HDB dwellers invest in shoebox apartments

With a private home market which fell 40 per cent last year, 2014 looks like it might continue to be in the home buyer’s favour. But more HDB dwellers have been snapping up shoebox apartments in light of the fall in home prices.

J GatewayConsidering the fact that most HDB flats are more than 500 sq ft in size, these smaller homes are more likely than not for investment purposes. In 2013, 13.3 per cent of private home transactions were from HDB dwellers, with them making up a whooping 62 per cent of sales in the shoebox apartment category.  Some of the more popular choices from this group were the Bartley Ridge, J Gateway and D’Nest condominium developments.

But it seems buyers are letting their nest eggs lay for longer, with secondary home sales dropping to a 10-year low. With smaller apartments being possibly easier to rent, with its overall lower rental price, it is an easy entry-level property investment and suited to HDB owners who are looking to ease their way into the private property market.

Who exactly are still buying up private properties then? The foreign buying force, it seems. The fall in foreigners purchasing homes here is marginal and in fact increased from 6 to 9 per cent in 2013. Mainland Chinese were the top buyers, closely followed by Malaysians and Indonesians.

When even suburban mass-market home prices fell

8 RajaSingapore’s housing market could be bracing itself for a year of tougher times. It has after all enjoyed a rather long period of highs.  Though the initial signs are slight, a 0.7 per cent drop in December, it could be a warning for the year or next couple of years ahead.

As new properties now come with lower price tags, apartments in the resale market may find themselves having to lower their prices as well in order to attract buyers. The biggest decline came in the suburban segment, which may be a bit of a downer for the market since this is the sector which has been faring the best for many consecutive quarters. But the huge number of launches all over the island could have diluted the buying crowd. Investors who would previously have snapped up these properties in a jiffy may also have been hindered by the loan restrictions implemented last June.

Homes in the central districts could however take the hardest beating this year as many are left unsold. As most of the properties head towards completion in the next few years, the housing supply glut may become more apparent. Put into the mix resale properties and the bowl seems rather big, unless of course the population grows, which might cause other issues for the small nation and its limited resources and space.

Which districts will earn you big bucks, and fast?

It will not be an overstatement to say that the property industry in Singapore is booming. Recent announcements by the government may have gotten everyone into a festive mood with the promise of good things to come. But those good things, such as the Greater Southern Waterfront, may be planned this year, but may only materialise a decade or so in the future. A savvy investor would probably look at which areas will be completed first, and target those for sooner returns.

Woodlands Regional Centre URAThe Woodlands Regional Centre has been in the works for sometime now, drafted and planned by the URA under the Masterplan 2008. Being the closest to our neighbouring Johor Bahru, and served by an established transport network, which will only be further extended in future, commercial plots are already being put up for sale by the government as early as December 2013. Investors can expect development to be rapid, possibly up and running within the next five years.

In another district with a different ambience, but still as vibrant, is the Holland Village area. With bits of nostalgia and pockets of the new and modern, it’s an eclectic mix which attracts the artistic aånd creative crowd. To be extended to include 1,500 new homes and community park, it is also suitably close to the commercial hubs of Biopolis and Fusionpolis at One North. With the circle line and upcoming Thomson line, it will be even easier to connect to other parts of the island from this “urban-village” icon. Properties and businesses in this area might be set up to see a huge change.

Holland Village Extension_640.ashxIndustry analysts are expecting the other areas included in the Master Plan 2013 to be developed much further down the line. The Marina South area for example, will only be developed after the completion of the Thomson MRT Line, which means it will only  begin work 4 years later. Tanjong Pagar, Kampong Bugis and the Greater Southern Waterfront are all areas set for development under the Master Plan 2013, but properties in these areas will mostly be commercial and retail. Residential properties will command high prices, for its proximity to the city centre, thus property consultants are expecting new suburban areas to overtake in popularity and speed of progress.

No mixed feelings about Mixed-use properties

In comparison with suburban and city fringe homes, properties in the downtown area has been languid for awhile. But that looks set to change as the growing popularity of mixed-use developments return with a vengeance. There are a total of 4 mixed-used properties currently in the planning stage and that includes one which might claim the title of the new tallest building in Singapore.

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.

These properties are:

Although these projects sound more like shopping malls and offices, which they will have, they will also include hotels and residential units. Their prime location will command high prices for these apartments, and developers are expecting most buyers to be foreigners or those looking for a worthy piece of investment property. But rental yields might also be considerable as these projects are close to the city centre and central business district (CBD) and also provides the prestige of a downtown address.

Tanjong Pagar CentreResidential units at the DUO, which is situated between Rochor and Ophir road, will be put up for sale before the end of the year. The 49-storey residential block will hold 660 studio apartments and one- to four-bedders and penthouses. Just below is the Bugis MRT station of the new Downtown Line.  Marina One is touted to be one of the only developments in the Marina Bay district to have 65,000 sq ft of greenery. Rare in a built-up city like Singapore, and especially in the city centre. It is also twice the size of DUO.

Tanjong Pagar centre might be the tallest feature in Singapore when it’s built. At 290m, its residential units, Clermont Residences, will be up for sale also end 2013. At South Beach, only 190 residential units will be available.

Will the launch of these mixed-use developments inject some fervor into the year-end property market?

Private property rents may drop

Many property investors count on rental yields, immediate or future, to boost profits. However, with the sheer number of new homes being built and launched, raking in immediate profits may be tougher than before. As population growth slows and immigration policies tighten, finding a suitable tenant may not be easy.

In fact, if you’re thinking of selling your property, resale prices may also suffer because of the surge in the supply of new properties, private and public. By 2017, the market is projected to have an entry of 100,000 new private non-landed homes and 123, 000 HDB flats. At a 7 to 8 per cent increase in annual landed home supply, this may be the quickest that new non-landed properties have grown thus far.

One Eighties ResidencesWhat this means for landlords may be lowered asking rental prices as competiton heats up and tenants have more options to choose from. Based on previous market cycles, when vacancy rates push the 7 per cent mark, rental prices tend to correct and passing the effect down the chain, resale prices will also be affected.

Some industry experts are expecting a 10 to 15 per cent drop in rental and selling prices between now and 2016. However, others are expecting a gentler drop of 5 to 10 per cent as most of the new units are HDB flats which cannot be sold in the open market within the first five years, thus reducing the actual number of available units for sale. In addition, a number of these new homes may be occupied by home-owners rather than merely purchased for rental purposes, thus once again taking a chunk away from available rental units.

Either ways, this may be a time to be smart about spotting value-for-money, investment-worthy properties which have longer legs and can withstand hard knocks from global and local policy influences. Seeking advice from experienced property investors, analysts and attending property seminars are a good way to get started.

Iskandar region properties continue their price rise

News of increasing interest in properties in the numerous Iskandar regions have brought prices of resale homes up, up and up. Original buyers of landed properties in particular, have recently began selling their resale homes at dramatically higher prices, some as much as twice the buying price.

Horizon Hills in Nusajaya, Johor, Malaysia.

Horizon Hills in Nusajaya, Johor, Malaysia.

The high-speed Singapore-Kuala Lumpur rail link which is slated for completion by 2020, will largely increase traffic flow between the 2 countries and make working and living in either, or both, much more feasible. And that could be why owners of landed homes have been asking for prices up to RM500, 000 ($194, 000) above bank valuations. Are there any takers? Singaporean property investors are thinking twice, it seems.

Although Iskandar Malaysia has been gaining much newsworthiness and a rising profile in the investment market mainly through its rapid development in recent years. One of the major milestones include CapitaLand and Temasek Holdings’ involvement in the development of a $3.2 billion township in Danga Bay as well as Singaporean billionaire Peter Lim’s proposed Motorsports City. But one of the main reasons may not be such a positive one. The lack of transparency of transacted prices have left home owners setting their own prices, simply based on how much a home in the vicinity has sold for. This however has not stopped a rising demand for landed homes in gated communities and as current supply has not surpassed demand.

Horizon Residences Bukit INdahIn popular areas such as the Taman Bukit Indah, a two-storey semi-detached house now costs RM950,000. It previously sold at RM400,000 in 2008. Over at Horizon Hills, a RM400,000 property now sells for RM1 million, more than twice the original price tag.

Has this put off serious investors? Does this give the Iskandar region properties a diamond-in-the-rough image or an atmosphere of uncertainty which makes one think twice before jumping into the deep end?

90 per cent of Marina Bay Suites sold

Luxury properties may not be hogging industry headlines right now, but from the looks of it, sales of high-end apartments may not be slipping as much as we think. Buyers know what to look out for, if the 90% of units sold at Marina Bay Suites is anything to go by.

Marina Bay SuitesAThe residential private condominium development is situated next to The Sail @ Marina Bay and has already received its Temporary Occupation Permit (TOP). 198 of its 221 units have been sold at an average of $2, 700 psf. Singaporean buyers made up half of the owners of units in the establishment and Indonesians, Malaysians and Chinese made up majority of the other buyers.

Though Marina Bay Suites has yet to be launched, units sold have been through previews in Singapore as well as in Malaysia and Indonesia from as far as five years back. One of the highest priced units sold was a penthouse for $19.3 million. Out of the 23 units left are 2 four-bedders and 2 penthouses above the 48th floor. Mr. Thomas Tan, head of residential marketing at Raffles Quay Asset management is certain all will be sold by the end of this year.

Marina Bay Financial Centre

With the fast and furious development of the area since the inception of Marina Bay Sands, the Marina Bay Financial Centre and other private condominiums, prices of units of residential property in the area, such as Marina Bay Residences, have risen from $2,000 to as much as $3,000 psf since 2006. By the looks of it, the area could indeed be a money-making machine.

Know your Asia-Pacific Real Estate property restrictions

As the property buying-selling scene bubbles possibly into a timely frenzy, governments across the Asia-pacific region are tightening the hold on local properties. Foreign buying of property might be becoming more difficult, especially if you are unfamiliar with the ins-and-outs of the industry.

res280Countries with the most amount of restrictions include China, India, Indonesia and Vietnam. Australia and Thailand are in the middle tier and Hong Kong and Malaysia have the least amount of restrictions. Singapore straddles the middle and last tier, with some restrictions applying while in Sentosa Cove, there is almost no restriction where non-PR foreigners can purchase landed homes. On the mainland, foreigners can buy private homes albeit with a 15 per cent additional buyer’s stamp duty.

Melbourne ApartmentIn countries where Singaporeans frequent when looking at investing in real estate include Thailand, Malaysia and Australia. A brief outline of regulations in these countries are:

  • Malaysia – In general no restrictions apply, but foreign buyers can only purchase properties above the threshold value of RM500,000 per unit.
  • Thailand – Foreigners can purchase land with a 30-year lease period, with the option of renewing for two following 30-year periods. But foreign real estate buyers can buy freehold properties for up to 49 per cent of a single development. If exceeded, the purchase can only be leasehold.
  • Australia – While foreigners cannot purchase resale homes, all uncompleted properties or land earmarked for development can be purchased.

What are the advantages and disadvantages of these property restrictions? In countries where land is scarce, governments’ protectionist schemes are deemed as necessary to keep prices in check. But in places such as Singapore and Hong Kong, these schemes do not yet seem to keep foreign buyers away. Is there a reason behind the moves or merely a calculated and well-timed measure to buoy coffers and boost growth?