Buyers paying $22k over valuation for resale flats

Buyers paying $22k over valuation for resale flats

 

Median cash over valuation amount up a third; trend filters to outlying areas

 

By Tan Hui Yee

 

BUYERS of resale Housing Board (HDB) flats paid a median amount of $22,000 in cash over the property’s valuation for their new homes from October to last month, a whopping 30 per cent rise from the previous quarter.

 

The good news for HDB flat owners in outlying areas is that this trend is filtering outwards towards them from the most popular districts downtown.

 

HDB data released yesterday showed that 86 per cent of all resale transactions in the fourth quarter of last year required cash payments over valuation, up from 80 per cent in the previous quarter.

 

However, greater resistance from buyers to the surging prices of resale flats last year resulted in a 13 per cent drop in the number of flats sold, to 6,700. For the whole of last year, 29,436 flats changed hands.

 

In fact, despite the overall rise, the median cash over valuation (COV) of some units in traditionally more popular estates such as Queenstown actually dropped. The median COV for a five-room flat in that area, which hit $110,000 in the July to September period, actually shrank to $79,000 in the period after that – albeit off a high base.

 

This, said the assistant vice-president of ERA Singapore, Mr Eugene Lim, showed the extent of the current market resistance towards high COVs.

 

‘Very often, the deal cannot be closed or takes much longer to close because of unrealistic sellers demanding high COV transactions,’ he said.

 

The chief executive of PropNex, Mr Mohamed Ismail, said another reason for this phenomenon is that the number of flat buyers with thick wads of cash in hand – mostly due to the collective sales of their private homes – is shrinking.

 

Most people buying HDB flats rely heavily on home loans to finance their purchase.

 

Resale prices of HDB flats rose 5.7 per cent during the quarter to bring the year’s growth to 17.5 per cent.

 

Last year’s growth is the biggest in a decade but property agents are not expecting a repeat for now as the HDB is offering at least 4,500 new flats for the first half of this year to calm buyers worried that housing is growing out of their reach.

 

These flats, which are highly subsidised, have an advantage over resale flats because they do not require buyers to fork out cash over valuation.

 

While ERA’s Mr Lim expects the price of resale flats to grow by 5 to 8 per cent this year, Mr Ismail reckons it would move by about 10 per cent.

 

Mr Ismail pointed out: ‘The economy is still doing well. And the labour market is tight.’

 

Source: Straits Times

Home prices on city fringe, suburbs still rising strongly

Home prices on city fringe, suburbs still rising strongly

 

PRICE increases for high-end homes in the central areas may be easing, but not so for homes on the city fringe and suburban apartments – where prices are still rising strongly.

 

Urban Redeveloment Authority figures showed growth in the prices of uncompleted apartments in the central areas slid from 7.8 per cent to 7.6 per cent from October to December. Price increases for city fringe units, on the other hand, rose from 7.6 per cent to 8.3 per cent.

 

Growth in the prices of uncompleted apartments in suburban areas also crept up to 9.2 per cent from 9.1 per cent.

 

Dr Chua Yang Liang, head of research, South-east Asia, at Jones Lang LaSalle, said home prices in the suburbs would keep growing by 24 per cent to 26 per cent this year. This would be supported by home owners looking for new homes after being disloged by collective sales.

 

Last year, 14,811 new homes were sold.

 

Mr Li Hiaw Ho, executive director of research at CB Richard Ellis, meanwhile, expects price rises and sales volume to moderate this year.

 

‘Luxury prices are likely to stabilise at current levels, while mid-tier and mass market prices may have the potential to rise by 10 per cent to 15 per cent,’ he said.

 

TAN HUI YEE

 

Source: Straits Times

Property market shows signs of cooling

Property market shows signs of cooling

 

By Fiona Chan

 

AFTER months of relentless price rises, the property market finally took a breather at the end of last year.

 

Almost all sectors – including private and public homes, offices and shops – applied the brakes in the fourth quarter, ending almost two years of acceleration, official figures showed yesterday.

 

They confirmed initial estimates earlier this month that suggested, in particular, that housing demand is cooling.

 

Experts say this was due partly to the global fallout from the sub-prime mortgage crisis in the United States and partly to local government measures, such as the withdrawal of the deferred payment scheme in October.

 

The slowdown is set to continue this year. Growth will still be healthy, but considerably lower than last year’s one-record-after-another spiral, experts say.

 

Most predict a rise in private home prices of 10 to 20 per cent this year – a far cry from the robust 31.2 per cent growth last year.

 

Private home rental, which caused tenants no end of headaches by shooting up 41.2 per cent last year, are also expected to moderate to between 5 and 15 per cent.

 

HDB resale prices are projected to increase by not more than 10 per cent, down from last year’s 17.5 per cent. Offices and shops will also fall in line. Price rises are forecast to be less than last year’s increases of 32.6 per cent and 13.2 per cent, respectively.

 

Volatility in stock markets and the stream of bad economic news coming out of the US have made for a quiet start to the year, particularly in the housing market.

 

Developers have delayed planned launches of new projects or scheduled upcoming launches well after Chinese New Year, according to industry sources.

 

Plans to start sales for Marina Bay Suites yesterday, for example, are said to have been shelved until after the festive holiday.

 

‘We expect the residential market to remain cautious, at least in the first quarter of 2008, until the global situation becomes clearer,’ said Mr Li Hiaw Ho, executive director at CBRE Research.

 

Demand for homes also appears to have eased.

 

Although a record 14,811 new homes were sold last year, sales in the last three months contributed only 1,449 of those units – the fewest transactions in a quarter since 2005.

 

But homeowners can take heart: The boom has enough steam to run for some time before reaching its peak, said property consultants.

 

‘I would say we could be nearing a peak, but we’re not there yet,’ said Dr Chua Yang Liang, head of Singapore research at consultancy Jones Lang LaSalle.

 

‘Typically, we will see growth of around only 1 per cent in a quarter before we hit a peak,’ added Mr Nicholas Mak, director of research and consultancy at Knight Frank.

 

Private home prices rose 6.8 per cent in the fourth quarter of last year, down from 8.3 per cent growth in the third quarter.

 

HDB resale prices grew 5.7 per cent, compared with 6.6 per cent in the previous three months.

 

Consultants said while the rises in home prices will slow, prices will not actually fall until at least 2010, when a slew of new homes is expected to be completed.

 

In the meantime, much of this year’s residential market growth is likely to come from HDB flats and suburban mass market condominiums, which are signs of more genuine home-buying demand.

 

Speculative demand has already dropped dramatically. A measure of speculation is sub-sales, which are when uncompleted homes change hands. These fell to 513 in the fourth quarter – a third of their level in the previous quarter.

 

Source: Straits Times

Two new MRT lines by 2020

Two new MRT lines by 2020

 

They will run through estates in north and east; North-South and East-West lines will also be extended by 2015

 

By Maria Almenoar

 

TWO new underground MRT lines will be built by 2020 – one from Woodlands to Marina Bay via Thomson, and the other from Changi to Marina Bay via Marine Parade.

 

The 27km Thomson line will run through Sin Ming and Kim Seng, while the Eastern Region Line (ERL) will slice through Siglap and Tanjong Rhu. All are neighbourhoods not served by the MRT now.

 

The two new lines add 48km of rail and possibly 30 new stations.

 

In addition, extensions will be made to the East-West and North-South lines by 2015.

 

The East-West line will stretch 14km out to Tuas with an above-ground track, while the North-South line will be extended underground to Marina South.

 

These four additions, together with the lines now being built, will extend the rail network from the current 138km of track to 278km.

 

The tab: $20 billion. This is over and above the $20 billion already committed for the Circle Line, the Downtown Line and the Boon Lay extension.

 

When completed, cross-city trips will be faster; commuters will have a train stop within 400m, or five minutes’ walking distance, said Transport Minister Raymond Lim yesterday.

 

He was delivering Part Two of his three-part policy speech on improvements to Singapore’s land transport system.

 

He first unveiled a slew of changes to the bus system last week, and will wrap it up next week with what is in store for other road users.

 

With the Thomson Line in operation, commuters in Sin Ming, for example, will shave 20 minutes off their current 45-minute trip to the city; those in Marine Parade will get to Marina Bay on the ERL in 20 minutes – almost as fast as by car, said Mr Lim.

 

The extensions to the existing East-West and North-South lines will also shorten commuting time.

 

Take, for example, a commuter who lives in Clementi and works in Tuas. To get to work now, he will have to take a train from Clementi to Boon Lay, from where it will take him another 35 minutes by bus to his destination. With the extension of the East-West line to Tuas, he will save 20 minutes.

 

Mr Lim, who toured the Kim Chuan train depot yesterday, said: ‘Commuters can look forward to new extensions or stages of new lines opening almost every other year until 2020.’

 

The next milestone will be marked in the middle of next year, when Stage 3 of the Circle Line opens – a year ahead of schedule – to connect areas such as Lorong Chuan and Bartley.

 

But commuters will experience improvements from next month, when 93 train trips will be added every week during the rush hours to ease crowding and cut waiting times.

 

Down the road, new trains will be bought and work done on the two oldest tracks so they can carry 15 per cent more passengers.

 

As with bus routes, the Government will also open up the rail market to competition. Contracts to run rail services will be 10 to 15 years long, down from 30.

 

To enhance the commuter’s experience, more covered linkways and overhead bridges will be built in the next two years; the elderly and disabled will have full access to buses and improved access to MRT stations. A six-month trial to allow foldable bicycles on trains will also be carried out.

 

As for taxi commuters, a centralised call booking centre will be set up by July.

 

Mr Lim gave the assurance that fares will continue to be regulated by the Public Transport Council, and help will be given to those who cannot afford to pay.

 

Source: Straits Times

Increases in cost of offices, shops starting to slow down

Increases in cost of offices, shops starting to slow down

 

By Fiona Chan

 

RESPITE may be in sight for those who have been griping about the surging cost of doing business in Singapore.

 

Latest figures show that the increases in the cost of shops and offices eased in the fourth quarter of last year, in line with a general slowdown in the property market.

 

Prices and rentals for these commercial properties soared for most of last year, especially for office space, which reached an all-time high amid an acute short supply.

 

This prompted complaints from businesses and sparked off worries about Singapore’s competitiveness.

 

But official data released by the Urban Redevelopment Authority yesterday may finally calm these jitters.

 

Rentals for offices rose by 10.9 per cent between October and last month, down from 14.8 per cent in the previous three months – which was a decade-high jump, said Mr Li Hiaw Ho, the executive director of CBRE Research.

 

The slowing could be ‘the initial sign that the numerous efforts by the Government to cool the sector are taking effect’, said Ms Tay Huey Ying, the director of research and consultancy at Colliers International.

 

These moves include releasing more land for offices as well as immediate steps such as short-term leases in existing buildings and temporary office plots.

 

Colliers’ own data shows that office tenants are becoming increasingly resistant to further rent rises. Rents for office space in several areas, including Grade A buildings in Raffles Place, have seen declining growth rates for the past two to three quarters, said Ms Tay.

 

She said this is because firms are more willing to explore alternative business space locations, including business parks and high-tech industrial space.

 

For the whole year, rentals for office space jumped by 56.1 per cent. The rental index is now at an all-time record of 175.1 points, said Mr Li.

 

Ms Tay expects growth to moderate next year as tenants hold out for the expected large new supply in 2010. She is forecasting a rise of up to 20 per cent for Grade A office space.

 

As for shops, the rise in rentals has all but peaked. Overall rentals rose by 0.6 per cent in the fourth quarter, compared with 8.1 per cent in the previous quarter.

 

In Orchard Road, rental growth was almost flat at 0.3 per cent in the quarter. Shops on the fringes saw slightly higher growth, but suburban retail space did the best with a 1.3 per cent rise.

 

For the whole year, shop rents rose by 18.2 per cent.

 

But landlords wanting to raise rents this year are likely to face strong resistance from retailers, said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

 

‘With the projected large supply coming on stream next year, retailers would have more space choices and would resist large increments in retail rents.’

 

He expects rents to increase by 5 to 10 per cent for this year.

 

Source: Straits Times

Growth in rents of private homes beginning to ease up

Growth in rents of private homes beginning to ease up

 

EXPATRIATES and other tenants in private apartments can finally start to breathe easier. Data from the Urban Redevelopment Authority released yesterday showed a subsiding of the sharp rise in rentals for condos in key areas.

 

Rentals for non-landed property in the coveted core central region, which covers Tanglin and Bukit Timah, for instance, grew just 5.3 per cent, less than half the rate of 12.2 per cent achieved in the third quarter.

 

The drop in rental growth was not as dramatic for the rest of the central region, though, which slid from 11.9 per cent to 8.8 per cent, and outside the central region – from 11.8 per cent to 8.5 per cent. Overall rents of private homes grew 6.8 per cent from October to December, slowing from an 11.4 per cent rise in the previous period. For the whole of last year, private home rentals surged 41.2 per cent.

 

Mr Nicholas Mak, the head of research and consultancy at Knight Frank, expects private homes rentals to rise in a more ‘tamed manner’ of 10 per cent to 15 per cent this year.

 

Still, Ms Tay Huey Ying, director for research and consultancy at Colliers International, reckons rentals of luxury homes will rise by 25 per cent to 30 per cent this year.

 

Meanwhile, rentals for the HDB market continued to grow strongly.

 

The median rent for a four-room flat rose from $1,400 to $1,500 in the fourth quarter, while that for a five-room unit also grew $100 to hit $1,700.

 

From October to December, 3,300 flat owners were given approval to rent out their flats. The total number of flats being rented out rose 7 per cent to 17,400 in that period.

 

The chief executive of property agency PropNex, Mr Mohamed Ismail, expects rentals to rise by 15 per cent to 20 per cent for the whole of this year, as expats pushed out by high rentals for condo units look for cheaper options.

 

TAN HUI YEE

 

Source: Straits Times

Private homes losing speculative froth

Private homes losing speculative froth

 

Subsale activity slowed in Q4; rising rents defined 2007

 

By KALPANA RASHIWALA

 

(SINGAPORE) The level of speculative activity in the private property market, as measured by the extent of subsales, slowed considerably in Q4 last year, especially in the Core Central Region (CCR), according to the latest official data.

 

Islandwide, subsales as a percentage of total private housing sales fell from 14.4 per cent in Q3 last year to 10.7 per cent in Q4, while in the CCR, the hotbed of speculation, the subsale percentage fell from 24.8 per cent to 18.6 per cent over the same period. Property consultants attributed the drop to uncertainty about the financial markets as well as the withdrawal of the deferred payment scheme in October 2007.

 

Reflecting the current housing shortage, the stock of completed private homes increased by just 1,448 units last year – the smallest rise in at least 12 years. The stock had increased by 4,008 units in 2006, 7,453 units in 2005, and 10,969 units in 2004.

 

Rents of condos and apartments rose significantly last year – by 42.3 per cent in CCR (comprising the prime districts 9, 10, 11, Downtown Core and Sentosa), an even higher 47 per cent in the Rest of Central Region (RCR), and 41.9 per cent in Outside Central Region (OCR).

 

‘Looking back at 2003/2004, developers were cautious and there were not many housing starts. So three or four years down the road, we’re seeing a fall in terms of new home completions,’ DTZ executive director Ong Choon Fah explains. ‘Of course there have also been a lot of en-bloc sales in the past two years and some of these properties have been demolished,’ she adds.

 

‘The situation is even more severe in the prime areas, and we’ve been seeing a lot of expats fanning out from the prime districts to RCR, to rent private homes, which probably explains why the increase in non-landed rents was steeper in RCR compared to the CCR,’ Mrs Ong explains.

 

With many private residential projects likely to be completed only in late 2008 and 2009, property consultants including Knight Frank managing director Tan Tiong Cheng expect rentals for non-landed properties to increase further this year. The rise could be less steep – perhaps 20 per cent, or around half the rate of increase for last year.

 

Yesterday’s data on the private property market by Urban Redevelopment Authority showed that the overall price index for private homes rose 6.8 per cent in Q4 over the preceding quarter, slower than the 8.3 per cent hike in Q3. For the full year, the index was up 31.2 per cent, three times the 10.2 per cent rise in 2006.

 

In terms of regions, the price index for non-landed private homes in CCR rose 7.5 per cent in Q4, more measured than the 8.3 per cent gain in Q3. Price indices for RCR and OCR advanced 7.7 per cent and 7 per cent respectively in Q4, slightly more modestly than in Q3.

 

For the whole of last year, the non-landed home price index for CCR rose 32.7 per cent, while RCR and OCR indices were up 30.4 per cent and 26.4 per cent respectively.

 

Developers sold a record 14,811 private homes last year, surpassing the previous high in 2006 by 32.9 per cent. They launched a total of 14,016 units in 2007, 26.6 per cent above the 2006 figure and also a new high.

 

Knight Frank director (research and consultancy) Nicholas Mak predicts that URA’s overall private residential property price index will rise at a more sluggish pace – around 10-15 per cent – this year, as buyers become more prudent.

 

Colliers International director (research and consultancy) Tay Huey Ying reckons that subsales as a percentage of total private homes sales islandwide will continue trending down in the coming months, to average about 8 per cent for the whole year, as the market moves to a ‘healthier and more sustainable set of fundamentals’.

 

Less speculation could also slow the hike in home prices, she says. ‘As a result, developers are less likely to bid aggressively for development sites and this will affect the success rates of collective sales,’ she adds.

 

Some seasoned market players are predicting that home prices in CCR could take a hit of up to 10 per cent this year; those in RCR will be flat, perhaps rising slightly; while OCR will post the biggest gains of about 10-15 per cent.

 

‘There’s significant supply of projects for launch in CCR, and that will weigh down on prices. Foreign buying will thin because of the financial market turmoil which is hitting high-net-worth bankers and others,’ a veteran industry observer suggests.

 

BT learnt yesterday that the release of the high-profile Marina Bay Suites, which was initially slated for the end of this month, has been delayed till after the Chinese New Year festivities – by which time the Budget should also be announced and hopefully lift sentiment.

 

Source: Business Times

New short-term work passes for foreigners

New short-term work passes for foreigners

 

FOREIGNERS working on short-term assignments in Singapore are no longer to be issued with Professional Visit Passes (PVPs) by the Immigration & Checkpoints Authority. Instead, from Feb 1, the Ministry of Manpower (MOM) will introduce two new Work Pass categories for such foreigners – the Miscellaneous Work Pass and the Work Permit (Performing Artiste).

 

Foreigners currently exempt under the PVP scheme as well as those performing two new short-term activities will be exempted, but they will still need to notify MOM before performing such activities.

 

The Miscellaneous Work Pass is valid for up to 60 days and will apply to:

 

·  a foreigner involved in activities directly related to the organisation or conduct of any seminar, conference, workshop, gathering or talk concerning religion, race or community, cause, or political end;

 

·  a foreign religious worker giving talks on any religion;

 

·  a foreign journalist, reporter or accompanying crew member not supported or sponsored by any Singapore government agency to cover an event or write a story in Singapore.

 

The maximum duration of the Work Permit (Performing Artiste) is six months. The new pass will apply to foreign artistes performing at any bar, discotheque, lounge, night club, pub, hotel, private club or restaurant.

 

Two types of activity will be exempt because they are of short duration, sporadic in nature and do not involve an employer-employee relationship with a local company. They might also require specialised expertise generally unavailable here.

 

The first type includes those in the commissioning or audit of any new plant or equipment, and those involved in the installation, dismantling, transfer, repair or maintenance of any equipment. The other type of activity involves those in the arbitration or mediation services in relation to matters not involving religion, race or community, nor a cause or a political end.

 

Foreigners performing Work Pass Exempt activities can do so for the duration of their Social Visit Passes subject to a maximum of 60 days.

 

More information is available on the MOM website at http://www.mom.gov.sg.

 

Source: Business Times

HDB resale deals at a new low in 2007

HDB resale deals at a new low in 2007

 

Rising resale prices and higher COVs result in last year’s total of 29,436

 

By UMA SHANKARI

 

THE number of resale HDB flats which changed hands fell to a new low in 2007 – with just 29,436 transactions recorded – as buyer resistance set in, in the face of escalating resale prices and more sellers asking for large amounts of cash-over-valuation (COV), fresh HDB data shows.

 

The number was lower than the 29,723 resale transactions seen in 2006, which was itself a new low. Stock-market jitters in the fourth quarter also caused resale transactions in the last three months of 2007 to fall 13 per cent to 6,700.

 

The fall in transaction volume came despite a 17.5 per cent increase in HDB resale prices last year. In the fourth quarter, HDB resale prices rose 5.7 per cent, lower than the increase of 6.6 per cent seen in the third quarter.

 

‘With escalating resale prices and more and more COV transactions, we saw the resale market hitting resistance level in the fourth quarter as HDB flat buyers do not have or are not willing to part with so much cash,’ said Eugene Lim, assistant vice-president of property agency ERA.

 

The COV is the amount that is paid above the valuation of a flat and cannot be paid with a home loan or monies from the Central Provident Fund (CPF). With high COVs demanded by sellers, buyers are required to fork out more cash.

 

In the fourth quarter, cases requiring COV constituted 86 per cent of all resale transactions, up from 80 per cent in the third quarter. The median COV amount also increased to $22,000 in the last three months of the year, from $17,000 in the previous quarter.

 

However, a closer look at some of the traditionally popular estates show that median COVs have actually decreased as buyers resisted forking out large sums of cash. For example, in the third quarter, the median COV for a five-room flat in Queenstown was $110,000. In the fourth quarter, it had fallen to $79,000.

 

But despite the lower total resale volume, the number of five-room and executive flat transactions actually increased in 2007 over 2006, ERA’s Mr Lim pointed out.

 

The number of five-room resale transactions rose 13.3 per cent to 7,275 in 2007. Similarly, for executive flats, there were 2,627 transactions in 2007 – a jump of 17.9 per cent compared with 2006.

 

The robust numbers are mainly due to cash-rich buyers from enbloc sales or private property sales downgrading to larger HDB flats in choice locations, experts said. These buyers also account for the robust COVs fetched by larger flats.

 

‘Based on our data, more than 50 per cent of the high COVs of $80,000 or more seen in 2007 are from private property downgraders,’ said Mohamed Ismail, chief executive of property firm PropNex.

 

Sellers of these larger HDB flats are either upgrading to private properties or downgrading to smaller HDB flats, Mr Ismail said. He added that there was little upgrading from smaller to bigger HDB flats.

 

ERA’s Mr Lim said the fact that sellers of larger HDB flats are upgrading is good news for developers of mass market condos as traditionally, the support for their projects comes from buyers living in these HDB flats.

 

Source: Business Times

2 new lines and $20b to double rail network

2 new lines and $20b to double rail network

 

Current projects could also be completed earlier, greater contestability in rail industry to be introduced

 

By SAMUEL EE

 

(SINGAPORE) The government will spend some $20 billion to build two new rail lines and a couple of extensions to double the length of Singapore’s rail network by 2020.

 

The figure, announced by Transport Minister Raymond Lim yesterday in the second instalment of the sweeping changes arising from the land transport review, is over and above the $20 billion already committed for the ongoing Circle Line, Downtown Line and Boon Lay extension.

 

Two new underground MRT lines will be built to connect Marina Bay to Woodlands in the north, and Changi in the east. The 27-km long, 18-station Thomson Line will run upwards from Marina Bay through Ang Mo Kio, connecting Kim Seng, Thomson, Sin Ming and Kebun Baru – areas that do not have a direct MRT link. This is expected to be ready by 2018.

 

Similarly, the 21-km long, 12-station Eastern Region Line will branch out to the right – parallel to the East-West Line – and serve the residential estates of Tanjong Rhu, Marine Parade, Siglap, Bedok South and Upper East Coast. It will be completed by 2020.

 

In addition, the current North-South and East-West Lines will be extended. The former, which now ends at Marina Bay station, will be extended one kilometre southwards to serve upcoming developments in the area such as the new cruise terminal in Marina South.

 

As for the East-West Line, it will be extended by another 14 km into Tuas. Both extensions will be completed by 2015.

 

‘Together with the rail lines now under construction, the new rail lines will double our network from today’s 138 km to 278 km in 2020,’ said Mr Lim. ‘We expect our rail network to carry three times as many journeys, rising from today’s 1.4 million a day to 4.6 million in 2020.’

 

The government is also speeding up construction of the Circle Line (CCL) and Downtown Line (DTL). Mr Lim said additional resources will be pumped in to bring forward the completion of DTL Stage 3 by two years – from 2018 to 2016 – so that it would be ready just a year after DTL Stage 2 is ready. DTL 3 serves Bedok Reservoir and Tampines, while DTL 2 the Bukit Timah Corridor.

 

CCL Stage 3, which was due to open from 2010 onwards, will now be ready in mid-2009 to benefit residents in the north and north-east areas. More CCL stations will be opened, such as the Thomson and West Coast stations. Originally, these two shell stations were to be fitted out only when they were deemed to have sufficient surrounding developments.

 

With these plans firmly in place, Mr Lim said new extensions or stages of new lines would open almost every other year until 2020.

 

The minister was speaking during a visit to the $290-million Kim Chuan Depot, an underground MRT depot that is the first of its kind in Singapore and the largest in the world. The 11-hectare, four-storey facility took five years to build. It will provide the stabling and maintenance facilities of the Circle and Downtown Lines, as well as house the two lines’ operation control centre.

 

As for the existing rail network, Mr Lim revealed that all above-ground MRT stations will have platform screen doors installed by 2012 to curb the rising number of train track intrusions.

 

He also said that as the rail network is expanded, future lines would cost more to build and operate as they would mostly be underground. Mr Lim said his Transport and Finance Ministries would work together to refine the financing framework. A more holistic network approach will be taken when evaluating new MRT lines, instead of the current line or project approach.

 

‘This would potentially enable future new lines to be implemented a few years earlier than otherwise, so long as the entire rail network remains viable,’ he explained.

 

Greater contestability in the rail industry will be introduced as well, in order to enhance efficiency and maintain cost competitiveness.

 

‘A key step in enhancing contestability is to have shorter operating licences, say 10 to 15 years, compared to the existing 30-year licence periods,’ said Mr Lim. ‘Operators will compete for the right to operate rail services. They will have to meet service obligations or risk being replaced at the end of their term.’

 

A senior executive at SMRT, the dominant rail operator, called the minister’s remarks ‘positive’.

 

‘More rail lines is good news for everyone,’ he said. ‘As for competition, that is to be expected. But we believe we are well-positioned to bid for the lines because of our operation, maintenance and engineering skills. And in terms of cost management, we are already one of the most efficient in the world.’

 

SMRT’s licence to operate the North-South and East-West Lines expires in 2028. As for the contestability policy, the Transport Ministry said this would only apply when the current licence expires. Existing contracts will be honoured and ‘any changes will involve discussions with the operator’.

 

Source: Business Times