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Pent-up demand expected for Seaside Residences in Siglap

Market watchers are anticipating strong pent-up demand for the upcoming condominium project at Siglap Link by Singapore-listed Frasers Centrepoint Limited by virtue of its location and palatable price quantums for the smaller units.

The launch, scheduled on April 22 after a two-week preview starting this weekend, comes on the heels of strong sales in earlier launches this year.

The 843-unit Seaside Residences will be the first new project built along the East Coast Parkway (ECP) in 15 years, with unblocked sea views when ready in 2021.

The one-bedders (420-506 square feet) are priced from S$690,000 to S$1.05 million while the one-plus-study units (560- 592 sq ft) are from S$886,000 to S$1.16 million. Two-bedroom units are priced from S$977,000 to S$1.6 million, the three- bedders are in the range of S$1.45 million to S$2.33 million and the four-bedders are in the region of S$2.29-3.08 million. There is also a five-bedroom penthouse measuring 3,294 sq ft and two commercial units.

Some sources estimate the average pricing for the residential units in the 99-year leasehold project to be S$1,600-1,650 per square foot (psf).

The launch timing is good as it follows on the momentum created by earlier launches such as The Clement Canopy, Grandeur Park Residences and Park Place Residences and the positive publicity generated, said an analyst.

Secondly, the launch is also after the release of the flash estimates which show that non-landed prices may be headed for stability and this is likely to have a positive effect on buyers.

For the first time after 13 quarters of decline, the price index for non-landed private homes in the first quarter of this year remained flat, after easing 0.8 per cent quarter-on-quarter in Q4 2016, official flash estimates show. The overall private home price index eased 0.5 per cent quarter on quarter in Q1, unchanged from the preceding quarter.

There have been few new condominium projects launched in District 15 in the past three years. Hence, Seaside Residences could enjoy some pent-up demand from the largely middle-class buyers in that location.

CapitaLand also officially launched last month a District 15 project, Marine Blue in Marine Parade, at an average of S$1,700 psf, after moving 38 units since a soft launch more than two years ago. The 124-unit freehold project received its temporary occupation permit (TOP) in October last year.

The residential resale market in District 15 has been among the most active given its proximity to East Coast Park and the short driving distance to the CBD. With the upcoming Siglap MRT station being a three-minute walk to Seaside Residences, the rental prospects also look promising.

About 70 per cent of the units at Seaside Residences are sea-facing; the development site coverage is only 23.4 per cent of the site.

Frasers Centrepoint Singapore head of development and projects Cheang Kok Kheong said he expects this project to generate strong interest from new homebuyers and investors. "Singapore's eastern precinct is seeing development of large government-spearheaded projects like Jewel at Changi Airport, and Changi Airport's Terminal 4 and 5. These projects will greatly boost the area as an all-inclusive hub for work and leisure, making it a choice investment," he added.

Adapted from: The Business Times, 8 April 2017

Home worries surface as lease expiry looms

From the age of 13, Madam P.C. Koh has lived at her terraced house in Geylang Lorong 3.

Now 70, she is facing the prospect of being homeless in less than three years' time.

That is when the 60-year lease of her property runs out. Come 2020, it will be returned to the state and its value will plummet to zero.

She said in disbelief: "My home is still standing. I don't understand how it can be worth nothing. Will I still have a home to live in?"

The short answer is no. In a statement, the Singapore Land Authority (SLA) reiterates the Government's stance: Its general policy is to recover land upon lease expiry.

The reality of an expiring lease is slowly seeping in for an estimated 30 households - out of 190 private landed homes - still living in the Geylang Lorong 3 estate.

This is especially after National Development Minister Lawrence Wong's recent cautionary note on buying older leasehold properties.

Although directed at owners of Housing Board flats, Mr Wong's comment was a stark reminder that all leasehold properties, whether public or private, will eventually go back to the state upon lease expiry.

Besides Geylang Lorong 3, there are at least three other private residential estates with fewer than 40 years left on the lease, The Sunday Times understands.

Unlike the case of HDB flats, private property owners can collectively sell adjoining units to another developer before the lease is up. But that ship has sailed for Geylang Lorong 3, given how short its remaining lease is.

One resident, Mr Lim Kah Chin, 68, a retired delivery driver, said the estate used to have an association of residents. But its chairman moved out eight years ago when prices were still relatively high. This left the remaining residents - mostly retirees who are not financially savvy - leaderless, he added.

"Those who wanted to leave have already sold and moved on. Some died, some went to live with their children, and now it is just the few of us left," said Mr Lim.

Like many other residents who spoke to The Sunday Times, he hopes the authorities can find them an alternative housing solution.

However, analysts said they have little choice but to wait for the Government's decision. The owners will probably not get any compensation for their homes. Any bonus will depend on the goodwill of the Government.

The SLA spokesman did not respond to a question about rehousing options, but said: "Each plot of land is assessed carefully, taking into consideration the planning intention and Singapore's socio-economic needs before decisions are taken on the relevant land leases."

The Government might consider options for the older residents there, as many who have lived there since the estate was built in 1960 are not necessarily well-to-do. The houses were built by the Government as replacement homes when the residents' kampung burned down in a fire.

Meanwhile, at Jalan Chempaka Kuning in Bedok, a 70-year leasehold property with 17 years left, residents have been asking the land's trustee to extend the lease at each annual general meeting. Said Mr Akbar Ali, 49: "We don't mind paying a reasonable amount to live here longer because we like this estate."

A lease extension would delay the agony that the Geylang Lorong 3 residents are now going through, said Mr Akbar, who is in the publishing business and moved in six years ago. "When the lease eventually runs out, we have to be prepared that the money we spent is gone and that we have somewhere else to live."

As for Mr Lim, he now regrets not selling his unit around 10 years ago, when a unit was sold for around $200,000. He paid $35,000 for the two-storey terraced house in 1987. "I stayed on as I needed a roof over my head. This place was also where I met my wife, so I couldn't bear to move," he said.

Whatever sentimental reason he had for staying faded with the expiring lease. Neighbours who moved out were replaced by temple operators and foreign worker quarters, and the once-lively neighbourhood has lost its vibe. A rat problem has forced residents to build knee-high partitions at doorways to keep out the pests. "We will be lucky if there is any buyer at all, with only three years of lease remaining," said Mr Lim.

Adapted from: The Straits Times, 9 April 2017

What happens to property at end of lease?

Land ownership in Singapore falls under two categories: freehold and leasehold.

Freehold owners will hold on to the land title in perpetuity. This means there is no expiry date.

While there are many different tenures for leasehold property, 999-year and 99-year leasehold are the most common. At the end of the leases, the rights of the leasehold owner are effectively nullified.

For 99-year leasehold Housing Board flats, the unit will be returned to HDB, which will then surrender the land back to the state.

Some flats in older estates may be selected for redevelopment under the Selective En bloc Redevelopment Scheme (Sers), but a majority will likely see the end of their leases. Sers is done by the Government - the HDB homeowner cannot initiate any collective sales.

But for private property owners who want to continue living in their homes, they can apply to the Singapore Land Authority (SLA) to top the lease back up to 99 years. It requires SLA's approval and the premium will be determined by its chief valuer.

Private property owners can also collectively sell two or more units to willing buyers, such as property developers, in what is known as an en bloc or collective sale. The most common collective sale is that of all the units in a strata or flatted development. Owners of two adjoining developments or landed properties can also collectively sell their properties to a single buyer. The sale proceeds are divided among all the unit owners. But there is no guarantee of success for both options.

Owners must first reach consensus. If the property is older than 10 years, at least 80 per cent of the owners must agree to the sale or the lease top-up.

In a collective sale, the incoming developer will have to pay to take the remaining lease back up to 99 years. This makes it more difficult for owners with shorter remaining leases to find a willing buyer.

Adapted from: The Straits Times, 9 April 2017

Overpaying for old flats

Having grown up in the good ol' 1980s, I feel pangs of nostalgia now and then, gazing in wonderment at how much skylines and neighbourhoods here have changed: Old and once-familiar landmarks making way for gleaming skyscrapers or some other modern-day infrastructure.

At these times, as if on cue, rosy memories of youthful bliss would bubble up.

One of the best ones was of the sun-drenched five foot way outside my grandfather's barber shop, in a quaint Jalan Besar shophouse, where my cousins and I played any number of childhood games in the sultry afternoon heat.

Skip 30 years ahead to 2013. It was with this sense of nostalgia - a hope of recreating that warm and fuzzy feeling - that I took up the search for an HDB resale flat to call my own. "How nice to live in a little charming estate steeped in heritage," I thought.

Predictably, I found myself looking at the old walk-ups in Tiong Bahru and chanced upon a three-room flat on the ground floor of a block in Lim Liak Street.

The unit was then 40 years into its 99-year lease. It was old, a fact that was immediately apparent once I stepped into the 800 sq ft-plus space. The walls could use a fresh coat of paint and the bathroom felt slightly depressing. It was in its "original condition", the property agent had said.

While the state of the unit did not put me off, the asking price and the extensive renovation the flat needed did. I was also concerned about the ticking 99-year-leasehold clock. It had 59 years of lease left at that point. Surely, the value of the unit would depreciate as it gets older? Who would buy it if I tried to sell it 15 years down the track?

"There's the hope of Sers (the Selective En bloc Redevelopment Scheme) in the future," I mused.

In that scenario, HDB would acquire the flat - which would be demolished - at the prevailing market value, and offer a replacement flat in a new block at a subsidised rate, with a fresh 99-year lease.

Compelling. But Sers is never a given, and it is risky to bet on it.

In the end, pragmatism ruled the day and I went for a much newer, 11-year-old flat in a highrise block nearby and, in so doing, bought myself more time.

The HDB said that Sers is offered on a "highly selective basis" to residents of public housing blocks located in sites with "high redevelopment potential, subject to the availability of suitable replacement sites and the Government's financial resources".

Only 4 per cent of HDB flats have been identified for Sers since the scheme was launched in 1995.

So what happens when the lease runs out? "The flats will be returned to HDB, who will in turn have to surrender the land to the state," National Development Minister Lawrence Wong said in a recent blog post, reminding home buyers not to assume that all old HDB flats will automatically be selected for Sers.

As the flat ages, its value would decline accordingly. Theoretically, the value of an HDB flat at the end of the lease is zero. A sobering thought, given that the flat is for most people their largest store of asset value.

The thought that HDB flats would lose their value significantly is perhaps not front and centre of the collective consciousness, owing to several reasons.

For one thing, prices of older flats appear to have been fairly resilient thus far. A case in point: A friend sold her flat in Moh Guan Terrace in Tiong Bahru last year for $630,000. She had bought the unit - with a 99-year lease commencing in 1973 - for $550,000 in 2011. She said all the prospective buyers who viewed the flat were young couples who did not seem overly concerned about the diminishing lease.

Second, many Singaporeans do not think the Government will let the 99-year-lease time bomb explode. They believe the Government will intervene to help support the value of their flats - as it has done for years - by improving them through estate-upgrading programmes or redeveloping them under Sers or some other new policy down the road.

Third, there is no precedent. No public housing block has hit that 99-year mark yet. Today, there are about one million flats in Singapore, with just 7 per cent, or about 70,000, more than 40 years into their leases, according to HDB figures. Depreciation aside, once the lease declines below 60 years, there are constraints on using Central Provident Fund (CPF) savings to finance the property.

The owner would not be able to use his CPF Ordinary Account savings to finance the unit if the flat has a remaining lease of less than 30 years.

For flats with a remaining lease of less than 60 but at least 30 years, the sum of the owner's age and the flat's lease balance must be at least 80 years for the owner to be able to use CPF savings for the property. However, the amount of CPF savings that can be used is lower for such flats.

Owners of very old flats would similarly face difficulties in re-selling their unit later on, as the pool of buyers starts to shrink due to CPF and loan restrictions.

The HDB housing loan will not be extended to flats with less than 20 years' lease, while banks typically do not provide financing for units with under 30 years of lease balance. These restrictions mean the old flats can be sold only to buyers who are "cash-rich".

To this end, paying top dollar for a flat of 40-plus years today, and hoping to make a hefty profit from its resale 20 years later or for it to be picked for Sers is not realistic.

Of course, the lease is but one factor that will affect a property's value. Others include market supply and demand dynamics, as well as the location's attributes.

Ultimately, the decision to buy a home is a very personal one, depending on individual needs, circumstances and finances. The purchase is, for most of us, a big long-term financial commitment, and due diligence ought to be done.

Adapted from: The Straits Times, 9 April 2017

OFFICE MARKET

Singapore office market improving as supply tapers off: BlackRock

Blackrock said the worst is over for Singapore's office property market with supply tapering off, and that elsewhere in the Asia-Pacific, the world's largest asset manager is looking to raise its real estate exposure in Japan and Australia.

Prime office rents in Singapore's financial district dropped by more than 10 per cent in the past two years due to oversupply, making it one of the worst performing major Asian markets. But the outlook is improving with analysts expecting limited new developments until 2021 after some constructions this year.

"You get short supply and demand holds up, then all of a sudden rents start going up. We are already past that inflection point in Singapore," John Saunders, Asia-Pacific head at BlackRock Real Estate, told Reuters on Thursday.

"We are starting to see it become more of a landlord's market and we are starting to see rents move again and that makes it very attractive," he said, adding that the firm is mulling investments in malls and industrial assets in Singapore.

In Singapore, BlackRock last year sold its 43-storey office building, Asia Square Tower 1, for US$2.5 billion to Qatar Investment Authority in what was the city state's largest ever office transaction.

The US firm hailed the deal as indicating that gloomy views about the market were likely overdone.

But others have been less optimistic, with Singapore ranked 21st out of 22 Asia-Pacific real estate markets for investment prospects in a recent survey by PwC and Urban Land Institute.

Mr Saunders, however, highlighted strong investment interest in Singapore from funds and corporates. "There's competition from all around - funds, domestic capital and there's also non-domestic Asian capital," he said.

He said BlackRock's remaining tower, also in the Asia Square development and nearly 95 per cent occupied, is "a very sought-after asset", but declined to comment on a potential sale.

Adapted from: The Business Times, 8 April 2017

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