Dual key apartments rising in popularity

The latest property type on the block has been gathering an increasing crowd of fans. Not surprisingly, since they offer the space and the privacy for larger, multi-generational families, giving them the option of having their family members close, but not too close for comfort.

The concept began with the Housing Development Board and their “Granny flats” in 1986 and the first private properties to pick up on that were the Caspian and 8@Woodleigh. And now, new properties actively set aside a number of units as dual key apartments.

Boathouse ResidencesSome of the latest market offerings to include these units include Seventy Saint Patrick’s, Northpark Residences, Riverbank@Fernvale and Botanique @ Bartley. Older properties with these options include Coco Palms, and The Santorini at Tampines. At the latter, there are 144 dual key units. Most of the dual key units include a two- or three-room unit attached to a studio apartment, with two separate entrances.

In addition to providing privacy, these units also provide a cheaper alternative to buyers who are running an office out of their home. It gives them a separate entrance to their business and a physical separation from their living quarters while saving on transport costs and time.

Plus, it is easier to rent out these smaller units. For longterm investment considerations, these units could also be sold as it is or as a normal unit with the separating structures reconfigured.

Coming up later this year, the Boathouse Residences, developed by Frasers Centrepoint Limited, will also feature dual key apartments.

Stronger Singdollar = Better overseas property investment opportunities

Though investing in overseas properties may have its risk, the opportunities of gain it brings could also be significant, especially in times when the Singapore dollar is strengthening against the Malaysian ringgit, British pound and Aussie dollar.

Malaysia, the UK and Australia have been favourite countries for Singaporeans in terms of travel, study and emigration. Property launches in these countries have been strongly marketed to local investors looking outside of our shores for investment opportunities. Especially for those who have purchased properties in Malaysia, their buck may walk a little longer now that the exchange rate is S$0.374 to RM$1.

DangaBayMasterPlan-600x235With cheaper payment options,  property developers have seen increasing interest from Singaporean buyers in the Iskandar Malaysia regions, Penang and Kuala Lumpur. At the same time, analysts caution buyers against jumping into the market without consideration. A property’s potential value appreciation should also be carefully weighed as the current property market in Malaysia is facing a almost sure-fire sign of saturation. And quickly too.

In London on the other hand, buyers who have previously bought property there have reported “unprecedented price growth”. However, he also added that investors who are looking to purchase properties purely to turn a profit should take into consideration factors such as currency fluctuations, political stability, ease of entry and exit from the market and market transparency.

One way to keep ahead of things is to attend property expos, seminars and know your market trends well.

Condominium prices wavering

It may be a year of fluctuations for the private non-landed property market. Condominium sales have been slow, though it picked up slightly in February.

Both new and resale private condominiums were affected by the market slowdown, much of it attributed to the TDSR (Total debt servicing ratio) framework set by the Monetary Authority of Singapore (MAS). But some property analysts are also connecting the dots between the lowered Cash-Over-Valuation (COV) prices of resale HDB flats. When COVs were high, potential HDB upgraders were able to leverage on these to leap into the private property market by using the COVs as part of the cash down payment for their new private homes. With the lack of this financial impetus, more are finding themselves in between an rock and a hard place when it comes to scaling up.

Sims Urban OasisWeaker buyers may find themselves having to hold back for now while those with the financial abilities will still be able to well afford what the market currently offers, and perhaps even more so as prices have been coming down for sometime now.

There has however, been a shift of interest from newer units to resale ones, in favour of larger floor area. HDB buyers have been purchasing units with an average of 926 sq ft in size, while private buyers leaned towards units averaging 1,119 sq ft in size. The sweet spot of affordability is now between $1.28 million to $1.46 million for private buyers and $950,000 to $1,09 million for HDB upgraders.

More foreign private home buyers

The number of Singaporean buyers of private properties have fallen last year. Possibly overshadowed by the increase in number of foreign buyers since rules have changed for Permanent Residents (PRs) buying HDB flats. New PRs must now wait 3 years before they are able to purchase from the public housing market. The rules have been in place since August 2013.

Marina ONe iprop watermarkThe percentage of PRs purchasing private properties in Singapore have risen from 15 to 18 per cent in 2014. But the number of Singaporean buyers have dipped almost by half. In 2013, 16, 789 homes were sold to Singaporeans while in 2014, Singaporeans only purchased 8,707 private homes.

Most of the foreign buyers were made up of Chinese nationals, Malaysians, Indonesians and Indians. 229 units were sold to Chinese nationals in the last quarter of 2014, up from 214 units in the third quarter. With the launch of the Marina One Residences, which is a joint venture between Malaysia and Singapore governments, Malaysian buyers were also active in the private property scene here. Over the course of last year, some 119 units were purchased by US citizens and 58 by Britons.

The number of PR and foreign buyers have remained steady for the past couple of years. Should this be a promising sign for the road ahead? And how can local private property buyers leverage on this?

HDB property market – Has balance been struck?

The last four years saw aggressive moves by the Housing Development Board to release and build new HDB flats. In 2014 alone, 51, 598 new HDB flats were added.

Has this supply of new flats been effective in stabilising the property market? Is the supply and demand scale now balanced? Minister for National Development, Mr Khaw Boon Wan, has mentioned that the increased supply has helped move the selling price of HDB flats down, yet at a gradual pace and margin which buyers are still able to stomach.

WEst Rock HDB FlatFrom this year on, the number of new HDB flats will begin to decrease, from 50,796 this year to 38,316 in 2018. Which could mean that this year might be the watershed year for the HDB market. Will buyers be taking the opportunity to purchase before supply becomes tighter once more? Or will the number of HDB flats which have been released thus far be able to provide for a stable resale market, keeping a level playing field between buyers and sellers?

As Singapore grows in population size, and global and domestic economies fluctuate, all this would also be tightly linked to population and immigration policies. With the election possibly coming our way next year, buyers may take the chance to look out for opportunities to upgrade property-wise this year, or perhaps wait and see what the post-election changes may bring.

Competitive pricing will help Property developer move units quicker

Home mortgage interest rates look set to rise sometime this year, and while new properties continue to come into the market, buyers will be spoiled for choice with executive condominiums, resale private apartments and new condominium units all competing for their attention.

Trilive KovanPricing might then be the differentiating factor in the current property market which is still finding its footing. In January, Symphony Suites in Yishun proved to be one of the best sellers in the non-landed private property market. Prices averaged at $1,010 psf, which was not considered to be on the higher end of the price spectrum. Most suburban properties fared better, making up 62 per cent of the total sales numbers last month. City fringe properties followed behind with 28 per cent and city centre homes took up only 10 per cent.

The TDSR (total debt servicing ratio) continues to be the main obstacle for buyers as the loan amounts they are now able to receive have been largely reduced. However, developers are unlikely to make drastic price reductions as land prices have been high for the past two years.

Contrary to concerns that new properties may outshine previous older launches and resale properties, some older developments have fared well in the last month. Trilive in Kovan sold 22 units at a $1,562 psf median price while 20 units in Jurong West’s Lakeville also exchanged hands at the average selling price of $1, 378 psf.

While the influx of new units and restrictive loan limits may be the way things go for the year ahead, the demand for residential properties may not necessarily have disappeared altogether. It may simply be a matter of buyers taking longer to weigh their options.

City fringe properties – Sales versus Rental prices

Despite a steep drop in prices of non-landed properties in the city fringes, rental prices in these districts seem to be holding up well. In 2014, sale prices in the Rest of Central Region (RCR) fell 5.3 per cent, more than the 4.1 in the central region and 2.2 per cent in the suburbs. Sale prices between city fringe and suburban properties are narrowing, especially with the large number of new city fringe properties introduced last year, paired with the increased ABSD (additional buyers’ stamp duty) and TDSR framework (Total debt servicing framework).

Sims Urban OasisExpatriates may be steering towards the city fringe regions with their exclusivity, proximity and more price-friendly options. Rental prices in the city fringes are around $3.50 to $4.50 psf, compared to $5 sf in the city centre and $3 psf in the suburbs.

With city fringe homes becoming more affordable, and rental prices still considerably high, these properties may be a good investment as resilience in demand and rental seem consistent. One of the latest city fringe residential development to go on sale is the Sims Urban Oasis, just a stone’s throw away from Aljunied MRT station and the future Paya Lebar Central Sub-regional Centre. Prices are starting at $628,000 for a 440 sq ft one-bedder to $1.55 million for a 990 sq ft four-bedder. Other properties in various city fringe districts include TRE Residences in Geylang, Eight Riversuites in Whampoa East, Highline Residences in Tiong Bahru and Sky Vue and Sky Habitat in Bishan.

Low sales for resale homes in January

With city centre homes leading the way, resale home prices seemed to be walking down the same path as the month before, with a dip of 1.7 per cent. Suburban homes’ decline was slightly less steep at 1.1 per cent and across the board, resale homes saw a 0.2 per cent drop in prices. On the bright side, city fringe properties did fairly well, with a 1.5 per cent gain.

The number of transactions were part of the reason for the drop. In January, only 282 private properties were sold, down from 363 in December last year. Other reasons include the loan restrictions and overall lower buying sentiments. With the festive season coming up in a couple of weeks’ time, the numbers for February may not see a drastic pick-up, but from March onwards, the figures will be telling of the year’s property market prospects.

6DeryshireAs the year goes on, industry experts are expecting buyers to pick up on the softening home prices and keep a quick eye out for serious sellers who may have potentially value-worthy offers. There are sellers out there who are still holding on to their asking prices as they wait out 2015. The year could be a tussle between the these two groups. Any extreme asking prices on both ends will be unlikely to do anyone any favours.

Currently, areas with the highest resale home value (Measured by the amount buyers were overpaying or underpaying) of $60,000 are Watten Estate, Novena and Thomson. In Bukit Panjang and Choa Chu Kang, the prices were a negative $31,000.

A major shift in dynamics this year could be caused by the higher interest rates which are likely to happen this year. Buyers may take that into consideration, together with the tightened loan limits, which does not give them much leeway in negotiations. Sellers who are eager to make a sale will do well to consider these limitations as well and understand that it will not be easy for their buyers to easily fork out additional cash.