Private homes’ rental rates continue to decline

While HDB rental rates inched up ever so slightly in May, private home rents have gone in the opposite direction and fallen 0.8 per cent in May. Compared to the same month last year, rental prices have fallen 3.9 per cent.

Ballota Park condominium in Pasir Ris

Ballota Park condominium in Pasir Ris

In the private home sector, prime district rents fell the hardest at 1.8 per cent while rental prices of units in the city fringes and suburbs fell 0.5 and 0.4 per cent respectively. The number of leases closed last month did however increase by 12.5 per cent from April with 4,650 condominium units rented out in May compared to the 4,134 in April.

HDB rents have risen 0.7 per cent though property analysts are taking it to be a temporary adjustment which is unlikely to be sustainable as the rental market may remain weak through the months ahead. HDB rents are expected to fall 4 to 5 per cent this year while private property rentals are expected to fall 8 to 10 per cent as more units are left vacant and competition for a limited tenant pool applies downward pressure on the market. The entry of new condominium units into the burgeoning market has not aided matters as well and expatriates’ housing budgets have also shrunk, leading to weaker demand in particular for high-end luxury housing.

Much of the future of the real estate sector is dependent on the job market as well. Should the job market take a turn for the better, the number of tenants looking for units nearer their workplace, in the Central Business District or regional commercial hubs, may also then increase.

Market recovery uncertain despite rise in resale condo prices

May was a rather good month for the resale private condominium market as prices rose 0.4% and sales volume increased by 17.4%. In comparison with the same month last year, prices have risen 1.5%.

CreekBukitTimahAll signs seem to be pointing to a market recovery after 3 years of lacklustre performances. However, some property analysts are taking a more conservative stance with regards to the recent price adjustments. The leasing market remains weak and rental prices have fallen, putting additional pressure on an already-weak market hence the market is still a ways from bottoming out. Private property values have fallen 11.6 per cent since the peak in Q3 of 2013.

skyline-residencesPrices of resale properties in the core central and city-fringe regions have shown improvements with a 1.1 per cent rise from April. In the suburbs, prices fell slightly by 0.4 per cent. A moderate look at the current situation would more likely than not mean a gradual rise in prices over the course of a year rather than a quick and immediate recovery. A recent hash of high land bids and the gradually diminishing stock of unsold private homes do however seem to be beacons of light, however dim, pointing towards the promise of a market stabilisation at the least. Positive sentiments and sales at new project launches and continued low interest rates may add icing to the cake if developers can have it and eat it too.

 

$1-billion bid for Stirling road land plot breaks record

A $1 billion bid for a piece of land at Queenstown made history as the first time a residential site under the Government Land Sales (GLS) programme scored such a high offer, almost $300 million more than the previous record.

queenspeakcondoChina-based developers Logan Property and Nanshan Group put the bid of $1.003 billion in for the 21,109 square metre plot in Stirling Road. The site had been on the GLS reserve list since 2010 and consists of a 2 adjoining land plots. It was triggered for sale only last month after a bid of at least $685.25 million was put in for the site.

But the billion-dollar bid certainly takes things to a whole new level. The previous highest ever bid was $925.7 million from MCL Land and for a pure residential site, the record stood at $682.8 million for the site where Costa Del Sol condominium now stands. At 20.6 per cent higher than the winning bid for the nearby Queens Peak condominium, the latest $1billion bid may set a new record for the Queenstown area in terms of cost per square foot. With a maximum permissible gross floor area of 954,328 sq ft, the bid will translate to $1,050 psf per plot ratio.

Commonwealth TowersThe Stirling Road site is close to Buona Vista, and placed strategically between the Central Business District and Jurong East regional business hub which makes it the prime spot for rental properties. Despite the existence of many other private properties in the area, developers do not seem intimidated, possibly as most investors of units in the area would have sold them by the time this new development is ready and will in fact be looking for new investment opportunities. There could also be a rebound of foreign investment interest following Bandar Malaysia‘s recent collapse.

Limits placed on tenancy of private homes

From today on, private homes can no longer be tenanted by more than 6 unrelated persons. This is 2 lesser than previous cap of 8 persons.

Enforced by the Urban Redevelopment Authority (URA), the new ruling kicks in today but existing tenancy agreements of 7 or 8 persons will be allowed to carry on until May 15, 2019 regardless of the tenancy contract’s expiration date.

TownervilleThis change was made to keep the integrity and character of the local community and to ensure that residential premises integrate with the neighbourhood. The move will also better engage the services of student hostels and company dormitories. There are differing views to this change. Property agents, some landlords and even tenants may welcome this shift towards quieter and less disruptive living environments. Others who are relying on rental income to prop up their finances may have opposing views. The loss of 2 tenants could very well surmount to $1800 to $2600 in potential monthly rents.

This shift to tenancy regulations will also affect home-sharing market such as Airbnb. The URA has been considering the creation of new leasing category for short-term rentals such as those publicised on home-sharing sites. And for those wondering if a huge bungalow and a small private studio may have different restrictions? The answer is no. URA has stated that there is no “stratified occupancy cap control based on unit sizes”.

Aura83For HDB flats which are sublet, the number of sub-tenants allowed remain unchanged at 6 and 9 for 3-room and 4-room or bigger units respectively. Property analysts are however expecting this new tenancy rules to soon apply for the HDB market.

 

London Home prices fall for first time in 8 years

Home prices in London have been rising continually despite its high levels. Brexit has slowed the rate of increase slightly, but for the first time in 8 years, prices have fallen 1.8 per cent in April to S$1.4 million. The last decline of 2 per cent was in 2009.
FiftySevenEastCentralLondon
Central London properties experienced the biggest change as the sector underperformed on a whole. Brexit aside, tax increases and unaffordable valuations have also had a part to play in the decline. Consumer confidence suffered a blow in the first quarter and though foreigners are still closing some property transactions in the city, the change is the first indication of the Brexit-effect.
That said, the national annual increase for the United Kingdom still registered at 2.2 per cent and prices rose 1.1 per cent in April. On average, prices have risen 1.6 per cent during this time over the past 7 years. The luxury property market perhaps saw the biggest change  with a 4.2 per cent annual decline. Properties in less expensive suburbs posted a 1.7 per cent decline. Most of  the country have however enjoyed a surge in spring but some higher-end real estate are seeing the need to re-adjust prices to make sales.

 

Weak rental market not an obstacle for investors

While the weakening rental market may have been putting pressure on investors, the concurrent weakening private property prices are opportunities to some. While the leasing market has slowed down considerably, the property-purchasing market has been gaining speed, especially in the last quarter or so.

TRE ResidencesThe overall genial atmosphere in the private residential property market over the past few months have brought property investors back into the heat of things. As more newly completed properties enter the market and new projects such as The Clement Canopy and Grandeur Park Residences were launched to affirmative responses early in the year. Overall private home prices fell at the slowest rate in 3 years, which could point to an increasingly stabilising market.

It would be prudent however for investors to take into consideration that the property cooling measures have not yet been lifted, though some signs of relief have been provided earlier this month. In the past, profits of up to 60 per cent could be reaped in the short-term, but the long-term potential of a property, rather than quick turnarounds or a dependency on rental profits, will be at the heart of a good investment henceforth. Property analysts advise investors to consider cash-flow, calculate mortgage and maintenance costs carefully while keeping a portion aside for periods of negative cash flow when  the property is unable to be tenanted.

Will rental market climb back up this year?

The private rental market has made a bit of a turnaround last month, posting a 1.3 per cent rise after months of lacklustre demand and declining prices.

MillPointCondoIn the prime districts, rents have rise 0.9 per cent, while the most obvious change was in the city fringes where prices rose 1.6 per cent. In the suburbs, a 1.3 per cent price increase was recorded. Rental volume also rose by 5.8 per cent in January with 3,813 units leased. That is 0.7 per cent higher than the 3,785 units leased in January 2016.

With the year leaning on this positive note, could the private residential leasing market be climbing its way out of the gloom? While property analysts are not expecting any drastic or quick decline in prices, neither are they predicting a recovery in the near future. As more new completions from 2015 and 2016 hit the market, the increase in available leasing options will make it more a tenant’s market. What are more popular are shorter leases, and the authorities may even begin to reconsider making shorter leases legal as more tenants are leaning towards these preferences. Previously 2-year tenures were common, but of late, 1-year leases are now becoming the new norm.

HDBFlatRentalFor HDB flats, rents have been falling almost entirely across the board with the 5-room flat segment leading the way with a 1.5 per cent decline. 3-room flat rental prices have however risen by 0.2 per cent. Rental volume for HDB flats have also fallen 16.1 per cent last month.

 

 

First private condominium launch in 2017 – Clement Canopy

Open for preview today is a new condominium in the west – on Clementi Avenue 1 to be exact. The 505-unit Clement Canopy is a joint venture between UOL Group and Singapore Land and the developers are hopeful about an uptick in demand, as shown by a pickup in new home sales last year.

The-Clement-Canopy-1Photo credit: http://clementcanopy.info

Situated in the Jurong Lake District – which is earmarked to be developed into the second Central Business District (CBD)– and with a number of schools such as the NUS High School of Mathematics and Science and the Yale-NUS College, this new condominium project will benefit from high rental demand. The 99-year leasehold development will consist of two 40-storey blocks holding a range of 2- to 4-room units. 194 out of the 505 units are 2-bedders sized between 635 to 732 sq ft and priced between $85,000 to $1 million. These smaller units are more palatable in terms of the total quantum price and also more in demand in the rental market.

The TrilinqOther bigger units include 3-bedders starting at $1.28 million and 4-bedders priced from $1.62 million. Selling prices are pegged between $1,340 to $1,360 psf. As a comparison, the neighbouring private residential condominiums, The Trilinq, is going for $1,400 psf but it is a tad nearer the Clementi MRT station; and Parc Riviera on West Coast Vale is selling at around $1,200 psf . There are no one-bedroom apartments at Clement Canopy and developers are hoping this will help differentiate their product from the rest of the market. Swimming pools and smart home features will be included in the project.

This year, the  would probably be all about timing. Launched at the right time, when demand is high and supply slow in stirring consumer interest, a new development could do very well indeed.