Strong response from buyers for 2 new condos in eastern suburbs

Private home buyers remain unfazed despite the global economic downturn and the government’s recent proposal to tax speculators who sell more than one property within a four-year period.

Freehold condominium “The Gale” in Loyang has certainly caused quite a storm.

Prices average S$700 per square foot and so far, half its 330 units have been snapped up.

It is an encouraging sign for developer Hong Leong Group, which attributes the response to pent-up demand for freehold properties in the area.

Demand is just as strong at the higher-priced, 99-year leasehold “Silversea” at Marine Parade.

Prices for the 380-unit condo start at S$1,300 per square foot and so far, 40 per cent of its 80 preview units have been sold.

However, compared to the property frenzy of 2007, developers say that buyers are displaying more caution this time.

Source : Channel NewsAsia – 11 Jul 2009

Is there still trust in Reits?

THE Singapore real estate investment trust (S-Reit) sector has grown remarkably since the first Reit – CapitaMall Trust – was listed in July 2002. Between 2006 and 2008 alone, more than 13 Reits were listed, compared with only seven between 2002 and 2005.

Choices of Reits have also expanded. In 2005, investors could only choose between commercial (retail, office or mixed), industrial and logistics Reits. Today, they can find hospitality, healthcare and residential Reits. There are also Reits that own foreign assets.

S-Reit growth in 2006 was mainly driven by increasing speculative interest in the property sector after commercial rents started to rise strongly. The office rental index was up 30.3 per cent in 2006, compared with 12.7 per cent the year before. This was a stark contrast to a 5.6 per cent increase in the shop rental index in 2006. The median monthly rent for central office space at end-2006 was $6.24 per square foot (psf), compared with $4.24 psf in 2005.

Investors’ hunger for Reits grew dramatically. The market capitalisation of the Reit sector at the start of 2005 was $9.4 billion – but it hit $16.9 billion in June 2006. Furthermore, only one new Reit – Allco Reit, now known as Fraser Commercial Trust – was listed in the first half of 2006. The increased demand for Reits pushed their unit prices up and dividend yield down. Average dividend yield in January 2005 was around 6.5 per cent, compared with 5.6 per cent in June 2006. This together, with higher Sibor rates, squeezed dividend yield premiums – the difference between dividend yield and three-month Sibor rates – from 5.2 per cent in January 2005 to a low 1.9 per cent in June 2006.

Although office prices rose 17 per cent on the back of higher rents, the increase was more benign than the 30 per cent rise in rents. This resulted in an increase in median annualised rental yields of office properties from 8.1 per cent in 2005 to 9 per cent in 2006. Rental yields of shop space and industrial properties, on the other hand, remained at 7.9 per cent and 5.2 per cent respectively.

The combination of a lower cost of equities and higher rental yields spawned many new Reits between June 2006 and December 2007. Seven new Reits were listed in second half 2006 and another five in 2007. Reits’ assets under management (AUM) grew from $13.4 billion in 2005 to $23.2 billion in 2006. In 2008, AUM were $42.5 billion.

Given the increased competition, Reits started to enhance their yields with debt to attract investor interest. The average debt to total asset ratio of the Reit sector rose from 26.3 per cent in January 2006 to 30.7 per cent in June 2007. A few Reits even pushed this ratio above 50 per cent in June 2007.

Reit investors’ high hopes of continued price increases started to shake when the first sign of financial turmoil presented itself in July 2007 and Reit prices started to fall. The situation did not improve into 2008. Between June 2007 and December 2008, the S-Reit index fell more than 66 per cent, as opposed to 50 per cent drop in the Straits Times Index. Although Reit prices have recovered 16.8 per cent for the year, they are still 60.3 per cent lower than in June 2007.

High debt ratios employed by Reits became a concern as Reits started to signal that they would face challenges refinancing their loans – and even paying dividends. Loan-to-value ratios increased in 2008 as Reits revalued their assets downwards – adding more concerns over their survival. To improve the strength of their balance sheets, some Reits issued rights in 2008 and 2009.

There are, however, some positive developments from this debacle. First, dividend yield premiums have increased since July 2007. With lower prices, S-Reits now offer dividend yields of around 12.4 per cent, compared with around 7.3 per cent a year ago and 4 per cent in June 2007. Sibor rates have also fallen, from 2.7 per cent in June 2007, to the current 0.7 per cent. Dividend yield premium has thus improved to 11.9 per cent, from just 1.4 per cent two years ago.

Prices of Reits are also at more affordable levels now. For example, the prices of CapitaMall Trust, A-Reit and Mapletree Logistics Trust were at $1.40, $1.59 and $0.56 respectively as at June 30 this year – around half their prices in June 2007.

Most importantly, the good and bad Reits are now easier to differentiate. The lower ‘tide’ has exposed Reits that have bad assets and have been poorly managed – making investment decisions easier than two years ago.

Unfortunately, uncertainty still lurks in the sector. Although there are now signs that the economy is bottoming, economic recovery will probably be gradual at best. Furthermore, the Singapore economy is dependent on foreign demand, and therefore recovery will lag the developed nations.

Vacancy rates of offices and shops in March 2009 increased to 10.0 per cent and 6.6 per cent respectively from 7.7 per cent and 6.4 per cent a year earlier. Only industrial properties bucked the trend, with the vacancy rate falling from 7.6 per cent to 7 per cent.

Between March 2008 and 2009, rents for office space and industrial property were down 12.9 per cent and 6.5 per cent respectively, while shop space was up a marginal 0.5 per cent.

Even though developers have been holding back new projects, the chances of significantly higher rental and lower vacancy rates this year is not high. Reits may, therefore, have to reduce their dividends.

Reits do look attractive in the long term at current prices, but investors must choose carefully and diversify their investments accordingly. Here are a few important factors to consider:

A Reit’s ability to raise funds, especially in times of turmoil, will determine its ability to thrive and survive. This is an important factor. In good times, most Reits will enhance their yields through higher leverage, but only well-managed Reits will be able reduce this leverage in challenging times. Without this ability, badly managed Reits will find it difficult to refinance or raise sufficient equity to repay their loans, putting them in danger of liquidation.

The quality of assets is another important factor, and Reits that own properties beyond just Singapore would be a plus. Too much emphasis has been put on dividends and too little on assets. Investors must bear in mind that they are buying the underlying assets when investing in Reits – the dividends are the result of the ownership and management of the assets.

However, good assets can produce poor returns if poorly managed. The quality of the managers is therefore another important factor. Good managers will continuously enhance the yield of the assets and use an appropriate debt-equity mix at all times. A sudden fall in rental revenue, rental collection issues and below average rental yields are some signs of poor management. Such Reits should be avoided.

Last but not least, investors must check if a counter is a Reit, such as CapitaMall Trust, or a business trust, such as IndiaBulls Property Investment Trust. Business trusts and Reits are created to allow unit holders to receive dividend payments from operating cash flow instead of accounting profit. However, only Reits are required to pay 90 per cent of distributable income to unit holders. There is no such requirement for business trusts. Investors should therefore look closely at what they are picking, to ensure the counter they choose is in line with their investment intention.

The writer is vice-president, SIAS Research

Source : Business Times – 11 Jul 2009

Developers market London homes here

DEVELOPERS are marketing London homes in Singapore. And by most accounts, they are not finding it difficult to find buyers.

A few weeks ago, Colliers launched a selected number of units in two London residential properties here, and all were snapped up. There were 23 Union Point units and 23 Dalston Square units, and they were bought at average prices of £250,000 (S$592,794) and £210,000 respectively.

And in May this year, Jones Lang Lasalle (JLL) launched Napier at West 3, its first development in London this year. Singapore was picked as the first stop for the launch of 86 units, and saw 18 sales.

To capitalise on the interest in London properties, more London residential properties will be launched in Singapore this weekend.

Savills will start marketing two projects in Singapore – Chevalier House in Knightsbridge, and Highbury Square in north London. Prices at Chevalier House start from £1.15 million for a one-bedroom apartment and go up to £5.75 million for a three-bedroom penthouse overlooking Harrods and Harvey Nichols. Homes at Highbury Square are relatively cheaper – one-bedroom apartments start from £275,000 while two-bedroom apartments will start from £375,000.

Colliers will also market two London developments this weekend. It will release 15 units in Draper’s Yard, where homes cost an average of £235,000 each. In addition, it will launch 32 units in 1010 Rochester, where prices start from £800,000 for a two-bedroom apartment.

Berkeley Homes (Urban Living) is also giving Singaporean purchasers the first worldwide opportunity to reserve a property at Ultima – the final phase of the popular Chelsea Bridge Wharf development – this weekend. The project will be marketed at a property showcase by agents King Sturge and DST International. Prices start from £345,000.

And JLL has also said that it has more London launches in the pipeline.

Marketing agents say that Singapore is a good location for international property launches because of the large pool of expatriates here and a well-travelled population.

Sellers report that both Singaporeans and foreigners buy their properties. At Union Point, for example, marketing agent Colliers said that half of the buyers were Malaysians who travelled to Singapore, while the other 50 per cent were made up of Singaporeans and expats based here. At Dalston Square, on the other hand, most of the buyers were Singaporeans investing in UK property for the first time.

Buyers at exhibitions have mostly been younger professionals buying UK property for the first time, said Ed Lewis, head of London new homes at Savills. But outside exhibition settings, the buyers appear more discerning and are targeting higher quality products in the prime areas.

‘Many buyers are motivated by the weakness in the London market, which is now improving. The weaker currency is also drawing buyers – particularly the trophy buyers,’ he said. ‘Others are buying with children in mind and for attractive yields.’

And Singapore is not alone – London properties are selling well in Hong Kong and Kuala Lumpur as well, analysts said. Mr Lewis said that it was difficult to provide actual numbers but his firm estimates that between the successful exhibitions and individual sales, there have been about 250 deals since the Easter weekend in mid-April. Most of these deals – some 60 per cent – were done in Hong Kong. Singapore accounted for another 35 per cent, while the remaining homes were sold in Kuala Lumpur.

Mr Lewis is currently on a tour of South-east Asia, advising investors on where they should – or shouldn’t – spend their money.

‘There have been huge price corrections in the London market which can give the impression that everything is a bargain,’ he said. ‘This is not always the case. While there are some bargains out there, there are also opportunities for wasting money, and the canny investor must differentiate between the two. Just because a property is cheap now, it does not mean it will be expensive in 25 years’ time. Chances are, in many non-established locations, it will still be cheap in 25 years’ time.’

Source : Business Times – 11 Jul 2009

Homes at your service

While the hotel industry has been hit by the economic downturn, serviced apartments – which come with their own kitchens, suiting professionals on short contracts who want a homely environment – are on a roll.

Two developments, totalling 204 rooms, have opened this year and two more with 675 rooms altogether will open within the next three years, all outside the city belt.

The latest to open is the 50-unit Fraser Place Fusionopolis located in the heart of Singapore’s thriving research and development scene at JTC Corporation’s Fusionopolis@one-north research hub at Buona Vista.

The serviced apartments, which are on levels 17 to 19 of the park’s ‘Symbosis’ Tower, opened last Wednesday and rates start from $6,300 a month.

The other serviced apartment development to open this year, in January, was the 154-unit Citadines Singapore Mount Sophia off Selegie Road, bringing to about 30 the number of such developments in Singapore.

Rates at Citadines start from $2,660 a week for a studio apartment.

Like Fraser Place Fusionopolis, the two upcoming developments see being located at business parks ideal for securing residents who want to live near their workplace.

The 370-room Park Avenue@Rochester is set to open in 2011 at one-north while the 305-room Park Avenue@Changi will open in 2012 at UE BizHub at Changi Business Park. UE BizHub has retail and business space, and a convention centre.

Serviced apartments are a popular choice with expatriates. Bigger than hotel rooms, they provide a home away from home, being fully furnished including a kitchen and coming with housekeeping services.

They differ from hotels in that the minimum stay is seven nights.

The new Fraser Place Fusionopolis certainly seems to have hit the right note with its target market.

Although it opened just several days ago, its general manager, Ms Tonya Khong, told Life! at the opening that it had already received many bookings. An earlier report on the opening said it had bookings that translated to a 60 per cent occupancy rate.

She is not worried about opening in a downturn. ‘There are no other serviced apartments in this area and we have a new market here,’ she says.

The development is targeted at researchers, academia and professionals who work nearby.

It is managed by Frasers Hospitality which has two other such properties in Singapore – Fraser Suites in River Valley and Fraser Place in Robertson Quay. Frasers Hospitality is the hospitality arm of Frasers Centrepoint, a subsidiary of Fraser and Neave.

The complex boasts the first all-loft residences in Singapore, with one-bedroom units ranging from 495 sq ft to 1,066 sq ft.

Its first guest is Swedish professor Jan Carlstedt-Duke, director of Medical School Project at Nanyang Technological University (NTU). He checked in last month even before it officially opened.

Prof Carlstedt-Duke, whose lease will end in December next year, says its location is ideal for him as his job requires him to travel between the NTU campus in Jurong, the nearby Ministry of Education and Tan Tock Seng Hospital in Moulmein.

Over at the other new kid on the serviced apartment block, Citadines Singapore Mount Sophia, Mr Gerald Lee, CEO of its owner Ascott Hospitality, says it stays ahead of the game by giving customers what they want.

‘In this current economic climate, residents are looking to get more value for their buck,’ he says. At Citadines, guests pay only for services that they want such as extra housekeeping services.

Occupancy rates at Citadines are now at about 90 per cent. Mr Lee adds that ‘the global slowdown has also brought opportunities for Citadines as business travellers become more cautious with their spending and look for options that give them greater value for their money and flexibility’.

One resident, Mr Kevin Ho, 41, who has leased a one-bedroom apartment, says he was attracted by its stylish and spacious look. The monthly rate for a one-bedroom executive apartment is $9,200.

The managing director at an investment bank, who is from Hong Kong, says: ‘I like the apartment’s minimalist look.’

Apart from a bedroom and wardrobe, his apartment has a sofa bed and a work desk in the living room.

Home away from home

As for the two upcoming serviced apartment projects, they are being developed by United Engineers and its managing director, Mr David Liew, says this new breed of guest-stay complex seeks to serve a particular business hub.

‘They can better cater to the needs of the hub dwellers or visitors, not just in terms of facilities and amenities, but also special packages relating to length and terms of stay.’

Overall, the serviced apartment sector here has an occupancy rate of about 75 to 80 per cent compared with 50 to 60 per cent for hotels.

The length of stay can vary from three months to a year or more.

While newer developments are opening away from the city area to meet new demands, it is the service factor that guests place a premium on, say those in the industry and guests themselves.

For example, the Pan Pacific Serviced Suites in Somerset Road prides itself on being the only serviced suites accommodation to offer ’round-the-clock personal assistants to provide residents local and reliable connections to the city, so that they may feel at home immediately’, says Mr Fabien Lindsay, its general manager. The 120-room complex opened in April last year and has an occupancy rate of over 80 per cent.

Singaporean housewife Sharon Wells has been living at Fraser Suites in River Valley with her husband, Mr Sultan Alfaheem, a senior vice-president of a petrol chemical company, for the past six years.

The couple, who are both in their 40s, have two school-going children. They moved into their three-bedroom penthouse when Mr Alfaheem was posted to Singapore from Abu Dhabi.

She likes that everything she needs, from the supermarket to the hair salon, is in the same building. She declines to say how much the apartment costs. But monthly rates for a three-bedroom apartment at Fraser Suites start from $14,500.

The couple had considered renting or buying an apartment but decided against it.

Ms Wells says: ‘If I need a lightbulb changed, I just pick up the phone and the apartment gets cleaned regularly. Where else can I get such convenient service?’

Source : Straits Times – 11 Jul 2009

Green team’s chief gets EcoFriend award

AS CHAIRMAN of property giant CapitaLand’s Green Committee, Mr Wong Hooe Wai, 51, is no stranger to initiatives to save the environment.

One of the novel ideas his committee brought to fruition was an Environmental Tracking System in 2007 to monitor and regulate electricity and water usage of more than 150 CapitaLand properties worldwide, such as Raffles City in Singapore and in Chengdu, China.

But his work did not benefit only the environment. Over the past year, his Green For Hope programme encouraged 260,000 primary schoolchildren from 154 schools to recycle, helping Singapore’s less fortunate in the process.

CapitaLand’s Hope Foundation – its philanthropic arm – pledged $2 to school welfare funds for every 1kg of recyclable waste collected by students.

The foundation is still collating the amount earned.

Yesterday, Mr Wong’s efforts were lauded as he received the National Environment Agency’s (NEA) EcoFriend Award from Environment and Water Resources Minister Yaacob Ibrahim at Hort Park.

The honour was shared with nine other individuals – including Ms Tan Puay Hoon, president of the Singapore Restroom Association, and Mr Alfred Tan, deputy director of the Building and Environment Division of the School of Engineering at Ngee Ann Polytechnic.

They were chosen from 282 nominees for initiatives in nurturing communities to care for the environment.

Honoured too was the future of local environmental conservation: Samuel Lim, 18, one of the two winners in the Youth and Student category.

The Raffles Junior College student already has five green projects under his belt, from promoting conservation awareness through fun walks, to organising an international environment conference.

He said his interest blossomed as a child: ‘As I grew older, I realised that the ecology would be destroyed if we did not care for our planet.’

It is a concern shared by Mr Wong: ‘It is important to promote a sustainable environment for future generations, and give back to the communities within which we operate.’

Source : Straits Times – 11 Jul 2009

Here’s the lift but there goes the view

FOR some Eunos HDB residents, getting a lift that stops on every floor has been more of a nightmare than a dream come true.

They say that new lift shafts built on the outside of their blocks have robbed their flats of privacy and ventilation and blocked their views, as well as some light.

The external shafts being built under the Lift Upgrading Programme (LUP) affect 14 out of 116 units in each of three 13- and 17-storey blocks near the Geylang Serai market.

Blocks 411, 415 and 417 at Eunos Road 5 are U-shaped blocks combining two-storey maisonettes with single-storey corner units. This means that not every floor has a common corridor, and that is where the problem arises.

Last month, the small group of residents who have objected to the LUP since plans were first mooted in 2006 went so far as to ask that the lift shafts be torn down – even after the Housing Board had made several modifications to the design to address their complaints.

On Thursday, the HDB cited the Eunos example when it said that more such problems are likely to crop up as the LUP moves to other blocks across the island with unusual designs.

When the programme began in 2001, it said, the blocks involved were mostly slab-sided ones.

Providing lift upgrading was thus a straightforward affair of making existing lifts stop on every floor.

But since 2004, the LUP has been moving to blocks with more complex designs.

For example, there are about 180 maisonette-mixed blocks islandwide, at estates like Bishan, Bukit Batok, Bukit Panjang and Hougang, among others; and about 180 ‘half-landing blocks’ at places such as Sunset Way in Clementi and in Tampines.

These blocks present different challenges the HDB said, but it would work with residents to come up with solutions to problems, and will tweak its designs to address some of their concerns.

At Eunos, for example, the board made changes to the lift design before polling started because of residents’ feedback, said Mr Sng Cheng Keh, director of the HDB’s development and procurement department.

As a result, he said, the lift shafts are now positioned further away from the blocks – 6.3m, rather than the planned 5m.

More modifications may be in store: To allow more light and ventilation, the HDB is looking into replacing part of the length of brick wall linking the lift shaft to the corridor with aluminium fins instead, so residents of affected units do not look out onto a full brick wall.

Such fins have been used in lift upgrading in other HDB blocks. They also help protect residents’ privacy – the angle at which they are positioned blocks a direct view into a flat.

Despite the changes it plans, the HDB admits it is not possible to eliminate all inconveniences for affected units.

It can only reduce them, said Mr Sng, explaining that LUP solutions had to be ‘technically feasible, cost-effective and practical’.

For blocks with common corridors on just a few floors, for example, only the construction of an external lift shaft can ensure the lift stops on every floor.

ST checks at Eunos and two other estates with external shafts – Dakota Crescent near Old Airport Road, and Hougang – turned up mixed reactions to the new lifts.

But despite the complaints of some, other residents say a lift upgrade is worth it.

Take Eunos Block 415 resident Patrick Lim, 52, who lives on the 10th floor.

The sales executive said he had voted against the upgrading project because he felt construction would be messy.

Now he can see the positive side.

‘When it’s done, I don’t have to lug my golf bag down two flights of stairs.’

Source : Straits Times – 11 Jul 2009

Act to curb current hype in property market

THE property market is now being hyped up to the point where a good minority are goaded into panic over escalating prices. There is also a play on phantom sales and resales advertised at exaggerated prices.

What is required now is a law that clearly prohibits sub-sales until legal completion. Another way is to remove deferred payment altogether. A third is to bar developers from marketing before at least 33 per cent of the works are completed and increase the down payment to at least 20 per cent.

A further means is to control developers and property agents. This will remove the current hype in the market and soften a sub-prime crisis, which seems imminent.

In the current scenario, a meltdown can be softened only with regulatory measures. Capital gains tax is not an effective instrument, though it would have some minor impact.

K. Rajagopalan

Source : Straits Times – 11 Jul 2009

Analysts say more feedback should be gathered before amending tax policy

It may be best to gather more public feedback before changing the tax policy on profits earned from property sales, say analysts.

Analysts Channel NewsAsia spoke with said that it is because some are concerned the proposed amendment may hurt the property sector and Singapore banks.

The Singapore residential property market is showing signs of picking up, but analysts say the proposed tax amendment may hurt sentiment and derail the rebound.

That is because potential buyers may hold back on fears that if they sell more than one property during a four-year period, they may then be taxed on the profits.

The Finance Ministry has stressed that the proposed change is not an anti-speculation measure.

However, it is still something to think about for those with more than one property, or planning to own more than one.

Chong Lee Siang, partner at International & Corporate Tax Services at Ernst & Young, said: “It probably comes as a surprise to a lot of people. But the government has said that it’s not an anti-speculation measure so that may be a little assuring, but still (at the) back of people’s minds would be ‘when will I be taxed?’

“As you can see, the public is reacting and giving its feedback and expressing its concerns. So hopefully, the government will take a while to think through it more carefully and see what would work better or make people more comfortable.”

If the proposed change for the tax policy goes through, observers say local banks would get hit badly as housing loans make up a large chunk of their business.

Looking at the housing rental agreements, some say the government may want to consider introducing a two-year period of non-taxation if a person sells only one property, instead of the suggested four years.

As many HDB flats are financed through banks today, some believe the suggested tax amendment will hurt the banks’ portfolio.

Jeremy Goh, associate professor at the Lee Kong Chian School of Business in the Singapore Management University, said: “The banking business is basically taking deposit and making loans. If this proposal puts a damper in the market, then it will definitely have an impact on the bank.

“There will be less people needing loans, or people staying out of the housing market. So the demand for loans will be somewhat affected.”

The public consultation for the draft Income Tax (Amendment) Bill ends next Tuesday. So far, It has attracted about 50 responses.

Source : Channel NewsAsia – 10 Jul 2009

Delay in opening of Marina Bay Sands could potentially mean big losses

The delay in the opening of Marina Bay Sands integrated resort could potentially mean millions of dollars in losses.

Analysts say that it is not just the integrated resort that stands to lose, but Singapore could potentially see lower tourism receipts as a result.

The opening of Marina Bay Sands at year-end was seen as one of the highlights in Singapore’s tourism calendar, in what has been a dismal year of falling visitor arrivals so far. But that has now been pushed back by a few months to early 2010.

While it is hard to pinpoint an exact dollar value for potential losses, some industry-watchers say it could go into millions.

Sands Bethlehem, for example, which has just opened in Pennsylvania on May 22, made US$5.9 million in its first full week of business alone.

But there is also the cost in terms of tourism revenue for Singapore.

Jonathan Galaviz, gaming analyst and partner at Globalysis Ltd, said: “There is a certain amount of economic loss that the Singapore government needs to be looking at as it relates to two things.

“One is the original contract that they made with the IR owners and operators as it relates to the construction timeline that they promised in their original proposal to the government.

“And second, what is the loss of tourism visitation on a month to month basis every month that the IR is not open or not 100 per cent open?”

H P Loi, chief executive officer of the Tourism Management Institute of Singapore, said: “Even if they are to open in first part of 2010, not all the facilities will be up… the perception of travellers might be ‘I will wait for whole resort to open, then I will come’.”

But some also note that the year-end is a low season for the conventions sector.

Loi said: “The November-December period – convention business is usually on the lower side because a lot of companies are closed for the holiday season. So even if you open in November-December, big conventions won’t come in yet.”

The government says it is currently in talks with Sands on contractual obligations but is hopeful of a good outcome.

Market watchers say that with both integrated resorts now trying to rush to possibly open before the important Lunar New Year holiday period in February next year, the country as a whole can have a more integrated approach towards marketing both resorts to the region – especially the China market, whose arrival figures into Singapore have been slipping in recent months.

Source : Channel NewsAsia – 10 Jul 2009

Secondary transactions on the rise

An indication of just how market confidence has turned in a span of just two months can be seen in the sale of the penthouse at Arcadia. The 7,503 sq ft unit was first put up for sale by auction at the end of April. The indicative price was $6 million then, but there were no bidders. However, according to a caveat lodged with URA Realis on June 8, the penthouse has been sold for $6.25 million.

Also in District 11 but on Lincoln Road, off Newton Road, there has been a spate of transactions at Park Infinia at Wee Nam, completed by Keppel Land last year. Recent prices, according to caveats lodged from June 5 to 12, indicate that units above the 20th floor were changing hands in the resale market for $1,400 psf and above. The most recent transaction was for a 1,668 sq ft, 26th -floor unit that changed hands for $2.4 million or $1,450 psf. Another floor unit on the 23rd floor, was done at $1,400 psf. Back in March, similar units were going for around $1,200 psf.

In the super-luxury segment, a 37th-floor unit at The Orchard Residences changed hands for $6.4 million or $3,549 psf. It is the first time this year that a unit in the super-luxury-condominium segment has crossed the $3,500-psf mark. The owner had bought the unit in April 2007 for $6.4 million or $3,566 psf when the project was first launched for sale.

The secondary market saw a significant pick up in transaction volume with foreigners’ purchases also on the rise, notes DTZ in a report last Friday. Indonesians and Malaysians accounted for close to half (49%) of the caveats lodged by foreign purchasers (excluding permanent residents) in the months of April and May.

Amid the buying frenzy, average private-resale home prices increased in 2Q, with homes in the prime districts registering the most significant increases compared with those in the suburbs. Average prices had started off being relatively flat in the first half of 2Q2009 but as buying momentum picked up around May, price recovery was seen in all segments.

Freehold condos and apartments in the prime districts of 9, 10 and 11 saw average resale prices rise 11.3% to $1,247 psf, following a 3.7% drop in 1Q2009. Two-bedroom units saw the most significant price increase of 12.8% as the lower quantum price meant that it was the most popular entry level for most people who wanted a property in the prime districts, says Chua Chor Hoon, DTZ’s head of research for Southeast Asia.

Average prices of luxurious nonlanded resale homes also increased 9.6% to $2,060 psf. Average prices of leasehold resale homes outside the prime districts on the other hand, increased by 3.2% to $573 psf in Q2 2009, as prices had fallen less with fewer “specuvestors” in this segment.

Source : The Edge – 6 Jul 2009