Singapore - Housing 01 (May 08 - Oct 08)

[winston]

From Kim Eng:-

Draft Master Plan 2008 (Wilson LIEW; DID:6432 1454)
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Release of the Draft Master Plan 2008
The URA has released the draft Master Plan 2008 (MP08) for public comments from 23 May 2008 to 20 June 2008 and be gazetted by the end of the year. The Master Plan is the statutory land use plan which guides Singapore’s urban development over the next 10 to 15 years and is reviewed every 5 years. The Master Plan provides a more detailed development guide than the Concept Plan, which guides Singapore’s strategic land use and transportation plan for the next 40 to 50 years and is reviewed every 10 years.
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4 Key Thrusts of MP08
The draft MP08 has identified 4 key thrusts that will guide Singapore’s development over the next 10 to 15 years, namely for Singapore to be 1) A Home of Choice; 2) A Magnet for Business; 3) An Exciting Playground; and 4) A Place to Cherish.
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What’s new?
The draft MP08 identified 4 key areas of growth, some of which already have been revealed to the public. They are the City Centre (includes Marina Bay, Tanjong Pagar and the Beach Road/Ophir-Rochor Corridor, Jurong Lake District, Paya Lebar Central and Kallang Riverside. Other than Kallang Riverside, the other areas were already introduced to the public over the last year or so. The latter three areas will form commercial hubs outside of the city centre, providing alternative locations for businesses and bring jobs closer to homes. In all, the three regions will provide over 1m sqm of office space, about 750000 sqm of retail and hotel space and over 5000 new homes.
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What’s not?
Comparing the draft MP08 with the existing MP03, we noticed that hardly any changes were made to the allowable plot ratios and landuses, other than at the four areas of growth mentioned above. In particular, we zoomed into the plots around existing and upcoming MRT stations and by and large, we do not notice any changes. While the Government had already ruled out across-the-board changes in the plot ratios, we had postulated the possibilities of localized plot ratio increments, especially around MRT stations, but this is not the case.
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What MP08 means to developers
Reviewing the impact the MP08 may have on the property developers, we think that it is negligible. Firstly, developers’ do not benefit as plot ratios for their landbanks remain unaffected. Secondly, the announcement of the four growth areas also has minimal impact to areas surrounding their landbank. Thirdly, the MP08 does not provide new impetus for redevelopment.

The MP08 may have provided for more office and retail spaces, hotel rooms and new homes, but these will be progressively released and materialised over the next 10-15 years and its pace will be regulated by the Government Land Sales programme. Hence, this future supply will not cause an immediate oversupply situation.

Due to the abovementioned reasons, we think that the draft MP08 does not result in any fundamental changes to our outlook for the individual companies. Maintaining our BUY calls on City Developments (TP: $14.67), Keppel Land (TP: $9.72) and HPL (TP: $4.74). We are also upgrading CapitaLand back to a BUY on attractive valuations at current levels (TP: $7.47).

[millionairemind]

For me to start investing in property stocks like Keppel land etc.. I always send out my feelers to my friends who are veteran real estate agents to get a feel of how the mkt sentiment is on the ground...

So far NOT GOOD..

I should have started my shorts back in Aug 07 on the property counters when my real estate buddies told me they were hitting flies in the show room...

Well, when you snooze, you lose.

[winston]

Bids for residential site fall short of expectations

URA closes tender after top bid of just $203 psf ppr for the 99-yr leasehold site

By EMILYN YAP

A RESIDENTIAL site in Choa Chu Kang Drive has attracted a top bid of just $203 per square foot per plot ratio (psf ppr), reflecting weak sentiment in the property market.

The Urban Redevelopment Authority (URA) yesterday closed the tender for the 99-year leasehold site, which has a maximum gross floor area of 572,600 square feet.

The tender drew five bids - Tian Hock Properties came out tops with an offer of $116.01 million, or $203 psf ppr.

This was 7.4 per cent higher than the next highest bid - from Sim Lian Land, at $108 million or $189 psf ppr. The lowest offer came from HHA Properties - at $80.2 million or $140 psf ppr.

Analysts had expected bids ranging from $230 to $270 psf ppr, or $131.7 million to $154.6 million in all.

'The lower quantum of the bid prices is a reflection of the current subdued mood in the residential market.'
- CB Richard Ellis Research's Li Hiaw Ho

'The lower quantum of the bid prices is a reflection of the current subdued mood in the residential market, taking into account the current cautious environment and the relatively lacklustre take-up of new projects in the first four months of the year,' said CB Richard Ellis Research's executive director Li Hiaw Ho. But five bids reflect 'fairly good interest in the site', he added.

The director of research and advisory at Colliers International, Tay Huey Ying, noted the absence of larger developers such as Far East Organisation, saying this could be a sign of weak market sentiment.

While the bids for this site were 'healthier compared with recent ones received for the Ten Mile Junction site', Ms Tay also feels the bids were in 'the lower range of expectations'.

A site at Choa Chu Kang Road and Woodlands Road, where the state-owned Ten Mile Junction currently sits, recently drew a top bid of only $61 million or $162 psf ppr.

Market observers believe that URA may nevertheless award the site. According to Ms Tay, the 'bid price is fair under current market conditions', and the project may result in a breakeven cost of about $550 psf and a selling price of $610-$620 psf.

Mr Li also reckons the top bid for Ten Mile Junction was 'reasonably fair'. Based on the bid, he estimates a breakeven cost of $580-$600 psf, which would translate to a selling price of about $650 psf.

URA launched the tender for the Choa Chu Kang Drive site in March and will decide on a possible award after evaluating the bids.

[winston]

From UOB-Kay Hian

Property - Residential
Interest in mass market site at Choa Chu Kang Drive remains strong

According to the Urban Development Authority, a 99-year leasehold residential site in Choa Chu Kang Drive has received the highest bid of S$116m, or S$203 psf ppr, from Tian Hock Properties. Five bids in the S$140-203 psf ppr range were received. The highest bid was 7.4% higher than the next highest offer. We estimate the breakeven cost for the project at S$560 psf. The ASPs in the nearby The Warren and North Vale are in the S$441-614psf range.

Assuming a development margin of 10% at the least for the mass market site, selling prices are expected to be above S$625 psf. The site is a walking distance from the Choa Chu Kang MRT station and is well connected to major arterial roads and expressways such as Choa Chu Kang Road, Choa Chu Kang Way and Kranji Expressway. It offers shopping, dining and entertainment facilities located nearby at Lot 1 Shoppers' Mall, Yew Tee Shopping Centre, Ten Mile Junction and Bukit Panjang Plaza.

Other recreational and sporting amenities in the vicinity include a community library, Choa Chu Kang Park, a swimming complex, a sports hall and Warren Golf Club. Numerous schools such as South View Primary School, Bukit Panjang High School and Pioneer Junior College are also located in the vicinity.

The bid for the Choa Chu Kang Drive site is 25% higher than the bid for the site at the junction of Choa Chu Kang Road and Woodlands Road in early April. With the breakeven point close to the current price levels in the area, the selling prices appear achievable. The bid has priced in a reasonable 10-15% premium for the new development. The low price levels of the bids received are reflective of developers’ less aggressive stance on the mass market segment compared with
that seen in the earlier mass market bids.

However, the large number of bids is suggestive of the keen interest in this segment. We expect demand to outpace supply in the mass market segment well into 2009. Allgreen (BUY/Target:
S$1.65/RNAV: S$2.05) offers good exposure to the mass/mid-market segment, deriving nearly 40% of its value from these segments.

[LenaHuat]

Yesterday, HSBC's CEO exhorted global central bankers to join in a concerted effort to fight inflation by jacking up interest rates.

2day, Dallas Fed Board Director said : "If inflationary developments and, more importantly, inflation expectations continue to worsen, I would expect a change of course in monetary policy to occur sooner rather than later, even in the face of an anemic'' economy".

This stance is supported by fellow Directors from Kansas City and Minneapolis.

Looks like interest rates are going to s-p-i-r-a-l UP. 2morrow, the local property counters will melt

[kennynah]

i just had kopi-o with a fren a moment ago...

he was thinking of buying a property in New York City...given prices fell off the cliff...then i said.. "u not even there...why not buy one in singapore as an investment"...he said " very high leh"...

so, this is 1 person's general opinion of singapore's property market... i oso duno what to make of it...

[HengHeng]

Waiting for developers to come out with lucky draws and stuff then it would signal that property price are near the bottom ... meanwhile i will wait for developers to get squeezed

[winston]

From Credit Suisse:-

Mid-cycle correction on uncertain global economy and increased supply likely to be more pronounced at the luxury housing segment; we expect prices at mid-to-mass market properties to be more resilient

Sound macro fundamentals, an expanding population from a liberal immigration policy, and on-going transformation of Singapore into a more cosmopolitan city to support long-term demand for real estate

We see strong investment case for SREITs, and diversified and financially strong developers

Sentiment towards developers could stay subdued in the near term as investors assess the economic fall-out from the US sub-prime crisis. However, with property developer stocks trading at close to parity to their revalued net asset values (RNAV), we see trading opportunity emerging in financially strong players if prices dip further.

Our top pick is Capitaland (CAPL SP, BUY) for its diversified property exposure and its asset-light, capital recycling REIT management business model.

[LenaHuat]

Juz a note to local property shoppers : Watch out for "undesirable nitebirds".

Some1 commented in this forum that CityLights might become the next highclass Pacific Mansions:http://www.skyscrapercity.com/showthread.php?t=140847&page=201

Life can be strange. Many many years ago, I was eyeing a small development in district 15. It had some 45 units with a large landscaped garden, opened-air parking lots and pool. I backed away cuz I tot I recognized "undesirable nitebirds" when I recced the condo. Last year, the condo was en-bloc.

(2day, my brain is hyperactive after Great S Sale shopping and visiting some showflats)

[kennynah]

dear L :

what's the "undesirable nitebirds"? as in many lovers using stairwells to express their affections, like those found at the Toa Payoh Garden tower?