What carrots do Property developer dangle?

With competition heating up in the property scene, developers are finding it increasingly difficult to find ready buyers. The stakes are now higher and thus the incentives offered have been interestingly varied. From discounts to free furniture, rental guarantees, holiday and travel memberships; and even sports-car discounts and diamonds! The “carrots” may now be actual “carats”!

Mon JervoisQingjian Realty has recently offered one-carat diamonds in a lucky draw for Bellewoods executive condominium (EC) e-applicants. 20 diamonds for that matter. Buyers of the Highline Residences in Kim Tian road can look forward to a 3-year “lifestyle membership” which includes limousine rides and complimentary golf privileges at the Ria Bintan Golf Club. Most of the developers are offering these incentives as a way to market and spur renewed interest in their previous launches. These offers help protect their selling prices whilst balancing the expectations of buyers who may
have purchased units in the initial phases. Would this holding back on offers affect the response during first-phase launches? Whilst some may rest a little on their laurels and wait for possible offers in future launches, buyers who are keen to select their prime units may still prefer to strike while the iron is hot and go for first releases to ensure they get a unit they truly want.

At the Infinium cluster-homes in Kovan, IG |Development was offering a $200,000 Mercedes to the first 3 buyers but later withdrew the offer in place of price discounts of $100 psf on their first 3 units sold. That would mean savings of up to $500,000. But if it’s a vehicle you’d like, UIC and SingLand are partnering with Aston Martins to provide discounts on their cars for buyers of three-bedders and bigger units at Mon Jervois.

But as the supply of new homes may trickle come 2015, will developers continue to dangle these incentives or will the property market make a U-turn and head up the charts on selling price alone?

Private home sales down in Q3

Despite recent new launches, private home sales remained lacklustre as the third quarter registered  lowest sales figures since 2008. Only 1,596 new homes were sold in the last 3 months, though 648 units were sold in August alone, signifying a plausible comeback.
 Tre ResidencesSome of the more popular residential properties were the newer ones such as Highline Residences, Seventy St Patrick’s, Lakeville, Eight Riversuites, and some new launches from projects such as The Panorama. As per previous years, post Hungry Ghost Festival meant home buyers were once again eager for new deals and were actively seeking property purchase opportunities.

Across the board, 6,030 private properties were sold in the first 3 quarters of the year, almost half that of the same period last year. Much of the decline was due to weakening demand in the primary market, which could be a result of the tightening home loan limits implemented in June 2013.

Upcoming launches of Sophia Hills, Tre Residences and Symphony Suites might bring renewed activity into the market and possibly close the year on a high. But most of the attention will be in the executive condominium (EC) market as the drought of new launches in this sector welcome new launches of Lake Life, Bellewoods and Bellewaters.

A little east-side enclave – St. Patrick’s road.

The Thomson-East Coast MRT line looks set to have a big effect on properties near the future MRT stations. The exclusive area of St Patrick’s road is but just one of them. With a station in Marine Parade situated nearby, properties in the area may see a big boost in home prices as the future MRT line will cut down travel time to the city.

Grand DuchessAlthough situated in the prime district 15, near good schools and many other amenities such as the 112 Katong and Parkway Parade shopping malls, the Marine Parade library, and the market and town centre just a stone’s throw away, sales has been far and few in between for a long time. But private home rental prices has held steady. With new property launches coming up, buyers may now consider these properties in all seriousness, with their potential for high rental yields.

Currently, only a few private apartment blocks stand in its vicinity, such as the St Patrick’s Residences and the Grand Duchess @ St Patrick’s. New launches planned for the months ahead include Seventy St Patrick’s and Amber Skye. Despite the harsh conditions of the TDSR framework, buyers may be drawn to the area by its exclusive and lush surroundings, the convenience of amenities and schools just streets away, and the evergreen plus point of a MRT station nearby.

Pinnacle @ Duxton almost ready for resale market

50-storeys high with sky gardens and sitting at the top of an excellent location, the Pinnacle @ Duxton will soon be ready to enter the resale market as the five-year minimum occupation period (MOP) comes to an end in December this year. Will the peak of resale HDB flats prices be found in this exclusive public housing development? And how many of the flat owners will be looking to sell? In the current market lull, will more be looking to rent out their units instead?

It seems the resale market can ready themselves for some high prices. Ahead of time, one seller who has received special permission to sell the unit has had more than 50 viewings and offers of up to $830,000 for the 90 sq m four-room HDB flat.

Pinnacle @ Duxton was awarded the 2011 Urban Land Institute (ULI) Global Awards for Excellence. Image by HDB.

Pinnacle @ Duxton was awarded the 2011 Urban Land Institute (ULI) Global Awards for Excellence. Image by HDB.

With a total of 1, 848 units in the massive 7-block development, there will no doubt be competition, though most of the units being put up for sale now are four- and five-room flats. Prices nearing the million dollar mark will be expected. Even the Minister of National Development, Mr. Khaw Boon Wan, has said that when units at the Pinnacle are ready to hit the market, “there will be many millionaires there”.

Those who are ready to sell may be those who are hoping to move into the private property market as the amount they might earn from the sales could be double, if not triple the amount they originally paid for the units. When they were sold in 2004, five-room flats were priced only at $345, 100 to $439,400 while the four-bedders cost $289,000 to $380,900. Considering the prime location of it being near MRT stations, new businesses, a hip area of cafes, restaurants and pubs, the bustling Chinatown stretch and the Central Business District, it’s not surprising that public housing in the area has continually received high-priced offers. Most five-room flats in the Tanjong Pagar and Cantonment Close area have fetched above $800,000.

The only thing that might stop buyers from coming would be the mortgage limits. But as the market awaits the day the regulations are relaxed or policies changed, flat owners may continue to hold on to their asking prices, at least at this iconic building.

Varied market response to declining property prices

Home prices in both the private and resale HDB markets have continued to dip in the second quarter of 2014. In the first three months of the year, the decline was 1.6 per cent. Perhaps buoyed by the increased number of launched in Q2, the rate of decline was somewhat less steep at 1.3 per cent the quarter past.

Rezi 3 TwoBuyers who have been on the lookout for opportunities such as this may be happy to find that more than a few property developments have been offering discounts. Though the overall number of sales have picked up in the second quarter, mostly due to new launches, the private homes market saw a more obvious slowdown in both the city centre and suburbs. The drop was 1.5 per cent in the city centre and 1.1 per cent in the suburbs. Properties in the city fringe fared better with a 0.6 per cent drop, an improvement considering the 3.3 per cent dive in the earlier part of the year.

But there are those who are concerned about the longevity of their investment should they purchase now. The question they may ask is, is this the lowest prices can go? If I were to buy now, will the prices continue to drop? Though property analysts are doubtful that the prices will bottom out anytime soon, they are expecting the maximum of a 5 per cent decline.

As long as the supply continues at a steady pace, prices will not vary far from the current levels. Perhaps true change will only come with a shift in policies. Considering the elections will be here in a couple of years’ time, the time leading up to that might be a period of uncertainty.

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.

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?

More looking to rent private property

Immigration rules have shrunk the pool of foreign workers here in Singapore, and that also meant a lower demand for home rentals. Closely linked to this are the prices and sales of private homes,  which have been on the decline for sometime now.

But the market is starting to look up as the previous quarter saw a increase in demand for private rental homes. The growth is expected to continue into the second half of the year. Though figures are somewhat positive, the number of vacant rental units available in the market also means tenants will have more to choose from and competition will be fierce.

Shore-Residences-Amber-Road.jpgTenants seemed to favour the city fringe areas, as rental budgets have been largely reduced, and price-conscious expatriates are now more stringent with their spending. The Rest of Central Region districts received the most loving from rental home seekers, including areas such as Bishan, Toa Payoh, Little India, Queenstown and Geylang. New private condominium developments in these areas have accounted for renewed interest. Slightly further west, Ascentia Sky, Waterbank at Dakota and The Interlace all in the Alexandra, Depot road region meant up to 2,500 new units, some of which no doubt will join the rental pool. In the East, Waterview in Tampines, Vacanza@East and The Shore Residences will be completed in the first quarter of 2015.

The Loft at Nathan, situated in River Valley on the city fringe.

The Loft at Nathan, situated in River Valley on the city fringe.

Landlords of high-end apartments may continue to see a lack of movement in the rental front. And units are already expected to add to the mix, with the completion of Suites @ Orchard and Loft@Nathan next year.