Limits placed on tenancy of private homes

From today on, private homes can no longer be tenanted by more than 6 unrelated persons. This is 2 lesser than previous cap of 8 persons.

Enforced by the Urban Redevelopment Authority (URA), the new ruling kicks in today but existing tenancy agreements of 7 or 8 persons will be allowed to carry on until May 15, 2019 regardless of the tenancy contract’s expiration date.

TownervilleThis change was made to keep the integrity and character of the local community and to ensure that residential premises integrate with the neighbourhood. The move will also better engage the services of student hostels and company dormitories. There are differing views to this change. Property agents, some landlords and even tenants may welcome this shift towards quieter and less disruptive living environments. Others who are relying on rental income to prop up their finances may have opposing views. The loss of 2 tenants could very well surmount to $1800 to $2600 in potential monthly rents.

This shift to tenancy regulations will also affect home-sharing market such as Airbnb. The URA has been considering the creation of new leasing category for short-term rentals such as those publicised on home-sharing sites. And for those wondering if a huge bungalow and a small private studio may have different restrictions? The answer is no. URA has stated that there is no “stratified occupancy cap control based on unit sizes”.

Aura83For HDB flats which are sublet, the number of sub-tenants allowed remain unchanged at 6 and 9 for 3-room and 4-room or bigger units respectively. Property analysts are however expecting this new tenancy rules to soon apply for the HDB market.

 

Office and retail rental market: The competition between old and new

GSH PLazaIn the commercial property market, the effects of demand and supply is more strongly felt that ever as many new developments enter the market in line with the government’s efforts to grow and restructure the country’s commercial sector.

The positive outlook and sentiments in the private property market here does not seem to have rubbed off in the commercial sector as office rents fell 3.4 per cent in Q1 and retail rents fell 2.9 per cent – its 9th consecutive quarter of price declines. Prices of office spaces also fell 4 per cent in the first quarter of the year, following the 0.6 per cent fall from last year’s Q4. The numbers do not reflect the 2.5 per cent expansion of Singapore’s economy in the first quarter of the year, largely boosted by manufacturing and other trade-dependent sectors.

MarinaOneOfficeOther than Marina One which found tenants quickly, landlords of older commercial establishments are finding it increasingly difficult to compete with the newer offerings and have found themselves having to drop their prices in order to source for more tenants, even as more companies are relocating into cheaper and newer buildings outside of the core central region. Some companies are also exploring co-working options, which decreases the demand for commercial real estate on a permanent basis. New commercial buildings such as GSH Plaza and Guoco Tower will also increase the supply of prime office spaces in the Central Business District (CBD) and as these landlords are already raising their asking rents for Grade A office spaces, property analysts are expecting the country’s economic growth to fuel the commercial property market as the year moves on.

Heritage property in Orchard Road up for bids

Rising retail rents and popularity of e-commerce has had the old dame of Singapore retail, Orchard road, in need of a facelift. The recent month-long Fiesta on a Great Street hoped to draw shoppers back into the area with pop-up events, shopping promotions and lucky draws.

SLAOrchardRoadPropertyPhoto credit: State Land Authority

But what about keeping some heritage of the area, giving it a touch of tradition and history amidst the modern retail street. A heritage state property spanning 5 adjoining addresses on Orchard road has come up for sale. Situated near MacDonald House, the history of these properties herald from the post World War I era, with classical and art deco architectural features. It is the last remaining street-block of buildings in Orchard road.

Managed by the State Land Authority (SLA), the 5 units are now being offered up for a 3-year tenancy. And unlike previous government bids which were based purely on price, SLA has said that they will also consider the quality of the bid, which means the tender may not necessarily go the lowest bidder. 50% of the consideration will be dependant on the bid price and 50% to the concept.

SLAOrchardRoadProperty1Photo credit: State Land Authority

Though an attractive offer, property analysts do not expect it to be an easy-going tenancy as the property is placed at the end of the Orchard road stretch. The concentration of tourists and expatriates in the area however could be a jumping off point for the conceptualisation of a proposed plan for the property. The conservation status of the property also means some restrictions will apply and it will take a tenant with experience and adaptability to make it work. Market rental rates for the properties are currently around $3 to $4 psf.

Overall price decline in Q1 but buying sentiment remains upbeat

Price-declines across the board for private residential, commercial and resale public housing sectors could mean the bottom of property cycle is close. For the 14th consecutive quarter now, private home prices have fallen, the longest period in the past 13 years.

That said, the general market sentiment has recently picked up as slight tweaks in the property cooling measures and a series of new and exciting property launches have gotten buyers’ blood flowing once more. Private home prices have fallen 0.4 per cent in Q1, slightly lesser than the 0.5 per cent in Q4 of last year.

Paya Lebar Quarter_Lendlease PLQPhoto credit: Lendlease 

Values of private residential properties have fallen 11.6 per cent since its peak in 2013, and this difference has probably revived purchasing interest as most buyers still see the potential of well-located properties in Singapore.

Total private home transactions hit 5,202 units in Q1, the highest in 15 quarters thus far. Property analysts are expecting the market to remain bullish and continue its growth barring any unexpected economic circumstances. City fringe properties are faring particularly, propped up by the strong demand for newly launched projects such as The Clement Canopy, Grandeur Park Residences, Park Place Residences and the Paya Lebar Quarter. Non-landed home prices have in fact risen 0.3 per cent in the city fringes and 0.1 per cent in the suburbs. Core central region property prices fell 0.4 per cent however.

ParkPlaceResidencesLanded home prices fell 1.8 per cent last quarter, likely due to the restrictions placed on these rarer commodities. Foreigners are not allowed to own landed properties. On the resale HDB flat front, prices fell 0.5 per cent, though the decline is expected to reverse itself soon, in response to the positive sentiments from the private property market.

Office rents in Central Business District expected to rise in 2018


RobinsonTower
Rental rates for Central Business District (CBD) offices are expected to rise next year, which may push companies to reconsider relocating to regional commercial hubs.

While office rents are expected to ride a growth curve towards the end of 2017, a sustained recovery is expected to occur only in 2018. That however gives companies the value of time to weigh in on the possibility of moving outside of the CBD and into growing regional hubs where they could save on housing and commercial space rental.

Take the upcoming Paya Lebar Quarter for example. Its 840,000 sq ft of office space across 3 towers will be ready for occupation next year and on the other side of the island, Woods Square in Woodlands will offer up 534,000 sq ft of office space by 2019. While this means the companies will have to be situated away from the buzz of the CBD, the decentralisation of office spaces is timely as the government moves towards a new era of self-sustaining regional townships.

WOods SquarePhoto credit: Far East Organization

The limited supply, of less than 1 million sq ft, of additional office space in the prime Central Business District from now to 2020 could mean a projected rental growth. Though Frasers Tower and Robinson Tower will add a combined 823,000 sq ft of new office space to the CBD next year, it is still a long way below the 2.15 million sq ft injected by the Marina One and 5 Shenton Way developments this year.

Resale HDB sales volume down last quarter

After a period of relative stability in the resale HDB flat market, numbers have dipped once more last month with 1,834 transactions recorded in April compared to 1,910 in March.

TheTerraceECPunggolSales volume for resale HDB flats fell 4 per cent in April, and was also 0.9 per cent lower than April 2016. Prices also fell 0.3 per cent from March with only that of 5-room flats increasing by 0.2 per cent. Resale prices for 3-, 4-room and executive flats fell 0.2, 0.7 and 0.9 per cent respectively.

While resale units in mature estates continue to be in demand, prices of those in mature estates have fallen 0.9 per cent, as compared to the 0.2 per cent of units in non-mature estates. Though this may not necessarily signify a bottoming-out of the property cycle, property analysts are hopeful that sales will pick up in the 3rd and 4th quarter to hit the 20,000 target by year-end.

Since the property peak of 2013, resale flat prices have fallen 11.4 per cent. Q1’s fall of 0.5 per cent was a little steeper than the relatively minute fluctuations of 0 to 0.1 per cent for the last year, but art of the fall in sales volume in Q1 could be due to the Chinese New Year festivities and the market continues to be plug on in a state of stability.

 

New condominiums in district 9 to generate more buying interest in H2

Less than 2 months to the second half of 2017 and things may continue to look up for the private home market, particularly district 9. Two new condominium projects in prime locations will be launched in H2 – Martin Modern by Guocoland and New Futura by City Developments (CDL). Property analysts are expecting more than positive responses from the public – that is if the prices are right. Foreign buyers of luxury properties have been picking up units in increasing numbers as prices of high-end residential homes begin to bottom out. Non-landed private home prices in the core central region have already fallen 10.3 per cent by the end of March from it’s peak in 2013 and the demand for local property from non-Singaporeans have been increasing steadily.

MartinModernThe recent relaxation of the property cooling measures, however slight, and the brighter economic outlook may have helped boost overall market sentiments and given a much-needed push to the private property sector. 3,141 private homes were sold in Q1 alone which is more than twice the 1,419 units sold in 2016.

The 450-unit Martin Modern situated in Martin Place will provide more fodder for property buyers and investors looking for prime district units. Set in greenery amidst the busy city background, the property will offer 2- to 4-bedroom apartments across two 30-storey towers. The main feature of the property will be the “botanic garden”-like atmosphere where over 200 species of plants and animals and more than 50 species of trees and palms will imbue the development. Another of Guocoland’s similar properties, Leedon Residence, has sold 42 units worth over $250 million within Q1. Prices of units at Martin Modern is expected to hover around $2,300 psf.

New Futura1

Photo credit: Newfutura.net

The other district 9 property to look forward to is New Futura in Leone Hill Road. This new CDL project will feature 124 two- to five-bedders (including penthouses) across 2 blocks of 36 storeys each. Prices are approximated to be between $2,700 to $2,900 psf.

The would-be Woodlands

The Woodlands of the future could very well be the “Star Destination of the North” and home to 10,000 more new units as part of the Housing board’s (HDB) Remaking the Heartland (ROH) programme.
HDB Woodlands
Photo credit: HDB
There are 2 components to building the new Woodlands and the entire redevelopment is scheduled to take between 5 to 10 years. The remake will include Woodlands Central which will integrate commercial and community units at Woodlands Central and Woodlands North Coast public housing development. It is yet undecided if the residential units at Woodlands Central will be public or private ones though they are likely to be popular as the site is situated near Woodlands MRT station.
The Woodlands North Coast Land parcel will also house a business park, the first cluster in the North. The new commercial cluster will also provide ample spaces for small and medium-sized businesses. The Woodlands Regional Centre will also be revamped and expanded upon, structuring it to become a new hub for Malaysian and Asean-linked businesses.
Woodlands is in the third batch under the ROH scheme to undergo redevelopment, after Toa Payoh and Pasir Ris. It is set to change the landscape in the Northern region quite extensively with 3 new MRT stations coming up under the Thomson East Coast Line, a new Healthcare complex which includes a new acute care hospital, community hospital and nursing home, and the North South Expressway scheduled for completion by 2026.