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12 Apr

Malaysian properties will soon cost more

Singaporeans and expatriates in South East Asia have been big buyers of properties across the border in Malaysia for their lower prices and favourable currency exchange rates. The government has tried to cool the market, but without significant effect. The minimum price soon may be raised to RM 1 million. How much does it now cost to own a house in Malaysia?

Singaporeans looking to buy properties in Malaysia may see the bar raised. Malaysia is mulling a two-fold increase to the floor price of residential properties purchased by foreigners in a bid to prevent prices from spiralling too rapidly. The possibility of a revision to existing guidelines to raise the minimum price to RM1 million (S$417,000) from RM500,000 was flagged by The Star.

Kingsley Hills residential project in Selangor

In a report yesterday, the local daily cited unnamed sources as saying that the measure was ‘in the pipeline’, with a forthcoming announcement to be made by Nor Mohamed Yakcop, minister in the Prime Minister’s department heading the Economic Planning Unit. It did not say when it would be implemented. One of the sources told The Star that selected growth corridors such as Iskandar Malaysia might be less affected by the proposal, in that a lesser minimum threshold might be applied – RM800,000 for example – to assist with their development success.

The government has continued to come under pressure over affordability issues despite recent measures to cool the property market. Pushing the floor price up for foreign buyers – especially in landed properties – could be a welcome move in the eyes of young middle-class Malaysians frustrated with soaring real estate prices when starting salaries have advanced little in two decades.

Semi-detached house in Senibong Cove, Johor Bahru.

Many believe that foreigners have little difficulty stumping out RM500,000 for homes because their currencies tend to be much stronger. Property consultants say they were aware of the possibility of the new rules, but believe that the move is still at the proposal stage. ‘It’s a flyer to check public response. Not all states will agree,’ Malaysia Property Inc chief executive Kumar Tharmalingam told BT.

Foreign buyers of Malaysian property come mainly from China, Singapore, Japan and South Korea, the newspaper said. Even so, foreigners only account for an estimated 2 per cent of the residential market which saw robust growth last year. The volume and value of properties sold last year was the highest in the past five years, according to the Property Market Report 2011 by the Finance Ministry’s Valuation and Property Services Department, rising by 19 and 22 per cent respectively from a year ago. Landed property remain popular. They recorded the biggest jump in prices last year, with link houses in Kuala Lumpur registering gains of 8-13 per cent, according to the 2011 property report.

If you're looking to buy property in Malaysia, it might be a good idea to see what options are available at the International Property Expo at Marina Bay Sands.

Following a revision in lending guidelines this year that benchmark an applicant’s criteria to meet his loan obligations against his net rather than gross income, bankers and property players have reported slower loan applications and a softer market, with the rejection rate estimated at 20 per cent. Some reckon that the central bank ought to have tightened lending criteria a year or two ago as ample liquidity and easy credit terms encouraged speculators to buy with a view to flipping the properties before the payments were due. Owing to high take-up rates, developers continued to build and to raise prices. But going by the assortment of auction notices found around the suburbs, many borrowers appear to have defaulted on their loans, especially those taken for apartments.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:

Considering the ready availability of land, high buying volume from foreigners of Malaysia properties may not yet be putting a dent in the local property buying market. But in Singapore where land is many times more limited, how will the same sales volume affect the real estate market here? How effective have the cooling measures been and will more be needed?

26 Mar

Waterfront homes still popular with Foreign property buyers

The waterfront lifestyle has always been popular. And now that Singapore boasts a few more of these developments in the Marina Bay and Sentosa Cove areas, foreign buyers are snapping up units. Will the property investors keep coming?

Half of the units sold at Reflections at Keppel Bay in recent months were scooped up by foreigners, suggesting foreign demand for local luxury homes has not totally abated. Keppel Land sold a total of six units (at an average price of $2,100 per square foot) at the luxury waterfront development over the past two- and-a-half months, out of which three units were bought by foreigners. ‘There is still a worldwide trend for waterfront living,’ said Augustine Tan, president (Singapore residential) of Keppel Land who remains bullish on the outlook for waterfront homes. To add to the draw, all homeowners of Keppel Bay are also given a complimentary 10-year membership and five-year membership subscription at the Marina.

Reflections at Keppel Bay boasts waterfront living with a marina and a good many luxury amenities as well.

Obtaining its TOP (temporary occupation permit) in December last year, Reflections at Keppel Bay has a total of 136 apartments left unsold out of its 1,129 luxury units. Among the unsold units, 25 remain unlaunched by the developer and comprise premium units such as the development’s only 13,300-square-foot super- penthouse. Prices for the remaining units have an average asking price of about $2,400 to $2,500 per square foot (psf), though some premium units may go as high as $3,200 psf. This is in contrast to an average of $2,000 psf when the development was first launched. The property group has also set aside a total of 154 units as corporate residences to tap into the strong demand for the lease of such homes. Comprising configurations that range from two-bedders to four-bedders, leasing for the corporate units have commenced with average rents averaging $8,000 to $9,000 per month.

Bungalow at Sentosa Cove, where you can enjoy the waterfront lifestyle away from the mainland.

On future launches in the Keppel Bay area, the property group indicated at a press conference yesterday that it will be focusing on selling off the remaining units at Reflections at Keppel Bay before delving into their next launch. Having said that, plans for the plot 3 development have already begun with the new project envisioned to be a premium waterfront property comprising 367 home units to be located along the historic King’s Dock. Owning a total of six plots in Keppel Bay, Keppel Land will be partnering master architect Daniel Libeskind once again for the development of its third Keppel Bay plot. When all the plots are fully developed, Keppel Bay will have a total of 2,600 waterfront homes.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Although there is talk that activity in the luxury property market may die down because of the Additional Buyer’s Stamp Duty put on foreign buyers, it may only be location specific. Waterfront living seems to still be a viable option and foreign property investment may not go away that quickly.

6 Feb

Foreign buyers not deterred by ABSD

In recent months, the Additional Buyers Stamp Duty (ABSD) has created some furor in Singapore’s real estate industry, but what have the actual effects on the ground been? What other options do foreigners who have moved here for work have?

The additional buyer’s stamp duty (ABSD) slapped on foreigners has not stopped expatriates from looking for well-priced buys, say consultants. Said Jones Lang LaSalle’s head of residential and national director Jacqueline Wong: ‘International buyers are still looking to buy.’ Ms Wong highlighted that though foreigners have decided to sit on the fence till the second quarter of the year awaiting further clarity, many are still keeping a sharp eye on the market for good buys, pointing to a sustained interest in local properties.

Foreign buyers are finding other accommodation options such as long-term house or apartment rentals. Image courtesy of ThinkStock.

But while they wait, many expatriates who come with families in tow, need a temporary place to stay. As such, key beneficiaries of this ‘waiting game’ are seen to be rental properties comprising private homes, serviced residences as well as long stay accommodations. In fact, some consultants have pointed out that there has been a noticeable pick-up in the rental market post-ABSD, but acknowledged that the cooling measure may not have been the sole driver. Having said that, The Club at Capella Singapore – a long stay residence situated on Sentosa island – has seen a ‘slight but noticeable growth’ in inquiries since the ABSD kicked in, though other factors could also be at play – such as the residence’s growing brand name in the luxury long stay accommodation industry.

Property agents have also noticed a pick up in rental inquiries from foreigners, especially for larger home units in well-located areas since. Even serviced residences like Pan Pacific Serviced Suites Singapore say that they are seeing faster take up rates for advance bookings after the measure. Hartaj Sewa Singh, a resident who has signed a two-year lease agreement at The Club, said that he has always been keen to invest in a property in Singapore as he is here for the long haul. But he has been deterred by headlines harping on the government’s efforts to lower property prices. Mr Singh, who is also a businessman, said that he might buy a home in Singapore when the overall sentiment turns for the better. He feels that many expatriates will buy eventually if they plan to stay in Singapore for the long term.

Rent a unit at The Club at Capella in Sentosa Island.

Furthermore, some developers have gone ahead to absorb part if not all of the additional stamp duty to alleviate the cost burden for foreigners, as well as dish out five-digit furniture vouchers. Speaking of ABSD, Chia Siew Chuin, director of research & advisory, Colliers International, said: ‘Whether the measure will be effective in the medium to longer term will hinge upon a host of factors, including macro-economic conditions as well as the condition of property and investment market in other countries, among others.’ Ms Chia highlighted that if the Singapore property market outperforms its foreign peers and maintains its reputation as a ‘safe investment haven’, the downside effects of the ABSD would be mitigated and in turn support buying demand. Said Chua Yang Liang, head of research at Jones Lang LaSalle: ‘The market, I believe, will eventually find its balance. In the longer term this additional stamp duty will not necessarily deter those genuine foreign buyers. Long term investors local, foreigners and corporate alike, will factor this as part of the overall cost of transaction.’ As such, it seems most feel that ABSD will deter foreigners from buying local properties only temporarily and not forever.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Rent or buy? That is besides the point. As long as there are expatriates who will require housing and accommodation, the property market will be looking up. As a start, property developers are offering to absorb part or all of the ABSD. Will more ways to get around the rules soon surface?

 

4 Jan

What is Singapore’s real estate future?

2011 has ended with announcements of property cooling measures. How will 2012 respond to this? Will this move by the government to change the tide and shift towards a “Singaporean First” policy make a difference to the rising HDB flat prices? How much are foreigners truly affecting the local property market?

The Real Estate Developers’ Association of Singapore (Redas) has been holding a series of meetings with industry players to look into the impact of the latest round of property curbs. According to the sources, meetings were held recently with stakeholders such as developers, property consultants, brokerage analysts and lawyers. They discussed the intended objectives of the cooling measures – which include an additional buyer’s stamp duty (ABSD) of 10 per cent for foreigners – as well as the likely consequences. Several suggestions for a more ‘calibrated’ approach were also raised at the meetings. Some of those proposals, which are still being explored and fine-tuned, could eventually be tabled and presented to the authorities, sources said.

Marina Bay Residences is situated near the CBD and town area, a district popular with foreign property buyers.

One idea floated was to identify ‘hot spots’ for foreign investments according to postal district codes, and then apply tiered stamp duties. According to a recent CBRE analysis of URA’s caveat data lodged from January 2011 to November 2011, almost 29 per cent of private homes in the core central region – which includes the prime districts 9, 10 and 11, Marina Bay and Sentosa Cove – were purchased by foreigners. By contrast, the foreigners’ share was only just over 14 per cent in the outside central region, which is a proxy for suburban mass market locations.

Industry players also suggested that instead of singling out foreigners to bear heavier taxes, the authorities could  give more incentives to support Singapore citizens and Permanent Residents (PRs). One proposal was to provide more generous subsidies for first-time homebuyers. Under the latest round of measures announced on Dec 7, foreigners and corporations have to pay an ABSD of 10 per cent – on top of the existing buyer’s stamp duty of up to 3 per cent. The new duty will also apply to PRs buying their second or subsequent homes and Singaporeans buying their third residential property or more – though only to the tune of 3 per cent. Those at the meetings noted that foreign buyers have not significantly contributed to the increase in mass market home prices.

Based on a list collated by Redas ahead of the meetings, foreigners had a strong presence in only three out of 33 selected projects launched recently. At least 50 per cent of the units in the three projects, all of which are targeted at mid to high-end buyers, were sold to foreigners, PRs and corporations. And only one project had more than 50 per cent of units sold purely to foreigners. Industry players also noted that the new measures do not address the rising prices of resale HDB flats – which are thought to underpin the demand for mass market private homes and the subsequent price surge in that segment.

Besides landed properties, Sentosa Cove also has a gamut of other worthy non-landed homes available for sale. The Coast at Sentosa Cove.

Analysts are split over whether the ABSD is here to stay. CBRE’s executive director for residential, Joseph Tan, thinks that the duty is not likely to be around forever. ‘We are of the opinion that these measures are unlikely to be a permanent feature because of the nature of Singapore’s highly open economy,’ he said in a recent report. But Chua Hak Bin, an economist with  Bank of America Merrill Lynch, said the government is shifting to a ‘Singaporeans first’ policy, and that the differentiated buyer’s stamp duty may therefore become a permanent fixture. ‘The differentiated buyer’s stamp duty may remain even after property markets cool, as the government moves towards differentiating the privileges and rights of Singaporeans, permanent residents and foreigners,’ Dr Chua said in a Dec 15 note. Any relaxation would likely occur by way of loan-to-value (LTV) ratios or the seller’s stamp duty, he added.

When the measures were announced, the Ministry of Finance and the  Ministry of National Development said that they were introduced to moderate investment demand for private homes and promote a more stable and sustainable market. But industry players have speculated that in addition, the government could have unstated intentions such as lowering the cost of living, implementing a ‘Singaporeans first’ policy, and managing foreign investments into Singapore.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
The housing issue, amongst other rising concerns such as healthcare and transport, will no doubt be on minds and mouths as we transit into the new year. Despite all the discussion surrounding the recent stamp duty hike and emphasis on foreign property ownership, what are some practical improvements you hope for in 2012?

3 Jan

A year of Property highs and lows

What were the high points of Singapore’s real estate market in 2011? The showing was strong in the mass market suburban home sector, with quite a few successful new property launches. Not to be completely dampened by the recent cooling measures, let’s recap some of 2011’s highs and lows. And be a step ahead and look at which areas are expected to do well next year, and which are taking a backseat.

Mass market homes saw a sharp spike in prices and sales volume this year. How much of it was from foreign investors or Permanent Residents?

New home sales have proved remarkably resilient this year, with buyers nonchalantly shrugging off a host of worries, though the tide may be turning. Data from the Urban Redevelopment Authority (URA) showed that in the first 11 months of this year, developers sold 15,393 new homes. Once this month’s figures are in, this year could come close to beating the record-breaking 16,292 homes sold last year, but an apparent slowing in the sector could stymie that. Analysts attribute these remarkably buoyant figures to strong demand for mass market homes, which often seemed impervious to external factors.

But others have cautioned that the recent strong demand for homes may have been induced by the number of new developer launches. The strong demand for homes prompted two rounds of property cooling measures this year. The first batch came in January, marking a rocky start to the year. Those rules slapped residential properties with a seller’s stamp duty if they were sold within the first four years of purchase and lowered the amount banks can loan to home buyers to 60 per cent.

Another even tougher round of cooling measures was rolled out earlier this month. The new rules mean that foreigners and corporate entities will have to fork out an additional buyer’s stamp duty of 10 per cent. This is on top of the existing stamp duty of about 3 per cent. Permanent residents buying their second and subsequent homes and Singaporeans buying their third and subsequent homes will have to shell out an additional buyer’s stamp duty of 3 per cent. While the tough measures are keeping buyers at bay for now, industry watchers do not expect this to last long.

An iProperty survey showed what Singaporeans thought about the property cooling measures rolled out eariler this year. What will they think about the second round?

The latest round of measures is largely targeted at foreign buyers, said Mr Joseph Tan, CBRE’s head of residential services, a group that is not prominent in the mass market property segment. A recent report issued by CBRE outlined how Singaporeans make up 69.9 per cent of caveats lodged for homes outside the central region, and it is this local demand which will help prop up sales of mass market homes next year. Homes in this segment have long been dominated by first-time home owners and HDB upgraders. Now such homes are also a huge draw for investors and foreign buyers like the Chinese and Indonesians who have increasingly been muscling in on the scene.

Buyer sentiment is expected to moderate next year, with some analysts predicting a price correction of up to 30 per cent. But places with good fundamentals like a strategic location, access to public transport hubs and an established network of shops and amenities are slated to do well.

Several districts have remained tops among buyers while other neighbourhoods have fallen out of favour.

What’s hot?

Bedok:
The District 16 town of Bedok is the most popular pick this year, said Mr Nicholas Mak, executive director of research and consultancy at SLP International. So far this year, Bedok has recorded 3,848 caveats for both new and resale transactions. More than 100 units were sold at the 577-unit Archipelago project during its preview weekend earlier this month, at an average of $1,000 per sq ft. Bedok Residences stirred up controversy over its queuing system last month, ultimately selling more than 470 units out of the project’s 583 homes at a $1,359 psf median price. ‘Bedok benefits from a big pool of people who live in the east. This means the pool of potential buyers and sellers is also bigger than in other areas. Most of these people also tend to be reluctant to move outside the east and tend to seek out homes within the eastern neighbourhoods,’ said Mr Mak.

Bedok is where Archipelago project is situated, with all the pluses of Singapore's eastern neighbourhoods.

Punggol:

The Luxurie - near Sengkang MRT/LRT Stations.

The rapid redevelopment of the Punggol area has boosted the popularity of this fledgling waterfront new town. According to SLP International, this has helped boost the ranking of District 19, which includes Hougang, Punggol and Sengkang, to the No.1 spot for new home sales, with a total of 3,102 deals so far this year. The neighbourhood recently entered a new stage of development, with more than 5,000 new private homes slated for completion over the next few years. Many buyers will be drawn by an attractive new waterway and plans for a new mall near the MRT station. Still, some buyers have tended to dismiss this neighbourhood, saying it does not measure up to the amenities and infrastructure boasted by mature towns like Toa Payoh and Tampines.

But others have been more open to the area’s development potential, encouraged by the Government’s plan to establish Punggol as a waterfront town. In the first nine months of this year, close to 1,900 uncompleted units were launched for sale in District 19. Projects such as A Treasure Trove and The Luxurie proved a hit, with each development achieving take-up rates of more than 70 per cent. These projects have helped to boost overall sales activity in Punggol by 9 per cent year-on-year, and lifted new home sales in the area by 40 per cent, according to data compiled by Jones Lang LaSalle (JLL)

Yishun and Sembawang:
Yishun and Sembawang have also done well, riding on healthy demand for private homes with innovative designs, said Mr Ong Kah Seng, director of property research firm R’ST Research. So far this year, 1,184 new homes have been sold in District 27, which encompasses the Admiralty, Sembawang and Yishun areas. Several notable projects such as Miltonia Residences and Canberra Residences have contributed to the boost in new home sales. Still, Mr Ong added that such far- flung areas face some hurdles as they are not so well-located and do not have significant development potential. This means some buyers may sideline these areas in favour of neighbourhoods like Jurong East and Paya Lebar which have better fundamentals like strategic location and long-term development goals.

Miltonia Residences in Sembawang.

District 15:
Coming in third in the new home sales ranking is District 15, with nearly 1,149 deals closed this year. Made up of neighbourhoods such as Katong, Joo Chiat and Marine Parade, this location has once again proved to be popular among home buyers. The area has also done well in overall home sales. According to data compiled by Savills, District 15 chalked up 11 per cent of the total caveats lodged this year, second to the 12 per cent garnered by District 19. Ms Chia Siew Chuin, Colliers International’s head of research, said the location’s popularity stems from its proximity to the city, airport and recreational and leisure facilities such as East Coast Park. ‘(Districts 15 and 14) also host a wide array of supporting amenities… as well as a large selection of food and beverage haunts,’ said Ms Chia.

Tivoli Grande in District 15.

What’s not?

Districts 9 and 11:
Despite being among Singapore’s most prestigious postal codes, Districts 9 and 11 have achieved less than stellar sales this year. The two areas include high-end luxury homes in the Chancery, Bukit Timah, Orchard, Oxley and Cairnhill neighbourhoods. It has been a lacklustre year for the high-end and luxury home segment. The poor transaction volumes in these two particular districts have dragged them to the bottom five postal districts for this year, said Dr Chua Yang Liang, head of research at JLL. Year-on-year sales in District 11 slumped 53 per cent while those in District 9 tumbled 47 per cent.

Dr Chua said limited new supply in the prime markets is to blame: ‘People looked for better value options with a smaller overall quantum as the economy stuttered and buyers became more budget conscious.  ‘(This benefited) the mass market as the more affordable properties on offer drew in the buyers,’ he said, adding that foreign buyers have also been switching their location preference.

WaterScape @ Cavenagh condo project in District 9.

Promising

Tresalveo condominium project in Marymount.

Marymount and Thomson:
Interest in this District 20 neighbourhood has been building throughout the year, partly due to the opening of the remaining sections of the MRT network’s Circle Line, which now links the area to Holland Village and Buona Vista. ‘(The neighbourhood) is one of the few low-rise estates available which is centrally located, and perhaps still considered affordable for the average to above-average income buyer,’ said Mr Ong. A 603-sq-ft unit at Tresalveo, a condominium located opposite Marymount MRT station, sold last month for $748,000 or $1,241 psf. Mr Ong added that the smaller but more strategically located neighbourhood gives off an exclusive, quaint vibe, which could differentiate the area from the rest of the housing supply that will come onstream in the next few months.

Set to underperform:

Districts 9, 10, 11:
Prime areas popular among foreign buyers are likely to be the worst performers next year, said JLL’s Dr Chua. He explained that these areas will experience a drop in transaction volumes involving foreign buyers as they feel the pinch from the new 10 per cent stamp duty. Other analysts said the market for high-end properties had been slow even before the measures and this trend is set to continue, with prices and sales volumes remaining in the doldrums. The changing profile of foreign buyers is partially to blame, said Mr Mak. ‘More of them are from China and are turning to suburban residential projects, this compared to earlier batches of buyers like Europeans, Indonesians and Australians who tend to favour snapping up homes in the prime districts.’

Next year will no doubt be a challenging one for the private residential market as it adapts to the new cooling measures and the economic slowdown. Segments within the residential market will become more distinct, say analysts, with landed property to be a more resilient sector due to its limited supply and lower foreign participation. For now, both buyers and developers are playing a waiting game, said property consultants, and a clearer picture of what tone the market will take will probably emerge only later next year.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:

Will it be a long and drawn out wait between home buyers and sellers as the stamp duty hike kicks in? Despite it possibly affecting the foreign investment volume, how much will this put Singaporeans first in terms of housing? 

26 Nov

Mainland Chinese top foreign property buyers chart in Q3

It seems money from China is flowing into the property market here in Singapore. Mainland Chinese have once again topped the foreign buyers chart in local real estate circles. What have they gone for and which properties are they attracted to?

Buyers from mainland China continued to snap up private homes in Singapore’s east in the third quarter, pushing up their share of deals, according to a new report from DTZ. The property firm, which analysed caveats lodged for both new and secondary sales, also found that foreigners bought 18.6 per cent of all private homes that were sold in Q3 – a new high. Foreigners (excluding Singapore PRs) accounted for 16 per cent of all private home sales in Q1 and Q2. Buyers from mainland China were the biggest group of non-Singaporean (that is, foreigner and Singapore PR) purchasers. They accounted for 30.6 per cent of all private home transactions in Q3, up from 26 per cent in Q1 and Q2.

Tivoli Grande in the Eastern area (District 16) of Singapore.

‘Mainland Chinese buyers are increasingly looking to buy properties overseas, including in Singapore, as a result of property cooling measures in China which have led to residential property prices falling in some cities,’ said DTZ’s South- east Asia research head Chua Chor Hoon.  ‘The predominantly Chinese population, good infrastructure and education system, and the safe and clean environment here make Singapore property an attractive investment option for mainland Chinese investors to park their money or buy a home for their children studying here.’

Private homes in the east were most popular with Chinese buyers. Their purchases in the first nine months in Districts 15 (Katong, Joo Chiat and Amber Road areas) and 16 (Bedok and Upper East Coast areas) totalled 419 units and made up 21.7 per cent of their total purchases. Standard Chartered analyst Regina Lim similarly noted in a new report this week that foreigners bought 28 per cent of all mass-market homes (that is, homes that sell for less than $1 million) in the first nine months of this year – higher than the 19 per cent in 2009 and 22 per cent in 2010. ‘With volumes and prices staying buoyant despite the weakening economic environment and repeated initiatives by the government to dampen the market this year, we will not be surprised if new measures directed at foreigners are introduced by the government, which in turn could negatively affect home prices,’ Ms Lim said.

Aalto condominium in District 15.

Foreigners’ share of all homes bought rose even as overall transaction volume fell. According to DTZ, transactions of private homes fell to 6,879 units in Q3 2011 – some 24.5 per cent lower than the 9,107 transactions recorded in the previous quarter. The figure was also lower than the average of 8,003 and 9,167 units per quarter in 2009 and 2010 respectively. DTZ, which downloaded the caveats from URA Realis on Nov 15, also found a larger proportion of buyers with public housing addresses buying private homes with sizes below 1,000 sq ft, as the overall quantum for such homes is lower and hence attractive to HDB upgraders.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
In comparison to other countries where foreign property buying is also on the rise, are the foreign buyers here buying for occupancy or merely as a means of earning? Who are the ones really profiting from such transactions? Do you think it will affect property prices here?

23 Nov

Bedok Residences – Are the serious buyers turning up?

Is Singapore a city where long queues are the norm? It certainly seems so at the Bedok Residences launch over the weekend. However it was revealed that many were actually queuing in place of agents or buyers. Is demand as high as it seems, especially with the high prices of units at $1,3000 psf? Is there a reason property agents are standing in line?

Hundreds of people braved the rain and scorching heat yesterday to queue for the upcoming Bedok Residences project, but many claimed they were either acting for agents or being paid to stand in line by genuine buyers. The line started forming on Sunday night and numbered a few hundred by 7pm yesterday. The CapitaLand project will be launched tomorrow. Plastic bags and rubbish were strewn across the entrance of the showroom as the crowd settled in for the long wait at the show-flat near Bedok MRT station. A CapitaLand spokesman said each person in the line is assigned a number that entitles him to pick a unit.

How will units at the Bedok Residences do?

It was not clear why the potential buyers, having obtained a queue number, had to remain behind instead of being allowed to return on the day of the launch. Some market watchers reckoned this to be a marketing ploy, as the sight of a big turnout might help drum up interest among buyers at a time of flagging interest in the residential market due to the global uncertainty.

While the project is centrally sited near the Bedok bus interchange, the pricing is unlikely to be a top draw. Although no firm details have been released, prices are expected to hover around $1,300 per sq ft (psf), valuing a 517 sq ft one-bedroom unit at $723,000. In contrast, several new projects – including A Treasure Trove in Punggol – have sold well in recent months, with analysts pointing to their average price of about $870 psf as a key attraction.

Options are wide and many at Bedok Residences. Will there be units for everyone?

Bedok Residences comprises 583 units of one-, study plus one-, two-, three- and four-bedroom units, and penthouses. The 15-storey project will be built above a retail development and is due for completion in 2015. It is unclear how many in the queue are really buyers looking to secure a flat in the 99-year leasehold project. Since the last cooling measures were implemented in January, no major project has been an instant sell-out.

And Bedok Residences is unlikely to buck the trend, analysts noted. Many people in the queue The Straits Times spoke to were property agents, or students and retirees who said they were being paid by agents to stay in line. Asked if they were there to buy, a group of women shook their heads and pointed to a property agent’s name card.

Bedok Residences is situated in a prime location, near public transport, shopping malls and other amenities.

A potential buyer, Mr Lim K.T., said he was interested in the place as his in-laws lived nearby, but added that some of his friends who had come with him had decided against buying when they saw how disorganised the situation was. There was no clear instruction on where to queue and many people pushed in. Some analysts were taken aback at the turnout, given the unstable economic outlook. Guessing at a reason for the crowd, Mr Colin Tan, head of research at Chesterton Suntec International, said the resale market has been slow, so agents may be focusing on developer sales.

Analysts said that the indicative selling price of $1,150 to $1,400 per square foot (psf) at CapitaLand’s newest condominium, Bedok Residences, is higher than expected – but they still expect a strong launch performance. OCBC Investment Research analyst Eli Lee, who visited the showflat on Monday afternoon, checked with three agents and found that they will only hire a replacement to wait in line if his team committed to buy and submitted cheques.  ’From these data-points, we judge that there is robust demand for the launch and expect a strong sales performance in terms of both units sold and average selling prices later this week,’ Mr Lee said.

Take a peek into the showflats of units at Bedok Residences.

Kim Eng Research also noted that the lack of condominium supply in Bedok Town Centre probably allows the project to set a higher price. The 99-year-leasehold, 583-unit Bedok Residences is part of an integrated development comprising homes, a shopping mall and a transportation hub linked to Bedok MRT station. ‘Demand for such integrated projects is expected to be strong as they provide convenient access to key transport nodes and retail outlets, not to mention their limited quantity. After all, there are only so many MRT stations in Singapore,’ said Kim Eng’s analysts in a fresh note.

Take-up could also be boosted by foreign purchasers, said Ku Swee Yong, chief executive of International Property Advisor. ‘There is likely to be a fair amount of foreign interest in this project, and around 20-30 per cent of the units could be bought by non-Singaporeans,’ he said. CapitaLand decided to forgo the traditional balloting system (which is largely based on chance) and instead opt for the queue system for Bedok Residences, so that selection and purchases can be done on ‘fairer, first-come first-serve basis’, said ERA.

The property firm added that many people in the queue outside the project’s showflat are paid to stand in line by agents who represent potential buyers with keen interest in the property. ‘We expect most of the queuers to be students and retirees as most of the interested buyers are working adults holding full-time employment and therefore are unable to take leave from work to be in the physical queue themselves,’ ERA said. ‘Similarly, the agents themselves are unable to join in the physical queue as they will have appointments, such as HDB appointments and viewings to attend to.’ Some of the agents also have more than one customer keen to purchase a unit, in the project, ERA added.

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Are property buyers giving a final year-end push to sales volume or are they still waiting for more options to fall on their plate?

4 Oct

Prime home rents dropping

As economic situations continue to walk a thin high-wire above uncertain waters, budgets across the globe are generally cut and less is available to be spent on housing rental for expatriates working abroad. Could this be a reason for the dipping prime home rents here in Singapore? What other factors could be affecting this drop?

Rents of homes in prime areas have fallen for the first time in almost four years as global economic uncertainty means fewer executives are hired, according to a property consultancy. Average rents in districts 9, 10 and 11 dipped 1.4 per cent in the three months to Sept 30 compared with the previous quarter, said Jones Lang LaSalle (JLL) South-east Asia. It was the first fall since the first quarter of 2008, JLL added. It was worse in the luxury home segment where third-quarter rents fell 1.9 per cent over the previous quarter.

111 Emerald Hill condo for rent in district 9, situated in the Orchard Road area.

Experts said that fears over the global economy are starting to be felt here with companies freezing hiring or scaling back on employment packages for existing staff. This has hit demand for homes, especially in the prime markets where new expatriates typically choose to live, said JLL’s head of South-east Asia research, Dr Chua Yang Liang.

‘This fall in demand, combined with an influx of new supply such as Nassim Park and Cliveden at Grange in the luxury market and City Vista Residences and Soleil@Sinaran in the typical prime market, has put downward pressure on rentals,’ he added. ‘Increasingly, occupiers are not maximising their housing budgets and are opting for less expensive options or downsizing their existing properties to reduce accommodation costs.’

JLL’s data also found that new properties in the central region – including the business district and Chinatown – and East Coast areas are increasingly attractive to tenants, with rents holding firm. Activity also remains high in properties renting for under $6,000 a month as people reduce housing costs, JLL said. Mass-market rental flats are benefiting as a result with ‘high activity’, Dr Chua noted.

Cliveden at Grange condominium.

Despite falling rents, he does not think home prices will drop in tandem unless the euro zone financial crisis takes another negative turn that sends shock waves across Asia. ‘Even if rents fall, owners might not be motivated to sell as there is no distress there,’ Dr Chua added. City centre home prices might hold steady with an increase of less than 1 per cent in the fourth quarter, he said.

Skypark@Somerset.

The JLL findings differed from the results of a Knight Frank report last week which showed rents still rising. The report showed marginal rental increases in the prime segment with a 1.9 per cent rise in the third quarter, although it was sharply down from 6.5 per cent in the second quarter.

Mr Png Poh Soon, Knight Frank’s head of research and consultancy, said the influx of foreigners is spurring rental growth. The run-up in property prices also resulted in landlords increasing rents during lease renewal to maintain property yields. ‘The slowdown in property price appreciation and tightened immigration policies may consequently moderate residential rental growth,’ added Mr Png. ‘Rentals may lose growth momentum as more newly completed residential homes are pushed out to the rental market. ‘We expect general average residential rental to increase marginally at less than 2 per cent or to remain flat for the rest of the year.’

Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
URA’s flash estimate release yesterday showed that home prices are not rising and with rent prices dropping simultaneously, will home owners be less willing to sell their properties? What then will be the consequences of this?

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