Resale non-landed residential property prices hold steady in April

After 5 consecutive months of climbing figures, resale condominium prices have steadied themselves in April. Resale transactions fell by 21 per cent as a number of new launches drew the attention of buyers and investors in the past couple of months.

Thomson Impressions2Though the numbers are still shy of that during the peak of 2010 and 2013, things have been looking up for the private property market this year. Year on year, private resale prices and transaction volume were 1.8 and 48 per cent higher than in April last year. In comparison with March 2017, April’s resale private property market numbers dipped slightly. Prime district property prices fell 1.2 per cent last month while prices of units in the city fringes and suburbs rose 1.2 per cent.

In the 5 months prior, private resale prices have risen 0.6, 0.3, 0.9, 1 and 0.8 per cent from last November to March this year. The improving market sentiments seem to be reflected in the overall above-market-values which rose to $5,000 from $0 in just a month. Districts which posted the highest median above-market-values at $37,000, and had more than 10 resale transactions, were District 16 and 21. Despite higher resale activity in the city fringes, District 11 which consists of Newton and Novena, posted the highest negative median above-market-value of -$40,000.

the-crestThe year is almost at its mid-point and the latest new launches have boosted numbers in the new private home sales market, but how will the resale private property sector fare in H2?

New 153,000 hectare township near KL planned for next 30 years

There are big plans for a big project spanning 153,000 hectares in Negeri Sembilan, just beside the administrative capital of Putrajaya. At twice the size of Singapore, the township will launch its first phase which at 11,000 hectares is 22 times the size of Sentosa, in Q3 this year. 

MVV ipropertyMYThe Malaysia Vision Valley (MVV) is a major township development which encompasses the Seremban and Port Dickson districts near the Kuala Lumpur International Airport (KLIA) and just an hour’s drive away from downtown Kuala Lumpur. The masterplan is managed by 2 government-linked entities – Sime Darby Properties and Kumpulan Wang Persaraan – and  is reflective of the Iskandar Malaysia development in Johor. The MVV will consist of 5 main clusters, namely: a Central Business District (CBD), residential estates, a nature city, an education and technology hub and a tourism and wellness precinct.

SenadaResidencesSimeDarbyPhoto credit: Sime Darby Properties

The residential offerings in this new township is expected to be at lower costs in comparison with the higher property prices in KL city. There seems to be future plans for an eventual merging of KL and Seremban within the next 2 decades and the current impetus is for the development to accrue RM290 million (S$93.9 billion) in investments and to become the hotbed of potentially 1.38 million job opportunities. The federal government has also put aside RM560 million to develop transportation infrastructure that will serve the MVV district.

 

$653 million asking price makes Eunosville largest collective sale

Should the asking price of between $643 to $653 million for the HUDC estate of Eunosville truly go through, it would be the largest collective sale of late as it surpasses the $638 million paid for Shunfuville last year and the expected $450.8 million asking price for Rio Casa in Hougang which went on sale last month.

EunosvilleAnd it would mean each unit owner at the Sims Avenue estate would receive $780 to $790 psf or $1.9 to $2 million approximately. The estate has already reached the 80 per cent requirement for consent and the sheer size of the estate would be a dream for the winning developer. The 376, 713 sq ft site currently holds 225 maisonettes in 10 blocks and upon redevelopment, could yield 1,035 units of approximately 90 sq m each.

With 70 years left on its lease, $181 million on top of the bid will be required for intensification and a new 99-year lease. The site is just 100 metres away from the Eunos MRT station and strong showings at recent property launches show that buyers are still keen on new launches at good locations. Recent sales at Grandeur Park were a good example. All 420 of the units available at the launch were sold with the first weekend at the average price of $1,350 psf.

GrandeurParkResidencesThough bidding will be prudent as developers are keenly aware of the completion and sales deadlines imposed by the qualifying certificate and additional buyer’s stamp duty, some may be willing to put more into sites with long-term potential as land banks have been running low for the past year or so.

Consistent growth in private resale property prices

For the fifth consecutive month, resale private home prices have had a good showing. Can we hope for a market recovery? Perhaps not quite yet, but there is no reason not to feel good about the turnaround.

THeSienaCondoMarch’s numbers were the highest in 2 and a half years with the resale index hitting 168.8 with an improvement of 50% in the number of units sold. Market prices have also been creeping upwards with sellers now beginning to set asking prices above the market rates. Overall, private resale property prices rose 0.5 per cent last month and were 2.2 per cent higher than the same month last year.

In the same year-on-year comparison, resale transactions grew by 77.5 per cent last month with 1,058 units sold. That is 51.8 per cent higher than the 697 units sold in February. Prime district property prices rose 0.4 per cent while 0.7 per cent and 0.4 per cent increases were registered in the city fringes and outlying suburban regions respectively.

Though the numbers are still lower than when the property market was at a few of its peaks in 2010 and 2013, the consistently improving numbers reflect an overall positive market sentiment. As the half-year mark draws closer, the numbers from the second quarter will be more crucial in determining the direction for the rest of the year.

High-risk mortgages prompt Hong Kong authorities to rethink cooling measures

Singapore authorities rolled out property cooling measures just 4 years ago and while it was not necessarily a welcomed move, it was certainly a prudent one. With restrictions placed on the loan-to-value and the debt servicing ratios, home prices were kept from escalating. Now Hong Kong could also be considering doing the same as their real estate market skyrockets. The worry is that property prices could become unsustainable and a property bubble could grow and subsequently burst with disastrous consequences.

hongkongpropertyThe rapidly increasing number of high loan-to-value mortgages taken out on properties have had the de facto central bank of Hong Kong concerned. Property developers and individual buyers alike, these high-value loans are creating a growing list of high-risk financial profiles. Some developers have even taken out mortgages worth 120 per cent of the project’s value. Developers such as Sun Hung Kai Properties and Cheung Kong Property have been offering incentives such as tax rebates and loan offers in attempts to attract buyers.

Despite the Hong Kong government implementing higher taxes on properties last November, property prices have continued to climb and increased home buyers’ borrowing costs. Many buyers have not only been putting all their assets into property purchases, but also their parents’ monies and all that will be at risk should the bubble burst. Some buyers have even been leveraging on their parents’ properties in order to fulfil residential deposits. The Hong Kong Monetary Authority (HKMA) is keeping a close eye on the situation and may move to enforce new regulations on banks should there be any undue changes.

 

Land a landed property despite softer market?

Despite the softer real estate market, landed properties remain rare and in demand, particularly in land-scarce Singapore. Would this then be a good time to invest in one in preparation of a market recovery? How will the value of landed properties hold up in tough times?TanahMerahGreenHOUSEIn terms of availability, as of Q4 of 2016, only 1,352 new landed residential properties will be built by 2021. Sales volume for landed homes have also risen by 0.8 per cent in the last quarter of 2016. That said, the landed property market is recovering more quickly than expected. And perhaps despite sentiments of a flailing sector, sales figures have shown that the number of homes sold last year was close to that in 2013. The number of private homes sold overall have shown a 30 per cent dip from 2013.

The Total Debt Servicing Ratio framework implemented in 2013 has had some impact on the market, overall with landed residential property price index falling 14.1 per cent, likely due to the high stamp duties and price quantum. The demand for freehold landed properties have remained strong with prices of such properties in prime districts falling only 6.6 per cent. Most of the price decline came from leasehold terraces in non-prime districts and in the secondary market.

Thomson Grand condo project along Upper Thomson Road.

Freehold landed homes in or near the Central Region will continue to be popular amongst buyers and investors this year due to their accessibility, scarcity and potentially higher capital returns. Property analysts do however caution buyers to think beyond location and accessibility. Other factors such as growth prospects of the area, development potential in the surrounding township and rebuilding and construction costs should also be taken into serious consideration before closing the deal.

Junction city in Myanmar ready for tenants

In the heart of Yangon’s central business district is a spanking new 23-storey new Grade A office tower. Junction City Tower, developed by Keppel Corp’s property unit and Myanmar’s Shwe Taung Group has opened its doors 2 weeks ago to tenants.

JunctionCityMyanmarIt is Keppel Land‘s foray into Myanmar’s growing real estate industry where the long-term potential for Grade A office spaces in the city is great as the country continues to open up to regional and foreign investors. While Keppel Land established its presence in Myanmar as early as the 1990s, demand for quality commercial and residential properties has only recently been steadily growing.

Junction City is a 260,000 sq m integrated development which will include 33,400 sq m of Grade A office space and 50,000 sq m of premium serviced apartment, the later as part of Phase 2 of the project, amidst retail and hotel businesses. The ready availability of office spaces have already encouraged confirmed tenants such as Allen & Gledhill, WongPartnership, Samsung and the British Chamber of Commerce to take up units.

As more businesses invest in Myanmar and the expatriate population increases, the real estate market will be likely to rise in tandem. While the rate of growth is quick for now, and might be so for the decade or so ahead, how will it fare in the horizon?

Stamp Duty changes bring cheer to real estate market

With the recent Sellers’ Stamp Duty (SSD) changes, the real estate market is beginning to feel more upbeat all around.

PLQThe most significant changes were the SSD rates and the fact that sellers who let go of their properties after 3 years will no longer have to pay the sellers’ stamp duty. The Total Debt Servicing Ratio (TDSR) threshold has also been relaxed for properties with  loan-to-value (LTV) limits of 50% and less. The latter move is aimed at helping retirees monetise their properties as many could be sitting on their assets while having trouble with cash-flow or liquidity. Some property owners may wish to cash out on their properties in order to start businesses or send their children for overseas education but find themselves unable to loan enough as the TDSR framework limits the borrower only to amounts totalling up to 60 per cent of their gross income.

All these changes will give buyers a higher sense of security, knowing that they will have more flexibility in managing their finances without having to hold on to their properties should they urgently require liquidity. The crowds at the Paya Lebar Quarter’s (PLQ) residential project – Park Place Residences a couple of weekends ago were a positive affirmation of the improving sentiments in the property market. Property agents reckon that the SSD changes will motivate more people to buy as they now have less restrictions to take into consideration.