Right time for luxury (property) shopping?

With the current property market lull, developers are offering many larger-sized luxury properties at discounted prices. Prime central district properties have also seen less activity as foreigners are buying fewer condominium units possibly due to the higher stamp duties and taxes levied on them. Could this be the right time to suss out a good investment deal?

Twin-Peaks3

Photo: Twin Peaks condominium on Leonie Hill

In fact, many developers are looking at doing bulk sales on their unsold stock in order to prevent paying the penalties such as  the Additional Buyers’ Stamp Duty (ABSD). Property funds may be the most likely buyers, though individuals or groups of individuals eyeing specific projects could also jump on the opportunity.

City Development Limited (CDL) for example has been trying to sell one of the two 24-storey towers at Gramercy Park and OUE is doing the same with their Twin Peaks development. Prices for Gramercy Park, a freehold condominium project, is expected to hover around $2,600 psf and will be ready for occupation by the Q2 of this year.

Though almost 92.9 per cent of their 174 units have been sold by last year, they still have a number of unsold stock to sell by 2018. Developers can file for extension of their Qualifying Certificate (QC) which allows them a bit more time to sell their stock. But developers will also have to weigh the charges and ABSD against the discounts they are able to provide buyers with bulk-buy offers.

 

Waterfront Living moving inland

Moving away from the coastlines, waterfront living has become more available inland. Aligned with the Urban Redevelopment Authority’s (URA) Masterplan, Singapore’s landscape will evolve to include many man-sculptured green areas and waterways, with enhanced island-wide connectivity and a movement of population and property towards less mature districts and estates.

And it is only logical that building and property-development in these areas have ramped up in recent years. Besides government-built HDB flats, private condominiums have also been mushrooming in these developing districts.

Near Sungei Serangoon, just beside the Serangoon Park Connector, is the 1,165-unit Waterbay condominium. This 99-year leasehold condominium boasts a wide array of 1- to 5-bedroom apartment units, 2 swimming pools and even a childcare centre and 6 retail outlets. The waterfront views promise to bring a sense of living in a city but away from the buzz of a city.

In Punggol, there is the Watertown condominium, a mixed-use development that harnesses the beauty of nature and the Punggol Waterway while providing the convenience of city living with its extensive collection of integrated commercial and retail outlets.

With Punggol set to be the creative cluster in the North Coast Innovation Corridor which will also include Woodlands, Sembawang and the future Seletar Regional Centre, this outlier may soon be the latest town on the block to watch.

Private condominium prices hold steady

The fall in completed private condominium prices was gentler last year at 3.5 per cent, compared to the 5.7 per cent from the year before. Prices are expected to hold steady this year as a dip in supply of properties in this sector bring prices to a plateau.

Jewel CDL

Photo: Jewel @ Buangkok

Demand for smaller apartments of up to 500 sq ft in size, have been weakening as their numbers, especially in the suburbs, have been on the rise in the past couple of years. Investors have found them more difficult to rent out in the dulling leasing market and those outside the central region or further from regional business hubs may find themselves competing for the same tenant pool. Tenants now prefer units with larger floor spaces with just slightly higher rents.

Sale prices of completed private properties within the central regions however have fallen more sharply as they usually come with a higher total quantum price. Compared to the many newer properties which have found a sweet spot with their total selling price, units in these central or prime districts see fewer overall transactions.

As the volume of unsold completed condominium stock diminishes and with the fewer launches expected this year due to cutbacks on land supply, resale properties could expect a happier year ahead.

Lull in private home prices

Despite a projected lull in local private home prices this year, interest in Singapore’s property market remains steady as prime residential property prices are still 165 per cent and 92 per cent lower than those in Hong Kong and London respectively.

 Photo credit: Singapore Tourism Board

So despite property analysts predicting a 5 to 10 per cent fall in prime and mass market private property prices this year, the local property market’s core remains strong. 2010’s property cooling measures may have kept property prices 17 per cent lower than what it could have been. Private home prices have fallen 4 per cent last year, following a 3.7 per cent fall in 2014. In the luxury home market, prices have fallen 20 per cent since the Additional Buyers’ Stamp Duty (ABSD) was implemented in 2011.

China’s recent growth slump, plunging oil prices, the Federal Reserve interest rate hike and a general sense of a global recession looming, might consequently affect the property markets around the world. Businesses may reconsider their expansion plans, which could mean a fall in demand for office spaces and commercial properties. This in turn may affect the number of expatriates entering the country, which may also affect rental prices.

This year could prove tough for investors and property sellers, but not without glimpses of hope. 2016 may be the year to hang-in-there, but industry experts are expecting 2017 to take a turn for the better.

ABSD deadline looms

Properties launched 5 years ago are now facing their deadline to sell their units or incur the dreaded Additional Buyers’ Stamp Duty (ABSD). The regulation allows developers a 5-year window period in which to build and sell the the units in a residential project. Beyond this time frame, they will need to pay a 15 per cent duty on remaining units. This impacts the final selling price, which will see even fiercer competition from newer launches and other resale properties.

Mon Jervois

Photo: Mon Jervois private apartments

What some developers do is to purchase their own units, if the cost of paying the ABSD supersedes the losses otherwise. Properties launched before mid-2013 have mostly sold all their units, but launches after the Total Debt Servicing Ratio (TDSR) framework kicked in tell another story. Non-Singaporean developers have an even tougher job as they need to sell their units within 2 years of completion or incur hefty fines and pay for extensions.

Prices of unsold units at these projects facing the deadline have already come down since their launch. At Kingsford@Hillview Peak for example, the media selling price have fallen from $1,340 psf to $1,288 psf in about 3 years. More than half of the 512 units remain unsold.

A similar story is told at The Trilinq in Clementi where 220 of its 775 units has sold by the end of 2015 at median prices of $1,329 psf. When it was launched in Q1 of 2013, the average selling price was at $1,545 psf.  It is not only the larger scale projects which are facing the deadline pressure. The 109-unit Mon Jervois apartments also saw a drop of $235 psf in the last 2 years. The project is approximately 43 per cent sold.

 

Fewer launches More sales

Despite property developers rolling out fewer new property launches last year, sales of new private homes rose 2.9 per cent from 2014, to ring the tills at 7,529 transactions in 2015. The number of new homes launched last year was in fact 8.2 per cent lesser than that of 2014. Buyers may have realised that property prices are stabilising and will not decline much more, and thus are returning to the market to pick off already-better deals.

The Trilinq
Photo: The Trilinq

759 new private property units were sold in November alone last year, buoyed by the launch of The Poiz Residences. In December, there were 384 transactions recorded, 154 more in a year-on-year comparison with December 2014. Though 2013’s peak saw 14,948 new home sales, almost double that of last year’s, the signs are more positive than expected. Property investors may also be picking up real estate as the stock market remains volatile. Perhaps declining property prices have also managed to strike a chord with investors. At The Trilinq for example, which first launched at prices of $1,545 psf in 2013, have since trimmed their prices to $1,329 psf.

Market activity this year will await to be seen as the interest rates hikes and loan restrictions combined, and the reduction of land sites sold this year, may deter buyers and lower demand. Industry analysts are however remaining positive, projecting 8,500 new private home sales this year. They are expecting lower overall quantum prices to be the draw of this years’ property market.

Home prices along Downtown Line go to town

As expected, the newly completed Downtown MRT stations have brought much cheer not only the commuters but also to owners of properties in their vicinities.

The SkywoodsPhoto credit: Skywoods.com.sg

Since the Downtown Line began operating some of its stations last December, prices of properties near these stations have already seen an increase in interest, units sold and also rental prices. Private apartment prices have risen from $1,523 psf to $1,592 in the last quarter, up 4.5 per cent from the previous quarter. Out of the 18 stations now operating include long-awaited ones along Bukit Timah and Upper Bukit Timah such as Tan Kah Kee, King Albert Park, Sixth Avenue, Beauty World, Cashew, Hillview and also Bugis, Little India and Rochor stations along Rochor Canal and Sungei Road.

The price increase can be observed at private apartment projects such as Eco Sanctuary, where 9 per cent more units were sold by December. The development is now 91 per cent sold. Kingsford Hillview Peak condominium also saw a 3 per cent increase in sales and The Skywoods almost doubled their in the number of units sold.

With the effect MRT stations have on property prices, it would not be surprising to find prices of homes along upcoming Downtown and latest Thomson-East Coast line appreciate in the near future.

A stable year for Singapore’s property market?

Resale HDB flat prices have fallen only 1.5 per cent last year, as compared to 6 per cent the year before. Industry experts are not expecting prices to fall much more this year and in fact last quarter saw a 0.2 per cent rise in HDB resale flat price index. But that may not mean a sudden rebound of HDB flat prices as the options available to home buyers have now increased, especially as private home prices have fallen and more are now eligible to purchase new BTO flats directly from HDB.
Poiz Residences2Photo: Poiz Residences

HDB has announced that they will be rolling out up to 18,000 new flats this year, 3,000 more that last year. Private properties are now more affordable as developers have caught on to buyers’ affinity to total quantum selling prices. Last year, private property prices dropped 3.7 per cent overall, and a 0.5 per cent fall was registered last quarter of 2015.

The number of new property launches in the 4th quarter propped up new property prices with launches such as Principal Garden, The Poiz Residences and Thomson Impressions. Prices of new units in the city fringes fared well with no price changes. Landed property prices however fell 10.4 per cent over the last 2 and a half years, with prices falling 4.4 per cent last year alone.

Property analysts are watching the market closely as they are expecting the interest rate hikes to put a strain on those servicing home loans, especially as the property cooling measures concurrently remain.