Encouraging response from recent property launches

Over the weekend, show flats at two new condominium launches were packed to the rafters with eager buyers and those shopping for a good deal. Affordability and proximity to transport seemed to be the biggest crowd pleasers at these two developments.

Northpark Residences saw more than 70% of their 430 units sold with most of their buyers being Singapore citizens. Prices averaged at $1,300 psf. A 431 sq ft studio apartment for example, went for $612,000 while five-bedders with an average floor area of 1,432 sq ft sold at approximately $1.89 million.

Botanique @ Bartley2At the Botanique at Bartley, most of their units, about 70%, were all priced below $1 million. Definitely wallet-friendly for the middle-upper class household in Singapore and also more plausible for those who need a home loan. And they boasted the options of turning two- and three-bedders into dual-key apartments. Situated in the midst of quite a few schools such as the Paya Lebar Methodist Girls’ School (PLMGS), Maris Stella High School and the Australian International School, the property was quite the hot target for local and foreign buyers alike. Although only 300 units were put up for sale over the weekend, almost half have been sold. The most popular units were the one- and two-bedroom apartments starting at $598,000 for one-bedders and $798,000 for two-bedders.

If the weekend response and sales were anything to go by, the next few months may not be such dull ones. Is it time the property market picked itself off the floor, dust off and hit the road running? Will the positive effect rub off on older properties in close proximity to these new launches?

 

Are resale home prices stabilising?

After January’s dip in resale private property prices, February’s fall was considered slightly more positive. It was less steep for one, at 0.3 per cent as compared to January’s 0.9 per cent. Buyers have been waiting around for prices to slide further, but they seemed to have held firm. The prediction for January’s fall was originally 1.6 per cent.

Tre ResidencesLuxury homes took the brunt of the hit, with those in the city centre suffering an obvious softening demand. Suburban home sales remained level. Some of the market movements could be due to the lack of new property launches in February and the lack of activity during the festive Chinese New Year period.

Prices of shoebox apartments have been uncertain of late, as more have been completed are are now ready for the rental market. This in turn may have implications for the latter as competition runs high. Tenants now have fresh pickings to choose from and may have the upper hand when it comes to price negotiations.

In the months ahead, buyers and investors can expect a slight market shift, but not necessarily a significant one. It will be constant cha-cha between buyers and sellers and they try to suss out the other’s expectations.

Private condominium rental – Volume up, prices down.

Despite a softening of the private property market across the board, private condominium rental demand seemed to have remained steady, especially at popular projects in close proximity to transport and in areas with a low supply of similar new properties.

At Reflections at Keppel Bay for example, 314 more leases were signed last year as compared to 293 in 2013. But rental prices dipped 6.6 per cent as landlords may have been forced by competition to lower their asking prices. Average monthly rental here was $4.85 sf. Nearby, at the Caribbean at Keppel Bay, average monthly rent dipped by $0.43 psf from the previous $5.63 psf.

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

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

The tipping scale may now be leaning towards tenants as the influx of new properties, and in larger residential properties, many landlords may be competing against one another for the same audience. And once rental begins to dip across the island, tenants have an upper hand at bargaining for reduced rent and landlords often find themselves having to adjust prices to seal a deal.

Properties with a prime location and fewer competing units in the vicinity may still be in high demand, though City Square Residences at Kitchner Link seems to be losing its popularity with tenants despite its proximity to City Square Mall and Farrer Park MRT Station.

As more new properties reach their occupation-ready status this year, and coupled with the rising interest rates, it may be a slow but arduous journey for the market. What can property owners and landlords do to steel themselves for the year ahead?

Re-zoning Geylang – Fewer residential properties

At first instance, this proposal may not sound promising, but it may actually bring good news for owners of existing condominiums in Geylang. The Urban Redevelopment Authority (URA) has recently announced a re-zoning of residential areas in Geylang for commercial use.

Rezi3TwoWhile this means that there may not be as many private residential properties in the area, the value of those which have already been built may appreciate as offices and businesses eventually move into the area. This proposal by the URA could be seen as mainly to facilitate the balancing of residential and commercial activities in the district. The over-building of residential properties in the red-light district could have a reverse effect and introducing more commercial properties and maintaining a suitable amount of residential properties in the area may in turn increase the rental yields and value of properties in its proximity.

With Geylang’s prime location putting it close to the city centre, Aljunied MRT station and the Singapore Sports Hub, rental yields here are already 1.5 per cent higher than those in other districts. With the area mostly made up of smaller land parcels, the likely tenants would be boutique developers and small businesses, with the possibilities of niche eateries and shops.

Some residents have however raised concerns over this re-zoning move as more commercial spaces here may mean an increase in the illegal and disruptive activities normally associated with this infamous district. What are the pros and cons of purchasing property in Geylang and does one outweigh the other?

New private condos threaten Rental Market

As more new private condominiums in the suburbs attain their occupation-ready status, the number of apartments available for rental has increased significantly and fierce competition has brought rental prices down. Though concentrated mainly in the suburbs, where most of the new condominiums are situated, the decline has dragged the rental market down by 1.5 per cent.

FOresta Mount FaberAnd as most of these new condominiums are in close proximity to HDB flats, the HDB rental market has also been affected somewhat as tenants now realised they may be able to afford a private condo after all and instead choose this option over HDB flats. And as this pressure is exerted on the HDB market, some HDB flat owners may consider jumping over to the private property market and the HDB resale flat sector may see some shifting as a result of the spillover effect.

From January to September of this year, there were a total of 6,621 condominium units entering the market in the suburbs alone. This has pushed rental prices down 5.3 per cent and a 1.3 drop in the number of rental deals signed in September alone. However, a year-on-year comparison with 2013 showed an increase of 11.8 per cent in terms of the number of units leased. This could signify a shift of tenants leasing private properties as opposed to HDB flats as the price gap narrows.

Eight RiversuitesMoving forward, 2015 and 2016 may see a vacancy rate of 10 per cent and more if immigration policies remain the same and if rental prices become even more competitive with up to 20,000 new units reaching completion annually. Is this a sign that the cooling measures have worked? Or is it merely a sign that investing in residential property may have to take a different slant, to focus on long-term profits through property appreciation rather than on short-term rental profits? How does that then change the criteria for property selection?

New properties lower overall rent

Though the government has reduced land sales in the second half of the year, a fresh new crop of properties reaching their point of maturity in the next year may have some effect on the rental prices of private properties across the board. In 2013 alone, 16,000 new non-landed properties entered the market and 25,000 more are expected to flood the market by 2016.

Shore Residences on Amber Road

Shore Residences on Amber Road

Tenants will have more rental options ranging from units in brand-new condominium to those at older private apartments as a large supply of condominiums enter the market next year. And as most tenants in a new development receive keys to their units at the same time, they may face competition from one another as they put up their units for rent at the same time. Older neighbouring properties as well as HDB flats may also face the same competition as tenants opt for newer choices. Rental prices may waver and some landlords may find themselves having to lower the rent to secure a suitable tenant.

Landlords may find themselves competing for the same and somewhat decreasing tenant pool, especially with concurrent restrictions placed on the foreign workforce. Diminishing expatriate housing allowances may also mean tenants may be looking out of the city centre for rental options. And though most of the new properties are situated out of the central region, the sheer supply may overshadow the demand.

Take the Katong, Joo Chiat and Amber road district for example. In that small area, there is The Shore Residences, Silversea, The Meyerise amongst other older properties. And in the up-and-coming Punggol and Sengkang regions, there is a good mix of ECs and private condominiums such as A Treasure Trove, The Luxurie and the latest launch of Bellewaters. It could very well be the battle between the new and newer in time to come as many new homes are erected in already-new clusters of private homes.

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.