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.

 

 

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.

Increased supply beginning to affect private resale condo prices?

There has been talk about private non-landed home prices being affected by the onslaught of new completed homes flooding the market this year. Could the supply-glut effect be already taking hold of the market as resale completed condo prices fell 1 per cent in March?

Bentley ResidenceFebruary and January were positive months for the private resale property market as prices rose 0.5 and 0.2 per cent respectively. Though the fall in March may seem a bit of a letdown, an overall dip was registered in all market segments. The largest decrement was for the non-central regions, where a 1.4 per cent fall was recorded.

Property analysts are expecting a 3 per cent fall in private home prices this year as the supply of completed homes continue to be met by competition from new launches and competitive pricing from developer-sold projects. Resellers of completed or older resale condominium units may face increase competition from developers who are now pricing newly-launched units are more palatable pricing. Buyers have also become more selective and are more likely to pay only for location. The total debt servicing ratio (TDSR) framework also limits the amount they can loan, thus putting a bit of a dampener on investment- or upgrading-based property purchases.

As the middle of the year approaches quickly, the next quarter will likely show the market response more clearly as more new launches are planned. How will the consumers react to the competition for their attention. Will sales volume increase significantly or will prices fall in the heat of battle?

Prices of suburban properties dipping

Prices of new properties in the prime central districts have been rising, even as the market dulls. Suburban homes are feeling the strain put on the market by the influx of completed new homes this year.

The PanoramaBuyers seeking out properties in the suburbs tend to be more price-sensitive, and are often hampered by the total debt servicing ratio (TDSR) framework and the additional buyers’ stamp duty (ABSD), leading to higher competition from an expanding pool of stock for a shrinking pool of ready buyers. Prices at The Panorama in Ang Mo Kio have fell 9.7 per cent since its launch to $1,213 psf and similarly in Clementi, units at The Trilinq are now priced around $1,408 psf, almost 9 per cent lower than its launch price.

In comparison, buyers of properties in the prime central districts are more affluent and are able to afford the prices properties here demand. For example at Robin Residences, selling prices are now hovering at $2,371 psf, 2.4 per cent higher than its launch-price. Buyers of centrally located properties also have stronger holding power and less likely to sell unless the price is right.

RObin ResidencesThe price gap between suburban and central district homes have been widening. Last year, CCR (core central region) new-home price premiums were 81 per cent over those in the OCR (outside central region). As more OCR homes hit the secondary market this year, how will smaller investors handle the competition?

 

No luxury comfort for luxury property market

At $1,300 psf for a Cairnhill Plaza 4-bedder, it might be the lowest for a prime property in the middle of town in the last 10 years. As competition in the luxury property market heats up, owners and investors are finding themselves in a bit of a bind as prices dip and the buyers are few and far in between.

The Sail MarinaLeasing them out to fund mortgages have also proven to be increasingly difficult as the foreign workforce and pool of expatriates have shrunk due to job losses in the finance, oil and gas sectors. Combined number of secondary market losses registered in the core central region which consists of the prime districts of 9 to 11, the downtown core planning area and Sentosa Cove come up to 63 in the first quarter of this year alone.

As most of the expatriates looking for housing are now middle- or executive-level individuals with smaller housing budgets, smaller suburban properties in areas with regional business and commercial hubs are doing better than larger, high-end apartments in the prime or Central Business Districts (CBD). In fact, property analysts are now finding that more buyers are local Singaporeans who are purchasing a second or subsequent holiday home. As they are purchasing for occupation purposes, rental yields are less of a concern for them and are able to hold on to their purchases till a later date should they wish to sell.

843 new private homes sold in March

And that is a 8-month high, especially since the last new property launch was 4 months ago – The Poiz Residences in November 2015. That could be the glimmer of hope the local property market has been waiting for, though some analysts are still cautious about a obvious rebound as the government has tightened their grip on land supply this year.

WIsteria YishunThe rise in transactions of new units last month could be partly due to the pent up demand over the Chinese new year lull in February and the lack of new launches in the first 2 months of the year. Only 209 units were launched in February while the number more than tripled to 682 in March. The number of units sold doubled from 303 in February to 843 in March. The 2 new launches in March were Cairnhill Nine and The Wisteria.

Although the government has announced that they will be unlikely to ease up on the property cooling measures anytime soon, some buyers who may have been waiting in the sidelines for better deals may be coming to realise that prices will not be falling drastically this year and may have finally made the purchase move last month.

Overall, market sentiment is picking up and buyers are picking off bargains and affordable units before the winds change. New mass market suburban properties are capturing eyeballs and wallets.

Top reductions on Top-end London properties

As the number of new high-end luxury properties in London‘s prime and popular fringe districts such as Central London, Nine Elms and Earls Court climb, developers are feeling the pressure of a slump in demand and international investments.

London ApartmentDevelopers are finding that they now have to pursue overseas buyers more actively than before. They are also looking outside for cheaper development loans as there has been a 13 per cent fall in international buyers last year, and sales have fallen 19 per cent. Funding for some developments may be running into trouble and developers are looking at offering discounts for bulk purchases in order to secure monies for the construction process.

London Apartment2Higher property taxes have dulled some of the shine of high-end London apartments and land values have fell 1.1 per cent by the last quarter of 2015, compared to a 6.4 per cent gain in the earlier part of the year. What will this year hold for the industry? Property analysts are hoping developers find the funds they need to finance more extensive fringe projects. There are however doubts about whether bulk buyers willing to take up more than 100 units will be easy to find as most of these newer projects are not designed for the rental market.