Temporary Extension of stay for HDB

Sellers of HDB flats will, with effect from today, be able to negotiate with their buyers for a temporary extension of stay in their HDB flats, by up to three months.

This is part of HDB’s regular review to respond to the needs of HDB resale flat sellers and buyers.

This move will facilitate sellers who are transiting to their next homes, including those who may need more time for renovation or those awaiting funds from the sale of their current flats, eg. contra cases.

Flat sellers who wish to extend their stay temporarily must have committed to buy a completed housing unit1 in Singapore at the time of the resale application, i.e.
they must have exercised an Option to Purchase or signed a Sale and Purchase Agreement.

The request for the extension of stay is to be submitted to HDB at the time of the resale application.

The extension of stay will automatically cease at the end of three months.

Any earlier termination must also be communicated to HDB, as this will impact flat buyers’ Minimum Occupation Period, which commences on the day when they take
over the flat.

Any such arrangements are, however, subject to the agreement of buyers.

Details of the extension, including the duration and monetary compensation, if any, must be mutually agreed to by both parties.

HDB estimates that 15% of total resale transactions, ie. some 2700 households a year, will benefit from this relaxed rule (based on total resale volume of 18,100 in 2013).

For further enquiries, the public can contact HDB at 1800-8663066.

Source: HDB press release – 22nd July 2014


Spring Grove up for en bloc sale at $1.39b

Spring Grove condominium in the prime Grange Road area has officially been launched for sale by tender with an asking price of more than $1.39 billion.

If it goes through, this will beat Farrer Court’s record $1.34 billion en bloc sale in 2007. But several condos before Spring Grove have similarly asked for ambitious reserve prices and seen their deals lapse and expire without a buyer. The same fate seems likely for Spring Grove, consultants say.

The enormous 263,513 sq ft site can be developed into a maximum gross floor area of 553,377 sq ft.

Spring Grove currently comprises three blocks of 20-storey apartments with 325 units, plus the conserved Victorian-styled Spring Grove House – previously an ambassadorial residence and home to several renowned businessmen in Singapore, now integrated within the development as a clubhouse.

But the sheer size of the plot, coupled with its large price quantum which translates into a hefty $2,512 psf per plot ratio, will also likely deter developers, analysts said.

The reserve price of $1.39 billion includes a lease top-up premium for a fresh 103-year lease, to be paid to the US government, but Knight Frank’s Mr Loh declined to reveal the sum of the top-up.

The tricky nature of the site is such that it has a 99-year lease which started in 1991 and reverts back to the US government at the end of the tenure as freehold land. A draft collective sale agreement obtained by The Straits Times last year put the top-up sum at $121 million, assuming a land price of $1.045 billion.

One reason for the expensive price tag could simply be due to demand from Spring Grove’s own unit owners for higher compensation. BT earlier reported that the condo’s sales committee had to raise the price after its offer of $2,100 psf in March last year failed to obtain the requisite consensus from residents.

The en bloc sale market has been quiet in recent years, a marked change from 2005 to 2008, when homebuyers’ demand for high-end projects led to developers rushing to replenish their land bank through en bloc sales.

But with loan curbs now restricting high-value purchases, this has tempered homebuyers’ demand for luxury homes and in turn killed off appetite among developers for land in Singapore’s prime residential region.

The tender for Spring Grove will close at 3pm on Sept 10, 2014. If it closes without a suitable bid, a 10-week private treaty period will ensue to allow for private negotiations, so the agent effectively has until March 22, 2015 to find a buyer and file an application to strata-title the plot.

Source: Business Times – 17 July 2014


Hiap Hoe seeks sole buyer for Balmoral condo units

Another developer is putting up unsold condo units for bulk sale, apparently to avoid having to pay hefty fees to extend the sales period.

Singapore-listed Hiap Hoe Group wants to sell all 48 units in its District 10 project, Treasure on Balmoral, at a guided price of $1,850 per square foot (psf) or $191.4 million.

This follows attempts by other developers to offload their unsold units in bulk sales – as did Great Newton Properties for its Newton Imperial condominium project and Heeton for iLiv@Grange.

With buying interest still dampened by tough lending rules, property consultants believe more bulk sales at reduced prices are in the offing, especially for high-end projects.

The government’s Qualifying Certificate rules, under which developers have to pay extension charges to extend the sales period two years after the project’s completion.

Hiap Hoe’s project received its temporary occupation permit (TOP) in November 2012, meaning that the developer will have to pay extension fees for unsold units from this November.

To extend the sales period, developers have to pay 8 per cent of the land purchase price for the first year of extension, 16 per cent for the second, and 24 per cent for the third year onwards; the charges are pro-rated according to the proportion of unsold units in the project.

Hiap Hoe’s subsidiary paid $138 million for the Balmoral site by way of a collective sale tender in 2007. The guided price of $1,850 psf for Treasure on Balmoral is lower than the median prices achieved for units at two other projects on Balmoral Road: Goodwood Grand ($2,360 psf) and One Balmoral ($2,451 psf), going by caveats lodged.

In January, Great Newton Properties tried in vain to offload unsold units in the 36-unit Newton Imperial to a single buyer, after selling only nine units.

Heeton was also said to be seeking $2,200-$2,300 psf for the 30-unit iLiv@Grange, which TOP-ed last October. Not a single sale has been lodged there so far.

Source: Business Times – 10 July 2014

Government mulls changes to Land Acquisition Bill

SINGAPORE: The Government has tabled amendments to the Land Acquisition Bill, potentially paving the way for landowners to be better compensated when the authorities acquire part of their land for development.

It is proposing to remove the Betterment Levy, which is a levy placed on the compensation a landowner gets because of the perceived gain in the value of the remaining land after the acquired land has been developed.

For example, if the land in front of an owner’s home is acquired for the development of an MRT station, any increase in the value of the remaining land – because of the proximity of a train station in future – will be deducted from the compensation given for the acquired land. The imposition of the Betterment Levy has resulted in some landowners given only nominal compensation in the past.

The Law Ministry said affected landowners will stand to receive better statutory compensation once the removal of the levy is in effect.

Other proposed changes to the law include enabling Management Corporation Strata Title developments to act on behalf of individual unit owners in the acquisition of common property. Under current laws when, say, car park lots in a condominium are acquired, every unit owner must go through the entire acquisition process – from engaging a valuer to submitting claims – even if the units are not affected.

The Law Ministry said this results in inconvenience. The last major changes to the Land Acquisition Act were made in 2007.Lawyers say abolishing the betterment levy would create feelings of fairness for land owners whose properties are being acquired, because it means the Government recognises the property belongs to them.

“A lot of the land owners, when their properties are being compulsorily acquired, they will feel that: ‘Look, it’s not my fault that you want to compulsory acquire my land. I don’t have a choice in this, I don’t have a say in this.’ And as such, when you impose a betterment levy on me, it’s really something that’s not my fault. And you are imposing a levy on me,” explained Mr Steven Lam, Director of Templars Law.

He said it can give people the feeling that authorities have not taken into consideration issues such as how when public facilities are being built, “it’s going to create problems, it’s going to create a nuisance, it’s going to create things which affect me.” 

Property prices could dip further: Tharman

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam has raised the possibility of a further correction in property prices. He told a conference yesterday: “I think further correction would not be unexpected.”

He told a conference that Singapore had responded early enough to raging property prices with a set of cooling measures, but added that a crash in the property market was unlikely.

On the subject of keeping track of the market, he called for more emphasis on monitoring banks. “I don’t want to quarrel with the Basel recommendations. They are basically in the right direction; they are good for the long term.

“But far more focus needs to be placed on supervising banks and other financial institutions in the midst of the game, not just setting the rules of the game before it starts,” he said. “You need a good umpire, you need a good linesman.”

Last week, it was announced that Singapore would identify and regulate certain banks essentially deemed “too big to fail”. Such lenders, to be known as domestic systemically important banks, would have to meet Singapore’s prescribed liquidity coverage ratio, which seeks to ensure that these banks hold enough high-quality liquid assets to cover short-term market shocks. “The larger the bank is, and the more international it is, the more intrusive your supervision has to be,” said Mr Tharman.

As a result of greater banking regulation, which has meant higher capital requirements, growth may slow.

“It does mean that it weakens the ability of the banking systems to stimulate growth,” said Mr Tharman, adding that rules around crisis management of banks need to be outlined, too.

“Otherwise, I fear that we keep adding to regulatory requirements, some of which are already having negative impact, including in emerging economies.”

Mr Tharman invited laughter from the crowd, as he turned his attention to the subject of service expectations. “If you go into a top hotel in Stockholm, sit down and have breakfast, you don’t call someone for your coffee, because you’ve got a rather nice flask right in front of you – and you pour it yourself. Is it difficult?”

Here, a Singaporean is likely to look around for someone to serve the coffee. He said: “We must develop a new form of what comes naturally. Customers have to do things for themselves and not feel like they are getting less service as a result. It’s the quality of the coffee that counts.”

Source: Business Times – 5 July 2014

Private home prices fall in Q2, but pace slows

SINGAPORE – Private home prices in Singapore fell for a third consecutive quarter in the longest losing streak in five years as cooling measures and mortgage restrictions continued to slow the market, but the rate of decline moderated, suggesting the curbs are likely to stay in place, analysts said.

Overall prices of private residential properties declined by 1.1 per cent in the three months to June from the previous quarter, the Urban Redevelopment Authority’s (URA) flash estimate showed on Tuesday. The pace was slower than the 1.3 per cent drop registered in the first three months this year.

Analysts said the second-quarter fall was not surprising as some developers had cut launch prices in recent months to boost flagging sales.

“The residential market has started to consolidate since the affordability of home buyers, especially that of the upgraders, is hurt by the measures, and home prices will need to come down in tandem,” said Ms Christine Li, head of research and consultancy at real estate agency OrangeTee.

“However, due to the current low interest rate environment and a keen interest in property investment, the price decline has been rather subdued,” she added.

The Total Debt Servicing Ratio (TDSR), introduced in June last year, and the Additional Buyer’s Stamp Duty (ABSD), introduced in December 2011 and raised in January 2013, are frequently cited as the two most effective measures in curbing demand and causing prices to fall across the island.

The Core Central Region (CCR), or city centre, was the hardest hit in the second quarter, with prices falling for the fifth straight quarter, the URA data showed. The pace of decline accelerated to 1.5 per cent from the 1.1 per cent fall in the previous three months.

Home prices in the Outside Central Region (OCR), or suburbs, also suffered a quicker decline of 1.1 per cent, compared with the 0.1 per cent decrease seen previously. Meanwhile, prices in the Rest of Central Region (RCR), or city fringes, fell at a slower pace of 0.6 per cent after a 3.3 per cent slide in the first quarter.

Ms Chia Siew Chuin, Colliers International’s director of research and advisory, said: “Strong buying interest in the 845-unit Commonwealth Towers and 212-unit Kallang Riverside provided some level of support for prices (in the RCR). These projects benefited from pent-up demand, as there has been little launch activity in these two locations.”

Analysts said the 2.3 per cent drop in the URA residential price index in the first half of this year is not likely to lead to the Government reviewing the cooling measures.

“The Government has said it is not looking to ease off the measures yet, and looking at the overall price level, it is still considered high. Overall real estate sentiment is still reasonably healthy, which means if any measures are eased, that might trigger a surge in interest again, not necessarily from just Singapore,” said Mr Tan Kok Keong, chief executive of consultancy REMS Advisor.

“So it’s in my opinion that it’s still early for the Government to relax the measures … A quarterly decline of around 1 per cent is reasonable in the current market conditions. We’ll probably see this persist for the rest of the year.”

With the property curbs remaining intact, private home prices are expected to continue on a downtrend in the next six months, with analysts projecting the annual decline at the lower end of a 5 to 8 per cent forecast.

The recent price cuts by developers have given buyers hope that there will be further discounts, noted JLL’s national director of research and consultancy Ong Teck Hui.

“Price cuts raise buyers’ expectations of further discounts and this feeds into a downward price cycle as we are seeing,” he said.

Source: Today – 1 July 2014

Right time to review cooling measures: Kwek Leng Beng

Veteran property developer Kwek Leng Beng fears Singapore could lose its edge as an investment destination unless the Government reviews its property cooling measures.

Mr Kwek, executive chairman of Hong Leong Group Singapore and City Developments, said foreigners were choosing to plough their investment dollars into countries like Britain, Australia and the US over Singapore, while Singaporeans have been investing abroad.

“We are losing these investments to other countries even though these foreign properties have a higher risk profile,” Mr Kwek told The Straits Times yesterday. “It is unlikely these investment dollars will return to Singapore.”

He noted the unexpected decline in Singapore’s manufacturing activity in May, adding that it is crucial to ensure that the property sector is in good health as it is a crucial pillar of the economy.

“The overall picture seems to suggest that it may be timely now for the Government to take another look at the cooling measures introduced and make adjustments accordingly,” he said.

Mr Kwek’s comments came as the Total Debt Servicing Ratio (TDSR) loans framework, which aims to deter borrowers from accumulating too much debt, hit its one-year mark on Sunday.

The measure, together with the Additional Buyer’s Stamp Duty (ABSD), has hammered demand in the market.

New home sales in the first five months of this year plunged 52 per cent to 3,984 units from the same period a year ago, according to fresh estimates from the Urban Redevelopment Authority.

Industry players echoed Mr Kwek’s sentiments, pointing out that even if the ABSD is eased, it is unlikely to encourage more speculative buying.

Mr Kwek suggested in February that the Government consider lifting the hefty 15 per cent duty levied on foreigners buying homes after the property market and global economy showed signs of slowing. Prices have since fallen, confirming his concerns, he said yesterday.

However, Mr Kwek noted that the different segments have been affected to varying degrees, so there is no blanket solution.

“I have confidence the Government will take appropriate measures to deal with the challenges that Singapore faces,” he said.

Source: The Straits Times – 1 July 2014