Chinese top buyers of Singaporean properties

Foreign interest in local properties have not waned despite rising prices and supply over the past half a decade. Their appetite have not diminished, if at all. Transactions may have shrunk slightly due to the additional costs involved in foreign-purchases of properties in Singapore, put in place by the series of property cooling curbs rolled out since 2011, but they buyers are back in the market in search of potential sites and units, in particular buyers from mainland China.

skyline-residencesIn a year-on-year comparison, foreign property transactions were up 11.8 per cent and this excludes purchases by permanent residents. Besides the Chinese, other major buyers hail from Malaysia, Indonesia and the United States. Each group have their preferences as the numbers show. Chinese buyers mostly favoured suburban properties while Malaysia and Indonesian buyers went for core central region units. 68 per cent of Indonesian buyers and 40 per cent to Malaysian buyers purchased homes in the prime districts while 58 per cent of transactions from the Chinese were for homes outside of the core central districts. Most Indonesia buyers are willing to pay $2,000 psf and above for prime properties while Chinese buyers usually went for properties priced between $750 to $1,700 psf.

Marina ONe iprop watermarkThe Additional Buyers’ Stamp Duty (ABSD) may have been a deterrent at one point in time, but as the government made clear that the measures are here to stay, acceptance is beginning to truly sink in and buyers are willing to spend the additional amounts in exchange for long-term capital gains. Buyers from the United States are exempt from the ABSD due to a free-trade agreement and this has raised the number of buyers up from 1.1 to 7.3 per cent over the past 5 years.

 

Will home loan rates rise soon?

Low interest rates have been ruling the home loan environment for at least the past year. But how long more can this streak continue is anyone’s guess, especially as the current global economic climate is uncertain at best, what with the effects of the recent Brexit and US elections yet to be revealed.

Two golden idols carrying a red house with a "%" inconProperty analysts say that this may be the last chance for home owners to jump on the refinancing bandwagon as interest rates in the United States have been expected to rise starting next month, and similarly those in Singapore may also follow suit. Some loan packages may however have a lock-in period and borrowers may find themselves unable to refinance or having to pay a penalty for loan-cancellation or pre-payment. But there are a good many options out there and financial planners or experienced property agents will be able to advise on the best course of action for those looking to refinance their home loans. There are also data, website and apps out there to help borrowers who may want to do their research before approaching the banks.

forte-suites1The current financial climate is competitive and banks are also out to acquire market share, thus the competitive rates in the initial loan period could help shave a load of your ultimate home loan. Though the rise in interest rates is likely in the next 2 years, the climb will be gradual with the Sibor possibly doubling from the current 0.9 per cent to 1.85 per cent by 2018.

Property market slowdown reflected in stamp duty collected

In 2014, the property stamp duty assessed was at $4.11 billion. This year, the total amount for the period ending March 31 was 28 per cent lower at $2.96 billion. Property prices and transaction volume have also fallen since the peaks of 2009 and 2013.

TheOceanfrontThe real estate market here has hit a number of speed bumps over the past 3 to 4 years and with the various cooling measures in place, buyers and investors have shied away from this previously almost-surefire means of investment. Introduced almost 5 years in December 2011, the Additional Buyers’ Stamp Duty (ABSD) has gradually taken effect on the market, perhaps in particular the luxury property sector which used to attract mostly foreign investors. With the 15 per cent ABSD imposed on them, and 7 to 10 per cent on Singaporeans, many may have thought twice about buying a second or subsequent property as the additional monies to be paid are considerable.

Much of the ABSD assessed came from share transfer from bulk purchases by non-Singaporean entities or shareholders who may have to let go of unsold units before they are hit by the Qualifying Certificate (QC).

marinacollectionBut with the current financial and economic climate hazy at best, the future of other investment products fairly volatile, and local property prices having fallen to affordable quantum levels, could more buyers be picking off units to secure more stable future yields?

 

Rents down but sales of some projects up

Home rental prices have been slipping with a 0.4 per cent and 0.5 per cent fall in the private non-landed apartments and HDB flats markets respectively.

Cairnhill Nine CapitaLandPhoto credit: CapitaLand

But perhaps the decline in rent has increased rental volume. There was a 8.2 per cent increase across the board in rental volume with 3,686 units leased this October as compared to 3,408 from the same month last year. On the same year-on-year comparison, rental prices were however down by 4.5 per cent.

The increase in rental volume may also be reflected in the sales volume this quarter as stronger home sales may have lifted earnings for some developers. CapitaLand for example saw a 28.4 per cent rise in net profit in Q3. Locally, their private residential projects, The Nassim and Cairnhill Nine, have boosted sales, together with their new projects in China – namely Riverfront in Hangzhou, New Horizon in Shanghai and Vermont Hills in Beijing.

nassimhillcapitalandPhoto credit: CapitaLand

In Singapore, they have sold 206 units in the second quarter, and a total of $1.24 billion in total sales value in the first 3 quarters of the year. With the happy increase in number of launches within the last quarter, sales volume may hit a positive note and ring in the festive year-end cheer come end December.

Resale private property prices slip further in October

Following the dip in resale prices in September, last month saw a further slip of 0.7%. Resale prices of private non-landed properties were apparently at a 50-month low.sycamoretreeSales volume of resale private properties also fell 15.2 per cent with 586 transactions clocked in October, in comparison to the 691 in September. In the peak of April 2010, 2050 units were sold, 71.4 per cent higher than the current numbers. September’s numbers may have been slightly more positive due to the pent up demand from the lack of major launches in the second quarter and the Hungry Ghost month in August.

Some districts fared better, with more than 10 resale transactions recorded – namely district 10 where the median selling price was $10,000 more than the computer-generated market value. But in most regions, sellers have found themselves having to offer prices up to $10,000 below the market value in order to close deals and attract buyers. In district 21 in fact, selling prices went as low as $23,000 below the market value.

HighlineResidences2Property prices in the city fringe, normally where selling and buying is the most active, have fallen 2 per cent. In the suburbs, prices also fell 3.3 per cent. Prime district properties however enjoyed a 4.9 per cent price increase, though it might only be sufficient to consider it a rebound from previous lull months.

Commercial property sector facing price and rent squeeze

As the supply of commercial spaces increase, demand has not unfortunately shown a proportionate growth, resulting in a squeeze on prices and rents. Across the board in the third quarter, prices and rental rates have fallen while vacancy rates are on the rise.

tuaswarehouseWhile things in the manufacturing sector has picked up, a bigger turnaround needs to happen before a corresponding uptake in the commercial property industry. The warehouse sector has taken the hardest hit apparently, with a 4.4 per cent fall in rent from Q2. Industrial property prices fell 1.7 per cent, a 7.8 per cent fall in a year-on-year comparison with Q3 of 2015. Rents in the same segment fell 2 per cent in the third quarter. Property experts are expecting similar market reactions for the next few quarters ahead.

kampunbahrushophouseMore rare commercial spaces such as shophouses are however entering the market at more reasonable prices than before. And with selling prices low, investors who might be looking at very long-term prospects of the commercial property market here might be picking off deals. The increase in industrial space – almost 3 million square metres – by end of 2017 will also put further pressure on prices, which could mean a market shift towards the tenants and investors while landlord struggle against the competitive grain.

Parc Riviera – One price fits all

Developers have been dishing out various incentive schemes to draw buyers into the new private home fold, and now an upcoming property launch will do the same. EL Development will be offering a flat-price within the same type of units between the second and fifteenth floor of their Parc Riveria condominium. And the offer only stands when the deal is sealed at their launch this Saturday.

parcriviera2Photo Credit: www.parcrivieracondo.sg

With this new incentive scheme, units on the more popular higher floors will likely be the first to fly off the shelves as they traditionally command higher prices for the view they promise. As a price guide, the 2-bedroom units are going for $725,000. Other units available in the project’s two 36-storey blocks include 463 sq ft one- and 1,711 sq ft four-bedders though more than half are made up of one- to two-bedroom apartment units.

parcriviera1Units in the floors above the 15th-storey will also be available for purchase, though prices will be higher. Traditionally, units in the higher floors are about 15% more expensive than those in the lower floors. EL Development came up with the first-in-market scheme as a way to provide buyers with a transparent pricing system and a way to draw attention to specific units. Some of their other properties currently in the market include Skysuites 17, Stevens Suites, La Fiesta and Trivelis. Parc Riviera has already received positive interest and with this creative new strategy in place, it looks like the Parc Riviera sales office might see a flurry of activity this weekend.

 

 

Property market in the doldrums in Q3

The local property market seems to have taken a harder hit in the third quarter as both sales and rental figures fell. While the decline was not drastic or sudden, it nevertheless points to possibly tougher times ahead.

alexresidencesOverall property selling prices fell 1.5 per cent while rental prices dropped by 1.2 per cent. The general global economic gloom, fears of inflation and growing unemployment rates have given way to a sense of impending recession. Buyers are likely to be more careful with their finances and though property is a good way to hedge excess funds, investors are likely to weigh yield potential even more seriously should the negative sentiments persist.

The private residential market seems to be the most affected as vacancy rates rose. Property analysts report more positive sales in the resale rather than the new homes segment, possibly because there were fewer new residential project launches in Q3. Resale property sales clocked a 15.7 per cent increase while new homes sales fell by 12 per cent.

tampineshdbIn the resale HDB property market, prices continued to stabilise, with no significant rise nor fall. However, the number of transactions recorded fell by 5.5 per cent. Currently, overall private home prices have fallen 2.6 per cent.  With only 2 months left to the year, property experts expect a slight fall in prices and transactions in the private property market, which largely dependent on market sentiments may result in a final 3 to 4 per cent decrease for 2016.