Foreign investors like Singapore property market for its stability

http://www.thehumanbuilding.comThe recent en bloc sale of Shunfu Ville to Qingjian realty plus a $145-million dollar sale of a Cuscaden road bungalow to a Hong Kong Tycoon may have boosted foreign-investment sentiments, especially in the property market. It shows that many high net-worth individuals and funds are finding long term potential in Singapore’s property market.

AsiaSqaure

Photo credit: http://www.thehumanbuilding.com

They often have the financial holding power and are looking beyond short-term cyclical trends, setting their sights instead on mid- to long-term goals of 5 to 10 years. Asean is just beginning to boom, as many of the nations and economies become interwoven and thus provide more opportunities for growth and a general sense of vibrancy and promise. Aside from residential properties, commercial properties are also faring well, with offers of up to $560 million being made for the Straits Trading Building on Battery Road and $3.5 million for Asia Square Tower 1. Many regional and global companies are setting up headquarters in Singapore and will be looking at picking up office, commercial and retail spaces.

The recent dealings though hardly representative of Singapore’s weakening local market, may be a positive sign that companies, funds and high net-worth individuals are still happy to put their monies in Singapore properties. And though a market turnaround may not be quick, the time will come.

 

Bungalow of Tan Tock Seng’s descendant sold for $145 million

Is paying $145 million for a landed house over the top? Well, there is a first for everything.

The recent sale of a 25,741 sq ft freehold bungalow at 9 Cuscaden road is the first foray into Singapore’s property market for Hong Kong tycoon, Stanley Ho who has made billions through the gambling industry. The bungalow was put up for sale by Tan Tock Seng’s descendants and the site is zoned for hotel redevelopment with a plot ratio of 4.2. The bungalow was originally the family home of Tan Tock Seng’s great-grandson, Tan Hoon Siang and was put up for sale for between $160 to $170 million just last month. Named Villa Marie, it was presumably named after Mr. Tan’s second wife, Marie Windsor.

BungalowsStanley Ho’s Shun Tak Holdings paid $145 million for the prime site, the highest ever paid for a landed property and at $2,145 psf, it is all eyes on what is eventually built. Because of how it was zoned, the transaction was made sans the Additional Buyers’ Stamp Duty (ABSD), which could be a real positive, considering how much the deal cost. Though zoned for hotel redevelopment, there is also the possibility of building residential units up to 20 storeys high. Could Orchard road be seeing a new residential block or hotel in its midst? Will other landed properties possibly be seeing more activity soon?

 

Promising year ahead for landed properties?

At least in the Good Class Bungalow (GCB) segment apparently. Property analysts are predicting a 5 per cent price growth this year following promising response in the first quarter alone.

Despite economic slowdown and stock market volatility earlier in the year, this luxury landed property sector has seen a pick-up in sales volume as Singaporean investors are turning their sights on home ground once more, after a few seasons of investing in overseas propeties. Property agents have reported buyers making serious offers as compared to just a quarter ago in the latter part of 2015.

Leedon Road GCBRecent sales of GCBs included one at Swettenham Close at $1,354 psf. A total of 33 GCBs were sold in 2015, a similar number is expected for this year. Perhaps property owners have lowered their expectations and asking prices, and buyers are also enticed by the rarity and land area these bungalows provide. Many are upgraders or investors while sellers tend to be those whose children have flown the coop and are looking to downsize to more manageable properties. Rental yields for these large-sized properties have been diminishing, and these properties also tend to have higher property taxes and maintenance requirements.

Buyers may be more willing to take the bite this year as prices have already fallen 15 per cent since its peak in 2013, and further price declines will be unlikely. As these landed properties are also far and few in between, they may be quicker to pounce on a deal as it will not be easy finding similar options.

Property auction sales do well in weakening market

Multiple-property owners may face increasing pressure as the market continues to soften. Rental yields and demand have fallen due to slowing global economic growth.

Axis@SiglapPhoto: Axis @ Siglap

Real estate consultancies and auction houses are beginning to see an down-the-middle split in auction listings between owner listings and mortgagee listings. The latter are units put into auction by banks because of owners defaulting on their mortgage payments.

Not only are residential units being put up for auction, but office spaces, shophouses and retail units are also finding their way into these auctions. Home owners are increasingly favouring the path of auction listings are they garner higher exposure and are more likely to attract investors or buyers who may be willing to pay for quality or a good bargain.

Some of the auctioned properties out there are in the million-dollar range, including a 1,776 sq ft penthouse with roof terrace at Axis @ Siglap for $1.3 million, a 13th-floor 1,808 sq ft unit at The Orchard Residences going for $6.2 million and a $16 million single-storey detached Branksome Road house in Tanjong Katong.

TanameraCrestPhoto: Tanamera Crest

Affordable units sold below valuation are also available at these auctions, for example a 603 sq ft unit at The Greenwich in Seletar road going for $730,000 and $980,000 for a 1,205 sq ft unit at Tanamera Crest. These suburban units may be good bargains for buyer-occupiers while the higher-end listings are good fodder for investors in the know.

More bulk property and auction sales

The year ahead may be a bumpy one for property developers who have a large inventory of unsold stock and for investors who may have overstretched themselves.

A good many unsold properties may be making their rounds within the local market as sellers, buyers, investors and developers bid against one another to see who gets the best deal. There will be those who need or want to sell, and those who are able to buy when the price is right despite a market slowdown.

Hua Guan Gardens House

Photo: House in Hua Guan Gardens for sale

As more buyers are defaulting on their mortgage as interest rates rise and the market lulls, more homes are going under the hammer in mortgage sales. Last year saw the number of units put up for auction almost double from 47 to 87. Comparing this to 2012, when only a mere 9 units were put up for auction, the numbers have leapt considerably over the past 5 years. Given the quietening rental market and a global economic tossup, some owners are finding it difficult to service their loans. What does this signify? Will private home prices fall this year or will the number of new units coming into the market simply place more options out there for buyers?

The mortgage-sales properties were mostly larger apartments or private landed homes. Though this may mean the market for these properties have shrunk, it is good news for buyers who have been waiting and are ready to buy purchase these rare properties. One such property is a cluster bungalow in Hua Guan Avenue, just off Dunearn road, attractive for its rarity, 4,219 s q ft size, and location. It is situated near King Albert Park MRT station. Other potential money-makers include 2 maisonettes and one former-HUDC unit all sized around 1,600 sq ft and a steal at possibly below $1 million.

A stable year for Singapore’s property market?

Resale HDB flat prices have fallen only 1.5 per cent last year, as compared to 6 per cent the year before. Industry experts are not expecting prices to fall much more this year and in fact last quarter saw a 0.2 per cent rise in HDB resale flat price index. But that may not mean a sudden rebound of HDB flat prices as the options available to home buyers have now increased, especially as private home prices have fallen and more are now eligible to purchase new BTO flats directly from HDB.
Poiz Residences2Photo: Poiz Residences

HDB has announced that they will be rolling out up to 18,000 new flats this year, 3,000 more that last year. Private properties are now more affordable as developers have caught on to buyers’ affinity to total quantum selling prices. Last year, private property prices dropped 3.7 per cent overall, and a 0.5 per cent fall was registered last quarter of 2015.

The number of new property launches in the 4th quarter propped up new property prices with launches such as Principal Garden, The Poiz Residences and Thomson Impressions. Prices of new units in the city fringes fared well with no price changes. Landed property prices however fell 10.4 per cent over the last 2 and a half years, with prices falling 4.4 per cent last year alone.

Property analysts are watching the market closely as they are expecting the interest rate hikes to put a strain on those servicing home loans, especially as the property cooling measures concurrently remain.

Buyers picked up properties worth $102.27 million at auction

Rising interest rates and restricted loan options may have amounted in more properties going under the hammer this year. Though the number was not drastically different from last year’s, the total property value fetched at the auctions was much higher. The total value of properties sold at auctions this year is currently at $102.27 million, the highest in these past 5 years. Last year’s total auction value was $72.5 million.

LuckyHeightsBungalowPhoto: Bungalows at prime locations could have high projected values.

Residential properties were the main draw at these auctions. And figures have been on the rise since 2009. A total of 34 properties were sold at the auctions this year, and out of that 26 were private homes. That is almost double of the 46 per cent of private properties in auction in 2013. Property analysts are expecting the list of residential mortgagees to grow next year as the combined effect of a dampened rental market, increase in supply of completed homes, interest rate hikes, prevailing property cooling measures and a general sense of a slowing economy, sinks in.

One of the largest sales this year includes $16.3 million single-storey bungalow at Branksome Road. The projected value of its redevelopment may have made it a bargain buy, even at the hefty price. For developers and investors hunting for a worthy investment, these mortgage sales may be fertile ground.

Property Auctions – Going, going, gone

With interest rates growing and demand on the decline, some home owners may be forced to allow their property to go to auction.

Mortgage auctions have been on the rise with a total of 99 homes put up for auction in the January to July period of this year alone. Property analysts are expecting an increase even as interest rates rise, with numbers hitting closer to 200 by the end of 2015.

GCB Leedon RoadRecently, landed homes, in particular larger ones such as corner terraces, semi-detached or detached houses, were the more frequent subjects of property auctions. Buyers may have been attracted to the higher profit margin of these properties, but failed to gauge their holding power. Finding buyers for these big ticket items is more difficult as they often come with a very much higher total quantum price and the pool of buyers is restricted to Singaporeans and Singaporean Permanent Residents (PRs).

Some of the properties which have sold at recent auctions include a Good Class Bungalow (GCB) at Binjai Rise, a detached house in One Tree Hill and some larger apartments in Seascape @ Sentosa Cove and Orchard Scotts.

Investors seem to favour smaller apartment units at property auctions as falling rental yields all around have made them more wary. Although not as dire as the 2008 Lehman Brothers and 1998 Asian financial crisis, investors and government authorities are keeping a close eye on the market direction. Property cooling measures have seemingly curbed rampant property flipping, but could there be more room for swifter, sharper manoeuvres? How much wriggle room should you leave yourself if you’re hoping to score a good deal at the auctions?