Chinese top buyers of Singaporean properties

Foreign interest in local properties have not waned despite rising prices and supply over the past half a decade. Their appetite have not diminished, if at all. Transactions may have shrunk slightly due to the additional costs involved in foreign-purchases of properties in Singapore, put in place by the series of property cooling curbs rolled out since 2011, but they buyers are back in the market in search of potential sites and units, in particular buyers from mainland China.

skyline-residencesIn a year-on-year comparison, foreign property transactions were up 11.8 per cent and this excludes purchases by permanent residents. Besides the Chinese, other major buyers hail from Malaysia, Indonesia and the United States. Each group have their preferences as the numbers show. Chinese buyers mostly favoured suburban properties while Malaysia and Indonesian buyers went for core central region units. 68 per cent of Indonesian buyers and 40 per cent to Malaysian buyers purchased homes in the prime districts while 58 per cent of transactions from the Chinese were for homes outside of the core central districts. Most Indonesia buyers are willing to pay $2,000 psf and above for prime properties while Chinese buyers usually went for properties priced between $750 to $1,700 psf.

Marina ONe iprop watermarkThe Additional Buyers’ Stamp Duty (ABSD) may have been a deterrent at one point in time, but as the government made clear that the measures are here to stay, acceptance is beginning to truly sink in and buyers are willing to spend the additional amounts in exchange for long-term capital gains. Buyers from the United States are exempt from the ABSD due to a free-trade agreement and this has raised the number of buyers up from 1.1 to 7.3 per cent over the past 5 years.

 

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.

Property market slowdown reflected in stamp duty collected

In 2014, the property stamp duty assessed was at $4.11 billion. This year, the total amount for the period ending March 31 was 28 per cent lower at $2.96 billion. Property prices and transaction volume have also fallen since the peaks of 2009 and 2013.

TheOceanfrontThe real estate market here has hit a number of speed bumps over the past 3 to 4 years and with the various cooling measures in place, buyers and investors have shied away from this previously almost-surefire means of investment. Introduced almost 5 years in December 2011, the Additional Buyers’ Stamp Duty (ABSD) has gradually taken effect on the market, perhaps in particular the luxury property sector which used to attract mostly foreign investors. With the 15 per cent ABSD imposed on them, and 7 to 10 per cent on Singaporeans, many may have thought twice about buying a second or subsequent property as the additional monies to be paid are considerable.

Much of the ABSD assessed came from share transfer from bulk purchases by non-Singaporean entities or shareholders who may have to let go of unsold units before they are hit by the Qualifying Certificate (QC).

marinacollectionBut with the current financial and economic climate hazy at best, the future of other investment products fairly volatile, and local property prices having fallen to affordable quantum levels, could more buyers be picking off units to secure more stable future yields?

 

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.

aoyama
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.

China authorities set limit on property loans

As the property market in China continues to soar, the Chinese government has set about implementing rules in further attempts to slow the market. Though they have put some gateways in place, those with stronger spending power may easily overcome those hurdles. Perhaps to speed up the cooling process, the authorities have placed a limit on the number of new home loans issued by banks.

hongkongpropertyUp to 35 per cent of bank loans in the first half of 2016 were from home loans and by August, the numbers have jumped to almost 71 per cent. Even as home prices rose, and rapidly, more were jumping onto the bandwagon, perhaps in fear of prices rising even further.

With a national population of more than 1 billion and growing, the government has a huge task in managing housing and an ageing population. While the property industry has boosted China’s economy, helping it to grow by 6.7 per cent this year, should property prices continue to rise, the country may be facing a diminishing capital reserve while struggling to manage credit risks and a possible sudden collapse of the property market with sudden fall in home prices which may put many out of a home, in debt and the banks in big trouble.

Within the country, 21 cities have already set their own property cooling curbs such as limiting the number of multiple property purchases to clamp down on property speculation and increasing the down payment. As the regulations change, more mainland Chinese are looking for property investment opportunities outside of China and Hong Kong is one of the first places they focus on. As more countries savvy up to the purchasing practices of the Chinese, such as Australia and Singapore, their eye-line may shift to emerging South-east Asian countries such as Vietnam, Cambodia and Laos.

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.

October’s private home sales set to rise

After a quarter of being in the doldrums, the mood in the property sector may lift a little next month as private home sales are expected to rise, mainly due to the increase in number of new property launches this last quarter of the year.

queenspeakcondoSome of the major launches which have already started things off on the right note include Forest Woods in Serangoon and Queens Peak in Queenstown. Both properties are situated near MRT stations and will no doubt be popular with buyers and investors who often look at the location and potential sales and rental yields. The Alps Residences in Tampines which launched last month has been enjoying the attention from buyers and have been selling well.

Property analysts are in fact expecting Q4’s property figures to exceed that of 2015. The total number of private homes sold last year stood at 7,440 units; and this year’s predictive numbers are between 7,500 and 8,000. Some of the best-sellers in the private home segment include Lake Grande in Jurong, The Trilinq in Clementi, Kingsford Waterbay in Serangoon, The Glades in Bedok and Sophia Hills in the fringe of the city. For October alone, sales volume looks set to exceed the 1,100-units mark, the highest number of units sold in a month this year.

KingsfordWaterbayWhile interest rates remain low, buyers are more savvy about where they put their money, and are more likely to look at new, uncompleted units, especially with some developers offering incentive schemes that benefit the financial plans of buyers without cash liquidity, which do not yet require immediate rental yields to help tide them over the market lull.

Parc Riviera – One price fits all

Developers have been dishing out various incentive schemes to draw buyers into the new private home fold, and now an upcoming property launch will do the same. EL Development will be offering a flat-price within the same type of units between the second and fifteenth floor of their Parc Riveria condominium. And the offer only stands when the deal is sealed at their launch this Saturday.

parcriviera2Photo Credit: www.parcrivieracondo.sg

With this new incentive scheme, units on the more popular higher floors will likely be the first to fly off the shelves as they traditionally command higher prices for the view they promise. As a price guide, the 2-bedroom units are going for $725,000. Other units available in the project’s two 36-storey blocks include 463 sq ft one- and 1,711 sq ft four-bedders though more than half are made up of one- to two-bedroom apartment units.

parcriviera1Units in the floors above the 15th-storey will also be available for purchase, though prices will be higher. Traditionally, units in the higher floors are about 15% more expensive than those in the lower floors. EL Development came up with the first-in-market scheme as a way to provide buyers with a transparent pricing system and a way to draw attention to specific units. Some of their other properties currently in the market include Skysuites 17, Stevens Suites, La Fiesta and Trivelis. Parc Riviera has already received positive interest and with this creative new strategy in place, it looks like the Parc Riviera sales office might see a flurry of activity this weekend.