Success of collective sales continues

2017 continues to be a good year for the collective sales market with Shunfu Ville given the go-ahead from the Court of Appeal last week and the sale of One Tree Hill Gardens site for $65 million this year.

OneTreeHillGardensThe Lum Chang Group has purchased the latter freehold landed residential development site near Orchard Road at $1,644 psf. Its proximity to Orchard Road makes it a prime site that is rare also because of its freehold status. It is of sizeable land ratio and developers have expressed considerable interest. The site was initially put up for sale at $72.8 million. Despite the $7.2 million shortfall, individual owners of the 6 maisonettes and 7 apartments will still receive $4.3 to $9.1 million depending on the size of their units.

Under a 2014 masterplan, the freehold site is zoned for 2-storey semi-detached residential use within a 39,063 sq ft land area. What it could potentially yield are 8 semi-detached houses, 5 bungalows or 10 semi-detached homes and 3 bungalows. With such landed properties near Orchard Road a scarcity, the freehold homes will no doubt receive much interest from investors and high net-worth buyers.

venturaheightsWhile the market is still tender from the previous years of slow growth, developers are beginning to replenish land stock and collective sales may be their means to the ends as the government has recently cut back on the release of land plots. Though price-sensitivity continues to rule developers’ bids, the collective sale market will be active this year especially with more home owners enquiring about en bloc sales and the sale of Eunosville and Rio Casa last month.

Sparks of hope in property market

Despite the prolonged property lull, analysts are hopeful that a few sparks of recovery will begin to rejuvenate the market this year. The office sector may boost the commercial market while high-end luxury homes will hold up the residential property segment.

dleedonAs far as regions go, the core central region is heating up in terms of foreign interest in both residential and commercial properties. The sliding private home prices, by 11 per cent since 2013, have brought investors back into the luxury homes market. Currency valuation will however continue to play a part in the movement of investment money, and Singapore will still have to compete with other cities such as Melbourne, Sydney and Shanghai for investors’ attention.

Compared to other major cities such as Hong Kong, New York and London however, apartment prices here have fallen and will become more appealing to foreign buyers as the potential for yields in the medium term is considerable, especially as these specific market segment is expected to perform well this year.

skylineorchardboulevardThe collective sales market is another to watch in 2017, as developers are expected to collaborate to build up their store of land sites for long term yields. There might also be acquisitions of smaller developers by larger ones in order to participate in the government land sales programme. Property prices are expected to remain stable but depending on a property’s rental yields as a means of investment or profit could become less attractive as investors find it more difficult to find tenants in an increasingly competitive market.

Will current property bright spots continue to shine in 2017?

Private home prices have continued to fall in 2016, and while that may have coloured the market atmosphere somewhat grey, bright spots are beginning to shine through the gloom, with 3 sectors performing particularly well this year.

Miro condo on Lincoln Road, just off Novena at the City Fringe districts.

Miro condo on Lincoln Road, just off Novena in the city fringe.

The luxury residential property, commercial office and collective sales segments have all shone this year. And industry players are no doubt hoping that the positive streak will continue in 2017. In this year alone, 3 en bloc sales were closed. Only 1 such transaction was recorded for 2015 and none in 2014. Even for the private home market, sales volume has risen 9.8 per cent this year despite 10.8 and 10.7 per cent fall respectively in sale prices and rents in 12 consecutive quarters.

Some property analysts however consider the fall in property prices a good thing, as this has enticed more buyers back into the market. Buyers who may have previously stayed away from the market due to the increased stamp duties and fees implemented by the authorities in the past few years to attempt to cool the market, have now returned and are now swiftly closing transactions.

2 RVG condo apartment in River Valley

2 RVG condo apartment in River Valley

In the prime districts of 9, 10 and 11, private home transactions were already 42.6 per cent higher than the total in 2015. 2,601 deals were sealed in the Orchard, River Valley, Bukit Timah and Novena areas as of mid-December. With more land allocated under the Government Land Sales (GLS) scheme and developers on the lookout for smaller prime location sites, the market may see a lot more activity quite soon.