Freelance Research Analyst

Tay Hock Meng

Thematic (Sector/Industry)

<ul><li>The most recent quarterly financial updates disclosed by the major Singapore banks showed that non-performing loans (NPLs) tied to the housing sector experienced slight increases for some banks, but largely remained low relative to the historical trends.&nbsp; </li><li>There were concerns before the releases that due to the nine rounds property cooling measures implemented since 2010, many highly leveraged households which have housing loans tied to their residential properties might be exposed to mortgage delinquency risks.&nbsp; </li><li>Most of these households were finding difficulties in servicing their two or more housing loans, or have difficulties in selling off their existing properties in order to pay off their outstanding loan obligations.&nbsp; </li><li>The issue was compounded by various reports on the relatively high volumes of mortgagee sales taking place monthly, and most of these sales were comprised of a large majority of high-end properties located in the Core Central Region (CCR), and some in Sentosa Cove area. </li></ul>In this insight, we would like to examine the period between the pre financial crisis in 2006 – 2007 and during the height of the crisis in 2008 – 2009 in order to determine whether the non-performing loans (NPLs) tied to the housing sector posed a threat to the overall financial stability outlook in Singapore. We will also like to examine whether there are potential implications, if any, on the housing mortgage outlook going forward.

The most recent quarterly financial updates disclosed by the major Singapore banks showed that non-performing loans (NPLs) tied to the housing sector experienced slight increases for some banks, but largely remained low relative to the historical trends.&nbsp; There were concerns before the releases that due to the nine rounds property cooling measures implemented since 2010, many highly leveraged households which have housing loans tied to their residential properties might be exposed to mortgage delinquency risks.&nbsp; Most of these households were finding difficulties in servicing their two or more housing loans, or have difficulties in selling off their existing properties in order to pay off their outstanding loan obligations.&nbsp; The issue was compounded by various reports on the relatively high volumes of mortgagee sales taking place monthly, and most of these sales were comprised of a large majority of high-end properties located in the Core Central Region (CCR), and some in Sentosa Cove area. In this insight, we would like to examine the period between the pre financial crisis in 2006 – 2007 and during the height of the crisis in 2008 – 2009 in order to determine whether the non-performing loans (NPLs) tied to the housing sector posed a threat to the overall financial stability outlook in Singapore. We will also like to examine whether there are potential implications, if any, on the housing mortgage outlook going forward.

Singapore Housing non-performing loan (NPL) ratios – A comparison between 2006 – 2007 and 2008 – 2009

<ul><li>In a Business Times news article published on November 20, 2014, it was reported JTC together with Urban&nbsp;Redevelopment Authority (URA) are looking into creating a separate category for Type B-1 industrial space and&nbsp;office space usage. The planned location that will be a test bed for this new classification was cited to be&nbsp;somewhere near the Woodlands Industrial Estate. One of the main objectives arising from this potential new&nbsp;classification was to address the various concerns expressed by many industrialists on the relative high costs of&nbsp;office rentals, resulting in many firms choosing to relocate outside of Singapore, or seeking out various methods&nbsp;to ‘skirt’ around the strict regulations governing Type B-1 industrial space usage.</li><li>Under the current JTC regulations, there must be at least 60 percent of the total floor area in each strata unit in a&nbsp;Type B-1 development to be set aside for core industrial activities such as clean and light manufacturing,&nbsp;assembly and repair, or warehouse and storage. The balance of the 40 percent can be allocated only for ancillary&nbsp;offices or support services such as technical service centres, and furniture showrooms, among others. Standalone&nbsp;offices such as attorney offices, architecture firms, and banks, among others are strictly prohibited.</li><li>In this article, we will like to examine the historical Type B-1 rental trends by region; the percentage spread&nbsp;difference between office rentals located in the central region and multiple industrial space rentals; and vacancy&nbsp;rates of both office and industrial spaces in order to determine whether a new classification is warranted or what&nbsp;are the potential policy implications arising from such a revamp in regulations governing industrial space&nbsp;usages.</li></ul>

In a Business Times news article published on November 20, 2014, it was reported JTC together with Urban&nbsp;Redevelopment Authority (URA) are looking into creating a separate category for Type B-1 industrial space and&nbsp;office space usage. The planned location that will be a test bed for this new classification was cited to be&nbsp;somewhere near the Woodlands Industrial Estate. One of the main objectives arising from this potential new&nbsp;classification was to address the various concerns expressed by many industrialists on the relative high costs of&nbsp;office rentals, resulting in many firms choosing to relocate outside of Singapore, or seeking out various methods&nbsp;to ‘skirt’ around the strict regulations governing Type B-1 industrial space usage.Under the current JTC regulations, there must be at least 60 percent of the total floor area in each strata unit in a&nbsp;Type B-1 development to be set aside for core industrial activities such as clean and light manufacturing,&nbsp;assembly and repair, or warehouse and storage. The balance of the 40 percent can be allocated only for ancillary&nbsp;offices or support services such as technical service centres, and furniture showrooms, among others. Standalone&nbsp;offices such as attorney offices, architecture firms, and banks, among others are strictly prohibited.In this article, we will like to examine the historical Type B-1 rental trends by region; the percentage spread&nbsp;difference between office rentals located in the central region and multiple industrial space rentals; and vacancy&nbsp;rates of both office and industrial spaces in order to determine whether a new classification is warranted or what&nbsp;are the potential policy implications arising from such a revamp in regulations governing industrial space&nbsp;usages.

Singapore Real Esate: Potential policy implications resulting from creating a new classification between Type B-1 industrial  space and office space

Singapore

Starhill Global REIT is a real estate investment trust.  The trust invests in retail and office buildings in Singapore and overseas.

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Starhill Global REIT (SGREIT SP)

Singapore Housing non-performing loan (NPL) ratios – A comparison between 2006 – 2007 and 2008 – 2009

The most recent quarterly financial updates disclosed by the major Singapore banks showed that non-performing loans (NPLs) tied to the housing...

Tay Hock Meng

Singapore Real Esate: Potential policy implications resulting from creating a new classification between Type B-1 industrial space and office space

In a Business Times news article published on November 20, 2014, it was reported JTC together with Urban Redevelopment Authority (URA) are...

Tay Hock Meng

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)