Why property cooling measures are here to stay

ABSD, SSD, TDSR, QC – These abbreviations related to property cooling measures implemented over the course of 5 years have taken root in the local real estate and construction industry and despite a much quieter market, may not go away anytime soon. And with good reason.

Aeon MelbourneThe demand for properties in other major Asia-pacific countries and cities such as Hong Kong, China, Australia and Japan have not seem to wane, reflected by soaring home prices in Hong Kong, Sydney, Melbourne and various top-tier cities in China. And this is despite their governments placing more restrictive regulations in place in efforts to curb investment outflow and property speculation. But perhaps it could be the case of too-little-too-late. And it also goes to show that investors are still looking for markets to hedge their funds and the pool of willing China investors looking to take capital out of their country agains a depreciating yuan.

CasaAerataIn Singapore, despite a gradually decline in home prices, the market has remained resilient and a untimely lifting of property curbs may result in a quick and unrecoverable increase in property speculation. In fact, despite the series of property curbs instrumented since 2013, the property cycle seems to already be reaching the bottom, which could only mean a turnaround possibly within the year. Last year, resale volume rose 28 per cent and total sales increased by 16 per cent from 2015, indicative of a recovering, or at least stabilising, market.

Freehold site to yield potential landed homes in Orchard road

The Orchard road belt has not seen landed homes in its midst, or at least new ones, for quite sometime now. They are few and far in between and usually cost more than an arm and a leg. But a freehold residential site near Orchard road worth $72.8 million might potentially yield landed homes.

OneTreeHillGardensThe One Tree Hill Gardens site measures at 39,063 sq ft and currently consist of 6 maisonettes and 7 apartment blocks or $1, 864 psf in asking price. The units here are of considerable sizes, ranging from 1,916 to 4,682 sq ft. Should the development succeed at a collective sale, each home owner could receive anything between $4 to $11 million. What the site could potentially yield are 13 detached and semi-detached houses. Considering the prime district, the rarity of landed homes across the board and more so in the centre of town, and the lack of sizeable residential sites readily available for redevelopment, marketing agent Knight Frank is confident of the interest the site will garner. Recent sales of sites in Grange Road, Cuscaden Walk and Hullet Road have all drew considerable bids of $190.5 million in total.

The area surrounding the One Tree Hill Gardens site is in itself an exclusive enclave of high-end apartments and some landed homes. Add on its future proximity to the upcoming Orchard Boulevard MRT station along the Thomson-East Coast Line and up goes its value.

Rise in new private home sales volume

The number of new private homes sold last year have risen on the back of declining prices in the primary private home sales market. Fighting against predictions of a languishing private residential sector, new private home sales have held up in 2016 with 8,136 new units sold, 9.4 per cent higher than 2015’s 7,440.

SantoriniBuyers have been picking up units directly from developers, aided by a couple of pushes from low interest rates an and lower selling prices. Though 2016 was a slow year for Singapore’s real estate industry in terms of home prices, the number of transactions clocked have surprisingly went against all odds. While private home prices have fallen over the past 3 years, market sentiments have begun to pick up last year and increased interest and availability of one- and two-bedroom units whose total quantum prices were more palatable for the general buying public and investors alike.

In Q4 of 2016, 2,480 new units were sold, the highest number in a quarter for the year. Despite the year end’s usual market lull and only 90 new units launched in the last quarter, December’s sales were positive with suburban projects leading the way with 231 sales, followed by 112 in the city fringes and 24 in the core central region. Last month’s best seller was The Santorini in Tampines which sold 26 units at an average price of $1,046 psf.

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.