New Property Market Cooling Measure

Below is the press release from URA regarding the new shock and awe cooling measure, starting 12 Jan 2013.

11 January 2013

Additional Measure to Ensure a Stable and Sustainable Property Market

The Government announced today a comprehensive package of measures to cool the residential property market. It also introduced a Seller’s Stamp Duty on industrial properties for the first time, to discourage speculative activity in the industrial market.

Cooling Measures for the Residential Property Market

The Government has implemented several rounds of measures to cool demand and expand supply, so as to moderate the increase in housing prices. While these measures have dampened speculative buying, the demand for residential property remains firm and prices have continued to rise.

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SC Global Privatisation Update

Image courtesy of SC Global via The Straits Times

Here’s an update on what has happened since my post on the subject:

1. On 19 Dec, the offer documents were despatched to shareholders
2. On 26 Dec, SC Global’s IFA, PrimePartners Corporate Finance, released a statement to offer their opinion that the offer was fair and reasonable, being 15 – 20% discount to their calculated RNAV
3. On 30 Dec, Simon Cheong released a statement that he has no intention of raising the offer. As such, the Takeover Code forbids him from subsequently changing the offer.
4. In response to an analyst’s speculation that there may be a chance for the privatisation to go through with joint privatisation of Wheelock, the Board of SC Global released a statement affirming that there are no talks with Wheelock and that the Code forbids any such transaction.

Talk about throwing a spanner in the works! Well, now we know 2 things. The first is that $1.80 is the only game in town for now with no chance of increase. The second is that the privatisation will fail, assuming that Wheelock stick to their guns.
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SC Global Privatisation

Straying slightly away from straight property market commentary, I’d like to weigh in on Simon Cheong’s bid to take SC Global private. For those who haven’t been paying attention to the news, here are the terms of the offer:

The all-cash General Offer price is $1.80, representing:

49.4% premium to the last transacted price before the announcement; and
39.5% premium to the highest closing prices in the 12 months prior to the announcement.

Reasons given for privatisation were the usual generic few: low liquidity, no requirement for market access, management flexibility and savings on listing costs.
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MAS Restricts Loan Tenure for Residential Properties – What Does the Future Hold?

After several rounds of cooling measures, Singapore’s residential market has continued to climb in Q2 and Q3 of 2012. Thus MAS has stepped in once again, and as of today, borrowers will no longer be able to take loans of longer than 35 years. Given that the average tenure of residential property loans in Singapore is well below 35 years (29 years, according to MAS’ official press release yesterday), and bearing in mind that this average does not take into account the percentage of homes in Singapore that are fully paid-up, I don’t foresee this measure having a huge impact on the market. Continue reading “MAS Restricts Loan Tenure for Residential Properties – What Does the Future Hold?”

Property investment – staying ahead of the curve

In the mutual funds universe, you have index funds on one end of the spectrum, and “special situation” funds at the other. The former simply track the market index, rising and falling in tandem with the market’s peaks and troughs. The latter, on the other hand, attempt to home in on unique upside opportunities and gain alpha.

As a property investor, you should try as far as possible to emulate the latter rather than the former. I draw inspiration from strategies taken by the fund manager behind a special situations fund I once invested in. He looked for themes that were on the uptrend, then dug beyond the obvious to seek out a more targeted vehicle for harnessing that trend. For instance,when he felt that international trade was set to boom, instead of banking on shipping stocks, he bought into ports, as the latter represented a more finite resource – you can have as many ships as can be built, but ports are strictly limited by geographical and administrative factors, amongst other constraints. Similarly, when he sought a means of investing into Asia’s growing need for infrastructure, he avoided construction companies, and went for the one key player providing the cranes to the many construction companies. This all took place years ago, but I reckon there is timeless wisdom in the investment style adopted.

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Property market crash? – what you should be asking

If I had a dollar for each time I’m asked the golden question “is it the right time to buy?”, I’d have accumulated a tidy sum by now.

Similarly, if I were blessed with such prophetic vision, I’d probably be dictating this blog post to a personal assistant whilst sipping cocktails on some idyllic island resort in the Caribbean.

The thing is, a property bubble will mean very different things to different people, so it’s not so much a question of where the property market is headed (which nobody will be able to tell you will absolute certainty), but where are YOU headed?

Do you dream of bubbles? (Image courtesy of http://anchiix.deviantart.com/)

The Home Buyer

So much has been said about speculators who flipped properties they could ill-afford for fast profits in the heady days of 2007, but what of the other form of property market speculators that aren’t normally recognised as speculators – those that hold off their home purchases indefinitely in the hopes of a property market crash? Is it wise to hold off getting a permanent roof over ones head in the vague hopes of buying in “cheap”? Continue reading “Property market crash? – what you should be asking”

Over-exuberance in the industrial sector – Are we due for a commercial break?

I have hesitated to cover this topic for some time, as by my own admission, I am no industrial expert. However, given the high frequency with which clients and prospects have been coming to me waving attractive flyers and recounting killer sales spiels from commercial property agents they’ve encountered, I felt it necessary to at least highlight some key issues to consider before one takes the plunge into commercial property.

It’s always a bad idea to go into any investment sector when it seems like half the world including the taxi driver on your last ride into town is buying into it. A telling sign would be when the true industrialists are staying on the sidelines and renewing their leases, while the bulk of buyers appear to be virgin industrial investors. The industrial newbies are drawn by the promise of high rental yield, and seemingly cheaper pricing as compared to alternative real estate sectors, and of course the avoidance of additional buyer and seller stamp duties affecting the residential sector.

They appear to have completely ignored the fact that in the event of a sharp economic downturn, industrial property will be affected even more than the residential sector. According to URA reports, the median rental for multiple-use factory space (ie. B1 & B2) was about $2 psf/mth in Q2 2012. Given that there is currently over 23,000,000 square feet of factory space lying vacant, and another 49,000,000 square feet coming online over the next two years, one can only imagine what rentals will be like come 2014. (As my learned friend and mentor Mr Ku Swee Yong thoughtfully points out, the total lettable floor space at Vivocity Mall is about one million square foot.** So that’s basically more than 23 times Vivo’s total shop space going rent-less, with another 49 Vivos in the pipeline!)

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Beyond psf- what’s your property’s bright-&-airy quotient?

In a recent Bloomberg article on Asian Millionaires taking charge of their own wealth, Akbar Shah, Head of Southeast Asia and Australia for Citigroup’s private-banking unit, describes real estate markets as hands-on markets that require a feel. I respectfully agree with her opinion. As I’ve mentioned on several occasions, both verbally and in writing, property analysis is more than just dollar-per-square-foot.

I’m struck by the number of times I’ve heard comments from clients like, “It’s pretty old, kinda rundown even… but somehow I just have a good feel about this place!” or “It’s a pleasant-enough place, but somehow it just doesn’t feel quite right?”

Obviously, when it comes to choosing a place to stay, there’s a wide spectrum of lifestyle needs, tastes and preferences. But one trait that almost all home-seekers unanimously favour in a home is the “bright and airy” factor. I believe this is something that contributes greatly to whether a home conjures up a feeling of spaciousness or not, perhaps even more so than whether a home is 1,200 square foot or 1,400 square foot. In a sense, this also echoes some of the principles of Fengshui – “qi” flows easily in a place that enjoys a good breeze and ample natural light, and in theory makes for a more auspicious home.

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Press Release: CapitaLand Group to relocate to Westgate Tower in 2015

CapitaLand Group to relocate to Westgate Tower in 2015

Westgate targets to meet BCA Green Mark Platinum and Universal Design standards

Singapore, 14 August 2012 – CapitaLand Limited today announced that the CapitaLand Group will relocate to Westgate Tower progressively from early 2015. The Group will occupy 11 floors, a total of about 160,000 square feet (sq ft) of the new 20-storey prime office tower. The relocation will further enhance staff interaction and sense of belonging and provide for a holistic sustainable workplace so that it becomes more productive for all. This centralised destination for “work, live and play” will strongly motivate and integrate the Group as one united family-like organisation.
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Stamp Duties – Who pays what, when, and how much?

From my daily dealings with buyers and sellers of Singapore property, along with enquiries from blog readers, there are a number of queries that constantly pop up on my radar (besides the perennial favorite, “How’s the market?”)

One area that has a lot of people confused is the different stamp duties introduced via the various cooling measures. Apologies to readers who are familiar with the stamp duty matrix and consider this stale, but I reckon the fact that I’ve encountered even senior conveyancing lawyers who aren’t too clear on their stamp duty facts suggests that this is an area that requires clarification.

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