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14 May

Singapore’s Luxury home prices remain stable

In most countries across Asia, high-end properties are seeing a considerable rise in prices. Only in Singapore and Hong kong, where property cooling measures were implemented, did prices remain stable.

While luxury homes here saw a 0.6 per cent dip in prices, in other major Asia cities such as Beijing, Shanghai, Bangkok, Kuala Lumpur, Manila, Jakarta and Mumbai, prices leaped an average of 6.1 per cent year on year. Singapore is the only city where year on year high-end home prices fell, at 4.3 per cent.

Corals at Keppel Bay.

Corals at Keppel Bay.

Which city saw the largest jump in luxury property prices? Jakarta – with an increase of 8.7 per cent in Q1, that is a whooping 32.9 per cent year on year. Kuala Lumpur and Beijing saw steady quarterly rise in property prices as well. But it is worth noting that the Chinese government is quite aware of a possible property bubble and may be clamping down on building and investments soon. Jones Lang LaSalle‘s head of Asia Pacific research, Ms Jane Murray, is predicting a fall of up to 5 per cent for high-end property here in SIngapore. As population and economic growth slows, the same is expected of the property market.

Have investors veered away from Singapore properties to focus on real estate  elsewhere in Asia and are Singaporean investors doing the same? As property cooling measures continue to kick in, will they deter home buyers even further? What will it mean for Singapore’s real estate market and is this the intended purpose of the property cooling measures?

13 May

HDB Resale flat sales lowest in 16 years

The numbers are low but the prices may not be so. Is this a case of rare treasures raking in high prices?

HDB’s reports have shown that there were only 4,335 resale flat transactions in Q1 of this year, as compared to the average of 8,000 for the first quarters in previous years. However resale flat prices have continued to increase with a 1.3 per cent rise this year. Albeit slower than the 2.5 per cent increase from Q4 of 2012, it is still a 0.6 per cent rise when compared year on year.

Photo by HDB.

Photo by HDB.

The latest property curbs could have had a part to play here. HDB flat buyers can now only loan up to 35 per cent (previously the cap was at 40 per cent) from HDB and bank loans are now capped at 30 per cent of the household income. Thus with these restrictions, some may now not be unable to upgrade to larger flats and thus taking away a considerable pool of buyers from the resale HDB flat market. PRs who previously form a significant number of buyers, may also be out of the picture as they are now subjected to an additional 5 per cent tax on their first home.

Skypeak @ Bukit Batok. Photo by HDB.

Skypeak @ Bukit Batok. Photo by HDB.

But with the drop in flat buyers, there is in turn an increase in flat renters. HDB reported a 15 per cent rise in subletting transactions, to 7,410 this quarter. The money is coming through rental now as more HDB owners hold on to their flats, hoping to reap in enough profit to help them make the leap to private property.

This, plus the number of new HDB flats being launched and built last and this year, have drawn buyers away from the resale market. Which type of resale flats are seeing the most activity? Is there now less competition for the larger 4 and 5-room flats? Are 3-room flats the current “hot property”? Come July, singles will also be able to purchase new flats directly from HDB. Will this impact the demand for the smaller 2 and 3-room flats?

8 May

Novena Ville will soon be Novena Regency

As far as mixed-use developments go, the new kid on the block is Novena Regency. Taking over the spot of the previous Novena Ville, (foodies might remember it as the location of the popular Wee Nam Kee Hainanese Chicken Rice),  Novena Regency will consist of 45 shop units and 55 residential units. It is set to receive its Temporary Occupation Permit in 2017.

Novena RegencyConsidering its prime city fringe location, the proximity to the Novena MRT Station, shopping malls such as Novena Square and United Square, post offices, churches and offices, Novena Regency looks set to bring even more life to the area. Launched just a few weeks ago, property developer Fragrance Realty, a subsidiary of the Fragrance Group, is predicting a more than healthy demand for both their shop and home units. Shop units are going for $7, 000 psf and the apartments at $2,300 psf.

Fragrance Group executive chairman and chief executive Koh Wee Meng has expressed positivity in buyer demand, “We are fairly confident that buyers will be attracted to its location – an exclusive private estate enclave within the Novena vicinity”. Commercial units will face the main road, where human traffic is heavy both on the weekdays from the offices nearby, and also on the weekends from the church-goers from Novena Church.

And if you’re looking for a home that is both private yet highly convenient, Novena is the prime spot. Already more than 44 units have gone to eager hands since its launch in mid April. Not many residential units, made up of one-, two- and three-bedroom units, are left. There are quite a number of condominiums nearby, but if you’re looking for a unique development that combines exclusivity with vibrancy and convenience, these Novena Regency units might be just the thing to look at. Will apartments in their vicinity see a corresponding response from buyers?

7 May

Property curbs brought in revenue

What did all the previous rounds of property cooling measures bring to the table?

$1 billion. In tax revenue.

Financing Your HomeFollowing January’s new Additional Buyer’s Stamp Duty (ABSD) hikes, in February and March $158 million were added to the taxman’s coffers. The ABSD is now up to 15 per cent. $580 million came from foreign buyers, were 3, 041 homes were sold since December 2011. Singaporeans and Permanent Residents (PRs) forked out $386 million for 7,269 homes. ABSD was introduced in 2010, and since then, home owners have paid up a total of $66.6 million of this levy.

Foreign home buyers have retreated somewhat, with a 36 per cent drop from last year. The ABSD currently stands at:

  • 15 per cent for foreign buyers
  • 5 to 10 per cent for Singaporeans and PRs
Starlight Suites condominium.

Starlight Suites condominium.

Since new home sales have continued to push on, strongly, despite the measures, the ABSD may not have entirely been a deterrent nor an aid to managing home prices. Property developers are also helping to bolster the market by providing discounts, rebates and other incentives to home buyers.

Many buyers are willing to suffer a little now and buy when they can, rather than wait for something that may or may not happen. As the population continues to grow, they are perhaps preemptive of the future where rental could be a considerable means of income and should homes become out of reach for their children.

2 May

Tanjong Pagar – Old School charm with New prices

Altez condominium.

Altez condominium.

Designated as one of the very few conservation areas in Singapore, Tanjong Pagar holds a distinct charm and mixture of the old and new, straddling chinatown and outram and the Central Business District. The Pinnacle@duxton towering over old conservation shophouses outlining the upcoming arts and design enclaves, modern condominiums, hotels embracing the skyscrapers of Shenton Way and old HDB flats just round the corner.

With the new Maxwell MRT station on the Thomson Line coming up within the next decade, this area might once again be vibrating with the heartbeats of a cosmopolitan melting pot. The new MRT station is expected to largely increase the amount of human traffic in the area, including residents from across the Causeway. Shophouses along Tanjong Pagar road have seen a sharp hike in rents in recent years, as new properties along the stretch bring new residents and human traffic to the area. And in turn, as the area becomes more vibrant, rents of residential properties may also rise.

New high-rise residential properties such as Altez, Skysuites@Anson and Spottiswoode Suites; and a mixed-use development along Peck Seah Street all hold a considerable amount of investor potential. Shophouse units along the main road are calling the shots in term of rental prices as well. Recent price appreciation have rised rents to around $4,000 per month on average for a 700 sq ft ground floor unit, to up to $10,000 per month for restaurant owners.

Tanjong Pagar RoadOne of the major concerns about living and running a business in the area could be the lack of parking space. Street parking is almost impossible and there are hardly any parking areas near enough to the business or residential homes in the vicinity. Do homes in this area command higher rents? As compared to other prime district and city centre homes,  is the investment value higher? Once the Pinnacle@Duxton completes its Minimum Occupation Period (MOP), will units in the area flood the resale HDB flat market?

24 Apr

Foreign buyers back in the market

Have the cooling measures done their job in managing property prices? Foreign property buyers have held back for the last quarter,  but are now back in full force. Instead of aiming high for prime district properties, they have instead gone for cheaper options, namely suburban condominiums,

La Fiesta condominium in Sengkang.

La Fiesta condominium in Sengkang.

Foreign buyers made up 10.7 per cent of 4,884 private homes sold in Q1 of 2013. Chinese and Indonesians made up the largest numbers, followed by Malaysians. The number of Mainland Chinese buyers particularly has been on the rise once more. This could be partly due to the tightening of property buying policies in their own country.

Almost half of the 108 foreign buyers in March alone were Chinese nationals. With their strong buying power, even with the newly raised 15 per cent Additional Buyers’ Stamp Duty (ABSD), a private condominium of $1.53 million is still very much affordable in their books. One of the most popular suburban condominiums in district 19 was La Fiesta in Sengkang and in prime district 10, D’Leedon.

d'Leedon condo project on Farrer Road.

d’Leedon condo project on Farrer Road.

Before December 2011, when the ABSD was first introduced, foreign buyers made up 21.2 per cent of the total home sales. By the first quarter of 2012, the proportion has dropped to 5.7 per cent. The current level is at 10.7 per cent. Jones Lang LaSalle Singapore research director Ong Teck Hui has said that Singaporean investors seemed to be more affected by the cooling measures than PRs and foreigners.

In short, the additional buyers’ stamp duty has merely herded the buying crowd in another direction. Are they competing with local buyers? If there are sufficient private homes to go around, then market forces will keep the real estate machine chugging on its own. Does this answer what Singaporeans have been asking for in terms of housing prices and supply?

22 Apr

Bought landed property. What did you really land?

With the rise of high-rise properties in Singapore, landed homes are becoming very much the rarity it is. But surprisingly, you can still buy a landed home for as little as $2 million, which is in the same range as a condominium unit in the suburbs. In Geylang and MacPherson, there are a number of landed properties tagged with that price.

Freehold or Leasehold? What other criteria would affect the price of landed property? Belgravia Villas in Ang Mo Kio.

Freehold or Leasehold? What other criteria would affect the price of landed property? Belgravia Villas in Ang Mo Kio.

According to URA’s real estate data, at least 10 freehold landed properties were sold for under $2 million last year. The cheapest was a 1, 841 sq ft property in Geylang which went for $792,000. That is $392 psf for you, less than half of some suburban condominiums. But these finds are few and far in between. Usually the plot size of these landed homes are smaller, such as a 893 sq ft terrace house in MacPherson which sold for $1,133,000. One of the rarest sales last year was a landed home in the prime district 10 on King’s road. The terrace was sold at $800,000.

But since sale of landed properties are limited to Singaporeans (foreigners are usually not allowed to buy landed homes), prices and demand are surprisingly lower than you think. Landed properties are valued mostly for the land alone. Thus size definitely matters.The condition, age and location of the property all come into play as well of course.

Jansen cluster terrace homes in District 19.

Jansen 8 cluster terrace homes in District 19.

Landed home prices rose 7.3 per cent in 2012; as compared to resale freehold condominium prices which rose 2.3 per cent. Leasehold suburban condominiums rose 3.4 per cent in the same period. Property agents and industry players have been seeing a rise in the number of landed home buyers within 35 and 40 years old. Previously most buyers are above 40 years old.

So if you find a good landed property deal, could it be too good to be true? Perhaps.

There are a number of hidden costs to punch into the calculator before you sign on the dotted line.

  • Land size
  • Age of the property
  • Condition of the property
  • Location
  • Parking spaces
  • Quality of the neighbourhood
  • Restoration and renovation costs

One should also take note of the number of years remaining on leasehold properties. Since demand in the resale market for properties with limited number of years left on the lease might lower the selling price quite substantially.

9 Apr

100% condo sales few and far in between

Rare are the new condominium launches which see a “Fully sold” sign plastered on their boards within a few months of launch. Though most may eventually reach a 100% sale status, they are taking longer to do so. This depends on the location of the property and the number of units available for sale, of course, but so far, the top scorer has been Seasuites in Pasir Panjang Road, at 85 per cent of its 52 units, with an average psf price of $1,650.

Seasuites condominium in Pasir Panjang.

Seasuites condominium in Pasir Panjang.

A strong runner-up in the race is Urban Vista in Tanah Merah. Considering it just launched mid-March, this 582 unit condominium project is selling exceedingly well with 77 per cent already sold. Average prices are $1,350 psf. March’s other big launch, D’Nest in Pasir Ris also sold a cool 76 per cent of its 912 units at $920 psf.

Private condominiums are still selling well, with new trumping resale. But there are 9 more months left of the year, and what will keep or halt the sale momentum? Chances are new properties which check the right boxes will win the race:

1. Good location
2. Competitive pricing
3. Comparison of other residential projects nearby

In 2012, most of the properties which reached a fully sold status were launched in the early part of the year, and most of them were one or two-bedders or studio apartments. Will 2013 see a reprise of last year? Or will the cooling measures change it up?

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