Many choices for flat buyers

Many choices for flat buyers

 

HDB ensures affordability of flats for different groups

 

Wednesday • January 23, 2008

 

 

Letter from LEONG CHOK KEH

Deputy Director (Policy and Property) for Director (Estate Administration and Property) Housing and Development Board

 

I REFER to the letter from Chan Han Jun, “A costly commitment” (Jan 8). The Design, Build and Sell Scheme (DBSS) was launched in 2005 to complement HDB’s sales scheme. The objective was to offer HDB flat buyers an additional choice to meet their needs and aspirations.

 

Under the DBSS, private developers would determine the price of the flats, bearing in mind the location, design features and demand from eligible buyers. It is intended to be one of the many sale options, including resale flats, to cater to the needs of flat buyers.

 

We wish to clarify that HDB’s Build-to-Order (BTO) sales exercises will remain the mainstay of new flat supply. Under the BTO sales exercises, buyers have a choice of Standard and Premium designs, as well as flats of various sizes, prices and locations. HDB remains committed to ensuring affordability for their target income groups.

 

HDB has increased the launch of BTO sale exercises in response to demand. Flat-buyers should consider the various types of flats available, based on their needs and affordability. As buying a home is a long-term financial commitment, buyers are advised to exercise financial prudence and purchase a flat within their affordability

 

Source: Today Newspaper

 

BTO exercises mainstay of new flat supply

BTO exercises mainstay of new flat supply

 

I REFER to the letter from Mr Chan Han Jun, ‘Review criteria of HDB design-&-build scheme’ (ST, Jan 8).

 

The Design, Build and Sell Scheme (DBSS) was launched in 2005 to complement HDB’s sales scheme. The objective was to offer HDB flat buyers an additional choice to meet their varied needs and aspirations. Under the DBSS, private developers will determine the pricing of the flats, taking into consideration the location, design features and demand from eligible buyers. It is intended to be only one of the many sales options, including resale flats, to cater to the diverse needs of flat buyers.

 

We would like to clarify that HDB’s Build-to-Order (BTO) sales exercises will remain the mainstay of new flat supply. Under the BTO sales exercises, buyers are given a choice of Standard and Premium designs, as well as flats of varying sizes, prices and locations. HDB remains committed to ensuring their affordability for their target income groups. HDB has also increased the launch of BTO sales exercises in response to demand.

 

Flat buyers should consider the various options of flats available, based on their needs and affordability. As buying a home is a long-term financial commitment, buyers are advised to exercise financial prudence and purchase a flat within their affordability.

 

Leong Chok Keh

Deputy Director

(Policy & Property)

for Director (Estate Administration & Property)

Housing & Development Board

 

Source: Straits Times

Panic and fear, not fundamentals, driving sharp market selldown

NEWS ANALYSIS

 

Panic and fear, not fundamentals, driving sharp market selldown

 

Widespread selling creating financial violence people hope to avoid, analysts say

 

NEW YORK – THE fear is spreading.

 

For months now, investors have been lured to overseas markets with the promise that surging growth and solid economic fundamentals in Asia and the Middle East would insulate them from the credit squeeze plaguing the United States market.

 

But the broad international sell-off yesterday and Monday has raised fresh concerns that a looming recession and the fallout from sub-prime mortgages could have global repercussions.

 

Some analysts saw the sell-off, with leading stock market indexes off 4 per cent to 8 per cent worldwide, as being driven by fear more than by fact.

 

‘I don’t think it’s warranted by the fundamentals,’ said Mr Edward Yardeni, an independent strategist. ‘The global economy’s resilience in the face of a credit crunch has been impressive.’

 

Mr Yardeni warned, however, that in a time of panic and fear, less attention is paid to fundamentals, like a fairly tight US job market and strong growth and the extraordinary build-up of foreign exchange reserves in emerging markets. The result is panic selling and the prospect of a global recession.

 

‘People are creating the financial violence that they hoped to avoid,’ he said.

 

Other analysts point out that the overseas uncertainty reflects the unpleasant, if not devastating, reality that the excesses of the long-running credit boom will not go away soon.

 

What makes this correction more dangerous, they say, is that the selling is not being driven by panicky retail investors, as it was in the collapse of the technology bubble, but by hedge funds and investment banks that find themselves saddled with illiquid securities backed by an array of valueless assets.

 

‘What you see is not a panic of the public. This is a panic of the sophisticated,’ said Mr James Sinclair, a well-known gold trader who oversees a financial website and who has warned investors for years about the dangers of derivatives.

 

‘But this will have a tremendous impact on the public. It’s very serious, and drastic emergency economic action is needed.’

 

Most retail investors have not invested directly in the complex securities that have ruined the reputations of some of Wall Street’s most-respected minds.

 

Their exposure, however, to plummeting companies like Citigroup and Merrill Lynch, and now a broader basket of stocks affected by the market malaise, will add to the sense of wealth erosion that many are already feeling from the declining values of their houses.

 

On his blog, JSMineSet, Mr Sinclair has told his readers that as much as US$450 trillion (S$649 trillion) worth of derivatives could disintegrate, leading to a far greater and, in some ways, unpredictable calamity.

 

He argued that compared with the savings and loan crisis in the late 1980s, when the formation of a trust company for beaten-down institutions established a floor for sinking assets, the inability of the government to form a similar entity for suffering securities had heightened investors’ unease.

 

While the views of Mr Sinclair, who expects the price of gold to go to US$1,650, up from about US$870 now, might be taken with a grain of salt, other experts have also begun to warn of the dire consequences of the credit market collapse.

 

Mr Christopher Wood, a strategist based in Asia who publishes a widely read newsletter called Greed & Fear, pointed out in a note published this weekend that the potential insolvency of bond insurers like Ambac, MBIA and ACA Capital signals a larger market correction that has not yet been grasped by policymakers.

 

‘Greed & Fear’s view is that with the bond insurance business model fast unwinding, a full-scale crisis could be coming,’ he wrote.

 

The international selling has also stoked a long-held fear that flush Asian and Middle Eastern central banks and government-

 

backed investment funds will cut back on their US dollar-based investments – like Treasury bills and stakes in troubled investment banks – in the face of another round of interest rate cuts and continued weakness in the dollar.

 

These flows have been a crucial source of liquidity for an economy that produces little of its own domestic savings, and they have been lifelines for capital-starved banks. But no money manager, regardless of how long the timeframe, likes to invest in a falling market, and analysts fear that a spate of additional write-downs and market turmoil will signal to foreigners that the markets in Asia have not yet found their bottom.

 

One large investor, who asked not to be identified because he did not want to tip his hand, said the sell-off on Monday was a direct response to the stimulus package proposed by the Bush administration – not so much a judgment that the proposal was inadequate as a reflection of the weakness and drift of the world’s largest economy.

 

‘It is one thing to see the market go from 14,000 to 12,000,’ he said. ‘But when the president of the United States says we are sick, you can’t ignore that.’

 

Source: Straits Times

Why it’s difficult for HDB to predict demand

Why it’s difficult for HDB to predict demand

 

By Yeo Ghim Lay

 

THE Housing Board cannot accurately predict demand for HDB flats years down the road.

 

However, it will be flexible and boost the supply of flats when needed, Minister of State for National Development Grace Fu said yesterday.

 

She gave this assurance in response to a question from Madam Cynthia Phua (Aljunied GRC), who wanted to know how long newly married couples can expect to wait for a new flat.

 

With rising property prices and surging demand for HDB flats, some young couples have reportedly had to postpone their customary wedding ceremonies because they could not get a flat in time.

 

Madam Phua also noted that the HDB seems to face a problem of ‘excesses’: Three years ago, it had 10,000 excess flats. Now, it has 27,000 applicants for more than 4,000 flats.

 

She asked if the ministry would consider providing data on the potential supply of flats over the next three years, to help young couples plan.

 

In response, Ms Fu said it would be difficult to ‘predict with precision’ demand for HDB flats over a three-year time frame.

 

‘There are certain market forces that affect supply, demand of public housing vis-a-vis private housing, for example, that are not possible to predict with accuracy,’ she said.

 

Ms Fu pointed out that while demand far outstrips supply in popular projects like Telok Blangah Towers, that is not the case in others.

 

For example, first-time flat owners have a one in two chance of getting a flat in upcoming projects in Sengkang and Punggol.

 

She advised buyers to carefully consider their budget and how long they are prepared to wait before making a decision on which project to apply for.

 

She also assured MPs that the supply of flats will be adjusted when necessary.

 

Last year, for instance, the HDB offered 13,000 flats for sale, more than double the number in 2006.

 

This year, it expects to offer about 6,000 flats in the first half of the year.

 

‘Our building plan has flexibility and where we see there’s a high subscription rate, we will increase the supply of HDB flats,’ said Ms Fu.

 

Source: Straits Times

US home owner sues agent amid property woes

US home owner sues agent amid property woes

 

Case could be first of many as finger-pointing escalates; any player in the crisis may be sued

 

CARLSBAD (CALIFORNIA) – MS MARTY Ummel feels she paid too much for her house. So do millions of other Americans who bought their homes at the peak of the housing boom.

 

What makes Ms Ummel different is that she is suing her agent. In the midst of the United States housing and global credit crisis, the players are all pointing fingers at each other.

 

Home owners are suing mortgage lenders. Mortgage lenders are suing Wall Street banks. Wall Street banks are suing loan specialists. And investors are suing everyone.

 

Ms Ummel claims that the agent hid the information that similar homes in the neighbourhood were selling for less because he feared she would back out and he would lose his US$30,000 (S$43,000) commission.

 

Real estate lawyers and brokers say the case, which went to trial on Monday, is likely to be the first of many in which regretful or resentful buyers seek redress from their housing agents.

 

‘When your house appreciates US$100,000 in the first six months, you’re not quite as concerned that maybe the valuation was US$25,000 or US$50,000 off,’ said Mr Clifford Horner of the law firm Horner & Singer. ‘But when the value of your house goes down, you ask: ‘Who might have led me astray here?’ ‘

 

The agent in Ms Ummel’s case is Mr Mike Little who said the suit was motivated mainly by the declining market. ‘When people see their home values and assets declining, they always feel there’s someone to blame,’ he said.

 

Looking at the bigger picture, analysts said today’s legal and regulatory wrangles could dwarf the ones that followed the technology- stock bust. Worse still, the size and complexity of the modern mortgage market will make untangling the latest mess even trickier. Some cases stretch across continents. Others are likely to involve state and federal regulators.

 

Two questions lie at the heart of many of the cases. The first is whether lenders and investment banks alerted borrowers and investors to the risks posed by sub-prime loans or securities backed by them. The second is how much they were legally obliged to disclose.

 

ASSOCIATED PRESS, NEW YORK TIMES

 

Source: Straits Times

Govt rejects Aljunied site bid; offers flood Jalan Sultan plot

Govt rejects Aljunied site bid; offers flood Jalan Sultan plot

 

By Fiona Chan, Property Reporter & Joyce Teo, Property Correspondent

 

THE Government has decided not to sell a short-term office site in Aljunied because the sole bid that came in last week offered too low a price.

 

This decision follows a recent string of lower-than-expected offers for state land and is the first time since 2001 that the Urban Redevelopment Authority (URA) has rejected bids for a government-owned site.

 

Demand for some commercial land, however, appears to still be going strong. A state parcel at Jalan Sultan, reserved for office or hotel use, received 20 offers when its tender closed yesterday, the URA announced.

 

The top bid came from Chiu Teng Estates. It offered $14.8 million, or $973.60 per sq ft (psf) of gross floor area, almost double the lowest bid, from NYP Holdings, of $8 million.

 

The Jalan Sultan site, comprising 17 two-storey conservation shophouses that have to be restored, also got offers from Fragrance Group, Hotel Royal and Hind Lifestyle.

 

This compares to the single bid for the Aljunied office site, submitted by Mezzo Development, at $7.8 million – just $38.37 psf of gross floor area.

 

Property consultants say the market may have reached a saturation point for transitional office sites, introduced last year as a quick relief to the office space crunch.

 

Any development built on these short-term sites is likely to be completed only next year or in 2010, when they will have to compete with a slew of new office space set to come onstream, they added.

 

One such building is the new $60 million Straits Trading block in Battery Road. The 28-storey building is expected to be completed late next year and could fetch high rents of $18 psf, analysts estimate.

 

Average rents of Grade A blocks in Raffles Place are now $16.64 psf, said Colliers International. The old Straits Trading building fetched rents of $7 psf.

 

Mainboard-listed Straits Trading, which owns the building, brushed aside worries that it would be affected by a possible office oversupply that could emerge after 2010.

 

Source: Straits Times

Record 20 bids for Jalan Sultan site

Record 20 bids for Jalan Sultan site

 

$14.8m is top offer for parcel with 17 shophouses

 

By ARTHUR SIM

 

A RECORD 20 bids have been received in the Urban Redevelopment Authority (URA) public tender for a site including 17 two-storey conservation shophouses at Jalan Sultan.

 

The URA said that this was the highest number of bids it has received for a public tender in at least 10 years.

 

The 15,200 sq ft Reserve List site was put up for public tender after an unnamed bidder last November committed to place a minimum bid of $7.8 million.

 

The highest bid received by the URA – $14.8 million – exceeds this by about 90 per cent.

 

The $14.8 million bid was from Chiu Teng Estates Pte Ltd, which is in the construction, development and property management business. The price works out to $973.63 psf of site area, or about $870,000 per shophouse.

 

The second highest bid, $13.61 million, was from Brilliant-1 Investments Pte Ltd, followed by KMC Holdings Pte Ltd’s bid of $12.8 million.

 

Colliers International executive director of investment sales, Ho Eng Joo, said that as the top three bids varied only by about $1 million, it is fair to assume that the prices were ‘fair market value’. Mr Ho had himself earlier estimated the site could fetch a top bid of around $14 million.

 

Estimating that the potential developer will have to pump in another $500,000 in renovation and restoration costs, the cost for each shophouse unit could rise to $1.3 million.

 

Based on this, Mr Ho expects that the potential developer will possibly seek a monthly rental of between $5,000 and $7,000 per shophouse unit.

 

Separately, the URA said that it will not award the tender for a transitional office site at Aljunied Road/Geylang East Avenue 1 because the only bid it received, Mezzo Development’s $7.8 million (or a unit land price of $38.35 per square foot per plot ratio), was too low.

 

Three transitional office sites have been awarded so far. However, demand for these sites has been on the wane, with some property consultants saying that the sites may no longer be relevant.

 

URA said: ‘The government is evaluating the market response to the recent tender and the demand for transitional office sites. URA will continue to release more sites if there is demand for such short-term office space.’

 

Source: Business Times

Straits Trading launches 28-storey office tower

Straits Trading launches 28-storey office tower

 

By CHEW XIANG

 

A NEW 28-storey Grade A office tower at 9 Battery Road has been launched by Straits Trading Company through its subsidiary Straits Developments.

 

The Straits Trading Building, which is intended to be completed by the third quarter of next year, will have about 160,000 square feet of lettable office space. It replaces the old Straits Trading Building, which was built in 1972 on the same site and redeveloped into the present tower in 2006 with a slightly higher plot ratio.

 

Calvin Yeo, director of commercial leasing at Colliers International, the marketing agent, said it was asking for about $18 per square foot in rent. Colliers has been marketing the building to multinational corporations especially those in the financial sector, business services and professional services. Mr Yeo said pre-launch interest has been strong.

 

‘Though large financial institutions represent the bulk of recent growth in demand for office space in the current market, we are also observing strong demand for premium office space from multinational companies who are mid-sized users,’ he said.

 

The new building features two double-storey open air gardens, and roughly 8,300 sq ft of office space per floor for a maximum of two tenants.

 

The designer, Team Design Architects, is studying plans to build solar panels on the roof, as well as solar-powered air conditioning for the top floors, said director Loke Kwong Yoon.

 

The green features will add less than 5 per cent to the development cost, he added.

 

The construction cost is now put at $60 million, according to Straits Trading Company president and chief executive Norman Ip.

 

Straits Trading Company, which had its corporate headquarters in the old building, is likely to return to the new one and take up the top floors.

 

Source: Business Times

HDB may offer 6,000 flats in H1

HDB may offer 6,000 flats in H1

 

SOME 6,000 housing board flats are expected to be offered for sale in the first half of this year, Parliament was told yesterday.

 

Minister of State for National Development Grace Fu said this matches the sales pace seen in the same period last year.

 

For the whole of 2007, HDB sales programme offered 13,000 flats – more than double the 5,700 flats sold in 2006.

 

Ms Fu was responding to questions about HDB’s planning parameters and had cited those figures to illustrate the flexibility in the government’s building plans.

 

For instance, if the HDB sees high subscription rates in a certain area, it would also increase the supply of flats in that area.

 

Ms Fu also stressed that it is ‘difficult to predict with precision what the actual demand is in a three-year time frame’. For this reason, the build-to-order (BTO) scheme helps prevent an excess supply of flats. Under BTO, construction will proceed only if booking for a sizeable number of the flats has been confirmed.

 

Yesterday, Ms Fu also urged first-time flat buyers to check out information on flats supply in different locations, and to consider factors like the chances of success in the balloting exercise, the waiting time, and their budget before deciding on a location.

 

Source: Business Times