News Roundup (April 2017)

 

Our top Singapore property stories.

Is Singapore’s housing market on the road to recovery?

The recovery in Singapore’s residential property market appears to be gathering pace following a protracted downtrend, revealed a CNBC report.

The inflection point in prices is expected to come “very soon”, said Cushman & Wakefield’s Managing Director for Asia Pacific Research, Sigrid Zialcita, in CNBC’s “The Rundown” recently.

This reversal was brought about by the government’s relaxation of some of its property cooling measures, which improved market sentiment. “We’ve seen an increase in foot traffic and it’s incentivising a lot of buyers,” she noted.

Other experts also believe that the reduction on the seller’s stamp duty and the lower minimum holding period may be helping to stimulate market activity.

For instance, PropertyGuru’s CEO Hari Krishnan revealed that the number of property listings on its website increased two percent in Q1 2017 on an annual basis, followed by a 2.4 percent gain in March.

“These increases could be indicative of an uplift in seller sentiment,” he said.

Citigroup analysts, in a recent note, also underscored the sudden “sentiment uplift” after the government relaxed some of its property curbs. However, they feel the “exuberance” might be exaggerated.

They explained that it would be more logical for would-be buyers to wait for more significant policy easing, or for larger discounts from developers racing against the deadline to sell their residential units.

Wong: URA grants exemptions on GFA

The Urban Redevelopment Authority (URA) permits developers to exclude some spaces from the computation of the gross floor area (GFA) to achieve certain planning objectives, revealed National Development Minister Lawrence Wong recently.

“For example, air-conditioner ledges below one metre in width are exempted from GFA in order to encourage developers to house air-conditioner condensers neatly in residential developments.”

On the other hand, balconies are not excluded from the GFA, and developers must pay a development charge for them.

When pricing units in their developments, he explained that developers factor in the strata area, which encompasses floor space sold to the buyer on the basis that it is for the buyer’s exclusive enjoyment. As balconies and air-con ledges solely serve individual units, they are considered part of the strata area, and are therefore chargeable to the buyer.

Wong was responding to a parliamentary query from Jurong GRC MP Ang Wei Neng on whether the URA is reviewing the rule of allowing developers to build big air-con ledges and balconies for non-landed homes without them being counted as part of the GFA, and yet buyers are being charged for such space.

Ang also asked whether developers are required to disclose the floor areas dedicated for balconies, air-con ledges and other outdoor space in the floor plans of housing developments during their launch.

In response, Wong said that developers are already obliged to provide potential buyers with a drawn-to-scale floor plan of the unit they are intending to purchase, including a detailed breakdown of various types of spaces, such as bedrooms, bathrooms, air-con ledges and balconies.

“This information must be given to prospective buyers before they pay the booking fee for an Option to Purchase the unit,” he noted.

Furthermore, the floor area of such spaces must be accurately depicted in the showflats. The URA will not hesitate to act against developers who misrepresent such information to buyers, Wong added.

Landed Property in Singapore

Landed home prices drop 2.8% in Q1

Private home prices across Singapore fell 0.5 percent in the first quarter of 2017, the same rate of decline as in the previous quarter, according to recent flash estimates from the Urban Redevelopment Authority (URA).

In Q1 2017, prices of landed properties fell 2.8 percent, while those of non-landed properties remained unchanges. Specifically, prices of non-landed properties in the Outside Central Region (OCR) increased 0.1 percent in Q1 2017. The Core Central Region (CCR) saw prices of non-landed properties dip 0.2 percent, while prices in the Rest of Central Region (RCR) held firm.

Desmond Sim, Head of CBRE Research for Singapore and South East Asia, said the latest URA figures “provide another piece of evidence that Singapore’s residential market is reaching its trough”.

He noted that the fall in index for landed homes was a “function of the price of the projects transacted.”

“Key projects may skew indices occasionally and with a wide geographic spread, it is more important to look at the trends over a longer period. The market should prepare itself for a landing very soon, going by the latest figures.”

Looking ahead, Sim expects home prices to “come in at between 0 and -2 percent for the whole of 2017″.

Property investment company under fire for failure to provide payouts.

Following an injection of over S$1 million from 2011 to 2014, five investors have filed police reports against A2A Capital Management, after they failed to receive returns for their investments in the company’s land-banking schemes, reported the Straits Times.

The property development and investment company’s land-banking schemes offered generous returns for cash investments in real estate in Canada and the US. In fact, a brochure for one of the schemes in which property manager Veronica Chen invested showed that a total investment of US$91 million (S$127.6 million) has an estimated target return of US$122 million (S$171 million). This works out to an overall return of 134 percent for the project.

Chen, however, has not received any payout for the US$30,000 (S$42,063) she invested in the 10-year project in Texas. Retiree Madam Mohamed received only one payment amounting to S$1,500 last year for her S$500,000 investment made between 2011 and 2014.

“I am very sad I may die before I get my money back. I’m 78. I had told my two grandchildren I can help pay for their studies but now I can’t help them,” she said. Investor Vijay N, on the other hand, said the S$700 payout he received in the middle of 2016 was much lower than he had expected. The businessman invested S$50,000 in two projects in 2012 and 2013.

“I thought it was a good investment… I expected my first payment of the returns to be in 2014. When I didn’t receive anything, they told me the winter was bad,” said Mr N, who claimed to be impressed by A2A’s marketing presentation and well-decorated office in Raffles Place. The company has since vacated its Raffles Place office and moved to the Philippines.

When contacted in February, A2A’s client services department explained to Mr N that the relocation of its office was the result of the Singapore authorities “putting regulatory impositions” on land-banking products. It added that the management is working on the project’s payout timelines and would update the investors as these are ironed out.

Meanwhile, the Monetary Authority of Singapore (MAS) in March placed A2A on its investor alert list as it “provides a listing of unregulated persons who, based on information received by MAS, may have been wrongly perceived as being licensed or authorised by MAS”.

 

 

The PropertyGuru News & Views This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!