According to M&G’s global outlook report, green assets will be in demand more than ever. This highlights major trends that are affecting global property investment. The result will likely be a growing value diversion based on asset quality, occupiers’ sustainability needs and asset quality. It states that tenant-landlord relationships will be redefined as a result of net zero and will require unprecedented cooperation.
Asia Pacific has seen green real estate take off and it is “gaining a lot more momentum”, Richard van den Berg, M&G Real Estate’s Asia fund manager, said in a panel discussion discussing the real estate outlook in Asia Pacific for 2022.He says that the Covid effect has made people realize how important it is for them to live and work in a healthy and safe environment. This is evident in the demands for high-efficiency particulate filters, better ventilation, and crowd control measures at work.
M&G says that the “green revolution” in Asia will offer significant opportunities for investors, especially through the financing and delivery of green energy, as well as the construction and manufacturing of projects.These are evident in initiatives like Singapore’s CleanTech Park or South Korea’s Pangyo Technovalley 2. They offer investors the chance to tap into clean tech growth and longer-term structural changes related to ESG through direct investment in real estate facilities.
M&G states that buildings with poor environmental, governance, and governance (ESG), features will be under greater pressure. It adds that asset managers will have to balance the delivery of ESG enhancements with the need to weigh up medium- and long-term performance benefits against short-term costs.CBRE predicts that future ESG regulations will be more stringent. CBRE’s market outlook report highlights that “more countries are pledging to achieve carbon neutrality by 2030 or 2060,” and that occupiers will be under greater pressure to adhere to ESG standards for sustainability disclosure.
It adds that companies will be more careful in selecting offices based upon sustainability and wellness features, as well as landlord ESG performance, this year.Hybrid working guidelines are likely to have an impact on the office sector. CBRE says that while occupiers want to save money by using less space they are concerned about the impact on productivity, engagement, and corporate culture. “Occupants will have to redefine their office role while accurately measuring space usage and creating an agile office network that supports a dispersed workforce.
Rebound in office expansion
CBRE predicts that Asia Pacific offices will reopen by 2H2022. According to data from Google Mobility Index, traffic in offices districts of Hong Kong, South Korea, and Taiwan have all returned to pre-Covid levels. According to it, Asian companies will most likely return office-based work. North Asia’s initial response showed that, despite Covid-19 spreading, most companies continue to work in-office with some restrictions on occupancy and team rotation.
The new Grade-A office supply for Asia Pacific will rise 15% yo-y to nearly 67 million square feet in 2022. This is the highest number in more than a decade. CBRE notes that China will account for almost half of all new supply, and cities such as Shanghai and Shenzhen are likely to experience a supply peak by 2022. The majority of supply pressure will come from non-CBD regions, which account for 90% of the new space.CBRE forecasts that leasing activity will rise in Hong Kong and Japan, Australia and South Korea, but new supply will limit demand in Singapore and South Korea.
It adds that there will be “major drivers of demand” for flight-to-quality relocations this year. This is due to the emphasis on sustainability as well as wellness.CBRE recommends that office landlords invest in smart, green buildings and retrofit older stock to achieve this end. By incorporating sustainability features at every stage of a building’s life cycle (planning, design, construction, and operation), new ESG requirements can be met.CBRE suggests that landlords consider incorporating flexible space into their office portfolios or forming partnerships with co-working operators to cater for uncertainty.
There are bright spots for select retail
Although e-commerce has been greatly accelerated by the pandemic, brick-and mortar stores still exist. This is evident in the need for omnichannel sales, and delivery. As part of the “click-and-collect” model, physical malls also fulfill online orders. M&G observes that many online retailers have partnered with physical retailers to enhance the customer experience. Additionally, goods returns are being processed more frequently in physical retail assets.
CBRE anticipates that experiential retail will be more prominent. It says that the shift to online shopping during the pandemic has meant that retailers and shopping centers must offer a unique experience in order to entice shoppers back to brick-and mortar stores. You can use promotional events, expand display areas, set up more thematic shops, and implement new F&B concepts to attract shoppers.M&G predicts that the retail sector may be at a “turning moment” in its cycle. It cites early signs of rising capital values and better sentiment in certain parts of the market. It says that retail rents could stabilize or grow as the economy recovers. This could potentially lead to the return of yield-hungry investor,”CBRE warns that although recovery is expected to continue this fiscal year, the expansionary momentum will be driven by select outperforming street shops, malls, and other retail outlets. It states that secondary retail, even properties in core areas, is unlikely to face further rental cuts and tenant outflows.It anticipates that China will see retail rental growth accelerate from last year in Hong Kong, but it will remain low single digits.
In the meantime, Taipei’s high-end shops and many CBD districts in Australia will see a rental correction in 2022. However, it is expected that this will be milder. It is expected that this will continue in the face of high vacancy and a shortage of international tourists and students, but it could quickly reverse once international travel resumes.CBRE expects that the retail leasing market will favor tenants in the future, but it believes landlords will adopt a risk-sharing model of leasing, which includes more rent clauses, fit-out subsidies, and tenancy improvement.Pop-up and shorter leases are gaining popularity among general retailers. This would allow them to test consumer reaction, while landlords would have the ability to renew their tenant mix more frequently, CBRE points out.…
After deciding where their first home should go, many homeowners are now wondering about the differences between a bank loan and an HDB loan. Are you overwhelmed by all the fine print and jargon? We’ll help you understand the differences between HDB loans, and bank loans.
What are the key points regarding HDB loan vs. bank loan?
- HDB loans require a lower cash outlay
- Bank loans have variable interest rates, while HDB loan rates are stable.
- For about a decade, bank loans were cheaper than HDB loans
- It is possible to switch between an HDB loan and a bank loan.
- HDB is more flexible than banks when it comes to late payments
An HDB loan has a huge advantage in that you can pay a lower downpayment.
HDB loans have a maximum loan to-value (LTV), of 85%. You can borrow up to 85% of the flat’s price or value, depending on . You can pay the 15% remaining downpayment with cash or savings from your CPF Ordinary Account.
Bank loans have a maximum LTV ratio of 75%. This means that you will need to pay an additional 10% downpayment.
Additionally, 5% of the downpayment must be made in cash. The remaining 20% can be paid in cash or CPF OA savings.
Monthly instalments and interest rates
The interest rate on HDB loans is 0.1% higher than the CPF rate. The interest rate for HDB loans at 2.5% CPF is 2.6%
Bank loan rates, however, are more volatile, as they can change depending on market conditions. Also, this applies to loan packages with fixed interest rates. These so-called fixed rate home loans have a locked-in period of between two and five years. After that, they are subject to a floating rate.
Regardless of whether you are taking a SIBOR or SORA, BR, FHR home loan, your interest rate will be the prevailing rate plus the spread.
The interest rate of “3M SIBOR + 0.75” is the current three-month SIBOR rates plus the spread (0.75%) charged by banks. The interest rate will change every three months if the SIBOR rate is changed.
If you have a home loan at 1M SIBOR, your monthly loan repayment amount will be different. The loan repayment amount for a 3M SIBOR home loan will change every three to four months.
The interest rate for “BR + 0.5”, is the current board rate minus 0.5% spread by the bank. The bank sets the board rate, but that is the difference.
FHR home loans are tied to fixed deposit rates at the bank. It is very similar to a BR loan, as the bank sets the rate.
Why is bank lending cheaper?
Historical interest rates for bank home loans range from 3% to 4 percent per annum. This is higher than HDB loans.
Bank interest rates have fallen to record lows over the past 10 years, largely due to the 2008 Global Financial Crisis. Bank loans currently average 1.8% per year, compared to HDB’s 2.6%.
Lower monthly instalments are due to lower interest rates.
This is an example
Let’s assume you are buying a flat for S$350,000. Let’s say that the purchase price and the valuation are equal.
An HDB loan has a maximum loan amount of S$297.500 and a LTV of 85%. The downpayment is S$52,500. Monthly repayments for a loan with a term of 25 years will be S$1,349.67.
The loan quantum for a bank loan with a 75% LTV will be S$262,500. The downpayment will be S$87,000.
If you assume a rate of 1.8% annum for a 25-year loan term, your monthly payments will be lower at S$1,087.24.
*Based on typical loan rates at the time of writing. It is not possible to assume that bank interest rates will stay at the same level for 25 years.
To calculate the monthly payments for your home loan, you can also use 99.co’s mortgage calculator.
HDB loans are available for purchase of HDB BTO and resale Flat. They have stricter eligibility criteria including the income ceiling. An HDB loan is not available to you if your monthly gross household income exceeds S$14,000
Bank loans, on the other hand, don’t have income caps, so they’re suitable for people with higher incomes.
HDB loans have a maximum term of 25 years while bank loans for HDB apartments can be extended up to 30 years. The LTV will be reduced by 55% if the loan term exceeds 25 years, or if the borrower is older than 65.
To learn more about the impact of home loans on loan amounts, please read our LTV limits guide.
A longer tenure is a positive thing as it can lower your monthly payments and spread them out. However, this can also mean paying higher interest.
Refinance your HDB loan to a bank loan, subject to approval by the bank. This is possible even if the original loan had a lower LTV. You can lower your monthly payments by getting a lower interest rate.
You can’t refinance a bank loan into an HDB mortgage. You can refinance your bank loan by either repricing it or switching to another bank.
HDB assesses the annual rate and charges late payment fees for monthly instalments. The rate is 5.5% annually, from 1 January through 31 March 2022.
They are also more flexible and willing to negotiate late payments. This doesn’t mean that you won’t have to pay your home loan. You can still sell the flat or downgrade.
Banks are less willing to minimize their losses.
The HDB loan has another advantage: there is no lock-in period and no early repayment penalty. You can also pay it off sooner to lower the interest and financial burden.
However, it is better to not pay off a bank loan early if you are taking it out. If you cancel your bank loan before the lock-in period ends, the bank will charge a prepayment fee. This is because they earn interest.
HDB Loan vs Bank Loan: Which one is better?
HDB loans are a good option if you have a tight budget. They require less cash upfront. Fixed interest rates give you an idea of the monthly cost of your home loan. If you feel the interest rate is too high, you have the option to refinance your HDB loan to a loan from a bank later.
If you are looking to make a quick upgrade (e.g. If you plan to quickly upgrade (e.g., sell your flat and buy private as soon you can), you might consider a bank loan or a quick refinance into an HDB loan. This will reduce your monthly payments and lower the interest that can be added to your resale profits.…