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Prices of completed condos down 0.3% in February

- March 31, 2015 No Comments

Prices of completed private non-landed homes in Singapore dipped 0.3% in February from January, going by flash estimates of the National University of Singapore (NUS) Institute of Real Estate Studies.

This signalled a 5% drop in NUS Singapore Residential Price Index (SRPI) from a year ago and a 9.4% fall from the peak in July 2013.

The main drag to the NUS SRPI in February published on Monday came from the Central Region, which NUS defines as covering districts 1 - 4 (including the financial district and Sentosa Cove) and the traditional prime districts 9, 10 and 11.

The sub-index for Central Region (excluding small units of up to 506sqft) fell 0.7% month-on-month in February. The NUS sub-index for small units of up to 506sqft showed a 0.2% decline in prices.

NUS on Monday also published the revised index values for January 2015 as more data became available, showing the overall price index fell 0.9% month-on-month, smaller than its earlier reported 1.6% fall.

Consultants note that monthly reporting of non-landed residential prices is becoming more volatile amid sharply reduced market transactions.

This rings even more true for the NUS shoebox sub-index as fewer data points tend to increase the degree of error in an index.

The number of sales transactions involving units in the fixed basket tracked by NUS was 273 units in February, of which only 3 were shoebox units.

But under NUS SRPI methodology, prices of untraded units in the basket are marked-to-market based on sales signals observed in the vicinity. Each month, the values of the properties tracked are estimated using regression analysis of transacted prices observed.

Its pre-determined basket comprises private condominium projects that received temporary occupation permit in the past 10 years, and projects with fewer than 40 units are left out since they are less liquid.

Source: BT

Thinking about investing in an overseas hotel or student hostel project?

- March 30, 2015 No Comments

It was report in The Sunday Times last weekend that about 200 Singaporeans are facing the prospect of losing about $20 million after investing in botched hotel and student hostel projects in Britain.

They had bought units in nine projects by British property developer Key Homes, which became insolvent and was put into administration last year.

Many of the investors are aged 40 and older, with a number using their savings from the CPF to buy these housing projects.

Singaporeans have been buying Key Home projects as early as 2011. In total, they bought more than 300 units costing around £39,500 to £60,000 each ($89,000 to $122,000).

In return, they were assured of getting annual rent of around 5 to 8% of the property's cost.

Among the affected group are several people who have invested more than $400,000 each in the investment, buying up several units in the project. The reasons given for investing include affordable prices ("For the same amount of money, I probably can just get one property in Singapore") and hassle-free rental arrangement ("I was attracted because I didn't have to bother about getting tenants as the British property management firm would handle it").

The wife and I had the "misfortune" of buying into an overseas hotel development when we first started investing in foreign properties some years ago. The developer went bust one year after we had put in the investment. Luckily for us, the money was held in trust with the developer's lawyer so not only did we get back the full sum, we actually made a small profit on the foreign exchange difference. But that little episode made us decide to "invest in hotel project no more".

And as far as student accommodation is concern, this is one type of property investment that we will not consider. The reasons being:

1. For student accommodation, you cannot (legally) rent the apartment out to anyone else other than (yes guessed it) students. This limits the rental pool that you are able to get with this type of housing.

2. We have heard horror stories (and from quite a few sources) of how the apartment are "thrashed" by the occupants after the one- or two-year lease period. Although the repair can be offset by the rental deposits, it may be a challenge going after the tenant for any shortfalls. And there is also the hassle of coordinating repairs/refurbishment from overseas.

3. These projects are more often than not undertaken by lesser-known developers, which do not exude the same level of confidence with us. 

So even though the investment quantum is much smaller than your typical run-of-the-mill residential projects, the corresponding risks are (in our opinion anyway) much higher...

New project update: Amber Skye re-launched!

- March 26, 2015 No Comments

Amber Skye, a freehold residential project near Katong Shopping Centre, has been re-launched last weekend. This follows the tepid sales during its first launch last September.

The 109-unit project in Amber Road is being developed by CS Amber Development, a joint-venture between China Sonangol Land and OKP Land.

As at late October, the project had sold only six units.

Indicative pricing at the re-launch ranges from $1,680psf to $2,500psf, the developer said. In September last year, some units sold for $1,800 and $1,900psf.

The developers said one of the attractions of the project is the number of larger units on offer, at a time when many condo developers are tending to downsize.

It offers two six-bedroom units, 11 four-bedders and 30 three-bedders, with the rest made up of smaller units.

The project is close to a number of schools, namely CHIJ Katong Convent, Tao Nan, Victoria Junior College and Chatsworth International.

Amber Skye is expected to receive its temporary occupation permit in the middle of 2017.
Info source: ST

Our day jobs have gotten in the way of us putting up this post earlier. But the wife and I understand that there were more than 300 visitors to the Amber Skye sales gallery last weekend. While having more people coming by to look at your showflat is definitely a positive sign, it will probably take more than eyeballs to boost sales  in this project.

We had reviewed Amber Skye in November last year. While we have had some good things to say about the project, we did comment  that the price of the units are too steep (at least to yours truly). And given the current market sentiments, it may take some steep discounts to move units...

Click on the link below to read our review of Amber Skye:

SIBOR rate update: It's now above 1% and a 6-year high!

- March 24, 2015 No Comments

The three-month Singapore interbank offered rate (SIBOR) was fixed at 1.00129% on Tuesday (March 24), according to Association of Banks in Singapore (ABS) data posted on Bloomberg, up 0.9% from Monday's fixing of 0.99216%. The rate has been climbing steadily since end-December when it stood at around 0.45%.

This is the first time in more than six years that the SIBOR - a key benchmark lending rate - has risen above the 1% level, which may indicate that mortgage rates will increase further in coming weeks.

Many home loans in Singapore are pegged to SIBOR. For instance, Oversea-Chinese Banking Corp (OCBC) has a home loan package that charges an interest rate 0.85% point above three-month SIBOR. If SIBOR rises, the interest rate will also increase. OCBC will review the rate every three months based on movements in SIBOR.

Singapore interest rates have been on the rise, in line with expectations that the US Federal Reserve will increase interest rates this year.

Info Source: CNA

New project info: Botinque at Bartley

- March 21, 2015 No Comments

UOL Group has priced more than 70% of the 797 homes in its latest development, Botanique at Bartley, at below S$1 million as the developer seeks to drive sales after the Chinese New Year lull, but it remains to be seen if buyers will emerge in numbers in the current soft property market. 

Ahead of the showflat opening for public viewing today, UOL said yesterday that it wanted to attract buyers looking for a high-quality property in the city fringe at an affordable price, setting the average selling price a little below $1,300psf.

Botanique at Bartley consists of 200 one-bedroom units, 382 two-bedroom units and 215 three-bedroom units, with starting prices of about $598,000, $798,000 and $1.6 million, respectively. Apartment sizes range from 495 to 689sqft for the one-bedroom units, 657 to 958sqft for the two-bedroom units and 926 to 1,356psf for the three-bedroom ones.

Expected to be completed by 2019, the 99-year leasehold condominium is a three-minute walk from Bartley MRT station, and is close to many schools, such as Paya Lebar Methodist Girls' School, Maris Stella High School and Nanyang Junior College.

The project will be launched in two weeks to coincide with the Good Friday long weekend.
Info Source: TODAY

Even at "a little below $1,300psf", the wife and I reckon that it will be quite the challenge to move units at this new project given the current market sentiments. But the saving grace may just be the MRT station proximity, so we'll have to see in 2 weeks...

Tax implications for overseas property purchase

- March 19, 2015 6 Comments

Thinking of investing overseas but unsure of the taxes that you may be liable and how much they cost?

Here is a handy table of what you may need to pay for some of the more "popular" buying locations, courtesy of The Business Times today.  

The tax illustration is for a Singapore resident individual investing in a residential rental property overseas. 

Disclaimer: The table above is generic and does not consider the individual circumstances of one particular investor or investment. It is not an extensive summary of all tax implications of property investment and is not a substitute for tax advice in respect of specific transactions.

SIBOR shot past 0.9% - highest in 7 years!

- March 13, 2015 No Comments

Homeowners servicing mortgages will need to tighten their purse strings further: The three-month Singapore interbank offered rate (SIBOR) on Wednesday (Mar 11) charged past 0.9% — a level not seen since 2008 — amid widespread expectations that the United States Federal Reserve will raise benchmark borrowing costs by mid-year.
The local interest rate, widely used to price home loans here, closed at 0.87943% Wednesday, figures published on the Association of Banks in Singapore website showed. SIBOR continued to rise on Thursday to above 0.9%, banking sources said, doubling the level seen at the beginning of this year.
Analysts whom TODAY spoke to said SIBOR’s climb followed the weakening of the Singapore dollar against the greenback in January, but took on added momentum after a very strong February job market in the US raised the likelihood that the Fed will normalise interest rates come June.
Following the US job report on Friday — showing the world’s biggest economy created 295,000 net new jobs last month to drive the unemployment rate to a seven-year low of 5.5% — the US dollar rose to its highest versus the Singapore dollar since 2010.
“The rise in SIBOR has a lot to do with what we saw last Friday in the US, which caused the US dollar to move to a level we have not seen in a while. For a short time it touched S$1.39, which is very close to many people’s year-end forecast of S$1.40,” said UOB economist Francis Tan.
The other mortgage-pricing benchmark, the Singapore Swap Offer Rate (SOR), which is even more dependent on the US dollar-Singapore dollar exchange rate, soared above the 1% level on Thursday, the highest since 2009.
The Monetary Authority of Singapore’s (MAS) surprise move in January to ease policy ahead of its scheduled April meeting had given rise to greater expectations of a weakening local currency, analysts said.
“I think there is rising expectations for the exchange rate to depreciate, not necessarily against the US dollar but also against the basket of currencies that the Singapore dollar is weighed against. That will put some upward pressure on interest rates,” said Credit Suisse economist Michael Wan.
“What this means is mortgage rates will rise, so households that have over-leveraged over the past years will be hit quite a bit and there may be some downward pressure on consumption spending. If domestic demand disappoints, it leaves more of the burden on external demand, or global growth, to drive the economy,” he added.
The recent rise in domestic interest rates have led to some economists re-looking their exchange rate projections for the year, but they said MAS’ policy decision come April will very much determine how things will pan out.
UOB’s Mr Tan said another easing by the central bank could push the US dollar to S$1.44, which will see the three-month SIBOR ending the year at around 1.3%, up from his previous forecast of 1%.
Source: CNA
It was a mere 3 days ago when we reported that SIBOR has breached the 0.8% mark. And right now we are staring at 0.9%!

Some may say that we are being马后炮 (literally translated into English as "a cannon behind the horse") but for those are regular followers of our blog, the wife and I have been cautioning about the impending rise of interest rate and its adverse effects for the past year and half at the least. And we are not overly surprised by the fast and furious manner in which the SIBOR rates have been rising over the recent months. 
Others may argue that since we are rebounding from a very low interest rate environment to begin with, the recent increases in SIBOR rates should not pose excessive hardship to those serving a mortgage. But precisely because many of the current generation of homeowners (especially first-time buyers) are so used to the low interest rates prevailing over the past many years, they may be the ones that are most vulnerable to the recent pace of increase in SIBOR rates.

The wife and I certainly hope that mortgage rate will not hit the 2% level by end of the year. But if SIBOR continues on its warpath as per what we have seen over the past months, it could well become a reality...

P/S: In case anyone is wondering about the meaning of “马后炮”, the link may provide some enlightenment.

Sibor has surged past 0.8%!

- March 10, 2015 No Comments

According to a report in BT today, the three-month Sibor has jumped to 0.836% on Monday on continued US dollar strength.

At Monday's level, the three-month Sibor which is used to price home loans is up almost 3% from last Friday, and 115% higher from the 2014 low of 0.389%.

Some analysts now expect the three-month Sibor to reach 1% by end of 2015.

Time to be concerned yet...?

Private resale prices flat in February: SRX

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Resale prices of non-landed private homes were flat in February from the previous month, while resale volume remained low, according to flash estimates from SRX Property on Tuesday (Mar 10).

Year-on-year, resale prices dropped 3.2% from February 2014. Compared with the recent peak in January 2014, prices have declined 5.8%, SRX said.

Resale prices of private homes in the Core Central Region and the Outside of Central Region rose 1.5% and 2.0% month-on-month, respectively. In comparison, prices in the Rest of Central Region fell 0.8%.

Resale volume remained low, with 321 units resold in February, a 6.7% decrease from January, which saw 344 units resold. Year-on-year, resale volume was 36.6% higher compared with the 235 units transacted in February 2014.

The overall median Transaction Over X-Value (TOX), which measures whether people are overpaying or underpaying the SRX Property X-Value estimated market value, remained at -$10,000 last month, the same as in January.

For districts with more than 10 resale transactions, district 10 (Bukit Timah, Holland Road, Tanglin) had the highest median TOX of $27,000. This means that majority of the buyers in this district has purchased units above the computer-generated market value, said SRX.

Conversely, district 15 (Katong, Joo Chiat, Amber Road) had the lowest median TOX with -$31,000, followed by district 23 (Bukit Panjang, Choa Chu Kang) with -$20,000.

Source: CNA

New projects sales update: Another 29 Sims Urban Oasis units sold over the weekend!

- March 9, 2015 No Comments

This brings the total tally to 170 units sold, out of 200 units launched in the first phase of this 1,024-unit project.

New project sales status: 140 Kingford Waterbay units sold in one day!

- 1 Comment

Shenyang developer Kingsford Development sold 140, or about 40%, of its 320 launched units at the mixed-use Kingsford Waterbay at Upper Serangoon over the weekend.

Prices for the condo units ranged from $1,050 to $1,180psf. In addition, it also sold one strata terrace house, two strata semi-detached houses, and six retail shops. The shops, ranging from 431 to 452sqft, were sold at about $2,700psf.

The two-to-three bedders were the most highly sought-after units, as has been the trend with "quantum-friendly" units since the onset of the TDSR framework that started to tighten credit conditions.

But Kingsford Development board chairman Cui Zhengfeng told BT that it could also be because a larger percentage of the two-bedders were facing the river.

The 1,165-unit project is being built on two amalgamated government land sales (GLS) sites with a combined 400-metre direct frontage of Sungei Serangoon.

Among the units transacted, one-bedroom units started at $514,000; two-bedders at $650,000, three-bedders at $893,000, four-bedders at $1.073 million; and five-bedders at $1.432 million.

Semi-detached homes (1,948sqft) cost about $2.1 million, while the retail shops cost about $1.2 million in quantum.

Mr Cui said that most of the buyers were Singaporeans. RST research director Ong Kah Seng added that in this location, buyers would tend to be owner-occupiers buying for future long-term capital gains rather than investors buying to lease.

In addition to its condo units, the 99-year leasehold Kingsford Waterbay has six strata terrace houses and two strata semi-detached houses, as well as its own childcare centre and six shops.

Source: BT

Just goes to show that if the pricing's right, developers are still able to move units. But it be interesting to see what the sales numbers are like for this project going forward...

New project sales status: Over 100 units sold at Sims Urban Oasis

- March 1, 2015 No Comments

Guocoland has sold more than 100 units at its 1,024-unit Sims Urban Oasis condo project at Aljunied since sales began on Feb 14.

Some 200 units ranging from one to five-bedroom units were released in the first phase, with selling prices of between $1,295 and $1,595psf.

The nearly 2.4-hectare site fronting Sims Drive, Aljunied Road and the Pan Island Expressway (PIE) was acquired by GuocoLand last year at $530.9 million or $687.9psf of potential gross floor area.

Market watchers noted that the sales performance for the 99-year leasehold Sims Urban Oasis was largely within expectations given today's subdued environment.

Almost 90% of the buyers are Singaporeans. Half of the buyers are owner-occupiers.
Source: BT