Market not ready for property cooling measure to be lifted

The Monetary Authority of Singapore (MAS) has said that it is still too early for the property cooling measures to go away. Unlike the car financing sector, the housing sector has yet to achieve the intended levels. The authorities are cautious about a sudden forward surge in the market should the measures be prematurely lifted.

c22aa9c3d5354ad6858cc5cec7ca1854Household debt levels have become more manageable as the debt servicing ratio helped keep new loans portfolios realistic and banks are feeling a reduction in the percentage of non-performing loans. The ultimate aim is a sustainable pathway for the property market – a balance between growth and affordability.

Though the market feels like it has been slowing down for quite a few quarters now, the numbers tell another story. Property prices have fallen 9.4 percent since it’s peak in Q3 of 2013, but between 2009 and 2013, prices rose 60 percent while income rose only 30 percent. Clearly the numbers are disproportionate and it will be some time yet before the market reaches a comfortable equilibrium.

Moving forward, the private resale market is showing signs of bottoming out, and investors who have been sitting in the sidelines may come back into the fold as long as interest rates remain low and home prices steady.

 

Indonesia opens up property market to foreign investors  

Buying an apartment in Indonesia may soon become easier. The Indonesian government is working towards changing the law in favor of foreign investors in a bid to grow the economy. The new regulations may be in place before the end of the year. Previously, the Agrarian law instated in 1960 stipulated that foreigners are not allowed to own properties in Indonesia.

Aeropolis Indonesia propertyThe new emergency law, named perppu, will take effect next month and foreigners will then be able to purchase apartment units though landed properties are still restricted. Property agents have already reported more enquiries for properties in Jakarta, mostly for properties in the suburbs priced around 2 billion rupiahs. Apartment prices in Indonesia are considerably lower than that in Singapore and so is the cost of living, thus this new law may indeed be the impetus behind a economic change in Indonesia.

Although job creation and economy growth are the motivation behind this move, some analysts say that this may change the landscape of property ownership for Indonesian citizens, as property prices may rise to unaffordable levels. The new law will no doubt come with caveats, for example price and property type restrictions, but the average Indonesian may still see the median prices rise about 20%.

Signs of property market bottoming out?  

Though the vacancy rates of private residential properties are currently 1.4 percent higher in Q2 and at a 16-year record high, and property prices 9.4 percent lower than the 2013 peak, property analysts remain positive about the outlook as these could be signs that the property market is reaching the bottom of its cycle.

7478d455d05b4f2aa26fd1e5a8ce7bd2There were 30,310 vacant private homes in the second quarter, that is 5,391 units more than in Q1. As the number of completed properties rise, with almost 11,400 new units entering the market in the first half of 2016, the rates are seemingly modest. Property prices have also been stabilizing, and as long as interest rates remain at their current level, most households will be likely to be able to hold on to their properties over the down season.

More property buyers are now making home purchases for their own use instead of pure investment purposes and many are taking the opportunity to seal deals during this quieter time. In a year-on-year comparison, sales volume has risen 11 per cent and the luxury property market in particular is enjoying a spike in buying interest as prices have fallen sufficiently, luring buyers back into the high-end property market.

 

 

 

Luxury property market heats up 

After the market lull in the past couple of years, buyers are once again picking off choice luxury units in the prime residential property sector.

ArdmoreIIIPrices in this segment have gradually become more competitive over the last year or so and sales volume has increased, partly due to this change. For example, in the first half of 2016 alone, 131 apartments priced above $5 million were sold. Only 166 similar units were sold in the entire 2015.

Investors are favoring Singapore properties they match up well against those in other global cities such as New York and London. Property analysts say most investors are still Singaporeans, though  Malaysians, Indonesians and Chinese continue to feature strongly in the investor pool as they see the value of properties here and are not deterred by the currency fluctuations.

An upcoming luxury development is the 99-year leasehold Victoria Park Villas by CapitaLand which consists of 3 bungalows and 106 semi-detached houses starting from $4.3million. In better times, these houses could have cost up to $6 million. Other high-end units currently in the market include those at Gramercy Park, OUE Twin Peaks and Ardmore Three.

Spain – Holiday spot or potential gold mine? 

How does an apartment or a house in the suburbs of Barcelona or Madrid sound? More foreign investors are going into the Spanish property market, despite the political uncertainty without having had a new government for 7 months now. There has been a recent increase in building permits which could be an indicator of a property boom in the near future.

1089_XA77-3924_3_2016071905520431250Though there was a peak of real estate activity in 2007, most of the properties were in remote areas or urban fringes which did not garner as much interest as expected. That left almost half a million new homes empty . This time round, the popular properties are luxury apartments  and middle-class homes in the middle ain cities and regions with a strong industrial influence.

Many leading real estate developers have been buying up land banks in regions where demand for property is high, such as the Basque country, Madrid and Barcelona. Spain is 4th on a list, compiled by PWC, of European cities with property markets offering the best prospects.

1097_0_foto_20160719174440302_945856908925211Prices of properties go from as high as 8 million euros on an upmarket apartment in Madrid’s shopping Boulevard Serrano, or a 10,000 euros per square metre unit with swimming pool and spa which despite its price tag, is only a mere 10% of a similar unit in London. The immense potential for growth is apparent to investors, and despite the Brexit vote dragging down the pound, the major cities in Spain will still have their clout with savvy investors.

Jurong Lake District – New sparkling Gem of the West

In less than 2 decades, the landscape of Singapore’s west-side could be said to be almost completely transformed. From the largely industrial factory districts to far-flung housing estates and only a few schools, new shopping malls, transport hubs, commercial and office spaces, private residential homes and spanking new build-to-order (BTO) flats now dot the scene.

Juronglakedistrict

Photo credit: URA

Jurong, once a busy but secondary commercial district, has been slated for development as Singapore’s second central business district (CBD). Every large city is almost certain to have one secondary commercial hub, as big and functional as the town-centre CBD, but newer and with more space for development. Just thing of Shanghia’s Pudong or London’s Canary Wharf. The Urban Redevelopment Authority (URA) is looking to transform the Jurong Lake District into a eco-friendly, futuristic township with homes, offices, hotels and filled with greenery and waterways.

LakeGrandeWith the Kuala Lumpur-Singapore high speed rail in its midst and as the convergence point of a number of new and existing MRT lines, there seems to be quite a far breadth for value appreciation of residential and commercial properties in the Jurong Lake district.

With Punggol and Jurong both set to include many good, new things may be coming the country’s way in the next decade or two.

The En-bloc secret

Could you possibly be sitting on an En-bloc golden egg and not know it? Or before you make an investment, do you know if your purchase could earn you a tidy sum in the  future?

Laguna Park

Laguna Park

En-bloc sales of older properties can often be the windfall property owners are looking for and having an idea of the process could be the start to planning for the future. Not every development will have the same potential and often the wait could be longer than the photos yields, but there is money to be made this way.

The first step involves securing 20% of the total share value of 25% or the total number of owners. But should the first bid at a collective sale fail,  50% of the previously mentioned total share value or total number of owners will be required to requisition a extraordinary general meeting (EOGM) within 2 years. Then there is the election of the collective sale committee (CSC). They will then draft the proposed a reserve price as part of the collective sales agreement (CSA). Though a high reserve price may increase the probability of securing sufficient signatures go the sale, the high price may also turn potential buyers away. Developers do after all need to take the time and money to conduct feasibility studies and land surveys of the site.

Then there is also the issue of valuation per unit. The criteria for share allocation as recommended by the Singapore Institute of Surveyors and Valuers are valuation, strata area and share value. In addition,  80% of the owners must also agree on the method of apportionment before the bid can happen.

ShunfuVilleOnly then will  public tender be made and a property valuation be made by an independent valuer on the closing date of the tender. In the 10-week period after the tender closing date, the CSC is still able to enter into a private treaty with a buyer. The process is often long and could take years, such as in the case of the Pearl bank apartments or Laguna Park.

 

Home loan competition heats up

As the economy slows worldwide,  as global markets struggle to make sense of the recent Brexit vote and as the US Federal reserves rate hikes are put on hold, the time to secure or refinance a home loan could be now. Especially as banks compete for earnings with diminishing property demands.

Image courtesy of Singapore Tourism Board.

Image courtesy of Singapore Tourism Board.

The Singapore Interbank offered rate (SIBOR) at which local home loans are set to, has since fallen to 1 per cent. At its peak, rates went as high as 1.25 per cent.  On the commercial property front, the swap offer rate (SOR) was at 0.94 in June, down from 1.36 per cent in March. What all this means is it now costs less for banks to borrow funds from one another, which makes it easier to schedule fundings for their clients and they may take the opportunity to offer lower rates to secure more earnings.

Banks have been battling for clients and offering up increasingly competitive home loan packages. The dropping SIBOR rates also means linked home loan packages will have lower interest rates. If the US Federal reserve continues to hold off the incline of the rates hike, home buyers may still be able to benefit from the correspondingly lower home loan rates here.