A resale private condo market respite

3 consecutive months of rising private non-landed home prices is reason enough for some mid-year cheer. Could this be a sign of respite from the recent property market lull?

GramercyParkProperty seekers and buyers who have been on the lookout for good deals and the right opportunity to jump back onto the property investment train have proven to be more active of late. Incentive schemes for various residential developments such as OUE Twin Peaks and Ardmore Three have also helped boost sales and prices. The former’s deferred payment scheme has received positive response from buyers, which ultimately translated to sales. The number of resale units sold in May rose by 36% with 840 units sold. 619 units were sold in April.

Prime central region properties are once again finding favour with investors as they view the potential value of the private residential properties here with new eyes. The next launch in the core central region (CCR) would be Gramercy Park luxury apartments by City Developments.

Property analysts are however cautious about their predictions for the rest of the year as the cooling measures will still mean buyers continue to be price-sensitive. They are expecting resale private apartment prices to fall 3 per cent across the board this year.

 

Increase in Foreign property purchases

The local property market is looking a little zestier as more foreign buyers picked up units in the first quarter. This affirms the continued popularity of properties in Singapore as compared to those in other major Asian cities, or global cities for that matter.

Kingsford HIllview PeakProperty prices in Singapore are still relatively affordable, and the number of purchases made by non-Singaporean residents rose by 5.4 per cent, while purchases made by permanent residents rose by 2.6 per cent in Q1. The Additional Buyers’ Stamp Duty (ABSD) initially dampened sales, but as foreign property investors find themselves having similar, it not even higher, fees levied upon them in other markets, their return is not particularly surprising. While there are other emerging markets with even lower property prices, the stability and proven track record of Singapore’s properties has done the market justice.

Most of the properties foreign buyers hunt down are priced between $1.5 to $3 million. They bought 79 units at Cairnhill Nine and 38 units at Kingsford Hillview peak. Most of the foreign buyers were Mainland Chinese or Malaysians. Property analysts are keeping positive about the market’s prospects for the rest of the year despite the number of local buyers falling 18.2 per cent, though it could be due to the Chinese New Year holidays falling in the middle of Q1.

 

 

More collective sales in the pipelines?

Following the successful en bloc sale of Shunfu Ville, the property market is once again energised. It has reignited the fire for some developments which have been unsuccessful with previous collective sale attempts, while also pushing some properties to reach out to property firms and developers for quotes. The minimum approval for a property to be sold en bloc is 80 per cent.

TheCapriAt a former HUDC in Potong Pasir Avenue 1, blocks 110 to 112, 60 per cent approval has already been secured. Another similar HUDC property in Tampines have begun drafting a sale agreement while Eunosville on Sims Avenue is also looking to restart the collective sale process. As most of these HUDCs are older establishments in mature estates, their potential value may heavily outweigh the units’  current condition and value.

ShunfuVilleThe recent collective sale of Shunfu Ville garnered each owner an average of $1.78 million each, that is almost 50 per cent more than what each unit would have received when sold individually in the current market. Other properties which are also trying their hand at the process are Changi Garden and The Capri. In the commercial property realm, Katong Shopping Centre has reached the 80 per cent minimum approval criteria and will be launching the site for sale soon.

To balance off the government’s recent diminished land sales, these private collective sales could be attractive to developers looking for an opportune time to  strike it out in the market.

London properties only foreign investors can afford?

Londoners are railing against the consistently rising property prices which have reached a mark where only rich foreign investors from Middle East and Asia are able to afford.

As foreign property investments become more common globally, countries are finding the need to regulate the property market and it ultimately comes down to the question of priorities. Taking notes from the US real estate bubble a decade ago, Australia and Singapore have both recently made policy adjustments to guard against excessive financial loans and foreign purchases on local properties.

London PropertiesLondon’s new mayor may also be lobbying to make moves to allow residents to purchase new properties ahead of foreign investors who have been snapping up units with fervour, with prices rapidly rising over the years. The average price of a home in London now costs approximately S$1.2 million and rental for a flat in central London can easily be S$2,700 per month. 20 per cent of home sales in Kensington and Chelsea are from foreign buyers and for new properties, the numbers can come up to as much as 75 per cent, with almost 67 per cent of them purchasing purely for investment purposes.

LondonProperty2Though some of these foreign buyers are purchasing units to rent out, some are owned by shell companies who leave the units empty on end, taking away essential numbers of available homes for London’s residents when they are already only rolling out half of the 50,000 new homes required each year.

With similar high-population versus limited land issues, Singapore’s average private home prices could easily rival that in London. While income growth lags behind other first world cities, living expenses are not necessarily remaining stagnant, will the country’s government need to revise their strategies in keeping homes affordable?

Penang properties a hit with Singaporeans

Over the recent decade, Penang has quickly found favour with foreign investors, many of which are Singaporeans. And many have invested in vacation homes and condominium units to earn rents on.

Penang ShophouseAs the prices of Singapore’s pre-war era shophouses skyrocket, many are turning to snapping similar properties in Penang, Malaysia. In the World Heritage Site of George Town, foreign buyers have been buying up pre-war shophouse units to renovate and refurbish and then renting them out, at times up to 5 times the previous rental rates. Just slightly over half a decade ago, rental rates were about RM$1,300. Now, monthly rents can easily come up to RM$10,000 – that is about 8 times higher than in 2010.

Tropicana Bay Condo PenangIn fact, so many Singaporeans have bought up these shophouses along a street near Komtar, that the place has been nicknamed “Little Singapore”. Some locals have expressed their concerns about the commercialism of George Town and that some local businesses or residents may be chased out of the area by rising rents. Most Penang property owners charge around RM$4,000 for monthly rents, less than half of what foreign property owners are asking for. Some local NGOs are lobbying for rent control and some traditional organisations such as the Cheah Kongsi who owns about 100 shophouse units and have kept rental prices between RM$1,500 and RM$2,700 to allow the city’s British Straits Settlement heritage to live on.

But market analysts are also aware of the high cost of conservation for these pre-war properties and foreign property buyers such as World Class Land are able and willing to put in the monies to keep the integrity of these historic properties.

Foreign investors like Singapore property market for its stability

http://www.thehumanbuilding.comThe recent en bloc sale of Shunfu Ville to Qingjian realty plus a $145-million dollar sale of a Cuscaden road bungalow to a Hong Kong Tycoon may have boosted foreign-investment sentiments, especially in the property market. It shows that many high net-worth individuals and funds are finding long term potential in Singapore’s property market.

AsiaSqaure

Photo credit: http://www.thehumanbuilding.com

They often have the financial holding power and are looking beyond short-term cyclical trends, setting their sights instead on mid- to long-term goals of 5 to 10 years. Asean is just beginning to boom, as many of the nations and economies become interwoven and thus provide more opportunities for growth and a general sense of vibrancy and promise. Aside from residential properties, commercial properties are also faring well, with offers of up to $560 million being made for the Straits Trading Building on Battery Road and $3.5 million for Asia Square Tower 1. Many regional and global companies are setting up headquarters in Singapore and will be looking at picking up office, commercial and retail spaces.

The recent dealings though hardly representative of Singapore’s weakening local market, may be a positive sign that companies, funds and high net-worth individuals are still happy to put their monies in Singapore properties. And though a market turnaround may not be quick, the time will come.

 

Singapore prime properties considered reasonably priced 

Singapore properties are expensive. But compared to other major global cities such as London, New York, Paris, Tokyo and Hong Kong, perhaps they are simply reasonably priced, particularly in the category of prime district properties. The government-implemented property cooling measures might have helped keep prices down.

Marina One ResidencesAccording to the Monetary Authority of Singapore’s (MAS) Financial Stability Review from November 2015, Singapore’s home prices very well could have been 17 per cent higher than they are now if not for the property curbs implemented since 2010. The ratio of home prices to income for Singapore is now 5.6 per cent, lower than the 8 to 9 per cent for most major cities. Mortgage rates (at between 1.6 to 2 per cent) are approximately the same as average rental yields for prime properties, which are currently at 1.8 per cent.

Average luxury prime district home prices are hovering around $1,991 psf at the moment, about 20 per cent lower than the segment’s peak in 2011. Though sales volume has been low in the past year, as the year moves ahead, property analysts are expecting rental rates to increase after this year as the supply of prime properties dwindle. For savvy investors, the time to purchase may be soon, before property curbs are lifted and demand rises once more.

 

Developers’ incentive schemes under scrutiny

As competition in the private property market heats up and sales slow down, developers have been coming up with creative ways to sell their unsold stock. Some have offered rebates, vouchers and even tiered payment plans. The Urban Redevelopment Authority (URA) has however been picking up on some creative incentive schemes which may have tripped up on regulations.

Lloyd Sixtyfive

Take the newly launched Gem Residences as an example. There is currently a 5 per cent minimum booking fee for purchases of a new home, and the developers of Gem Residences have tried to ease the burden for their buyers by offering cheques of $7,500 to $10,000 to offset their booking fee under a “specimen cheque scheme”. As this would circumvent the fulfilment of the minimum booking fee requirement, the developers have instead offered rebates or direct discounts accumulating to the same amount originally to be offered in the cheques.

Another project with a creative scheme is Lloyd Sixty Five in River Valley. Its developers had originally come up with an “experiential purchaser scheme” which offers the buyer the opportunity to stay in the unit with only a downpayment, and the option to purchase will only kick in 2 years later. The scheme is under review by the Controller of Housing as it is essentially a tenancy scheme.

Twin Peaks2Uncompleted residential projects in particular were under URA’s scrutiny. Completed projects with unsold stock enjoy slightly more leeway as they will already have obtained their Certificate of Statutory Completion and are no longer restricted by the Housing Developers Rules. Developers of OUE Twin Peaks were for example able to successfully offer deferred payment schemes which allowed buyers to pay 20 per cent of the purchase price up front, with the remaining amount payable only 2 to 3 years later. Buyers who may be banking on the lifting of property curbs, in particular the total debt servicing ratio (TDSR) by then may find this scheme favourable.