Resale condominium market in gradual recovery

Could a slice of sunshine be sliding its way back into the local private property market? Resale condominium prices have risen 1.1% in January and it’s a bigger increase than the 0.5% in the last 2 months of 2016.

RivervaleCrestAnd as expected, non-landed private residential properties located in prime districts lead the way, with a 1.9% month-on-month increase. Central region properties also gained 1.5% in terms of prices while that of suburban properties rose by 0.4%. In a year-on-year comparison, resale prices were 0.3% higher than in the same period of 2016.

In some districts, resale properties exchanged hands at lower-than-market value, though the price difference at minus $4,000 is lesser that the $5,000 in December. District 23 posted more than 10 resale transactions in January alone and selling prices went as high as $2,000 above market value.

GrandeurParkResidencesThough the year is still young, it could be a budding sign of the things to come for the rest of the year. Property analysts are not expecting sharp rebounds anytime soon, though the stabilisation of prices and an increase in sales volume would already be sufficient to signify market recovery, albeit a gradual one. What could also be seen from the market data was that sellers were beginning to moderate their asking prices, possibly with pressure coming in from new property launches and completed new units entering the weak rental market.

 

Winning $292 million West Coast Vale land sales bid

Properties in West Coast have been garnering tons of interest lately. One of the latest offerings in the area is the Parc Riviera condominium, and nearby the Clement Canopy also recently launched last weekend.

parcriviera3Thus a winning bid of $292 million for a 99-year leasehold site in West Coast Vale probably did not come as a surprise. The bid was won by China Construction Development, with 8 other bidders vying for the same site. Second in line was MCC Land (Singapore) with a bid of $289.9 million. The affordable quantum was likely what drew the bidders as the plot was one of the last to be offered up for tender last year under the Government Land Sales Programme. The site was launched on December 7.

Considering the final bidding price of $592 psf is 7.4 per cent higher than the $551 psf paid for the neighbouring Parc Riviera project, the developers must be optimistic about the prospects of the property market. Parc Riviera is closer to the Ayer Rajah Expressway though the proximity of the Jurong Lake District and malls such as Jem will help in marketing the property to potential buyers.

parcriviera2Developers have been seen to be more aggressively bidding for land plots in recent tenders as most are hoping to replenish their land banks and preparing for better times ahead as the property market is seen to be bottoming out.

Demand for well-located properties remain high

Properties near MRT stations often bring in the buying crowds. And there will be 2 such properties to look forward to in the first half of 2017.

GrandeurParkResidencesThe first is the 720-unit Grandeur Park Residences which is expected to launch in March, near the Tanah Merah MRT station. It’s proximity to transport, the inclusion of a childcare centre and 2 shop units is expected to add value to project. 1- to 5-bedroom units here will range between 420 sq ft and 1,450 sq ft in size. And if prices at the neighbouring The Glades are anything to go by, the units at Grandeur Park Residences may be priced between $1,300 to $1,400 psft.

Situated near East Coast Park and the upcoming Siglap MRT station, is the 843-unit Seascape Residences. With sea views and as one of the first private condominium projects to come up in the area in the last decade and a half, this new project along the coastline may make quite the splash on its launch. Prices are expected to hover between $1,550 to $1,650 psf.

SeasideResidencesDespite a weak economy and the property cooling measures, demand for new homes remain resilient and while buyers may be more selective with their purchases, properties which are well-located and offer competitive pricing will still sell. Interest rates remain a uncertain factor impacting market sentiments however, as sudden spikes may affect demand.

Launches of new projects can often boost sales of new homes across the board and this first quarter could very well already set the tone for the rest of the year.

Luxury market makes for a suitable investment playground

Recent news of veteran banker and one of Singapore’s richest men, Wee Cho Yaw’s latest property purchase of 45-units at the luxury property, The Nassim for $411.6 million, may have reignited interest from potential buyers of high-end luxury apartment units.

Seascape at Sentosa Cove.

Seascape at Sentosa Cove.

Although property prices have fallen last year, the rate of decline has slowed and the luxury market has fared considerably better than the other property segment. Prices of high-end properties in prime districts, particularly in the Central Business District, Orchard road and Tanglin areas, have fallen 1.2 per cent last year. But the fall is still lesser than the 2.8 and 3.4 per cent in the city fringe and suburbs respectively. This segment also clocked more transactions last year, an increase of 48.7 per cent from 2015. Home sales in the city fringe and suburbs rose by 27.2 and 3.7 per cent.

Meyer Road Bunaglow2Property analysts are confident that the luxury market will find its footing more firmly this year as the supply of high-end properties will increase in the next few years. Though rents have fallen, those who have the holding power will come out tops in the long run, when the property cooling measures are relaxed. Most sellers put a 15 to 20 per cent premium on the value of freehold properties. Property auctions and en bloc sales could be activities to watch this year, especially for those with cash to spare and the financial endurance to last through at least the next few years.

 

Resale HDB flat market’s continued stabilisation

For 2 consecutive years now, the sales volume of resale HDB flats have been on the rise. Since 2014, the number of transactions recorded for resale HDB flats have been increasing, from 17,318 in 2014 to 19,306 in 2015 and then 20,813 last year.

ToaPayohHDBflatResale flat prices are showing signs of stabilisation, with only a 0.1 per cent fall in 2016 from the year before. Though last quarter’s transaction figures fell 9.1 per cent, it could be due to the usual year-end lull as most were away for the school holidays. Akin to buyers’ sentiments and reactions in the private property market, HDB flat buyers have also been increasingly keen on closing deals as prices have been falling steadily since 2013. Most consider the market currently nearing or at the bottom of the property cycle and are thus more confident or willing to make the purchase at what they consider lowest-possible prices.

Despite the government ramping up supply of new BTO (build-to-order) flats for young couples and families, even including singles in their bigger scheme of things by providing them the option to purchase 2-room units directly from HDB instead of previously restricting them to only units in the resale market, there are still those who will require a unit sooner rather than later or do not quite qualify for new flats. These buyers will be the ones who prop up the market, though with the current cooling measures still in place, prices are unlikely to rebound anytime soon.

ClementiHDBflatProperty analysts are however hopeful that the number of resale flats transacted this year will be closer to the 21,000 to 23,000 mark. Resale prices have fallen to a level at which young couple and families find attractive or affordable enough to commit. A large number of HDB flats and suburban condominiums will also reach completion this year, which could mean more HDB upgraders will be looking to sell their existing flat in the resale market. And as rents are expected to fall as well, for the same reasons, the most optimistic outlook could be a 1 to 2 per cent price increase by end 2017.

Resale condominiums make a comeback

Do not underestimate the power of the trickle-down effect as older resale condominiums leverage on new launches to bring in activity and renewed interest.

LakeGrande

December’s resale private home sales figures were case in point, in particular The Santorini in Tampines. The new launch of The Alps Residences resulted in a spillover of buyers’ interest in surrounding condominiums and though the 597-unit The Santorini was launched more than 3 years back in 2014, it sold 106 units in 2016 alone, compared to only 32 units in 2015.

The overall sentiment is one of hope as buyers, now more driven to purchase and increasingly swayed by lower quantum prices, have been seen to be re-entering the market in the past months. Upcoming new townships such as Bidadari and the Jurong Lake district have been showing up more often on buyers’ radars and interest in the latter is particularly telling especially as the area is flagged in the Government’s development plan as the next central business district.

thealps

The 710-unit Lake Grande development in the Jurong Lake district has already sold 553 units and nearby, Sim Lian’s Wandervale and Treasure Crest executive condominium (EC) projects have also sold 1,003 units. With the government holding back on the release of land sales, the resale condominium market may hopefully continue with its winning streak this year. Most of the sales developers received last year were from older developments launched before 2016, Commonwealth Towers, Coco Palms, Bellewoods and Bellewaters, just to name a few.

More condo developments offering deferred payment plans

As the number of completed private home units in the market rise without the same exponential reaction from buyers, developers are finding it increasingly difficult to move remaining units.

peak-cairnhillMore developers have been seen to offer incentives such as a deferred payment scheme in order to entice buyers. One of the latest to hop on the bandwagon is TG Development‘s The Peak @ Cairnhill II. Following good response to their previously-launched deferred payment scheme, CapitaLand has added Sky Habitat to their other 2 properties, d’Leedon and The Interlace, offering the same incentive. Their stay-then-pay option allows Singaporean buyers to make a 10 per cent down payment (15 per cent for foreign buyers) within 8 weeks to exercise the option to purchase and the other 90 per cent within a year from that even while living in the unit.

Some other properties such as One Balmoral are offering sweeteners such as direct discounts. The freehold 91-unit condominium in prime district 10 has offered a 13 per cent discount on all their units with prices averaging at $2,150 to $2,200 psf. Over at the waterfront-style Corals at Keppel Bay, the developer is offering $50,000 off selected units with average prices working out to be around $1,850 psf.

threebalmoral the increasing number of unsold units in the market, industry experts are not yet concerned about new launches coming up this year. New blood will likely inject active browsing and buying sentiments into a stabilising market, and with prices holding steady buyers are likely to take the bait, and the effect may very well trickle down to the secondary and other sectors.

Fierce bids for Perumal Road land site

A mixed-use land site on Perumal road which could potentially yield 200 private homes and an entire floor of commercial spaces have attracted bullish bids from property developers since its release in November last year.

Sturdee-Residence11 bids have been placed, the highest at 4.4 per cent more than the next in line came from Low Keng Huat at $174.08 million. The second highest bid came from China Construction (South Pacific) development. The keen activity in the land sales sector could translate into a competitive primary and thereafter secondary market which will in turn mean a ready pool of buyers who are ready to spend after the prolonged market lull over the past few years.

Average selling prices at this site is expected to hover around $1,700 psf due to the high land cost and also its proximity to the Farrer Park MRT station and other amenities such as City Square Mall and Mustafa Centre. The neighbouring plot where Sturdee Residences stands only lodged at $787 psf.

The lack of land sites available for sale in the earlier part of 2016 could have resulted in pent up demand from developers who are looking to replenish their lank banks in preparation for 2018 and beyond when market recovery is expected to happen. Property analysts are already seeing signs of market stabilisation and developers who prepare ahead of the recovery could just catch buyers at an opportune time.