HDB tweaks and overseas woes
PRIME Minister Lee Hsien Loong will deliver this year’s National Day Rally – widely seen as the most important political speech of the year in Singapore – on Aug 20.
Affordable and accessible public housing is expected to be a key theme in this year’s rally. What changes will there be to public housing schemes?
Maybe the income ceiling for buying new flats from the Housing and Development Board (HDB) will be raised. Possibly the qualifying criteria for housing grants to buy new HDB flats and the grant amounts can be calibrated to benefit more Singaporean households. Could there be a new scheme unveiled to give people who rent HDB flats the option to buy their flats?
Perhaps, details will be shared on the building of more HDB flats in prime locations to support the creating of inclusive communities. Also, plans could be unveiled on building more elderly-friendly public housing estates to cater to the growing ageing population in Singapore. And the classification of HDB estates as mature and non-mature ones might be changed.
Meeting the diverse housing aspirations of Singaporeans is challenging. Maybe there is room for executive condominiums (ECs) to play a larger role in Singapore’s housing landscape. Buying an EC can be a cost-effective way for locals to achieve their private housing aspirations, as new ECs can be cheaper by 25 per cent or more versus new private condominiums in comparable locations.
In this week’s The Level Ground, I argue that the government should consider setting aside housing sites in prime areas for the building of ECs.
Against a backdrop of high interest rates and economic uncertainty, buyers’ demand for private homes in Singapore may be faltering. Maybe there is too much choice in the market with the spate of new home launches, and buyers are balking at high asking prices.
At its recent sales launch, TMW Maxwell sold seven out of a total of 324 homes at an average price of S$3,310 per square foot. This 99-year leasehold mixed-use development project, jointly developed by CEL Development, Singhaiyi Investments and Chuan Investments, is sited at Maxwell Road.
As it stands, things are somewhat less rosy for the big property agencies here. PropNex’s H1 net profit fell 18.4 per cent to S$22.1 million on lower commission income. Apac Realty, whose real estate brokerage services are operated by ERA Realty Network, saw net profit tumble 70 per cent in its half year ended June.
Housing developers may not be the only ones here fretting over possible faltering demand. Office landlords could be worrying over possible troubles brewing among major tenants.
Recently, co-working giant WeWork said there’s “substantial doubt” about its ability to continue operating, citing sustained losses and cancelled memberships to its office spaces. Nonetheless, WeWork said it has no plans to exit any of its 14 locations in Singapore.
The adoption of remote working and the use of higher capitalisation rates to value property is causing much pain in the commercial property space in places such as the US and UK. This felt is felt by some Singapore-listed real estate investment trusts (Reits) and property groups.
The manager of Manulife US Reit, which owns office buildings in the US, declared no distribution for the first half ended Jun 30, as the trust has breached banks’ unencumbered gearing ratio, causing all its loans to be reclassified as current liabilities.
Ho Bee Land reported a net loss of S$155.7 million for H1, mostly due to the unrealised fair-value loss of S$208.3 million recorded for the group’s portfolio in London UK, as well as higher interest costs.
Leading property developer City Developments Limited also recorded impairment losses on its UK investment properties in H1. The group posted a 94.1 per cent drop in net profit to S$66.5 million for its first half ended Jun 30.
The going is also tough for players exposed to the China market. Property developer Yanlord Land Group posted a net profit of approximately one billion yuan (S$186.9 million) for the half year ended Jun 30, down 20 per cent from 1.4 billion yuan a year ago.
Meanwhile, troubled Dasin Retail Trust, which focuses on malls in China, received a notice of default occurring under a Singapore dollar and United States dollar denominated offshore syndicated term loan facility of up to S$430 million.
Still, despite the high interest rate environment and China’s slower than expected recovery, giant CapitaLand Investment (CLI) said it is “cautiously optimistic” about its second half and will remain disciplined in its capital management and acquisitions. CLI posted an 18.9 per cent drop in net profit to S$351 million in H1.
Home-buying sentiment in China continues to be weak, with buyers uncertain over the prospects for real estate in the country. Also, major Chinese property developer Country Gardens appears to be in financial distress. Its onshore bonds were suspended, sending its shares plunging. Trouble in China’s largest private property developer could have a chilling effect on homebuyers and financial institutions, further dampening the prospect of a near-term recovery in the sector and the broader economy.
