Tuesday, January 24, 2012

Ridiculous European Debt Crisis Solution Cycle

David Einhorn is one of the most successful long/short equity hedge fund managers of the past decade. He is the manager of  4,6 Billion USD Greenlight Capital which has "returned 9.7% during the last quarter of 2011 with  net returns for 2011 is 2.9%. This is the 13th consecutive year Greenlight Capital managed to outperform the S&P 500 index.[1]

In the Greenlight Capital’s Q4 2011 investor letter, the comedy of European Debt Crisis repeated again and again in the last 1.5 years with the exact manner is depicted very good:

"The cycle looks like this: The time passes and the crisis deepens. Markets, eternal creatures of habit, begin to reflect the ensuing fear. Then, just as things appear to unravel, there is a reprieve, as red headlines race across the screen: "Sarkozy and Merkel to Meet at Deauville", "Obama Phones Cameron", or "Christine Lagarde Waves From Bus". The market jumps. You'd think the media would quit falling to this charade, but having run out of clever headlines to describe the impending doom - 'Eurogeddon' Really? - they herald every briefing, meeting, assembly, and conference.

The market embraces these announcements as eagerly as the media, behaving as if any and all communication is equally constructive, and likely to yield any solution. The market continues to rise until the day of that summit, as all ears await a Grand Communique. Within minutes of any proclamation, the market may cheer with a final, celebratory spike. Upon evaluation of the actual statement, it becomes clear that either nothing has truly been agreed upon, or that the plan is insufficient, impractical, or just won't work. The market sells off and the crisis deepens some more. Lather. Rinse. Repeat.

Source : Greenlight Capital Q4 2011 Investor Letter

Doing whatever it takes(!) and solving nothing - European Debt Crisis Cycle of 2010 - 2012

And again and again everyone is looking at these leaders for the solution, the guys who ridiculously repeat the same useless words, "do whatever it takes". This whatever it takes "seems to include everything except making necessary sacrifices that might actually solve the crisis".

The letter says that "2012 may be the year in which currency crisis will no longer be kept at bay by politicians buying time with empty promises" and "maybe the fall of Euro will be the 2012 catastrophe that Mayans predicted".

Some must reads to understand the dynamics of current and upcoming financial crisis:
This Time Is Different:
Eight Centuries of
Financial Folly
Endgame: The End of
the Debt Supercycle and
How It Changes Everything
The Theory of Money and Credit

[1] - Greenlight Capital Q4 2011 Investor Letter

Monday, January 16, 2012

Do not overlook LinkedIn when looking for a job in Singapore

A colleague in my company has recently secured a job from LinkedIn which reminded me the increasing importance of using LinkedIn to find a job in Singapore. Here, although traditional sources of looking for jobs are still very strong, I observe that people are increasingly using LinkedIn to connect more people and based on the views to my profile, recruiters are also increasingly using LinkedIn to find right candidates.

LinkedIn, if you have somehow not heard about it, is a business-related social networking site. A well prepared and well-connected LinkedIn profile may bring incredible job opportunities to you, most of the time with little afford from your side.

LinkedIn has a beta application called “Jobs You May Be Interested In”. This small section on the left hand side is worth to check frequently if you are looking for a job since it compiles a list of jobs those match your profile in some way. To optimize your chances you should complete your profile with all the information necessary to make your profile 100% complete and use right keywords in your profile which would help the LinkedIn algorithms to locate a suitable job for you.

Many people I know are extremely shy to announce that they have just got out of their job until they find a new one. But announcing the loss of the job may not be that bad idea since it seems to me like when you are “free”, some recruiters are notified and they call you. This happened to me and several friends. When I have found my current company, I have “left” my previous company in LinkedIn and did not announce my new company for a while. During these times several recruiters called me.

Another way to come across more employment opportunities in LinkedIn is to extend your network so that you fall into the network of more recruiters and join your interest groups in LinkedIn and keep an eye on the job listings there.

Since the best time to look for a job in Singapore is approaching, you should create a LinkedIn account if you have not done yet and enrich it with content and connections to be ready for the hunting period. As we have written before the best time to find a job in Singapore is after Chinese New Year holiday during when people already collect their bonuses, have rest and jump to new jobs.

Sunday, January 15, 2012

Singapore private property sales fell sharply in December 2011

Singapore property developers could sell 632 new private homes in December 2011, significantly lower than the 1,702 units of November 2011. This is a 62 percent month-on-month fall and although some part of the fall can be attributed to the seasonal year-end slowdown, it looks like the last round of cooling measures in December 2011 took its toll on the private property sales.

In December 2011, Singapore government has announced the second round of property market cooling measures and introduced an Additional Buyer's Stamp Duty (ABSD) of 10% for foreigners buying private property in Singapore. Share of foreigners in Singapore private property was 20% as of Q3 2011 which climbed from 16.22% at the beginning of the year.

The numbers are still near record for all 2010 according to The Straits Times:

"This brings the year's total to 16,026 units - just 266 units shy of the record 16,292 units sold in 2010. 
Sales were powered mainly by UOL Group's Archipelago which sold 103 units at a median price of $1,118 per sq ft (psf) and The Nautical in Sembawang Road which sold 84 units at a median price of $882 psf." 
Source : Private home sales in December slump

Singapore New Private Property Sales 2011
The Straits Times also reports that the property cooling measures making home buyers cautious:

"It is the week before Chinese New Year and home buyers, while still turning up in healthy numbers at show-flats, prefer to remain cautious and keep their options open. 
A Straits Times check over the weekend unearthed a steady stream of visitors at show-flats but few buyers. Analysts said the possibility that home prices might fall following the latest round of cooling measures last month kept many potential buyers at bay."

The main worry is (or should be) the European debt crisis. As John Mauldin put it boldly in his last Weekly E-Letter "Europe has not yet really entered into recession, which is almost guaranteed this year". Their banks are "are massively insolvent, because they have 30 times their capital invested in the second problem, which is the sovereign debt of countries that are going to have trouble paying that debt". This does not only mean slow economic growth at best and recession at worst for Singapore, it also means that interest rates can go north if these banks start to pull back capital from Asia to home to improve their capital structure.

There are also some wind changes regarding the Singapore property in 2011 which effects the market. First, there is a large supply of private property coming to the market between 2012 and 2015. Second, slow or negative economic growth combined with stricter Singapore PR and Singapore Work Pass criteria means less tenant to attract for these large pool of new properties, a significant portion of them are bought by foreigners and locals for investment purposes. Third, demand is and will be taken away by a large number of Executive Condominiums, increased earning limits for public housing and large number of HDB units released in 2011 and 2012 (50,000 in total). These all may work against the only supporter of the private property prices : the positive monthly cash flow generated from such property in a ultra-low interest plus ultra-high rent environment. Many owners would simply hold on until this cash flow is positive but they, especially the ones with many mortgages, will have difficult time when this cashflow becomes negative.

In the light of these facts, many analyst predicts price falls some are as high as 30 percent in 2012. So it may well be wise to wait-and-see other than locking into a property just before it falls from its new peek.

Saturday, January 14, 2012

Singapore Property News - 2012 2nd Week

Oversupply of Luxury Property
Singapore is facing an oversupply of luxury homes in 2012 while their primary buyers, foreigners, are required to pay 10% Additional Buyer's Staamp Duty tax since December 2011.
According to property consultancy CBRE, there are at least 25 launch-ready projects in districts 9 through 11 in the market. These districts are prime areas for high-end homes. The projects—including Ardmore 3, Leedon Residence and TwentyOne Anguilla Park opposite Wheelock Place—are made up of more than 2,000 unsold units.
CBRE also revealed that at least 30 already-launched projects in these districts still had at least 2,846 homes (or 50% of their units) unsold as of the end of November last year. Majority of these unsold homes came from the D'Leedon (with 1,257 of 1,715 units unsold), the Twin Peaks (413 of 462 unsold), the Hilltops (208 of 241 unsold); and the The Scotts Tower (200 of 231 unsold).
Taken into account all the homes that were not even released for sale, the stock of high-end homes stands at 5,903. This number excludes the luxury units of Sentosa Cove, where sales have also slowed drastically. According to caveats lodged with the Urban Redevelopment Authority, there were only 12 new sales in Sentosa Cove for the whole of 2011. 
 Show flat buzz not translating to sales
European debt problems has started to bite in Singapore's growth, banking and financial industry players are laying off workers, an oversupply of flats are entering the market from 2012 and new measures effected 10% of all private property buyers (foreigners) in Singapore. So there is no rush to buy a property now, which can turn into a 30% loss in the next few years:

The Straits Times has reported that Qingjian Realty’s Riversound Residences in Sengkang East Avenue has attracted “hundreds of viewers”. In spite of the traffic, UBS Investment Research reported a “lukewarm take-up” of the project. Only 50 of the 250 units launched at the estate were sold, at an average price of $850 per sq ft (psf). For instance, one four-room flat spanning 1,259 sq ft sold for $1.13 million (or $896 psf) after discounts. The project comprises 590 apartments. 
Property agents told The Straits Times some 700 home seekers visited the showflat over two days, but the majority of them were only looking around, not planning to make a purchase.
Indeed, this trend seemed to carry across other launches. For one, the 577-unit Archipelago at Bedok Reservoir faced a similar sales slump. Its developer UOL Group declined to provide The Straits Times with numbers, but said, “We are pleased with the interest and level of visitors at our showflat over the last few days. 
“We had transactions done over the weekend. Buyers are taking more time to commit and we hope to see more sales going forward,” it added. Source : Show flat buzz not translating to sales

Rented a flat at last!

I have finally found an HDB flat for rent after looking for an HDB flat for months. Although the price was higher than I was planning to pay, at least the unit was deserving it. As I have written before, it was a very frustrating process at the beginning thanks to the new lows of Singapore property agents but luckily I have started very early to look for one and did not have to end up with an inferior but expensive unit. Big bonus was that at the end, I did not pay a penny to any property agent.

Do not get me wrong: I advise you to work with a licensed property agent if you are looking for a place to rent, especially if you are new to Singapore. if you do not know what you are doing, you may end up with a rental scam. But if you are new here you should also know that for every good property agent out there, "there are two more that make parasites look good by comparison".

Anyway, I have realized that not all the steps involved and items to be careful about are written in a single place so I will write a check list here to rent a flat in Singapore.

1 - Find a good property agent. This is important and based on my own experienced best are found by reference. Ask to your friends and colleagues to find one which they worked and liked the service. Second best option is the newspaper classified pages and I personally stay away from big property portals. Check How to find a good property agent in Singapore for details.

2 - Find a landlord property agent. This is the best you can get. It involves an agent and you also do not pay for the agent fee. In Singapore a property agent cannot represent both sides and collect money from both sides. The landlord agents usually start with an ad in newspaper or internet and tenant agents find them. Be the one finding them. But doesn't it mean that he/she will protect landlord's interest and will not care about yours? Well first, your friendly tenant agent will probably not care about your interest. Second, this is usually not the case. I have rented my new flat like this and although I have worked with a very good agent which did a very good job even for our side. And 2 months before, one of my colleagues rented a very reasonable 2+1 HDB for a very reasonable price (1,700 SGD per month) on Bedok Reservoir Road through an agent and although her agent was also good, landlord's agent was great. Simply call the ad and ask whether the agent is working for landlord or a tenant agent. You can save thousands if you can find a landlord agent.  Refer How to rent a flat in Singapore without paying property agent fee? article for details.

3 - Check the license of the agent. This is very easy and sure way that you will not have any big problem like falling into a scam and if things go wrong, you will have a legitimate party to blame. You can do it online and make sure that the man/woman on the photo in the web site is the one you are engaging with. See  How to avoid rental scam in Singapore for details.

4 - Avoid rental scams. Here is an article that lists a checklist from Singapore Police to avoid rental scams. Renting a flat without agent is possible but if you want to follow that way make sure everything is checked.

5 - Follow the procedures of renting a property in Singapore. After we have viewed the flat and decided to rent it, we have visited it for a second time to check if everything is in working condition and there is any major problem in the house. This is important before the next step is giving a letter of intent. You should list any request you have from the landlord (in our case the washing machine was just ultra old so we have requested them to change it which they have accepted) there.

Next, we have signed the tenancy agreement.  I have heard people signing tenancy agreement without letter of intent right away but usually these 2 steps are followed. You should not pay any deposit until the tenancy agreement is signed. If you will pay the deposit at the time of the tenancy agreement signing, do not pay cash but use check. If you do not have check, you can get a one time check from the bank which costs $5 only for admission fees.

You should also not pay the rent until keys are handed over to you. Again pay by check if the bank transfer is not possible. Do not pay cash without documentation. If you have also not done until now, go around the house with agent or the landlord and make sure to document all defects before getting the keys. Other than documenting we have also photographed them and mailed to the agent. It is important to look at the details and make sure that the air conditioning units, television, refrigerator, washing machine and etc. are working.

Thursday, January 12, 2012

Morgan Stanley cuts 10 fixed-income jobs in Singapore, Hong Kong. Further banking lay-offs are expected in Asia

According to Reuters US Investment Bank Morgan Stanley has cut 10 fixed-income jobs in Singapore and Hong Kong. The job cuts mainly came from sales and trading.[1] In December last year, the bank has announced that it will cut 1,600 employers. According to Reuters source, layoffs included executive directors, vice presidents and associates, mainly in sales and trading and Sneha Sanghvi, who was co-head of fixed-income sales in Southeast Asia and was a managing director, is the most senior banker in the latest cull. Smaller number of jobs in equities and commodities have also been eliminated in Singapore. Foreign banks in Asia started to lay off staff to cut costs and are now even targeting the senior bankers.[1]

Unfortunatelly, according to the headhunters in Hong Kong the recent layoffs by late 2011 and early 2012 are just the beginning and there is “far worse to come”.[2]

As we have written recently in RBS 2012 lay offs may effect Hong Kong and Singapore most, RBS started to make heavy cuts in Asia equities division and mentioned in Singapore job outlook bleak in 2012 article that RBS, Barclays and Morgan Stanley has already started lay-offs in Singapore in late 2011.

On the other hand,  AXA has announced that wealth manager ipac Hong Kong and ipac Singapore will be closed within the first half of 2012. ipac Singapore has a staff of 'just under 50' in Singapore.[1]

[1] - Morgan Stanley cuts 10 fixed-income jobs in Singapore, HK-sources
[2] - Closure of wealth manager ipac hits S'pore, HK clients
[2] -  Daily Dispatches: Morgan Stanley chops 10; ipac closes in Singapore and Hong Kong; headhunters warn of more cuts to come in Asia

Wednesday, January 11, 2012

RBS 2012 lay offs may effect Hong Kong and Singapore most

Royal Bank of Scotland (RBS), part-nationalised British fat cat,  is expected to announce Britain’s biggest corporate loss of up to £28bn on Thursday and will lay off 5,000 staff globally from its investment banking division. But unlike the previous lay offs which effected Asia the least, this time might be different:

"“We have just heard that most of them will be made redundant here in Asia in Q1 and Q2,” says a headhunter who was told the news by a director at RBS in Hong Kong on Wednesday. The BBC’s business editor has similar thoughts: “much of the pain will be in Asia and North America.”

As the major regional centres, Hong Kong and Singapore are likely to be most affected. But why has Asia now been hit when other banks have focussed their recent international redundancy announcements on Western markets? “With all that has gone on in the last couple of years at RBS, it has already trimmed down Europe and the US to a minimum. Asia can no longer escape,” says the headhunter.

RBS has already cut 30,000 staff since its near collapse in 2008 and as much as 20,000 of them came from UK. As the headhunter above said, there is no much room to cut staff there and this time Asia may not escape.

According to Bloomberg, everyone in cash equities will be cut, and quite possibly everyone in corporate broking and M&A. Lay-offs are likely in the back and middle office as well as the front, adds the headhunter."
Source : Lay-offs loom large as the RBS axe arrives in Asia

Bankers bringing money are safe for now, the cuts will mostly effect "the fat cats on large base salaries who haven’t bought in enough business". The shrinkage of investment banking will take the number of employees in Global Banking and Markets down from around 17,000 at the moment to less than 15,000. I am told that a couple of thousand left at the end of last year, so total job cuts would be around 5,000, including those who have already left.[1]

According to Asianinvestors.net, RBS makes heavy cuts in Asia equities division, has made major lay-offs in institutional and retail equity sales and structuring in the region, and whispers it plans to shut its equities and corporate finance units globally:

"Amid reports that the UK’s RBS will cut 4,000 staff in investment banking globally, the equities division in Asia is seeing deep cuts across Hong Kong, Japan and Singapore, including a raft of institutional salespeople and structurers."

The article gives details about people who has recently left RBS in Hong Kong, Singapore, Japan and China.

As we have written before Singapore and Hong Kong job market trends for 2012 are already not very good and Singapore job outlook looks bleak in 2012.

[1] - Why RBS is shrinking its investment bank

See also Morgan Stanley cuts 10 fixed-income jobs in Singapore, Hong Kong. Further banking lay-offs are expected in Asia.

HDB launched first batch of 2012 flats: 3,923 New Flats in 5 projects

Housing Development Board (HDB) has launched 5 Built-To-Order (BTO)  projects today, offering 3,923 new flats in Choa Chu Kang, Punggol, Sengkang and Tampines. This is the first BTO launch of 2012. In total, HDB plans to offer 25,000 BTO units for the entire year.[1]

These 5 projects are Fernvale Lea in Sengkang, Sunshine Gardens in Choa Chu Kang, Tampines Alcoves and Tampines GreenTerrace in Tampines, and Waterway Sunbeam in Punggol.[1]:

"The selling prices excluding grants for units at Fernvale Lea range from S$83,000 for a 2-room unit to S$283,000 for a 5-room unit. For Sunshine Gardens, the price range is from S$77,000 for Studio Apartments to S$295,000 for a 5-room unit. For units at Tampines Alcoves and Tampines GreenTerrace, the price range is from S$86,000 for Studio Apartments to S$292,000 for a 4-room unit. And at Waterway Sunbeam, it's S$152,000 for a 3-room unit to S$340,000 for a 5-room unit.

These prices are excluding grants."
Source : HDB launches 5 BTO projects

HDB has also announched that the next launch will be in Mar 2012, and it will offer 4,110 new flats for sale in Bedok, Bukit Batok, Bukit Panjang, Bukit Timah, Clementi, Geylang and Toa Payoh.[1]

HDB has offered 25,200 flats in 2011 and is offering 25,000 more units in 25,000 more units. This is nearly 3 time the average yearly rate between 2001 - 2010 period. HDB has also changed its policy of supplying new flats only in new towns and is now supplying new flats in mature towns such as Tampines and Bedok. It is very likely that the flats in Tampines will be oversupplied and many will probably wait the March 2012 offer to try their chances with Bedok flats.

[1] - HDB Launches 5 BTO Projects Offering 3,923 New Flats

Monday, January 9, 2012

Is Singapore home rental market’s future bright?

Some analyst believe that after the December 2011 property cooling measures, "the rental market could brighten for landlords in 2012 as home buyers defer buying units in the wake of the recent cooling measures:

"They believe the larger pool of tenants might stabilise the rental market or even drive a pick up of up to 5 per cent in rents over the next 12 months. These analysts’ comments are a contrast to earlier expectations that rents were set to fall as a large supply of completed units come onto the market this year. Analysts had predicted a possible softening of rents this year due to the new private and public homes that will be completed within the next few months."

I believe it is really early to talk about this kind of good news for landlords (and bad news for tenants) as 2012 will not only see a large supply of completed units, it will probably see a sharp drop in growth of number of foreigners here due to economic slowdown and expected headcount reductions in banking and financial services industry.

Renting a private unit is not for everyone in Singapore. Lowest rental price you would find will be 3,000 - 3,500 SGD per month in a country where average full time pay is 2,700 SGD per month. So if a family is not making more than 6,000 SGD, it is not possible to rent one. 

So, it requires some sort of high paying job to be able to rent a private unit here in Singapore. Unfortunately in late 2011, companies has started to freeze hiring or even started firing people in bulk among ranks of these kind of high paid individuals. In our Singapore job outlook bleak in 2012 we have talked about this, many banks has started firing staff in bulk and many are planning net headcount reduction in 2012.

It will be quite difficult to offset larger supply + less tenants with foreigners who will rent instead of buying a property. Many foreigners effected by additional buyer's stamp duty are probably not residing or planning to reside in Singapore but are just investing in Singapore. 

Sunday, January 8, 2012

Singapore Property News Jan 1 - 8 2012

Here are some news about Singapore property in the first week of year 2012.

Thousands of luxury units launched in 2011 are still unsold
It seems like only the OCR (Outside Central Region) or so-called "mass market" private properties are doing quite well in Singapore while luxury segment is already undersold as of November 2011, even before the Additional Buyer's Stamp Duty (ABSD) introduced to restrict foreigners. With ABSD, 2012 will probably be even difficult for the luxury segment where nearly 50 percent of the demand is, or was, from foreigners.
Source : Singapore Luxury Property Oversupply

Far East Organization has sold 67% of released units at The Hillier in 3 days of launch
The Hillier, a SOHO (Small Office/Home Office) development in Hillview Avenue was launched on the first day of 2012 and by Jan 3rd, 225 of 333 units were sold. Most of the buyers are Singaporeans and Singapore PRs. The project has 528 SOHO units and is 5 minutes walk to upcoming Hillview MRT Station.
Source : Far East starts year with strong demand for The Hillier

Singapore home prices continues to rise
Although the pace of rise is slowing, the prices are still rising. Singapore property market has become a case study for low interest rates fueled asset bubble where the power of low interest rates and resulting artificial home affordability is stronger than any other cooling factors combined; low growth, slower foreign intake and government cooling measures.
Source : Singapore's private home prices continue to moderate

Unintended Consequences of cooling measures in rental market?

Some experts believe that the rental market in Singapore may improve this year, because home buyers are likely to put off purchasing amid the recent cooling measures. If this happens, this will be the second "unintended consequence" of cooling measures. As you may recall, a cooling measure in August 2010 "mandated that resale flat buyers who are private property owners had to dispose of their private homes within six months of purchasing their HDB resale unit. In addition, the Minimum Occupation Period (MOP) of non-subsidised flats was increased from three to five years. This probably made HDB upgraders reluctant to sell their HDB flats because it may be more difficult for them to buy a HDB flat in the future, adding to already severe supply crunch in resale HDB market. Source : Resale HDB flat prices to soften

But this time, any number of foreigners renting instead of buying will probably be offset by huge number of private properties coming to the market while virtually nobody is hiring and some are firing.
Source : Home rental markets future bright

HDB resale flat prices rised 1.7% in Q4 2011
Housing Development Board, HDB, has just released the "Flash Estimate of 4th Quarter 2011 Resale Price Index" and is 190.4 now, an increase of 1.7% over 3rd Quarter 2011. Although the increase is lower than the 3.8% seen in the previous quarter, it is still a significant rise.
Source : HDB resale flat prices rised 1.7% in Q4 2011

Buyers return units for fear of price decline
Some units at major projects released in November and early December 2011 are being returned to their developers, possibly indicating a reflex reaction to the implementation of the additional buyer's stamp duty (ABSD), according to market watchers.
Source : Buyers return units for fear of price decline

Saturday, January 7, 2012

Singapore and Hong Kong job market trends for 2012

Recruitment in Singapore and Hong Kong fell in the second half of 2012 and currently, there seems no reason to not believe that this will be the major trend for jobs market in 2012. While banks are very cautious for hiring, they are planning to reduce existing headcount. On the other hand, less people will be willing to change their position since being a new guy in a company can be quite dangerous in this job environment.

Normally, the months after Chinese New Year are the best times to look for a job since people get their bonuses, have their holidays before Chinese New Year and move to new jobs after it. But this year, even these months may be difficult to secure a new job because of the above reasons.

One particularly worrying trend for Singapore and Hong Kong is off-shoring. Singapore and Hong Kong became very expensive places to do business due to ultra high office rentals, higher salaries required to live in these cities and general increase in every day costs. It seems like financial IT will take a hit in the next few years but even analytical jobs may fly out of Singapore and Hong Kong:

"Off-shoring has been a hot topic in recent years, but I predict it will become even more prevalent in 2012,” says Nick Lambe, managing director, Morgan McKinley Hong Kong. Turbulence in global financial markets has made the majority of organisations extremely in the New Year and as a result, off-shoring will be a part of many firms’ resourcing strategies." 
Although process-orientated functions like IT and operations have traditionally been off-shored, banks will also target analytical jobs this year, such as product control. “This will therefore drive hiring within the project management and change space as banks look to strip out these functions and complete the off-shoring process,” adds Lambe."
Source :  A year to fear? Our five-point preview of the Asian job market in 2012
 Recently, Morgan Stanley has slashed 80 Singapore support staff and offered transfers to India and Hungary. Other banks have back-office relocation on their radars.

Singapore Luxury Property Oversupply

At least 30 already launched projects in Singapore's central districts; district 9, 10 and 11 have still more than half of its units unsold by the end November 2011. 4 projects among these are heavily unsold: For example 1257 units of total 1715 units in D'Leedon in district 10 are unsold (73 per cent). 413 units of 462 units of Twin Peaks, at the site of old Grangeford apartments near Orchard Road, 208 units of 241 units of Hilltops and 200 units of 231 units of The Scott Towers are unsold.[1]

Things will be harder in 2012 for luxury projects in Singapore, which are ridiculously high priced and mostly grapped by foreigners. This is because of new property cooling measures requiring 10% extra stamp duty from foreign buyers, economic uncertainties as well as the financial positions of the developers. They will probably use the ultra low interest rate environment to finance their operations for a while instead of lowering the prices:

"Developers have strong balance sheets after reaping super-normal profits over the past five years. They have enough built-in fat and are hibernating ... Most of these sites are freehold so there is no urgency to launch".[1]

Some experts believe that they can lease up the units instead of selling them with lower prices. But this will be really difficult in an environment where expat packages are shrinking, banking and financial services industries are cutting jobs in Singapore and economy is growing with a slow pace. It is also very damaging for all developers to hold back since they eventually need to launch the projects and if they all hold back and launch around the same time in a high interest rate environment, it may be even more difficult to sell.

But some experts expect 15 per cent price falls in the luxury segment. According to DTZ, luxury condominium segment has already have a very bad 2011 even before new property cooling measures and prices of these condos have just gone up 1 % in 2010.

If the prices of these units are beaten by nearly 6% inflation, there must also be no reason to force buyers to put their money to luxury property.

[1] - Luxury home market faces oversupply

Wednesday, January 4, 2012

Luxury online shopping in Singapore

Clout Shoppe
Clout Shoppe is recently launched in June 2011 by SingPost as a luxury lifestyle e-commerce portal for online shoppers and claims to provide "hottest, most elite brands and fashion labels at competitive prices". Clout Shoppe has a "time limited" private sales feature for its members where a sales begin at 10am SGT and are time-limited. The online shop also provides exclusive access to brands which are unique or unavailable elsewhere in Singapore:
"With private sales, members have  access to international designer brands such  as Prada, Miu Miu, Fendi, Gucci, Bottega Veneta and Jimmy Choo at extremely competitive prices for a 3 to 4 days window. In addition,  Clout Shoppe carries a selection of  internationally renowned  designer brands exclusively for its members. This includes Maison Takuya, a luxury label famous for its exquisite range of exotic leather  iAccessories which  comes in mainstream  hues and funky colours. Another  exclusive  brand is  LVMH‟s Make  Up For Ever, which has a strong following amongst top international makeup artists and consumers. Aurelio Costarella, a leading Australia Designer label will also be available soon at Clout Shoppe. Aurelio‟s designs have long been admired and worn by international  celebrities gracing the red carpet,  including Rihanna, Eva Mendes, Tina Arena, Naya Rivera, Dannii Minogue and Dita Von Teese."
Clout Shoppe claims Best Price Guarantee, if you can find a lower price in any local authorised boutique or reseller they refund you the price difference in cash, in the same mode of payment you made your purchase in. (See FAQ) Other than Singapore (where shipment is free for above 150 SGD purchases) they also ship to Malaysia, Brunei, Australia, New Zealand, USA, Canada, Taiwan, South Korea, UAE, Indonesia, Hong Kong and China for 29 SGD flat rate.

You can access Clout Shoppe from www.cloutshoppe.com.

Doorstep Luxury - Online Shop for Handbags, Jewellery & Accessories
Doorstep Luxury is a Singapore based company with a well designed premier luxury e-commerce site. But for those in Singapore and want to see the product before buying they also have a boutique shop and studio located in Telok Ayer Road.  and They source hottest emerging designer handbags, high fashion jewellery and accessories directly from their designers and manufacturers and ship them globally from Singapore. Aside from some well known designers, they also source from emerging Asian jewellery and handbag designers.

For orders from Singapore or international orders above $300 shipping is included in the displayed prices. Their online shop can be reached from this address : http://www.doorstepluxury.com/

Tuesday, January 3, 2012

What is Design, Build and Sell Scheme (DBSS)?

Time to time you will encounter this housing type called Design, Build and Sell Scheme (DBSS) in Singapore. What is a Design, Build and Sell Scheme (DBSS) flat? Where are they? Who can buy them? If you wanna know the answers to these questions you are at the right place.

DBSS flats are public housing flats developed by private developer.  DBSS are built with better designs compared to normal HDB flats in mature estates such as Tampines, Ang Mo Kio and Bishan and the private developer will undertake all the entire development from planning, design, and construction, to the sale of the flats directly to eligible buyer.  Developers are flexibility in design as long as the design does not compromise the objectives, fundamentals and characteristics of public housing. For example the design of DBSS need to maintain open access to common properties and DBSS cannot have fencing and facilities such as swimming pool, gymnasium and tennis courts. These flats are still public housing flats with the similar HDB eligibility conditions like other flats developed by HDB.[1] Like other public housing flats, DBSS flats are 99 years lease and Minimum Occupation Period of 5 years is applied before buyer can sell the unit.

DBSS was introduced by the Housing and Development Board in 2005 and the pilot project was The Premiere @ Tampines, composed of eight 17-storey blocks, which was launched in 2006 and completed in 2009 by Sim Lian Land Pte Ltd on  21,000 sq m  land acquired for $82.2 million. The other DBSS projects as of December 2011 are:

In 2011, the sale of land for Design, Build and Sell Scheme (DBSS) projects has been put on hold while the Government carries out a review, said National Development Minister Khaw Boon Wan:

"Mr Khaw made these points on his official Facebook page over the weekend, in response to a member of the public who called for the scheme to be scrapped in the wake of high asking prices at a Tampines project called Centrale 8.

The developer, Sim Lian Group, initially estimated prices at $880,000 for five-room units, later revising them to $778,000 after a public uproar.

Yesterday, the Ministry of National Development (MND) said that pending the results of the review, the Housing Board would not proceed with the sale of a DBSS site in Bendemeer slated for later this month."[2]

[1] - What is Design, Build & Sell Scheme (DBSS) Flats?
[2] - DBSS land sales on hold pending review

Latest HDB Resale Flat Prices

What are the latest HDB resale flat transaction prices in Singapore? What is the price of a resale HDB flat in Singapore? To find answers to these questions you can google the web but you will most probably end up with the asking prices. What really matters are the property transaction prices and there is a place where you can get some general information on these prices.

As we have written back in 2011, Singapore Urban Redevelopment Authority (URA) has a e-Service named "Private Residential Property Transactions with Caveats Lodged" where you can check the latest Singapore condo, landed property transaction prices. Housing Development Board (HDB) also provides a similar e-service where you can check past 1-year resale transacted prices. The data provided is based on approved resale applications and is updated on the 1st and 16th of each month. Transacted prices are better indicators for you to estimate the price you will pay since asking prices may have a large greed premium. This e-service enables potential resale flat buyers and sellers to make more informed decisions, "taking into account the prevailing trends in the HDB resale market."

All you need to do is to enter the flat type (1 room, 2 room, 3 room, 4 room, 5 room, Executive, HDUC or Multi Generation), HDB Town or Street Name. You can also filter search results by block number and/or transaction prices as well as resale approval date. The results show the floor of the transacted flat, age of the building, resale price and transaction approval date.

These prices also include Cash Over Valuation (COV):

"The price information shown in this e-service is based on the actual transacted prices declared by the buyers and sellers. For cases where the resale flats were transacted above valuations, the resale prices would include the cash amount above valuations. Please note that there could also be resale flats that were transacted at or below market valuations."
Source : HDB 
Actually HDB recently went one step further and started to provide HDB Centralised Map Services which provides resale transacted prices within 500 metres from any HDB Block or DBSS Site/Project and resale transacted prices for all flat types in each block. The map application also displays other information on the block such as EIP/SPR Quota, Upgrading Programmes and Distance Enquiry for CPF Housing Grant.

HDB Centralized Map Services displaying resale transaction prices within 500 meter of selected block by flat type.

Monday, January 2, 2012

HDB resale flat prices rised 1.7% in Q4 2011

Housing Development Board, HDB, has just released the "Flash Estimate of 4th Quarter 2011 Resale Price Index" and is 190.4 now, an increase of 1.7% over 3rd Quarter 2011. Although the increase is lower than the 3.8% seen in the previous quarter, it is still a significant rise.[1]

The index was 172 at the end of 2010 so the year-on-year increase is around 10.6% in 2012. The price index doubled since 2006 in just 5 years.

Between 2001 and 2008, the average number of HDB units completed fell to 8,260 units per annum from the average of about 25,700 units per annum between 1991 and 2000 (See Forecasting the future of Singapore property market). This under-supply situation is the key reason for the continuous HDB resale price rise. Although HDB now responsed to under-supply situation with 25,000 units in 2011 and plans to release 25,000 more in 2012, these units will be completed in 2-3 years and will require 5 years of occupancy before entering the resale market.

Supply crunch is also fueled by the cooling measures of August 2010:

"Beyond the historical under-supply of HDB flats in the 2001 to 2010 decade, some of the key reasons for the supply crunch lie in policies that have been effected in recent times. As part of the cooling measures implemented in August last year, it was mandated that resale flat buyers who are private property owners had to dispose of their private homes within six months of purchasing their HDB resale unit. In addition, the Minimum Occupation Period (MOP) of non-subsidised flats was increased from three to five years. This means that HDB upgraders might be reluctant to sell their HDB flats because it may be more difficult for them to buy a HDB flat in the future, said DWG’s Mr Lee. These upgraders will be looking to rent out their HDB flats, resulting in less supply of resale flats."

But the price index only tells a part of the story. There is also a Cash-Over-Valuation (COV), money paid in cash to the seller over the valuation of the HDB flat. And COV has fallen $5000 just for the month of December 2011 to $25,000 - $40,000. "COV are likely to remain soft and could dip $10,000 to $15,000 in the coming six to nine months" says PropNex Chief Executive Mohammed Ismail.[2]
Source : HDB
Since supply side crunch has no magic and fast cure, demand side measures are the ones which can make difference. For example, In 2011, HDB has offered 28,043 HDB flats 25,196 of which were new flats under the Build-To-Order (BTO) system. For 2012, HDB plans to release 25,000 BTO flats in the various towns/estates. This month, in January 2012, 3,890 BTO flats in Choa Chu Kang, Punggol, Sengkang and Tampines will be offered for sale.[1]

Income ceiling is also raised from 8,000 to 12,000 to enable more Singaporeans to buy new BTO flats rather than going to resale flat market. One another measure is also reducing the Singapore PR intake, which has slowed significantly in the last 3 years and expected to slow further. Singapore PRs are eligible to purchase HDB from resale market and many had done so to avoid paying ultra high rents to the same flats.

[1] - Flash Estimate of 4th Quarter 2011 Resale Price Index
[2] - Resale flat prices still up, but at slower pace