey of 231 cities helps companies and organisations determine compensation and hardship allowances for international staff. It uses dozens of criteria such as political stability, health care, education, crime, recreation and transport, according to its website.

Global centres London, Paris, Tokyo and New York City did not make the top 30, lagging behind most big German, Scandinavian, Canadian, New Zealand and Australian cities.

San Francisco, placed 29th, was the highest entry in the US. Top of the list in Africa was South Africa’s Durban at 87.

Source : Channel NewsAsia – 14 Mar 2017

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Tweaks to some property cooling measures will not have significant impact: Analysts

The Government’s tweaks to some residential property cooling measures on Friday (Mar 10) are a timely move, but observers said these adjustments are unlikely to have a significant impact on the local property market.

Even as the announcements marked the Singapore Government’s first relaxation of the property cooling measures rolled out since 2009, market participants should not expect further easing, analysts told Channel NewsAsia.

In a joint statement on Friday, the Ministry of Finance, Ministry of National Development and the Monetary Authority of Singapore (MAS) said “calibrated adjustments” will be made to the seller’s stamp duties (SSD) and total debt servicing ratio (TDSR) framework.

With effect from Saturday, home owners will only have to wait three years before selling their properties to avoid paying the SSD, down from four years currently. This applies to residential properties which are bought on and after Mar 11. The rate will also be cut by four percentage points for each tier.

The TDSR will also be eased, with the 60 per cent TDSR threshold no longer applicable to mortgage equity withdrawal loans with loan-to-value (LTV) ratios of 50 per cent and below. These refer to loans where borrowers borrow against the value of their properties.

NO SIGNIFICANT IMPACT ON PROPERTY MARKET ACTIVITY, PRICES: OBSERVERS

Cushman & Wakefield’s research director, Christine Li, said the cut in the SSD is timely given that newer measures, including the Additional Buyer’s Stamp Duty (ABSD), have “overlapped” with the SSD’s aim to clamp down on speculative property investments. The SSD was first introduced in 2010.

“There’s no need to have different sets of measures that do the same thing … but the Government will want to introduce changes gradually. They don’t want the market to have a knee-jerk reaction.”

Meanwhile, the SSD has been “rather punitive” for home owners looking to sell their properties in circumstances such as death, divorce and job losses. Amid a slowing economy with rising redundancies, this adjustment will be welcome news for people looking to cash out of their properties to tide over a difficult period, Ms Li added.

“The previous four-year holding period is just too long and such home owners have been hit by a double whammy. They have had to sell their properties at a loss and the SSD made it worse,” she explained.

Similarly, ERA’s key executive officer, Eugene Lim, said the lowered stamp duty will “bring relief and a way out” for home owners who have to dispose their properties within three years. But given that the new rule is only applicable to all homes bought on and after March 11, the adjustment is a “forward-looking measure” and is unlikely to have the effect of pushing up property prices in both the primary and secondary market, Mr Lim said.

“This is because there is still abundant supply in the residential property market and the demand-cooling ABSD rates and loan-to-valuation limits remain unchanged. Developers and sellers are expected to remain realistic when pricing their units for sale,” he explained.

PropNex Realty’s CEO Ismail Gafoor agreed, noting that the change is also unlikely to have a significant impact on transaction volumes. He attributed that to the presence of “minimal speculative activities” in the market, with most buyers now taking a “mid- to long-term view” towards property investments.

Likewise for the TDSR, most observers said the latest adjustment emulates previous rounds of “targeted tweaks”, such as the fine-tuning of refinancing rules in 2016 to allow borrowers more flexibility in managing debt obligations.

The latest tweak is similarly a minor change and will only affect a small group of home owners, said Mr Ismail. “We feel that changes to the TDSR framework will help home owners to monetise their properties in their retirement years.”

Still, some observers like R’ST Research’s director, Ong Kah Seng, think the cut in the SSD could have a “positive knee-jerk effect” on new home sales for some property developers.

“We may see developers (being) able to clear stock rapidly at least in these two months. This includes projects that were launched a while ago and saddled with substantial unsold stock, as well as projects with strong selling points.”

Mr Ong Teck Hui, national director of research and consultancy at JLL, echoed that view, noting that the adjustments are sending out a positive signal.

“The policy relaxation is likely to be seen as the beginning of the unwinding of cooling measures and this is expected to lead more buyers back to the market. Buyers would perceive the market as bottoming and be hopeful of a price recovery,” he wrote in a note.

FURTHER LIFT OF COOLING MEASURES IN THE PIPELINE?

Even with Friday’s surprise announcement, most observers noted that a broad-based easing of property market curbs remains unlikely in the near term.

“The statement from the Government shows a holistic review, with the mention of other measures like the ABSD and how they remain relevant,” Ms Li told Channel NewsAsia. “With responses for recent property launches being quite positive, the Government will remain cautious and that’s why they’ve made the small moves today which will have minimal impact on the property market.”

For ERA’s Mr Lim, the odds of further easing remain a “wait-and-see game” after authorities maintained the current ABSD rates and LTV limits. “It’s a calibrated step-by-step approach that the Government is adopting so as not to unravel the stabilisation efforts that have (borne) fruit over the last three years. I do not think further easing will come so soon.”

UOB’s senior economist, Alvin Liew, expects the cooling measures to remain in place unless significant changes, such as a spike in Singapore’s interest rates and unemployment figures, occur.

For the former, Mr Liew expects the three-month Singapore Interbank Offered Rate (SIBOR) to follow US interest rates higher and reach 1.45 per cent by end-2017. But even so, it may not be “high enough for the Government to unwind some of the measures like ABSD or LTV”, he said.

SINGAPORE PROPERTY SHARES GET A BOOST

Nonetheless, shares of property developers, which have already been on an upward trend, got a further boost following the announcement.

Among the biggest gainers in the sector, City Developments (CDL) jumped 5.62 per cent to close at S$10.15. UOL Group rose 4.53 per cent to finish at S$6.92, while CapitaLand gained 3.64 per cent to S$3.70.

An index of 44 Singapore real estate companies rallied to the highest since July 2015, according to Bloomberg.

CDL said in a statement that it welcomes the adjustments, which are “both measured and prudent”. The revised SSD, in particular, “will provide flexibility for property investment and is expected to inject increased activity into the residential property market”, the spokesperson added.

Source : Channel NewsAsia – 10 Mar 2017

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Seller’s stamp duties cut as Government eases some property cooling measures

Home owners will only have to wait three years before selling their properties to avoid paying seller’s stamp duties (SSD), down from four years currently, under several adjustments made to property cooling measures.

With effect from Saturday (Mar 11), those who sell their properties within three years will also pay less in SSD, according to a joint press release by the Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore on Friday. This applies to residential properties purchased on and after Mar 11.

The rate will be cut by four percentage points for each tier – properties sold in the third year will be subject to SSD of 4 per cent, while those sold in the first year will be subject to SSD of 12 per cent, down from 16 per cent currently.

According to the agencies, the decision to revise the SSD was made after the number of property sales within the four-year window fell significantly since the measure was introduced.

The Total Debt Servicing Ratio (TDSR), which was implemented to encourage prudent borrowing by households, will also be eased. Currently, property loans should not exceed a TDSR threshold of 60 per cent.

However, some retirees have given feedback that because of the TDSR, they are unable to borrow against their properties to obtain more cash, the release said.

With the easing in rules, the TDSR will no longer apply to mortgage equity withdrawal loans with loan-to-value (LTV) ratios of 50 per cent and below.

NO CHANGE IN ABSD, LOAN-TO-VALUE LIMITS

The Government has decided to retain the current Additional Buyer’s Stamp Duties (ABSD) rates and LTV limits, the release said.

“Transaction volumes in the private residential property market remain healthy. There is firm demand for private housing, in part because of current low interest rates and continued income growth.

“While the growth in outstanding housing loans has moderated, it is prudent for households to further build up their financial buffers to protect against future interest rate increases or any losses in income. The Government is therefore retaining the current ABSD rates and loan-to-value limits,” it said.

The “calibrated adjustments” made to the SSD and TDSR are part of the Government’s review of conditions in the residential property market, the release said, adding that the current property measures are necessary to “promote a sustainable residential property market and financial prudence among households”.

Source : Channel NewsAsia – 10 Mar 2017

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More co-working spaces sprouting up in CBD as demand rises

Property developers are leasing more space to co-working space operators, even as demand rises from businesses in the new economy looking for flexible work areas.

Currently, there are 53 co-working space locations in Singapore, almost one-third of which are in the Central Business District (CBD) – up from about one-fifth of the overall 40 co-working offices a year ago, according to real estate company Cushman and Wakefield.

This number is set to grow, with relative newcomers Spacemob jostling into the space with more established property players such as Frasers Centrepoint.

Industry watchers cited a growing interest among landlords to lease to co-working space operators, despite initial concerns that new players will not stay through their full tenure, which is aiding this growth.

Cushman and Wakefield’s Singapore research director Christine Li said “there is not a lot of track record” among these operators, and “the last thing landlords want is to get a tenant in, and after a few months, pre-terminate the lease”.

“Particularly when times were good and there was no shortage of tenants knocking on their doors, they did not have to go out to attract these co-working operators,” she said.

CHANGING VIEW ON CO-WORKING SPACES

However, as the property market has “softened”, she has seen a healthy take-up of such co-working spaces around the CBD.

In 2016 and 2017, Ms Li estimated that an average of 2 million sq ft of office space is expected to be completed each year in the CBD, double the annual average of 1 million sq ft over the past 10 years. And having such operators will help soak up the market supply, she added.

Industry watchers also note the new concept can help to optimise yield, while providing startups and freelancers access to prime locations and regional networks.

Frasers Centrepoint’s Singapore commercial head Low Chee Wah said that having a co-working space can give tenants more flexibility, particularly amid the changing nature of work.

“As work becomes more complex, the need to have discussions, brainstorm, and the need to work together increases,” Mr Low explained. “Because of that, a lot of companies are building more flexible work spaces – for example, break out areas within their office space.”

Having a serviced office provider or co-working space within the building, he added, provides tenants who are working with startups the space to “encourage their partners to occupy that area and work closer together on projects”.

TAPPING ON GROWING DEMAND

One operator that is hoping to tap on this demand is Spacemob, which recently signed a partnership with property developer Ascendas-Singbridge to open a new 14,000 sq ft office.

Located at Ascent in Singapore Science Park 1, the space is said to provide more than 100 companies with close proximity to key research and tertiary institutions, research and development, high-tech innovation and startup communities for as little as S$350 a month.

The new co-working space will open by end-March, adding on to Spacemob’s first office at Claymore Hill in Orchard.

Spacemob founder and CEO Turochas Fuad estimates that startups can save up to 40 per cent per employee by working out of a co-working office, “instead of spending their funding money on capital expenditure of building their own space”.

The Skype alum said he aims to set up 30 offices across Asia, with new co-working spaces slated to open in Jakarta, Thailand, Vietnam and Japan this year.

“It’s a platform that allows SMEs, MNCs, and freelancers to discover one another,” Mr Fuad said.

Frasers Centrepoint, too, has signed its first lease for its upcoming office building, Frasers Tower, with serviced office provider The Executive Centre. The new tenant will occupy approximately 20,000 sq ft at the Cecil Street building, which is expected to be completed in 2018.

The Executive Centre provides infrastructure to run a business including workstations, meeting rooms, and IT and telecommunications systems, but also allows for collaboration through shared and social workplaces, broad networks and interactive events.

The company’s regional director for Australia, Indonesia and Singapore Yvonne Lim said they chose Frasers Tower as the building will provide four common areas where executives can work from, and Wi-Fi will also be available throughout the building.

“The space is clearly designed with the users in mind and we see the potential of customising our space to meet our clients’ demand for exclusive corporate and recreational spaces,” said Ms Lim.

Homegrown space provider JustGroup had earlier shared that it was planning to open two shared offices with a combined floor area of more than 100,000 sq ft in the CBD come April, while property developer CapitaLand is also looking to provide more co-working spaces in its real estate portfolio.

Source : Channel NewsAsia – 2 Mar 2017

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Refurbishment of Chinatown Street Market to start in May

The Chinatown Street Market will finally get its makeover from May 15, announced the Chinatown Business Association on Friday (Mar 10). Work is expected to take more than a year and finish by the end of 2018.

The refurbishment work will take place in phases to minimise disruption, especially during Chinese New Year and the Mid-Autumn Festival, to ensure that most of the market remains open, said the association in a media release.

Launched in 2004, Chinatown Street Market was designed to offer visitors a more authentic experience by re-creating the street hawking scene of the past. However, some stall structures have worn out over time.

“This effort is aimed at enhancing Chinatown’s visitor experience and improving fire safety,” said the association, adding that shophouses will incorporate fire safety features such as water sprinklers and fire-rated shutters, which will be activated automatically when smoke is detected.

Standalone street stalls will have improved roof insulation to keep out the heat, as well as extended shelters and rain curtains.

All stalls at the street market, along Pagoda, Sago, Smith and Trengganu Streets, will be refurbished, said the association, adding that come end-2018, the Chinatown Street Market will be home to 140 stalls selling a mix of merchandise.

The Chinatown Business Association said it has engaged stall tenants, shophouse landlords and other stakeholders to help them understand key details of the project, seek feedback on new stall designs, address their concerns and make arrangements as necessary.

“Tenants have also been given a two months’ notice period and informed about the expected refurbishment timeline. The association will also continue to engage all stall tenants and shophouse landlords during the refurbishment period,” the release said.

During the renovation works, signs to various attractions and businesses will be put up around the market’s temporary hoarding. Fans and lights will also be installed along the five foot-way of affected shophouses.

Source : Channel NewsAsia – 10 Mar 2017

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