Downturn for Downtown homes

The luxury property market has taken a downturn as homes in the downtown areas take a hit. Transactions were still taking place, and there were homes being resold, but an increasingly number of them at a loss. Recent transactions show a $60,000 loss in the resale of a Marina Bay Residences unit just last month. One of the largest differences came from a $342,000 loss from a subsale of a Robinson Suites unit.

eMuch of the competition comes from unsold stock from developers, a dipping rental market and a diminishing expatriate population. The first factor could be the most hurtful to investors as some developers have begun adjusting prices downwards, and even renting out unsold units instead of selling them. This puts up fierce competition for buyers who have originally planned for their properties to earn them the monthly sustenance through rental. Even small apartments and and one-bedders are meeting similar fate.

Downtown home prices have fallen 8 per cent, and properties in the prime districts 9 and 11 have fallen 5 per cent. Ultimately, it may come down to holding power. And learning some tricks of the trade through property seminars and talks could be the best way to safeguard yourself from bad investments.

Blooming Balestier

Although it has had the reputation of being a red-light district, albeit a less infamous one compared to the likes of Desker road and Geylang, its proximity to the Novena medical hub and being on the city fringe has brought the value of its properties up. With a new round of property launches and mixed-use properties such as hotel-parks like the Zhongshan Mall, Zhongshan Park, the Days and Ramada hotels, the Balestier area looks set to be the next property hot spot.

Viio BalestierWith its fair share of pre-war preservation shophouses and a quaint, historical feel, just the right amount of new condominiums, hotels and malls has breathed some new life into the area without taking away too much of its original facade. This, coupled with expatriates’ diminishing housing packages, means an increasing interest in rental and sales of properties here.

One of the latest residential projects, Viio @ Balestier, has launched its two-bedders at $1, 600 psf. At Ascent @ 456, prices hovered around $1,477 psf. Cosmo Loft, yet another freehold property in the district sold 5 units at $1, 775 psf. Prices of new launches in the area have risen over the past 2 years alone, up by almost 10 per cent.

Though property owners who had bought into the area early may not be reaping the profits yet as resale property sales and rental demand has dipped across the board, property experts are expecting things to turn around in another 7 years or so.

Marina One Residences breathes new life into Marina Bay

Activity at the Marina Bay district may see a boost as new units at the Marina One Residences were launched over the weekend. With its exclusive CBD address, the 1,024-unit residential development may see a more positive uptake as property cooling measures could have kept prices at a reasonably affordable range for investors.

Those with strong holding power and are looking for properties with a high growth potential may consider the Marina One development quite seriously. With one- to four-bedder apartments available in the mixed-use development, residents will be in close proximity not only the entertainment areas, the Central Business District but also the Marina One offices and the 65,000 sq ft retail podium, The Heart. Prices are set to hover around $2, 600 psf. Over the past year, prices averaged between $1, 945 to $2,694 psf.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Buyers of units in the Marina Bay area, such as those at Marina Bay Residences, Marina Bay Suites and The Sail @ Marina Bay, have seen profits ranging from $60,000 to close to $1 million. Other properties in the area include V on Shenton.

With the Marina One Residences being one of the rare freehold apartments in the area, property experts are expecting its value to hold steady or increase over the years. Despite resale prices falling up to 8 per cent, and with expatriates now moving into less central areas such as the suburbs due to their housing allowance curbs, smaller units are still expected to do well as the mid- to senior-level foreign workforce may still favor the convenience and proximity of units in the CBD.

For this sector of the market, the main change which came about from the implementation of the TDSR (total debt servicing ratio) framework by the MAS (Monetary Authority of Singapore) is that buyers may now dictate how owners and developers price their units.

Shoebox apartments falling out of favor?

These tiny but self-sufficient apartments have been doing exceedingly well for the last five years, and many investments favored these smaller units as their total quantum is more affordable than the larger ones and are easier to find tenants for. But as developers caught on and began building more of the same units, the number of shoebox apartments, or units below 500 sq ft, rose in number. By 2015, 53,900 new private condominium units will hit the market, and most of them will be shoebox apartments.

Alexis @ Alexandra CondoAccording to URA figures, there are currently 2,400 such units in the market. By end of 2015, there will be 11,000. That is almost five times the numnber. Will this dilute the market of potentla buyers? No doubt. But landlords with units in highly accessible locations may find themselves having the upper hand. Others who own units further away from transport nodes, town centers may find it harder to secure rental rates which they had hoped for.

However current rental yields for shoebox apartments remain 1 to 2 per cent higher than other types of units, which are 2 to 3 per cent. Private properties with such units include Alexis in Alexandra road, Parc Imperial in Pasir Panjang and Suites@Guillemard.

Property analysts still see some brightness in this market as singles, young couples and expatriates with smaller housing allowances continue to lean towards these smaller, more affordable units.

Lakeside Wonder

Things in the West are heating up, especially with the launch of a number of private residential properties, announcements of a new Jurong Lake Gardens, a new retail and commercial hub Jurong Gateway and new transport lines. It’s a whole new township blossoming.

Prices of properties at Lakeside, a largely residential district, has been on the rise, significantly more so since 2009. Lakeholmz condominium apartments were only priced at $440psf in 2003. In 2009 and 2010 respectively, relatively properties such as The Caspian and Lakefront Residences were already costing buyers $580 psf and $1, 020psf. That is almost double in just a year’s time.

LakevilleOne of the newer launches is the Lakeville condominium and current median prices of properties in the area range at $1, 300 psf. Over the past 12 months, prices have ranged between $706psf for older establishments such as Lakepoint condominium to $1,263 psf at Lakefront Residences.

The new malls, businesses and regional offices setting up shop in the area has also brought along with it a new flow of tenants. Thus rental prospects are promising, especially for newer properties. Rental prices above $3 psf and at least 10 leases are signed at each residential property per month.

With a new land parcel up for bids in December, buyers looking to enter the market in the west side of the country could possibly have something to look forward to.

Property market slump continues

Resale home sales and rental prices have continued to soften as we reach the middle of Q3. July proved to be rather quiet for the resale private home market as prices reached a 21-month low, according to the Singapore Real Estate Exchange (SRX) figures.

LakevilleAs more new private properties reached their completion dates and entered the rental market, the number of units for rent increased, which caused the rental market to become more competitive. And as immigration rules tightened, the supply and demand scale tipped in favor of tenants. Rental prices were at a 38-month low last month. And the blow is felt not only in the private property market but also the HDB resale market with prices dropping to a 30-month low in July.

The areas with the largest price decline is the city center, with prices dropping 4 per cent. This is followed by the city fringe areas with a 1.1 per cent dip and the suburban districts with a 0.6 per cent drop. Property experts say that the drop in rental prices could be one of the reasons contributing to the slipping resale prices.

With property prices so closely linked to immigration policies in this small nation, how will the authorities balance the issues of housing and population?

Deflating rental prospects hurt home sales

Buying a property and collecting rent used to be one of the most popular ways to start your investment journey. Usually the case for cosmopolitan cities, the situation may have changed in this developing country. Rental rates have continued to deflate as immigration policies were adjusted.

According to URA data, vacancy rates have reached the highest point since 2006. City centre and luxury homes have been hardest hit as expatriates are now choosing to live further away from the city with more and cheaper housing options. And as sentiments go, the less lived in a property, the less others will want to live in it. And it’s a cycle which if not arrested soon, may be detrimental to the market.

But most of the unsold units reside in the prime districts 9, 10, 11. Further away in Sentosa, the Cape Royale is 100 per cent unsold with its 302 units still on the market. It was completed last year. Developers IOI and Ho Bee are going with the decision to rent the units out instead of trying to sell them.

The Interlace at Depot Road.

The Interlace at Depot Road.

And as more developments were finished in 2014, the number of unsold homes in completed projects continues its climb. Some of these include The Interlace at Depot road, Starlight Suites in River Valley, TwentyOne Anguilla Park and Concourse Skyline on Beach road.

Developers have been steadily offering discounts or cutting prices in order to bring the buyers and tenants back into the market. As shown by recent sales at The Vermont, where slashing the prices have sold 30 of its 37 unsold units. From $2,400 psf, it dropped to just a little over $2, 000 psf.

Up and coming district – Jalan Besar

As properties in the city centre become increasingly out of reach for the average investor hoping to gain a footing in the property industry, more are turning to the city fringe areas such as Marine Parade, Kampong Glam and Novena. Now, the Jalan Besar and King George’s Avenue districts could also be attracting buyers.

CitronThough the private homes market in the area has softened in the past year due to mortgage limits, its proximity and increasing popularity with the young and hip crowd and potential connectivity with future MRT lines in its midst, has renewed interest from investors. An area in King George’s Avenue has also been gazetted for future HDB blocks. One completed condominium apartment block in its vicinity is the City Square Residences, which during its launch drew huge crowds looking to purchase smaller units for rental purposes. Other private residential properties include Parc Somme and Kerrisdale.

Buyers waiting for new options can keep an eye out for private residential properties such as The Citron Residences on Marne road. Property experts are positive about the potential rental yields of smaller apartment units in the area as the district continues to bring in a variety of new businesses. Currently rents for smaller apartments in the area go for as much as 4 per cent more.