Sydney properties still finding ready buyers

Property prices in Sydney have become notoriously expensive, perhaps more so in the past couple of years than ever before. But the buyers are still ready to take the dive, no matter how deep, as reflected by the sales of a Darling Square apartment project by Lend Lease Group where all the 391 units were sold within 4 hours.

DarlingSquarePhoto credit: Lend Lease Group

Prices were not cheap, starting at A$630,000 (S$625,000) for a studio apartment and going up to A$3.5 million for a 3-bedder penthouse. In truth, property prices in Singapore are comparable and this Sydney property is situated in a prime location – just west of Sydney’s Central Business District. The property is set for completion by 2019 and will be able to house approximately 4,200 residents.

While more of the buyers were Australian, and with about 66 per cent buying the units to live in, property analysts are still waiting for the verdict to be out. Considering the proximity of these units to Sydney’s CBD, and positive rental yields, some buyers may eventually be looking at renting these units out.

There will be a construction boom in Sydney in the next couple of years as more than 81,649 new homes are expected to be built and completed within the time frame. By 2017, 34,300 new apartment units will enter the market. How will the rental market be able to cope with the spike in numbers come 2019, and will demand continue to increase?

No luxury comfort for luxury property market

At $1,300 psf for a Cairnhill Plaza 4-bedder, it might be the lowest for a prime property in the middle of town in the last 10 years. As competition in the luxury property market heats up, owners and investors are finding themselves in a bit of a bind as prices dip and the buyers are few and far in between.

The Sail MarinaLeasing them out to fund mortgages have also proven to be increasingly difficult as the foreign workforce and pool of expatriates have shrunk due to job losses in the finance, oil and gas sectors. Combined number of secondary market losses registered in the core central region which consists of the prime districts of 9 to 11, the downtown core planning area and Sentosa Cove come up to 63 in the first quarter of this year alone.

As most of the expatriates looking for housing are now middle- or executive-level individuals with smaller housing budgets, smaller suburban properties in areas with regional business and commercial hubs are doing better than larger, high-end apartments in the prime or Central Business Districts (CBD). In fact, property analysts are now finding that more buyers are local Singaporeans who are purchasing a second or subsequent holiday home. As they are purchasing for occupation purposes, rental yields are less of a concern for them and are able to hold on to their purchases till a later date should they wish to sell.

Renting out your private condo apartment

Many property owners here rely on property rental to help them with their mortgages and oftentimes, the rental option is regarded as a long-term financial aid. What then should you as a home owner who is looking to rent out your private property or even just a room in your home be watching out for? And as a tenant, do you know what you should or should not do?

DuchessResidencePublic housing or HDB flats fall under the jurisdiction of the Housing Development Board (HDB), which has clear rules and guidelines for property leasing. But private properties are often left to the discretion of the market, tenants and landlords, with some areas which though seemingly grey, should be quite glaringly clear.

What is not allowed?

  • Short-term rentals. Though concepts such as Airbnb have been around for sometime, it sadly may not yet work within Singapore’s legislative system for property rentals. URA’s lease and subletting rules currently states that rentals need to fulfil certain requirements, with the time period being a minimum of 6 months.
  • Partitioning of a unit into smaller units. It is not uncommon to find landlords or sometimes a master tenant putting up false walls or partitions in order to sublet the unit.  The maximum number of residents in a private residential property is 8, regardless of the size of the property.
  • Leasing to tenants without proper papers. Landlords should always make it a point to check and keep a copy of the tenants’ passport and work permits or employment passes as the onus is on the owner of the unit to ensure that the unit is rented only to legal workers. A quick check on the ICA website will allow you to verify your tenants’ validity and authenticity.
  • Subletting of properties by master tenants. As landlords of a property, always be vigilant and do frequent checks on your property to ensure the clauses in your tenancy agreements are not flouted.

And for tenants, be aware that your landlord should pay for the condominium’s maintenance fees. For both sides, a reliable agent who will be able to advise and help you with the proper paperwork and help your keep a lookout for blind spots is an invaluable asset.

 

 

Rising competition in the Rental market

If you were looking to buy a condominium unit to call home, competition from the rising number of new homes might be good news for you. But if you were looking to invest in a unit to reap rental profits, it might be wise to consider your options carefully.

Jupiter18 CondoThe rental market for suburban condominiums has been falling, especially as more new properties enter the market. Private condominium rentals have fallen 0.6 per cent last month and is 6 per cent lower than last May on a year-on-year comparison. More new condominiums will receive their TOP (temporary occupation permits) in the next few months, which may suppress the rental market even more. Property analysts are expecting a fall of up to 7 per cent for the private property rental market this year.

The effects may also trickle down to the HDB rental market as competition heats up across the board. The price gap may be narrowing between HDB and private apartment rents, thus giving tenants a much wider pool of options. A five-bedroom HDB flat now usually rents for up to $2,400 per month while a 2-bedder private condo unit rents at just under $3,000.

Location is still king and units in mature estates or near MRT stations will still command slightly higher rents.

Private condominium rental – Volume up, prices down.

Despite a softening of the private property market across the board, private condominium rental demand seemed to have remained steady, especially at popular projects in close proximity to transport and in areas with a low supply of similar new properties.

At Reflections at Keppel Bay for example, 314 more leases were signed last year as compared to 293 in 2013. But rental prices dipped 6.6 per cent as landlords may have been forced by competition to lower their asking prices. Average monthly rental here was $4.85 sf. Nearby, at the Caribbean at Keppel Bay, average monthly rent dipped by $0.43 psf from the previous $5.63 psf.

Reflections at Keppel Bay boasts waterfront living with a marina and a good many luxury amenities as well.

Reflections at Keppel Bay boasts waterfront living with a marina and a good many luxury amenities as well.

The tipping scale may now be leaning towards tenants as the influx of new properties, and in larger residential properties, many landlords may be competing against one another for the same audience. And once rental begins to dip across the island, tenants have an upper hand at bargaining for reduced rent and landlords often find themselves having to adjust prices to seal a deal.

Properties with a prime location and fewer competing units in the vicinity may still be in high demand, though City Square Residences at Kitchner Link seems to be losing its popularity with tenants despite its proximity to City Square Mall and Farrer Park MRT Station.

As more new properties reach their occupation-ready status this year, and coupled with the rising interest rates, it may be a slow but arduous journey for the market. What can property owners and landlords do to steel themselves for the year ahead?

Shoebox apartments falling out of favor?

These tiny but self-sufficient apartments have been doing exceedingly well for the last five years, and many investments favored these smaller units as their total quantum is more affordable than the larger ones and are easier to find tenants for. But as developers caught on and began building more of the same units, the number of shoebox apartments, or units below 500 sq ft, rose in number. By 2015, 53,900 new private condominium units will hit the market, and most of them will be shoebox apartments.

Alexis @ Alexandra CondoAccording to URA figures, there are currently 2,400 such units in the market. By end of 2015, there will be 11,000. That is almost five times the numnber. Will this dilute the market of potentla buyers? No doubt. But landlords with units in highly accessible locations may find themselves having the upper hand. Others who own units further away from transport nodes, town centers may find it harder to secure rental rates which they had hoped for.

However current rental yields for shoebox apartments remain 1 to 2 per cent higher than other types of units, which are 2 to 3 per cent. Private properties with such units include Alexis in Alexandra road, Parc Imperial in Pasir Panjang and Suites@Guillemard.

Property analysts still see some brightness in this market as singles, young couples and expatriates with smaller housing allowances continue to lean towards these smaller, more affordable units.

Kovan and Dual-key apartments – A Perfect Match

Dual-key apartments were a relatively new property type just a couple of years ago, but now, they are all the rage, especially with big families and property investors who are looking for prime property to rent out. And the latter could have found their perfect match with dual-key properties.

Trilive KovanThese dual-key apartments are unique for its 2 entrances within one unit. And this helps investors rent out the same unit they live in, while still keeping their privacy, all the while avoiding the ABSD (additional buyers’ stamp duty). If you own more than 1 property, subsequent properties will mean higher taxes and duties.

Developers are quickly picking up on buyers’ keen response to dual-key apartments and are including more of them in new launches. A new condominium development, Trilive in Kovan, will feature 88 dual-key units , that’s almost 80% of its total 124 units. To be launched later this year in June, dual-key units will start from its 614 sq ft two-bedders. Prices have yet to be released but are expected to be similar to that of the nearby The Tembusu, at $1,400 to $1,500 psf.

Kovan is an up and coming area for high rental take-up rates as rents there are relatively affordable for its convenient location and surrounding amenities. It has one of the highest rental yields in Singapore. It’s proximity to areas such as Hougang and Serangoon also means it is close to a number of schools, various modes of transport and just a few stops away from the city center.

The road ahead for the property market could be spiced up with the introduction of more dual-key units in future launches. Buyers will undoubtedly be interested to see how these new properties provide an edge up from what is currently in the markets.

Private home sales – Will the decline continue?

The property market has been softening. The decline seemed inevitable, especially as completed new private homes flood the market in the upcoming year or two.

Not surprisingly, shoebox apartments saw the largest dip in sales as the number of units are somewhat saturated. Buying power is also now lower and buyers who were initially looking at these units for investment may no longer be able to get the loans they need.

 

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Rental issues such as the age, functionality and location of resale units now have to compete with the newer and sometimes faster property models. In the central districts, the decline in rents and sales of apartments were most evident. This could be due to the number of unsold high-end properties in these areas. Even suburban condominiums are feeling the heat as many expatriates shun them as they often do not provide the convenience and exclusivity they desire.

Whether the effect will transfer to the HDB resale market also awaits to be seen. As HDB upgraders who are moving to their completed units will have to let go of their HDB units within a specified time period, many may be in a hurry to let go of their units and possibly at lower prices than before as the market gets competitive. Pair this up with a diminishing market for smaller units as singles are now able to purchase new flats from HDB directly, as well as a smaller pool of permanent residents, the property market seems to be in for quite the turn this year.

Even as more new property launches are promised, how private home sales fare the next quarter may set the mood for the rest of the year.