Luxury property market gearing up for bigger and better H2

In less than 10 days’ time, a new luxury property in Robertson Quay will be launched, and hopefully to continued positive response from buyers.

MartinMOdernThe demand for upmarket luxury properties have been encouraging this year, after a few quarters of falling prices and lacklustre sales. GuocoLand’s Martin Modern will perhaps hit the market at just the right time as buyers have been gradually filtering back into the market. The 450-unit property is one of the larger-scale high-end residential to launch in the Robertson Quay area for the last 8 years and units are expected to be released in phases.

Projected to launch on July 22, the 99-year leasehold Martin Modern condominium is situated between Martin Place and River Valley Close. Prices of the units are expected to hover around $2,300 psf with the smallest apartments starting at $1.8 million, higher than the average transacted price of $1,969 psf for units at the neighbouring Martin Place Residences.

MartinPlaceResidencesThe development will hold two 3o-storey towers with apartments ranging from 2-bedders to four-bedders. The 150 two-bedroom units will be sized at 764 sq ft, while there are also other options such as two-bedders plus study, three-bedders, premium three-bedders and four-bedders. The largest units being the four-bedders, will range from 1,701 sq ft to 1,798 sq ft.

The targeted completion date will be in 2022, and by then the Great World MRT station on the Thomson East-Coast line, which is just a 5-minute walk away, will be ready and in action.  The developers are expecting a proportionate mix of owner-occupiers and investors picking up units at the launch.

Home prices fell slightly in Q2. Bottom could be in sight.

Home prices of private residential properties fell by 0.3% in the last quarter, though it is nothing to fret over as it is the smallest dip since Q4 of 2013, which was when prices started to show a decline.

Thomson Grand3Since the April 2013 peak, private home prices have fallen 11.6%. Nothing too alarming considering the rate of its fall, but nothing to scoff at either. After a year or so of buyers retreating from the market in wait of prices falling further, new launches this year have brought them out of the shadows and the overall market sentiment has been positive thus far.

The first indication of a possible market recovery in the near future is the slowdown in rate of decline of property prices. This could indicate that the bottom is nearing and may draw even more buyers into actually committing to a purchase – when the price is right.

Non-landed private residential properties in the “rest of central region” such as Marine Parade and Bishan fared the best last quarter, with a 0.5% growth. The core central region saw the steepest fall of 0.9% as most of the transactions recorded were from older establishments and from mortgagee sales.

Activity in the landed property market is surprisingly heightened last quarter, with 527 units sold, a whooping 56.8 per cent higher than in Q1. In the resale HDB flat front, prices fell very slightly at 0.1%, a smaller decrease compared to the 0.5% in Q1, though sustained interest may be questioned here as more buyers could be considering upgrading into the private property market as older HDB flats with fewer years left in their lease may mean fewer takers.

Third time lucky for Tampines Court?

One of the biggest collective sale of a privatised ex-HUDC of the decade may go down should developers go for the $960 million sale price put by for Tampines Court.

TampinesCourtLaunched just this Tuesday, the development has secured 82 per cent approval from the residents and each owner will stand to received $1.7 million from the sale. The 702,000 sq ft Tampines street 11 site currently holds 560 apartment units across 14 residential blocks but could potentially yield 2,100 new private homes in the future. Tampines Court is located in a mature estate with very good possibilities of being redeveloped into an eco-establishment suitable for families.

Property analysts are hopeful for a successful sale this third-time round as the collective sale sector has shown itself to be performing exceedingly well in the last few quarters. This is despite of the $348 million additional charges required to intensify land use and to top up the lease to 99 years. But the home owners are optimistic about current market sentiments. The most recent collective sale tenders include the private property The Albracca in Meyer Road and another ex-HUDC, Serangoon Ville in Serangoon North Avenue 1 and a Stirling road site was recently sold for $1 billion.

There may be a small window of opportunity before the market becomes too saturated with sales bids and also as the government intends to ramp up supply of land sites in H2. Success or not, it may all come down to timing.

Release of new land sites in H2 may not satisfy developer demand

After holding back for the past few quarters, 16 new land sites will be released under the Government Land Sales (GLS) programme in the second half of this year. That is in addition to other private land sites which might go on sale as well during the same period.

CUscadenResidencesDespite this ramped up supply of land plots, property analysts expect continued aggressive bidding from developers as they seem to be on the hunt for resources to replenish their land banks and especially as the demand for new homes has grown steadily in the last few months. As the nation’s population continues to grow, the authorities also recognise the need to keep up with the demand for new private housing in the years ahead.

The 16 sites from the GLS programme can potentially yield up to 8,125 private homes. And yet, analysts still consider this allocation inadequate in meeting developer demand. The sites most likely to draw the most number of bids are those in Jiak Kim StreetFourth Avenue and Cuscaden Road due to their locations. New record high bids are expected for these sites.

With  the possibilities of more joint ventures between developers and funds, the potential for higher bids for limited land plots may very well drive land prices up. Could that mean eventual increases in property prices, even if not now then sometime in the future? How would that then affect the market then?

Office occupancy rates increase in major global cities

Work in an office space at the top of skyscraper in New York or in the centre of the Hong Kong Central Business District? Both might cost you an arm and a leg, and perhaps a few more body parts as 4 office spaces in these 2 cosmopolitan cities across the globe from each other have come up as some of the costliest commercial properties amongst 121 markets worldwide. Overall, office space costs have increased 1.9 per cent year on year.

NewYork1NewYork3An office space in Hong Kong West Kowloon topped the list at US$303 (S$420) psf per year. London and New York came next with a unit in London’s West End costing US$214 psf and one in New York’s Midtown at US$203 psf.

While many investors are going for residential properties as they have the potential of doubling up as a home in future, some savvier ones and perhaps those with more cash to spare are also buying up commercial properties. As companies expand globally, capital cities in many countries have found office occupancy rates rising.

The highest rise occupancy cost globally is Durban (South Africa) while Stockholm, Palma de Malloca, Belfast and Amsterdam followed closely. In the Americas alone, Buenos Aires, New York Midtown, Houston and Denver registered the biggest occupancy cost increase. And in the Asia-Pacific, Shanghai, Guangzhou, Bangalore were the biggest winners in terms of office occupancy.

And where is Singapore on the list of the top 100? Number 27 at US$85.02 psf.

Private homes’ rental rates continue to decline

While HDB rental rates inched up ever so slightly in May, private home rents have gone in the opposite direction and fallen 0.8 per cent in May. Compared to the same month last year, rental prices have fallen 3.9 per cent.

Ballota Park condominium in Pasir Ris

Ballota Park condominium in Pasir Ris

In the private home sector, prime district rents fell the hardest at 1.8 per cent while rental prices of units in the city fringes and suburbs fell 0.5 and 0.4 per cent respectively. The number of leases closed last month did however increase by 12.5 per cent from April with 4,650 condominium units rented out in May compared to the 4,134 in April.

HDB rents have risen 0.7 per cent though property analysts are taking it to be a temporary adjustment which is unlikely to be sustainable as the rental market may remain weak through the months ahead. HDB rents are expected to fall 4 to 5 per cent this year while private property rentals are expected to fall 8 to 10 per cent as more units are left vacant and competition for a limited tenant pool applies downward pressure on the market. The entry of new condominium units into the burgeoning market has not aided matters as well and expatriates’ housing budgets have also shrunk, leading to weaker demand in particular for high-end luxury housing.

Much of the future of the real estate sector is dependent on the job market as well. Should the job market take a turn for the better, the number of tenants looking for units nearer their workplace, in the Central Business District or regional commercial hubs, may also then increase.

Market recovery uncertain despite rise in resale condo prices

May was a rather good month for the resale private condominium market as prices rose 0.4% and sales volume increased by 17.4%. In comparison with the same month last year, prices have risen 1.5%.

CreekBukitTimahAll signs seem to be pointing to a market recovery after 3 years of lacklustre performances. However, some property analysts are taking a more conservative stance with regards to the recent price adjustments. The leasing market remains weak and rental prices have fallen, putting additional pressure on an already-weak market hence the market is still a ways from bottoming out. Private property values have fallen 11.6 per cent since the peak in Q3 of 2013.

skyline-residencesPrices of resale properties in the core central and city-fringe regions have shown improvements with a 1.1 per cent rise from April. In the suburbs, prices fell slightly by 0.4 per cent. A moderate look at the current situation would more likely than not mean a gradual rise in prices over the course of a year rather than a quick and immediate recovery. A recent hash of high land bids and the gradually diminishing stock of unsold private homes do however seem to be beacons of light, however dim, pointing towards the promise of a market stabilisation at the least. Positive sentiments and sales at new project launches and continued low interest rates may add icing to the cake if developers can have it and eat it too.

 

Rise in China and Singapore cross-border property investments

In global real estate sectors, the Chinese are known to be ferociously investing within as well as outside of their country. But is anyone else buying into properties on the mainland?

CapitaLandChinaProperty

Photo credit: CapitaLand China

Increasingly, investors looking to invest in land plots are looking to China to fulfil their development needs. Most of these are companies or developers looking for value-for-money options to buying land in Singapore, which is rare and often priced high. The property cooling measures and 5-year completion deadline for residential projects are also factors property investors are looking elsewhere.

In Q1 of 2017 alone, 88 per cent of investment monies in Asia Pacific residential land from Singapore went instead to residential sites in China. Cross-border investment activity has increased, as also seen in the high bids from China-based developers and co-ventures on recent collective sales within Singapore. Residential investment between China and Singapore has risen 137 per cent over the last 10 years to $42 billion last year.

Singaporean developers are also looking elsewhere for lower-cost assets and with the cultural and language similarities, and geographical proximity, China seems like as good a choice as any other. Within Southeast Asia, Vietnam and Malaysia are also on the list; as are Sydney and Melbourne in the Asia Pacific region. Property analysts expect continued increases in land prices in Singapore as government land sales sites are becoming limited.