Why property cooling measures are here to stay

ABSD, SSD, TDSR, QC – These abbreviations related to property cooling measures implemented over the course of 5 years have taken root in the local real estate and construction industry and despite a much quieter market, may not go away anytime soon. And with good reason.

Aeon MelbourneThe demand for properties in other major Asia-pacific countries and cities such as Hong Kong, China, Australia and Japan have not seem to wane, reflected by soaring home prices in Hong Kong, Sydney, Melbourne and various top-tier cities in China. And this is despite their governments placing more restrictive regulations in place in efforts to curb investment outflow and property speculation. But perhaps it could be the case of too-little-too-late. And it also goes to show that investors are still looking for markets to hedge their funds and the pool of willing China investors looking to take capital out of their country agains a depreciating yuan.

CasaAerataIn Singapore, despite a gradually decline in home prices, the market has remained resilient and a untimely lifting of property curbs may result in a quick and unrecoverable increase in property speculation. In fact, despite the series of property curbs instrumented since 2013, the property cycle seems to already be reaching the bottom, which could only mean a turnaround possibly within the year. Last year, resale volume rose 28 per cent and total sales increased by 16 per cent from 2015, indicative of a recovering, or at least stabilising, market.

China clamping down on investment outflow

The Chinese have been known to be big spenders in many real estate markets worldwide, thus the recent clamping down on investment outflow by the Chinese government has markets all over the globe in a little bit of a tizzy as Chinese buyers are now finding it increasingly more difficult to transfer funds out of China in payment for the properties they have previously purchased. In an announcement on Dec 31, the State Administration of Foreign Exchange (Safe) stated that all buyers of foreign exchange must now sign a pledge to not use their US$50,000 quota for offer shore property investment.

SydneyCondoDarlingSquareThis may put a crimp in things as many real estate markets may find themselves missing out on this potentially huge audience pool as Chinese buyers are now shying away from foreign investments due to the difficulties involved in trying to bring their monies offshore. While the move may not deter the major buyers, first-time buyers with a lack of offshore assets and expertise in capital-manuvering may be forced to relinquish their offshore real estate purchases despite having already made deposits of previous scheduled payments.

Those who violate the new ruling may be denied access to foreign currency for up to 3 years, be added to a government watch list and may be investigated for money-laundering. The regulation also applies to companies with corporate outflows, requiring them to provide clear documentation with regards to outbound monies. The use of foreign currency for real estate has always been banned, but the authorities are serious this time, as seen in their request for additional documentation.

Scope for property investment opportunities in Vietnam widen

As Singapore-based property developers deepen their foray into emerging Southeast Asian markets, the opportunities for investment are increasing. Not only are residential projects viable investment options, but commercial and industrial spaces are also added to the mix.

d1mensionPhoto credit: CapitaLand

CapitaLand for example, is investing US$500 million (S$713 million) into commercial property in Vietnam come 2017. They will also be looking into acquiring more residential development sites to add on to the 9 which they have already launched since they established their presence in Vietnam in 1994. Major wealth management funds are indicating interest in investing in Asian real estate and many of these emerging markets are untapped pools of potential.

d1mension2Photo credit: d1mension.co

One of the most recent developments is a residential project in Ho Chi Minh city named the D1mension, suitably so as it stands on prime district 1 land. The project will consist of a 102-unit residential block as well as a 200-unit serviced apartment block which will be operated under the Somerset brand. More than half of the 30 units launched in the residential tower have already been sold and more will be launched next month. Private residential properties in Vietnam have been selling well as the middle class grows and rapidly. CapitaLand has already sold more than a third of the 1,700 units they have in stock with total sales accumulating to $114 million. The rising suburban class and increased foreign business investment will mean a higher demand for housing.

CDL reports positive growth despite property lull

With a whooping 60.1 per cent spike in net profits in the third quarter, City Developments (CDL) seems to be shaking off the market gloom early. Their Q3 net profit rung in at $170.3 million.

gramercyparkPositive public response and strong sales from their properties, both local and international, have contributed to their recent success. At their latest launch, Forest Woods condominium, sales have hit the 70% mark at the considerable price of $1,400 psf. The project has a total of 519 units. They are fully sold at their 616-unit Jewel@Buangkok condominium development and almost all of its 40 units released at the 174-unit Gramercy Park have also been snapped up.

At the 944-unit Coco Palms condominium in Pasir Ris and the 638-unit The Brownstone executive condominium in Sengkang, they are also 91 and 80 per cent sold respectively. Such promising numbers considering the current global economic uncertainty will put them ahead of their competitors and help them pave a strong foundation for the journey ahead.

The Brownstone ECCDL also has properties overseas which are doing well, including the Hanover House project in Reading, Britian. The group is also expanding their suite of investments into other areas such as hotel operations, investment properties and management. Moving forward, investors can looking forward to more international properties being added to the list of potential investment opportunities.

Has Brexit really affected UK property prices?

northcentrallondonNot yet, it seems. Though the recent Brexit event has had investors in a bit of fluster, with the lack of clarity of the horizon ahead for both the UK and other European nations, with many expecting some sort of a price drop in properties in the United Kingdom, the real punch of Brexit has yet to take effect – for the real estate sector at least.

Unlike the 2008 financial crisis, property owners are yet pushed to the point to having to dump their assets haphazardly. The risks for property owners and sellers are not extreme yet, thus most of the re-pricing of properties are in secondary assets, according to property analysts familiar with the UK property market. Britain’s real estate sector has remained strong thus far, with continued interest from Asian investors and buyers. Some of the most recent property investments include a£700 (S$1.2 billion) deal from Singapore’s GIC fund who has joined forces with student housing provider GSA in a student-acommodation property.

grovelaneukSome British funds who may be dealing with investors pull-out due to Brexit may however be looking to sell their property assets and buyers could look towards these properties for possible bargains. Most would however be commercial properties. Residential property hunters may also still be enticed by the weaker sterling and slight discounts.

Singapore developer plans for 302-unit condo in Ho Chi Minh

One of Singapore’s property giants, CapitaLand, has just bought up a prime piece of land in Ho Chi Minh city and intends to develop a luxury private residential and serviced residence project which will yield 302 units across 0.5 ha in the city’s Cau Kho ward of District One.

seasonsavenuevietnam

Photo credit: CapitaLand Vietnam 

CapitaLand has previously launched 3 residential projects in Vietnam, including The Vista, Vista Verde and Seasons Avenue. All 3 had sales launches in Singapore and response has been positive ever since Vietnam relaxed their rules on foreign ownership of local real estate. The fact that this recent US$51.9 million (S$70 million) purchase is the developer’s third acquisition in less than a year and a half makes them a formidable foreign presence in the Vietnamese real estate sector. This launch will bring CapitaLand’s residential real estate portfolio in Vietnam to 9,100.

thevistavietnamPhoto credit: CapitaLand Vietnam 

As The Ascott‘s largest market in South-east Asia, CapitaLand will be managing the 200-serviced apartments in this new project under Somerset brand. The 17-storey residential block is targeted for a year-end launch, and will house 102-units made up of two- to four-bedroom apartments and penthouses. Akin to Cairnhill Nine, also developed by CapitaLand, in Singapore, plans are for the residential tower to also offer concierge services from the neighbouring serviced apartment block. This is apparently a first in Vietnam.

Keppel Land develops mixed-use project in Yangon

Photo credit: Keppel Land

Photo credit: Keppel Land

1993 – the year Keppel Land first dipped their toes into the Myanmar property market by breaking ground for the Sedona Hotel Yangon. Now almost a decade and a half into the 21st Century, they are building an even stronger presence in Myanmar as they tie up with Myanmar conglomerate Shwe Taung Group to develope serviced residences and Grade A offices in the heart of Yangon.

More developers are making headwinds in Asean countries such as Vietnam, Laos, Cambodia and Myanmar. The potential for growth in these countries is immense as they rapidly open up to the international business and investment world. As the pool of young, educated professionals grow, so does the interest in these South-east Asian countries.

At Junction City in Yangon, Keppel Land is already in the second phase of developing this massive mixed-use project which will eventually house the 260-unit Sedona Suites and 50,000 square metres of office space in addition to the Pan Pacific Hotel, an entertainment centre and retail spaces.

sedonahotelyangon

Photo credit: Sedona Hotel Yangon

International investment monies have been pouring into the city and country in the past few years, and there are no signs of slowing down as yet. Property developers and real estate companies are capitalising on this population and commercial business boom by providing quality accommodation and business spaces – and rapidly too. The second phase of Junction City is scheduled for construction beginning in 2018 and 33, 400 square metres of Grade A office spaces will be ready as soon as the early part of 2017.

Weaker UK pound drives up property market interest

Following Brexit, the Sterling pounds to Singdollar exchange rate have fallen from S$1.85 to S$1.7437 as of last Friday. The 16 per cent fall, since the pound started at S$2.0847 in the beginning of 2016, may be the reason behind a sudden spike in interest in British properties, especially those in London and Manchester.

Photo credit: OrangeTee.  Downtown Apartments in Manchester, UK.

Photo credit: OrangeTee.
Downtown Apartments in Manchester, UK.

Real estate agencies have understandably began to market British residential properties, with a few new launches coming up. These include JLL‘s London City Island apartments and Atria in Slough, and OrangeTee’s Downtown apartments and Property Group’s Affinity Living Riverview apartments in Manchester.

JLL’s London City Island apartments, which is jointly developed by Ecoworld and Ballymore and situated near Canning Town Station, will be launched soon, on 27 and 28 Aug. Also in London, but towards the west, is the 108-studio apartment development Atria, in which Oxley Holdings has a 20 per cent stake. Over the Manchester, buyers will have a couple of options to choose from with the 368-unit Downtown or 318-unit Affinity Living Riverview residential projects. With a variety of apartment types including studio, one-, two- and three-bedders to whet their appetite, buyers may wish to research property and rental potential, neighbourhood popularity, transport convenience and financial longevity before closing a deal.

Property experts caution against the risks of overseas property investment, in particular currency exchange fluctuations and maintenance costs. Despite the lure of the weaker pound, there may also be corresponding concern about the future of UK’s economy and the effect it has on property sales and rental prices.