View Full Version : TARGETING SINGAPORE’S PROPERTY MARKET, CHINESE DEVELOPERS LEAVE A TRAIL OF UNEASE
Amber Woods
06-08-17, 18:44
BY AARON LOW
6 AUG 2017
For more than a decade, a plot of land roughly the size of three football fields sat empty at the heart of Singapore’s oldest public housing estates.
As property developers snatched up parcel after parcel in the Queenstown estate, named after Queen Elizabeth II, the plot of empty land that sat beside Stirling Road remained untouched. Until April this year.
On April 10, the Singapore government said it had received an application by a property developer to launch the site for tender, with the developer promising to pay no less than S$685.25 million (HK$4 billion).
A month after the tender was launched, 13 bids were lodged for the 99-year lease on the plot of land. The lowest bid was S$713.8 million, S$30 million above the reserve price. The highest and winning bid was a record S$1.002 billion, lodged by a consortium of two Chinese developers, Logan Property and the Nanshan Group.
The winning bid by Logan, which is listed in Hong Kong, was higher than the second bid made by Hong Kong’s MCL Land by 8.3 per cent.
The stunning coup comes on the back of a foreign invasion of the Singapore property market, led by the mainland Chinese. Out of eight land sites released by the Singapore government so far this year, three were won by Chinese developers who put in bids that far outstripped what local rivals were prepared to pay.
Flush with cash and squeezed out by domestic property curbs, the Chinese are making a strong push in global property markets, including Singapore and the Asia region. But the pace and aggression is creating a sense of unease among local players in Singapore.
At a recent forum organised by the Real Estate Developer’s Association of Singapore (Redas), which represents the Singapore real estate industry, the hot topic among participants was the aggressive land bids made by foreign developers.
Redas president Augustine Tan told the media that the high bids for land could lead to property prices becoming unhealthy.
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“Every piece of land sold sets a benchmark for the next piece of land sale. That is the concern. I fear that land prices will run into a situation that may not be healthy. We may not see it now but in a few years’ times we will,” Tan, who is also a senior executive at Singapore-listed developer Far East Organisation, told Singapore’s TODAY newspaper.
According to property firm Cushman & Wakefield, the winning margin for foreign bidders are twice that of the local firms.
In 2017, foreigners who won their land parcels bid, on average, 4.8 per cent higher than the second-highest bidders. For local players who won their land bids, the average winning bid was just 2.5 per cent above the second-highest bid, said Cushman & Wakefield’s research director Christine Li.
The percentage of foreign bidders for land sites has also jumped from 25 per cent in 2015 to 34 per cent so far this year.
This is, in turn, squeezing local players out of the market.
Smaller construction companies are also worried the increasing presence of Chinese developers will mean fewer jobs for them in the big projects. Chinese companies have been known to hold onto their entire value chain, bringing in their own workers, materials and even managers.
One medium-sized construction company, which managers did not want to be named for fear of souring relationships with Chinese companies, told This Week in Asia that mainland Chinese firms rarely gave out jobs to local subcontractors.
“They bring their own people in, source their own labourers and import their materials into the country,” said the company’s boss.
Another civil engineering firm said Chinese firms were able to undercut local ones for public sector projects because of economies of scale.
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“It’s like having a heavyweight beat up a welterweight boxer. When they come here, they have no restrictions. But when we go to China, we have to cross several hurdles to bid for projects. How is this fair?” asked the firm’s senior manager.
Property consultant Ku Swee Yong said that the ability to source cheaper materials and labour was part of the reason why Chinese developers had been bidding aggressively for land.
“It’s a strategic imperative. They have spare capacity and can get steel, sand and other materials cheaply, compared to a local firm,” said the CEO of International Property Adviser. “So after accounting for cheaper materials, they can still price their units competitively.”
He also warned that the Chinese firms’ preference to rely on their own managers could spell trouble for local white-collar professionals in the real estate industry.
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“If the bids are being won by Chinese firms, and the Singapore big firms like CapitaLand and CDL are not developing parcels of land, then the mid-level manager jobs could be at risk,” said Ku.
Chinese firms are also eager to invest in Singapore because it is an easy way for them to diversify their portfolio and a prime location to show off their expertise, said Desmond Sim, CBRE’s head of research for Singapore and Southeast Asia.
“Many firms want to have Singapore as part of the portfolio. It’s not just about profits,” he added.
David Ji, Knight Frank’s head of research for Greater China, said industry watchers should expect the Chinese to continue to export capital to the rest of the world’s property markets.
Chinese firms have also been submitting record bids for land in Hong Kong. Chinese developer KWG Property and Logan Property paid HK$16.86 billion for a plot on Ap Lei Chau island. This works out to be about HK$22,118 per square foot of gross floor area for the site, making it the most expensive purchase in Hong Kong’s history.
In fact, when compared to Hong Kong, Singapore is comparatively cheap, said Ji. “Both Singapore and Hong Kong are similar, except that Singapore’s government is still releasing a lot more land for development,” he said.
“The exporting of capital will continue for now.”
Historically, residential land price in Singapore had been on a gradual upward trajectory even when the resale market went through its up and down, as illustrated in the RRPI.
The government established reserve prices for all land sales.
During the downturns, most developers were able to reduce the cost of construction because of excess construction capacity and lower material cost. They were also accepting lower profit margins. Therefore the developers were able to maintain new launch prices at or slightly above the previous benchmark in the area.
This is what Augustine meant by “a healthy market”.
He is saying, after the feeding frenzy is over and the culprits have left the scene, for the first time we may be seeing new land price bid below the previous benchmarks.
This can translate into new launch prices that are lower than those being transacted in resale market, or the previous new launch.
It is expected that land sales price (even for 99-years leasehold land) will always increase in Singapore (if they can), most importantly being that it is an important source of revenue to Singapore government, particularly when Singapore's economic growth is expected to grow at very slow rate of 1-3% going forward, and they have to pay more money to support aging population, some social securities, support many more older folks (and these will not come from growing corporate and personal income taxes anymore).........
Historically, residential land price in Singapore had been on a gradual upward trajectory even when the resale market went through its up and down, as illustrated in the RRPI.
The government established reserve prices for all land sales.
During the downturns, most developers were able to reduce the cost of construction because of excess construction capacity and lower material cost. They were also accepting lower profit margins. Therefore the developers were able to maintain new launch prices at or slightly above the previous benchmark in the area.
This is what Augustine meant by “a healthy market”.
He is saying, after the feeding frenzy is over and the culprits have left the scene, for the first time we may be seeing new land price bid below the previous benchmarks.
This can translate into new launch prices that are lower than those being transacted in resale market, or the previous new launch.
Nothing much left for local Consultants with professional fee down to only 2%. Local contractor are squeezed. Large Developers such as CapitaLand, CDL, Keppel Land, etc have gone overseas for a Long time.
Quality of new launch properties will become poorer and poorer!
Quality of properties built by China developers are "famous"!
Don't believe people should just talk to native Chinese and those who bought Chinese built properties in Malaysia..................
But anyway, some people will say never mind since their properties only need to last 99 years (for 99-years leasehold properties). We never know you know?! Anyway, just a few years and problems start to come out, leak here, leak there, leak everywhere, concrete slab falling off, so I won't bet that they really can last 99 years though............. :grief:
Nothing much left for local Consultants with professional fee down to only 2%. Local contractor are squeezed. Large Developers such as CapitaLand, CDL, Keppel Land, etc have gone overseas for a Long time.
tonymontana
06-08-17, 22:05
Quality of new launch properties will become poorer and poorer!
Quality of properties built by China developers are "famous"!
Don't believe people should just talk to native Chinese and those who bought Chinese built properties in Malaysia..................
But anyway, some people will say never mind since their properties only need to last 99 years (for 99-years leasehold properties). We never know you know?! Anyway, just a few years and problems start to come out, leak here, leak there, leak everywhere, concrete slab falling off, so I won't bet that they really can last 99 years though............. :grief:
aiya please lah CDL quality also leak here and there after xx no of years. need to do repairs, that's what the sinking fund is there for.
In my opinion, i think OVERALL quality of all new condo is not as good as it was. But i don't have quantitative data to prove it. just my feeling.
recently went to view a fraser centrepoint home, Oh gosh, cannot believe the quality, just TOP less than 2 -3 years can see wide plaster cracks along facade.
CDL is leak after xx no of years?
Those Chinese built properties is leak after x no of years! (and the "x" < 3!) :grief:
aiya please lah CDL quality also leak here and there after xx no of years. need to do repairs, that's what the sinking fund is there for.
In my opinion, i think OVERALL quality of all new condo is not as good as it was. But i don't have quantitative data to prove it. just my feeling.
tonymontana
06-08-17, 22:09
CDL is leak after xx no of years?
Those Chinese built properties is leak after x no of years! (and the "x" < 3!) :grief:
you replied very fast. i edited my previous post.
here is Fraser centrepoint condo, is less than 3 year old
"recently went to view a fraser centrepoint home, Oh gosh, cannot believe the quality, just TOP less than 2 -3 years can see wide plaster cracks along facade."
Do you know which contractor was doing that Fraser Project?
tonymontana
06-08-17, 22:23
Do you know which contractor was doing that Fraser Project?
main con nakano . so it's not china construction co.
That is NOT the only problem with new condos, there are many more problems:
1) You pay say 1000 sqft condo, but your usable area only like 750 sqft (the rest eaten up by balcony, big big air-con ledge, private lift lobby etc)!
2) Previously a condo unit has about 150 units per tennis court in the estate, not you frequently see private condo estates with 1 or 2 tennis for >600 units in the estate! Some don't even any tennis court! Similarly insufficient facilities like swimming pool, gym size etc!
Well, in case people don't know, previously you can only find ECs with >600 units having only 1 or 2 tennis courts! Now these private condos with >600 units having only 1 or 2 tennis courts are NO BETTER than ECs (so squeezed and packed like sardine estate)!
3) Condo units used to have premium furnishing, including marble flooring, 3m high floor to ceiling height etc. Now many (mostly OCR private condos) give you tiles, 2.8m high ceiling etc!
4) A 3-BR condo used to be 1200 sqft and above. Now they built squeeze 3-BR condo into 800 sqft! Have Singaporeans shrunk so much in size to be like mickey mouse???! :grief:
aiya please lah CDL quality also leak here and there after xx no of years. need to do repairs, that's what the sinking fund is there for.
In my opinion, i think OVERALL quality of all new condo is not as good as it was. But i don't have quantitative data to prove it. just my feeling.
recently went to view a fraser centrepoint home, Oh gosh, cannot believe the quality, just TOP less than 2 -3 years can see wide plaster cracks along facade.
tonymontana
06-08-17, 23:07
That is NOT the only problem with new condos, there are many more problems:
1) You pay say 1000 sqft condo, but your usable area only like 750 sqft (the rest eaten up by balcony, big big air-con ledge, private lift lobby etc)!
2) Previously a condo unit has about 150 units per tennis court in the estate, not you frequently see private condo estates with 1 or 2 tennis for >600 units in the estate! Some don't even any tennis court! Similarly insufficient facilities like swimming pool, gym size etc!
Well, in case people don't know, previously you can only find ECs with >600 units having only 1 or 2 tennis courts! Now these private condos with >600 units having only 1 or 2 tennis courts are NO BETTER than ECs (so squeezed and packed like sardine estate)!
3) Condo units used to have premium furnishing, including marble flooring, 3m high floor to ceiling height etc. Now many (mostly OCR private condos) give you tiles, 2.8m high ceiling etc!
4) A 3-BR condo used to be 1200 sqft and above. Now they built squeeze 3-BR condo into 800 sqft! Have Singaporeans shrunk so much in size to be like mickey mouse???! :grief:
agree except pt 4, sorry to say, size HAS to shrink to maintain "affordable" quantum. as mentioned before, it's nice to have an old river valley condo but 2,000 sft at 4m , can be difficult to find buyer , since as you know, 4m you can buy FREEHOLD LANDED PROPERTY already.
there is actually One major major big problem of a lot of newer condo that i absolutely hate. but i don't want to continue saying bad things regarding this, after all many people bought them (including my friends, and relatives). so i will shut up on this topic now.
agree except pt 4, sorry to say, size HAS to shrink to maintain "affordable" quantum. as mentioned before, it's nice to have an old river valley condo but 2,000 sft at 4m , can be difficult to find buyer , since as you know, 4m you can buy FREEHOLD LANDED PROPERTY already.
there is actually One major major big problem of a lot of newer condo that i absolutely hate. but i don't want to continue saying bad things regarding this, after all many people bought them (including my friends, and relatives). so i will shut up on this topic now.
$4 mil can get a Landed, but not in CCR lo.
But I think buyers are not into CCRs because of quantum but some of those attributes that Teddy has written before including 'exclusivity'.
The worst is, after The Seaview’s case on suing the developer, main contractor and architect on the defects. The High Court and Court of Appeal has ruled these parties are NOT responsible for the defects. The SPs need to identify who is the one (i.e. sub-contractor or even sub-sub) directly for the defects. And you also can read…what will happen to all these sub-cont once full payment is received.
So, you can read now what will happen to the quality of all these projects going to be? There will be very impressive showflats but the final products, have yet to be seen. Do the SPs of these properties have the $$$$, time and expertise to take up the court case for defects.
Many people worry missing the boats and think that the easiest way to make money is to invest in property and collect passive income. Most of these people has yet to experience winter in property market yet. There is hardly any good money to be made in property already.
tonymontana
07-08-17, 09:37
The worst is, after The Seaview’s case on suing the developer, main contractor and architect on the defects. The High Court and Court of Appeal has ruled these parties are NOT responsible for the defects. The SPs need to identify who is the one (i.e. sub-contractor or even sub-sub) directly for the defects. And you also can read…what will happen to all these sub-cont once full payment is received.
So, you can read now what will happen to the quality of all these projects going to be? There will be very impressive showflats but the final products, have yet to be seen. Do the SPs of these properties have the $$$$, time and expertise to take up the court case for defects.
Many people worry missing the boats and think that the easiest way to make money is to invest in property and collect passive income. Most of these people has yet to experience winter in property market yet. There is hardly any good money to be made in property already.
Hi, Laguna, actually Sg property market is still mighty fine to me. Its' like buying a blue chip stock.
Although I bemoan the new build quality, it's still way better than other properties around this region due to our stringent regulatory regime and guidelines.
the seaview case is really unfortunate.
In actuality, it means when you buy a new property for 1 million, you have to standby 30,000 more for renovations. If the price pressure persists, you gotta prepare 50,000 for rectification. It's like buying a old property with a new 95 year lease.
Hi, Laguna, actually Sg property market is still mighty fine to me. Its' like buying a blue chip stock.
Although I bemoan the new build quality, it's still way better than other properties around this region due to our stringent regulatory regime and guidelines.
the seaview case is really unfortunate.
It is not just The Seaview is unfortunate, but for all private properties are unfortunate if they face the same problems.
HDB is still much more responsible in this context
tonymontana
07-08-17, 09:50
$4 mil can get a Landed, but not in CCR lo.
But I think buyers are not into CCRs because of quantum but some of those attributes that Teddy has written before including 'exclusivity'.
Or that buyer doesn't qualify for a landed.
If you had about 5m to spend on a property would you go for this:
http://www.propertyguru.com.sg/listing/20793956/for-sale-greenwood-avenue?ref=ls%7Ctl3%7C18%7C1
or this:
http://www.propertyguru.com.sg/listing/18034657/for-sale-paterson-suites?ref=ls%7C%7C4%7C1
Btw, Greenwood Ave is CCR. And it looks exclusive enough to me.
The worst is, after The Seaview’s case on suing the developer, main contractor and architect on the defects. The High Court and Court of Appeal has ruled these parties are NOT responsible for the defects. The SPs need to identify who is the one (i.e. sub-contractor or even sub-sub) directly for the defects. And you also can read…what will happen to all these sub-cont once full payment is received.
So, you can read now what will happen to the quality of all these projects going to be? There will be very impressive showflats but the final products, have yet to be seen. Do the SPs of these properties have the $$$$, time and expertise to take up the court case for defects.
Many people worry missing the boats and think that the easiest way to make money is to invest in property and collect passive income. Most of these people has yet to experience winter in property market yet. There is hardly any good money to be made in property already.
mind sharing the seaview case?
mind sharing the seaview case?
The Seaview started to work on the defect case, immediately the first MCST took over the estate, that was about 8 years back.
They engaged professionals like PE, building surveyors, and of course lawyers. The entire process of investigation, joint inspections, negotiation and court hearings took, if not wrong 8 years.
Both High Court and Court of Appeal have ruled the case against The Seaview on the ground of "Independent Contractor".
I am not sure how the case was ended, perhaps some private settlements and costs incurred by all parties... definitely is in MILLIONS.
The case is rather complex, and you can google for more.
Or that buyer doesn't qualify for a landed.
If you had about 5m to spend on a property would you go for this:
http://www.propertyguru.com.sg/listing/20793956/for-sale-greenwood-avenue?ref=ls%7Ctl3%7C18%7C1
or this:
http://www.propertyguru.com.sg/listing/18034657/for-sale-paterson-suites?ref=ls%7C%7C4%7C1
Btw, Greenwood Ave is CCR. And it looks exclusive enough to me.
Well, Landed and condo they are like apple and orange.
The price metrics we are used to for condo do not apply to Landed, in term of $ psf and also quantum.
In other words, if they are mixed up then the chance is that a buyer will have overpaid for a Landed.
Landed living is a lifestyle choice; some like it while others utterly hate it.
The subject of how to assess a Landed property is wide and deep, I don't intend to cover these. There is the art, and there is the science of the assessment.
This is a CT so while it has some of the attributes of a SD, the land size is far too small for these to be meaningful. Buyer looking to buy a SD will just buy a SD, not a CT.
The pricing of CT also tends to be sticky to Terraced’s rather than SD. Overall the pricing of Terraced today is inflated, suffering from the same issue of quantum play (in the Landed segment) of the previous years.
tonymontana
07-08-17, 21:37
Well, Landed and condo they are like apple and orange.
The price metrics we are used to for condo do not apply to Landed, in term of $ psf and also quantum.
In other words, if they are mixed up then the chance is that a buyer will have overpaid for a Landed.
Landed living is a lifestyle choice; some like it while others utterly hate it.
The subject of how to assess a Landed property is wide and deep, I don't intend to cover these. There is the art, and there is the science of the assessment.
This is a CT so while it has some of the attributes of a SD, the land size is far too small for these to be meaningful. Buyer looking to buy a SD will just buy a SD, not a CT.
The pricing of CT also tends to be sticky to Terraced’s rather than SD. Overall the pricing of Terraced today is inflated, suffering from the same issue of quantum play (in the Landed segment) of the previous years.
oh i didn't realize it's a CT, so yes, that's not as good.
i'm sure one can find an older terrace or even SD around the area but i could be wrong. Not been shopping in that price range. :p
anyway, my point being a landed property (freehold) would be a safer bet in land scarce singapore. And people with that budget of 4-5m would probably be considering a landed option, although not on grange / patterson rd.
oh i didn't realize it's a CT, so yes, that's not as good.
i'm sure one can find an older terrace or even SD around the area but i could be wrong. Not been shopping in that price range. :p
anyway, my point being a landed property (freehold) would be a safer bet in land scarce singapore. And people with that budget of 4-5m would probably be considering a landed option, although not on grange / patterson rd.
Certainly.
For Landed, a big portion of what is paid for is the real piece of land. Whereas for condo, only a share value of land as SP.
You can observe that for a Landed, it retains its land value very well even when the dwelling has turned derelict.
Not so for condo.
Landed is a direct play on land value, condo a direct play on rental value.
Regardless of landed and condos properties, buying "freehold" is a play on land..............
Those buying "99-years leasehold" properties either only want it for own consumption or just plainly want to flip to next greater fool.....................
(own consumption type is like 99-years leasehold The Horizons >30 years old those owners still objected to enbloc and successfully blocked their enbloc sale!)
To play Landed, you must always go for freehold premier locations, e.g. GCBs in choice CCR locations, where quantum involved is big (actually condos too, but condos has much more choices and quantum involved is much smaller).
Others landed better not touch (e.g. like landed in Yio Chu Kang, Woodlands, Jurong etc).
Because of this, not many can afford to play landed.
Imagine you buy landed in e.g. Woodlands, who are you going to sell to in future with such "large" quantum (considering status of OCR people) with slowing economic growth, stagnant incomes, etc? Most of these people don't even need so big space! (that is to say, many OCR people can't afford, those who can afford didn't even want to buy landed!).
For laymen who want to play properties, condos are better choices................
Certainly.
For Landed, a big portion of what is paid for is the real piece of land. Whereas for condo, only a share value of land as SP.
You can observe that for a Landed, it retains its land value very well even when the dwelling has turned derelict.
Not so for condo.
Landed is a direct play on land value, condo a direct play on rental value.
1992 my seller bought one landed FH property at Sunbird road, last offer 3.08 million.
My seller would like to buy one self-stay and one rental property after selling the FH landed.
Which is a better option?
Remain to stay in the FH landed property without income.
Sell and buy two LH property one for self-stay and one for rental income.
Only husband and wife retired, all children got their own property.
https://scontent-sin6-1.xx.fbcdn.net/v/t1.0-9/20708064_10211250481070745_5760014103825035268_n.jpg?oh=458e616b3937e49a9ab0f95993bf107d&oe=59ED4D81
tonymontana
08-08-17, 21:19
1992 my seller bought one landed FH property at Sunbird road, last offer 3.08 million.
My seller would like to buy one self-stay and one rental property after selling the FH landed.
Which is a better option?
Remain to stay in the FH landed property without income.
Sell and buy two LH property one for self-stay and one for rental income.
Only husband and wife retired, all children got their own property.
https://scontent-sin6-1.xx.fbcdn.net/v/t1.0-9/20708064_10211250481070745_5760014103825035268_n.jpg?oh=458e616b3937e49a9ab0f95993bf107d&oe=59ED4D81
buy 2 freehold condo for 1m ++ each (one stay, one rent), the balance money can buy dividend blue chip or bond or even put fixed deposit for safety.
else can buy one for 1.5m for own stay (freehold) and the rest invest in bond or fixed dep or any capital guaranteed instrument.
since retired already, no point take too much risk. playing landlord is not for everyone, it take some effort, has some risk.
i always believe in freehold. LH later get stuck during bad market time.
Depends on price. Rent for LH easier to last through bad markets comfortably also.
buy 2 freehold condo for 1m ++ each (one stay, one rent), the balance money can buy dividend blue chip or bond or even put fixed deposit for safety.
else can buy one for 1.5m for own stay (freehold) and the rest invest in bond or fixed dep or any capital guaranteed instrument.
since retired already, no point take too much risk. playing landlord is not for everyone, it take some effort, has some risk.
i always believe in freehold. LH later get stuck during bad market time.
anythingwhatever
08-08-17, 23:33
Depends on price. Rent for LH easier to last through bad markets comfortably also.
Remember PropSoul once said: "No Freehold no problem, No Holding Power is".
How true... :)
Would you like to have 2 rental property, one self-stay or one FH landed without rental income?
Many in their quest for FH property forget they need an income after retirement.
Also many do not see their 10 years is running low until it is too late.
Shoe box may be what most people need when their 10 years is at the end.
tonymontana
09-08-17, 09:53
nothing wrong with MM unit.
income: there is always CPF life, or buying an additional annuity.
FH is safer especially if downturn hits the market at the time when the building starts getting older.
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