Rougher terrain for local leasing market

Property owners with rental units at hand have been finding it increasingly difficult to find tenants.

MartinPlaceResidencesForeigners make up approximately 60 per cent of the rental demand in Singapore, and as the financial and oil and gas sectors take a hit, demand has declined with the foreign workforce diminishing due to companies moving out of the country or simply because housing budgets have been cut as the sluggish global economic drags out. As of mid-2016, vacancy rates stand at 8.9 per cent and there were about 30,310 units vacant. The sudden influx of completed new homes hitting the market this year could not have helped things as well. This year, the number of completed properties entering the market outgrew the influx of a foreign workforce. Immigration and labour policies have changed since the last general election.

Rental rates in the suburbs fell the hardest at 1.2 per cent, followed by 0.6 per cent in the city fringes. Rents of core central region properties however increase by 0.1 per cent.

cavenaghlodge2017 will see the completion of even more residential developments and analysts are expecting rental demand to fall even further, particularly in the suburbs. Rents have dipped by up to 8.8 per cent in the suburbs and 4.5 per cent in the central districts. Some landlords have even give discounts of up to 30 per cent, just to secure a tenant. Others have found themselves going months without finding a suitable taker on the unit. Smaller one- and two-bedroom apartment units are however still faring well, especially those in the Central Business District (CBD), Marina Bay, Orchard Road, and River Valley areas.


Showflats season – Parc Riviera and Queens Peaks

Starting low and working the way up. That’s the strategy property developer, EL Development, will be taking with their latest project, Parc Riviera. They are hoping that buyers will continue to take the price bait and are thus pricing their units affordably and on the low side, with an option of raising prices later on should market conditions improve.

parcrivieraPhoto credit:

And this weekend looks like it will be busy one for the real estate industry as crowds are expected to take to the 2 latest private residential project offerings with relish, if recent buyers’ response to new condominium units are anything to go by. Buyers have been snapping up units at the recently-launched Alps Residences and Forest Woods condominiums.

Although Parc Riviera is only launching in November, their show flats will be ready for viewing this and next weekend. The projected average selling price at this 752-unit development in West Coast Vale is expected to stand at approximately $1,250 psf.

queenspeak2The 99-year leasehold Parc Riviera will feature  two 36-storey towers consisting of a range of units from 463 sq ft one-bedders to 1,711 sq ft four-bedders, though more than half will be smaller one- and two-bedroom units. Situated near the Pandan Reservoir and will feature rooftop pavilions and jacuzzi decks.

Another private condo project which will have their show flats ready for public viewing this weekend is Hao Yuan Investment‘s Queens Peak which sits near the Queenstown MRT station. Larger units are available at this 99-year leasehold development, ranging from 431 sq ft for a one-bedder to 2,002 sq ft for a five-bedder, including a penthouse at 4,768 sq ft unit.

Is new the new gold?

New private condominiums that is. The resale private condominium market may have a strong competitor in new private condominiums as prices in this sector become more competitive with developers offering various discounts and incentive payment schemes.

The TrilinqIndicative of the heightened activity in the new condominium sector was the 8.8 per cent rise in transactions last month, from the 468 units in August to the 5o9 units in September. And this was in spite of the lack of major launches. In fact, property analysts are expecting a further 8 to 10 per cent rise in the number of new condo units sold this year. There were 7,440 new residential units sold last year.

The highest sales number of 297 units sold last month came from properties in the city fringe, followed by 144 units in the suburbs and 68 units in the core central region. Some of the best-selling projects were Lake Grande, The Trilinq and Kingsford Waterbay.

queenspeakcondoIt seems, buyers are finally coming to terms with the stabilising of property prices, almost three years after the first property cooling measure was rolled out. They may have relinquished further expectations of price declines and are picking off deals whenever they come up in the market.

There will be 2 major launches next month – Parc Riviera and Queens Peak and new homes sales are expected to cross the 1,000 units per month mark in the next 2 months.


Home rental market softening

Rents for both HDB flats and private condominiums have been falling. The number of leases transacted per month have also dipped.

olina-lodgeThe weakening economic situation might be lengthening its stay as the job market remains soft and the hiring of expatriates is on the decline as well, indirectly affecting rental demand. The influx of new completed private condominium units and increase in number of HDB flats being sublet have also pushed rental prices and volume down in recent months.

In September, private non-landed property rental prices fell 0.6 per cent while HDB flat rents fell 0.3 per cent. In a year-on-year comparison, prices have fallen 4.6 and 4.5 per cent in the previously-mentioned property sectors respectively. Weak rental demand have also impacted property sales as resale private condominium prices have been reported to be shrinking, especially with added pressure from new completed units and new project launches.

hdb-flat-rentalStrangely however, core region property prices have increased despite the district leading the drop in condominium rents at 1.8 per cent. City fringe properties bucked the trend with a 0.2 per cent rise as the quantum rental might be more affordable to foreign tenants who also want to live in convenient and popular locales.

In the rest of 2016, the rental market may stagnant while in wait for the new year. As most of the completed projects were rolled out this year, 2017 may be the turning point for both the rental and resale markets. Property analysts are expecting rents to fall by a further 5 per cent before a possible rebound.

Resale apartment prices falling

If anyone has found it increasingly difficult to find buyers for their private apartment, they may not be alone. Falling resale private non-landed property prices have heightened market competition, aided by the increase in completed new units hitting the market and the presence of major new launches in the past quarter.

visioncrest-residenceThe weak rental market has not helped as well. Property experts are expecting the rental demand to remain stagnant till 2017. In August, 830 units exchanged hands while only 683 were transacted in September. The drop in transactions were particularly apparent in the suburbs, once again possibly fuelled by the influx of completed units since 2014. The only bright spark came from the core central region resale properties, with a 0.6 per cent rise from August.

The volatility of the economic outlook and impending interest rates hike has also caused some edginess and those who may not have been able to handle the financial burdens of servicing their home loans may also be in a hurry to sell, thus pulling home prices down. Private resale apartment prices have fallen once more in September, this time by 0.9 per cent. In a year-on-year comparison, prices were 1.5 per cent lower than in 2015. City fringe home prices fell 1.3 per cent.



Forest Woods condominium in Serangoon selling fast

Keeping unit prices at the new Forest Woods condominium below the $1 million mark seems to be a good move by developer, City Developments (CDL).

forestwoodsBuyers are attracted by the prime suburban location and its proximity to the Serangoon MRT station which speaks volumes since location is still a key mitigating factor for most tenants. The fact that the Serangoon MRT station is a major interchange node connecting between different MRT lines, is linked to a bus interchange and also a huge shopping mall, NEX, are all bonuses. And as property prices have been falling for a couple of years now, buyer sentiment is that they will not fall any further, and are taking the opportunity to buy now before interest rates potentially rise in the later part of the year. The $6,000 to $12,000 early bird discount may also have enticed some to seal the deal early.

forestwoods2All the one- and two-bedroom apartments launched at Forest Woods have sold out and the median selling price currently stands at $1,400 psf. The development has a range of units ranging from 506 sq ft one-bedders to 2,185 sq ft penthouses. As of Sunday evening (the project was launched last weekend), almost 65% of the units were already sold. One of the three penthouses available was also sold at $2.85 million. Almost 90 per cent of the buyers were Singaporeans, with the rest being permanent residents or foreigners from China, Indonesia, Malaysia, Taiwan, Vietnam and Switzerland.

Luxury market boosts overall real estate figures

Ironically one of the markets which first took the hit when the property cooling measures kicked in is now the one keeping the numbers looking good.

GoodwoodResidencesFor her relative political and economic stability, Singapore is considered a haven for the rich who are hoping to park their wealth somewhere safe. And real estate here are considered stable long-term assets; not so much for those in for speedy turnarounds or hoping to make a quick buck in short-term rentals, but for investors looking at long-term capital appreciation.

Recent numbers released by the Urban Redevelopment Authority (URA) has shown a 76 per cent increase in sales of luxury apartments worth above $5 million this year. Some of the best sellers in this segment were Ardmore Three, Leedon Residence, Goodwood Residence and Gramercy Park.

GramercyParkProperty prices of city fringe units also rose 0.2 per cent though prices in the suburbs fell 0.5 per cent. But property analyst are seeing the market possibly bottoming out this and next quarter as the incline of the price drops have been gradually reducing.

There were a high number of completed units entering the market in the earlier part of the year, but as developers held back on major launches for a couple of quarters, it gave the market a few chance to do some catching up in terms of sales volume. The prolonged period of low interest rates may also push consumers to pick up deals now rather than later.

Executive condominiums top August property sales

August was a good month for the executive condominium (EC) market, with all 3 top sellers coming from this particular property sector, namely – Treasure Crest in Sengkang, Sol Acres in Choa Chu Kang and Bellewoods in Woodlands.

Bellewoods ECUnderstandably, there were not many major property launches in August with only 590 units launched in the month at Victoria Park Villas in District 10. A total of 805 units were sold, less than half of the 1,921 sold in July, with 41 per cent of the month’s sales coming from ECs. But demand for these rare hybrid public and private properties seems to be rising.

The price gap between ECs and private properties may be closing in as resale private property prices continue to dip though there is still a considerable distance between these 2 property types. The median selling prices of all 3 top EC developments below $800 psf whereas average prices for private apartments are mostly above the $1,000 psf range.

Sol Acres Besides comparison with ECs, new developer launches have also been fighting market competition from completed resale units, providing discounts and other incentive schemes to entice buyers. As a hybrid between public and private housing, EC buyers can tap on HDB grants and subsidies in the initial purchase and after 10 years, are able to leverage on the private property status of their property, harnessing the full capacity of a private resale condominium.