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Operations and market reviewSingapore – ResidentialMarket reviewResidentialMid-tier market to enjoy spillover demand2006 marked a bumper year for the Singaporeresidential market. According to Urban RedevelopmentAuthority (URA), take-up for new home sales was astrong 11,147 units in 2006, up 24.5% from 8,955 unitssold in 2005. The URA private residential price indexalso rose 10.2% in 2006, the fastest rate of growthsince 1999 and a considerable improvement over the3.9% gain in 2005.The appreciation in residential prices was led primarily bythe high-end segment, driven mainly by strongerdemand from foreign buyers and local high-net-worthindividuals. While Asians continued to dominate foreignbuying, it is notable that buyers are not just from theneighbouring countries of Malaysia and Indonesia butalso increasingly from China and India. Based on URAstatistics, Malaysian and Indonesian buyers accountedfor about 23% and 27% respectively of foreign purchasesin 2006 while buyers from China (including Hong Kong)and India made up about 7% and 6% respectively. Thereare also significant numbers of non-Asian buyers fromthe UK, the US and Australia.URA statistics also showed that speculative activityremains relatively healthy, with the proportion of sub-salesat 4.1% of total sales transactions in 2006 compared withsome 28% during the 1996 peak.The strong demand for high-end projects is evident fromKeppel Land’s launch of Marina Bay Residences, whichwas 100% sold within three days of its preview. Theluxurious development achieved an overall average sellingprice of approximately $1,950 psf. Transacted prices forthe five single-level penthouses were between $3,230 psfand $3,450 psf, setting new records for 99-year leaseholdresidential property prices in Singapore. The ‘uber’penthouse, one of the largest penthouses in recent times,was sold for $28 million. Local buyers includingpermanent residents made up approximately 60% of thedevelopment’s sales.Similarly, sales were brisk for other high-end developmentssuch as The Sixth Avenue Residences which was sold outwithin two weeks of its preview. The project achieved anaverage selling price of about $1,000 psf. Local buyersincluding permanent residents made up about 85% of theproject sales.In total, Keppel Land sold over 1,200 homes in 2006, morethan double its sales in 2005, positioning it among the topthree listed developers in residential sales in Singapore.In the light of the improved property market, thegovernment has withdrawn the concession to deferpayment of stamp duty in December 2006. With thiswithdrawal, stamp duty will have to be paid within 14 days ofexercising the option to purchase or the sales and purchaseagreement instead of upon completion of the project.Several key factors will drive the growth of the residentialmarket in the years ahead. With the government’scontinuous efforts to attract foreign investments andtalents, Singapore has seen an increasing inflow of foreignexpatriates, business entrepreneurs and investors as wellas overseas students flocking to the Republic. Such inflowof foreigners will be even more pronounced in future asthe government undertakes to make Singapore a trulyglobal city and sets its sight on achieving a population of6.5 million, a 44% increase from about 4.5 million now.As Singapore’s birth rate is well below the replacementrate, this population growth will have to be met largely byforeigners, which make up almost 20% of the currentpopulation as compared to 5.5% in 1980. This will creategreater demand for private residential properties and couldsignify a dramatic change in Singapore’s housinglandscape. Official statistics showed that the percentageof resident population staying in public HDB housing hasfallen to 82% in 2006 from 86% in 2000. This suggeststhat the percentage of private residences has increased106 Operations and market reviewSingapore – ResidentialKeppel Land LimitedReport to Shareholders 2006