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Property agents battle with the lure of earning easy money

With the growing demand for short-term accommodations, property agents in Singapore contend with the constant struggle of fending off temptations of earning additional income by listing and managing vacant rooms or units on Airbnb.

A property agent who wanted to be known only as William said requests to list and manage units or rooms on Airbnb would usually come from overseas-based property owners or Singapore homeowners who wanted to “skip the hassle of managing (the short-term rental of their units) themselves”, reported Today Online.

OrangeTee & Tie property agent Timothy Chew revealed that he receives about 10 calls in a year from people in need of short-term accommodation.

Most of the calls come from foreigners with short-term visit passes who are here in Singapore for medical reasons or Singaporeans in need of a place to stay since their homes are being renovated.

And while Chew referred them to serviced apartments, some agents would usually refer such clients to homes listed on Airbnb due to the higher rent for serviced apartments.

Agents could also earn a higher commission from such deals, since their agencies are usually cut out from the transactions.

Propnex Realty agent Aaron Lin, however, pointed: “Is it worth it to take such risks? You still have to clean up the place every two to three days.”

Moreover, errant agents could lose their licence, be sacked by their agencies, or worse, brought to court – just like what happened to Savills Residential property agents Yao Songliang and Terence Tan En Wei.

The duo, who were the first to be brought to court for violation of Singapore’s short-term stay policy, allegedly rented out four units at D’Leedon condominium in Farrer Road for short-term accommodations via Airbnb.

With this, Suntec Real Estate Consultants research director Colin Tan said property agents “should know better” than to run the risk of losing their source of livelihood for easy money.

“These people are doing it quite blatantly… it forces the authorities to come down hard on them,” he added.

 

This article was edited by Keshia Faculin.

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Dennis Wee Realty hit by $66k fine, banned from selling overseas property

Dennis Wee Realty (DWR) has been prohibited from marketing or transacting foreign properties until 24 November 2018 and is required to pay a fine of $ 66,000, announced the Council for Estate Agencies’ (CEA) Disciplinary Committee on Wednesday (6 December).

“This is the largest fine meted out so far to a property agency for failing to abide by the regulations related to estate agency work involving foreign properties,” said CEA in a statement.

DWR was convicted of six charges under paragraph 16 of the Practice Guidelines for Estate Agents and Salespersons Marketing Foreign Properties (PGMFP). It states that estate agents appointed by a developer must provide a written advisory to clients that they should conduct due diligence. They also need to highlight the risks involved in purchasing offshore properties, such as the fact that these deals are subject to foreign laws.

In 2014, DWR locally marketed units at the Ibis Budget Hotel in Lymm and Ibis Budget Hotel in Knutsford, both in the UK. The agency had exclusive rights to sell these properties in Singapore. A unit at the Knutsford project was sold for £82,500 (approx. $ 169,645), while that in the other went for £82,500 (about $ 169,645).

In the same year, six sets of investors, including one who acted on behalf of his firm, purchased five units in the Knutsford project and 13 units in the Lymm project. Collectively, they paid £1,641,000 (around $ 3,374,400) in booking fees and as full payment for the units to the UK developers via DWR.

The investors were promised returns ranging from eight to 12 percent for the first three years. Thereafter, the developers guaranteed to buy back the units at a premium of nine to 20 percent over their purchase price.

The six investors received monthly returns for periods ranging from one to six months before payments stopped. Then in early-2015, the developers — Hotel Options (Lymm) Limited and Hotel Options (Knutsford) Limited — went into administration.

 

This article was edited by Keshia Faculin.

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MAS points to risks in the Singapore property market

The recent surge in collective sales poses potential risks to the stability of the local property sector. Hence, market players should proceed cautiously, according to the 2017 Financial Stability Review (FSR) published by the Monetary Authority of Singapore (MAS) on Thursday, 30 November.

“20 residential projects totalling about 2,900 units have been sold through en bloc transactions as of mid-November, up from six in the whole of 2016 and one in 2015. The redevelopment of these en bloc sites (coupled with supply from GLS sites) could potentially add another 20,000 new private housing units. This will more than double the number of unsold units currently in the pipeline within the next one to two years.”

Given that the compound annual growth rate of Singapore’s population has slowed down from three percent between 2007 and 2012 to 1.1 percent in 2012 to 2017 there is considerable uncertainty whether the new supply and the existing vacancies can be fully absorbed by the market.

As of Q3 2017, Singapore’s vacancy level remained elevated at 8.4 percent, with over 30,000 private homes left unoccupied. Although it is slightly lower than the 8.9 percent peak in Q2 2016, it is still higher than the historical average of about 6.5 percent in the past decade.

Hence, MAS is urging developers to take this into account when bidding for land. Likewise, potential buyers should remain prudent when acquiring homes as there is more than enough supply to meet demand. They should also carefully assess their ability to service their mortgage, particularly property investors, as they could struggle to repay their loans if interest rates rise and vacancy levels remain high.

Meanwhile, the central bank revealed that new housing loans have increased to an average of $ 3.5 billion per month over the first ten months of the year compared to $ 2.8 billion in the same period in 2016 due to stronger residential sales.

This article was edited by Keshia Faculin.

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Property trends in 2018

View of private apartments in Singapore.

Here are some important trends that have been driving Singapore’s real estate market this year, which are expected to continue to shape the industry.

1) En bloc frenzy

The collective sales fever in Singapore is anticipated to continue in the next few months. According to Cushman & Wakefield Singapore’s research head Christine Li, 18 existing residential projects worth a total of $ 6.34 billion have been purchased by real estate developers via this method as of 15 November.

This is already the highest figure in a decade, but the overall tally for 2017 is expected to rise even further as more en bloc tenders have just been launched. These include Pearlbank Apartments, which is selling for $ 728 million, as well as Parkway Mansion ($ 138 million), Riviera Point ($ 75 million) and Derby Court ($ 62 million).

2) Price rebound

Aside from government statistics revealing that home prices across the city-state are indeed recovering, the PropertyGuru Property Index shows that asking prices of over 200,000 homes listed on the website have been rising since bottoming out in the first quarter.

In Q3 2017, the index rose 3.2 percent quarter-on-quarter and 1.4 percent on an annual basis to hit 97.1. This reflects growing optimism that developers and homeowners could sell their units at higher prices.

3) PropTech revolution

Property developers here are leveraging on new technology not only to expedite construction, but also to connect end-users across different projects. Another aim is to transform their developments into sought-after destinations for visitors.

For instance, developer M+S recently launched MySphere, the first mobile app here that links businesses, residents and visitors across its two integrated projects – Marina One in Marina Bay and DUO in Bugis. 

Based on a recent JLL report, Asia Pacific’s PropTech scene is outperforming Europe and the US. In fact, 179 start-ups in the region have accounted for 60 percent of global financing to this sector after raising a total of US$ 4.8 billion since 2013.

 

 
  The PropertyGuru News & Views   This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!

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Land sales to hit $14b, a sign of property market resurgence

Pearlbank Apartments in Outram is a 37-storey horse-shoe shaped building that comprises 280 apartments and eight commercial units. (Photo: Colliers International)

More than $ 3.3 billion worth of land deals, including en bloc sales, are expected to be completed in Singapore during this quarter, boosting the total for the whole year to $ 14 billion, reported Bloomberg, citing data from Cushman & Wakefield Inc.

This is the highest figure since 2011, said the property consultancy, adding that this indicates that the city-state’s real estate sector is set to recover significantly by next year.

“Singapore’s residential and office market has passed its inflecion point, embarking on an exciting recovery journey,” said Cushman & Wakefield’s Research Director Christine Li.

“With brighter economic prospects and improved market sentiment in the next two to three years, developers are increasingly sourcing land sites to ride the wave of growth for the rest of the decade.”

Among the top land deals set to be closed in Q4 2017 is the ‘Reserve List’ site in Jiak Kim site formerly occupied by iconic nightclub Zouk. Zoned residential with first-storey commercial use, the site has a maximum gross floor area of 51,231 sq m and can yield 525 houses.

The government is offering the land for a minimum bid price of $ 689.353 million, but Cushman & Wakefield estimates that it could fetch $ 870 million.

Another is the anticipated collective sale of the 288-unit Pearlbank Apartments in Outram for a reserve price of $ 728 million. This translates to a land cost of $ 1,505 psf ppr after factoring in a $ 195 million premium for topping up the lease for the site with a GFA of around 57,000 sq m.

In addition, the 33,358 sq m Reserve List site in Fourth Avenue is expected to yield about 445 homes. The state is selling it for at least $ 448.8 million, but Cushman & Wakefield believes that the winning buyer could get it for $ 505 million.

The public tender for the Jiak Kim and Fourth Avenue sites will close on 5 December, while the Pearlbank Apartments en bloc sale is expected to be transacted by year-end.

Meanwhile, experts from BNP Paribas, Morgan Stanley and UOB Kay Hian forecast that residential prices here could increase by up to 10 percent in 2018.

JLL Singapore’s Research Head Tay Huey Ying is also confident that residential units and Grade A office space in the city-state will remain sought-after by investors next year.

 

This article was edited by Keshia Faculin.

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