More going for properties at Sentosa Cove

If the luxury property market seemed a little dull the past year or so, the numbers this year certainly do not show any lack in lustre. From the 4 bungalows sold last year to the tune of $64.5 million, the figures have already almost doubled to 7 units at $102.7 million, and H2 is only just about to begin.

SentosaCoveBungalowMost Singaporeans who have purchased properties at Sentosa Cove have plans to live in them or to hold on to them for mid- to long-term investment purposes. Most of the properties here were sold for between $10 million and $15 million with exclusivity being one of the biggest calling cards. The most expensive bungalow sold this year thus far was at Lakeshore View. At 11,270 sq ft, it was sold for $21.25 million. In the non-landed private property front, condominiums at Sentosa Cove have also been selling fairly well this year with 21 units have been sold this far. On average, only 24 to 26 units were sold yearly in the period of 2013 to 2016.

oceanfrontsentosaWhile there has been reports of vacant units and capital-loss of properties on Sentosa, wealthy buyers are still looking for value buys and while foreign buyers are unable to access landed properties on the mainland, Sentosa Cove is a good location as any to hedge their funds. Though surprisingly, 6 out of the 7 bungalows sold this year were to Singporean buyers. As prices of properties have somewhat bottomed out over the past couple of years, investors are keen to return to the luxury property market, perhaps somewhat boosted by the narrowing of the gap between sellers and buyers’ expectations.

Office occupancy rates increase in major global cities

Work in an office space at the top of skyscraper in New York or in the centre of the Hong Kong Central Business District? Both might cost you an arm and a leg, and perhaps a few more body parts as 4 office spaces in these 2 cosmopolitan cities across the globe from each other have come up as some of the costliest commercial properties amongst 121 markets worldwide. Overall, office space costs have increased 1.9 per cent year on year.

NewYork1NewYork3An office space in Hong Kong West Kowloon topped the list at US$303 (S$420) psf per year. London and New York came next with a unit in London’s West End costing US$214 psf and one in New York’s Midtown at US$203 psf.

While many investors are going for residential properties as they have the potential of doubling up as a home in future, some savvier ones and perhaps those with more cash to spare are also buying up commercial properties. As companies expand globally, capital cities in many countries have found office occupancy rates rising.

The highest rise occupancy cost globally is Durban (South Africa) while Stockholm, Palma de Malloca, Belfast and Amsterdam followed closely. In the Americas alone, Buenos Aires, New York Midtown, Houston and Denver registered the biggest occupancy cost increase. And in the Asia-Pacific, Shanghai, Guangzhou, Bangalore were the biggest winners in terms of office occupancy.

And where is Singapore on the list of the top 100? Number 27 at US$85.02 psf.

Australian property real estate a boon for some

Property prices in Australia have skyrocketed in the past decade, only increasing speed in the last 5. This has been a boon for property investors but it has also been tough for others as they struggle to keep up with the rapidly rise in housing prices.

SussexStSydneyPropertyJust as an example, property prices in Sydney, Melbourne and Brisbane have risen 75, 45 and 30 per cent over the last 5 years. At the same time, low interest rates and growing foreign investment monies, particularly from China, have pushed an increasing volume of properties into the “unaffordable” bracket for many Australians. In situations not unlike Singapore, many millennials now wonder about their future in terms of home ownership. While some young adults who have gotten into the investment game earlier risked a great deal while working exceedingly hard for their down payments are now seeing dividends paying off, many others have to settle for shared housing to make ends meet.

Those who have invested early are able to finance subsequent property buys based on the soaring value of their property assets while lower-income Australians are finding it harder to afford even a deposit. Competing with property investors is simply impossible. Many have submitted to the possibility of renting for the rest of their lives.

MelbournePropertyProperty analysts are however increasingly aware of the danger of a property bubble especially as the lending from the country’s banks may have resulted in an unsustainable rate of growth. Some loans are 4 to 6 times the borrower’s annual incomes and there is a fear that there will be a collapse. The push for the Australian government to ensure homeownership is affordable for the majority may come sooner than later as disinclination grows.

Bidadari township shaping up well

In the making and already receiving a welcoming public response, the new township of Bidadari has seen over-subscribed Build-to-order (BTO) HDB flat launches and now the first private mixed commercial and residential land site has just been successfully awarded to the the winning bid of $1.13 billion by entities linked to Singapore Press Holdings (SPH) and Kajima Development.

BIdadariHDB1The 99-year leasehold site measuring 2.54 hectares is situated in a prime spot, just next to the Woodleigh MRT station and had drawn 12 bids for the landmark project. The mixed-use development is one of the first to have not only a 310,000 sq ft retail and commercial component combined with the 825 new private home units it can potentially yield, but also a 65 sq ft community club and a 20,000 sq ft neighbourhood police centre. As the area is still relatively void of major heartland malls, residents in the area could have something new to look forward to.

The project will however be facing competition from another land site near Woodleigh Lane which will close for tender next month. However, considering the HDB flats in Bidadari have been sold at relatively higher prices, property analysts are expecting the general disposable income of future Bidadri residents to be rather high and could grow to 37,000 within the next 3 to 5 years.

POizResidencesCompared with the $775 psf paid for the neighbouring The Poiz Residences mixed development, the bid for this new site is 50 per cent more at $1,181 psf. Though property analysts consider the bid bullish, SPH and Kajima Development are planning for larger units in this new project, which could translator to a higher price quantum in comparison with other suburban condominium developments.

En bloc sales take centre stage this year

Yet another former HUDC estate has been put up for collective sale. Serangoon Ville situated in Serangoon Ave 1 has been made available for en bloc sale and the selling price is expected to be between $400 million and $430 million. The costs will be high for this land site as an additional $200 million to $220 million is required to intensify the land and to refresh the land lease by 99 years. The estate was privatised only in 2014 and has 69 years of lease left.

SerangoonVillePhoto credit: Google Maps Singapore

Property players and watchers are expecting developers to bid efficiently for this land site that averages out to be $720 psf per plot ratio, particularly since recent sales of ex-HUDCs such as Eunosville and Rio Casa were closed successfully and above asking prices. Currently, Serangoon Ville houses 7 blocks of 244 apartment units, including some maisonettes, with sizes ranging between 1,625 sq ft and 1, 733 sq ft. One redeveloped, the 296,913 sq ft plot could potentially yield 750 to 900 units.

2 other former HUDCs – Tampines Court and Florence Regency – are already in the process of putting their estates up for sale. The latter is planning to commence signing of their collective sale agreement in July this year. This year’s healthy new home sales has possibly boosted developers’ confidence in the market’s stabilisation and future recovery.

But with the number of private land sites being sold and private estates sold en bloc, one cannot but help to wonder how Singapore’s real estate sector will look like in 3 to 4 years’ time. Add the Bidadari township into the mix, the market might be seeing a huge entry of public and private housing within the next 5 years. Rents have been sliding due to the increased number of completed and available properties in the recent couple of years, how will the market react then?

New waterfront development in Penang aims to be iconic

Already one of the most popular states in Malaysia for foreign property ownership, Penang will now have a new mixed-use waterfront development named The Light City.

TheLIghtCityPenangPhoto credit: Perennial Real Estate Holdings

A joint venture between Perennial Real Estate Holdings and IJM Corportation, both companies have a 50% stake each in the IJM Perennial Development which will develop the landmark project that stands along the eastern coast of Penang in the Gelugor suburbs, near the Penang Bridge.

The 13.25 hectare project is targeted for a 2021 completion and will have a 4.1 million sq ft gross floor area on which sits the largest convention centre in Penang – The Penang Waterfront Convention Centre, 2 luxury hotels, an office tower, a retail mall and 2 residential developments – The Mezzo and The Essence. The developers hope to elevate Penang’s status as a destination for international conventions, events, exhibitions and retail shopping, and helping to create job opportunities for the state’s residents, to attract tourists and investors.

THeLIghtCityPenang3Photo credit: Perennial Real Estate Holdings

The Light City will be situated just a short drive from the Penang International Airport, which makes it accessible for visitors coming for future events and exhibitions at the convention centre. The 27,000 sq ft Penang Waterfront Convention Centre will contain a 76,000 sq ft multi-purpose hall, grand ballroom that seats 800 and pre-function areas with sea views.

 

Australia’s housing prices may correct following tax hike

Striking the iron while it’s hot might take on another meaning when it comes to the Australian authorities putting pressure on the real estate sector after months of consistent price-rises with a series of property cooling measures.

SYdneyPropertyThe most recent move by the New South Wales state to increase foreign-buyers stamp duties may come at the right time, just as the property market shows signs of cooling. Stamp duties on new home sales to foreign property buyers have risen to 8 per cent of the purchase price. As many new projects are targeted at overseas buyers, the sector may see a major and possibly immediate readjustment of expectations and yields. With the recent tax hike, overseas buyers will now pay 13 per cent of the total purchase price of a property or more in taxes.

Chinese investors are particularly anxious about the recent change as they have formed one of the largest pool of foreign monies from which Australia’s real estate sector draws from. Citizens have expressed concern about the rising housing costs and like most other destinations for mainland Chinese such as Vancouver, Singapore and Hong Kong, property cooling measures have been put in place to curb just that. Banks have also ceased foreign lending and the federal government has placed punitive measures on foreigners who leave their purchased properties vacant.

The risk of introducing more property curbs in current times are nevertheless ever present, especially as Australia has just had a record 26 years of being recession-free. Sharp falls in housing prices may change all that.

Private homes’ rental rates continue to decline

While HDB rental rates inched up ever so slightly in May, private home rents have gone in the opposite direction and fallen 0.8 per cent in May. Compared to the same month last year, rental prices have fallen 3.9 per cent.

Ballota Park condominium in Pasir Ris

Ballota Park condominium in Pasir Ris

In the private home sector, prime district rents fell the hardest at 1.8 per cent while rental prices of units in the city fringes and suburbs fell 0.5 and 0.4 per cent respectively. The number of leases closed last month did however increase by 12.5 per cent from April with 4,650 condominium units rented out in May compared to the 4,134 in April.

HDB rents have risen 0.7 per cent though property analysts are taking it to be a temporary adjustment which is unlikely to be sustainable as the rental market may remain weak through the months ahead. HDB rents are expected to fall 4 to 5 per cent this year while private property rentals are expected to fall 8 to 10 per cent as more units are left vacant and competition for a limited tenant pool applies downward pressure on the market. The entry of new condominium units into the burgeoning market has not aided matters as well and expatriates’ housing budgets have also shrunk, leading to weaker demand in particular for high-end luxury housing.

Much of the future of the real estate sector is dependent on the job market as well. Should the job market take a turn for the better, the number of tenants looking for units nearer their workplace, in the Central Business District or regional commercial hubs, may also then increase.