Bidadari – Property with longevity?

Where bustling and ever-so popular Bishan stands,used to be cemetery land. When it was first redeveloped in the early 80s, no one would have imagined the boom it enjoys today.

BidadariPhoto credit: HDB

Now it could be Bidadari’s turn. Already the new HDB flats to be built have garnered buyers’ interest and private landed residential properties in the area are also welcoming the attention. Surrounded by the quiet and exclusive atmosphere of Bartley, Mount Vernon, Sennett Estate and Upper Serangoon, Bidadari has been slated for development into a public housing precinct and a private property enclave.

Nearby Potong Pasir and Bendemeer have already seen their share of new properties coming up. HDB is planning 10,000 new homes in the area under the HDB Master Plan 2014, and up to 1,000 new private homes are expected to secure their place by end of 2015.

Nin residences at Bartley

Nin residences at Bartley

Considering the age and population density in the estate, there is a huge space for development, which could also mean potential for properties. So far, private condominium sales have been brisk. New developments in the area include Nin Residences, Bartley Residences, The Venue Residences, 8@Woodleigh. There are already some schools in close proximity, such as St. Andrew Junior College, Maris Stella High School and Stamford American International School. A new retail development, Market Square, is also on it’s way up.

Though demand for properties here may not seem to be as high as the neighbouring Bishan or Toa Payoh, one must not forget Bishan’s history. Their day will come, and perhaps it is just a matter of time.

Luxury apartments – Leased instead of Sold?

As the property market lull continues, developers of luxury properties are finding the going all the tougher. As the number of unsold units loom large in the horizon, some property developers have considered turning their private condominiums into serviced apartments instead.

iLiv@Grange

iLiv@Grange

The only other options are for those with deeper pockets to hold off their launches till the market turns around, or to offer steep discounts. Ardmore Residences is just one of the possible few luxury residential developments whose launch has been held off. Wealthy investors do not seem to be keen on hopping on the market for now, probably in lieu of the tightening measures placed around the housing and finance sectors. Since its completion last year, developers have chosen instead to lease out units at the Ardmore Residences for approximately $25, 000 per month. The Sculptura Ardmore condominium nearby has also not been launched.

Sculptura ArdmorePhoto credit: SC Global.

Although some marketing has been done for the iLiv @ Grange apartments in Grange road, it has not been officially launched as well. At its unveiling in 2010, developers were targeting selling prices of $3, 000 psf. But in the current market, that figure might be unrealistic. There has been talk of the developer, Heeton Holdings, possibly selling the units in bulk to a single buyer at $2, 200 to $2, 300 psf. Developers generally have a window of 2 years after completion of the project to sell off the units. Remaining units are not allowed to be rented out. Since Singapore may require more hotels and short-term accommodation, it may be a new venture should these luxury residential projects near the city centre to be converted into serviced apartments.

Resale private home prices down the slippery slope

The tussle between new and resale properties continue to play out as supply continues to outweigh demand and buyers are now pickier with the units they purchase.

There has been recent calls for relaxation of the cooling measures, particularly the Total Debt Ratio Servicing (TDSR) framework which limits the amount of loan buyers can receive, which is largely dependent on their income. Those with a flexible income or commission-based incomes are particularly hit as the main part of their income may not be considered towards their basic pay.

Buyers could also be holding out on new launches as prices have dipped since initial sales launches. CapitaLand’s Sky Habitat recently sold a median of $1, 377 psf last month. But when it was first launched 2 years ago, prices were at $1, 583 psf. There are still a considerable number of unsold units out there and some buyers could be looking out for developers looking to sell off remaining units, which also means resale properties may be struggling to get themselves noticed, unless their price is right.

Sky Habitat condominium in Bishan.

Sky Habitat condominium in Bishan.

And as rental demand also shows signs of weakening, investors are more wary of properties, particularly newer suburban mass-market homes, which are yet untested in the rental market. Some condominiums may have a higher number of units out on lease at the same time, which increases the competition for landlords.

Will this continued decline in resale home prices cause buyers to rethink their property investments? How can you better spot the potential of a property?

Dual-key units not forgotten

In fact, property developers are still building a number of dual-key apartments in new suburban condominiums despite its decline in recent months. These 2-entrances, 2-keys units are not very common though they can be found in some executive condominiums (ECs) and larger private suburban condominium developments. But they have appealed to large, multi-generational families.

For executive condominiums (ECs), only families who qualify as a multi-generation family as follows can apply:

  • Married couple with parents/grandparents
  • Fiance and fiancee couple with parents/grandparents
  • Widowed/divorced with children and parents/grandparents

SantoriniIn the private property sector, there are no such restrictions and those who are hoping to reap some profits from rental will find them particularly attractive. But the large size of these dual-key units may be an indirect reason for its fall in sales volume since the introduction of property loan limits. Home buyers simply are not able to afford the high quantum prices these units demand.

So far, dual-key apartments have been prominently featured in up to 8 private residential developments and now more than half of the condominiums with more than 400 units include dual-key units in their midst. Some of the more notable launches with dual-key apartments available for sale are:

How will these large condominium units fare in the later half of this year? Will it be a battle between the small shoebox apartments and larger rarer units?

Condominium units – Cheaper but also smaller

Property developers are now more attuned to the needs and wants of their customers and as buyers become more price-sensitive in light of the weakening property market, they are careful to align their new properties to fit tightening pockets.

But the lower overall prices may not necessarily translate to a lower psf price. Whilst keeping that steady, the other variable which has to change is the property size. The larger-sized units were the first to shrink, with five-bedders now measuring an average of 1,569 sq ft instead of the previous 2,035 sq ft. Surprisingly two-bedders showed a significant resize of about 11.2 per cent. Two-bedroom units are now between 698 to 864 sq ft as compared to the older units measuring 703 to 973 sq ft.

Coco PalmsSizes of three- and four-bedders remained largely the same, in fact some even increased. These mid-size units are deemed more popular with buyers. As the Total Debt Servicing Ratio (TDSR) framework has restricted many from loaning enough to upgrade to bigger units, some who were once prepared to purchase five-bedders are now settling for these bigger three- or four-bedders.

As Singapore continues to grow and land becomes scarcer, it’ll be quite the miracle to see home sizes increasing. Thus it might be impractical to wait around for the impossible to happen, and the investment-savvy move could be to purchase when the time is right. As prices continue to drop, could the time be now?

Private home sales – Will the decline continue?

The property market has been softening. The decline seemed inevitable, especially as completed new private homes flood the market in the upcoming year or two.

Not surprisingly, shoebox apartments saw the largest dip in sales as the number of units are somewhat saturated. Buying power is also now lower and buyers who were initially looking at these units for investment may no longer be able to get the loans they need.

 

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.

Rental issues such as the age, functionality and location of resale units now have to compete with the newer and sometimes faster property models. In the central districts, the decline in rents and sales of apartments were most evident. This could be due to the number of unsold high-end properties in these areas. Even suburban condominiums are feeling the heat as many expatriates shun them as they often do not provide the convenience and exclusivity they desire.

Whether the effect will transfer to the HDB resale market also awaits to be seen. As HDB upgraders who are moving to their completed units will have to let go of their HDB units within a specified time period, many may be in a hurry to let go of their units and possibly at lower prices than before as the market gets competitive. Pair this up with a diminishing market for smaller units as singles are now able to purchase new flats from HDB directly, as well as a smaller pool of permanent residents, the property market seems to be in for quite the turn this year.

Even as more new property launches are promised, how private home sales fare the next quarter may set the mood for the rest of the year.

Private condo units – Buy 15 in a go

As the property cycle could be heading towards its low point, property developers are eager to find ways to let go of remaining units in order to recoup losses or earn whatever profits are left.

Some have taken to offering discounts or freebies, whilst others have are even offering bulk sales of units at lower prices. Buyers are now more cautious about their purchases and with lending limits being restricted, many are now unable to afford additional property purchases. Most of these would be the middle to upper-middle classes who eye small private apartment units as potential for rental revenues. But as rental demand dips, they may think twice.

Newton Imperial21 units of the 36-unit condominium, Newton Imperial has been put up for bulk sale recently for possibly between $65 to $72 million. Only 15 units of the Great Newton Properties owned condominium development has been sold since its completion in 2011, most of which are to foreigners. The Newton and Novena area is known to be popular with expatriates and was once in hot demand as its city fringe location made its properties highly valuable. Most of the apartments in Newton Imperial are three-bedroom units.

Though bulk sales are a risky investment, there might still be a chance of profits, especially if the units are designed to suit specific tastes and are in the right location. Rental of private apartment units in Newton are at an average of $8, 000 psf. Units at the Newton Imperial were previously sold at approximately $1, 880 psf. Nearby, other private establishments such as L’Viv and 26 Newton are selling units at $2, 100 to $2,600 psf.

What lies in the future of private properties? Is the market headed towards a downward spiral and at what speed?

Median COV on the fast decline

It was not too long ago that Cash-over-valuation (COV) prices for resale HDB flats dominated the headlines. The rarer and more highly-in-demand the unit, the higher it went. HDB flats were being sold at close to the million dollar mark, with a few pulling ahead and making it across.

But the weakening property market has meant a dip in demand in resale flats and sellers now find themselves lowering their asking COV prices, or even selling prices, especially if there is some urgency involved in selling their HDB flat. From the median of $11, 444 in October, COV prices are now at $8, 000 in November. There were expectations that it will regain its foothold at $10, 000 by year-end. But the future seems a little foggy at the moment.

HDB Flats THinkStockPhoto source: ThinkStock

What are the factors causing this decline? And will these reasons resolve themselves in the new year?

  • Housing curbs. Stricter loan limits means buyers now have lesser to spend and affordability of their property purchases will now take priority in their decision-making process.
  • Less demand for resale units overall. As new private properties launch at an increasingly rapid pace, with smaller units available at lower prices, the popularity of public housing may continue to wan.
  • Less demand for resale units in popular estates. As more BTO flats are rolled out, with some in mature estates, buyers may be drawn to apply for these instead of buying a unit off the resale market, especially if they are not in a hurry and location is not as crucial a deciding factor.
  • Increasing number of HDB upgraders. As suburban condominiums become a more viable and popular option, there may be more HDB upgraders looking to sell their flats in order to purchase private, but this would also mean a growing pool of sellers looking to let go of their flat and hence diluting the intensity of the market.

Considering the fact that July 2009 was the last time COV prices fell below $10,000, the recent $8,000 mark could be one of the lowest in the last five years. In fact, some sellers are now offering their units for sale without any cash premium, and even at prices below valuation. But these cases could be few and far in between as resale units in popular HDB estates are still rare and may fetch reasonable prices.