Hong Kong’s property prices expected to rise further

As one of Asia’s, if not the world’s, most expensive cities to live and work in, it comes as no surprise that the real estate in Hong Kong is one of the world’s costliest.

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Photo credit: www.onekt.com.hk

Despite the Hong Kong government‘s repeated attempts to cool the market, with implementation of stamp duties and laying down of other purchasing restrictions, property prices in Hong Kong have continued to climb. And things could be heating up even more this year as even Mr Li Ka Shing, the country’s richest man, predicts the market still have room for property prices to climb further. In November last year, private property prices reached a peak unseen since 1979 when the data was made available by the city’s rating and valuation department.

Although there has been some political unrest, mostly civil, in the city and interest rates have been on the rise, there is still space apparently, for slight rise in prices this year. It will not be a smooth ride up, but there will be increments made nonetheless. China Overseas Land and Investment for example has listed the prices of their latest private residential development in the former Kai Tak airport area for almost 20 per cent higher that the same which were sold in August. In a city where liveable land is scarce, developers have been known to pay exorbitant prices for land sites, for example the record ids for sites in the same Kai Tak airport area for US$1.8 billion or S$2.58 billion.

 

Resale HDB market looking at a year of stabilisation

Transaction volume and prices of resale HDB flats dipped once more last month, following a rise in November. Prices of resale HDB units fell 0.3 per cent in December and 13.9 per cent fewer transactions were recorded in midst of the usual year-end quiet. A total of 1,364 resale flats were sold last month.

bishanloftecLarger units such as the executive flats and 5-room flats saw a bigger price decline of 0.9 and 1 per cent respectively. Prices of rarer 3-room and 4-room units dipped only 0.1 and 0.2 per cent. The steeper decline for the bigger flats could be due to declining private property prices, which may steer some buyers towards that direction. Smaller HDB flats are priced much lower than the same in the private property sector, thus the pool of buyers for these units are considerably more stable though now that singles can apply for 2-room flats directly from HDB, the pool could have diminished slightly.

5-roomhdbPrices of resale HDB units in non-mature estates fell the hardest at 1.2 per cent year on year, possibly due to competition from the rising number of private residences in the suburbs. In mature estates on the other hand, prices have risen 1 per cent. Overall, with prices fluctuation within the 1 to 2 per cent range, analysts consider the market stabilised after years of gradual decline since 2013. The market could be reaching a zero per cent change soon and with the current market levels remaining unchanged, buyers are beginning to take the opportunity to snap up units in the resale market when a suitable deal comes up. Resale transactions may rise up to 15 per cent this year.

Prime land plots released for H1 of 2017

Out of the 5 residential sites which were released under the Government Land Sales (GLS) scheme‘s confirmed list for H1 of 2017 are 3 sites which may see heated competition from bidders – one on Jiak Kim Street where the Zouk nightclub used to stand, another on Fourth Avenue right next to the Sixth Avenue MRT station and yet another on Woodleigh Lane, near the new Bidadari township and Woodleigh MRT station.

rmaisonThese 5 sites are expected to yield up to 2,330 new homes, about 50% more than the 1,560 units yielded by land released in the first half of this year. Bidding on the last few sites released this year have gotten developers and property analysts excited about the potential volume and size of land plots to be released next year, but the authorities have kept it conservative thus far, having released only 10 sites on the reserve list. This includes 1 mixed-use site and 2 commercial sites.

It is possible that the Government is concerned about the stock of unsold executive condominiums (EC) currently in the market. In addition, most of the units sold this year were purchased by investors and not true home-occupiers. The Monetary Authority of Singapore has also recently flagged their concern about rising vacancy rates in the private property market. This combination of factors may have influenced their decision on how much land supply to release in 2017. Only 1 EC site was released on the confirmed list and another on the reserved list.

West Coast Vale and Serangoon Road sites to yield more new homes

The Urban Redevelopment Authority (URA) has just released a West Coast Vale residential site with a tender closing date of Feb 9 next year, on the back of positive response from 14 developers for a Margaret Drive site.

parcriviera2While property analysts are more prudent with their predictions of response from developers for this site, they are nevertheless expecting 5 to 10 bids. It’s location is perhaps not as ideal as the previously released  Margaret Drive and Martin Place sites, but this 99-year leasehold, 16,378 sq m site is situated near the Jurong Lake District and its many amenities such as office and commercial spaces and also shopping malls such as Westgate and Jem.

A recently launched project nearby is the 752-unit Parc Riviera condominium. Sales for this development has been muted thus far with 130 units sold at around $1,175 psf, but analysts are still expecting a winning bid of between $222.1 million to $246.8 million for this new West Coast Vale site. There are speculations that EL Development might go for the bid in order to manage pricing of new homes in the area.

sennett-residencesOn the private front, the Serangoon Road site on which the National Aerated Water Company sits has also been sold to Malaysia-listed developer Selangor Dredging for $47 million. Unknown to some, the National Aerated Water Company used to distribute popular nostalgic soda pops such as Sinalco and Kickapoo Joy Juice and this site used to house its bottling factory up to the 1990s when operations ceased. As the new owner is planning to convert this industrial site into a residential one which could potentially yield 117 apartment units, there is an additional fee of $22.66 million involved in the transaction. This could very well be a worthy investment as the site is close to the Potong Pasir MRT station and upcoming Bidadari HDB estate, in the increasingly popular city-fringe district 12.

3 City fringe properties exchange hands for $190 million

3 residential properties in the city fringes – owned by 1 group of 3 investment holding firms and sold to 3 different developers fetching $190.5 million in total. Quite the sale, it seems. These 3 sites, situated in Grange Road, Cuscaden Walk and Hullet Road, were launched for sale in October for $185 million and from the interest it drew before the sale closed on November 2, developers and investors seem upbeat about the future of high-end luxury residential projects and serviced apartments or hospitality-based properties in Singapore.

urban-suitesThe luxury property market may have shrunk slightly in the past 3 to 4 years, but buyers are coming back into the market, after letting the effects of the additional buyers’ stamp duty sink in. Despite the authorities being unlikely to budge on the property cooling measures for now, interest is once again growing, with central region properties sales on the rise this last quarter.

The site on Hullet Road with a total strata area of 18,428 sq ft was sold to Hullet Development for $38.2 million. The consortium led by Mr Patrick Kho of Lian Huat Group have plans to build a high-end development in the site, leveraging on its location right in the centre of town. The biggest of the 3 sites on Cuscaden Walk with a land area of 21,560 sq ft, was bought by a consortium led by Sustained Land for $103.8 million. The other plot on Grange Road was purchased by Roxy-Pacific Holdings for $48.5 million.

boulevard-vueThese new sales may ultimately see the introduction of some choice luxury apartment units in and about town, by the time they are launched or built, the market may or may not provide a suitably soft landing for these new properties.

Japan real estate may see future boom

Japan may have previously abhorred foreign labour but as their population declines and ages, they may be pushed to relax immigration laws. This may also increase the demand for real estate, and in particular since Japan’s Airbnb scene is also rather active, those who own a piece of prime real estate in the country will have profits to reap in the long run.

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Photo credit: Mitsui Fudosan Residential and City Developments

Singapore developer, City Developments (CDL) has recently been taking up stakes in various Japanese properties such as Park Court Aoyama The Tower, a 163-unit residential project in the Aoyama area within the Minato ward, where high-end businesses and exclusive residential areas  surrounded by modern eateries and pretty parks reside. In fact, with 26 storeys of freehold apartments ranging from 389 sq ft to 3,789 sq ft, the property looks set to attract both domestic and foreign buyers. Prices for the units will start at 178.8 million yen (approximately S$2.3 million) for a 1-bedder to 271 million yen (approximately S$3.5 million) for a 3-bedroom apartment. Only 55 units were released in its initial launch in Japan where show flats are already available for public viewing.

parkcourttokyo1Besides residential properties, hotels and commercial business spaces are also hot properties, quite literally. CDL’s hospitality unit, Millennium and Copthorne Hotels have already staked claim on a prime Ginza site for their flagship 329-room hotel and have invested in 3 other hotels as well. The CDL group also has stakes in 2 other residential developments. Despite the uncertain economic climate, Japan remains one of the more active real estate markets in the Asia-pacific region thus value appreciation will work in favour of property owners for quite some time yet.

October’s new home sales up 128 per cent this year

With more that 1,252 new private homes sold in October, new home sales have risen 145 per cent from the 509 units sold in September and 128 per cent in a year-on-year comparison with 2015 when 549 units were sold.

thealpsresidences4The sudden spike may have been due to pent up demand after the slower months of the June school holidays and Hungry Ghost month in August, plus the launch of major projects in the later part of Q3. The 2 new property launches which garnered most of the sales were The Alps Residences in Tampines and Forest Woods in Serangoon Central. Each sold more than 300 units which made up 55.7 per cent of October’s sales. Other projects which consumers actively seemed out such as Stars of Kovan, The Trilinq and Kingsford Waterbay all sold only 30 units each, though understandably as these are much older launches.

Property analysts put the sudden rise in sales, a 15-month record high in fact, to the affordable prices put out by developers. Despite the slower economic outlook, consumers know a good deal when they see one and are willing to invest in what they consider to be long-term investment-worthy properties. Forest Woods is situated close to the Serangoon transport hub – the MRT station, bus interchange and NEX shopping mall – which could account for its popularity.

forestwoodsForest Woods was the top seller last month, with 364 units going at an average of $1,078 psf. Smaller units were purportedly gaining traction with buyers once more. Shoebox apartments, though aplenty in the market, remain affordable and property analysts report a direction change from investors who have turned their attention from riskier financial products back to the more stable property market.

 

Resale private property prices slip further in October

Following the dip in resale prices in September, last month saw a further slip of 0.7%. Resale prices of private non-landed properties were apparently at a 50-month low.sycamoretreeSales volume of resale private properties also fell 15.2 per cent with 586 transactions clocked in October, in comparison to the 691 in September. In the peak of April 2010, 2050 units were sold, 71.4 per cent higher than the current numbers. September’s numbers may have been slightly more positive due to the pent up demand from the lack of major launches in the second quarter and the Hungry Ghost month in August.

Some districts fared better, with more than 10 resale transactions recorded – namely district 10 where the median selling price was $10,000 more than the computer-generated market value. But in most regions, sellers have found themselves having to offer prices up to $10,000 below the market value in order to close deals and attract buyers. In district 21 in fact, selling prices went as low as $23,000 below the market value.

HighlineResidences2Property prices in the city fringe, normally where selling and buying is the most active, have fallen 2 per cent. In the suburbs, prices also fell 3.3 per cent. Prime district properties however enjoyed a 4.9 per cent price increase, though it might only be sufficient to consider it a rebound from previous lull months.