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.

DUO Residences rise up

With its prime location, DUO Residences is hitting all the high notes to the tune of an average $1. 994 psf. And bringing along with it, tons of potential investors to the Bugis area. Already 87% of its 660 units have been sold since its launch earlier this month.

DUO ResidencesIts completion is targeted for 2017, just three years away from now, and with the Central Business District (CBD) and Orchard Road shopping belt just a few MRT or bus stops away, it joins the ranks of properties in the fringes of the city centre commanding high prices. At the 360-unit Concourse Skyline for example, prices hovered between $ 2, 279 to $ 2, 830 psf. This is close at the heels of the top-selling mixed-use development, Southbank on North Bridge Road.

If you have travelled past the Bugis and Rochor areas of late, you would have noticed the major changes in the landscape, both horizontally and vertically, as it prepares itself for the new Downtown Line MRT stations and new residential and commercial properties. Rental potential is incredibly promising as there are not yet as many completed condominiums or private properties available in the area as compared to other city fringe districts. With its heritage and other artistic and entertainment centres nearby, not to mention schools such as the Nanyang Academy of Fine Arts and School of the Arts, the Bugis area seems set to be abuzz with activity.

Besides the usual Novena, Newton and Geylang city fringe districts, Bugis seems to be hitting the bulls eye with investors. Are you ready to grab a piece of the pie? What other considerations should you be weighing?

Luxury Apartment prices broke $5, 000 psf

But property analysts are not bringing out the champagne yet.

Although selling prices for luxury condo apartments have broken the $5, 000 psf record, it may not yet be significant enough to indicate a rebound of the previously lacklustre luxury apartment sector. The lack of interest from potential buyers, renters and investors have signaled a continuing weak top-end property market. Low leasing demand may be the main reason for the lull.

Hamilton Scotts

Hamilton Scotts

In view of the volatile and somewhat fragile global economy, companies which hire expatriates are more cautious about providing generous housing allowances. In addition, senior expatriates are increasingly more willing to cut frills and opt for less spacious, more functional properties. These same companies may also have cut back on the number of expatriates offered relocation packages.

TwentyOne Angullia Park. Photo by China Sonangol.

TwentyOne Angullia Park. Photo by China Sonangol.

The properties which went for more than $5, 000 psf? The first was a 2,756 sq ft unit at the Hamilton Scotts apartments at the edge of Orchard Road. The unit went for $13.8 million at $5,001 psf. Considering most units were going only at $3, 401 psf prior to January’s cooling measures, a $5, 001 psf selling price meant kudos to the developers.

Further into the heart of Orchard, the freehold TwentyOne Angullia Park sold not one, but two units above the $5, 000 psf mark. One went for $5, 099 psf and the other at $5, 5600 psf in May. Prior to this year’s top high-end apartment sellers, the last apartment unit which sold above the $5, 000 psf mark was one at the Skyline @ Orchard Boulevard in September 2012. After that, prices had hovered around $4, 000 psf.

It will be a real feat to keep the high prices going, and if they do, what does that mean for Singapore’s real estate sector? How does that affect the average Singaporean?

Lowered prices for High-rise living

If you’re thinking about reaching for the top, that is. All the way to the top.

Penthouses are the creme de la creme of every condominium, and naturally they would come with corresponding prices. But with the decreasing number of buyers for these sky-high units, developers are now dangling discounts and offers for these rare but expensive units.

Signature@Lewis is located in the prime district 9, near good schools, amenities and the Botanic Gardens.

Signature@Lewis is located in the prime district 9, near good schools, amenities and the Botanic Gardens.

As the number of expatriates dip and so do their housing allowances, rental is on the downhill slope as well. City Developments Limited (CDL) has been offering a 5 per cent discount on their unsold stock of completed penthouses. These include those at Shelford Suites, Wilkie Studio and The Glyndebourne. Prices start at $2.9 million after discount.

Another property developer offering discounts on penthouse units is Hiap Hoe. At Skyline 360, four penthouse units are going at a whooping 28 per cent discount. Though still a considerable $9 million, you get a 3,929 sq ft unit, and at those prices, shaving off 28 per cent is amount to scoff at. At their Signature at Lewis project, they are offering a similarly attractive discount of 25 per cent. Prices are estimated at $4.6 to $5.2 million ($1,500 psf).

Penthouses are usually priced out of reach for most buyers, thus they are seldom the first to be sold in a project. But they do offer premium space and privacy with the larger floor areas that includes large roof terraces of double-storey units – also known as duplex penthouses.

Is there a difference between penthouses within the Central region and those in suburban developments? But of course. Industry analysts approximate penthouse prices to be at:

  • City Fringe – $1,400 to $1,800 psf
  • Outside Central Region – $850 to $1,200 psf
Martin Place Residences in District 9

Martin Place Residences in District 9

In the resale market, penthouses are even harder to come by as buyers are often able to keep them despite not finding tenants, or simply enjoy them for themselves. Rental yields for these prestigious homes are high, but harder to come by. Monthly rentals are by the tens of thousands. A 4,230 sq ft penthouse unit at Amber Residences in district 15 for example, rents for $10,800 per month. At Martin Place Residences in district 9, the price could go as high as $24,000.

Are penthouses worth investing in or should they mainly be considered for owner-occupation. Are there any cons in buying one or are there only pros, especially in the long term?

2 Doors, 2 keys, 2 rental opportunities

Shoebox units and dual-key apartments have both been taking the real estate market by storm of late. Rental opportunities are often the reasons behind these property purchases. But which will earn you the most in rental income?

Urban Vista at Tanah Merah.

Urban Vista at Tanah Merah.

The answer is obvious. A dual-key apartment will easily earn you twice the rental income with only one property. But with a shoebox apartment, it’s only one set of rent. Unless of course you have 2 properties to rent. But that would cost you the additional buyers’ stamp duty (ABSD).

Developers are quick to catch on as well, and have been increasingly rolling out a higher number of dual-key apartments in their new projects. The Fragrance Group and World Class Land for example, have launched 700 sq ft dual-key units in their Urban Vista project in Tanah Merah. The new Liv on Sophia also has such units, albeit a limited number as there were not many to begin with. The development only has 64 units in total.

Dual-key apartments first hit the market in 2009, when Frasers Centrepoint brought it to the limelight. The main purpose was to cater for large family units who wish to live together under the same roof. Dual-key units are unique in that they have 2 separate entrances with their own keys and are big enough to accommodate large, extended families.Increasingly, these units now appeal to property investors who are looking to rent out both units in order to reap more profits and more quickly. And now for the ultimate plus point: If you purchase a single dual-key apartment, you can avoid the expensive ABSD since you are only essentially buying one unit.

Liv on Sophia.

Liv on Sophia.

In January, new rulings made the second and subsequent property taxable for Singaporeans and first purchases already taxable for Permanent Residents. Singaporeans have to fork out a 7 per cent ABSD for their second property and 10 per cent for their third and subsequent properties.

For smalls families or singles who are able to afford a dual-key unit, it might be the best way to reap profits through rental of the other unit. For now, the Central region is the only area without a restriction on the unit size, thus smaller dual-key apartments are available here and the costs might be considerably more affordable even for smaller families, couples or singles. Liv on Sophia’s dual-key apartments feature a small additional room or “suite” which features a small kitchenette and sufficient space for a washing machine. As a freehold property, units are going at $2, 450 to $2,500 psf.

Holland and Bukit Timah properties Big Hit with Expatriates

Despite January’s cooling measures, rental and sale prices of residential properties in the Holland and Bukit Timah areas remain high. A district commonly popular with expatriates, they are getting increasing interest as expatriates move away from the prime areas around town in search of something not too far away, but provides privacy and exclusivity at the same time.

The Trizon condominium in Holland Village.

The Trizon condominium in Holland Village.

Rental alone saw a 4 to 7 per cent rise in comparison to 2012, according to ECG Property. Property agents are seeing a hike in enquiries and requests for short-term leases, usually of a one-year period instead of two.

Property agents have always been familiar with the popularity of homes in Districts 9, 10 and 11, and SLP International‘s research shows that sale prices have risen 8 per cent and new properties along the stretch have brought prices up even more.

New properties along the Holland and Bukit Timah stretch has brought rental and sale prices of units at neighbouring, older apartment blocks up with them as well.

New properties along the Holland and Bukit Timah stretch has brought rental and sale prices of units at neighbouring, older apartment blocks up with them as well.

For example, units at the Trizon command rental prices of $6,500 – $7000 for a three-bedder. Neighbouring Ridgewood Condominium, which is an older establishment, also commands $5000 for a 1, 615 sq ft apartment. The newer One Devonshire condominium along Holland Road has also pulled rental and home sales up along with it.

Property investors could have something to look forward to, with an upcoming residential project at the existing Henry Park Apartments site. It is situated directly across Henry Park Primary School and that could be a plus point for some families.