THERE is now a growing consensus among analysts that rental rates for private homes will slide in the coming two years since the official data showed the first quarter-on-quarter decline in four years for private home rents.

Hopes that a growing expatriate population and resilient economic growth will lend support to rents have also dimmed since the latest government budget suggests continued tightening of foreign labour force.

Savills Research said in a note yesterday that the residential leasing market will see a decline in demand from a shrinking pool of overseas nationals as more employment restrictions are implemented.

"Rents in some locations may continue to see a correction, particularly in the mass-market segment due to strong competition from new supply, as well as smaller rental budgets amid the rising cost of living in Singapore," the property consultancy and research firm said.

Desmond Sim, head of Singapore research at CBRE, said he expects leasing volume to decline by around 10 per cent and rents to fall by 5 per cent this year.

"CBRE expects the rental market to face the challenges of rising supply versus an imminent decline in the number of new employment pass holders as the government take steps to secure job opportunities for locals," he told BT yesterday.

"Since the bulk of the vacant units (65 per cent) are in the Central Region, the bulk of the 5 per cent correction will be in this region as landlords vie for a limited pool of tenants," Mr Sim said. But rents in Outside the Central Region (OCR) are likely to hold as a greater proportion of buyers for those units are owner-occupiers, he added.

The latest data from the Urban Redevelopment Authority (URA) released last month showed that rental rates for private residential market slid for the first time since 2009. Private home rents took a 0.5 per cent dip in the fourth quarter, reversing a 0.2 per cent gain in the third quarter.

A total of 13,150 new homes were completed in 2013, and up to 18,003 completed private homes stayed empty as leasing supply exceeded demand. According to URA, there were 11,671 vacant units in the Central Region and 6,332 vacant units in the rest of Singapore in the fourth quarter.

Mr Sim of CBRE said he expects another 17,500 new homes to be completed this year, bringing the number of vacant stock beyond 20,000 units - "a level not seen in the Singapore housing history".

Donald Han, chairman of Chesterton Singapore, said he expects 20,000 more units to be completed in 2014 and this to exacerbate the downward pressures on rents. He is predicting a 5-8 per cent drop in non-landed private home rents this year from 2013, with the fall being most pronounced in the Core Central Region (CCR). He said he is expecting softness in rents to spill over into 2015 and 2016.

"It's harder to get premises rented out. In what was done in weeks, it now takes one to two months before you can find a suitable tenant because of the new supply that's coming up," he added. "It' a tenant's market right now."

Alice Tan, head of Consultancy and Research at Knight Frank, said she expects rents for non-landed private homes to see a 1-3 per cent moderation by the end of this year, and a further easing of 2 per cent in 2015 if the number of vacancies continue to rise.

"Occupancy levels of non-landed private homes may improve after mid-2016, as our population is slated to grow at a faster pace and completed supply of private homes will be gradually absorbed by the market," Ms Tan said.


Source from Business Times
http://www.businesstimes.com.sg/specials/property/spore-private-home-rent-rates-expected-fall-20140228

A REVALUATION gain of $489.6 million for The Metropolis office project in Buona Vista provided a big boost to Ho Bee Land's fourth-quarter and full-year net earnings.

The property group announced net profit of $506.1 million for the fourth quarter ended Dec 31, 2013, up from $66.9 million for Q4 2012. For FY 2013, the group's net profit rose to $591.8 million from $187.1 million in FY 2012. Also contributing to the stronger bottom line was the $47.2 million gain from disposal of shares in Chongbang Holdings (International) in early 2013.

As at end-December 2013, The Metropolis, comprising two office towers with Grade A specifications plus a small retail component, was valued at $1.242 billion by Colliers International. This translates to around $1,150 per square foot (psf) based on the project's 1.08 million sq ft total net lettable area. Market watchers reckon this may be on the conservative side. Ho Bee developed the project on a 99-year-leasehold site it acquired at a state tender in 2010.

Tower One received Temporary Occupation Permit in July 2013 and Tower Two, in November.

Beyond contributing to a "paper gain" arising from its revaluation, The Metropolis is starting to show a real and more enduring impact on Ho Bee's financial results as it has begun generating rental income.

The group's revenue from property investment jumped to $12.5 million in Q4 2013 from $2.7 million in Q4 2012. Full year, the figure more than doubled to $25.7 million from $11 million. Besides The Metropolis, rental income from Rose Court, an office building in London that Ho Bee bought in mid-2013, was the principal contributor to the sharp increase, the group said.

Based on a back-of-the-envelope calculation, The Metropolis could generate about $80 million gross revenue, translating to possibly around $60 million pretax profit, on an annual basis - assuming the asset is fully leased. The average monthly rent Ho Bee is achieving would be north of $6 psf, reckon market watchers.

While the group's revenue from property investment rose, revenue from property development shrank. For Q4 2013, the figure was $43.7 million, down 80 per cent over the same year-ago period. Full year, the figure contracted 75 per cent to $113.6 million from $450.7 million previously. The drop was due mainly to the higher revenue recognition on the completion of the Trilight residential project and One Pemimpin industrial project in 2012.

Group revenue shrank 75 per cent year on year to $56.2 million in Q4 2013. For FY 2013, the figure slipped 69.8 per cent to $139.3 million.

Ho Bee posted earnings per share of 87.4 cents in FY 2013, up from 26.7 cents in FY 2012. Net asset value per share rose to $3.48 at end-2013 from $2.58 at end-2012. On the stock market, the counter closed three cents higher at $2.15 yesterday. Ho Bee released its results after the market close. The company is proposing a three cent per share special dividend in addition to a five cent per share first and final dividend. Combined, this is a higher payout than for FY 2012, when only a first and final dividend of five cents was paid.

Net gearing decreased to 0.15 time at end-2013 from 0.17 time at end-2012.

The group commented that with the QE tapering in the United States which will result in tighter liquidity and expected rise in global interest rates, the real estate sector is expected to face more headwinds this year as the cooling measures implemented for the residential property market by the government are "not likely to be loosened anytime soon".

Ho Bee's chairman and CEO Chua Thian Poh said: "With the challenging residential property market in Singapore, the earnings for 2014 will be underpinned by the contributions from The Metropolis and the Rose Court office building in London.

"Apart from launching its residential projects in Melbourne and Gold Coast this year, the group is also continuing to look for investment and development opportunities both locally and overseas."


Source from Business Times
http://www.businesstimes.com.sg/premium/companies/others/ho-bee-earnings-soar-4896m-revaluation-gain-20140228

WITH softening property prices and sales volumes, City Developments (CDL) chairman Kwek Leng Beng expressed hope yesterday that this year, the government will tweak or even remove the rules on qualifying certificates (QCs), which bind developers with foreign stakeholders to strict timelines to complete and sell a residential development.

Speaking at the group's full-year results briefing, he noted that the QC rules put the heat on developers which purchase private land to push projects out quickly, depleting their land bank. These developers then have to turn to Government Land Sales sites and put in high bids to secure the land needed to replenish their land bank.

Mr Kwek said: "I believe that with the QC in place, bidding for every site will be competitive. To a developer, land is our stock-in-trade. Without sites, business will come to a standstill, so there is no choice but to bid at higher prices."

Paying top dollar for land means developers need to sell the units at a high-enough price, but current market conditions do not allow for this, he said.

He believes residential property prices may fall by 10 per cent this year, though he acknowledged that this may not happen, as the world economy is improving, even amid uncertainty. "If you are prepared to price them (the units) cheap, you can sell . . . but if you price it cheap today and buy the land today, you will make a loss," he said.

He added, however, that the government was unlikely to want that to happen: "If you read the Finance Minister's (Budget) speech very carefully, he said that they are not engineering a collapse in property, which I believe to be so."

Mr Kwek has long been lobbying for the government to relook its QC rules; in 2012, the Real Estate Developers' Association of Singapore submitted a proposal to the government to extend the two-year timeframe for developers to sell their units.

For its results briefing, CDL announced yesterday that its net profit fell 11.4 per cent to $221 million in its fourth quarter, as earnings from property development declined. Earnings per share for the period ended Dec 31, 2013 were 23.6 cents, down from 26.7 cents a year ago. Revenue slipped 12.6 per cent to $774.4 million from $886.4 million.

The company proposed an ordinary dividend of eight cents per share, taking the total dividend for FY2013 to 16 cents.

The fall in earnings came partly from the group being unable to recognise profits for some of its launched private residential projects because construction had yet to start or reach recognition stage, said CDL. These projects include Echelon, D'Nest, Jewel @ Buangkok and The Venue Residences and Shoppes.

Also, no profits were booked from sales of the three fully-sold executive condominium (EC) projects, namely, Blossom Residences, The Rainforest and Lush Acres; this was the result of the prevailing accounting treatment for ECs, which require them to be completed before profits can be recognised.

In Q4, CDL launched launched two projects, both in October. The first was The Venue Residences and Shoppes, a mixed development of 266 apartments and 28 retail units at the junction of Upper Serangoon Road and MacPherson Road. Half the retail units and 46 of the 70 apartments released for sale have been taken up.

The other project was The Inflora, a 396-unit joint-venture condominium in Flora Drive in the Changi/Pasir Ris area. All units there have been sold.

Chia Ngiang Hong, group general manager at CDL, told reporters on the sidelines of the results briefing that the group will launch for sale a 944-unit residential project in Pasir Ris next month or in April, and an 845-unit development in Commonwealth Avenue in the second quarter.

CDL disclosed in its financial statement that construction of the superstructures for the South Beach project is "progressing well". The 34-storey South Beach Tower designated for offices will be completed next month; the 190-unit high-end South Beach Residences will be launched "at an appropriate time".

For the full year, net profit rose 0.7 per cent to $683 million. Revenue fell 5.7 per cent to $3.2 billion. Net asset value per share as at end-December was $8.63, up from $8.03 a year ago.

CDL's shares closed 0.2 per cent higher at $9.34 yesterday.


Source from Business Times
http://www.businesstimes.com.sg/premium/companies/others/citydev-chairman-calls-easing-property-timelines-20140228