singapore property weekly issue 147

8/12/2019 Singapore Property Weekly Issue 147

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Issue 147Copyright 2011-2013 www.Propwise.sg. All Rights Reserved.
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CONTENTS

p2 Real Estate Crowdfunding A Growing Trend?

p8 Singapore Property News This Week

p12 Resale Property Transactions

(February 26 March 4)

Welcome to the 147th edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
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SINGAPORE PROPERTY WEEKLY Issue 147

Page | 2Back to Contents

By Getty Goh & Dr SehHuanKiat (Guest

Contributors)

In the recent Budget Speech, Singapores

Finance Minister Tharman Shanmugaratnam

commented that the government was

studying the potential of equity crowdfunding.To the casual observer, this may appear to be

just another way for start-ups to secure

funding. In reality, the benefits of such a

policy, if introduced, could have far reaching

economic and social benefits. Although I

cannot speak for the other sectors, perhaps Ican share my take on how crowdfunding can

potentially change Singapore as well as the

regionsreal estate landscape.

Real Estate CrowdfundingA Growing Trend?


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A bit of background on crowdfunding

Crowdfunding is defined as the pooling of

funds via the Internet to support projects

initiated by individuals or companies. The

crowdfunding movement started to take off inthe US, with the Federal government passing

legislative acts to promote economic growth.

This was done via the Jumpstart Our

Business Startups Act (also known as the

JOBS Act), which was intended to encourage

funding of US small businesses by easingvarious securities regulations. Specifically,

this meant that small companies were now

able to raise more funds by having more

shareholders, without having to list on the

stock exchange.

In Singapore, there is presently no similarlegislation. Based on the CompaniesAct, the

maximum number of shareholders a private

limited company can have in Singapore is

50.If companies wish to have more

shareholders, they would either have to find

some legal way to work around the current

regulations or be listed on the stock exchange

as a public company.

So how can crowdfunding benefit the real

estate sector?

Unlike other types of business, property

development tends to be more capital

intensive. While it could cost just several

hundred thousand dollars to get most

businesses off the ground, it would typically

cost several million dollars to kickstart a

development project. Most aspiring property

developers would have some seed capital to

buy the land and get the project started.

However, they often require additional funds

to keep the project going. This is especiallytrue for countries where construction loans for

foreign developers are not available. In those

instances, where can these developers turn

to for the funds they need?


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Although approaching banks for such

financing needs may seem like the obvious

choice, these financial institutions are

typically not interested in deals that are less

than S$5million, as the fees from makingthose loans may not be commensurate with

the effort.

Another possible funding avenue could be

from wealthy individuals. However, even if

they find the project attractive, many of them

would not be keen to take the huge financialrisk of investing several million dollars in a

single project. Hence, many aspiring property

developers currently face difficulties in

realising their projects that is where real

estate crowdfunding comes in.

How does real estate crowdfundingbenefit stakeholders?

Pooling different like-minded individuals

together to support viable projects through a

real estate crowdfunding platform results in

several benefits for the various stakeholders.

Developers are able to raise the funds they

need to push ahead with projects and some

of these developments could bringopportunities to improve the wellbeing of

members within that community. Also,

through these platforms, developers will be

able to proceed with projects in burgeoning

regions (i.e. Myanmar, Cambodia, Thailand,

etc.) where construction loans are not readilyavailable

On the fundersend, these crowdfunding sites

help make the real estate markets more

transparent. The most immediate benefit to

users would beto give them access to

opportunities that were once reserved forbanks, funds and wealthy individuals. Apart

from that, by aggregating different like-

minded individuals to partake in the same

deal, eachcrowdfunderwould have to come


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up with less capital (often just several

thousand dollars) to take advantage of the

good returns that some developers offer.

These crowdfunders can also spread their

risks by not putting all their eggs in onebasket as they do not have to invest in whole

units, unlike regular real estate investments.

Being in an online environment, users can do

their research by using interactive online

property tools to understand the overseas

markets before making a decision. Users canalso exchange notes with other crowdfunders

to do cross- references about a particular

developer or project. When these developers

know that their reputation is at stake, some of

them would definitely think twice before

putting up a dud deal.Teething IssuesGaining user confidence

Having listed some of the benefits of real

estate crowdfunding, it is important to

highlight that such sites are not without risks.

Having been around for only the last 2 to 3

years, the crowdfunding industry is still in the

infancy stage. One of the common concerns

relating to crowdfunding is the lack of

recourse should the project fail to materialise.Interestingly, this is actually less of an issue

for real estate crowdfunding as there is

usually some form of asset (i.e. land title) that

crowdfunders can stake a claim to.

Apart from that, another issue that has to be

overcome is the scepticism that some userscould have. Many people are not comfortable

with the anonymity of the opportunity

providers and would prefer to meet with the

developers before considering funding their

projects, especially if they are doing it for the

first time. This is especially important for realestate crowdfunding, as the funding amounts

can be substantial. Therefore, having offline

contact is an important step to gaining user

confidence.


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Is there a demand for real estate

crowdfunding?

At present, it is still too early to say if there is

sustained demand for real estate

crowdfunding. However, based on what we

have seen on CoAssets, areal estate

crowdfunding platform my company operates,

we have observed a growing trend.

As there is currently no legislation that is

similar to the JOBS act in Singapore,

CoAssets is simply a targeted leads

generation site that connects opportunity

providers (i.e. developers, bulk sellers, etc)

and users. Akin to any regular property site,

we do not get involved in the deal and any

arrangement is directly between the

stakeholders.

Based on this approach, the crowdfunding

platform grew from 200 to more than 1,300

engaged users (with a reach of more than

20,000 secondary contacts) within the first 6

months. More thanS$12million worth of deals

were also shortlisted and put on the site, with

many more turned away. As a whole, even

though this may not appear to be much, itvalidated the business process and suggests

that more can be achieved in time to come.

Apart from that, we are also seeing keen

interest in the inaugural Expo for Property

Investing and Crowdfunding (EPIC)that

CoAssets is putting together. This is the firsttime that a real estate crowdfunding event is

being organised in South East Asia. Real

estate crowdfunding is gaining traction in the

region.

Conclusion

This article just scratches the surface of the

topic of real estate crowdfunding and there

are definitely other risks as well as issues not

highlighted.

SINGAPORE PROPERTY WEEKLY I 147
http://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIChttp://www.coassets.com/EPIC


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Despite my apparent bullish view towards real

estate crowdfunding, the reality is that only

time will tell how this will pay out.

Nonetheless, when you put all the

considerations together, crowdfunding is

definitely an area for the government and

industry stakeholders to explore further as the

pros outweigh the cons. The true potential

behind real estate crowdfunding, if correctly

executed, will be the ease in channelling

resources from one region to another, insupport of financially viable or socially

beneficial projects. And the full potential can

only be achieved if there is more clarity in the

crowdfunding regulations.

Mr Getty Goh has a Masters in Real Estate

from the National University of Singapore

(NUS) and heis the CEO ofCoAssets.com,

South EastAsias first crowdfunding website.

Mr Goh is also a director with Ascendant

Assets Pte Ltd, a real estate research

consultancy and think tank. Dr Seh Huan

Kiathas a PhD from Massachusetts Institute

of Technology (MIT) and he is the CTO

ofCoAssets.com.

SINGAPORE PROPERTY WEEKLY I 147
http://coassets.com/http://coassets.com/http://www.moneymatters.sg/http://coassets.com/http://coassets.com/http://coassets.com/http://coassets.com/http://coassets.com/http://coassets.com/


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Singapore Property This Week


Residential

P r o c e d u r e f o r r e s a l e H D B t r a n s a c t i o n s t o

b e c h a n g e d

The procedure for reporting resale Housing

Development Board (HDB) transactions has

been changed to shift the focus from cash-

over-valuation (COV) to market prices.

Buyers now are required to get the option to

purchase (OTP) before asking for a valuation

from HDB who will not accept such requests

from sellers. Thus, instead of focusing on the

COV, buyers and sellers will negotiate resale

prices based on the latest transacted prices.

Buyers now also have 21, instead of 14,

calendar days to exercise their obtained OTP.

Daily prices of resale transaction will also be

posted on HDB InfoWeb every day, instead of

every fortnight, after they are registered.

(Source: Business Times)

N o n - l a n d e d r e s a l e h o m e v o l u m e r e m a i n s

lo w

Due to cooling measures and the Total DebtServicing Ratio framework, non-landed

private home resale volume remained low at

a levels not seen since the 2008 global

financial crisis. According to flash figures

released by the Singapore Real Estate

Exchange (SRX), resale volume decreased18.5 percent month-on-month, standing at

242 transactions in February; and decreased

22.2 percent year-on-year, from 311 deals in



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February 2013. Resale prices also went down

2 percent, which was seen as a natural

pullback from unsustainable price increases

of the previous months.


E L D e v e l o p m e n t w i n s t o p b i d f o r Y i s h u n

c o n d o s i t e

With an offer of $278.8 million or

$450.06psfppr, EL Development has won

over four other bids for the Yishun Avenue 9

site. This price exceeds the expected price of

$380-$431 psfppr, and makes a historical

high for a Yishun residential non-landed

government land sales site compared with the

previous record of $405.53 psfppr for another

Yishun sitein August 2010. Ong Teck Hui, thenational director for research and consultancy

at Jones Lang LaSalle, said that this winning

bid is in fact the lowest price for Outside

Central Region.


Pr o du ct iv e t ec hn olo gies w il l n o t h it

developersm a r g i n s

According to some analysts, productive

technologies adopted by developers for

Government Land Sale (GLS) properties are

unlikely to hit their margins despite increasing

costs. Regina Lim, head of Singapore equity

research and ASEAN property research at

Standard Chartered, said that with more

developers adopting prefab components,

costs might decline, while it is expected that

land bids by developers may slow down due

to higher construction costs. Switching costs

for technology and manpower upgrades aresaid to be passed to developers through their

tender pricing.




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T h r e e a d j o i n i n g f r e e h o l d p r o p e r t i e s u p f o r

sa le

Three adjoining freehold properties along

Queen's Road and Duke's Road with a

combined land area of 25,425sqft are now up

for sale with an estimated price of more than

$45 million or $1,430 psfppr under marketing

agent Knight Frank. It has a plot ratio of 1.4,

and can yield a maximum permissible gross

floor area of 35,595 sqft with an expected

development charge of $5.8 million.


Far E as t O rg an i s at io n C en t re aw a rd ed

Se n t o sa h o t e l s i t e t e n d e r

Far East Organization Centre, a member of

Far East Organization (FEO), was reported tohave won a hotel site tender on Sentosa to

develop a cluster of conserved buildings and

their repurposing into hotels. The site is

planned by FEO to be called The Outpost

with two hotels of 700 rooms. The Artillery

Avenue site, however, has been gazetted for

conservation, so FEO has to take heritage

and conservation requirements into

consideration during its development process.


Commercial

Sil ic on Valley -in sp ir ed L au nc hPad

revealed

JTC LaunchPad @ one-north, considered as

Singaporesstartup valley inspired by Silicon

Valley, was revealed to comprise three

adjoining buildings in Buona Vista (one new,

one repurposed and the startup hub Block

71), several cafes and food points, sport

facilities, and indoor and outdoor collaborativespaces the same facilities as Google and

Facebook in Silicon Valley. The startup

community in one-north, thus, is expected to

increase to reach 500 startups with 2,000



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entrepreneurs, or even 800 startups and

3,200 entrepreneurs. Exploit Technologies,

Joyful Frog Digital Incubator, SingTel Innov8

Ventures and NUS Enterprise are reported to

be interested in being part of LaunchPad.

I c o n i c p r o j e c t s c o m i n g u p

A group of iconic integrated mixed

development projects with a value of more

than $15 billion are reported to be coming up,

which will enhance Singapores luxury

residential property landscape. The group

includes collaborations between Temasek

Holdings and KhazanahNasional for the

Marina One and DUO developments.

Malaysian tycoon Quek Leng Chans

GuocoLand is also developing TanjongPagar

Centre with the tallest residences inSingapore Clermont Residence at 290 m

high. A joint venture between City

Developments and Malaysian group IOI is

also springing up to include two towers.

Capitol Theatre, Capitol Building and

Stamford House are being integrated into the

Capitol Singapore project. Another project

with 39 exclusive residences including Eden

Residences Capitol will also be available

soon. Such iconic residential projects are

expected to generate monetary value, attract

foreign investors and attract global high net

worth talents to reside in Singapore.

http://propertymarketinsights.com/


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singapore property weekly issue 147

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