MAS relaxes income cap on loans

Interest rates have been flying low for sometime now. At less than 2%, home loan rates are even lower than the 2.6% offered by the Housing Development Board (HDB). Though the latter offers stability despite inflation, the small difference is considerable for the large purchases real estate surmounts to.

And though there has been talks of rate hikes, a sharp increase has not yet happen and while interest rates have plunged to near-zero in 2011 and not surged since then, many have been favouring the floating-rate loans which are pegged to the Singapore Interbank Offer Rate (Sibor). But at the same time, the property cooling measures rolled out in waves by the Monetary Authority of Singapore (MAS) and Inland Revenue Authority of Singapore (IRAS) have restricted the ability of many to refinance their previously high-interest home loans.

MAS has since adjusted the total debt servicing ratio (TDSR) framework as of 1st September, and more home owners and new buyers will find that they now qualify to refinance their loans or service a less taxing one. Now all home owners are exempt from the 60 per cent income cap. Previously, the monthly repayment amount for total household debt can only be of and less than 60 per cent of the household income.

As the goal of this regulation is to prevent a property bubble and to stop buyers from overextending themselves and running into debt, property investors may still find themselves restricted by the rule, but now with the change, less so. The loan threshold may be surpassed if they pass the bank’s credit checks and they also have to commit to repaying at least 3 per cent of the outstanding bank loan within a 3-year period. This may still keep errant property investing in check while allowing those we have done their risk calculations carefully an opportunity to plan their financial growth.

The property market has been gradually cooling for a few years now and while no change downwards or upwards has been sudden nor drastic, and although the authorities say this is in no way a relaxation of the property cooling measures, this is nevertheless a good start on the pathway to building a more structured and robust real estate industry.

Keppel Land develops mixed-use project in Yangon

Photo credit: Keppel Land

Photo credit: Keppel Land

1993 – the year Keppel Land first dipped their toes into the Myanmar property market by breaking ground for the Sedona Hotel Yangon. Now almost a decade and a half into the 21st Century, they are building an even stronger presence in Myanmar as they tie up with Myanmar conglomerate Shwe Taung Group to develope serviced residences and Grade A offices in the heart of Yangon.

More developers are making headwinds in Asean countries such as Vietnam, Laos, Cambodia and Myanmar. The potential for growth in these countries is immense as they rapidly open up to the international business and investment world. As the pool of young, educated professionals grow, so does the interest in these South-east Asian countries.

At Junction City in Yangon, Keppel Land is already in the second phase of developing this massive mixed-use project which will eventually house the 260-unit Sedona Suites and 50,000 square metres of office space in addition to the Pan Pacific Hotel, an entertainment centre and retail spaces.

sedonahotelyangon

Photo credit: Sedona Hotel Yangon

International investment monies have been pouring into the city and country in the past few years, and there are no signs of slowing down as yet. Property developers and real estate companies are capitalising on this population and commercial business boom by providing quality accommodation and business spaces – and rapidly too. The second phase of Junction City is scheduled for construction beginning in 2018 and 33, 400 square metres of Grade A office spaces will be ready as soon as the early part of 2017.

Vietnam real estate market – Young and Dynamic

In many ways and in most sectors, Vietnam could be said to be one of the most dynamic countries in South-east Asia. Its current growth and potential for future growth is becoming clearer to investors and the real estate sector is simultaneously being well-ploughed and sufficiently fertilised.

Riviera-CovePhoto credit: Keppel Land

Keppel Land and Centurion Group are just a couple of major industry players setting their sights and putting in good investment money into Vietnamese real estate. One of the main pull factors are the Vietnamese government being actively pro-business and opening their industries up to foreign investments. They are not simply making essential changes to the law that allows foreign companies the ease of starting up businesses in Vietnam, but also consistently building up infrastructure. With a young and dynamic population growing, the demand for office, commercial and residential properties is set to intensify in the next decade or two.

THe Dalat 1200Photo credit: The Dalat at 1200

Keppel Land alone has 19 licensed projects totalling $2billion in the major cities of Hanoi, Ho Chi Minh City, Dong Nai and Vung Tau with plans to build up to 25,000 new homes in developments such as Rivera Cove. Rivera Point and The Estella Heights and Estella Heights, all in Ho Chi Minh City. The Centurion Group is developing a prestigious country club and private estate situated 1200 metres above sea level and a 40-minute flight away from Ho Chi Minh City – The Dalat at 1200. It is the world’s first country club and private estate to be accredited as an Asian Tour Destination and boasts an 18-hole golf course and expansive stand-alone villas and resort apartments surrounded by nature.

Vietnam will no doubt be one of the Asean economies to watch and with the dynamism it now exudes, growth seems inevitable.

New yields for Japan’s properties

With the rise of the popularity of Airbnb and with travellers flocking back to Japan, property owners are finding themselves in the midst of a  short-term accommodation boom. Hotels may not quite fancy this turn of events, but the property market, property owners and investors could be rejoicing. The number of travellers entering Japan is expected to grow to a whooping 21 million in 2016.

JapanPropertyThose who have been quick to jump on the bandwagon may already be reaping in some profits, as properties in popular districts and in particular those close to major train stations are in strong demand from travellers within and outside of Japan. The Shibuya district in Tokyo is an excellent example. As a major landmark and with connecting trains to 10 different lines (including the important Yamanote Line) and the Narita Express, properties in its vicinity are seeing a huge increase in short-term bookings.

Photo credit: www.japan-guide.com

Photo credit: www.japan-guide.com

And with the Tokyo 2020 Olympics just 4 years away, Japan’s hotel chains could be facing a shortage of accommodation and these privately-owned apartments could very well be a welcome relief to the city and help property owners earn a tidy sum at the same time. The number of platforms out there that connect property owners and travellers are growing and new launches though few will no doubt garner strong interest from investors.

 

Weaker UK pound drives up property market interest

Following Brexit, the Sterling pounds to Singdollar exchange rate have fallen from S$1.85 to S$1.7437 as of last Friday. The 16 per cent fall, since the pound started at S$2.0847 in the beginning of 2016, may be the reason behind a sudden spike in interest in British properties, especially those in London and Manchester.

Photo credit: OrangeTee.  Downtown Apartments in Manchester, UK.

Photo credit: OrangeTee.
Downtown Apartments in Manchester, UK.

Real estate agencies have understandably began to market British residential properties, with a few new launches coming up. These include JLL‘s London City Island apartments and Atria in Slough, and OrangeTee’s Downtown apartments and Property Group’s Affinity Living Riverview apartments in Manchester.

JLL’s London City Island apartments, which is jointly developed by Ecoworld and Ballymore and situated near Canning Town Station, will be launched soon, on 27 and 28 Aug. Also in London, but towards the west, is the 108-studio apartment development Atria, in which Oxley Holdings has a 20 per cent stake. Over the Manchester, buyers will have a couple of options to choose from with the 368-unit Downtown or 318-unit Affinity Living Riverview residential projects. With a variety of apartment types including studio, one-, two- and three-bedders to whet their appetite, buyers may wish to research property and rental potential, neighbourhood popularity, transport convenience and financial longevity before closing a deal.

Property experts caution against the risks of overseas property investment, in particular currency exchange fluctuations and maintenance costs. Despite the lure of the weaker pound, there may also be corresponding concern about the future of UK’s economy and the effect it has on property sales and rental prices.

Investors go big on Batam

Just a decade ago, Batam may not have been the place investors consider fertile for property development. But with the hospitality scene booming and visitors on the rise, more property developers have big plans for the island.

NuvasaBay

Photo credit: Nuvasa Bay project by Sinarmas Land

Besides the usual beach resorts, Batam was previously known more to be a highly-industrialised city. But the Indonesian government has been working on revising land laws for foreign investors and that could be the main push factor behind this recent interest in Batam. Already popular as a tourist destination, Batam’s land prices are also highly competitive, with immense potential for population growth and infrastructure development. Like in emerging markets such as Cambodia and Myanmar, the distance which property prices could travel is much more far-reaching than in saturated markets where property prices are already sky-high.

NuvasaBay3Photo credit: Nuvasa Bay project by Sinarmas Land

Developer Tuan Sing has recently joined the ranks of investors flocking to the island with their development of Marina City, a 85-hectare integrated mixed-development township which will include 2,000 apartment units, a hotel and also retail and entertainment facilities. Other investor favourites include the Meisterstadt project launched earlier this year by Pollux Habibie, the company owned by former Indonesian President B.J.Habibie; and the 228 hectare Nuvasa Bay project by Sinarmas Land, which will eventually yield up to 200 apartments and landed houses. Indicative prices are at $40,000 for a studio or one-bedroom apartment with views of the golf course.

Property experts are certain there will be Singaporean investors willing to take the first step, though the going may be slow initially. They cite the response to Iskandar as an example.

New property taxes for Australian Homes

Purchasing a property in sydney? Be prepared to pay a 4 per cent duty surchage. The rule was put in place on 21 June and will apply to all home purchases in New South Wales, making the state the second in the Country to impose stamp duties on foreign buyers. On top of that,there will also be a 0.75 percent land tax surcharge from next year on.

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New residential property in Hebei

Though the spotlight on some second and third-tier cities have dimmed, some bright sparks remain. Take the 533.3 ha Sino-Singapore Health City in Gaobeidian for example.

GaoBeidian1Photo credit: KSH Holdings

A Singapore-listed real estate and development company, KSH Holdings, has announced plans to launch a 3,050-unit residential project within the Hebei province by the end of 2016 together with their joint-venture partners, Beijing Jia Hua Hong Yuan Investment, Oxley Holdings, Lian Beng Group, Heeton Holdings and Zap Piling.

They continue to see potential for growth and demand for commercial and residential property development, especially as the infrastructure and shift in economics are favouring this particular township. With the high-speed train, Gaobeidian will only be a 20-min train ride away from Beijing. And with the food logistics centre moving to the city, the township is set to be an important hinterland.

GaoBeiDIanPhoto credit: KSH Holdings

The potential residential project launch will see up to 1,600 mass-market units priced between 4,000 to 5,000 yuan per sq m and 1,450 higher-end units priced between 7,000 to 8,000 yuan per sq m. And this is only a fifth of the 18,000 new homes the township will eventually yield in phase 1. The second phase will potentially yield up to 30,000 new residential units. The Gaobeidian development will also include a 40,000 sq m commercial site, a food-safety testing centre and even a mountain-climbing training centre.