Thursday, August 13, 2009

Singapore property market booms despite recession

As reported by AFP today:

AFP - Wednesday, August 12SINGAPORE (AFP) - - Despite Singapore's worst economic slump since independence, the residential property sector is in the midst of a new boom reminiscent of 2007, when the city-state was known as the world's hottest real estate market.

Greed and its twin brother fear are back in play as punters stake out condo launches days before sales open, with some offering blank cheques to pre-book flats, prompting the government to hint it may have to cool things down.

"Some of the practices and habits that you saw in the last property boom are beginning to come back, so I think we'll have to be careful," said Minister for National Development Mah Bow Tan, whose portfolio includes housing.

"A little bit of speculation is inevitable in every market, but when it becomes excessive, then it is something that we should try to avoid," he said.

The minister's words of caution fell on deaf ears.

A 297-unit condo called Optima in the extreme east -- well outside prime districts -- sold out in within three days in early August after Mah's warning, fetching as much as two million Singapore dollars (1.38 million US) a unit.

The developer had to issue ballots "to address the needs of the genuine buyers" and disperse the huge crowd that turned up for the launch of the project, which will only be ready for occupancy in 2014, a spokesman said.

Within days, some units were already being advertised for resale in the secondary market.

An AFP reporter who recently walked into the sales office of another high-rise condo being built close to the Orchard Road shopping belt was treated like royalty by agents expecting to close deals within days, if not hours.

Bank officers were ready to process loans on the spot.

"Buy before prices go up further," an agent whispered in his ear, gesturing to a "sky garden" bisecting the scale model of a glass-clad, 45-storey tower.

Singapore's economic output is officially forecast to shrink by four to six percent this year -- less severe than earlier estimates, but still its worst economic performance on record -- and office rents are still soft, reflecting weak business activity.

"It is too early to celebrate," Prime Minister Lee Hsien Loong warned over the weekend as he spelled out the country's economic prospects. "The outlook remains clouded."

The property frenzy began in middle-class condo projects due to pent-up demand from families upgrading from public to private housing but scared off by the 2007 price spiral.

Their enthusiasm quickly spilled over to more exclusive developments.

Prices of luxury condos -- the segment worst hit by the recession -- are now inching toward peak levels achieved around mid-2007, according to an analysis by business weekly The Edge.

Foreign investors, including Asians looking for a secure place to park their money, are also back in the Singapore market.

Singaporeans enjoy one of the world's highest savings and home ownership rates, but most live in relatively spartan government-built flats, making owning condos an obsessive goal for families.

A pension system forces them to save more than a third of their monthly income, and the accumulated funds can be tapped before retirement to buy property, creating a massive pool of financing ready to be used when market conditions are good for buyers.

Chua Chor Hoon, senior director and head of Southeast Asia research at property advisers DTZ Debenham Tie Leung, said various factors combined to spur renewed buying in Singapore properties.

Signs of economic recovery, the stock market rally, the imminent completion of massive casino resorts, low interest rates and lack of confidence in complex financial products encouraged property buyers.

Asked if the government will have to intervene to stop a bubble from forming, she said: "There's froth but no excessive speculation."

"The government is likely to increase the supply of housing units through the sale of government land and monitor the situation first."

Chua Yang Liang, head of Southeast Asia research at Jones Lang LaSalle, said demand is largely driven by buyers upgrading from government housing due to strong wealth creation in recent years, and the shrinking gap in cost between public and private housing.

"However, unless we begin to record positive growth in the larger global and domestic economies, the recent spike in demand and prices is short-lived and could cause asset driven inflation in the longer term, especially if wage increases do not keep pace," Chua added.

"In our opinion, there isn't enough compelling reason for the state to want to interfere into the market phenomenon just as yet, unless it affects the overall affordability for the masses and causes asset-driven inflation in the economy," Chua said.

Wednesday, August 5, 2009

Landslide in Bukit Ceylon

Reported by The Sun, 16 December 2008.

I have a feeling The Sun may have made an error as the Verticas Residensi is not actually located beside St Andrews Church. The project beside St Andrews Church which is on the slopes of Bukit Ceylon is the UMLand-MMC JV which is currently unnamed. Something else serious happened later on February 13th. I have checked the UMland-MMC JV site. Indeed work has stopped.

Reported by Bernama - Friday February 13, 2009
Contract worker killed in landslide

KUALA LUMPUR: An Indonesian died when he was buried in a landslide in Jalan Ceylon, Persiaran Raja Chulan, here.

In the incident which occurred at about 4pm yesterday, Nur Salim Manan, 48, and another colleague, Imam Rafie, 37, were said to be carrying out drilling work at the construction site for a 43-storey condominium in the area.

“Fourteen personnel and a fire engine were rushed to the scene after a distress call was received at 4.27pm,” Hang Tuah fire and rescue station officer-in-charge Marzuki Shafie told reporters at the scene.

“Nur Salim was completely buried by the landslide while Imam was buried from the waist down.”

Marzuki said Nur Salim died on the spot.

The landslide was believed to have been triggered by drilling works. — Bernama

Tuesday, August 4, 2009

Updated: St Mary's Residence

Situated on a 4 acre plot beside MAS building and Menara Hap Seng, and behind the Weld. This plot used to be the old St. Mary's School which was demolished. The developer, a E&O (of Dua Residency and Sri Tanjung Pinang fame) and Lion Group JV, is building 3 tower blocks forming a quadrangle with 5-star common facilities. Currently, the East tower beside MAS building is being launched (very quietly) and I understand the take up rate has been quite swift. Apparently, 70% of the units been snapped up as of 1st August 09. The 2nd tower parallel with Jalan Tengah and the Weld will be launched later. The 3rd tower running parallel with Jalan P Ramlee is given en bloc to the St mary's foundation in exchange for the land. It is understood that the foundation is negotiating with a hotel group to manage the building as a serviced residence.

Apparently, the developer has gone to Singapore to launch Tower A this weekend 29th August at a minimum price of RM1200psf. At this price, it puts the 1453sf 2 bedroom units at RM1.7million. At this price, I would imagine the Singaporeans would get quite excited as the location is akin to Singapore's Marina Square or Orchard Road or Raffles Place and they can't even get a bathroom in a HDB flat for that in those areas. Let's wait and see.

As for Tower C which saw an enthusiastic take up the past couple of months, there are still a few units available at higher floors. Naturally the not so popular units facing the MAS building are still available and I think the developer will still end up with these up till vacant possession. These units facing the MAS building is not very popular due to Feng Shui issues. The sharp side of the building pokes into the master bedroom and living room of the unit only 40 ft or 13m away. This is not very far... According to Feng Shui masters, if you have this kind of feature affecting you, it means you will not stay long in that place. You will be evicted at some stage either through bankruptcy, redundancy or whatever unpleasant ways... However, at RM700psf it seems many people did not care as the units all the way up to the 10th floors were snapped up. Those 11h floor and above have what they call the higher floor premium and hence, from the 10th to the 11th floor, there is a RM200,000 premium. That's why they are still available....

picture above: Those units facing MAS building has feng shui issues, hence the 20% - 30% lower price

picture above: Concrete wall will replace window where the sharp edge points into the building and the developer is providing vertical lourves to ward off the bad feng shui

It is no more a secret that the MAS building next door has been sold to the Government's investment arm, Permodalan Nasional. They have got a permit to convert the building into a hotel. Some blogs such as skyscrapercity has published some architect rendering of the hotel and it seems, the ugly tall tower of the building will be maintained. The podium area at the back of the building will be converted into a 20+ storey hotel tower, which will essentially block out all views from St Mary tower C unit 3A whether you are on the 2nd floor or 20th floor.... makes no difference... haha

The popular units in Tower C and I can imagine Tower A as well are the 1 bedroom units. These are large size 1000sf and above units and I love them because they are bright and airy being corner units. For those buying for investment, I also do wonder how many tenants would be able to pay at least RM6000/month for a 1 bedroom unit for the owner to enjoy at least 7% returns. But then again, I wondered the same thing when Seri Bukit Ceylon was being built 5 years ago when a bedroom unit there only cost RM250k and rent back then was about RM1500/month in that area. When Seri Bukit Ceylon was completed, owners were able to get RM3000/month rent, offering more than 12% yield.

picture above: The one bedroom units are large and all of them are corner units

picture above: on the other hand, the 2 bedroom units have no windows for the bathrooms and the 3rd room

The direct competitor of St Mary at launch time is Verticas Residensi in Bukit Ceylon. I've posted a point by point comparison as at that time I was contemplating between the 2 and St Mary won my vote (and my money...). Still, I am unhappy about the unit layout and the extremely shitty view I am about to get but for the location and the prestige of the project, I am satisfied that this will be good money to spend.

I am not going to post any more copyrights pictures on my blog so for some idea how this place looks like, please go to the developer's website at but please be careful with any beautiful marketing talk and renderings....

Monday, August 3, 2009

Verticas Residensi vs St Mary Residence

Two high value projects in the KL City Center. Which one to choose?

click on below map for clearer and larger view:

St Mary's wins hands down. As you can see from the map above, St Mary's is nearer to both Pavilion and KLCC. It's more central. The block where St. Mary's will be built is also the last open parcel of land for residential development. However, St. Mary's access can be a problem. Jalan Tengah is a one way street (often clogged up) and the other access via Sultan Ismail is also a one way. Verticas's road frontage is a dual way and you can either come in via Raja Chulan or Bukit Bintang.

Land Title:
For a residential project, Verticas wins. St. Mary's is a commercial title land which means higher rates. However, apparently the developer E&O-Lion JV has negotiated a residential rate for the electrical utility. Sewage treatment, water and quit rent remains at commercial rate but should be negligible amount for those who can afford to live here.

Floor Layout:
I'll find time to post the layout pictures here. If you ask my honest opinion, Verticas has the best floor layout. All rooms, including most bathrooms have windows which makes it bright and airy, and liveable. Tower A has 4 lifts serving 5 units per floor. The kitchens come in Wet and Dry ala Meritz which makes it suitable for own stay type cooking. The only kink is, no balcony but one can venture to the 27th floor common observation deck for some fresh air. St Mary's layout is a beautiful combination of retro and modern. But it's not suitable for long term stay. None of the bathrooms have windows. I think bathrooms are supposed to have natural light for hygiene and proper ventilation without having to rely on electronics. The +1 in the 2+1 room unit have no windows. The kitchen is open, so your couch will smell of whatever you had for dinner last night. But St Mary's have a nice balcony...

Verticas comes with a 20:80 financing package. High initial entry. But developer also pays the 1st year installment - so after the initial 20% outlay, you pay nothing until the 5th year.
St Mary's 10:90 package is more attractive but no 1st year installment paid. But that amounts to little over RM60k extra discount which is pocket money to those who can afford to live here.
The slightly higher price of St.Mary (almost 10% higher) is in the land premium because of the location. However, if one enters early, E&O offers up to 15% discount while Wing Tai Asia is only offering 8% discount although Wing Tai is threatening to reduce that to 5% if I don't book by this Friday.