Singapore property market on the mend?

Is Singapore’s property market finally bottoming out? Are current property prices the lowest they can go?

WhitehavenHong Kong and Singapore are 2 of Asia’s most expensive residential property markets, and while both countries’ governments have implemented property cooling measures to help abate the tension, prices remain high. Though Singapore’s property price spike of 92 per cent in the decade between 2003 and 2013 was not as drastic as Hong Kong’s 370 per cent in the same time period, housing cost has increased considerably and was much fodder for debate during the past 2 elections. While home prices have fallen 1.2 percent in Singapore and 13 per cent in Hong Kong since September 2015, the fall will have to be much more drastic for the situation to return to what it was before 2003.

Taking inflation, economic growth and global economics into consideration, property analysts feel that Singapore’s property cycle has almost reached its bottom or turning point as it is in a much more advanced state than Hong Kong’s. Considering the gentle slope of decline in Singapore’s property prices, a sharp rebound seems unlikely. Will there however be a glimmer of hope for a gradual increase upon policy changes and changes in the demand and supply scale?

Rents dip for Hong Kong’s luxury properties

The shaky global economic situation may have a wider effect than just the countries directly hit. The effects of cutbacks and job losses in the oil, gas and banking sectors have resounded worldwide. The flow of expatriates between countries have decreased and those who are still living overseas have found their housing allowances slashed considerably.

HKCEntralThis has in turn reduced the demand for property rental, mostly in the luxury sector. Besides  Singapore, Hong Kong is also feeling the effect of change. In Hong Kong, monthly rental budgets of expatriates have gone down to approximately HK$100,000 and below. Gone are the days when expats could easily afford a HK$300,000 per month rental. In fact, most are making do with HK$30,000 per month housing budget for individuals and HK$70,000 for families, which barely allows for a 550 sq ft apartment in the Central district.

Housing prices which have shot through the roof in September has since fallen 14 per cent and high-end properties at Victoria Peak have suffered the largest blow. Rental prices have fallen in some cases as much as 30 per cent. But considering the rise in property rents have risen steadily year by year for the past decade, it may not be as drastic as it seems.

HongKongPeakHowever, does this mean that smaller and middle-range private apartments are benefitting from the trickle-down effect? Are expats now looking at a whole new range of property types which could mean fatter pockets for landlords and developers willing to fit into their budget? In fact, some developers have already begin offering discounts in the form of offering a month’s rent for free.

Mixed-use development fever extends to the Philippines

Mixed-use developments have been hot properties in various Asian countries for sometime now and their popularity are extending to the city of Cebu in the Philippines.
MandaniBayPhilippines

Mandani Bay, the first mixed-use development in Cebu, hopes to bring the city the reputation of being a lifestyle destination. Even more so than it already is. For a long time now, tourists have flocked to the city for its clear waters, clean shorelines – well, the sun and the sea. The waterfront development is jointly developed by Hongkong Land and Taft Properties and will yield up to 10,000 residential suites and 240,000 square metres of retail and office spaces.

MandaniBay1Various hotspots within the Philippines have been attracting overseas investment money, either from foreigners or from monies remitted from well-educated Filipino professionals working overseas. And there is a growing demand for mid-range condominiums as The City of Mandaue, one of the 3 main cities in Metro Cebu invests in growing its IT and tourism sectors. The Cebu IT Park and Cebu Business Park for example , provide plenty of demand for not only residential but also office, commercial and retail units. Rentals of properties in and around Mandani Bay offer yields of up to 10 per cent per annum.  The population in this growing city-state is set to increase to 5 million by 2020.

With an annual GDP growth rate that is five times over the national average, Cebu’s potential for growth is not to be underestimated.

 

 

No signs of weakening China property market

Shanghai and Shenzhen – both super cities for properties. Home prices in these 2 top-tier cities have not waned despite China’s government tightening rules on the property market.

Savannah Hong KongIn April this year, home prices in Shanghai and Shenzhen continued to rise 2.3 and 3.1 per cent respectively. Though the numbers are slightly lower than March’s 3.7 and 3.6 per cent, in light of economic instability in other countries, this is a good sign. Even within China, where internal restructuring, higher global competition and weakening demand have began to put the brakes on their economy, the property sector continues to enjoy the momentum of growth.

Just over a year, home pieces in Shanghai  have risen a whooping 62.4 per cent and that in Shenzhen have grown 28 per cent. Across 70 cities in China, home prices are now 6.2 per cent higher, a further increase from the 4.9 per cent in March. Besides buying in the mainland, Chinese investors are also buying up properties in various other international cities such as Vancouver, Sydney, Melbourne, Hong Kong; and countries such as New Zealand, Malaysia, Cambodia and Thailand.

Canada HouseEven while property prices in first- and second-tier countries continue to accelerate, third-tier cities are also beginning to post positive growth after a period of declining interest and sales. Policy makers are however concerned about the excessive lending and rising debt levels and may be prompted to tighten lending rules and implement further measures.

Myanmar – Immense growth potential for property investments

While still battling a history of military rule, political censorship and restrictions, Myanmar has been gradually warming up to the rest of the world ever since its political reform in 2011 and the reception of foreign investment in 2012.

GOldenCity1

Photo credit: D3 Capital

Regional and global investors have been slowly exploring investment opportunities in the country and have found that it is a wealth of resources. Similar to China when the country first opened up, where folks had cash to spend but nowhere to spend them as it is not yet as developed as other Asian or Asean countries, the potential for growth is immense. Singaporean investors have also been seriously looking into the country for opportunities and properties have been sprouting rapidly.

D3 Capital, run by Daphne Teo, an ex-national swimmer who used to represent Singapore in her teens, has been developing mixed-used luxury project – Golden City – in Myanmar since 2014. Come 2018, the rare piece of land near the Inya LakeShwedagon Pagoda and University of Yangon, will see an amalgamation of some of the country’s tallest skyscrapers housing a hotel, serviced residences, plus offices and retail units. Consisting of ten 33-storey towers and a 6-storey block, it will also hold 100,000 sq ft of greenery and gardens and will be valued at approximately S$960 million.

CambodiaPropertyIf Cambodia and Vietnam, which have both had a head-start in the property investment market, are anything to go by, Myanmar will be a worthy contender for the fastest growing country in South-east Asia.

More unsold private home stock moved in April

New private home sales fell 11.6 per cent to 745 units last month, though the numbers may be considered to be decent as there were 2 major launches in March which caused a spike in sales volume, the highest in 8 months. The 268-unit The Cairnhill and 216-unit The Wisteria launched in March while the 305-unit Sturdee Residences and 48-unit The Asana launched in April.
The AsanaOlder projects however were finding favour with buyers as the number of transactions on previously launched developments rose from 541 to 619 in April. A few of these projects such as The Trilinq, have reached or will be reaching completion soon and are more of a draw for buyers who wish to move in sooner than later. Developers of some of these properties have also offered discounts and the lower prices are the icing on the cake.

Taking executive condominium (EC) units into consideration, the numbers are even higher. Approximately 400 EC units were sold. At the previously-launched The Terrace EC, the developers have put a buyer-referral scheme where both parties received $10,000 cash vouchers for successful transactions.

The TerraceProperty analysts are optimistic about the shift in tide as sales were spread evenly amongst the 15 top-selling residential projects, a sign that buyers are looking throughout the island, and not simply converging on new launches. Ironically, the government’s insistence on keeping the property cooling measures might have driven buyers back into the market as they realise the curbs may not be lifted anytime soon.

 

Investors go for smaller freehold private apartments

Properties in prime town-centre district 9 have long been highly-valued and investment-worthy. Recent trends have pointed to increased popularity in smaller apartments in the district as leasing yields are higher and more frequent, possibly as the effect of the Additional Buyers’ Stamp Duty (ABSD) and Total Debt Servicing Ratio (TSDR) is lesser on these smaller properties.

Sophia Hill ResidencesRecent sales figures seem to indicate that location and exclusivity of properties in district 9 sufficiently triumph tenure and size. Freehold and 99-year leasehold properties seem to only have a $30 psf difference and in fact in recent launches, leasehold property prices have exceeded freehold property prices. In the long run however, freehold apartments hold higher potential and reduced risks.

Some freehold private residential developments in district 9 include The Marq on Paterson, Martin Residence, Liv on Wilkie, The Trillium, Reignwood Hamilton Scotts and Hilltops, just to name a few. The most recent addition to the 99-year leasehold properties list include Cairnhill Nine. Other similar leasehold properties in the area are Sophia Hill Residences, UP at Robertson Quay, Orchard Residences and Leonie Gardens.

UP @ Robertson QuayAs expatriates’ housing allowances shrink and as Airbnb becomes an increasingly common and popular choice for travellers, property investors are looking more into completed smaller, well-located units to start their investment dollar rolling sooner rather than later.

Promising year ahead for landed properties?

At least in the Good Class Bungalow (GCB) segment apparently. Property analysts are predicting a 5 per cent price growth this year following promising response in the first quarter alone.

Despite economic slowdown and stock market volatility earlier in the year, this luxury landed property sector has seen a pick-up in sales volume as Singaporean investors are turning their sights on home ground once more, after a few seasons of investing in overseas propeties. Property agents have reported buyers making serious offers as compared to just a quarter ago in the latter part of 2015.

Leedon Road GCBRecent sales of GCBs included one at Swettenham Close at $1,354 psf. A total of 33 GCBs were sold in 2015, a similar number is expected for this year. Perhaps property owners have lowered their expectations and asking prices, and buyers are also enticed by the rarity and land area these bungalows provide. Many are upgraders or investors while sellers tend to be those whose children have flown the coop and are looking to downsize to more manageable properties. Rental yields for these large-sized properties have been diminishing, and these properties also tend to have higher property taxes and maintenance requirements.

Buyers may be more willing to take the bite this year as prices have already fallen 15 per cent since its peak in 2013, and further price declines will be unlikely. As these landed properties are also far and few in between, they may be quicker to pounce on a deal as it will not be easy finding similar options.