Luxury properties popular with investors once more

Luxury property seekers are coming back into the market as transaction figures show. Robust sales of units at Gramercy Park on Grange Road certainly seems to attest to that.

gramercyparkThe high-end luxury apartment project near Orchard road has sold almost half of its 174 units. Across its two 24-storey towers, 81 units have been sold, 11 of which were from the launch of its South Tower last onto. Most of the buyers were foreigners and Singapore permanent residents from China, Indonesia, Malaysia, Hong Kong, Taiwan, India, France, Britain and the United States. 24 per cent of the buyers were Singaporean.

As the bottom of the cycle seems more clearly in sight, buyers are picking off properties which might be priced rather differently from a few years ago. Property investors are also showing increased interest in luxury developments and the early bird prices at the launch of Gramery Park’s South Tower has drawn quite a few. Prices start at $3.4 million for a 2-bedder and study, $5.1 million for a 3-bedder and $6.8 million for a 4-bedroom apartment. The 2-bedroom units seem to be popular with investors as all of the same in the North tower were sold out. A 5,533 sq ft 5-bedroom penthouse in the North Tower has also been sold at $16.88 million. Properties in prime districts are once again leading the private residential real estate sector and riding on the positive sentiments, things could truly be looking up.

2017 to welcome more bulk sales?

As Qualifying Certificate (QC) deadlines close in on more residential projects, bulk sales could the difference between having to pay hefty penalties and escaping by the skin of their teeth. The Qualifying Certificate which developers are issued with once they purchase a private residential land plot binds them in a contract to finish building the project within 5 years of acquiring the land and to sell all units within 2 years of obtaining a temporary occupation permit (TOP). Should there be remaining units after this time, the developers will be required to pay extension charges.

nassimhillcapitalandPhoto credit: CapitaLand

The Qualifying Certificate which developers are issued with once they purchase a private residential land plot binds them in a contract to finish building the project within 5 years of acquiring the land and to sell all units within 2 years of obtaining a temporary occupation permit (TOP). Should there be remaining units after this time, the developers will be required to pay extension charges.

iLiv@GrangeThe most recent bulk sale of the 45 remaining units at The Nassim has helped developer CapitaLand avoid having to possibly pay up to millions of dollars worth of penalties as their QC deadline is in August this year. Mr Wee Cho Yaw, chairman emeritus of United Overseas Bank has paid $411.6 million for the 45 units with a strata area of 16,466 sq m at an approximate 18 per cent discount on the current sale price of individual units. The development consists of 55 units housed in eight 5-storey blocks, and the other 10 units have been sold to individual buyers.

Other recent bulk sales include the 156 units sold at a 16 per cent discount at Nouvel 18 and 30 units sold at a 23 per cent discount at iLiv@Grange. Though this enbloc exit of units may relief the unsold inventory of some pressure, more completed units are entering the market this year and may we could be looking at more bulk sales in the year ahead.

 

Property market in the doldrums in Q3

The local property market seems to have taken a harder hit in the third quarter as both sales and rental figures fell. While the decline was not drastic or sudden, it nevertheless points to possibly tougher times ahead.

alexresidencesOverall property selling prices fell 1.5 per cent while rental prices dropped by 1.2 per cent. The general global economic gloom, fears of inflation and growing unemployment rates have given way to a sense of impending recession. Buyers are likely to be more careful with their finances and though property is a good way to hedge excess funds, investors are likely to weigh yield potential even more seriously should the negative sentiments persist.

The private residential market seems to be the most affected as vacancy rates rose. Property analysts report more positive sales in the resale rather than the new homes segment, possibly because there were fewer new residential project launches in Q3. Resale property sales clocked a 15.7 per cent increase while new homes sales fell by 12 per cent.

tampineshdbIn the resale HDB property market, prices continued to stabilise, with no significant rise nor fall. However, the number of transactions recorded fell by 5.5 per cent. Currently, overall private home prices have fallen 2.6 per cent.  With only 2 months left to the year, property experts expect a slight fall in prices and transactions in the private property market, which largely dependent on market sentiments may result in a final 3 to 4 per cent decrease for 2016.

Jurong Lake District – New sparkling Gem of the West

In less than 2 decades, the landscape of Singapore’s west-side could be said to be almost completely transformed. From the largely industrial factory districts to far-flung housing estates and only a few schools, new shopping malls, transport hubs, commercial and office spaces, private residential homes and spanking new build-to-order (BTO) flats now dot the scene.

Juronglakedistrict

Photo credit: URA

Jurong, once a busy but secondary commercial district, has been slated for development as Singapore’s second central business district (CBD). Every large city is almost certain to have one secondary commercial hub, as big and functional as the town-centre CBD, but newer and with more space for development. Just thing of Shanghia’s Pudong or London’s Canary Wharf. The Urban Redevelopment Authority (URA) is looking to transform the Jurong Lake District into a eco-friendly, futuristic township with homes, offices, hotels and filled with greenery and waterways.

LakeGrandeWith the Kuala Lumpur-Singapore high speed rail in its midst and as the convergence point of a number of new and existing MRT lines, there seems to be quite a far breadth for value appreciation of residential and commercial properties in the Jurong Lake district.

With Punggol and Jurong both set to include many good, new things may be coming the country’s way in the next decade or two.

Glimmer of hope for Private resale homes?

Although the total number of private resale homes sold were lower in October than September, prices have begun to rise slightly. According to latest data, non-landed private home prices rose 0.4 per cent in last month. In suburban districts often popular with buyers such as Bishan, Toa Payoh, Little India, Geylang and Queenstown, prices rose 0.6 per cent. Transactions and prices of prime district properties however remained quiet, falling in fact by 0.3 per cent.

Okio Residences in Balestier.

Okio Residences in Balestier.

Have overall property prices fallen sufficiently? And have they reached the lowest point of the property cycle? If so, how long will this low point last? Private property prices have been low for quite some time now, maintaining a steady level in terms of pricing and transaction volume for almost half a year. The government has said that they will not relax the cooling measures anytime soon, perhaps in fear of a huge and quick rebound which may bring prices up even higher than before the curbs were put in place. They could also be giving the measures a bit more time to sink in, to further bring down home prices and getting the industry and public used to these measures.

Property experts are expecting prices to decline even further in the short term. Would this be the best time to invest? And how would you go about investing? Is it best to move away from residential property into commercial property? Or are there certain property types with hidden long term value?

Far East Organization came out tops in 2012

They were the top seller of private homes last year, selling 10 per cent of the total 22, 290 private residential property sales. The best sellers within the Far East Organization stable of new properties were The Hillier in Hillview and Watertown in Punggol. City Developments were second with 1,674 in total sales, with Bartley Residences and The Palette scoring top marks.

Watertown condominium. One of the first new properties to be launched in Punggol this year.

Watertown condominium. One of the Far East Organization’s top-selling properties launched in Punggol last year.

Out of the top 10 scores, 8 were local companies and the remaining 2 spots were taken by Qingjian Group and Hongkong Land. This is Qingjian’s first time in the top 10 list and its not surprising considering they have been lodging positive responses at GLS tenders.

Part of the reason for their success could be the rising popularity of suburban private homes the last year. Since high-end properties did not do as well, property developers like Wing Tai did not do as well, leaving space for smaller players such as Frangrance Properties and Macly Group. The latter were responsible for small residential projects such as Parc Rosewood, Guillemard Edge, Natura@Hillview and Eon Shenton. Most of these projects feature smaller units of fewer than 150 units, with the exception of Parc Rosewood.

Parc Rosewood condominium in Woodlands

Parc Rosewood condominium in Woodlands

Far East Organization, City Developments and Hong Leong are all pulling their weight in the Government Land Sales tenders. Having legacy sites certainly helps as well.

Property developers discounts may be cut

If you’re waiting to see if the developer of your property of choice might dangle discounts to counter the recent cooling measures, you might have to reconsider. The authorities have caught on to property developers‘ tactics of offering discounts as a means to entice customers to buy new properties, especially since the cooling measures have taken a huge chunk out of the business.
House

But fear not, only the indirect discounts are under review by the Urban Redevelopment Authority. These mostly refer to the rebates and vouchers that the buyer receives only after purchasing the property. Since these are not reflected in the upfront price which the buyer pays, it may make the cooling measures seem ineffective, which also means URA’s quarterly price index based on caveats lodged might not be a true reflection of the market situation.

Property developers on the other hand tend to lean towards indirect discounts as this helps placate early buyers who may not be happy that they had gotten the raw end of the deal. Keeping the upfront price high also helps to keep prices high all around.

Other ways which developers have been trying to help buyers out are through the partial or full absorption of the Additional Buyers Stamp Duty (ABSD) which has been increased in the most recent round of measures. The frequency and fervency of this practice might be what the authorities are watching as it negates the effect of the property measures.

Another concern is also that the true value of the property needs to be conveyed truthfully to the home buyer, but with the discounts and cuts, it might not be the case and it might only confuse consumers. Not forgetting that home loans are based on the property value, thus might buyers be paying more in the end through bank loan interests for a higher priced property?

So are the cooling measures truly working? If it seems that discounts are offered more frequently, then it might be.

Investors flocking to housing clusters

Those in the city fringes and eastern suburbs that is. And it’s no surprise either. These areas have been growing in popularity these past months and the numbers have shown. $1,500 psf used to be considered the pricing for expensive city-centre housing but now, it’s considered the norm even for suburban housing in the east, namely Marine Parade and Bedok. Other areas which registered a high percentage of transactions which crossed this $1,500 psf mark were Geylang and Bukit Timah.

The Sound private condominium in Bedok.

Property developers are lauding the ‘lifestyle’ concept of new private residential developments in a bid to attract the affluent. Many of the recent new property launches are also clustered in the east due the release of land through the government land sales programme. The Seawind and The Sound condominium projects had a median selling price of $1, 520 psf and $1, 650 psf respectively. There are, however, quite a number of new properties coming up in newer residential areas such as Punggol, Kovan and Sengkang and with competition heating up, gain in home prices in the East might slow in the months to come. Hillview might be another hotspot  for investors to keep a keen eye on, especially with the new Downtown Line 2 bringing property hotspots closer and closer together.

In the city fringes, the chart-topping districts were Kallang/Whampoa, Bukit Merah, Bishan and Bukit  Batok. And with commercial hubs being completed quickly in Buona Vista and Jurong Gateway, housing in these estates are expected to rise in due time. Are investments opportunities the only reason buyers look at when purchasing a home? Are there possibly other reasons and how can property developers better harness the momentum from this other home-buying group?