PROPERTY

Beach Road could be next prime hot spot

District, set for a snazzy makeover, boasts a good mix of shophouses and
strata-titled commercial and residential units on the market for the average
investor

By Jessica Cheam

FORGET the Central Business District. Property investors priced out of prime
zones but still hunting for a good buy should look to downtown’s upcoming
hot spot – the Beach Road, Ophir-Rochor district.

This hotchpotch of an area – with old shophouses dotting its landscape,
juxtaposed with towering modern office blocks – is set for a snazzy
makeover, as announced by the Government this week.

Already, property experts have identified strong potential upside for
properties in the district.

Minister of State for National Development Grace Fu said it would be ‘an
extension of Bugis’, complementing the Marina Bay financial district.

Although most major buildings, including The Gateway, Shaw Towers and the
Bugis Junction office tower, are owned by single developers, there is a good
mix of shophouses and strata-titled commercial and residential units on the
market for the average investor.

The 101, Premier Centre and The Plaza, for example, are all strata-titled
properties with a mix of commercial and residential units.

One shop owner, Mr Thomas Tan, who purchased a 1,300 sq ft unit on the
ground floor of The 101 for $1.4 million – or $1,077 per sq ft (psf) – in
April, told The Sunday Times he was glad he had taken the bold move to buy
earlier this year.

The same unit now costs more than $2 million – or $1,539 psf – on the
market, said the 61-year-old retiree.

Over at The Plaza, residential units are currently priced at around $933 to
$1,222 psf.

While Singapore’s property bull run seems to be taking a breather, prices in
the Beach Road, Ophir-Rochor area are likely to stay strong and move upwards
in the long run with new developments, said Savills Singapore’s director of
business development and marketing, Mr Ku Swee Yong.

Beach Road already has its own crown jewel in South Beach – an eco-friendly,
$2.5 billion mixed project developed by a City Developments consortium. By
2012, South Beach will boast two towers of up to 45 storeys, two luxury
hotels, service apartments and conserved military buildings of the old Beach
Road camp.

On Thursday, the Government said it would release one more 2.74ha plot -
between Rochor and Ophir Roads, surrounding Parkview Square – as a multi-use
‘white site’ next year, yielding 495 hotel rooms and 139,740 sq m of
commercial space.

CBRE Research executive director Li Hiaw Ho said the new projects would
complement each other and add much vibrancy to the area.

‘A mini-Raffles City on the white site is likely to do very well,’ added Mr
Ku.

Shophouses are now particularly attractive, especially those facing the new
plot, he said.

Currently, trendy eateries and drinking spots occupy shop houses along Haji
Lane and Tan Quee Lan Street.

The area, with its proximity to Bugis Junction, has, in recent years,
developed into a fashionable hang-out famed for good food and cheap beer.

Shophouses in the area have been going for $800 to $1,000 psf, and other
surrounding commercial units have been sold for about $1,600 psf, said Mr
Ku.

Considering that just across the street, Suntec is commanding up to $2,500
psf, there is much potential for capital values of properties in the area to
appreciate.

Still, before that can happen, certain parts of the district have to be
‘spruced up’ and polished, added Mr Ku.

Some small commercial buildings, shophouses and independent hotels there are
old and shoddy and will need facelifts to match the area’s new trendy image.

Although the area does not command Grade A rents or tenants, it still gets a
good mix of quality tenants with occupancy rates at a high 95 per cent,
Savills director of commercial services June Chua said.

Office rents are now in the range of $9 to $11 psf a month, up from $4 to $5
psf more than a year ago. This translates into good rental yields for
owners.

Mr James Smith, managing director of a media company based at the Evershine
& Century Complex, is one tenant who has had his rent doubled in the last
six months, and he may consider investing.

While the latest news will likely translate into higher rents in the future,
Mr Smith says the upside is that more quality offices will sprout in the
area, and this will have a good ‘trickle-down effect’.

‘This district will remain attractive, especially to us, as it’s a creative
hub with lots of knowledge-driven businesses and schools in the vicinity,’
he said. ‘It’s got a good vibe.’

Mr Tan recalled that the old Beach Road, in the 1950s to 1960s, was ‘the’
entertainment hub, with good food from the old Satay Club, and two cinema
houses lining the road.

‘Perhaps in the next decade, the hustle and bustle of the old Beach Road
will be revived and it will regain its old glory,’ he said.

Lippo’s Sentosa condo at about $2,750-2,900 psf

By KALPANA RASHIWALA

LIPPO Group is said to have priced its Marina Collection condo, a 99-year
leasehold project on Sentosa Cove, at about $2,750-2,900 psf on average.

Over the past few days, the group, controlled by Indonesia’s Riady family,
is said to have sold about half of the 60 or so units it has released so far
in the 124-unit, four-storey development next to the One Degree 15 Marina
Club. The development comprises three blocks.

Lippo is developing the condo jointly with the Marina Club, OCBC and
Austria’s Raiffeisen Zentralbank (RZB).

Buyers will be given a free membership at One Degree 15 Marina Club for each
unit of Marina Collection they purchase. The memberships are currently said
to be going for above $40,000 each.

Lippo’s price appears to be slightly higher than the $2,600 psf net average
achieved for the previous condo launch at Sentosa Cove – Ho Bee’s Turquoise.

The project was released in September and to date, Ho Bee is said to have
sold 45 out of the 60 units it has released so far out of 91 units in the
six-storey condo.

Marina Collection comprises three-, four-, and five-bedroom apartments as
well as penthouses. Three-bedder units cost about $5.4 million while
penthouses are priced at $10 million and above.

The 30 or so units Lippo has sold so far include five penthouses.

There are about 30 penthouses altogether.

The Lippo-led consortium is developing Marina Collection on a plot that it
bagged at a tender that closed in September last year for $234.7 million or
$818 psf per plot ratio (ppr).

Lippo’s pricing for its Marina Collection will no doubt be used by property
developers to peg their bids at next week’s tender for the Pinnacle
Collection – the last condo plot at Sentosa Cove.

The plot, which has a choice location at the entrance to the precinct’s
marina basin, has a reserve price of $963.8 million or $1,600 psf ppr.

STB approves en bloc sale of Horizon Towers

But it may not spell end of saga as minority owners who oppose sale may
still appeal

By MICHELLE QUAH

(SINGAPORE) Almost a year of wrangling and millions of dollars in legal fees
later, the controversial en bloc sale of Horizon Towers was eventually
approved yesterday by the Strata Titles Board (STB).

Still, the board’s verdict by no means spells the end of the long-running
saga – minority owners who oppose the sale could still appeal. That would
put the sale on hold, and could mean another round of protracted legal
disputes.

The STB’s much-awaited decision on Horizon Towers was delivered before a
packed room in the board’s Maxwell Road headquarters. Tribunal chairman
Philip Chan read out the prepared statement solemnly, before four teams of
lawyers and some 70 owners, curious onlookers and the media.

Acknowledging that this collective sale ‘lasted longer than most other en
bloc (sales)’ that have come before the STB, Mr Chan said that his tribunal
eventually decided to grant the application for the collective sale of
Horizon Towers, after considering the various merits of the case.

He said that the board had been ‘particularly guided’ by the recent decision
reached in the Phoenix Court en bloc sale and the parliamentary debates on
recent amendments to the legislation governing en bloc sales.

In the Phoenix Court case, Justice Andrew Ang threw out the sole minority
owner’s objection to the collective sale of the freehold apartment block at
St Thomas Walk. Justice Ang determined that it was important to look at the
purposive nature of the law governing collective sales, which requires that
80 per cent of owners have to agree to the sale before it can go through. As
the requisite majority was obtained in the Phoenix Court case, Justice Ang
ruled that the transaction was not prejudicial to the minority – as the law
had intended.

A similar stance was adopted by Senior Minister of State for Law, Associate
Professor Ho Peng Kee, and Deputy Prime Minister and Law Minister S
Jayakumar in the recent parliamentary debates on amendments to the Land
Titles (Strata) Bill.

Prof Ho had said requiring 100 per cent consent among owners for an en bloc
sale was untenable, as it would cause delays in any sale, acrimony and incur
costs. He said that amendments to the law would provide adequate safeguards
to protect minority interests and that the existing 80 per cent or 90 per
cent majority required – depending on the age of the development – was
satisfactory. DPM Jayakumar agreed that amendments to the Bill would provide
more safeguards and transparency for all owners.

Tribunal chairman Mr Chan also said yesterday that the minority owners who
opposed the sale had failed to prove their case that the transaction had
been carried out in bad faith. The minorities had alleged, among other
things, that the sales committee and its sales agent had not worked hard
enough to get the best price possible for the development.

The tribunal will issue detailed grounds for its decision at a later date.
It ruled yesterday that no order would be made for costs, meaning that the
minority would not have to bear any portion of the costs of the proceedings.

The gallery’s reaction to the tribunal’s decision was muted – surprising for
a case that has caused much emotional upheaval for its owners. Owners
received the verdict quietly and shuffled out of the room.

The minority owners, who feel they will lose their homes with this sale,
were accepting of the verdict. ‘The decision was not unexpected. We have
done and will do what is principally correct,’ said Jasmine Tan, who
declined to comment at this point on whether she would appeal against the
STB’s decision.

And, expectedly, the majority owners – the over-80 per cent who agreed to
the collective sale – were relieved with the STB’s decision. They face the
threat of being sued for up to $1 billion by the buyers, Hotel Properties
(HPL) and its partners, if the deal falls through.

Said a group of some 80 majority owners: ‘We are happy with the decision and
very pleased that the en bloc is going through. We look forward to the
buyers confirming that they will proceed with the deal and withdrawing the
legal suits they have started against some owners.’

HPL and its partners, for their part, have expressed their happiness with
STB’s decision – but have held back on any decision on the lawsuit, pending
the actual completion of the sale.

‘We are pleased that the STB has allowed the collective sale and rejected
the objectors’ case, including their allegations of bad faith,’ said HPL
executive director Christopher Lim.

The buyers’ lawyer, Senior Counsel K Shanmugam of Allen & Gledhill, added:
‘Our client entered into the transaction in good faith and paid what was
then a record price for the property. The application should therefore have
proceeded smoothly, but the market changed. As a result, the case went
through a number of critical junctures. We are, however, happy that the end
result is that the tribunal has ruled that the sale should now go ahead.’

Deutsche Bank unit sees global real estate recovery in 2009

(LONDON) Global real estate investment is leaving behind an era of
above-average returns and is set for leaner times but it will start to
recover in 2009, according to RREEF, Deutsche Bank’s alternative investments
arm.

‘There is some justification for the media hysteria but what we are seeing
is a cyclical correction not the end of the asset class,’ Peter Hobbs of
RREEF said in a telephone interview ahead of a speech yesterday at a Reuters
real estate event.

‘We are expecting a cyclical slowdown, especially in more volatile and
overpriced markets such as London, Madrid, Hong Kong, Singapore, Phoenix,
and San Diego, but the long-term picture remains exciting,’ Mr Hobbs told
Reuters.

Mr Hobbs is head of global real estate research at RREEF, one of the world’s
biggest property fund managers. He also sits on RREEF’s product development
committee.

The firm has expanded into private equity, hedge fund, and infrastructure
investment in recent years but remained committed to real estate, which had
a longer and deeper track record of performance than other alternative asset
classes, Mr Hobbs said.

‘Real estate still has huge potential,’ Mr Hobbs said. ‘There are
generational opportunities.’

The worst case scenario was a repeat of post-bubble Japan, where property
investors got their fingers so badly burnt that they abandoned the asset
class for much of the 1990s and beyond.

But that was unlikely due to several long-term positives, including the
continued growth of wealth in Asia, Latin America, and eastern Europe which
would lift demand for retail and residential property for years to come.

Mr Hobbs said total returns – rental income and capital growth – were set to
slow across most markets in 2008, bringing the global average down to 6 per
cent from 13 per cent this year.

But as aggressive real estate pricing was unwound, so money would be drawn
back into the market, he said.

Pension fund allocations to property remained below target in much of Europe
and Japan, while sovereign wealth funds with up to US$2 trillion at their
disposal had yet to follow the lead of Singapore’s GIC by committing funds
to real estate.

Even debt-dependent players would come back into play, eventually, as
funding costs eased and property was repriced.

The United States, where the economy was under a nasty cloud due to a savage
housing crisis, was already becoming an attractive destination again for
Europe-based property investors, given recent sharp falls in the dollar, Mr
Hobbs said.

The fundamentals in key market New York were also in better shape than in
rival financial centre London.

Excess new supply was an issue in London’s City office market, even though
speculative developments would be reined in due to the global credit crunch,
housing market weakness, and a slowing UK economy, Mr Hobbs said.

British shopping malls faced similar problems, as did Madrid, Hong Kong, and
some Indian cities, which would weigh on rental growth, he said.

Even red-hot Singapore was vulnerable. Having seen rents grow by 200 per
cent in the last three to four years, a recent dip in local real estate
investment trust (Reit) shares probably presaged a slowdown, as they had
already in the UK, Mr Hobbs said.

UK Reits are down 36 per cent so far this year, predating a slowdown in the
country’s underlying commercial property market by six to eight months.

In contrast, the Singapore property index is 17 per cent up in the year-to-
date period, but it had been 39 per cent up in early October. – Reuters

Pawn one property to buy another

(BEIJING) As bank loans for property dwindle, an increasing number of
prospective buyers are turning to pawnshops to finance their plans.

Wang, a 40-year-old Beijinger, owns an apartment worth about 700,000 yuan
(S$136,000) in the capital. His desire to move to a larger second-hand
apartment worth about one million yuan hit a snag when the owner demanded
payment in full. Wang, however, only had slightly more than 600,000 yuan.

People who have already bought houses with a bank loan are required to make
a downpayment of 40 per cent of the purchase price. And the loan interest
rate should not be lower than 1.1 times the central bank’s benchmark rate.

With the new rules blocking his dream, Wang turned to a pawnshop. He chose
to mortgage his first apartment for 400,000 yuan with Beijing Huaxia
Pawnshop Co.

He then registered with a real estate agent to sell his first apartment. He
soon made a deal where the buyer agreed to give him a downpayment of 400,000
yuan. With the money, Wang paid off his pawnshop loan and ended up buying
the larger apartment without a bank loan.

Li Tiejun, a Beijing Huaxia Pawnshop Co manager, said that since the banks
had tightened the rules for loans on second apartments, real estate loan
volume at his pawnshop had soared 40 per cent.

Likewise, Xu Yunpeng, manager of Beijing Bao Rui Tong Pawnshop, claimed its
trade volume in real estate had risen 30 per cent since September.

Some pawnshops advertised for potential customers by claiming that they
would give out money for mortgages within three to five days\. \– Xinhua

Property players likely to zoom in on central locations

Topping the list is multi-use ‘white site’ not far from Bugis MRT

By Fiona Chan

DEVELOPERS, and eventually homebuyers, can take their pick from 21 plots
that the Government will release for private housing between now and June.

Property players, however, are likely to zoom straight in on the handful of
land parcels that are more centrally located, industry experts say.

At the top of the list is the multi-use ‘white site’ bounded by Ophir Road,
Beach Road and Rochor Road. The property sits next to Parkview Square and is
a stone’s throw from Raffles Hospital and the Bugis MRT Station.

The sale of this 2.74ha plot will ‘kick-start the development of the…
Rochor Road/

Ophir Road corridor’, linking Marina Centre to the Bugis area, the Ministry
of National Development (MND) said yesterday.

The site, which will be launched for sale in June, must have some area set
aside for offices and hotels, but the rest of the space can be put to other
uses such as residential.

Bids will likely come in at $750 to $850 per sq ft per plot ratio (psf ppr)
for this site, said Mr Nicholas Mak, the director of research and
consultancy at Knight Frank.

Apart from this plum plot, there are a few other attractive residential
sites, consultants say.

One is a new site at the corner of Woodleigh Close and Upper Serangoon Road,
next to the Blossoms@Woodleigh condominium. It is near the yet-to-be-opened
Woodleigh MRT Station on the North-East Line.

About 270 homes can be built on the 1.07ha plot, to be launched for sale in
April.

Another choice site is at the junction of Lorong 2 Toa Payoh and Lorong 3
Toa Payoh, within walking distance of the Braddell MRT Station.

This 1.4ha site can host 535 homes and will be put up for sale in February.
It was previously on the reserve list for developers to indicate interest,
but it saw no takers. It has now been moved to the confirmed list to be
launched at a fixed date.

Mr Li Hiaw Ho, the executive director of CB Richard Ellis research, picked
out two more sites as being among the ‘best of the crop’.

The first, at Bishan Street 14, has an area of 1.2ha and can host a 535-unit
project.

The other is a 1.19ha site at New Upper Changi Road.

These four residential sites may fetch prices in the range of $400 to $600
psf of potential gross floor area, Mr Li estimated.

Mr Mak has noted, however, that apart from the Woodleigh Close site, which
is new, the other plots have been available for some time on the
Government’s reserve list.

Reserve list plots will not be launched for sale unless a developer comes
forward to bid for them. Usually, choice plots on the reserve list will move
quickly.

Those that remain to be ‘recycled’ for the next round of land sales are
generally less attractive.

This time, however, the ‘recycled’ plots are quite plum, said Mr Mak.

If even these sites cannot find takers, ‘maybe developers already have
enough on their plates’, he said.

In that case, perhaps the Government is offering more sites than the market
is ready to absorb, he suggested.

For private housing alone, the MND has added 12 new sites to its land sales
programme, including the Woodleigh Close plot.

Others include sites at Choa Chu Kang Drive, Tampines Avenue 1, Upper Changi
Road North, Chestnut Avenue, Upper Thomson Road, Sengkang West Avenue and
Sembawang Road.

There are also three executive condo sites, as well as a plot for landed
homes at Sembawang Greenvale Phase 2. This landed parcel will be put up for
auction in February to cater to smaller investors.

Outside land sales, the Government will also offer about 110 private housing
units, including 90 service apartments at one-north. It will also provide
120,000 sq m of commercial space.

Law Society moves to tackle touting

Panel to look into issues of touting for conveyancing work, entrapment

By Chong Chee Kin

THE Law Society is moving to tackle the hot-button issues of touting in
property deals and entrapment, even as lawyers say fees paid to agents have
been going up.

The lawyers note that lawyers who pay such referral fees get a lucrative
payoff. Their comments come in the wake of the suspension of three lawyers
on Tuesday.

They had been caught offering referral fees to a private investigator
pretending to be a property agent. The private eye was hired by unknown
lawyers.

But even as the Society said it is moving to tackle these issues – touting
and entrapment – many lawyers say its task is fraught with difficulties.

Under the law, lawyers are guilty of misconduct if they engage in touting
practices and pay an agent to refer a client to them in return for a fee.

But lawyers told The Straits Times it is prevalent.

The going rate for such fees now is about $500 – from about $150 five years
ago – for each conveyancing file which brings in about $2,000 per
transaction to the lawyer.

A lawyer with 10 years’ experience said: ‘Each property file is worth about
$2,000 and if an agent can bring in 20 files a month, that’s easily $30,000
- enough to cover rental and staff costs.

‘The agents will tell you: ‘I have a conveyancing case, how much will you
pay me?”

There is thus significant money to be made, especially if the agent can
bring in the cases in bulk.

The Law Society said moves are already afoot to tackle touting. A spokesman
said the practice is difficult to detect, especially when there is ‘an
absence of evidence from the parties concerned’.

But an ad-hoc committee had been appointed to see if ‘current detection and
enforcement procedures could be streamlined and enhanced’.

The committee will also look into the issue of lawyers ‘privately engaging
investigators to detect suspected unethical conduct’, the spokesman said.

A decision to set up the panel came in the wake of a failed attempt in late
2006 by lawyer Rayney Wong to stop a disciplinary committee which had
investigated him for touting.

In throwing out his request at that time, Justice V.K. Rajah also called on
the Law Society to deal with the problem of lawyers hiring private
investigators to entrap competitors they suspect of using touts to drum up
business.

Yesterday, the Law Society’s spokesman said that once the recommendations of
the committee are out, it will tackle the question of whether it should take
on a greater investigative role.

Many lawyers see this as a solution to touting. But they are split over the
issue of an absolute ban on referral fees.

The sole proprietor of a law firm and a litigator of 10 years said: ‘I
accept that it is an offence, but to me it’s business. If an agent brings in
business for you, wouldn’t you give him a commission? A car salesman would
be paid a cut for every car he sells. But in our case, it is against the
law.’

Mr Mark Goh, of Mark Goh & Co, disagreed. ‘The legal profession cannot be
equated with a commercial company…We owe a duty to our clients and
society,’ he said.

Allowing such fees can open another can of worms, said sole-proprietor
Patrick Tan of Patrick Tan & Associates. ‘There’s nothing to stop another
lawyer from handing out a higher fee to an agent to get the file. If one
gives $200, another might give $500.

‘Where does it stop?’

RESPONSE TO TOURIST BOOM

More hotel plots up for sale next year

TEN hotel sites will be made available next year to meet demand from the
fast-growing tourism sector.

Three are new sites in the Government’s land sales programme for next year,
while the others are carried over from last year’s programme, said the
Ministry of National Development yesterday.

One of the new sites is between Balestier Road and Ah Hood Road, near the
Sun Yat Sen Nanyang Memorial Hall. It had been put up for sale before but
there were no takers, so the Government enlarged the parcel to include a
park and an adjacent land plot.

The other two new sites are downtown. One is at the corner of Gopeng and
Peck Seah Streets, and can host 330 hotel rooms. The other is at the corner
of Clemenceau Avenue and Havelock Road, and can accommodate 260 rooms.

The Balestier Road site, which can hold 675 rooms, is on the confirmed list
and will be released in March. The only other hotel site on the confirmed
list is at the junction of Race Course and Bukit Timah Roads. It will be
launched for sale in February.

All the other hotel sites on sale, including the Gopeng Street and
Clemenceau Avenue plots, are on the reserve list. This means they will not
be launched for tender until a developer puts in an acceptable bid.

The other reserve list plots are at Victoria Street, New Bridge Road,
Kallang Road, Jalan Bukit Merah, Jalan Besar and Bernam Street.

US housing slump could last up till early 2009

NEW YORK – HOUSING markets from Punta Gorda in Florida to Stockton in
California will crash and suffer price drops of more than 30 per cent before
the housing crisis is over, a report from Moody’s Economy.com said
yesterday.

The United States housing recession will continue up till early 2009, said
the report, co-authored by Mr Mark Zandi, chief economist, and Ms Celia
Chen, director of housing economics.

The report paints a worsening picture of the housing sector, which is in the
midst of its worst downturn since World War II.

While activity will stabilise in 2009, it will not be until 2010 before a
measurable improvement in sales, construction and pricing will emerge, the
report said.

House prices are forecast to fall 13 per cent from their peak up till early
2009. After accounting for incentives home sellers are offering buyers,
effective declines peak-to-trough will total well over 15 per cent, the
report said.

Punta Gorda, Florida, and Stockton, California, are the hardest hit markets
in the US, with price declines from peak-to-trough forecast at 35.3 per cent
and 31.6 per cent, respectively. ‘This is the most severe housing recession
since the post-World War II period,’ Mr Zandi told Reuters.

Home sales, however, should hit a bottom early next year, which would mark a
40 per cent drop from peak-to-trough.

‘The housing market’s most fundamental problem is it is awash in unsold
inventory,’ the report said.

In addition, the housing downturn will take a large toll on the rest of the
economy.

During the height of the boom in 2004 and 2005, housing contributed nearly a
percentage point to annual real gross domestic product growth.

MND moving to cool private property prices, say analysts

Friday . December 7, 2007

Cheow Xin Yi
cheowxinyi@mediacorp.com.sg

In what some see as its most aggressive move yet to rein in bullish private
residential property prices, the Government has acted to increase supply
particularly in the suburban, middle-class market.

In its closely-watched, half-yearly Government land sales (GLS) programme
for the first half of next year unveiled yesterday, the Ministry of National
Development (MND) pushed out 37 sites, of which 21 are residential.

The ministry said this supply should meet demand “over the medium term and
support the continued growth of our economy”.

While the total number of sites released is marginally fewer than the 41
under its previous land sales programme in June, Mr Nicholas Mak, director
of research and consultancy at Knight Frank, pointed out that more
residential and commercial units would be generated this year.

The potential yield is 8,250 residential units, up from 8,000 units
previously, while commercial sites could generate 410,000 sq m of gross
floor area, compared to about 354,000 sq m in the second half of this year.

“The good thing is, the commercial sites are predominantly on the reserve
list, which would only be triggered when there’s genuine demand,” said Mr
Mak.

There are eight residential sites on the “confirmed list” – for land parcels
that are tendered regardless of whether developers initiate interest. This
is similar to previous figures, indicating that the Government is still
quite aggressive in pushing out residential sites, he said.

In particular, Mr Colin Tan from Chesterton International thinks the move is
targeted at investors who have played up the suburban market to “ridiculous”
prices topping $1,000 per square foot, thus pricing out the genuine HDB
upgrader.

“The message is clear: Don’t play with the suburban market,” Mr Tan said.
“Now, investors will think twice before paying that kind of price, and it
should become more affordable.”

The release of confirmed sites in Yishun, Toa Payoh and Choa Chu Kang would
“help rejuvenate existing HDB towns while meeting the demand of HDB
upgraders for private housing”, said the MND.

Executive director of CBRE research Li Hiaw Ho noted that the placing of
four Executive Condominiums (ECs), three of them new sites, on the reserve
list was another reflection of the Government’s concern for the middle
class.

Sales of ECs are subject to income ceilings, which means developers would
have to keep their prices under control for a certain group of buyers.

While some industry watchers believe the supply initiatives are a move to
help ease the burden of the middle class – hard hit by inflation lately – it
could, on the flipside, lead to a supply glut, should the economy slow down.

“We’ll see the effects in 2009. If the economy slows down and demand
weakens, it’ll accelerate the happening of the glut,” said Mr Mak.

Mr Tan added that external economic concerns – such as the US sub-prime
mortgage worries and high oil prices – have already made the market more
cautious generally.

“If you look at indicators in the last quarter, prices are still rising, and
in that sense, you should be aggressive with the supply. On the other hand,
since then, lots of things have also happened and market sentiment has
changed,” he said.