Resale condominium prices slide in February

The latest private resale condominium sales figures seem to slightly challenge industry experts’ expectations of the market bottoming out this year.

Marina One ResidencesFebruary’s resale condominium prices fell 0.3 per cent following a 0.1 per cent in January from December last year, indicating further decline in the private non-landed resale property sector. While the numbers could mean the market has yet to bottom out, the slower rate of decline does point towards a state of stabilisation.

The biggest impact was felt in the central region (made up of districts 1 to 4, 9 and 10, the financial district and Sentosa Cove) where a 1 per cent fall was registered following a hopeful 0.5 per cent rise in January. Even in the small-apartments (units 506 sq ft and below) segment, prices fell 0.6 per cent. Resale units outside of the central region however fared better, coming back up top with a 0.3 per cent rise following a 0.6 per cent fall from December.

Oceanfront Sentosa Cove CondoThough market sentiment has been picking up, the overall economic outlook and rising interest rates may not be enough to completely turn the market on its head. Recent tweaks in the property cooling measures may give the industry a little push towards to the direction of recovery, but property analysts are still expecting a 3 to 4 per cent price-decline by end of 2017.

Many new office buildings pre-leased

A sense of strength is coming back into the property market this year, with the bottom of the cycle possibly closing in. And consumer interest, in both the residential and commercial fronts, are on the rise too.

FraserTOwersWith news of Facebook pre-leasing space at Marina One, the upcoming Frasers Tower in the heart of the Central Business District (CBD) has also received leasing proposals for 30 per cent of its 38-storey office building from various interest tenants. Most were from multi-national conglomerates, legal services, technology firms and a serviced-office provider, The Executive Centre who expressed interest in taking up an entire 20,000 sq ft floor space.

New office buildings are gradually filling up even before they are completed or ready for occupancy. There is however some movement from other existing buildings as tenants take the opportunity to relocate or upgrade, as seen in the mix of tenancy in Marina One and Guoco Tower. Frasers Tower has a 663,000 sq ft of total net leasable area. More new office spaces are currently being developed in the CBD, including UIC Building and the new property which will sit on the site of the previous CPF building. Though office rents have been falling, it may be a good sign after all as the market would have picked up by the time these new buildings are

Chinese top buyers of Singaporean properties

Foreign interest in local properties have not waned despite rising prices and supply over the past half a decade. Their appetite have not diminished, if at all. Transactions may have shrunk slightly due to the additional costs involved in foreign-purchases of properties in Singapore, put in place by the series of property cooling curbs rolled out since 2011, but they buyers are back in the market in search of potential sites and units, in particular buyers from mainland China.

skyline-residencesIn a year-on-year comparison, foreign property transactions were up 11.8 per cent and this excludes purchases by permanent residents. Besides the Chinese, other major buyers hail from Malaysia, Indonesia and the United States. Each group have their preferences as the numbers show. Chinese buyers mostly favoured suburban properties while Malaysia and Indonesian buyers went for core central region units. 68 per cent of Indonesian buyers and 40 per cent to Malaysian buyers purchased homes in the prime districts while 58 per cent of transactions from the Chinese were for homes outside of the core central districts. Most Indonesia buyers are willing to pay $2,000 psf and above for prime properties while Chinese buyers usually went for properties priced between $750 to $1,700 psf.

Marina ONe iprop watermarkThe Additional Buyers’ Stamp Duty (ABSD) may have been a deterrent at one point in time, but as the government made clear that the measures are here to stay, acceptance is beginning to truly sink in and buyers are willing to spend the additional amounts in exchange for long-term capital gains. Buyers from the United States are exempt from the ABSD due to a free-trade agreement and this has raised the number of buyers up from 1.1 to 7.3 per cent over the past 5 years.

 

Singapore prime properties considered reasonably priced 

Singapore properties are expensive. But compared to other major global cities such as London, New York, Paris, Tokyo and Hong Kong, perhaps they are simply reasonably priced, particularly in the category of prime district properties. The government-implemented property cooling measures might have helped keep prices down.

Marina One ResidencesAccording to the Monetary Authority of Singapore’s (MAS) Financial Stability Review from November 2015, Singapore’s home prices very well could have been 17 per cent higher than they are now if not for the property curbs implemented since 2010. The ratio of home prices to income for Singapore is now 5.6 per cent, lower than the 8 to 9 per cent for most major cities. Mortgage rates (at between 1.6 to 2 per cent) are approximately the same as average rental yields for prime properties, which are currently at 1.8 per cent.

Average luxury prime district home prices are hovering around $1,991 psf at the moment, about 20 per cent lower than the segment’s peak in 2011. Though sales volume has been low in the past year, as the year moves ahead, property analysts are expecting rental rates to increase after this year as the supply of prime properties dwindle. For savvy investors, the time to purchase may be soon, before property curbs are lifted and demand rises once more.

 

More foreign private home buyers

The number of Singaporean buyers of private properties have fallen last year. Possibly overshadowed by the increase in number of foreign buyers since rules have changed for Permanent Residents (PRs) buying HDB flats. New PRs must now wait 3 years before they are able to purchase from the public housing market. The rules have been in place since August 2013.

Marina ONe iprop watermarkThe percentage of PRs purchasing private properties in Singapore have risen from 15 to 18 per cent in 2014. But the number of Singaporean buyers have dipped almost by half. In 2013, 16, 789 homes were sold to Singaporeans while in 2014, Singaporeans only purchased 8,707 private homes.

Most of the foreign buyers were made up of Chinese nationals, Malaysians, Indonesians and Indians. 229 units were sold to Chinese nationals in the last quarter of 2014, up from 214 units in the third quarter. With the launch of the Marina One Residences, which is a joint venture between Malaysia and Singapore governments, Malaysian buyers were also active in the private property scene here. Over the course of last year, some 119 units were purchased by US citizens and 58 by Britons.

The number of PR and foreign buyers have remained steady for the past couple of years. Should this be a promising sign for the road ahead? And how can local private property buyers leverage on this?

Marina Bay home sales show positive signs

Private home sales in the suburbs have been showing sign of strain as the increasing number of new completed condominium units compete for the increasingly limited number of buyers, which could be further limited due to loan limits, a downtown project seemed to be bucking the trend and pulling in sales in the luxury apartment sector.

Marina One Residences in the Marina Bay precinct secured half of the total number of home sales in October alone. But that could also be due to the fact that it was the only new launch in the month. 334 units of the 1,042-unit condominium were sold at the average selling price of $2,228 psf. However, sales were still lagging behind its initial preview launch when earlybird discounts were given, and sale prices hovered between $1,960 and $3,100 psf.

Marina ONe iprop watermarkDevelopers are finding it harder to attract the buying crowd and have found they are now more sensitive to pricing as it became more difficult to secure bank loans. Though the price fight is not evident yet, as buyers are still willing to fork out a considerable amount for properties in good locations, it may only be a matter of time before the cracks show. Especially since 2015 and 2016 will see an even bigger influx of completed private homes in the market.

For now, developers are focusing their efforts on selling remaining units at previously launched projects such as DUO Residences, Coco Palms and Lakeville condominium, thus holding back on new launches. Will this drive consumers towards other property types such as executive condominiums (ECs) and resale HDB flats or will they continue to seek better deals with the existing private property market?

Marina One Residences breathes new life into Marina Bay

Activity at the Marina Bay district may see a boost as new units at the Marina One Residences were launched over the weekend. With its exclusive CBD address, the 1,024-unit residential development may see a more positive uptake as property cooling measures could have kept prices at a reasonably affordable range for investors.

Those with strong holding power and are looking for properties with a high growth potential may consider the Marina One development quite seriously. With one- to four-bedder apartments available in the mixed-use development, residents will be in close proximity not only the entertainment areas, the Central Business District but also the Marina One offices and the 65,000 sq ft retail podium, The Heart. Prices are set to hover around $2, 600 psf. Over the past year, prices averaged between $1, 945 to $2,694 psf.

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.

Buyers of units in the Marina Bay area, such as those at Marina Bay Residences, Marina Bay Suites and The Sail @ Marina Bay, have seen profits ranging from $60,000 to close to $1 million. Other properties in the area include V on Shenton.

With the Marina One Residences being one of the rare freehold apartments in the area, property experts are expecting its value to hold steady or increase over the years. Despite resale prices falling up to 8 per cent, and with expatriates now moving into less central areas such as the suburbs due to their housing allowance curbs, smaller units are still expected to do well as the mid- to senior-level foreign workforce may still favor the convenience and proximity of units in the CBD.

For this sector of the market, the main change which came about from the implementation of the TDSR (total debt servicing ratio) framework by the MAS (Monetary Authority of Singapore) is that buyers may now dictate how owners and developers price their units.

No rise in private property market sales yet

Though the dip in private home sales is not as drastic as expected, with a 1.3 per cent decline in the first half of 2014, industry experts are expecting the same rate of decline for the remaining half of the year.

The restrictive home loan situation was the main deterrent as it has meant that buyers may no longer be able to loan as much as before and that has limited their possible property purchases. The Total Debt Servicing Ratio (TDSR) limits the total monthly debt repayment to 60 per cent of the borrower’s gross monthly income. For buyers who are already servicing a home loan or other loans, the amount they are able to loan will be lesser as well.

CIty GateThe smaller and more affordable units will seem more attractive than before. Or units such as dual-key apartments which allow bigger families to stay together may be more affordable should the cost be shared. As June was a relatively quiet month for new launches, figures from the next quarter will be more telling. In the first half, less than 5, 000 private homes were sold. Buyers can look forward to a few more launches in the coming months, including mixed-use development, City Gate at Beach road, The Crest in Prince Charles Crescent, Highline Residences in Tiong Bahru and Marina One in Marina Bay. Indicative prices of units at City Gate will range from $1, 900 to $2, 200 psf.

Will there be a surprise market rebound? Or will it decline further?