SG Property outlook

1.     Saturday December 31, 2011
Developers – the real landlords
Insight Down South
By SEAH CHIANG NEE
Developers – the real landlords

As a group, exclusive and rich, property developers have always wielded strong influence in small cities with rich land banks in a scale that probably rivals the government – until now.

TRADITIONALLY, property developers in cities like Singapore and Hong Kong have enjoyed economic power far beyond their numbers.

We were politely reminded of this when Singapore’s developers told the government they were disappointed at not being consulted before it announced recent measures to cool the market.

This was tantamount to a right to be informed in advance of any policy or price affecting their interests.

The developers’ reaction stirred public ire, with people considering it an audacity its demand to be consulted over changes.

Yet there is a tradition behind the demand.

As a group, exclusive and rich, developers have always wielded strong influence in small cities with rich land banks in a scale that probably only rivals the government.

After all it controls the city’s most precious asset.

My first lesson of this fact of life came in the 1970s when I arrived to take up the post as news editor of The Hong Kong Standard. A colleague asked who I thought were the colony’s most powerful people.

“The chief editor of New China News Agency” I ventured, regurgitating what I had often read.

“No, my friend, not even the Chinese mainlanders, and not the colonials,” he exclaimed, “It is the Hong Kong real estate developers.”

Land auctions often decided how well - or poorly – the Hong Kong people were to live.

Property prices would affect billions in budgets and living standards, in other words, people’s lives.

When I returned to Singapore, I found a little of the same, the difference being we were an independent country and not led by a passive colonial Governor. In short, developers here were powerful!

Once land values were decided auctions, the developers controlled the ultimate prices and timing of the sales.

To a large extent, it meant controlling of supply and demand.

If the developers thought the asking prices were too high, they would abstain from bidding, making them a sort of a little “pressure group”.

When I returned here I discovered a bit of the same.

Developers collectively could – if they chose to - influence the way the media reported the property market because they were big advertisers.

The bigger the spenders, the greater the influence! They could ensure newspaper reports did not report too negatively on the market and scare away buyers.

Some were not reticent exercising it by making it clear to advertising managers that their money could best be used in a media that keep encouraging property buyers, or at least not to predict weak markets too strongly.

Others stayed away from the game.

Many years ago when I was chief editor of a newspaper here I had one such run-in with several Singapore developers, who were among my paper’s frequent advertisers.

It was at a time when dark economic clouds were gathering and our Business Desk was reporting that property markets were heading for a fall. The bad vibes were strong, and they were reflected in our coverage.

During lunch, one developer referred to how much his company had spent on advertising in our paper.

He added that he “sometimes considered it a waste of money to advertise in a newspaper which frequently talked down the market”.

If this continued, they might as well stop or cut down advertising in the paper, he said.

I was very concerned. I replied that as a newspaper editor, I feared two things most; the government withdrawing the newspaper licence and secondly, businessmen threatening to withhold advertising unless we cooperated with them.

“In either case, our survival will be threatened, and we will bring the fight to Page One and let readers judge!”

We finally struck a deal: No advertising boycotts. In return I would run an interview on record with a property tycoon who predicted his views that the market would rise in the following year.

I am relating this to record appreciation of the National Development Minister Khaw Boon Wan’s stand not to bend to the developers’ will “by consulting” them about market “cooling-off” action or price movements.

That would have been tantamount to tipping them off in advance of price-sensitive measures, an act no government can do.

Analysts expect the recent measures to cool buying and bring down the home prices by between 15 to 30% over the next two years.

“There will be a sell-off in the next three-to-five months,” said a property agent.

By imposing stiff measures against foreigners’ speculative buying, including a 10% duty, Khaw has gained public acclaim.

“Khaw has my full support. His policy is good for the younger generation,” a Singaporean commented.

“If the young people feel that even with hard work they still cannot achieve their goal, Singapore is done for. That dream is to own a private property.”

Khaw has also succeeded in shortening the queue of new Singaporean graduates applying to own their first public flat.

Since becoming minister after the May election, Singapore’s once world-acclaimed public housing is slowly working to dispel public discontent over shortage and high prices.

Many more years are needed to clean up the mess. But for now, wrote Khaw - one of the more popular ministers: “We’re starting to see the light at the end of the tunnel”.

And instead of the usual brickbats, praises are starting to come in for fending off foreign speculators.

“I’m seeing the quality of Minister Khaw,” one surfer wrote.

Another said: “Thank you for the cooling measures. This shows Singapore is clean and NOT controlled by the (property) billionaires club.”
 

I AM put off by the latest round of cooling measures ('Property curbs could hurt economy: Redas'; Dec 28).

I am a Singaporean and own three private properties. I studied hard. I work hard. I employ Singaporeans and contribute to the economy. I pay annual taxes that amount to what some earn in a year.

To me, meritocracy works - and counts, and there are no short cuts: You work hard, you make money and you pay your dues. But now, I am told that as a native Singaporean who has run the gauntlet of our much vaunted meritocracy, I must be penalised further by that very same system because I invested my hard-earned rewards in more than one local property.

This is enough to drive me from the country I grew up in and in which I am still contributing, to think the better of investing here and invest in a property in another country that does not discriminate against high-income earners.

Does my money count? Do I count?

Tan Cheng Hock

www.straitstimes.com/STForum/Story/STIStory_751908.html


Dear Tan Cheng Hock, I am put off by your whining. The policy aims to restrain hot $ from creating a bubble which will lead to dire results for every one, including yourself, when it bursts. In any case, haven’t your properties made enough profits for you after the spectacular run in the last few years? If  you indeed drive yourself from SG, whichever country you go to, you will realize the governments do care about ensuring that property prices stay reasonably within the reach of the citizens. China. HK, Malaysia. Etc.

Does your money count? Yes. Please donate to charity.

Viviene  

Good! The turning point has arrived.



Developers' private homes sales slides to 632 units in December

By KALPANA RASHIWALA

Developers' private home sales dropped to 632 units, excluding executive condos (ECs) in December. This was 62.9 per cent lower than the 1,702 units developers sold in November, show latest figures from Urban Redevelopment Authority released on Jan 16.

December's sales decline followed the government's announcement of the additional buyer's stamp duty on Dec 7.

The 632-unit sales figure for Dec 2011 was the lowest monthly sales figure since June 2010, when developers sold 847 units. Including executive condos, which are a public-private housing hybrid, developers sold 670 units in December, down 63.9 per cent from November.

Two views to December home sales by Colin Tan 04:45 AM Jan 20, 2012
Last year, property developers sold an average of 1,300 homes per month. The recently-released December new private home sales figure of 632 is slightly less than half that number. Can we predict that overall home sales will be halved this year? This will be a huge concern for developers - their unsold stock will simply balloon. Or is last month the worst it can get and that conditions can only improve from here?

You could read last month's figure in two ways. The straightforward reading by most media is that new private homes sales, excluding executive condominiums, plunged 63 per cent from November. But housing agents I spoke to said they had expected a heavier fall after the imposition of the additional buyers' stamp duty (ABSD).

You can understand where they are coming from. After all, almost every property expert in the market had predicted that a price correction was on the cards or simply inevitable. Even a few developers admitted that the price situation was unsalvageable.

Yet, the fact that 632 purchasers chose to buy in the month when they could have ostensibly got them cheaper a few months later must be puzzling. These buyers seemed to act against good advice, or for that matter, the only advice offered publicly.

At a recent seminar, I told the audience that they had to analyse the market at both micro and macro levels. If you choose to analyse market behaviour purely from the ground level, you will always be puzzled. At the macro level, you would realise that there are few investment alternatives.

Some analysts have said that a price correction would be healthy for the market. I agree. I have never said that the current market is healthy but I cannot say that prices will fall as a result of the ABSD if I cannot see it happening. It can happen if there is a deep recession or if borrowing costs rise sharply and suddenly, but not purely as a result of the ABSD.

At the same time, it is also difficult to see prices rising in the near future as the authorities are continuing to make land available for private housing.

Still, last month's figure is the lowest in two years and reflects a huge dent on buying sentiment. The announcement of the ABSD on Dec 7 left enough room for those who want to pull out to do so. This would mean the figures would be the first month to accurately reflect the full impact of the ABSD.

I had expected weak sales at similar levels to continue for the next two months but after what happened on Wednesday at the launch of Watertown in Punggol Central, I am not so sure any more. If the sales figures are to be believed, more than 160 of the 250 units launched were snapped up. Had prices been lowered as the developer had indicated the day before? But as the news report pointed out, the project set a new price benchmark for Punggol.

As I often remind my colleagues, the money is out there, waiting to be spent. You need to build a good story line for the buyer to take out his cheque book. News reports also said that more than 90 per cent of the buyers were Singaporeans. Have we seriously under-estimated the pool of first-time buyers? Or were the serial investors out in force?

We should never dismiss the serial investors. They are a resourceful lot. Nothing energises them more than the prospect of making tons of money. Have they drawn up a list of family members, relatives and even friends whose names they can borrow?

I have spoken to some of them - many are outspoken and cocky. They thumbed their noses at the new rules and loudly proclaimed that they will not be beaten. Let me give them some advice - if the robust buying does not weaken, what do you think will happen next?

Yes, more cooling measures.


Colin Tan is head of research and consultancy at Chesterton Suntec International.

www.todayonline.com/Commentary/EDC120120...-December-home-sales