RESIDENTIAL MARKET
Central Region condos saw biggest price fall in December
Prices of completed private apartments and condos generally fared worse in December over November, according to latest figures from the National University of Singapore.
The university's December flash estimate for the Singapore Residential Price Index (SRPI) series showed that the most marked price deterioration was in Central Region, which is defined as Districts 1-4 (including the financial district and Sentosa Cove) and the traditional prime residential districts of 9, 10 and 11. The sub-index for Central Region (excluding small units) fell 1.3 per cent month-on-month in December, reversing a 2.2 per cent gain in November.
The sub-index for Non-Central Region (again excluding small units) rose 0.5 per cent in December, a more modest gain compared with November's 1.3 per cent rise.
According to the flash estimates, prices of small units (up to 506 sq ft) islandwide remained unchanged in December. In November, they rose 1.1 per cent.
The overall SRPI dipped 0.3 per cent in December, after rising 1.7 per cent in November.
NUS' Institute of Real Estate Studies (IRES), which minted the SRPI series, said that starting this month, the base period for the series is March 2009 (instead of December 2001 previously) as the indices bottomed in March 2009 and this change better reflects the movements in price.
Associate Professor Lum Sau Kim of IRES observed that transaction volumes for units in the SRPI basket registered declines from November to December in both 2012 and 2011 - due to "the end-of-year effect" of the holiday season. "And the volume declines were accompanied by a corresponding contraction in prices," she explained.
Commenting on the sharp reversal in the Central Region sub-index between November and December last year, she said: "Our SRPI Central Region sub-index had been boosted in November 2012 by several transactions in areas that had been relatively quiet for much of the year, such as in Sentosa. Hence, there was an increase in the Central Region sub-index on a marked-to-market basis. In December 2012, the price signals were generally subdued."
The SRPI series tracks prices of completed non- landed private homes but excludes executive condos, which are a public-private housing hybrid.
For the whole of last year, the sub-index for Non-Central Region was the star performer, climbing 8.8 per cent, followed by the small unit sub-index, which rose 5.7 per cent. The Central Region sub-index slipped 1.2 per cent, taking the overall SRPI 4 per cent higher last year.
In 2011, prices rose 11.3 per cent in Non-Central Region, 10.6 per cent for small units and 5.1 per cent for Central Region. The overall SRPI increased 8.7 per cent.
Source: Business Times –29 January 2013
Buyers' rights in building defect disputes
While recourse is available for homeowners following the purchase of a new home or a renovation stint, this is not to say that any and all defects can be claimed against the developer and/or renovation contractor.
Being able to differentiate between what is contractually binding and what is mere marketing speak is of great importance.
"Marketing speak should generally not be trusted or relied on to impose any legal obligations on the developer. The developer's legal obligations to the purchasers are contained in the sale-and-purchase agreement," said Rodyk & Davidson partner Ling Tien Wah.
Even so, marketing agents must not say anything to mislead or misrepresent, or make empty promises, otherwise the purchasers may potentially have a cause of action for misrepresentation or breach of contract, he added.
The sale-and-purchase agreement - which exists to govern the sale of uncompleted private residential properties - provides for a one-year defects liability period during which the developer is required to rectify, at his own cost, any defects in the units.
Such defects must be made good by the developer within one month of having received a written notice from the homeowner.
Failing this, the buyer can send a notice of intent, stating the homeowner's intent to carry out the rectification work and estimated costs to the developer.
The purchaser may then proceed to rectify the defects by engaging his own workmen and recover the cost from the developer. Such costs can be deducted from the sum held by the Singapore Academy of Law.
In the event that latent defects are observed beyond the one-year defects liability period, purchasers can still take civil action against the developer, said a spokesman from the Urban Redevelopment Authority (URA). "Beyond the one-year defects liability period, purchasers can still take civil action against the developer for latent defects due to negligence or breach of contract, within six years from the date that the damage arose, or three years from the date that the damage was discovered, whichever is later."
However, developers should first be given an opportunity to rectify any genuine building defect, whether patent or latent, that the purchasers claim the developers are liable for.
Specifically, consumers should write in to the developer instead of contacting them over the phone.
Said Rodyk's Mr Ling: "If this fails to resolve matters, then the parties should still try their best to resolve the issue amicably and also consider referring the dispute for mediation to try and reach an amicable settlement in the matter. Taking civil action against developers for defects (whether patent or latent) should be the option of last resort.
"Purchasers should seek legal advice as to whether or not their claim against the developers for latent defects is already time-barred. If the claim is not time-barred, and the matter cannot be resolved amicably, then the purchasers have the option of instructing their lawyers to commence a civil suit against the developers for the latent defects if the purchasers wish to go down that route."
In the same vein, the Consumers Association of Singapore (Case) has a model renovation contract available on its website that consumers can download to help consumers make more informed decisions.
"The renovation contractor is bound by the contract signed with the consumer. As such, the contractors have to fulfil the contract terms to provide satisfactory service to the consumers," said Seah Cheng Choon, executive director of Case.
Case asked consumers to keep in mind that renovation contractors have their field of speciality - that is, those who are good at HDB renovation may not be so for other properties and vice versa.
"In this regard, consumers must be mindful that their contractors must have enough expertise to guide them through the slew of permits required in a renovation job," it said.
To ensure this, consumers should check the credentials of their renovation contractors and ask for a list of works done. For HDB dwellers, it is important to engage an HDB-approved contractor.
"During works-in- progress, it is essential to monitor the works as sometimes inferior products can be 'buried' by contractors within their works. (If the defects are spotted) beyond the defect liability period, proof will be difficult," Case said.
Indeed, unsatisfactory work and pricing are two common gripes reported to Case, which counts complaints against renovation contractors among the top three disputes it received.
The number of disputes received by Case has been on the uptrend, jumping from 946 in 2009 to 1,313 in 2010. Case's data shows that complaints rose further, to 1,532 last year, from 1,488 in 2011.
"A possible reason could be the increase in real estate transactions in recent years," said Mr Seah. "As more people are buying properties, there is increasing need for contractor services."
Source: Business Times –29 January 2013
COMMERCIAL MARKET
Feb launch for units at Tg Pagar medical centre
Far East Organization is banking on upcoming commercial developments and residences in the CBD area to fuel demand for medical services as it readies to launch 48 units in its Mediplex@SBFCenter for sale next month.
Located near Tanjong Pagar MRT station, the Mediplex@SBFCenter on Robinson Road will occupy the third to fifth levels, with units ranging from 667 sq ft to 1,292 sq ft in size.
Marketing efforts are expected to commence from the middle of next month while the medical centre is slated for TOP by end-2016.
Aside from the medical centre, the SBF Center will feature 197 offices consisting of 192 smaller strata units ranging from 592 to 1,442 sq ft and 10,549 sq ft for five floor plate offices. The Singapore Business Federation (SBF) will relocate its offices as a major tenant and partner.
The medical units in the private healthcare centre are reportedly being marketed at between $3,800 and $4,000 per sq ft (psf) under a 99-year lease.
Medical suites at centres such as Novena Specialist Centre are selling at $4,100 to $4,200 psf, while Mount Elizabeth Medical Centre went at $7,300 psf last October.
"Coupled with the vibrant working population of about 200,000 professionals in the CBD and limited available supply, we see the potential for a dedicated medical suite development to fill the growing demand for medical and healthcare services from both the working and residential population in the heart of the CBD," said Chia Boon Kuah, chief operating officer (property sales) for Far East.
He noted that the Tanjong Pagar area is expected to undergo a transformation in the long term as more residences, hotels, offices and other commercial and lifestyle amenities come onstream.
Far East is targeting specialties such as dentistry, diet & nutrition, licensed traditional Chinese medicine, physiotherapy and others.
"Based on our interactions with doctors, medical practitioners, and medical specialists, we believe there will be demand to own purpose-built medical suites in a dedicated facility within the CBD where there is limited supply of strata-titled units available for sale," added Mr Chia.
Far East, which has a healthcare portfolio that includes Novena Medical Center and Novena Specialist Center, is also setting up another medical centre this year at Pacific Plaza called Scotts Medical Center.
Source: Business Times –29 January 2013
Rentals in suburban malls expected to dip
With the bulk of retail space due to come onto the market located in the suburbs, expect to see slight downward pressure on rents for space in some of these areas.
Prime retail space in the Orchard area, however, is expected to see stable yields due to a more limited supply coming onstream, although some uncertainty over how the area will perform exists, given the global economic climate.
This is the general prognosis experts have of the retail property sector in Singapore.
They also expect investors to show higher interest in strata retail space given the latest cooling measures that hit the residential and industrial property sectors, but note that the bulk of retail space available are owned by single landlords.
Consultants say that an estimated 1.9 million square feet of retail space is set to come onstream this year. The majority of this space is held under a single ownership structure by a commercial developer or reit (real estate investment trust) and is for rental income. As much as 80 per cent of this space is expected to be located in the suburbs.
Orchard Road
2013 is the only year with proposed completion of retail projects along Orchard Road up till 2016. This could help rents to stay stable.
The space has also been well-received. Three projects are expected to be completed in 2013 and they include the AEIs (asset enhancement initiatives) of The Heeren, Orchard Gateway and the redevelopment of 268 Orchard Road.
It was reported that The Heeren will be fully occupied by department store Robinsons, and that Orchard Gateway is already more than half pre-committed, with tenants like Crate & Barrel, Religion, Swatch Megastore and Nike's new concept store called Amplify Women's. The library@orchard will also be situated at Orchard Gateway.
In total, the three projects are likely to result in a 5 per cent increase in retail space along Orchard Road, less hefty than the 15 per cent increase in retail space seen in 2009, which saw the addition of malls like Orchard Ion, Orchard Central and 313@Somerset.
But there are other factors that impact rents of retail space, such as foot traffic and retailers' ability to generate sales.
And while retail sales this year are generally expected to be augmented by fairly healthy tourist arrivals on the back of new and reinvented visitor attractions in Singapore, there are risks surfacing for the Orchard shopping belt.
Jurong Gateway
Much of new shop space that will come onto the market this year will be located in the Jurong Gateway area, which will see two new malls spring up. Jem, by Lend Lease, has an estimated shop gross floor area (GFA) of 573,000 square feet. Westgate, a retail cum office development by CapitaLand, will offer an estimated shop GFA of 426,000 sq ft.
The malls are reportedly over 80 and 50 per cent leased, respectively, ahead of their expected opening.
The new malls may lead tenants of existing malls in the west to take flight from their current place of residence
Over the longer term, however, these existing malls that are differentiated from the typical mass market malls, such as JCube - which positions itself as an entertainment mall - and IMM - an outlet mall - could help them to retain their niche audience.
Suburban malls are generally able to widen their tenant base as the size and spending power of residential catchments increase. Suburban malls no longer cater purely to retailing low-end daily necessities but have evidently attracted new international retailers. Coupled with strength of management from Reit/funds landlords, prime suburban rents are expected to remain steadfast with an optimistic horizon.
Strata retail
Strata-titled retail space is expected to see heightened interest among investors this year, as a result of the cooling measures introduced by the government to the residential and industrial property markets.
Investors flush with liquidity are likely to support prices of commercial properties, especially in light of the freshly implemented cooling measures which will filter out some investment dollars from the residential and strata industrial markets.
Some new strata retail space is expected to come onto the market, but they do not make up a significant proportion.
Of the 1.9 million sq ft of retail space due to come on stream this year, just 46,630 sq ft, or about 2 per cent, is strata space.
Investors also need to understand the product and consider factors such as the location of the space.
The long term
But while take-up rates at malls, both suburban malls and those located in the Orchard area, appear to be holding up, there exists some longer term challenges that could potentially hit the market.
Discretionary spending by local residents may continue to slide given the uncertain and bearish economic outlook.
The prevailing problems of manpower shortages and the increasing resistance against further rental increases from tenants will all have a bearing on demand, and consequently retail rents.
Some malls are expected to be able to weather these challenges better than others.
New malls that are well-positioned with good accessibility and high foot falls are better considered.
Existing malls that are successful - tried and tested - have a good following, are more likely to have a long list of retailers who are 'waitlisted' to get in. But such strong demand may not be the same across all malls.
Source: Business Times –29 January 2013