Singapore’s official private home price index slid 5.7% in Q4 2008 over the preceding quarter. For full-year 2008, the index fell 4.3%, reversing a 31.2%  increase during 2007. This is the Singapore real estate market’s worst performance  since Q4 1998 and property consultants are predicting a further decline of 10-20% in 2009, with luxury homes continuing to be the worst hit, as in 2008, this sector having seen the biggest increases over 2006/7..

‘The bid-ask gap is very high; any buyer that comes in now wants to make sure he’s buying at very attractive prices to cushion against future risk. As a result, most transacted prices are quite distressed,’ said DTZ executive director Ong Choon FahBT understands buyers are looking at prices at least 20% below Q3 2008 levels before they are willing to commit.

URA’s non-landed private home price index for Core Central Region (CCR) fell 6.3% quarter-on-quarter in Q4, or a full-year drop of 5.5%. CCR includes the prime districts, financial district and Sentosa Cove. In the Rest of Central Region, the price drop was 5.5% for Q4, and 4% for the full year. Outside Central Region, a proxy for suburban mass-market locations, suffered the smallest declines, of 4.7 % in Q4 and 1.6% for the  year.

The declines in URA’s indices were far smaller than the price drops estimated by property consultants, probably due to lack of sales volumes, with sellers continuing to hold out for unrealistic prices. CB Richard Ellis said that last year, average prices of new luxury homes under construction fell 30 to 35% for prime districts 9 and 10, while those in Marina Bay and Sentosa Cove eased 10-13%.

URA’s price indices are also weighted according to the moving average mix of transactions for the preceding 12 quarters, and this tends to make changes in the indices more muted during sharp market swings.

For this year, JP Morgan analyst Chris Gee said: ‘The critical factor that will affect private home prices in 2009 - probably more importantly than the economy and jobs market - will be banks’ financing of property. Banks seem happy to lend to the right type of buyers, but they’re more conservative on valuations and tighter on loan-to-value.’

Smaller property developers have already started to cut prices. ‘Among bigger developers, some are restructuring their portfolios and re-evaluating their risk positions,’ DTZ’s Mrs Ong noted.

A seasoned developer pointed to a diversity of strategies among developers, according to their financial strength, profit margin for each project and their view of when the recovery will take place. ‘Some will cut and sell; some will package things that effectively give more discounts; some will lease instead of selling; some will just sit it out and wait for better times.

‘Projects will be slowed down or delayed, stretching out the supply coming into the market, which in itself is a regulating mechanism,’ he said.

In the public housing segment, the Housing & Development Board’s (HDB) resale flat price index still inched up 1.5 per cent quarter-on-quarter in Q4 to scale a new peak. But this was slower than the 4.2% rise posted in Q3.

ERA Asia Pacific associate director Eugene Lim said: ‘We’ve been seeing more transactions with decreasing cash-over-valuations (COVs). The days of transactions with above $50,000 COVs are over.’

He is predicting a sub-1% rise in the HDB resale flat price index for each of Q1 and Q2 this year. ‘If the recovery takes longer, we may see the price index flatten in H2 2009 before decreasing, if the situation worsens.’

Knight Frank director Nicholas Mak predicted a 5 to 10% correction in HDB resale flat prices this year, as the weakening economic conditions filter into the HDB market.

ERA’s Mr Lim noted that ‘in uncertain times, home buyers go for the ’safer’ option of HDB flats to ease their financial burden’. He estimated 30,000 to 31,000 HDB resale transactions were done in 2008 - surpassing the 29,436 in 2007.

As for the private housing sector, CBRE predicted developers may sell 5,000-6,000 units in 2009, as falling prices boost take-up. It put the figure for last year at 4,300 to 4,400 units - just 30% of 2007’s record volume. Sales also slowed in the secondary market. CBRE estimated about 7,400 to 7,600 resale deals were done last year - against nearly 21,000 transactions in 2007. The 1,600 to 1,650 subsale deals it estimated for 2008 were also a far cry from the 2007’s figure of 4,863.

URA press release

Singapore’s East Coast Road is renowned for being lined with large houses, condominium apartments and famous food and beverage outlets. Highly sought after in the 1970s for its suburban tranquility, this neighborhood looks set to enter a real estate boom with mounting speculation on the construction of an underground LRT (Light Rapid Transit) extension of the MRT(Mas Rapid Transit) line.

There have been no official reports to confirm the actual location of where the LRT line and its stations shall be built within this vicinity. Marine parade is the only other viable location but it stands upon reclaimed land. Regardless, developers and owners remain optimistic that East Coast Road shall be slected.

East Coast Road lies between the Singapore Changi International Airport, the Singapore Expo and both the new and existing CBDs (Central Business Districts) with 3 convenient access routes to the ECP (East Coast Parkay) Expressway. The convenience of proximity, as well as the quality of residential properties at this location make it the ideal choice for locals and expatriates alike.

The 1920s Through to the 1950s

This was once a quiet 2-lane estate road lined with coconut trees and some of the largest colonial houses. The end of World War One saw the rise of 2 and 3 story terraced shop-houses between the 1920s and the 1950s at the Western end called Katong.

Spanning a mile from East to West, this road housed 3 cinemas and a host of of the island’s best local food outlets known as coffee shops. Before the land reclamation that saw the birth of Marine Parade and the East Coast Parkway, East Coast Road lay barely a stone’s throw away from the shoreline. Indeed, this was Singapore’s playground by the sea. In those days, the now defunct Grand Hotel with it colonial charm was Singapore’s only seaside resort hotel.

Today, the Paramount Hotel and the Grand Mecure Roxy Hotel cater to the accommodations of a growing number of business travelers who seek quick and easy transit routes.

The 1960s Through to the 1970s

Apartment buildings started to emerge on the vacant plots of land during the late 1960s through to the 1970s. The introduction of higher property taxes also compelled some owners of large mansions to sell off their properties to private developers who then built even more apartments and smaller houses. It was during this period that a bowling alley and 2 shopping centers were built.

Singapore’s East Coast Road used to have 2 wooden ramshackle fishing villages. These were developed into brick and mortar houses and apartments. Such cultural legacies could not be conserved because of their squalid condition.

The 1980s Through to the New Millennium

This era saw large mansions being torn down and redeveloped into semi-detached and terraced houses. The demand for better housing also saw the start of en bloc sales of clusters of mansions that were then transformed into exclusive 4 and 5 story condominium apartment buildings.

The bowling alley was replaced by another condominium apartment complex, 3 more shopping centers shot up and 2 hotels chains set up shop on East Coast Road. With the exception of conserved shop-houses, real estate developers avidly seek en bloc sales of old apartments and houses from which to redevelop luxury condominium apartment complexes.

Projected Jump in Real Estate Value

As liquidity remains a problem during this time of economic downturn, only the most stalwart and optimistic developers continue to procure and redevelop land parcels acquired from en bloc sales. There are no more vacant plots of land in this area and thus, en bloc sales are the only means available for land acquisition.

The reason for such bullish sentiment at this inopportune juncture is because of the Government’s relentlessness at pushing infrastructural projects to their scheduled completion dates; in particular, the LRT extension that is most likely to run along Singapore’s East Coast Road.

Singapore’s Budget Statement for 2009 is eagerly anticipated. It is seen as pivotal to the outcome of both local and foreign businesses operating here in Singapore. As a matter of fact, it is so important that the Government has brought it forward to January 2009. The policies laid down in this Statement shall indicate the Government’s response in relation to the bleak world economic forecast for the year 2009.

Addressing a recent partisan assembly, Prime Minister Lee Hsien Loong announced that Singapore’s economy could possibly be negative next year. With the threat of slowing economic growth looming ominously on the horizon, PM Lee revealed the Government’s intention in expediently adjusting financial and economic policies to meet the global economic downturn by releasing the Budget Statement one month ahead of schedule.

Expedient Response is Vital to Real Estate Value

Singapore’s ability to quickly respond to changing world economic conditions has done much to stabilize local real estate value. This was evident during the SARS epidemic and the Asian Financial Crisis. Back then, the Budget statement had also been adjusted to stimulate the economy and support jobs while strengthening the economy at the same time. As the Government was able to minimize businesses casualties, the demand for commercial properties dipped slightly.

Real estate stability here is an incidental result of the Government’s emphasis on helping companies cope with the challenges ahead. This not only safeguards jobs but in so doing, ensures that industrial, commercial, and residential occupancy rates remain at an optimum in relation to the economy.

As was previously projected, real estate value is not expected to see a dip beyond 10% in the coming year ahead. It is speculated that the Budget Report 2009 shall further consolidate this position in the face of weaker tourism and domestic exports.

Market Indicators

In its weakest showing since September of 2007, the Singapore dollar fell to a low of 1.5253 against the US greenback. As Singapore is heavily dependent on tourism and trade, a weaker Singapore dollar is seen as positive direction in securing competitiveness and maintaining economic stability. The MAS (Monetary Authority of Singapore), which plays a key role in regulating and adjusting its monetary policies is also expected to bring forward its policy review to further boost Singapore’s competitiveness as and when necessary.

In breaking news, Las Vegas Sands Corp is reported to have announced that it has raised enough funds to complete construction of the Marina Bay Sands. It says that it is halting its Macau and Las Vegas projects and therefore can proceed with Marina Bay Sands without assistance from the Singapore Government. The continuance of this development amid worldwide economic uncertainty highlights confidence in both local commerce and real estate value.

And in other local news, the government has announced that it will enhance schemes to help businesses here to secure loans from banks. Finance Minister Tharman Shanmugaratnam was cited as saying that the government will be announcing ‘enhancement of loan schemes that will involve risk sharing with the banks so that they maintain access to credit on the part of our companies’. As a point of note, the Government is more than able to do this as all the local banks in Singapore are semi-Government institutions.

Existing Policies in Place

Finance Minister Tharman Shanmugaraynam also addressed the issue of Singapore’s budget deficit for the year 2008. He was reported as saying that this deficit was expected to triple to over S$2.4 billion. Although this is much higher that what was initially expected by the Government, Tharman attributed this to ‘higher infrastructure costs, additional spending on procreation measures and lower revenues collected”.

Tharman reiterated the government’s stance on raising expenditures that will facilitate a more expansionary budget given the current economic slowdown. The funding for this deficit shall not come from trimming Government spending or raising revenues. He affirmed that the funding for this deficit shall come from last year’s S$6.4 billion Budget surplus. He maintained that ‘the larger deficit is an appropriate fiscal stance in the context of an economy that has entered a slowdown’.

History has shown that such Government policies have been very effective in countering economic slowdowns and buffering the impact of economic recessionary waves. Most countries in the region cut down on costs and brace themselves to face economic recessions, and then struggle to recover throughout the aftermath of such recessions. Singapore builds itself up during such periods in preparation of the conclusion of economic recessions.

Singapore’s proactive response by stimulating the economy and providing aid to businesses saves companies and jobs and in so doing, supports local the real estate sector. For when far less companies go under, occupancy rates remain high and, supply and demand for real estate remains stable.

Singapore’s Duxton Hill is renowned as a good place to stay while on a business trip to Singapore where the Berjaya Hotel Singapore is but a stone’s throw away from busiest business center. Unlike most other hotels in the CBD (Central Business District), it sits in a neighborhood with building structures reminiscent of the early 1900s.

Who would have ever thought that a nutmeg plantation would one day be transformed into one of the most sought after niche real estate properties in Singapore? This is even more incredulous given that this plantation was later sold off and regressed into a crime-riddled slum. But thanks to the Urban Redevelopment Authority of Singapore, all the shop-houses in this area were selected for conservation and allocated for commercial use.

From it’s humble beginnings as a modest nutmeg plantation with nearly 2,000 trees, Duxton Hill has come a long way. No longer do people reside above the terraced shop-houses that comprise this small estate. A segment of these shop-houses have been procured by a hotelier while the rest of the units have been taken up by both day and night time businesses.

After Hours Entertainment

Duxton Hill is lined with 2 rows of small pubs. These refurbished double and triple-storey terraced shop-houses provide the ideal stopover for those that seek relief from a maddening day at the office. From secretaries to upper management, these individuals form the 1st shift that patronize these pubs between 5 to 7 PM - happy hours.

As “clubbing” (patronizing pubs) has become a part of the lifestyle of Singapore’s elite, the ambiance of these outlets also attracts the young and affluent in Singapore’s privileged citizenry. This group of patrons make their appearance well into the night and hop from pub to pub until the wee hours of the morning where they have to be coaxed to allow pub owners to close shop. The variety of pubs in this location makes it more convenient to do this. But the night scene is not the only thing that Duxton Hill is renowned for.

Niche Restaurants

Also within this alcove on the outskirts of town, you will also find some exceptional restaurants. The Universal is perhaps the most famous restaurant reputed to serve some of the finest European dishes anywhere on the island.

Another well known restaurant would be the BROTH Bar Restaurant. BROTH, which stands for Bar Restaurant On The Hill, serves classic and novel Australian cuisine. They also have a wide selection of Australian and international wines.

The Uluru is another Australian restaurant that specializes in gourmet beef cuts and steak grills that reach 1,500 degrees C. These are but a few of the restaurants found in this area.

Office Space

Businesses such as architectural and advertising firms have flourished here at Duxton Hill. These pre-World War 2 units possess a distinctive charm unlike any office in a modern skyscraper. Such units are tastefully decorated to cater to the image that companies want project to their clientele.

A part of the CBD and yet distinctly different, Singapore’s Duxton Hill stands out as the location of choice when one seeks to set up shop and make an impression that lasts.