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    Default Massive home supply to hit outskirts

    http://www.todayonline.com/Business/...-hit-outskirts

    Massive home supply to hit outskirts

    by Ku Swee Yong

    04:47 AM Jun 24, 2011


    2013 is less than two years away. I am feeling less lonely in expressing my views about the physical completion supply of residential units. It has been five years since I started to scrutinise the total stock of residential units in the pipeline, that is, current stock plus expected completions minus demolitions from en bloc programmes.

    Occasionally, people still ask: "Why look at completed supply when land sales are hotly bid and developers sell out most of their stock before construction has completed?"

    Regardless of the take up of pre-sales, physical supply and demand will ultimately influence future prices, rentals and returns.

    Two weeks ago, in an entry titled My Worries, National Development Minister Khaw Boon Wan cautioned in his blog (http://mndsingapore.wordpress.com) about the "massive supply that will hit the market from 2013". As of March 31, the official supply numbers for the next four years are as in the table.

    Mr Khaw's worry is about the total 50,826 units that could be completed in 2013 to 2015. With a historical long-term average supply of 8,000 units per year, the average of 17,000 units per year of supply from 2013 to 2015 seems risky should demand from users and tenants not increase in tandem.

    I have pointed out in previous commentaries in this newspaper and in my recently published book, Real Estate Riches, that there are inaccuracies in the supply data.

    IPA's own estimates are that the completions will take place earlier than what is reported by the Urban Redevelopment Authority (URA), which compiles and presents data based on submissions by developers. For our discussions in this article, let us assume the numbers above to be accurate.

    Where are the areas we should be concerned about?

    Almost all of the completions expected in 2013 and beyond were launched after the 2008 Lehman crisis. In fact, as the luxury home market struggles to find its feet from the depths of 2009, the mass market residential segment has taken off in terms of value and the number of transactions.

    From its trough in 2Q2009, the price index for non-landed residential properties in the Core Central Region (CCR) increased 42 per cent to 204 points from 144 points. The same index for Outside Central Region (OCR) climbed more rapidly, up 54 per cent to 185 points from 120 points.

    Many Singaporeans are not surprised to hear of transactions in the outskirts, such as Jurong West, Pasir Ris and Yishun, at S$1,000 to S$1,500 per square foot - even for mass market finishes on 99-year leasehold land.

    In terms of the number of homes being constructed, the proportion of units in the more luxurious locations inside CCR will decline from 33 per cent in 2013 to 26 per cent in 2015.

    This means the proportion of units in the outskirts (OCR) and mid-tier locations (RCR) of Singapore will rise from 67 per cent to 74 per cent. Now, the percentage rise may seem mild but in absolute numbers, we can expect 8,686 units to be completed within the OCR and RCR in 2013, 13,014 units in 2014 and 14,510 units in 2015.

    For the optimistic, those numbers may still be matched by demand from strong job growth, new Permanent Residents and other pass holders - assuming a generous talent attraction programme,

    However, when we include the additional supply of public housing and its accelerated pace of building, the numbers start to pile up. We can expect the 16,000 units of HDB flats launched last year to be completed in 2013 and another 22,000 (very likely more) units to be completed in 2014 and 2015.

    And with Mr Khaw calling on HDB to build ahead of demand, it has effectively moved from Build-to-Order to Ordered-to-Build. So the completion of HDB units in 2015 and beyond could also be significantly ratcheted up.

    Now, we know that the mature estates have limited land to accommodate new HDB units. We estimate that almost all of the 22,000 units launched this year to be completed in 2014 and, say, a ratcheted-up 28,000 units to be completed in 2015 will be in the OCR and RCR.

    In terms of physical supply and demand from end users, new HDB flats in mature estates such as Holland Road (situated inside CCR) do not compete with private homes priced at well above S$1,000 psf.

    However, new HDB flats - and the vast supply of them - in OCR locations such as Hougang, Bedok or Bukit Panjang will compete for attention from first-time home owners or parents who are financing their children's first marital homes.

    Therefore, I perceive the risks of the "massive supply" weighing heavily against private residential projects in the outskirts. Even riskier would be the smaller-sized apartments in the outskirts that were purchased at prices 20 to 40 per cent above the neighbourhood's average psf prices.

    Conversely, with very few residential land sales and en bloc programmes in Districts 9, 10 and 11 since 2009, we can hardly expect significant fresh supply in CCR in 2013 to 2015. A significant number of completions in CCR come from the projects delayed since the previous peak, such as d'Leedon (en bloc), Leedon Residence (en bloc) and South Beach (Government Land Sales).

    While many investors may be concerned about short-term market jitters, others are looking to take advantage of the uncertainty by searching for solid long-term value buys that offer strong downside protection in the older CCR properties. Our recommendation will be to explore the larger-sized apartments of 2,000 to 4,000 sq ft that were completed before this century.

    The investment search might take a lot more effort as many gems lay hidden from us and probably hidden from the risks of the impending "massive supply".


    Ku Swee Yong is the founder of real estate agency International Property Advisor, which provides services to high-net-worth individuals. He is the author of Real Estate Riches: Understanding Singapore's Property Market In A Volatile Economy (Marshall Cavendish).
    Last edited by mr funny; 30-06-11 at 02:13.

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    Mr Ku tell us something new.......

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    Wah! Why his view so similar to mine?

    Quote Originally Posted by rockinsg
    Massive home supply to hit outskirts

    by Ku Swee Yong
    04:47 AM Jun 24, 2011

    2013 is less than two years away. I am feeling less lonely in expressing my views about the physical completion supply of residential units. It has been five years since I started to scrutinise the total stock of residential units in the pipeline, that is, current stock plus expected completions minus demolitions from en bloc programmes.

    Occasionally, people still ask: "Why look at completed supply when land sales are hotly bid and developers sell out most of their stock before construction has completed?"

    Regardless of the take up of pre-sales, physical supply and demand will ultimately influence future prices, rentals and returns.

    Two weeks ago, in an entry titled My Worries, National Development Minister Khaw Boon Wan cautioned in his blog (http://mndsingapore.wordpress.com) about the "massive supply that will hit the market from 2013". As of March 31, the official supply numbers for the next four years are as in the table.

    Mr Khaw's worry is about the total 50,826 units that could be completed in 2013 to 2015. With a historical long-term average supply of 8,000 units per year, the average of 17,000 units per year of supply from 2013 to 2015 seems risky should demand from users and tenants not increase in tandem.

    I have pointed out in previous commentaries in this newspaper and in my recently published book, Real Estate Riches, that there are inaccuracies in the supply data.

    IPA's own estimates are that the completions will take place earlier than what is reported by the Urban Redevelopment Authority (URA), which compiles and presents data based on submissions by developers. For our discussions in this article, let us assume the numbers above to be accurate.



    Where are the areas we shouldbe concerned about?

    Almost all of the completions expected in 2013 and beyond were launched after the 2008 Lehman crisis. In fact, as the luxury home market struggles to find its feet from the depths of 2009, the mass market residential segment has taken off in terms of value and the number of transactions.

    From its trough in 2Q2009, the price index for non-landed residential properties in the Core Central Region (CCR) increased 42 per cent to 204 points from 144 points. The same index for Outside Central Region (OCR) climbed more rapidly, up 54 per cent to 185 points from 120 points.

    Many Singaporeans are not surprised to hear of transactions in the outskirts, such as Jurong West, Pasir Ris and Yishun, at S$1,000 to S$1,500 per square foot - even for mass market finishes on 99-year leasehold land.

    In terms of the number of homes being constructed, the proportion of units in the more luxurious locations inside CCR will decline from 33 per cent in 2013 to 26 per cent in 2015.

    This means the proportion of units in the outskirts (OCR) and mid-tier locations (RCR) of Singapore will rise from 67 per cent to 74 per cent. Now, the percentage rise may seem mild but in absolute numbers, we can expect 8,686 units to be completed within the OCR and RCR in 2013, 13,014 units in 2014 and 14,510 units in 2015.

    For the optimistic, those numbers may still be matched by demand from strong job growth, new Permanent Residents and other pass holders - assuming a generous talent attraction programme,

    However, when we include the additional supply of public housing and its accelerated pace of building, the numbers start to pile up. We can expect the 16,000 units of HDB flats launched last year to be completed in 2013 and another 22,000 (very likely more) units to be completed in 2014 and 2015.

    And with Mr Khaw calling on HDB to build ahead of demand, it has effectively moved from Build-to-Order to Ordered-to-Build. So the completion of HDB units in 2015 and beyond could also be significantly ratcheted up.

    Now, we know that the mature estates have limited land to accommodate new HDB units. We estimate that almost all of the 22,000 units launched this year to be completed in 2014 and, say, a ratcheted-up 28,000 units to be completed in 2015 will be in the OCR and RCR.

    In terms of physical supply and demand from end users, new HDB flats in mature estates such as Holland Road (situated inside CCR) do not compete with private homes priced at well above S$1,000 psf.

    However, new HDB flats - and the vast supply of them - in OCR locations such as Hougang, Bedok or Bukit Panjang will compete for attention from first-time home owners or parents who are financing their children's first marital homes.

    Therefore, I perceive the risks of the "massive supply" weighing heavily against private residential projects in the outskirts. Even riskier would be the smaller-sized apartments in the outskirts that were purchased at prices 20 to 40 per cent above the neighbourhood's average psf prices.

    Conversely, with very few residential land sales and en bloc programmes in Districts 9, 10 and 11 since 2009, we can hardly expect significant fresh supply in CCR in 2013 to 2015. A significant number of completions in CCR come from the projects delayed since the previous peak, such as d'Leedon (en bloc), Leedon Residence (en bloc) and South Beach (Government Land Sales).

    While many investors may be concerned about short-term market jitters, others are looking to take advantage of the uncertainty by searching for solid long-term value buys that offer strong downside protection in the older CCR properties. Our recommendation will be to explore the larger-sized apartments of 2,000 to 4,000 sq ft that were completed before this century.

    The investment search might take a lot more effort as many gems lay hidden from us and probably hidden from the risks of the impending "massive supply". [/SIZE]

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    the god will make it happen.. be patient.. wait for lightning.. now its only raining...

    when flooding... prices go up... but when thunder comes... all run lor.

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    I am of the same opinion as Mr Ku.

    Property prices will dip big time soon as anxious sellers sell off first

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    Quote Originally Posted by Geylang OKT
    I am of the same opinion as Mr Ku.

    Property prices will dip big time soon as anxious sellers sell off first
    I think with Sellers Salex Tax they will be actually struck with negative equity..
    Developers would be the only winner..can buy cheap land and then landbank..

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    These buy property high buyers subscribing to the greater fool theory deserve to be burnt big time as they do not listen to reason.

    Lemmings deserve to fall off the cliff.

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    Is there really lack of new supply in CCR?



    http://forums.condosingapore.com/att...9&d=1299494708

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    Quote Originally Posted by Jadey
    Is there really lack of new supply in CCR?



    http://forums.condosingapore.com/att...9&d=1299494708
    There isnt lack of supply in CCR.. but there is oversupply in OCR..
    The real demand is not that substantial anymore.. How many upgraders can afford 1000 psf? and how many renters demand is really out there?

    Sooner or later oversupply will hit(2013-14) and those who are buying at peak will get crushed real hard..

    Best appraoch is to wait and watch.. but with 1% interest rate greed takes over... people think they can always pay bank 1% and get 3-4% rental returns.. easy money...ain't gonna stay that way forever

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    Ha ha ha! What a relevant reply!


    Quote Originally Posted by rockinsg
    There isnt lack of supply in CCR.. but there is oversupply in OCR..
    The real demand is not that substantial anymore.. How many upgraders can afford 1000 psf? and how many renters demand is really out there?

    Sooner or later oversupply will hit(2013-14) and those who are buying at peak will get crushed real hard..

    Best appraoch is to wait and watch.. but with 1% interest rate greed takes over... people think they can always pay bank 1% and get 3-4% rental returns.. easy money...ain't gonna stay that way forever

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    But Mr Ku opinion is different from yours in that it is not "dip big time soon"? He is saying about earliest 2013 and mainly the MMs and mass market properties?
    Actually I believe the property price uptrend still have legs at least until 2013, both CCR and OCR for now, except CCR safer bet than OCR.

    Quote Originally Posted by Geylang OKT
    I am of the same opinion as Mr Ku.

    Property prices will dip big time soon as anxious sellers sell off first

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    Default New Supply ?

    There are a lot of talks of piling supply.

    Actually, people do not feel the impact until they see real happenings.

    If you start naming the number of units (projects) that has received TOP in the last 3 mths and add them to those we got it in the next 3-6 months, you will know how stressful things are going to be.

    From what I can see the following projects are on the list.

    Lucida
    Luma
    Illuminaire
    Parc Centennial
    Newton Edge
    Soleil
    Newton Imperial
    Hilltops
    Helios
    Promont
    One Shenton
    Lumiere (rental has been badly hit for this one)
    The Clift
    Trizon (this one not too sure will TOP in next 3-6 mths)
    Kovan Residence

    Okay, I will stop here and let you guys continue if you are keen.

    My message is, the "piling supply" is indeed start to pile up!

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    Quote Originally Posted by DKSG
    There are a lot of talks of piling supply.

    Actually, people do not feel the impact until they see real happenings.

    If you start naming the number of units (projects) that has received TOP in the last 3 mths and add them to those we got it in the next 3-6 months, you will know how stressful things are going to be.

    From what I can see the following projects are on the list.

    Lucida
    Luma
    Illuminaire
    Parc Centennial
    Newton Edge
    Soleil
    Newton Imperial
    Hilltops
    Helios
    Promont
    One Shenton
    Lumiere (rental has been badly hit for this one)
    The Clift
    Trizon (this one not too sure will TOP in next 3-6 mths)
    Kovan Residence

    Okay, I will stop here and let you guys continue if you are keen.

    My message is, the "piling supply" is indeed start to pile up!
    ur list mainly CCR wor....

    right now i goto agree CCR is having oversupply issues.....but soon will get normalise ard 2013-2014 once supply is gradually soaked up

    OCR.....really depends on govt immigration policy liao.....

    HDB oversupply....no worries.....we r having BTOs and not build to sell

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    Quote Originally Posted by teddybear
    But Mr Ku opinion is different from yours in that it is not "dip big time soon"? He is saying about earliest 2013 and mainly the MMs and mass market properties?
    Actually I believe the property price uptrend still have legs at least until 2013, both CCR and OCR for now, except CCR safer bet than OCR.
    I tend to disagree.. I think demand and price rise will last till end of this year only.. i.e. 2011 end..Unless CM4 is removed.. cause there is still litle genuine demand left..which possibly will take up last half of this year to finish..

    Some of the smart buyers who bought at lows will take advantage of peak and start cashing..they already have huge price advantage..some even 30-40% profit..once they start to cash in before 2013 supply hits market prices will start gradual decline throughout 2012..

    2013 will be the year of realization..when interest rates will creep back up to normal 3-4% rate and people will realize there is too much supply and low rental demand..
    2013 would be year of pain..

    Ofcourse all will depend on how much immigration Govt can bring in..
    But to be true I dont think Govt can bring anymore people till the infrastructure changes take place.. most of which are coming online between 2015-2020...mrt, roads, malls, everwhere its too crowded..

    Sg ppl are getting what they asked for in last election..less immigrants and lower property prices

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    Quote Originally Posted by rockinsg
    Sg ppl are getting what they asked for in last election..less immigrants and lower property prices
    this one i agree....we got 5yrs to repent

    ops...realised u r not belong to 'we'....u dun hf to

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    Quote Originally Posted by devilplate
    this one i agree....we got 5yrs to repent

    ops...realised u r not belong to 'we'....u dun hf to
    Nothing to repent lah..less immigrants and less property prices are needed..

    Been here for 5 years too.. have seen the infrastructure become from "great to just bearable"..

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    If market crash, and the MRT completed by then then FT Tao can open again....

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    Quote Originally Posted by devilplate
    ur list mainly CCR wor....

    right now i goto agree CCR is having oversupply issues.....but soon will get normalise ard 2013-2014 once supply is gradually soaked up

    OCR.....really depends on govt immigration policy liao.....

    HDB oversupply....no worries.....we r having BTOs and not build to sell
    There are also OCRs ones la! I can start a few and let others think abt it :

    One Amber
    Amber Residences
    Breeze by the East (sounds corny to me)
    Seafront (this one maybe TOP more than 3 mths ago)
    Waterfront whatever (think one or two of them goin to TOP real soon)
    Aalto(this one also more than 3 mths ago I think)

    Ok. I give up. You guys check out the classifieds yourself.

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    Quote Originally Posted by DKSG
    There are also OCRs ones la! I can start a few and let others think abt it :

    One Amber
    Amber Residences
    Breeze by the East (sounds corny to me)
    Seafront (this one maybe TOP more than 3 mths ago)
    Waterfront whatever (think one or two of them goin to TOP real soon)
    Aalto(this one also more than 3 mths ago I think)

    Ok. I give up. You guys check out the classifieds yourself.
    so how now? quickly sell all properties while u can??

    u forgot 1 thing, it is not an issue of oversupply, it is an issue of losing confidence in paper money people r switching paper money into something more tangible and useful

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    Quote Originally Posted by Allthepies
    so how now? quickly sell all properties while u can??

    u forgot 1 thing, it is not an issue of oversupply, it is an issue of losing confidence in paper money people r switching paper money into something more tangible and useful
    You are so right... Those who cash out must be accurate and spot on twice over.... Find the peak period to sell so that price will drop aft that and then whe prices drop, must enter the market at he right time.... Wha are the chances of that man? Lookmat those people during early 2009 whe prices were at a low, they think it willmdrop further and wee what happened... Missed the boat totally... My view of properties is always long term... Five years time frame sure make money.....

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    Quote Originally Posted by CCR
    You are so right... Those who cash out must be accurate and spot on twice over.... Find the peak period to sell so that price will drop aft that and then whe prices drop, must enter the market at he right time.... Wha are the chances of that man? Lookmat those people during early 2009 whe prices were at a low, they think it willmdrop further and wee what happened... Missed the boat totally... My view of properties is always long term... Five years time frame sure make money.....
    Cash will always lose with time..there is a thing know as inflation.....What you want is beat inflation and make profit..

    If infaltion stay next 5 years even at 3.. u need price to rise to 15% just to beat inflation...

    Only thing is will SGians become more productive to afford these properties..or Will SGians will allow to be struck in HDB while FT's and riches buy condo and luxury property..?

    Although SGians are very docile(no pun intended) .. but it wont be fun to see r political/social uneasyness in small country like SG

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    What talking you? As long as HDB flats stay affordable, how can there be political and social unrest in SG? You mean people want private properties to be affordable and if not they will cause unrest?
    Like that SG will have unrest 20 years ago, don't need to wait till now!

    Quote Originally Posted by rockinsg
    Cash will always lose with time..there is a thing know as inflation.....What you want is beat inflation and make profit..

    If infaltion stay next 5 years even at 3.. u need price to rise to 15% just to beat inflation...

    Only thing is will SGians become more productive to afford these properties..or Will SGians will allow to be struck in HDB while FT's and riches buy condo and luxury property..?

    Although SGians are very docile(no pun intended) .. but it wont be fun to see r political/social uneasyness in small country like SG

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    Many agents have been giving same feedbacks that investors are not buying much,on sideline some months ago... watching for clearer signals. It's the masses that are buying in from pent-up demand. What an irony ... if market turns otherwise.

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    Quote Originally Posted by teddybear
    What talking you? As long as HDB flats stay affordable, how can there be political and social unrest in SG? You mean people want private properties to be affordable and if not they will cause unrest?
    Like that SG will have unrest 20 years ago, don't need to wait till now!
    Hmm... I dont know what it was like 20 years ago

    But can private and HDB prices can remain so out of sync..?

    Nobody will pay 400-500psf diff for just a hole of water (pool) and security men(sleeping most of the time) ..thats why upgraders are not biting..

    Either HDB prices will rise or private ppt(mass market) will come down..

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    Quote Originally Posted by Geylang OKT
    These buy property high buyers subscribing to the greater fool theory deserve to be burnt big time as they do not listen to reason.

    Lemmings deserve to fall off the cliff.
    Hahaha... U can change urs to 'I love cheap buy'

    Those who bought in previous peak and got burnt big time... They can share if they are not afraid of being labelled the earlier fools.

    Wise and foolish share a thing in common, their money. Money and the fools are easily parted.

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    HDB & private out of sync? More like resale HDB flats seriously out of sync to new HDB flats! Either resale HDB will crash or new hDB will rise by a lot.


    Quote Originally Posted by rockinsg
    Hmm... I dont know what it was like 20 years ago

    But can private and HDB prices can remain so out of sync..?

    Nobody will pay 400-500psf diff for just a hole of water (pool) and security men(sleeping most of the time) ..thats why upgraders are not biting..

    Either HDB prices will rise or private ppt(mass market) will come down..
    Last edited by teddybear; 26-06-11 at 16:57.

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    Very obvious, new flats cheaper than Dbss but same as previous HDB prices.

    Eventually, prices will be stable as a dead beat.

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    So how long do we have to wait before prices stabilizes?

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