SIBOR vs SOR mortgage loans

This is going to be quite technical, but here goes:

SIBOR (Singapore Interbank Offered Rate) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Singapore wholesale money market (or interbank market).

SOR (Swap Offer Rate) is the effective cost of borrowing SGD synthetically through borrowing USD for 3 months and swap out the USD in return for SGD for the same maturity.

The Association of Banks in Singapore is the fixing authority for both rates.

Some of the differences between the two:

1. SIBOR is determined by the demand and supply of funds in the Singapore interbank market, whereas SOR is more influenced by external factors such as USD interest and exchange rates.

2. SOR tends to be more volatile because exchange rates and USD money market rates are more volatile.

3. SOR has been relatively lower than SIBOR for over a year, but is less stable. For example the 3-Month SIBOR is currently 0.44% while the 3-Month SOR is 0.27%.

As to which one you should take, if you’d like to go for the cheapest rate you can consider the SOR pegged loan, but if you want a rate that is less volatile you can consider the SIBOR one.

But honestly, I think the difference between the two is marginal. Also, no one can predict where these interest rates will go in the future or what the correlation between the two will be like.

[ This article is extracted from Propwise, Singapore ]

Singapore Property – The Top 5 Highest Yielding Projects

In light of the recent round of measures that imposes a harsh Seller’s Stamp Duty for a lengthy period of time (16%, 12%, 8% and 4% for years 1, 2, 3 and 4 respectively), the focus of property investors will now have to shift from the short term to the long term, and from capital gains to rental yield.

With the help of the Analytics team at Propertyguru, I have put together a list of the 5 projects in Singapore with the highest gross rental yields. Getting this list involved going through Propertyguru’s entire database of listings. The methodology for the gross rental yield calculation was to take the average annualized asking rental per square foot for apartments in each project and dividing that by the asking sale price per square foot. Note that we do not include any other ancillary costs such as maintenance fees, so the net rental yields will be lower. Only projects with listings both for sale and rental were included in this exercise, and room rentals were excluded.
And now the list of the top 5 highest yielding projects (drumroll please)…

Sims Green

In fifth place is Sims Green, a 99-year leasehold development located at Lorong 27A in Geylang. At an average asking price of $577 psf and rental of $2.59 psf/month, you get a gross rental yield of 5.4%. Completed in 2004 and situated near Aljunied MRT station, the 108 units here enjoy condo facilities such as swimming pool, BBQ pits, gym and playground.

Lilydale
Next is Lilydale, yielding 5.6% with an average asking price of $564 psf and rental of $2.61 psf/month. A 99-year leasehold development located at Yishun Avenue 6, it is a few minutes’ drive to Yishun MRT Station and is also close to Seletar Country Club and Orchid Country Club. Completed in 2003, residents of the 318 units enjoy condo facilities such as a swimming pool, BBQ pits, gym, tennis court, multi-purpose hall, and playground.

Lilydale

Atrium Residences

In third place is Atrium Residences, a freehold development located at Lorong 28 in Geylang. Close to 10 minutes walk from Aljunied MRT station, this project has a gross yield of 5.6% with an average selling price of $674 psf and asking rental of $3.16 psf/month. It is a relatively new development (completed in 2009), comprises 142 units and has facilities such as a swimming pool, BBQ pits, gym, and clubhouse.

People’s Park Complex

The second highest yielding project in the Propertyguru database is People’s Park Complex, which is yielding 5.7% with an average asking price of $812 psf and rental of $3.86 psf/month. It is an old 99-year leasehold development (completed in 1970) that is in a prime location just opposite Chinatown MRT Station.

People's Park Complex

Wing Fong Mansions

And the highest yielding development is Wing Fong Mansions – at an asking price of $626 psf and monthly rental of $3.03 psf, it has a gross yield of 5.8%. A freehold development located at Lorong 14 in Geylang, it is minutes away from the upcoming Mountbatten MRT Station. Completed in 1997, it comprises 218 units and has facilities such as a swimming pool.

From my observation, the highest yielding projects tend to fall into the following categories: 1) Projects in further away (e.g. Yishun) or unpopular (e.g. Geylang) areas that are located close to MRT stations and 2) Centrally located leasehold projects that are very old.

The key to getting a high rental yield is a low per square foot price (you can see that all the projects in the top 5 have a psf of less than $1,000) combined with good “rentability” (close to MRT, centrally located, good facilities). If you’re focusing on rental yield (as opposed to just capital appreciation), prime projects in Orchard or Marina Bay are unlikely to be your ideal targets.

[ Article extracted from propwise ]

Restoring SANITY to property prices

When the latest property measures were unveiled on Jan 13, it took most market watchers by surprise, mainly because we had been reassured several times that the previous rounds of measures announced on Aug 10 had been effective.

Reaction from the local market has been negative but not too severe, as shown in a survey by property blog propwise.sg. Were these new measures necessary? Definitely.

At the macro level, Singapore’s real estate is far from being overleveraged. According to data from the Monetary Authority of Singapore (MAS), as at the end of October last year, total housing loans amounted to $109 billion and the total number of completed private housing units stood at 256,513 units.

This included private residences, from good-class bungalows down to shoebox apartments. Assuming an average value of each unit at $1.1 million, the total value of completed private homes is $282 billion; that is, the loan-to-value ratio is a relatively low 39 per cent islandwide.

However, at the micro-level, pockets of risks exist.

Table 1 shows a sampling of the record high prices achieved last year.

Table 1 - Projects outside the city centre

The Vision was launched in the first quarter of last year and its “higher-than-the-neighbourhood’s” transacted psf prices helped to lift the general valuations in the West Coast. The highest price achieved of the 199 units that were transacted in Q2 last year was $1,266 per sq ft (psf). The average price for The Vision in Q2 2010 was $1,019 psf versus the neighbouring developments Blue Horizon (sharing a common boundary wall with The Vision) at $856 psf and Westcove Condo across the road at $689 psf. The highest price achieved in The Vision is almost double the average price achieved in Westcove Condo that quarter.

The same story unfolded itself across the outskirts throughout 2010: Serangoon, Pasir Panjang, Bukit Panjang, Pasir Ris, Yio Chu Kang, Ang Mo Kio, Yishun and more.

A most recent example is The Lakefront Residences in Jurong West launched in Q4 2010. Of the 167 units transacted, based on the latest Realis data, the highest price achieved was $1,362 psf and the average was $1,074 psf. Just 100m away, the older condominium Lakeholmz, at $681 psf on average, is half of the peak price at The Lakefront Residences (without considering the sizes of apartments, just comparing psf values for the street block). Even if we topped up the 10-year expired lease tenure for Lakeholmz to 99 years and added a generous construction cost of $250 psf, it would be difficult to place a value for a new apartment in that street at above $1,000 psf.

So it would seem Singaporeans value “newness” with a very high premium? Wrong. When we compare the prices of the still-under-construction Caspian (which shares a boundary wall with The Lakefront Residences), at an average of $793 psf in Q4 2010, we see that the newness value is not sufficient to explain the prices achieved at The Lakefront Residences.

Within two to four years, both projects will be delivered to buyers brand new. So why did The Lakefront Residences achieve an average price that is 35-per-cent higher than Caspian’s? I am obliged to add two other factors to justify the premium: The “showflat wow” factor and the “showflat peer pressure” factor.

Pushing up the PPI

With premium prices achieved during property launches at 20- to 50-per-cent higher than neighbouring average psf prices and multiplied by the number of transacted units, it is no wonder that the Private Property Index (PPI) kept rising though 2010.

The PPI rose in Q4 2010 despite August’s cooling measures. It’s a good thing the URA’s overall PPI is weighted so that transactions in a few launch projects do not overly distort the PPI. Otherwise, the rise of the Q4 2010 PPI would not have been a mere 2.7 per cent.

And that led us to the latest round of measures.

Apart from the overall islandwide PPI published by URA, investors can refer to URA’s website for transactions in specific projects and compare prices so as to make better decisions. However, of late, most investors do not seem to be doing their homework and have purchased in large numbers at record high prices in the suburbs across Singapore.
Who might be the next target?

Investors make up one of several constituents in a property transaction. The past few rounds of measures have already hit investors hard enough. In the next set of measures, if any, the other parties who may be targeted are the developers, the sales agents, the mortgage lenders and valuers.

Many investors and analysts have pointed their fingers at foreign investors and their “hot money” causing Singapore’s real estate to overheat.

Yet the new launches that set record-high prices in the suburbs do not attract foreigners as much as they attract Singaporeans. Table 2 shows why we should not blame hot foreign money for bringing on the latest round of measures.

Table 2 - Foreigners only make up a small percentage of buyers at new launches

On average, about 25 per cent of residential units are purchased by foreigners. These projects listed in the table are clearly well below the national average. Perhaps Singaporeans are the ones pouring hot money into property.

I would rule out targeting developers unless there are issues of misrepresentation. Otherwise, developers do what they do – acquire land, build showflats, and sell homes.

The sales agents have come under the new Council of Estate Agents and are already facing tighter operating parameters. Again, unless there is bad practice or misrepresentation, I do not think they will be the next target.

As for the mortgage lenders, when I made enquiries about loans for investors buying at these record high prices, the answer invariably was: “Oh, valuers matched developer’s selling prices.” Of course, as long as there are valuers who can sign off on a certain value for a property, banks are eager to lend.

How might valuers agree to value a new launch that is priced at 20- to 50-per-cent higher than other transactions in the neighbourhood? One counterargument regularly given to me is: As long as there are transactions in this new launch at this price, the valuers can support valuations at the new highs.

In the example of Caspian above, buyers today would find it difficult to obtain a loan based on $1,000psf valuation. Sellers are also unable to ask for prices above $1,000 psf when prospective buyers are unable to secure loans at that value. However, the same buyer can purchase a smaller unit at the same investment quantum at Lakefront Residences at $1,150 psf with a bank loan attached. I wonder why the discrepancy given that the two properties are side-by-side and both are not completed.

By not taking reference from other similar transactions in the neighbourhood, this means that valuations are justified solely on transacted prices within the new launch itself. Without taking into account the lower values of neighbouring condominiums and the intrinsic land value in the vicinity, this valuation method is a self-fulfilling upward spiral.

Having excluded the foreigners, the developers and the sales agents, we are left with two targets for the next set of cooling measures, if any.

Perhaps one approach would be to require valuers to disclose their assumptions and methods to the MAS and valuations for new launches to take into account values of other properties in the neighbourhood. Banks may be instructed to lend for new launches based on this more comprehensive and inclusive method of valuation.

Furthermore, seeing the strong response to the attractive investment package at Spottiswoode18 this week, I believe tougher measures to restore sanity to the market may not be far away.

[Originally published in Today, this article is authored by Ku Swee Yong, founder of real estate agency International Property Advisor, which provides services to high net worth individuals.]

The key is to look at Demand and Supply

We need good data and solid reference points to navigate towards investment decisions. A good source of raw data, with solid data integrity and consistency of reporting, layered with reasonable assumptions, deep experience and objectively interpreted and analysed will mean the difference between a mediocre investment versus a wildly profitable one.

With several rounds of policy changes imposed on the residential sector within the last 12 months, more investors are asking “What new policies next?”, “Should we divest now?” and “Should we wait a year or two before investing?”

The market is directionless, with indicators pointing in opposing directions: Low holding costs versus low rental yields against a backdrop of prices for mass market residential setting records in Yio Chu Kang, Ang Mo Kio, Pasir Panjang, Pasir Ris, Serangoon, etc, where demand remains strong.
So, what numbers can guide us to a decision?

IPA’s work and discussions involve high-net-worth investors (who may be buyers or sellers at any one time), mortgage lenders, developers, construction firms, institutional funds, private equity players, funds who lend for project financing, equities analysts, etc. Our basis of discussions for the residential market relies heavily on data provided by several sources.

In Singapore, the bulk of raw data comes from official sources. Databases we rely on are: URA Realis, SISV-Realink (whose main data source is caveats filed with SLA), HDB’s announcements and SingStat for population growth, household formation and income.

In the private residential sector, market watchers are very focused on a few key data points:

1. Number of units sold by developers monthly and quarterly, by project

2. Monthly lowest, highest and median prices of each project sold by developers

3. Number of units sold in the primary, sub-sales and resale markets

4. Number of units launched and sold, number of units launched but unsold

Perhaps this is because the equities analysts require these data sets to gauge the financial health of the listed developers whose stocks they cover — and these analysts are the voices most often heard by financial investors.

The larger listed developers have “investor relations” personnel to liaise with analysts and fund managers. Healthy share-price performances are important for the market’s short term confidence in the developers’ financial strength and perhaps also allow the developers access to more favourable credit terms.

In fact, the same mentality applies to data for public housing: Analysts are focused on selling prices, COVs, BTOs, DBSSs, launch prices, how many units launched and sold, over-subscribed or not, etc. Few enquire about the net new supply of HDB flats, which is the new supply minus the demolitions due to the Selective En Bloc Redevelopment Scheme (Sers) and other upgrading programmes.

So, which are the data sets that would form a solid basis and reference for a direct real estate investor’s decision making?

None of the above data sets matters as much as rentals, vacancies and real physical demand and supply. Forecasting future rentals and vacancies depends on our view of future demand — physical demand from home users, as opposed to demand based on buy-sell transactions.

Projecting future demand is about as easy as reading tea leaves and cloud patterns. However, we have a lot more certainty when it comes to predicting supply. We can be especially confident about supply that is coming in the next three years as many of the “under construction” condominiums can be completed within 36 months.
Lessons from the recent past

When vacancies are dropping and rentals are climbing fast, we can safely predict that property prices will move up. This was the case in 2006-2008, when tenants were at the mercy of landlords when it was time to renew their leases.

With hindsight, we see that the population increase over the two years of 2005-2006 was about 235,000.

Assuming the new population growth is based on households of four, we would require about 59,000 residential units. The net new supply in 2005 and 2006 was 17,000 residential units. Therefore, we can safely assume that a portion of the new population moved in to take up the vacant units (which at that time was about 7-8 per cent) while others moved in with friends and relatives or sought accommodation in hostels and serviced apartments.

The story continued through 2007 into 2008, when the physical demand for residential units skyrocketed due to the inflow of 438,000 into our population in 2007 and 2008. That period also saw many en bloc sales and HDB SERS projects, followed by demolitions such that the net new supply of residential units was only about 13,000 units.

Now, squeezing 438,000 newcomers into 13,000 new private residential and HDB units is not simple. Vacancies have dropped to around 5 per cent (there is a structural persistent vacancy of around 1 per cent which are apartments or houses which are not in usable condition or are intended for demolition).

Therefore, lesson here is: We need to keep a close tab on physical supply completions.

[ Originally published in Today, this article is authored by Ku Swee Yong, founder of real estate agencyInternational Property Advisor, which provides services to high net worth individuals.]

IMM - 7 Storey Chicken Rice [7th Feb 2011]

The chicken rice is still relatively nice. The white chicken taste slightly better than the brown ones (yiu2 ji1). They're not serving very much choices of drinks though. The favorite coffee and tea are gone. Can give a miss for other side dishes such as the Pork Chop, Prawn roll, ... It does not taste as good as any typical coffee-shop standard.


Verdict... just go for the chicken rice only.

How to Set Yourself Up for Promotion

When are you next up for promotion?

LinkedIn released interesting data recently about the best months of the year to get a promotion. In the United States, the most popular months are January, June, and July. Since June and July are right around the corner, now's a good time to think about how to set yourself up for good news.

Of course, a promotion isn't automatic. You have to prove that you're a problem-solver who is ready to take on more responsibilities, and that you've worked hard to deserve that next step.

Here are a few areas to focus on that will help you climb the corporate ladder this year:


1. Build relationships.

Just like most job opportunities occur through referrals, your next promotion is likely to be influenced by how well your colleagues perceive you and your work. In addition to your smarts, problem-solving abilities, and an accomplished track record, your relationships within the company will help pave your way to the next level.

[See How Perfectionism Hurts Your Career.]


2. Demonstrate your value to the company.

In as much detail a possible, keep a record of how your efforts have helped the company. Take note of all of your accomplishments as they happen and quantify them. Show how you saved your company $100,000 or reduced spending by a certain percentage, and record these accomplishments regularly. If not, you risk forgetting them. These notes will not only help you build a better case for a promotion, they'll also set you up for a solid transition to a new company when it comes time to take that route.



3. Ask for it.

Don't sit around waiting for your manager to offer you new opportunities. Your career progression isn't his top priority; it's only your top priority. Make an effort to ask for more responsibility and show your company that you're ready and interested to learn new skills. And when you ask for what you want, be prepared with to make a strong case for yourself by showing your value to the company and having co-workers who support you.

[For more career advice, visit U.S. News Careers, or find us on Facebook or Twitter.]


4. Keep score online.

Use online tools to stay in front of your boss, mentors, and colleagues who will help you move along your career path. Experts at LinkedIn suggest one way of doing this is to document the milestones in your career by requesting quality recommendations. If a client praises you for your work on a specific project, ask if they feel comfortable writing you a recommendation on LinkedIn. Not only does it look good on your profile, but your network will be notified of your recent recommendation, which reminds them what a great job you're doing.

 
[ Lindsay Olson is a founding partner and public relations recruiter with Paradigm Staffing and Hoojobs, a niche job board for public relations, communications and social media jobs. She blogs at LindsayOlson.com, where she discusses recruiting and job search issues. ]



[ Lindsay Olson, On Friday 28 January 2011, 0:25 SGT ]

Seven things you should never do on Facebook

 

There are some things that you should never do on social networking site, Facebook. Ever. (AFP file photo)

1) Never settle for the default settings

The people behind Facebook are keen for you to share your details with the world. The more you share, the more people you connect to, the more people want to sign up. However, sharing everything with all and sundry isn’t a good idea. To check and opt out of the recommended settings, open your Facebook page, click on ‘Account’ in the top right of the screen and then ‘Privacy settings’.

The ‘Recommended settings’ mean that your status, photo, posts, bio, favourite quotation, family and relationship details are shared with everyone. Photos and videos you’re tagged in, religious and political views and birthdays are shared with Friends of friends. Permission to comment on your posts, places you check in to, and contact information are shared with Friends only.

Change all to Friends only, and you’re safe from the prying world.

2) Never agree to have yourself listed on search engines

Telling your Facebook mates what’s going on in your life is one thing, but letting any old Tom, Dick or Harriet see your Facebook page via a web search is another.We would recommend opting to never have your Facebook details shared with other search engines.

To make sure you aren’t go to your Facebook page, ‘Account’, ‘Privacy Settings’, ‘Apps and websites’, then ‘Public Search’. De-tick the ‘Enable Public Search’ button.

3) Never put your address and phone number on Facebook

Unless you want app developers knowing where you live and how to contact you we wouldn’t recommend putting any real details in to Facebook for the time being. That means no home address and no phone number.

4) Never let apps lie dormant

One for the advanced Facebook user: Never let an app continue to suck your information once you’ve done with it.Remember the days when you played Zombies or maybe Vampires? Well those apps are most likely still active on your account and sucking in your personal data. Scary, huh?

Nip over to your Facebook page, go to ‘Account’, ‘Privacy Setting’ and then ‘Apps, games and websites’, and remove the ones you don’t want.

5) Never let your mum see your tagged photos

You’ve had one too many drinks and been tagged for all your friends, colleagues and family to see you not looking too hot. Not good. To avoid this, go to your Facebook page, ‘Account’, ‘Privacy Settings’, and make sure Photos and videos you’re tagged in is set to Friends only.

Taking this to the next level, you can also block individual people on top of those groups of people. Go to ‘Customise settings’, ‘Photos and videos I’m tagged in’ and chose to edit settings. Here from the drop-down menu chose ‘customise’ again and then start listing the people you want to hide your photos from.

6) Never give out your date of birth

What’s one of the first security questions you are ever asked when you deal with your bank? What’s your date of birth? And yet here you are giving it away on your Facebook page for all to see. You should never let people see the year you were born.

Go to your Facebook page, ‘Profile’, then ‘Edit profile’. In the first pane (‘Basic information’) chose as to whether you want to ‘Show my full date of birth in my Profile’, ‘Show only day and month in my Profile’ or ‘Don’t show my birthday in my profile’. If you still want birthday wishes go for the second option.

7) Never broadcast that you’re going on holiday

Always be careful about what you say on your status updates and never give out any personal information that you don’t want getting into the wrong hands.

Burglars prey on stuff like the fact that you’ve gone on holiday and left the keys under the flowerpot near the front door and the combination to the safe is…

[ By Stuart Miles & Ewen Boey (Yahoo! News)  – January 28th, 2011 ]