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Thread: Homes held back from launches in staring game

  1. #1
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    Default Homes held back from launches in staring game

    http://www.businesstimes.com.sg/sub/...76638,00.html?

    Published April 26, 2008

    Homes held back from launches in staring game

    Buyers not forthcoming, so developers delay projects that are ready for market

    By ARTHUR SIM


    (SINGAPORE) The number of homes that could be launched for sale immediately, but have been held back, has increased to 10,239 in the first quarter of 2008, an increase of 44.2 per cent over the 7,099 units in the fourth quarter of last year. This, perhaps, is a reflection of the standoff between developers and buyers.

    The Urban Redevelopment Authority's (URA) property data for the quarter also revealed that there were 2,526 homes launched, but unsold at the end of the first quarter of 2008, an increase of 22.4 per cent over the previous quarter.

    CB Richard Ellis director Leonard Tay said simply: 'As homebuyers were less forthcoming, developers decided to delay their launches.'

    Mr Tay highlighted that most of the new projects launched were small projects located outside the prime residential districts. 'The only project targeted at the mass market, the 405-unit Waterfront Waves at $800 psf (per square foot), met with a certain degree of success as evidenced by the 108 units sold,' he added.

    According to URA, prices of private residential property increased by 3.7 per cent in Q1 2008 compared to 6.8 per cent in the previous quarter.

    Mr Tay said that while there were no new luxury projects launched, a few units from existing projects were known to have been sold at above $3,300 psf in Q1 2008, with several units in Marina Collection sold at above $2,600 psf.

    'These, and probably some high-priced transactions in the resale and sub-sale markets, could have contributed to the 3.7 per cent rise to the private residential price index from the previous quarter,' he added.

    Interestingly, the 3.7 per cent increase in the PPI is lower than the earlier forecast of 4.2 per cent.

    URA said that the last time the flash estimate of the change in private residential property price index (PPI) was revised downwards by more than 0.5 per cent points was in Q4 2001, when it was pegged downwards by 1.4 percentage points.

    Jones Lang LaSalle local director and head of research (South-east Asia) Chua Yang Liang also noted that PPI was down by 3.1 percentage points from the 6.8 per cent growth recorded in Q4 2007, the biggest quarterly drop since Q3 2000, when prices declined by 4.2 percentage points.

    Dr Chua said that overall, developers remained conservative on their new launches.

    But while there was a significant growth in Outside Central Region (OCR) where a total of 813 units were released in the quarter - 60.5 per cent of total launches in Singapore in Q1 2008 - he noted: 'Demand in this region was however not as strong.'

    Take-up rate for OCR was only 38 per cent whereas Core Central Region (CCR) and Rest of Central Region (RCR) reported healthier take-up rate of 89 per cent and 71 per cent respectively.

    And Cushman & Wakefield managing director Donald Han believes buyers are prepared to wait. 'Property is sentiment-driven, and if buyers believe the economy will slow down, they will be prepared to wait it out on the sidelines,' he said.

    The disappearance of speculators from the market may have also dampened sales, as reflected by the lower number of subsales at just 346 transactions, down from 649 in the previous quarter.

    'Short-term speculators have been weeded out,' Mr Han said. But, as Mr Han notes, it is now also 'a smaller market'.

    Savills Singapore director (marketing and business development) Ku Swee Yong also believes sub-sales have reached a plateau with current data 'reflecting true demand'.

    According to Savills' own basket of properties launched and sub-sold in 2007 and 2008, the level of subsales fell from 34 transactions in Q4 2007 to just six transactions in Q1 2008. Subsale prices, however, remained stable, suggesting that panic selling for the time being at least is unlikely.

    On whether the increasing backlog of unsold homes could pose a potential over-supply situation in the future, Mr Ku said that he believes not all the potential developments will be built.

    URA projects that 56,501 units are expected to be completed between Q2 2008 and 2011, of which 29,685 units are already under construction.

    Mr Ku said there are certain 'control mechanisms' which could see a lower number of units completed by 2011 with the first being the construction factors. Mr Ku said that a project that has not already begun construction is not likely to be finished within two years, simply because of the costs and shortages within the construction industry currently.

    Another control mechanism lies with developers. 'In the previous downturn, some developers held off projects for 10 years,' he said.



  2. #2
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    Default Re: Homes held back from launches in staring game

    http://www.straitstimes.com/Money/St...ry_231213.html

    April 26, 2008

    Developers hold off launches in quiet market

    Number of private flats that have not been launched hits three-year high

    By Joyce Teo, Property Correspondent


    DEVELOPERS are so gun-shy of the quiet property market that they are continuing to hold off launching units, creating fears of a supply glut and possible price slump.

    The pool of unsold, uncompleted private flats that can be launched for immediate sale rose by more than 3,000 units in the first quarter of this year.

    This brings the number of such units to 10,239, a three-year high, according to Urban Redevelopment Authority figures released yesterday.

    Of the 10,239 unlaunched flats, 4,824 units were in the core central region, which includes districts 9, 10 and 11. These are areas with high-end properties - the very sort facing lacklustre demand now.

    Things are even worse in the rest of the central region, where the number of unlaunched units rose by 77 per cent to 2,934 in the first three months.

    High-end projects that have not been launched include Marina Bay Suites, Sentosa Quayside and Nassim Park Residences.

    CBRE Research expects more suburban launches this quarter as developers focus on mass market projects.

    Developers on the whole remain wary of new launches, said Dr Chua Yang Liang, Jones Lang LaSalle's head of research for South-east Asia.

    But there was significant growth in suburban areas, where 813 units - or 60.5 per cent of total launches - were released in the first quarter. Yet demand was weak.

    'This could result in a supply overhang that may encourage a more conservative approach by developers in the next quarter,' said Dr Chua.

    The industry uses launches to sell units to generate cash flow. Big developers have the resources to hold on for years if the market is flat, but smaller firms may be under pressure to sell at lower prices.

    Mr Nicholas Mak, Knight Frank's director of research and consultancy, said that if sales volume remains thin, more small developers will likely cut prices of their projects to improve cash flow, but the impact of their action may be lost on the market because of their size.

    But big-name developers able to launch units may not do so until the United States sub-prime crisis eases, said Mr Ku Swee Yong from Savills Singapore.

    Major developers such as Wheelock Properties, Far East Organization, City Developments and Keppel Land have, in the past, been willing to hold back their launches for several years, he added.

    Take Far East. It topped up the lease of its 99-year leasehold property, Orchard Scotts, while it delayed the launch several years ago.

    While the quarter was flat, there was naturally some sales activity. Developers sold 762 new homes in the first quarter, but that was one of the smallest numbers in 12 years.

    By the end of the first quarter, there were 2,526 flats that had been launched but remained unsold. These could include units launched several months ago.

    In the pipeline are another 29,920 units that have yet to obtain a sales licence

    The vacancy rate of private homes has also been rising steadily since the second quarter of last year, when it was at a low of 4.9 per cent. It hit 6.3 per cent in the first quarter.

    Developers sell about 8,000 homes a year. If their inventory of unsold private homes exceeds 17,000, it could indicate a supply glut, said Mr Mak.

    We are not anywhere near that point, he added. But it is now a stand-off. Buyers are waiting for prices to fall while sellers are waiting for buyers to return.

    But Mr Ku said that unless developers flood the market, which they are not expected to, the significant increase in stock is not a real concern.

    [email protected]

  3. #3
    hahahhahaa
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    Default Re: Homes held back from launches in staring game

    This is good news! This means that developers are not willing to sell for less.

    They know that property values are intrinsically worth much more than current prices. Current prices are low because market turmoil and uncertainty is priced in.

  4. #4
    DJ MARKET TALK
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    Default Re: Homes held back from launches in staring game

    DJ MARKET TALK: Demand For Mass-Mkt Homes Firm Until 2009 -UOB-KH



    0412 GMT [Dow Jones] Demand for mass-market private homes in Singapore likely to outpace supply well into 2009, based on recently released 1Q08 URA data showing prices for this segment outperformed those in mid-tier market, says UOB-KayHian. Prices of mass-market homes +3.8% on-quarter vs 3.3% growth in rest of central region, a proxy for mid-tier segment. "This is in line with our expectations of the favorable demand-supply dynamics in the mass market segment," says house, noting strong demand from buyers priced out of mid-tier market, from foreigners who prefer to buy instead of rent, from cash-rich owners who opt to downgrade following collective sale of their previous homes. Likes diversified developers such as Keppel Land (K17.SG), CapitaLand (C31.SG) and those trading at deep discount to RNAV, including Ho Bee Investment (H13.SG), Allgreen Properties (A16.SG). Respective target prices at S$8.86, S$6.90, S$1.50, S$1.60. (FKH)

  5. #5
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    Default Re: Homes held back from launches in staring game

    Quote Originally Posted by The Straits Times

    Singapore's pay forecast to rise 5% as talent remains scarce
    Companies in Asia reviewing salary packages to gain competitive edge

    Michelle Tay
    The Straits Times
    Monday, 28 April 2008

    With talent still scarce across many sectors in Asia, salaries in Singapore are expected to rise by 5% this year, according to a global human resources firm.

    Hewitt Associates, which undertook an extensive survey from August to December last year, said pay rises in Singapore would be up on the 4.7% increase recorded last year.

    The talent squeeze is hitting many sectors in the country, especially hospitality and engineering with the integrated resorts coming up.

    Salaries are expected to grow even more quickly in emerging economies. Pay in India, for example, will increase by 15.2% this year, according to Hewitt.

    It believes organisations in Asia are realising that their critical assets are fast evolving into their most expensive assets. They are, therefore, reviewing compensation strategies in search of a competitive advantage.

    The top reason for employees leaving jobs, the report found, is external inequity in pay. This is followed by lack of career opportunities and role stagnation.

    A bigger pay package alone, however, is no longer sufficient to retain talent.

    'Compensation is no longer a hygiene factor,' said Mr Nishchae Suri, a principal of Hewitt in India.

    This means salary, on its own, is a factor that can cause dissatisfaction if considered too low but that does not necessarily motivate employees if it is raised.

    Traditional, one-size-fits-all compensation programmes are not expected to be effective in the next generation of talent management, Mr Suri said.

    This is because today's economy faces a workforce - Hewitt dubs them 'new-age employees' - that is in short supply, empowered to 'switch jobs every other year', seeks instant gratification and fast-track growth, and is not afraid to 'toil for it'.

    The lack of talent hampers a company's growth.

    According to the study, a third of organisations in Asia had difficulties filling positions last year. This means they were, in effect, operating under sub-optimal conditions.

    Singapore's workforce, however, is still the most satisfied with their pay packages compared with those in other countries in the region.

    The average dissatisfaction with pay in the Asia-Pacific is 54%, while Singapore registers about 42%.

    Japan's workforce is the most dissatisfied, with about 74% reporting unhappiness.

    Perhaps it has something to do with Singapore also having the highest prevalence of variable pay among organisations in the region - 97% of companies here reward their employees with performance-pegged bonuses.

    By comparison, 84.6% of Japan's companies dole out variable pay.

    Mr Puneet Swani, a Hewitt associate based in Singapore, advised companies to pay out performance-based bonuses as frequently as possible, to better link the reward to the performance.

    'Good performance does not happen once a year,' he said.
    Pay needs to go up so that affordability is high.

  6. #6
    dreaming
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    Default Re: Homes held back from launches in staring game

    who is going to employ us if wages are high? MNCs are bracing for ecession and need to scale back on their operating costs.

  7. #7
    Registered
    Guest

    Default Re: Homes held back from launches in staring game

    Quote Originally Posted by dreaming
    who is going to employ us if wages are high? MNCs are bracing for ecession and need to scale back on their operating costs.
    Recession? In Singapore? In Asia?
    Which company is cutting? IBM? Apple? Catepillar? ExxonMobil?

  8. #8
    singapore boleh
    Guest

    Red face Re: Homes held back from launches in staring game

    Quote Originally Posted by Registered
    Recession? In Singapore? In Asia?
    Which company is cutting? IBM? Apple? Catepillar? ExxonMobil?
    Oh yeah I forgot... Singapore is immune to recession, even if rest of the world is in flames.

  9. #9
    Curious
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    Default Re: Homes held back from launches in staring game

    Quote Originally Posted by singapore boleh
    Oh yeah I forgot... Singapore is immune to recession, even if rest of the world is in flames.
    Who is the rest of the world?
    China with 10.6% GDP growth in Q1'08? India? Australia? Korea? Which country in Asia is in recession? Which country in Europe is in recession?

  10. #10
    DJ
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    Default Re: Homes held back from launches in staring game

    DJ MARKET TALK: CS Keeps Singapore Ppty Sector At Market-Weight

    0551 GMT [Dow Jones] Credit Suisse keeps Singapore property sector at Market-Weight after Friday release from URA and HDB of official 1Q08 data show growth slowed down across all segments: private residential, public housing (HDB), office, retail and industrial prices and rents; notes retail rents exception, growing slightly faster at 1%. Notes new private home take-up rates at 57%, marking lowest level since 1997, despite developers delaying launches. "Both developers and buyers continue to 'wait-and-see,' although we observe some developers and panic secondary sellers are already starting to drop prices." Notes 56,000 private homes, 8 million sq ft NLA of office space expected to be completed 2Q08-2011; says looks excessive vs average annual take-up of private homes and office space at 7,500, 1.6 million sq ft, respectively. "We remain cautious on the developers, especially those with substantial exposure to high end properties - Wing Tai (W05.sG). We prefer the retail REITs - CapitalMall Trust (C38U.SG) and Frasers Centrepoint Trust (J69U.SG) to play the still-buoyant retail sector, which should also be more resilient in a downturn." (LES)

    (END) Dow Jones Newswires
    April 28, 2008 01:51 ET (05:51 GMT)
    Copyright (c) 2008 Dow Jones & Company, Inc.

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