Right time for luxury (property) shopping?

With the current property market lull, developers are offering many larger-sized luxury properties at discounted prices. Prime central district properties have also seen less activity as foreigners are buying fewer condominium units possibly due to the higher stamp duties and taxes levied on them. Could this be the right time to suss out a good investment deal?

Twin-Peaks3

Photo: Twin Peaks condominium on Leonie Hill

In fact, many developers are looking at doing bulk sales on their unsold stock in order to prevent paying the penalties such as  the Additional Buyers’ Stamp Duty (ABSD). Property funds may be the most likely buyers, though individuals or groups of individuals eyeing specific projects could also jump on the opportunity.

City Development Limited (CDL) for example has been trying to sell one of the two 24-storey towers at Gramercy Park and OUE is doing the same with their Twin Peaks development. Prices for Gramercy Park, a freehold condominium project, is expected to hover around $2,600 psf and will be ready for occupation by the Q2 of this year.

Though almost 92.9 per cent of their 174 units have been sold by last year, they still have a number of unsold stock to sell by 2018. Developers can file for extension of their Qualifying Certificate (QC) which allows them a bit more time to sell their stock. But developers will also have to weigh the charges and ABSD against the discounts they are able to provide buyers with bulk-buy offers.

 

Waterfront Living moving inland

Moving away from the coastlines, waterfront living has become more available inland. Aligned with the Urban Redevelopment Authority’s (URA) Masterplan, Singapore’s landscape will evolve to include many man-sculptured green areas and waterways, with enhanced island-wide connectivity and a movement of population and property towards less mature districts and estates.

And it is only logical that building and property-development in these areas have ramped up in recent years. Besides government-built HDB flats, private condominiums have also been mushrooming in these developing districts.

Near Sungei Serangoon, just beside the Serangoon Park Connector, is the 1,165-unit Waterbay condominium. This 99-year leasehold condominium boasts a wide array of 1- to 5-bedroom apartment units, 2 swimming pools and even a childcare centre and 6 retail outlets. The waterfront views promise to bring a sense of living in a city but away from the buzz of a city.

In Punggol, there is the Watertown condominium, a mixed-use development that harnesses the beauty of nature and the Punggol Waterway while providing the convenience of city living with its extensive collection of integrated commercial and retail outlets.

With Punggol set to be the creative cluster in the North Coast Innovation Corridor which will also include Woodlands, Sembawang and the future Seletar Regional Centre, this outlier may soon be the latest town on the block to watch.

Executive living in Executive Condominiums

Despite the number of new private condominiums out in the market, executive condominiums (ECs) are still one of the more popular property types out there. Being the hybrid property they are, they provide buyers an option that allows them to transition comfortably between public and private property market.

EcopolitanPhoto: Ecopolitan Executive Condominium

Sold as public property, buyers are able to take advantage of the grants provided by the Housing Development Board (HDB). Though income ceilings apply, they have been raised to $14,000 last year and that has possibly opened the door to more applicants. And one of the best parts is after 10 years, ECs are considered private properties and thus increases their inherent value considerably.

Developed and built by private developers, many of these executive condominiums used to be situated in not-so-ideal locations. But as Singapore becomes more built-up, many new ECs are now quite conveniently located, near schools, transport nodes and many other amenities and shopping malls.

BellewoodsECPhoto: Bellewoods EC

Take the Ecopolitan EC for example, it is situated near the Punggol MRT station, Waterway Point, Punggol Waterway Park, Coney Island and just a 20-minute drive away from town. It will receive its Temporary Occupation Permit (TOP) this year and will no doubt inject much life into the Punggol HDB estate.

Another new EC, Bellewoods in Woodlands, can also look forward to being serviced by the upcoming Thomson-East Coast MRT line, with their proximity to the Woodlands South MRT station. Both properties are developed by Qingjian Realty and look set to be some of the more prominent projects in these blossoming estates.

Tenants calling the shots

Tenants are now calling the shots in the private apartment rental market. From lower rental prices and shorter leases to property renovations, some are even demanding specific furniture, new utensils and linen.

SeaHorizonEC

Photo: Sea Horizon executive condominium in Pasir Ris

Property rental prices have been coming down, especially as property prices have fallen over the last few years, and supply have increased substantially. Landlords are now finding it harder to find tenants willing to sign the standard 2-year leases which were commonplace in the past. Now most tenants are asking for shorter leases of 6 months as they know they are able to secure another place at a cheaper price should they wish to do so after the lease period. Private property rents have fallen 4.6 per cent in 2015, with rents in the outside central region (OCR) feeling the heat more with a 5.6 per cent fall. Rental prices of city fringe properties fell 4.9 per cent.

Property experts are expecting a 9 to 10 per cent vacancy rate this year, with rental prices falling 8 per cent. There will be approximately 26,467 new private property and executive condominium units made available this year, pushing supply up to an record high. Coupled with the authorities clamping down on immigration and a weak global economy, the prospects may seem a little dim. With investors and landlords not able to secure rental yields, the market may see an influx of units being sold; mortgage auctions may also find themselves having quite a few more units at hand.

Singapore’s Interlace on World Architecture Map

The Interlace condominium on Depot road has achieved international acclaim with a top-prize win at 2015’s World Architecture Festival, selected from 338 projects. In the jury were celebrated architects and professionals such as English architect Peter Cook, Japanese architect Sou Fujimoto and Neri & Hu Design and Research Office founding partner Lydndon Neri.

The InterlacePhoto: The Interlace

Lauded by the festival judges as “bold, contemporary architecture and thinking”, the 31-block Interlace designed by Ole Scheeren won the World Building of the Year award. Their hexagonal stacked concept won the judges over with their innovative alternative to tower blocks or clusters which provide options to housing types and unit/block dimensions. German architect, Ole Schereen is also working on the DUO mixed-use development on Beach road.

Oasis TerracesPhoto credit: Oasis Terraces by Multiply Consultants

Some of the other winners at the Festival included Oasis Terraces in Punggol and Homefarm, a proposed urban retirement housing project by Spark Architect. Oasis Terraces, a integrated polyclinic and integrated neighbourhood centre developed by Serie + Multiply Consultants, took away the prize in the Commercial Mixed Use – Future projects category while Homefarm won in the Experimental-Future project category.

 

 

 

ABSD deadline looms

Properties launched 5 years ago are now facing their deadline to sell their units or incur the dreaded Additional Buyers’ Stamp Duty (ABSD). The regulation allows developers a 5-year window period in which to build and sell the the units in a residential project. Beyond this time frame, they will need to pay a 15 per cent duty on remaining units. This impacts the final selling price, which will see even fiercer competition from newer launches and other resale properties.

Mon Jervois

Photo: Mon Jervois private apartments

What some developers do is to purchase their own units, if the cost of paying the ABSD supersedes the losses otherwise. Properties launched before mid-2013 have mostly sold all their units, but launches after the Total Debt Servicing Ratio (TDSR) framework kicked in tell another story. Non-Singaporean developers have an even tougher job as they need to sell their units within 2 years of completion or incur hefty fines and pay for extensions.

Prices of unsold units at these projects facing the deadline have already come down since their launch. At Kingsford@Hillview Peak for example, the media selling price have fallen from $1,340 psf to $1,288 psf in about 3 years. More than half of the 512 units remain unsold.

A similar story is told at The Trilinq in Clementi where 220 of its 775 units has sold by the end of 2015 at median prices of $1,329 psf. When it was launched in Q1 of 2013, the average selling price was at $1,545 psf.  It is not only the larger scale projects which are facing the deadline pressure. The 109-unit Mon Jervois apartments also saw a drop of $235 psf in the last 2 years. The project is approximately 43 per cent sold.

 

Home prices along Downtown Line go to town

As expected, the newly completed Downtown MRT stations have brought much cheer not only the commuters but also to owners of properties in their vicinities.

The SkywoodsPhoto credit: Skywoods.com.sg

Since the Downtown Line began operating some of its stations last December, prices of properties near these stations have already seen an increase in interest, units sold and also rental prices. Private apartment prices have risen from $1,523 psf to $1,592 in the last quarter, up 4.5 per cent from the previous quarter. Out of the 18 stations now operating include long-awaited ones along Bukit Timah and Upper Bukit Timah such as Tan Kah Kee, King Albert Park, Sixth Avenue, Beauty World, Cashew, Hillview and also Bugis, Little India and Rochor stations along Rochor Canal and Sungei Road.

The price increase can be observed at private apartment projects such as Eco Sanctuary, where 9 per cent more units were sold by December. The development is now 91 per cent sold. Kingsford Hillview Peak condominium also saw a 3 per cent increase in sales and The Skywoods almost doubled their in the number of units sold.

With the effect MRT stations have on property prices, it would not be surprising to find prices of homes along upcoming Downtown and latest Thomson-East Coast line appreciate in the near future.

What do home buyers value?

Location and price. The first is a well-known fact, that the better placed the property, the higher the demand and hence also the price. But home buyers are also keeping a close eye on their budget and the total quantum price could be the make-or-break factor when it comes to sealing a deal.

NorthparkResidences2Photo: Northpark Residences

Developers have been quick to catch on to this and the launches which sold quickly and well last year were those in the vicinity of a MRT station, school or shopping mall and affordably priced. Mixed-use developments such as Northpark Residences and The Poiz Residences were especially popular. Northpark Residences has sold 486 units at the $1,374 psf average while The Poiz Residences sold 277 units at $1,440 psf. Other mixed-use developments buyers seemed out include J Gateway and DUO Residences.

Home buyers’ appetite have signalled a trend towards $1,000 psf for suburban homes, $1,500 psf for city fringe properties and $2,000 psf for homes in the central regions. They are however more willing to pay more for mixed-use residential properties or those nearer MRT stations or bus interchanges.

WIsteria YishunPhoto credit: thewisteria.net

There will be a number of new launches such as 183 LongHaus in Upper Thomson and The Wisteria in Yishun coming up within this first quarter of the year, and it will be a time to watch as it will set the tone for the rest of 2016.