North-east region may see glut of homes, says report

Gosh, everyone seems to have a budget for investment property, except me!

The Straits Times
Jul 7, 2012
North-east region may see glut of homes, says report
Experts say 14,000 units 'worrisome', but others point to staggered supply

By Esther Teo

A SPATE of project launches in the north-east has sparked concern that there will be an oversupply of homes in the coming years.

Sites that can yield more than 10,000 homes have been sold in Punggol, Buangkok and Sengkang alone since September 2009, according to Square Foot Research.

These have been developed into projects such as A Treasure Trove, Watertown, H2O Residences and The Luxurie.

If other north-east estates like Hougang, Seletar and parts of Upper Serangoon are included, almost 14,000 units on about 25 sites are on the cards. These units, which include executive condominiums (ECs), are expected to be ready from 2014 to 2016.

Three EC sites in Punggol that can yield about 1,415 homes are also up for grabs in the government land sales (GLS) programme for the current half of the year.

Factor in upcoming Housing Board (HDB) build-to-order launches as well - and you have a daunting set of numbers.

Experts say that while there remains demand from HDB upgraders for private and EC projects, the bumper supply of sites does look 'worrisome'.

OrangeTee head of research and consultancy Tan Kok Keong said investors should be cautious even though Seletar Aerospace Park might boost rental demand.

'Even if there is demand, competition for tenants will be fierce and investors might have to accept lower rents, and hence, lower rental yields,' added Mr Tan.

'It pays to be selective and to choose a unit near an MRT station or an employment place.'

Other experts have played down the oversupply threat.

Chris Koh International director Chris Koh said 'there is no oversupply at the moment as there is high demand'.

Many HDB owners who are familiar with the surroundings do not mind upgrading to a private unit there, he said.

For instance, Punggol - the newest HDB town - will enjoy private home demand as an increasing number of HDB owners within the estate finish up their five-year minimum occupation periods (MOPs). The area's waterway concept is also appealing.

Square Foot Research director Ooi Yi Tung also noted that the oversupply risk is also mitigated by the fact that 46 per cent of the upcoming flats in Punggol, Sengkang and Buangkok are ECs. This includes the EC sites to be sold in the later part of this year.

ECs have condo-like facilities and are an upmarket hybrid of public and private housing. They also have an MOP of five years and can then be sold only to Singaporeans and permanent residents.

This means it could take at least eight years - three years of construction and a five-year MOP - before they enter the secondary market. This staggered supply will reduce the chance of a glut.

But Mr Ooi said potential buyers should note the amount of building going on in new towns such as Punggol, where construction is expected to stretch to at least 2017 given the continued rolling out of new GLS sites.

'Also, there is no need to rush into buying as there are still ample vacant land sites in Punggol.'

Ms Chua Chor Hoon, DTZ head of Asia-Pacific research, noted that Pasir Ris, which has also seen an increasing number of launches, may be of more concern.

NV Residences, The Palette, Ripple Bay, Palm Isles, Seastrand and Sea Esta plus EC projects Belysa and Watercolours have all hit the market recently. The ratio of private to public housing in Pasir Ris is expected to more than double when these projects are completed. This ratio will be significantly higher than the islandwide figure and the highest ratio among all towns, she pointed out.

Some investors told The Straits Times that while they are aware of the large supply in the pipeline in the north-east region, they hope for a first-mover advantage.

Mrs Mae Seow, who bought an investment home in Punggol last October, said the unit was within her budget. Plans for Punggol to become an eco-town and its waterfront features also appealed.

esthert@sph.com.sg

north east side is due for ramping up of more facilities like the subway, hospitals etc

(07-07-2012, 10:33 AM)Musicwhiz Wrote: Gosh, everyone seems to have a budget for investment property, except me!

For those have a budget for investment property, they may not have or lesser budget for equity investment, opportunity cost applies here. Moreover they may not even have the necessary skill for equity investment like you

(07-07-2012, 08:58 PM)CityFarmer Wrote: Moreover they may not even have the necessary skill for equity investment like you

Wah, you really give me far too much credit leh. Those people I know who dared to "take the plunge" back in 2010 by leveraging and buying property are all now laughing their way to the bank. Me? Just collecting dividends, haha!

(07-07-2012, 10:12 PM)Musicwhiz Wrote:

(07-07-2012, 08:58 PM)CityFarmer Wrote: Moreover they may not even have the necessary skill for equity investment like you

Wah, you really give me far too much credit leh. Those people I know who dared to "take the plunge" back in 2010 by leveraging and buying property are all now laughing their way to the bank. Me? Just collecting dividends, haha!

i concur - due to leverage, the avg property investor in 2010 should have done much better than an average equity investor.

The guy who has been making big $ off his property investments, does not care that he 'doesn't have the necessary skill for equity investment'. He is happy making multiple year returns with his property investment skills - Every single stroke of cooling measure by the gov is treated with glee, as it is just further indication that the property market is red hot, and he must continue catch the rising tide.

Music-san, I very much enjoy all your Straits Times articles. Free one mah, of course I like! But u read Daniel Ong ganna shoot by SPH for putting ST articles on his blog. Up to $500 per article. I think better respect copyright lah. People here read song song diam diam, and u r the one bearing the consequences. SPH shareholders laggi diam, becos they get more dividend

Of course, maybe u not as handsome as Daniel, but u going to become Warren Buffett, they sure come back to u for money. A bit machiam I see my primary school friend on the street and remind him he still owe me 50cents fr long ago.

If it's for discussion, maybe post a small extract of the article, like what giam siap SPH do when u don't subscribe.

(08-07-2012, 09:17 AM)lanoitar Wrote: Music-san, I very much enjoy all your Straits Times articles. Free one mah, of course I like! But u read Daniel Ong ganna shoot by SPH for putting ST articles on his blog. Up to $500 per article. I think better respect copyright lah. People here read song song diam diam, and u r the one bearing the consequences. SPH shareholders laggi diam, becos they get more dividend

Of course, maybe u not as handsome as Daniel, but u going to become Warren Buffett, they sure come back to u for money. A bit machiam I see my primary school friend on the street and remind him he still owe me 50cents fr long ago.

If it's for discussion, maybe post a small extract of the article, like what giam siap SPH do when u don't subscribe.

Don't anyhow frighten people here...
From CNA,

SPH reiterates it owns copyright to articles, in response to Daniel Ong's complaints

In response to the complaints made by former-radio presenter Daniel Ong over Facebook on Thursday, media company Singapore Press Holdings (SPH) expressed on Friday over Facebook that it "does not object to the use of our articles for personal use (subject to limits prescribed by law) or in relation to other allowed exceptions under the law".

"We do, however, expect to be paid licensing fees if our articles are reproduced and our copyright exploited for commercial purposes," SPH said.

The dispute, which Singapore newspaper TODAY on Friday called a "Storm in a cupcake", started when Ong claimed he was charged "about S$3,000" by SPH, for reproducing SPH magazine and newspaper articles about his actress wife Jamie Teo, and their cupcake bakery Twelve Cupcakes, on their social media accounts and their company's website.

Ong believed their actions had helped promote the articles and the SPH publications they were in, so he was upset that SPH would take them to task for reproducing the articles.

"We help spread the word about the article... they get more readers and readership... Everyone happy... no? SPH then writes us to say we need to pay!!!" said an irate Ong in a Facebook post.

Ong said he later agreed to take down the reproduced articles from their social media accounts and the company's website, but got what he described as "a super cold reply" that he no longer needed the pay the S$535 per article, though he still had to pay a S$214 "investigation fee".

SPH said it "wrote to Mr Ong to request that he remove the articles or pay a licensing fee for the continued use of the said articles."

It denied that Ong had been charged "about S$3,000" as he had claimed, and reiterated that SPH held the copyright to the articles - under copyright law, it is the author, not the interviewee who is the copyright owner of a piece of work.

"In Mr Daniel Ong's case, he and his wife granted interviews to Singapore Press Holdings' newspapers and magazines.

"After the articles were published, he reproduced the articles from 'Shin Min Daily News' and 'Simply Her' on his business website - www.twelvecupcakes.com," said SPH, in a short response to a commenter on its Facebook page.

However, SPH pointed out that hawker stalls and cafes can cut out and display the actual articles from its publications; though making copies would be an infringement of copyright.

-CNA/ha

(08-07-2012, 01:04 AM)weijian Wrote: i concur - due to leverage, the avg property investor in 2010 should have done much better than an average equity investor.

The guy who has been making big $ off his property investments, does not care that he 'doesn't have the necessary skill for equity investment'. He is happy making multiple year returns with his property investment skills - Every single stroke of cooling measure by the gov is treated with glee, as it is just further indication that the property market is red hot, and he must continue catch the rising tide.

Haha, well my view is that it probably didn't take much "skill" to leverage up and buy property in 2010 - it was more of guts. As in equity investing, I believe one can only say one has the skill in property investment once one has gone through a full property cycle. Of course, many people will make tons of money on the way up due to the leverage effect, but I guess I am one who likes to sleep well at night.

And oh yes, I also prefer to make it slowly and steadily - you appreciate it (the money) so much more!

(08-07-2012, 09:57 AM)Musicwhiz Wrote: Haha, well my view is that it probably didn't take much "skill" to leverage up and buy property in 2010 - it was more of guts. As in equity investing, I believe one can only say one has the skill in property investment once one has gone through a full property cycle. Of course, many people will make tons of money on the way up due to the leverage effect, but I guess I am one who likes to sleep well at night.

And oh yes, I also prefer to make it slowly and steadily - you appreciate it (the money) so much more!

Try telling some1 who has MADE more $ than u (any asset class) over the last few years, that he doesn't have skill!

The longer low interest rates persist, many (of the leveraged ones) will continue to enjoy the yield spread (rental yield - mortgage rates). Of course, most of them believe they are skillful enough NOT to be the last person holding the fruit punch bowl when the party ends and the bill comes.

Helicopter Ben has promised low interest rates till 2014 (at least), and the longer the Eurozone crisis drags, the higher probability things will remain status quo. If the most powerful man in the economic world is FOR them, i suspect they (the leveraged ones) sleep just as well, if not better, than u or me (the conservative ones).

Yeah Weijian,

I agree with what you said. I guess the good thing is that I don't hold these people up as benchmarks as to what I should be achieving with my life, because the methods are entirely different (property vs equities, leveraged vs unleveraged). So I don't let it bother me too much - people should get rich on their own terms and I am happy for them if they can make it.

That said, hope I'll still be plodding along 5-10 years from now on my road to building more wealth for me and my family.