Register as a MEMBER today and receive our FREE Special Report!

Dec

30

Housing prices set to rise, but govt committed to affordable homes

December 30, 2009 | Leave a Comment

SINGAPORE : It has been a roller coaster ride for the Singapore property market this year, dipping in the first quarter before registering a sharp rebound.

Market watchers have said housing prices will continue to rise next year, spurred by a recovering economy and the opening of the integrated resorts (IRs).

The robust turnaround in the property sector was something no one would have predicted.

Singapore entered the year in the midst of a recession, and the outlook was bleak.

But as the stock market rallied in March, sentiments improved.

Market watchers said pent-up demand over the last year and a “herd instinct” led to a buying frenzy.

Speaking to MediaCorp, National Development Minister Mah Bow Tan acknowledged it has been an exceptional period.

He said: “Nobody, no matter how prescient, no matter how clever, would have been able to predict that this is what is going to happen this year. All of us were caught off-guard…I did not expect the prices to go up. But the point is, are we able to respond to this change. And the answer is yes.”

Fears of a property bubble forming saw the government introducing measures such as removing easy financing schemes to cool the private homes sector.

The measures included removing the interest absorption scheme and interest only loan to temper the exuberance of the market.

Public housing supply was also ramped up, to signal that there are enough flats and there is no need to panic.

Eugene Lim, associate director, ERA Asia Pacific, said: “The market will probably stabilise for now. But I would say that when the IR opens, and when more international investors do come into Singapore, we may expect another run. Especially now, in the recent one, two months, we have noticed a pick up in high-end properties priced above S$2,000 per square foot.”

Although housing prices are set to rise next year, Mr Mah said the government is closely monitoring the situation and will take action, if necessary. For example, Mr Mah said more land will be released to developers if needed. He also promised first-time buyers that HDB will have more Build-To-Order exercises, if there is demand.”

But Mr Mah said calls for the government to artificially dampen prices is not the solution to affordability.

He said: “The whole question is, do we peg HDB flats to the market, or whether we follow another system. And that other system is what some countries use.

“In other words, I sell you a flat at fixed price, when you sell the flat, you have to sell it back to me also at a fixed price. In other words, you are not allowed to profit from the flat. There you can keep flat prices fixed.”

Mr Mah said a flat is not just a roof over one’s head, but also an asset that will increase with time.

Source: Channel News Asia, by Joanne Chan

NOTE: If you would like us to assist you in your property needs, you can contact us immediately at our Hotline +65 9459 5556 or email at sales@luxurysingaporehomes.com. You can also visit our website at www.LuxurySingaporeHomes.com to see our new launches today!

Print This Post

Email This Post

Nov

26

Measures to cool property market appear to have worked: Mah

November 26, 2009 | Leave a Comment

SINGAPORE: The government said on Monday the measures taken to cool the
property market appear to have had the desired effect.

Speaking in Parliament, National Development Minister Mah Bow Tan noted that
since the measures were introduced, the sale of private homes fell 37 per
cent on-month in September, and another 29 per cent in October.

In September, the government removed the Interest Absorption Scheme and
Interest-Only Loans to temper the exuberance in the property market and to
prevent a bubble from forming.

The government has also announced it will resume land sales under the
confirmed list of its land sales programme in the first half of 2010.

Mr Mah said the government will continue to monitor the property market
closely to assess the market’s response to the measures introduced before
deciding whether further measures are needed.

“Our key interest is to ensure that property prices and rentals remain
competitive and move in line with economic fundamentals. We want to curb
erratic spikes in prices due to excessive speculation, inaccurate
information or market manipulation,” the national development minister said.

“But we must let market forces determine prices, based on genuine demand
from home-buyers and investors.”

Mr Mah added that the measures introduced in September have also helped to
control speculative activity. Government records so far indicate that the
number of sub-sales today is not as high as it was during the height of the
property market boom.

Sub-sales are closely watched as a gauge of speculative activity in the
property market.

“The two schemes that we have removed or disallowed are rather targeted,
targeted at the speculators, for example, who would make use of these
schemes to flip or turn over properties quite rapidly. We have taken a
calibrated approach to the property market. The idea … is to cool the
market, not crash it,” Mr Mah said.

The minister said the government may remove the cooling measures in future
if the property market stabilises or weakens, but it is too early to say
when that might happen.

Analysts MediaCorp spoke to said they expect the property market to remain
subdued in coming months.

Nicholas Mak, adjunct lecturer for Business & Environment at Ngee Ann
Polytechnic, said: “(The cooling measures) have a psychological effect on
speculators, removing many of them from the market. Another factor is that a
large part of sale volume we experienced in the first half and later part of
this year is mainly due to the sale of 99-year mass market condominiums.
Developers are running down on inventory on such stock. As a result, home
sales will start to slow down.”

In addition, fewer launches are expected in the year-end period.

Ang Choon Beng, director and head of research services at Cushman &
Wakefield, said: “I think the November and December months will be quiet
because it’s the holiday season. Most developers will only start launching
new projects after the holiday season is over.

“The current situation is that developers are under no pressure to sell
because they have substantially sold down their inventory. They have already
sold down about 45% of total upcoming supply. So developers are not under
any sort of pressure.”

But analysts do not expect prices to trend down yet.

“There’s excess liquidity in the market as a result of global low interest
rates. Because Singapore is a transparent and open market, some of this
money may come in. That may be an underlying factor that will support the
property market in Singapore,” said Mr Ang.

Analysts expect prices to rise moderately, at about 5 to 10 per cent in the
year ahead. The bulk of the increase is expected to take place in the mid to
higher end of the market, as prices of mass market homes have already
reached a high.

Source: Channel News Asia, by Yasmine Yahya / Ng Baoying

NOTE: If you would like us to assist you in your property needs, you can contact us immediately at our Hotline +65 9459 5556 or email at sales@luxurysingaporehomes.com. You can also visit our website at www.LuxurySingaporeHomes.com to see our new launches today!

Print This Post

Email This Post

Nov

8

Foreigners back in private home market

November 8, 2009 | 1 Comment

FOREIGN buyers are streaming back into the private homes market in growing numbers, especially those from China.

New research from property consultancy Savills Singapore shows foreigners accounted for 22.7 per cent of private home sales in the third quarter - above the 19.7 per cent average since the start of 2000.

Buyers from China have dislodged those from India for the No. 3 spot in the rankings this year with a contribution of nearly 15 per cent of total foreign purchases. This puts China just behind Indonesia in the second spot and Malaysia at No. 1.

In the past two years, India had been in third spot, but it has slipped to fourth.

Last year, buyers from China had moved up to the No. 4 spot, dislodging buyers from Britain.

Buyers from Myanmar featured more strongly, coming in at No. 8. They did not make it to the top 10 last year, and were 10th in 2007.

In the July to September period, foreign buyers - including permanent residents - lodged 2,448 private home caveats, a key step to buying a home.

This is up from 1,807 caveats in the second quarter and just 498 in the first, according to data compiled by Savills.

In all, permanent residents bought 1,389 homes in the third quarter.

DTZ said its preliminary data for the third quarter showed that foreigners accounted for about 25 per cent of total sales, compared with about 33 per cent during the boom of 2007.

The most popular project sought by foreigners was Sophia Residence, a project launched in July. Then came Caribbean at Keppel Bay, Ascentia Sky, One Devonshire and Viva.

Permanent residents preferred Melville Park, a 99-year leasehold condominium in Simei, the recently launched Trevista, followed by Caribbean at Keppel Bay.

About 54 per cent of the purchases by China buyers were for resale homes, said DTZ head of South-east Asia research Chua Chor Hoon.

Like Malaysian buyers, buyers from China tend to prefer homes priced between $500,000 and $1 million.

One-fifth of them bought homes costing $1.5 million to as much as $5 million.

Indonesians, however, tended to go for higher priced projects, particularly those priced $1.5 million to $5 million.

They like properties located at Novena, River Valley and the Singapore River.

They had been the biggest group of foreign buyers, taking first place from 2004 to 2007, only to lose the spot to Malaysia during the recent economic crisis, said Ms Christine Sun, Savills Singapore’s senior research & consultancy manager.

The latest figures featured a substantial rise in the number of foreign transactions for higher-priced properties.

A total of 86 properties priced above $5 million were sold in the quarter, up from 27 in the second and a mere six in the first.

Also, there was a 60 per cent rise in deals for projects costing between $1.5 million and $5 million. Demand from foreigners for mass market homes was little changed from the second quarter.

Savills said recent data showed that foreigners who are not permanent residents tend to buy more pricey projects.

This group was also more likely to buy homes in prime districts than permanent residents, said Ms Sun. ‘We are hearing that more of these super-rich mainland Chinese buyers have come in recent weeks to buy prime properties like the bungalows in Sentosa Cove.’

But the big influx of foreigners to the luxury market in the 2006-2007 boom has not quite returned, consultants said.

Still, support from regional buyers could rise further. Jones Lang LaSalle’s head of residential, Ms Jacqueline Wong, said the firm has had rising interest from new potential buyers from India, China and Russia in the past four months.

‘We are one of the places they are considering. They see Singapore as a safe haven,’ said Ms Wong.

A senior private banker at a foreign bank said: ‘We are seeing some clients consider buying a Singapore property as one of a string of homes they have around the world. Luxury homes have come down 30 per cent from the peak, so they are better value now.’

DTZ’s Ms Chua said foreign buyers see the growing attraction of Singapore as a global city and expect prices to keep rising as the economy strengthens.

‘Prices of prime and luxurious units have not reached 2007 levels and there is still the potential of capital appreciation depending on the rate of economic recovery,’ she said.

Source: The Straits Times, by Joyce Teo

Print This Post

Email This Post

Nov

4

New heights for Singapore property

November 4, 2009 | Leave a Comment

SINGAPORE - A bubbling property market represents the latest indication that Singapore is recovering from its global crisis-induced economic doldrums.

Surging demand for residential units has in recent months seen potential buyers queue for hours before new house openings and anecdotally many have left blank checks with their property agents to fill out to secure their spots in new projects.

When the global economy crashed last year, Singapore was among Asia’s hardest hit. As one of Asia’s most open and export-dependent economies, the island state was the region’s first to slip into recession last year after recording two consecutive quarters of economic contraction. Slowing growth took an especially heavy toll on the island state’s property market, which was growing briskly in the run-up to the crisis.

Local property consultancy company DTZ said that the number of property transactions it handled last year was down about 35% on the number of units sold in 2007. Prices of non-landed freehold private homes in the island state’s prime districts fell by 21.6% year on year in 2008, driven down by a 14% quarter-on-quarter contraction in the fourth quarter.

Prices of government-built Housing Development Board (HDB) flats also suffered, with many apartments sold at or below market valuation.

Bearish sentiment, unsold inventories and the potential for buyer default risk had caused industry analysts earlier this year to predict that high-end property prices could decline by between 15-20% in 2009. For mid-market properties, the consensus forecast was a 5-10% decline. Singaporean buyers have defied those downcast expectations, with market sentiment turning positive in the second quarter judging by the surprisingly high number of deals closed.

Private sector developers in July launched an all-time high of 2,878 new flats and an astounding 2,767 of those units were sold out within a month. That sales figure smashed by 52% the record of 1,825 units sold set the previous month. Over 43% of the transactions that took place in July fell under the middle- to high-end tier, with prices anywhere between S$1,000 (US$715) and S$1,999 per square foot depending on location.

New luxury developments in Singapore’s reclaimed areas on the offshore island of Sentosa, where prices average S$2,000-S$3,500 per square foot, also reported steady sales. Significantly the rush has also driven up the prices of government-built HDB flats. In the second quarter, more than 10,000 HDB resale flats changed hands, up from 6,446 units in the first quarter and 7,763 units in the same quarter of last year.

That figure climbed higher to 11,649 units sold in the third quarter, representing the highest such level in five years. Mass-market leasehold projects outside of prime areas have returned to 2007 price levels, according to Chua Chor Hoon, head of Southeast Asia research at DTZ Debenham Tie Leung, a property consultancy. The average price of a leasehold non-landed resale home rose to S$610 per square foot in the third quarter of this year, a mere S$5 less than the 2007 peak level. This, he notes, reverses a more than 20% fall in 2008.

For resale HDB flats, price increases are calculated by the level of cash-over-valuation (COV) buyers pay sellers. The COV median in the third quarter quadrupled to S$12,000 per unit compared to the going rates in the second quarter, according to data released by the Housing Development Board (HDB). Property agents say many sellers now ask for a minimum of 30,000 COV per unit, and in some cases, it can go as high as $70,000. Property agency PropNex chief executive Mohamed Ismail, believes that resale HDB prices are on course to rise 2%-3% over the fourth quarter.

Singapore’s rebound comes as regulators in other recovering regional markets bid to rein in property lending due to concerns that rising prices could cause more bad debts. The recovery has also rekindled pre-crisis complaints about the chronic shortage and rising cost of government-built flats. In land-scarce Singapore there is always pent-up demand for new housing, including from newly married couples looking to purchase their first home.

But comparatively rich foreign buyers are now viewed as the main drivers behind the rising prices of both private homes and HDB flats. Property agency ERA’s statistics show that foreigners with permanent resident status (PRS) accounted for 40% of their recent buyers, up from 20% three years ago.

To cool the market, HDB announced it would release 7,000 new flats onto the market between October and December. It also said it would offer over the next two months 4,000 new flats under a build-to-order (BTO) scheme, on top of the 1,200 new BTO flats which were already in the construction pipeline. Private home sales rates came off their recent highs in September. But many analysts are skeptical the moves will stabilize the market due to doubts that buyers will be willing to wait the three year construction time and because the BTO scheme is only available to Singapore citizens.

Popular public housing
HDB flats, in which about 84% of the population resides, have long been the cheapest housing option in Singapore. Getting an HDB flat of one’s choice, however, is not easy because of a tedious balloting process. Flats in popular locations are usually oversubscribed by over 10 times and that high demand is expected to grow due to the inelasticity of supply and a growing population. One local newspaper recently featured a married couple who still live separately in their respective parents’ homes because of their inability to secure a HDB flat of their own.

Resale flats’ higher prices, driven up by foreign buyers, have put them out of reach for your average Singaporean. Many have also blamed the HDB for raising the valuation of its flats at the end of last year as a reason for the recent price spike. An online petition launched in September calling on the government to intervene in the market by lowering HDB valuations and building more affordable flats quickly surpassed its target of 1,000 signatures.

Parliamentarian Lim Wee Kiak raised the issue of affordable housing in September by advocating a new mechanism to provide bridging loans to young couples looking to buy their first flat. In response, National Development Minister Mah Bow Tan said that HDB flats remain affordable to most Singaporeans, with first-time households using on average less than 30% of their household income to service their housing loans.

However a study published last year by National University of Singapore economists Tilak Abeysinghe and Gu Jiaying found that the purchasing power of people’s lifetime earnings was lower in 2007 than it was in 1990 when tracked against the prices of HDB resale flats. The study found that the prices of HDB resale flats were less affordable over the period - and notably before the more recent surge in prices.

What Mah apparently overlooked was the impact of longer mortgage loan periods. In the 1980s, maximum loan tenures were set at 20 years. It has since been revised upward and this year 56% of HDB flat buyers opted for the maximum 30-year tenure. Analysts say a higher cost of living means that your average Singaporean must allocate a higher percentage of their monthly income for housing than was required 20 years ago. It also means that Singaporeans need to work longer than before to pay off their housing loans, they say.

Minister Mah also said that the HDB will continue to supply new housing units but “we cannot be building new flats to cater to every last person who wants a new flat … because if you do that, then obviously you are over-building”. He quoted HDB data which states that “eight in 10 first-timers could get a flat on their first try if they were not choosy; the success rate was 96% for the second try”. HDB has also stepped up efforts to provide smaller housing units for older people who wish to downgrade in size and purchase back flats from the aged who have lost their previous sources of income.

Since it was first established in 1960, HDB was designed to provide affordable homes to Singaporeans in a push towards economic modernization. The state agency was so successful in moving people out of slums and into neat storied flats that last year it won the United Nations Public Service Award, in recognition of its drive to raise public housing standards.

HDB does not intervene directly by fixing prices of its resale flats, but it does influence market conditions through its control over new supply, said Wong Tai Chee, associate professor in urban studies at the Nanyang Technological University and co-author of the paper “A Roof Over Every Head, Singapore’s Housing Policy between State Monopoly and Privatization”.

He cited an example of when the government cut prices by as much as S$40,000 per unit over eight years ago in newly opened remote areas of Punggol and Sengkang. Cash-strapped buyers were attracted by the price cuts and the measure helped to clear a temporary oversupply on the market.

During the 1996 property boom, the government imposed a capital gains tax on profits made from selling properties within three years of purchase. The rule continued until 2001 when it was abolished to spark more property transactions during an economic downtrend. The government could eventually decide to readopt such measures to deter current property speculation, some analysts reckon.

Minister of Finance Tharman Shanmugaratnam recently said the government does not plan to impose capital gains taxes on property as part of new changes to the income tax code, which come into force in January next year.

In a move many saw as a bid to tramp down speculation, the government last month barred certain low cost loans for housing projects. It also recently banned developers from absorbing interest payments for projects that were still under construction. But there are few indications yet that demand or prices are set to slow for HDB housing.

Source: Asia Times Online, by Megawati Wijaya

Print This Post

Email This Post

Oct

25

Housing prices up across Asia

October 25, 2009 | Leave a Comment

The real estate markets in South Korea, Taiwan, Hong Kong, and Shanghai are very lively at the moment, with property prices surging. Hong Kong’s housing price index jumped 20.4 per cent in the period from December to August. In Taiwan, average housing prices in the April-June quarter rose 9.6 per cent from the January-March quarter. In South Korea, housing prices have been on the rise for five consecutive months since April.

The common factor fueling these markets is the low cost of housing loans resulting from low-interest rate policies introduced by governments to cope with the recent worldwide financial crisis. These low loan rates have encouraged potential home buyers to take the plunge.

An official of DTZ, a Singaporean real estate research firm, said that in addition to low interest rates, people were diverting money into real estate having realised the high-risk nature of investing in complicated financial products after the deepening of the financial crisis following the collapse of Lehman Brothers last autumn.

In Singapore and Taiwan, ordinary citizens believe that real estate prices always rise, which attracts more investment in the real estate sector. A Singaporean real estate broker said that in 2007, condos worth millions of dollars were being sold at record high prices every day as investment money flooded in from the Middle East.

This time, there is greater demand for condos within the reach of ordinary citizens, the broker said, indicating the complex relationship between genuine and speculative demand. But the relevant monetary authorities are wary of the real estate markets heating up.

This is because banks, which have fewer borrowers because of the recession, have been competing to extend housing loans by cutting home loan interest rates, a trend that could cause bubbles in their respective real estate markets.

South Korea has introduced a limit on housing loans to between 50 percent and 60 percent of the price of the condominium. The financial authorities have also called for stricter screening of loan applications. Property prices in Seoul have risen 20 per cent since the start of the year. In Hong Kong, the government asked the banking industry in September to refrain from cutting loan interest rates any further. Meanwhile, the central banks of Taiwan and South Korea have announced they will closely watch rising housing prices and growth in the number of new housing loans.

Print This Post

Email This Post

May

16

Weekend launch for BelleRive off Bt Timah

May 16, 2009 | Leave a Comment

SING Holdings is launching its latest residential development, BelleRive, this weekend at indicative prices of between $1,325 and $1,464 per sq ft. The listed developer is also extending an interest absorption scheme to all buyers.

BelleRive, located off Bukit Timah Road between Balmoral and Robin roads, is a 15-storey apartment tower with a total of 51 units. Its two and three-bedroom units range from 958 sq ft to 1,679 sq ft.

The two penthouses, at 2,734 sq ft and 3,735 sq ft, each have a private roof garden, swimming pool and pool deck. The development boasts fittings and finishes from notable brands including kitchen appliances by Gaggenau and imported kitchens by Hoffen.

Project facilities include a swimming pool, barbecue area, children’s playground and gymnasium. Project completion is scheduled for end-2010. Sing Holdings chief executive Lee Sze Hao said yesterday that about 50 per cent of the freehold project was sold during a recent preview.

BelleRive is within walking distance of the upcoming MRT station in Stevens Road. It is also reasonably close to several schools including the Singapore Chinese Girls’ School, Anglo-Chinese School (Barker Road), Raffles Girls Secondary School and St Joseph’s Institution.

Sing Holdings’ previous projects include 38 Draycott Drive, a high-end apartment block in the Ardmore Park area, and an office building named EastGate in the East Coast area.

Residential projects in the pipeline are Meyer Residence on the East Coast, an 85 per cent-owned project, and a joint-venture project called The Laurels at Cairnhill.

Source: Business Times

NOTE: If you would like us to assist you in your property needs, you can contact us immediately by Clicking Here or simply visit our website at Luxury Singapore Homes to see our new launches today!

Print This Post

Email This Post

May

13

StanChart marks 150 years with new home loan deal

May 13, 2009 | Leave a Comment

STANDARD Chartered (StanChart) in Singapore is the latest bank to unveil attractive home loan packages for homebuyers and owners, as interest in residential property purchases continues to pick up.

It is introducing a package with a low interest rate of 1.5 per cent per annum for the first year. For the second year onwards, customers will pay an annual rate equivalent to the three-month Singapore Interbank Offered Rate (Sibor), plus 1.35 percentage points.

The promotion, which applies to any new mortgage taken up with the bank from yesterday till June 15, is part of StanChart’s 150th anniversarycelebration. It will also throw in freebies like free valuation, legal subsidy of up to $2,000, and free fire and home content insurance. There is also an additional perk for priority banking customers who hold StanChart’s Visa Infinite card.

A quick check shows StanChart’s offer to be one of the more attractive ones in town, particularly if Sibor continues to languish at well below 1 per cent.

A comparable package by Maybank - touted by the bank as the lowest three-year fixed rate home loan in town - fixes its first, second and third year rate at 1.6 per cent, 2.2 per cent and 2.9 per cent, respectively. There is no minimum loan amount required for application.

For StanChart, the minimum loan quantum is $100,000, while the lock-in period is just two years. Said StanChart retail banking products general manager Dennis Khoo: ‘With this offer, they (customers) can enjoy more flexibility in their finances to be more agile and responsive to market changes.’

Source: The Straits Times

NOTE: To find out more about the home loan packages, visit Home Loan today!

Print This Post

Email This Post

Tags: bank loan package, home loan

May

10

Now it’s property counters

May 10, 2009 | Leave a Comment

BANKS gave way to property counters yesterday as the extraordinary share market rally stayed in high gear. The property sector’s big guns rocketed and helped the market jump almost 63 points to 2,241.6. The numbers from two high-fliers were stunning. Keppel Land, which made a cash call late last month to raise $712 million, was the biggest gainer in percentage terms, rising 56 cents, or 25.2 per cent, to $2.78. It has gained 66.47 per cent in just five days.

City Developments looked a slacker in comparison but still surged 85 cents, or 11.3 per cent, to $8.35. The trading volumes of some property counters, including City Developments and CapitaLand, swelled by more than 40 per cent each yesterday.

The FTSE ST Real Estate Index has surged 59.5 per cent since its March lows, outperforming the benchmark Straits Times Index, which is up 53.9 per cent. Some observers have described the recent stock market resurgence as a ‘liquidity rally’ - one driven by new flow of capital into stocks.

‘I think it’s simply because the sector is so under-owned over the last few quarters,’ said CIMB-GK property analyst Donald Chua. ‘Once the market picks up and liquidity comes in, many fund managers have no choice but to buy into the sector.’

But he adds that fundamentally, there has been no changes in the sector, although there might be some talk of sales volumes picking up. ‘I don’t think you can conclude that property prices have stabilised and I think that’s the key thing to look out for before you can say anything has changed,’ he said.

Many developers have cautioned in earnings statements that this year will remain challenging as the local property market remains cautious. Fund managers have been steadily moving money back into equities, helping to ignite a rally in stock markets around the world.

Mr David Lee, managing director of Ferrell Asset Management, a Singapore-based hedge fund, said in an interview with The Straits Times this week that he had put money into property stocks at the start of this year. ‘It was the best time to increase Asian allocation in risky assets such as property stocks,’ he said, adding that real estate shares had been lagging. ‘Sentiment was very bearish; valuations of some stocks became very attractive,’ he said. ‘The situation is a lot better now. For example, refinancing risk of properties is improving. People feel a lot better now with easier credit and better liquidity.’

A recent UBS report said the Singapore economy bottomed in the first quarter, making this a good time for investors to buy property and banking stocks as they are likely to be the best-performing sectors in the six months to come.

Yet investors have been positioned ‘exactly the other way round’ with heavier allocations in defensive stocks like telecoms, said UBS strategist Tan Min Lan.

While rocketing share prices took the headlines, CapitaLand also offered some good news from the front line of sales. It has collected payment for almost all the 542 units sold in its RiverGate condominium at Robertson Quay, which was completed in March.
About 98 per cent of the buyers have paid up, with collection of the remaining payments still ongoing. Most buyers opted for the deferred payment scheme where they put up a 20 per cent downpayment and delayed the remaining payments until completion.

Source: The Straits Times, by Yang Huiwen & Fiona Chan

Print This Post

Email This Post

May

8

Will property recover faster than expected?

May 8, 2009 | Leave a Comment

MARKET turning points are very hard to spot. A recent example was the March 9 market bottom. Then, the world seemed a bleak place: we were in for a prolonged depression; banks were going to fail; many companies were going bankrupt and millions were going to lose their jobs and stay unemployed for years. That period also coincided with a spate of bad news from the Chinese companies listed in Singapore - the so-called S-chips. The cash wasn’t in the banks. The founders were losing control over their companies because they’d pledged their shares to financial institutions. Profit was overstated, and the companies’ status as going concerns was in question. One by one, the S-chips were getting suspended.

Under the never-ending onslaught of bad news, many investors threw in the towel and cashed out. By February, cash sitting on the sidelines was at its highest in more than 10 years. Government statistics showed that the amount of deposits of non-bank customers with domestic banking units and deposits with finance companies was equivalent to 99 per cent of the aggregate market value of all the stocks listed on the Singapore Exchange (SGX). The previous peak was in 2002, when the cash/market cap ratio was 91 per cent.

History has shown that such a high level of cash holdings portends strong upside in the equities market. The rebound did eventually come - almost out of the blue - and took many by surprise. The recovery - fuelled by sightings of ‘green shoots’ in the economy - has lasted eight weeks and equity prices have gained more than 40 per cent. But through it all, many analysts and
fund managers still doubt the sustainability of the recovery.

So what do we make of the projections of most property consultants that private residential property will slump by 25-35 per cent this year? The forecasts suggest more downside for the rest of the year given that prices fell ‘only’ 14.1 per cent in the first quarter. But like the pundits in the stock market, there is a possibility that these consultants too will miss the market turning point. For one, the stock market leads the property market by 4-8 months. If the stock market remains buoyant, then there is a
probability that the property market too will stabilise. And, as noted earlier, there is a lot of cash waiting to get into the market.

Already, there are signs that US real estate - the source of the current global financial crisis - is recovering. According to The New York Times, Sacramento (among the first US cities to fall victim to the real estate collapse) has seen investors and first-time buyers out in force competing for bargain-price foreclosures. Sales are up 45 per cent from last year, and the vast backlog of inventory has diminished. Progress is also visible in other hard-hit areas.

If so, one shouldn’t be too quick to dismiss the hope that the US property slump, just like the stockmarket slump, may end sooner than the doomsters think.

Source: Business Times

Print This Post

Email This Post

May

7

Crisis will drive more Mid-East funds to S’pore

May 7, 2009 | Leave a Comment

(SINGAPORE) Singapore and the region will attract more funds from the Middle East as the global financial crisis has underscored the importance of diversification, says Monetary Authority of Singapore (MAS) managing director Heng Swee Kiat.

In an interview with The Business Times, Mr Heng said the ability of Islamic banks to mobilise savings and deploy them productively will make Islamic finance more relevant.

This week, Singapore is hosting the 6th Islamic Financial Services Board (IFSB) Summit, an annual event that discusses key issues and developments in the regulation and supervision of Islamic financial services.

Mr Heng said that the Islamic finance sector faces some problems as a result of the financial crisis, but growth will resume in the medium term, bolstered by a trend in the financial world of going back to basics.

‘Greater Middle East flows moving to Asia will happen for a number of reasons,’ he said. ‘First, the financial crisis underscored the basic point of the need for risk diversification, and this will accelerate.

‘Second is the opportunity for investments. A lot of investment is going to be driven by economic growth and dynamism in this region.

‘Third, the capabilities for managing that flow have been increasing, over the years.

‘The opportunities for joint ventures - the sharing of management know-how and technology network - have grown very significantly. The talent pool has grown over the years.’

Many Asian countries are pushing to offer Islamic financial services, an estimated US$1 trillion industry. As part of its financial liberalisation strategy, Malaysia said last month it will let foreign law firms set up offices to advise on Islamic finance - a move opposed by the country’s Bar Council. Malaysia will also give out two foreign Islamic banking licences.

In February, Hong Kong said it will amend its tax laws in 2009-2010 to promote Islamic finance. And Korea is one of two countries that is showcasing its Islamic finance initiatives at this week’s IFSB Summit.

Since 2005, Singapore has taken several steps to develop Islamic finance. MAS’s approach has been to create a level playing field. It has refined banking regulations and put in place a tax framework to facilitate the growth of Islamic finance.

Singapore’s first Islamic bank - the Islamic Bank of Asia (IB Asia), a joint venture between DBS Bank and 33 Middle East investors - was launched in 2007.

Eleven Middle East banks, two Middle East reinsurers and two Middle East exempt fund managers are now operating in Singapore.
MAS’s Mr Heng said one outcome of the financial crisis will be a return to basics, and that will increase the relevance of Islamic finance.

‘I made a comment recently when I was in China, that in the case of the US and Europe, the financial systems have run too far ahead of the real economy,’ he said.

‘Some parts of the systems have become detached in supporting productive economic activity (and) turned very speculative. Complex securitisation was being done - not quite the economic functions they were intended to serve.’

But in Asia and the Middle East, where economic development has been rapid in the past 20-odd years, financial systems had yet to catch up, Mr Heng said.

This is partly why many Asian financial institutions did not run into problems - they had real economic opportunities to pursue.
In the medium term, new opportunities will arise as the symbiotic relationship between financial services and real economic development is restored, Mr Heng said.

‘A key Islamic finance precept is that finance has to support real economic activity, support productive uses - and make sure that it is not used for speculation.

‘I think this is a very important precept that will create momentum for growth once we get over this bump. At the same time, when we look at the Middle East and East Asia when the (global) economy recovers, demand for oil and natural resources will grow, and that will continue to generate wealth in these two regions.’

As for current financial systems, whether it’s conventional finance or Islamic finance, risks remain high. ‘Clearly, the global financial system is still fragile,’ Mr Heng said. ‘We (MAS) have stepped up significantly our surveillance in two aspects.’

At macro-economic level, MAS is more closely monitoring indicators such as the overall growth of credit and corporate lending in different areas. It has also stepped up supervision of financial institutions. ‘We have stepped up our supervision of individual financial institutions, local entities as well as foreign entities, ensuring that boards and management are closely looking at their risks and operations, and that they have complied with the rules and regulations and taken relevant mitigation measures,’ Mr Heng said.

‘The other area is working with various industry bodies to step up investor education. I think for the next 12-18 months, we need essentially to be on high alert - not just MAS but all financial institutions, financial intermediaries as well as investors - so we can navigate this very uncertain period successfully.’

Source: Business Times, by Siow Li Sen

Print This Post

Email This Post

Blogroll
Admin
- Register
- Login
- Wordpress
- XHTML
Search

Recently Written

Categories

Archives

RSS Subscriptions

Dec

30

Housing prices set to rise, but govt committed to affordable homes

Nov

26

Measures to cool property market appear to have worked: Mah

Nov

8

Foreigners back in private home market

Nov

4

New heights for Singapore property

Oct

25

Housing prices up across Asia

May

16

Weekend launch for BelleRive off Bt Timah

May

13

StanChart marks 150 years with new home loan deal

May

10

Now it’s property counters

May

8

Will property recover faster than expected?

May

7

Crisis will drive more Mid-East funds to S’pore

Admin

Search

Recently Written

Categories

Archives

RSS Subscriptions

Dec

30

Nov

26

Nov

8

Nov

4

Oct

25

May

16

May

13

May

10

May

8

May

7

Blogroll

Admin

Search