Private home sales – Will the decline continue?

The property market has been softening. The decline seemed inevitable, especially as completed new private homes flood the market in the upcoming year or two.

Not surprisingly, shoebox apartments saw the largest dip in sales as the number of units are somewhat saturated. Buying power is also now lower and buyers who were initially looking at these units for investment may no longer be able to get the loans they need.

 

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Rental issues such as the age, functionality and location of resale units now have to compete with the newer and sometimes faster property models. In the central districts, the decline in rents and sales of apartments were most evident. This could be due to the number of unsold high-end properties in these areas. Even suburban condominiums are feeling the heat as many expatriates shun them as they often do not provide the convenience and exclusivity they desire.

Whether the effect will transfer to the HDB resale market also awaits to be seen. As HDB upgraders who are moving to their completed units will have to let go of their HDB units within a specified time period, many may be in a hurry to let go of their units and possibly at lower prices than before as the market gets competitive. Pair this up with a diminishing market for smaller units as singles are now able to purchase new flats from HDB directly, as well as a smaller pool of permanent residents, the property market seems to be in for quite the turn this year.

Even as more new property launches are promised, how private home sales fare the next quarter may set the mood for the rest of the year.

Commonwealth – Properties not so common

Considered on the city fringe, just a little way off Alexandra which is an area popular with expatriates, Commonwealth may see renewed buyers’ interest as new private condominiums enter the mix.

The latest launch is Commonwealth Towers on Commonwealth Avenue. It will be officially launched on May 1 and is expected to be priced at $1, 600 to $1, 800 psf, it is relatively more expensive than similar properties in its vicinity, such as Queens condominium, Alexis, The Metropolitan, Ascentia Sky and The Anchorage private apartments. These are older residential developments and units are available on the resale market. Rental demand has been strong, though property experts are expecting competition to heat up once the newer condominiums are up and running.

The AnchorageAccording to URA figures, rental prices at the Queens averages at $4.32 psf per month. Sale prices were at $1, 350 psf. The Alexis commanded even higher prices at $6.65 psf and units sold at an average of $1, 939 psf, possibly because at 2 years old,  it is much newer than the Queens which was completed in 2002. Also, a third of the 293-unit The Alexis are shoebox apartments and are easier to rent out.

Alexis @ Alexandra CondoHowever the tightening foreign workforce rulings and immigration regulations may prove challenging for landlords looking to rent out their property especially with the rise in new units in the Redhill and Tiong Bahru area. Competition will always be present, but good location, providing attractive rental conditions and ultimately good timing may beat all that.

Property measures not hurting Malaysian property sales

And more are flocking to the local label of the new Puteri Cove Residences. This new luxury condominium is developed by local property developers, Pacific Star and DB2, with sea and harbour-view units up for offer, local investors seemed to have taken a liking to this new property.

Puteri Cove Residences. Photo by Pacific Star Singapore.

Puteri Cove Residences. Photo by Pacific Star Singapore.

450 of the 600 residential, 56 Soho and 340 serviced property units were sold within a week of its launch. Upon its targeted completion in 2017, this mixed-use development will also include a waterfront promenade housing eateries, retail stores, commercial businesses and clinics. Located strategically between the Second Link at Tuas and the Woodlands Causeway, it’s poised to have a brisk flow of traffic. Units consisted of one- to four-bedders between 600 to 4,100 sq ft. Prices ranged between RM 1, 180 (S$457) to RM 1, 580 (S$612) psf.

Most buyers were Singaporeans, followed by Malaysians and Indonesians. And with talks in the way between Singapore and Malaysia to improve transport infrastructure, such as the Kuala-Lumpur  expressway and a train system between Singapore and Johor Bahru, investors in the know are looking at long-term profitability. Will new Iskandar region properties continue to woo Singaporean investors?

68% drop in private home sales

In comparison to 2013′s Q1 home sales figures, the chasm is deep. And so are moods in the real estate market.

Private home sales have been on the decline for some time now. And recent figures are not exactly uplifting. Buyer sentiments are pessimistic, as the loan curbs implemented last year takes its toll on buyers and sellers alike.

Hillford Retirement Home
It has become much harder for buyers to secure loans, with the Money Authority of Singapore’s Total Debt Servicing Ratio framework in place. Buyers can no longer loan as much as they would like, which may place them just out of reach of their target property. The lack of new property launches this quarter has also dampened the mood somewhat. And property developers have been slow in introducing new units into the market as they are now accutely aware of a softer market.

Some properties nevertheless have beat the odds and continued to enjoy brisk sales. Topping the list is the 281-unit The Hillford in Jalan Jurong Kechil. Since its launch in January, units have been completely sold. Next up are a couple of neighbouring properties in Sengkang – Rivertrees Residences and Riverbank @ Fernvale. Most of the units went for an average of $1,000 to $1, 100 psf. Industry analysts are wondering if this could signify that buying power for suburban private properties will now hover around this ceiling.

Rivertrees condoThe rest of the year may see a tussle of prices between new and resale properties. As developers cut prices to make sales, resale home sellers may be forced to face the competition head on.

Jurong private properties in demand

For those who are not used to living in the west, the lure may not be strong. Not yet perhaps. But as it changes from the industrial, remote ‘wild west’ into a well-greased regional commercial and education hub, many have seemed to change their minds.

LakevilleThe 695-unit Lakeville at Jurong West Street 41 has sold so well last weekend that the developers, MCL Land had to release 50 additional units to its original release of 150 units. Most buyers were Singaporeans, and they purchased mainly two- and three-bedders. A total of 180 units were sold thus far, at an average of $1, 300 psf. J Gateway, which was the last westside property launched since Lakeville, sold at an average of $1, 480 psf.

Despite constant reminders that the property market may be on a downturn, the response has buoyed the mood of the real estate market. This could however be due to the lack of private properties, especially new ones, in this neck of the woods. New amenities such as the Ng Teng Fong General Hospital and Jurong Community Hospital, and new commercial properties promises of more jobs, and better services, which could drive up rents of both HDB and private properties in the area.

Commonwealth TowersSlightly more inland, Commonwealth Towers, which will be linked to Queenstown MRT station, could be the next property to watch. This 99-year leasehold property will likely be launched in May, with mostly one- and two-bedders in its massive 895-unit development. If nearby condominium prices are anything to go by, buyers could be looking at prices of between $1, 300 to $1, 700 psf.

Lakeside’s Westside Story

Off on the west-side, Jurong and Woodlands are the main areas of business and redevelopment. But with the authorities planning to diversify commercial activity into the suburbs and redeveloping the Jurong Lake District into yet another hub for waterfront living, leisure and business, Lakeside may no longer be the town just on the side.

URA Jurong Lake District

Photo credit: Urban Redevelopment Authority (URA).

Jurong Gateway and the potential working population and medical tourist it will bring serves to bring new life to the sleepy Lakeside township. Other businesses in the mix are Big Box, Westgate, Genting Hotel, Ng Teng Fong General Hospital and Jurong Community Hospital. The previously very much industrial west-side of Singapore will see new life in many ways.

Already response at The Lakefront Residences spoke volumes, as it sold out of its 629 units during its launch in 2010. Prices then were at an average of $1, 000 to $1, 050 psf. Units were already selling this year at $1, 1199 psf. Units at The Lakeshore and Lakeholmz saw similar sales values with promising increases throughout the past few quarters. Though rentals and sales may not yet peak this year, the potential for growth is tremendous.

LakevilleThe newest kid on the block is Lakeville in Jurong West Street 41. Developer, MCL Land, is expecting buyers to mainly be HDB upgraders from the nearby, though not ruling out savvy investors who might see the rental possibilities of these units near future regional commercial hubs.

New private residential projects breezing into Marine Parade

With its proximity and accessibility to the city centre, and its seaside township feel, properties in Marine Parade have always been an easy breezy sell. But it has been sometime since new properties were launched hence news of upcoming projects might bring a fresh round of excitement.

A new launch to look forward to is the Marine Blue (working title) project whose building is underway across Parkway Parade Mall, developed by CapitaLand.

Coralis condominium.

Coralis condominium.

Other properties which are garnering some eager eyeballs area:

Some of these properties are older resale homes, but some new units  will soon be ready for occupation, with the Silversea possibly receiving its TOP (temporary occupation permit) by end of April. Marine Blue units are expected to sell at a promising $2, 000 psf, which may then also bring up prices at the neigbouring Silversea condominium. Most of the units have been sold at the 383-unit Silversea since its launch in 2009. Recent sales clocked at $1, 714 psf. At the Coralis, which was completed in 2013, sales stood at $1, 842 psf.

SilverseaHigh rental prices are expected to hold up and  future transport links such as the Eastern Region Line which will pass through Tanjong Rhu, Marine Parade, Siglap, Bedok South and Upper East Coast Road may only mean rising value in properties in these districts.

New home sales up in February

After much news about home sales taking the hit, a rebound has brought some cheer to February.

Mainly lead by new suburban property launches, analysts are hoping that this is a sign of the market stablising. Excluding sales of executive condominiums, the Urban Redevelopment Authority released data showing a 28 per cent rise of private home sales of 724 units as compared to January’s 565 units.

2 launches in the Sengkang area, Rivertrees Residences and Riverbank @ Fernvale, made up majority of the sales. 218 units of the 495-uni Rivertrees Residences were sold at a $1,111 psf median while 211 units were sold at the 555-unit Riverbank @ Fernvale at an $1,033 psf average.

Rivertrees condoThe future however may lie in the hands of the property developers. Depending on their pricing structure and strategies, the buying public may respond correspondingly. Some older projects with units yet unsold, as well as resale units may find themselves competing intensely with lower-priced newer properties. But if recent sales are anything to go by, finding the sweet spot that hits home with pocket-conscious home buyers will bring the crowd back into the market.

Buyers who are looking for a good deal may find themselves searching for less salable units in older projects which may still be worth the investment depending on their location and potential for future development. March may be the turning point of this delicate dance between buyer and developer. What will the month show in terms of sales volume and prices?