Early redevelopment scheme 'gives owners of ageing flats viable exit option'

The Business Times - Aug 20
Prime Minister Lee Hsien Loong's announcement of the Voluntary Early Redevelopment Scheme (Vers) on Sunday will provide home owners of ageing flats with a viable exit option, consultants believe.

The announcement comes after the government last year cautioned home buyers not to assume that all old public housing flats will be automatically eligible for the Selective En bloc Redevelopment Scheme (Sers) - a scheme where the government buys back blocks of old flats from residents and gives them compensation and rehousing benefits.

At Sunday's National Day Rally, Mr Lee said the Vers scheme will likewise help to progressively redevelop precincts. It will occur from the 70th year of a building's lifespan, which should start 20 years from now.

He wanted to do this also to prevent a bunching-up of redevelopment projects in old estates when all the leases of the buildings within a precinct expire at the same time.

Tricia Song, Head of Research:
While details still need to be ironed out, such as the minimum level of consent for Vers, how compensation is determined, and on the fiscal level, how the scheme is going to be funded,  we think Vers perhaps offers the best solution to the year-long debate on HDB’s decaying lease issue. This helps to assure owners of aging HDB flats that they would be able to cash out when the lease runs down, and have more exit options other than a sale-and-leaseback to the government or an outright sale in the resale market. We thus expect this to have a positive impact on HDB resale flat demand and prices going forward.   


Rush to beat cooling measures sends developers' sales to 16-month high

The Business Times - Aug 16
The knee-jerk reaction by some buyers who raced to snap up private residential properties on the night of July 5 to beat the cooling measures that kicked in the next day sent developers' sales for July to its highest level in 16 months.

The 1,724 private homes developers sold in July was 2.6 times the 654 units in the previous month, and up 55 per cent from the 1,112 units in July 2017.

However, no one is expecting a repeat performance this month, given the double whammy from the cooling measures - higher additional buyer's stamp duties and lower loan-to-value limits - as well as the ongoing Hungry Ghost festival, when some buyers avoid buying property.

Among the projects launched so far this month, The Tre Ver in Potong Pasir has done relatively well; it has sold 148 units at an average price of around S$1,550 psf, which is deemed "reasonable" for the area.

Tricia Song, Head of Research:
Developers’ sales went gangbusters, surging to a 16-month high in July at 1,724 units (excluding Executive Condos) - thanks to a flood of transactions on July 05, as prospective home buyers rushed to lock in their home purchases before the new cooling measures kicked in the following day.

July’s new home sales – up by 163.6% from 654 units June - were the highest since the 1,780 units sold in March 2017. On a year-on-year basis, developers sold 55% more private homes last month compared with the 1,112 units shifted in July 2017.

Developers launched a whopping 2,239 new units in July – the highest since March 2013 where 3,489 new private homes were placed on the market.

We believe the robust sales in July reflected the relatively healthy demand for homes and ample liquidity in the market. New home sales will likely slow significantly hence forth as prospective buyers adopt a wait-and-see approach following the introduction of the fresh cooling measures. Transaction volumes in August and September could be particularly sluggish owing to the Hungry Ghost festival where some buyers may prefer to hold back purchases. Read the full analysis.


CapitaLand and CDL team up again - this time for Sengkang mixed development

The Business Times - Aug 17
For the first time in about a decade, property heavyweights CapitaLand and City Developments are teaming up for a project in Singapore.

The duo have just clinched a plum 3.7-hectare commercial and residential site next to Buangkok MRT Station under a dual-envelope (price and concept) state tender. The site can yield a maximum gross floor area of 842,124 sq ft.

Their winning bid of S$777.78 million  works out to S$923.59 per square foot per plot ratio (psf ppr) for the 99-year leasehold site along Sengkang Central.

The CapitaLand and CDL joint venture will be  subject to the previous additional buyer's stamp duty (ABSD) rules for this site - since the tender closed before July 5, when the latest cooling measures were announced. (The measures had spelt out more punitive ABSD rules starting July 6.)

Tricia Song, Head of Research:
The winning bid of SGD923.59 psf ppr is in line with our and market expectations, and 22% lower than SGD1,181 psf ppr for the Bidadari mixed development which was awarded in June 2017. While both are along the same Northeast MRT line, the latter is closer to the city centre of Singapore. For the Sengkang site, at least 60% of the maximum Gross Floor Area (GFA) of 78,299 sqm shall be for residential use and can yield around 700 homes. At least 13,615 sq m (or 17%) of GFA would be allocated for a community club, a hawker centre, a bus interchange and a child care centre.  Not more than 12,000 sq m (15%) GFA can be for retail. Private residential projects near Buangkok MRT Station such as The Quartz and Jewel@Buangkok transacted at SGD900-1250 psf over the past 12 months.