Prevailing market conditions may influence cost of new HDB flats: Lawrence Wong

Prevailing market conditions may affect prices of new HDB units offered under the Sale of Balance Flats (SBF) exercises, said National Development Minister Lawrence Wong in Parliament on Tuesday (Feb 7).

He was responding to a question by Workers’ Party chief Low Thia Khiang on the pricing mechanism of units under Build-To-Order (BTO) and SBF exercises and why prices could differ for the same flat in different exercises.

Mr Wong explained that prices of balance flats may be slightly higher as they are closer to completion. The prices may also be updated if there is a change in prevailing market conditions.

“For example, when the price of comparable resale flats in the vicinity have softened since the time of the BTO launch, the prices of balance flats may be lower than their original BTO prices,” said Mr Wong.

This has been HDB’s practice all along, the minister stressed. “I think that’s fair to all home buyers because the transaction is done at the point of sale,” he said. “And so if the market has come down, then we charge it at a slightly lower price. And this is not a new practice. We’ve been doing it all this while.”

SBF launches give buyers the chance to apply for balance flats from earlier BTO exercises.

Mr Wong also revealed that between 2012 and 2016, two in five applicants who had been selected to choose a new HDB flat did not proceed to do so.

The top three reasons were that their preferred units had been taken up, they wanted to apply for flats in other sales exercises, or they had changed their minds and would like to consider other housing options, he said.

Mr Wong was responding to a question from Member of Parliament Gan Thiam Poh, who wanted to know what the rate of rejection was by applicants invited to select a flat under the BTO and SBF exercises.

Mr Wong added that HDB shortlists applicants up to three times the flat supply. The average time taken to complete the selection of flats in a BTO exercise is around six months, while it takes about 10 months in an SBF exercise.

Source : Channel NewsAsia – 6 Feb 2017

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Short-term rentals of private property illegal, but Govt mulling alternatives

The use of private property for accommodation of less than six months was legislated as illegal in Singapore on Monday (Feb 6), making it unlawful for owners to rent out their homes via online homestay networks such as Airbnb and Roomorama.

Such short-term rentals of private property were already prohibited under guidelines by the Urban Redevelopment Authority (URA) and those who flout the rules face up S$200,000 fine or jail for up to a year if a private residence is rented or sublet for less than six months. The same penalties will apply going forward.

“Private residential properties should not be used for other purposes without planning approval, as there is a need to safeguard the living environment of residents in the neighbourhood,” Minister for National Development Lawrence Wong told Parliament.

He said URA had consulted Neighbourhood Committees and managing agents of private residential developments on the matter back in 2015, and found strong endorsement of the need to preserve the privacy and sanctity valued by the vast majority of homeowners.

“Over the past year, URA has already seen a 60 per cent rise in complaints from home-owners about breaches of this rule in their residential properties. The complaints related to public nuisance or even safety concerns for their families,” revealed Mr Wong. “So we must enforce the current rules, and make sure the issue does not worsen further.”

He noted that advertising on home-sharing or rental websites in itself was not an offence nor regulated, but URA will work with managing bodies of private properties listed online to notify residents of the rules.

“If the short-term rentals persist and cause disamenities for other homeowners, then URA will step in,” said Mr Wong.

He also announced that URA will now have enhanced powers to investigate suspected infringements. If officers believe a person might have knowledge of a violation, they can ask the person to attend interviews and question them.

Apart from verbally examining witnesses and recording statements, URA officers will also be able to require the production of information or documents relevant to the violation, and to take video evidence on site.

Where necessary, officers will be able to effect forced entry to carry out their investigation.

POTENTIAL TO REDUCE TIMEFRAME, CREATE NEW CLASS OF RESIDENCES

The minister also said, however, that the six-month period was an adjustable parameter. “URA had received feedback from a number of respondents … that there was scope to reduce the minimum period,” said Mr Wong. “So URA is studying this carefully, and will consider a possible reduction in the minimum rental time-frame.”

“But whatever adjustments we may make to this minimum period, it is clear that we will not accommodate residential homes that are put up for daily rental,” he said. “Such premises which are rented out daily ought to be regulated more like hotels rather than residential homes and should be subject to relevant license and conditions to ensure proper standards.”

“Many cities in Asia and around the world are also regulating short-term home-sharing platforms in a similar way to hotels.”

Mr Wong said URA was thus studying the option of creating a new use category for private residences whose owners wish to engage in short-term rentals.

He explained: “Such properties would then be approved for that specific purpose, like service apartments or hotels today. New residential sites can be sold with such an approved use, allowing flexibility for short-term rentals.

“For existing residential buildings, they would then require planning permission for change of use, and this would be subject to a set of guidelines which URA is looking into.”

Under Housing and Development Board rules, the minimum subletting period for a flat is six months as well.

Source : Channel NewsAsia – 6 Feb 2017

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Red Dot Traffic Building to be restored to original off-white colour

The Red Dot Traffic Building, known for its eye-catching red hue, will be restored to its original off-white colour as part of a S$25 million restoration plan, the Ministry of Law announced on Friday (Feb 3).

Built in 1928, the iconic building at 28 Maxwell Street used to house the former Singapore Traffic Police Headquarters, and was given conservation status by the Urban Redevelopment Authority in 2007. It is now home to the Red Dot Design Museum and other tenants.

The building will be taken over by the Law Ministry in May as part of the expansion of the adjacent Maxwell Chambers. Announced in January, the expansion is aimed at meeting growing demand and bolstering Singapore’s position as an international dispute resolution centre.

The expansion will add a total of 120,000 sqft of space to Maxwell Chambers, tripling its current size. The new building will house about 50 offices for international dispute resolution institutions, arbitration chambers, law firms and ancillary legal services over four floors.

The refurbishment of the building will focus on restoring its heritage, the Law Ministry said.

Architectural elements such as timbre louver windows and cast-iron rainwater downpipes which had been removed or fallen into disrepair will be restored. The five courtyards inside the building will be also be restored to their original open-to-sky design and opened for public use.

Also in the plans are a new link-bridge to connect the building to Maxwell Chambers’ current premises, a new annex block to add 3,230 sqft of office space and a new corridor block.

A tender for construction will be called in February. Restoration works will start in May and will be completed in 2019.

Source : Channel NewsAsia – 3 Feb 2017

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HDB launches 4,056 flats for sale in February BTO exercise

THE Housing & Development Board (HDB) on Tuesday launched 4,056 flats for sale under the February 2017 Build-To-Order (BTO) exercise.

The flats being offered in the first tranche for 2017 span across six projects in the non-mature town of Punggol, and the mature towns of Clementi and Tampines.They range from two-room Flexi to three-generation (3Gen) flats.

A project in Woodlands, originally planned for launch this month, has been deferred, the HDB said on Tuesday.

Due to the site conditions, a further review is needed to better integrate it with surrounding developments. The project will be launched after the review is completed.

This February exercise also marks the first time that families emplaced on the Fresh Start Housing Scheme (Fresh Start) can apply for a flat, since the scheme was launched on Dec 1, 2016, to help second-timer families with young children staying in a public rental flat, own a flat again.

Eligible families will be able to buy a two-room Flexi flat, with lease options ranging from 45 to 65 years (offered in five-year increments). The lease must last the applicants and their spouse (if applicable) until at least the age of 95. The flat price, grant amount and resale levy payable will be adjusted based on the chosen lease of the flat.

Families emplaced on Fresh Start will enjoy priority allocation of up to 10 per cent of two-room Flexi units, under the Tenants’ Priority Scheme.

HDB plans to launch a total of 17,000 flats this year. In May, it will offer another 4,600 flats in Bidadari, Geylang, Woodlands and Yishun, when it will also release 3,000 sale-of-balance flats.

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The Prospex back on the market, with lower price tag

THE Prospex, a nine-storey retail and office building next to Bugis+, is back on the market, this time with an indicative guide price “in excess of S$70 million”.

This appears to be lower than the S$80 million asking price when the building was previously put up for sale on an en bloc basis through an expression of interest (EOI) exercise that closed in October 2015.

The big difference this time around is that the building has now been substantially let; no tenants had been signed up when the previous sale attempt was launched.

A price of S$70 million translates to S$2,081 per square foot based on the total net lettable area (NLA) of 33,631 square feet. The Prospex is on a site with a 99-year leasehold tenure starting Dec 1, 1974; this translates to a balance term of about 57 years.

Located at the busy corner of Middle Road and Victoria Street and just a stone’s throw from Bugis MRT Station, The Prospex consists of a two-level retail podium (with 4,040 sq ft NLA) and seven levels of offices above (29,591 sq ft).

The building is about 85 per cent leased. Only the top floor and some units on the seventh floor are available for lease.

“On a fully leased and stabilised basis, a price of S$70 million would work out to about 3.5 per cent net yield,” says Anthony Barr, regional director of capital markets at JLL, which is conducting an EOI exercise for The Prospex, closing on March 21. The earlier EOI was conducted by another property agency.

Prospex is being offered by Hong Kong and Singapore-based property fund manager Pamfleet, which bought the former Bright Chambers on the site at S$45 million in 2013 and made major additions and alteration works to the building to achieve its current modern look. The Prospex received a Temporary Occupation Permit in the first quarter of 2016.

Tenants in the building include the second Singapore branch of Shanghai-based Mellower Coffee (which occupies the entire two-level retail podium); 701 Search, a leading digital media company backed by Singapore Press Holdings; and Zrii, an international nutrition company based in Draper, Utah.

Momentum in the Singapore property investment sales market is starting to pick up with the recent transactions at GSH Plaza, Prudential Tower and TripleOne Somerset.

Mr Barr anticipates strong interest for The Prospex from the likes of boutique property funds, family offices and high-net-worth individuals looking to invest in a newly refurbished income-producing asset.

“The property will also attract owner occupiers who are looking to purchase for their corporate headquarters with potential for naming and signage rights. The property’s income should grow organically with recovery in office sector rents over the next few years and by adding signage/advertising to the prominent façade of the building.”

Buyers may choose to purchase shares in the special purpose vehicle that holds The Prospex or do an outright asset purchase.

Acquiring 100 per cent control of this asset gives the future owner flexibility to later sell the entire property or do individual strata unit sales. Strata subdivision of the building has been approved.

“There is immense potential value to be unlocked from doing strata sales especially for the prime ground-floor retail units,” Mr Barr said.

As the property sits on land fully zoned for commercial use, foreigners may buy without regulatory approval . There is also no additional buyer’s stamp duty and seller’s stamp duty for such property, he added.

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Prime region leads private-home resale price rise in January: SRX Property

THE first month of 2017 saw a continued momentum in the high-end residential property segment, with resale prices in the Core Central Region (CCR) making a 1.9 per cent rise from a month ago and 2.7 per cent increase from a year ago, based on SRX Property estimates.

This helped to lift SRX Property’s overall resale index for the private residential market by 1.1 per cent month on month in January and 0.3 per cent from a year ago.

In the city-fringe or Rest of Central Region (RCR) and suburban areas or Outside Central Region (OCR), resale prices also rose by 1.5 per cent and 0.4 per cent respectively.

But compared to a year ago, resale prices in the RCR and OCR recorded a fall of 0.1 per cent and 1.1 per cent respectively last month.

SRX Property revised the price change in December 2016 from a 0.4 per cent rise to 0.5 per cent increase.
SEE ALSO: Prime region leads private-home resale price rise

Resale volumes in January marked a 9.1 per cent increase from December and 29.9 per cent from a year ago, based on resale data compiled by SRX Property.

An estimated 526 non-landed resale private units were sold last month. But resale volumes were still 74.3 per cent below the peak of 2,050 units in April 2010, SRX Property said on Tuesday.

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Redas calls for review of property tax, transparency in valuation

THE Real Estate Developers’ Association of Singapore (Redas) is urging the government to review property tax for vacant private land, and exempt property tax for land under or slated for development or buildings undergoing renovations.

Among other key suggestions, it is asking the government to offer more transparency in valuation when it comes to computing development charges to top up lease tenures as well as lower certain regulatory fees to reduce business costs.

Redas president Augustine Tan briefly shared the Budget wish-list at the Redas Spring Festival lunch on Friday.

The wish-list was submitted by the association to the Ministry of Finance (MOF) in late December. What was absent from the wish-list was any request to review property cooling measures.

Redas, which did not submit a wish-list for Budget last year, is concerned how negative sentiments can weigh heavily on the property market should there be a confluence of recessionary factors and destabilising events, Mr Tan said.

“This will in turn adversely affect Singapore’s economy,” he added, citing the worrisome rise in unemployment to a six-year high of 2.1 per cent, pressures on prices and rents across property segments plagued by persistent oversupply situation, rising vacancy rates and weak demand.

Mr Tan believes it is “still too soon to conclude that a market recovery is in sight” despite the renewed interest seen in recent residential property launches.

“The 2017 outlook remains murky with uncertainties surrounding global geopolitics and macroeconomic developments. With the weakened labour market, slower growth in employment and earnings, declining population growth, coupled with the prospect of rising interest rates, the current slowdown is expected to continue into 2017.”

With slow economic growth and property cooling measures still in place, dampened demand and rising operating costs remain key concerns for the sector, Mr Tan added.

Urging a review of the property tax on vacant land, Redas argued that an equitable system would be to have a tax that reflects the lease term.

The Property Tax Act states that the annual value of vacant land shall be assessed at 5 per cent of its capital value. This is based on the assumption that the land has a freehold title. But the annual value of a freehold site tends to be 10 per cent higher than that of a 99-year leasehold, Redas said in its paper to MOF.

“The disparity widens for say a 30-year leasehold industrial property or a petrol station or a piece of transitional office land on a 15-year lease, where they are assessed on the basis of a freehold title,” it explained. “Operators of such properties will find the current assessment a cost burden to their businesses.”

Redas also pointed out that this 5 per cent tax is also considered high given today’s high land value vis-a-vis the relatively lower rate of 2-3 per cent annual yield that one would expect from land investments.

There is a lack of incentives for developers to hoard land, given the various statutory provisions in place to discourage such practice. “Qualifying certificates (QC) and the attendant bankers’ guarantee requirements are measures to discourage developers from holding back development plans,” Redas said.

On that note, a fair assessment will be 2.5 per cent or a progressive tax rate of 2.5 to 5 per cent based on considerations such as annual yield or holding period, Redas added.

The association is also of the view that it is equitable to grant property tax exemption for land under, or slated for, development. In such situation, no income is received yet by the developer. A tax exemption will help reduce development cost and business risks for developers significantly.

Redas also urged the government to grant subsidies for additions and alterations (A&A) in the form of an exemption or concessionary rate to buildings undergoing A&A. “A policy change would encourage owners to retrofit and upgrade their buildings as well as adopt innovative solutions. This is in line with the government’s effort to rejuvenate the city and ensure a more sustainable built environment,” it said.

Redas is also hoping that a tax concession be extended to vacant properties, amid current high vacancy rates and risk of prolonged vacant periods as property owners are having a harder time finding tenants.

Vacancy of private residential units at end-2016 was 8.4 per cent, close to the peak of 8.6 per cent in 2005, when there was an oversupply of private housing stock.

Giving his regular update on the hefty fees that developers incur for holding unsold residential units beyond stipulated periods, Mr Tan estimated that about 730 units remain unsold in developments affected by extension charges under the QC conditions. Another 3,500 units in nearly 40 developments are impacted by the ABSD remission claw-back in 2017 and 2018.

On the key areas drawn up by the Committee on the Future Economy, Mr Tan said that Redas looks forward to participating and weighing in on innovating, developing and adopting digital capabilities for the real estate industry, elevating skills and raising the bar of competency within the industry, and playing a part in developing Singapore into a connected and sustainable city.

“The recommendations on urban solutions provide a wide scope for Redas members to respond with our collective action plans. Specifically, we will garner feedback from our members on how we can partner the public sector in the master developer scheme to develop, place-make and manage future precincts,” Mr Tan added.

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Hatten Land in non-binding pacts with founders to buy plots in Malaysia

HATTEN Land Limited said on Friday that it has entered into a non-binding memorandum of understanding (MOU) with the founding Tan brothers to acquire four land parcels and a company that owns development rights in Malaysia.

Those targeted four plots of leasehold land in Melaka range from 2.05 acres to 66 acres (0.83 hectare to 26.7 hectares), of which two have obtained development order approval.

The target company is Admiral Merger Sdn Bhd, which owns the rights to develop 25.55 acres (10.34 hectares) of freehold land in Cyberjaya in Selangor. The land is slated to be developed across three phases into a mixed development comprising retail, offices, residential and hospitality units and a hospital.

“The proposed acquisitions would be value accretive and in the best interest of all shareholders of the company in driving the next phase of growth of the group,” Hatten Land said in an announcement.

Following the signing of the MOU, the company will be engaging the vendors in discussions and will also be conducting due diligence on the targets to finalise the definitive agreements.

Also giving an update on its existing business, Hatten Land said unbilled revenue from July 1, 2016, was RM800 million (S$256 million) from the sales of units in Hatten City Phase 1 and 2, Vedro by the River and Harbour City.

Hatten Land was listed on the Catalist this year through a reverse takeover deal with Singapore-listed VGO Corporation and a transfer from the mainboard.

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Developers’ association calls for review on property taxes in Budget

THE Real Estate Developers’ Association of Singapore (Redas) is urging the government to review property tax, improve transparency in the property valuation process, and reduce business costs and regulatory fees.

It is also asking for special training grants to enhance maintenance skills and technical expertise among building maintenance engineers and technicians.

The association’s president, Augustine Tan, briefly shared the Budget wish-list at the Redas Spring Festival lunch on Friday.

The wish-list was submitted by Redas to the Ministry of Finance in late December. What was ostensibly absent from the wish-list was any request to review property cooling measures.

Rather, Redas has chosen to zero in on property tax issues, proposing a review on property tax assessment for vacant land, an exemption of property tax on land under development and buildings undergoing renovations, and a more transparent valuation process by the chief valuer.

Redas, which did not submit a wish-list for Budget last year, is concerned how negative sentiments can weigh heavily on the property market should there be a confluence of recessionary factors and destabilising events, Mr Tan said.

“This will in turn adversely affect Singapore’s economy,” he added, citing the worrisome rise in unemployment, pressures on prices and rents across property segments, and a high vacancy of 8.4 per cent for private residential units at end-2016, which was close to the peak of 8.6 per cent in 2005 when there was an over-supply of private housing stock.

Mr Tan believes it is “still too soon to conclude that a market recovery is in sight” despite the renewed interest seen in recent property launches.

“The 2017 outlook remains murky with uncertainties surrounding global geopolitics and macroeconomic developments. With the weakened labour market, slower growth in employment and earnings, declining population growth, coupled with the prospect of rising interest rates, the current slowdown is expected to continue into 2017,” he said.

On the key areas drawn up by the Committee on the Future Economy, Mr Tan said Redas looks forward to participating and weighing in on innovating, developing and adopting digital capabilities for the real estate industry, elevating skills and raising the bar of competency within the industry, and playing a part in developing Singapore into a connected and sustainable city.

“The recommendations on urban solutions provide a wide scope for Redas members to respond with our collective action plans. Specifically, we will garner feedback from our members on how we can partner the public sector in the master developer scheme to develop, place-make and manage future precincts,” Mr Tan said.

“We will support the government’s efforts to establish a formal place management framework to rejuvenate and realise more vibrant districts within the city.”

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HDB resale volume, prices down in January: SRX

HDB resale prices fell 0.3 per cent in January compared to December, while transactions fell 13.9 per cent to about 1,174 flats resold, according to data from SRX Property released on Thursday.

Consultants called the drop a blip and believe that prices of HDB resale flats are still continuing to stabilise. As for the double-digit drop in transaction volume, it could be due to the large supply of build-to-order (BTO) flats released for application in the new-sale market in November, they said.

R’ST Research director Ong Kah Seng said: “This might have drawn some interest away from the resale market in January because some buyers who participated in November’s balloting and were successfully allocated an appointment could have gone to do their selection in January.”

In January, HDB resale prices in mature estates fell by 0.7 per cent, while those in non-mature estates remained the same.

Mr Ong noted that HDB’s bumper crop had also included new flats in Bidadari and Kallang, which could have drawn away some buyers looking for resale flats in mature estates. This could have also affected prices of resale flats in mature estates in January.

Comparing flat sizes, resale prices were dragged down by HDB three- and four-room flats, which saw unit resale prices fall 0.6 per cent and 0.5 per cent, respectively. This was partially offset by resale prices of five-room and executive flats which rose 0.4 per cent and 0.9 per cent, respectively.

According to the SRX Property Price Index for HDB Resale, prices have decreased by 0.1 per cent from Jan 2016, and declined 11.2 per cent since the peak in April 2013.

On the transactions front, year-on-year, resale volume decreased by 8.9 per cent compared to 1,289 units resold in Jan 2016. Resale volume was down by 67.8 per cent from its peak of 3,649 units in May 2010.

Mr Ong expects resale prices to stay flat in 2017 should the property cooling measures remain in place.

As for mature estate flats, which tend to enjoy more resilient pricing, their prices could rise by up to 0.2 per cent in 2017, and prices in non-mature estates could fall by up to 0.15 per cent instead.

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