City Fringe wins once more

From Marine Parade to Novena to Kampong Glam, areas surrounding the busy city centre and central business districts are some of the best spots for property investments and this has hardly changed over the years.

The mixed-use development DUO at Ophir road was one of the latest offerings late last year. This year, another similar residential-cum-commercial project join their ranks – the City Gate on Beach road. But before these giant developments came into play, the Concourse Skyline condominium apartments were already in place. This 360-unit property was priced at $1, 590 psf at its 2008 launch. Despite 101 of its units remaining unsold, existing units have gone for as much as $2, 075 psf in the last quarter of 2013.

CIty GateWith the large number of incoming units from City Gate, which is targeting a price range of $1,900 to $2, 000 psf, these remaining units at the Concourse Skyline may be up for some fierce competition. Developers, Hong Fok Land, may experience some pressure to lower prices in order to meet the “All sold” status.

City Gate will sit on the site of the former Keypoint and will feature 188 commercial units and 311 apartment units ranging from one- and two-bedders to the increasingly popular dual-key units. Penthouses will vary in size, from 484 sq ft one-bedders to 1, 819 sq ft four-bedders. The wide variety of units will draw buyers with different intentions in mind, but with such a prime location, the only thing that might stop consumers in their tracks is the strict loan limits.

Smaller apartments gaining popularity once again

Just a couple of years ago, there were debates about whether homes were becoming too small for comfort as the 500 sq ft studio apartments or shoebox units took the market by storm. Some shunned small units, preferring instead to go for larger ones with a lower psf price.

But now as loan limits are truly showing their might, buyers are favoring smaller apartments once again due to their lower quantum prices and the ease of rental. Though not all are flocking to shoebox units, after all, young families do need a reasonable amount of space, the average home size has dropped to 947 sq ft from June last year. And for HDB upgraders, their chances to move onto the private property market might have become slimmer, especially if size is a major consideration. The average 4-room HDB flat is around 969 sq ft.

CIty GateOne- and two-bedders have increasingly become more popular with buyers as they are usually within their budget and investors find them easier to rent out. URA figures in fact also showed that new residential properties have also featured smaller units, with the average size being 753 sq ft. But this hardly comes as a surprise as home size has been shrinking since 2009.

The other popular property  type is the dual-key apartment which provides the atmosphere of having two separate living spaces within the same home. Some of these units share the same entrance but separate facilities such as kitchens and toilets, while others share the same facilities but have separate entrances, providing privacy for bigger families and offering more rental options.

As we progress into the second half of the year and the market evolves in reaction to buyers demand and supply of land, will developers be quick to re-strategize and cater to the majority?

Queenstown has more flats to offer

One of the oldest HDB estates in the West, Queenstown looks set to have a fresh set of HDB flats. For the 3,480 flats from Tanglin Halt road to Commonwealth Drive will be torn down and rebuilt under the Selected En Bloc Redevelopment scheme.

Queenstown-HDBThis will be a promising move for the mature estate as these two to four-room flats make way for newer, bigger blocks. Most of the residents were offered replacement flats and compensation based on current market value of their units. Most three-room HDB flats in the Queenstown area are priced between $305,000 to $390,000 according to current HDB transaction values.

Residents can look forward to new sky gardens and terraces, panoramic views of the city and new shops, eateries, supermarkets and hawker centres. Considering these flats will have a new 99-lease of life, future residents will be stoked that their new flats will possibly fetch even higher prices in the future.

Commonwealth TowersOne of the more prominent private property offerings in the area is Commonwealth Towers, which is particularly attractive to buyers due to its proximity to the Queenstown MRT station. In nearby Alexandra and Tiong Bahru, there are other popular apartments such as Highline Residences, Ascentia Sky and Alexis. Will surrounding properties also benefit from this redevelopment process?

HDB rental market stable

The rental demand for HDB flats has remained stable for most of the year. Though there was a slight rise in February and March, the take-up rate has sbeen sliding since August last year. But since April, demand has remained stable for the next three months.

Yishun HDB FlatRent prices for whole HDB flats now hover around $2, 300 per month. And since most tenants are fresh graduates or foreign students, they are likely to want to sublet to make rent. How then has the subletting quota affected tenants who wish to rent out part of their rented HDB flats? In January, rules were set to restrict the “formation of foreigner enclaves in HDB estates”. But figures have shown that hardly any HDB block has gone over the quota. With the exception of those nearer MRT stations and town centres. Tenants can search online for the quota of the specific HDB block they are interested in renting a unit in.

With more new flats being rolled up quarterly, what worries the industry more is the oversupply of flats for rent. Though prices of private properties are flat-lining, home loans are proving equally, if not more, difficult to secure. This means HDB upgraders may now re-think their plans to sell, instead, keeping their flats and renting out rooms to pick up profits which may go towards funding their targeted private property purchase.

As the year edges past the halfway mark, the balance between seller and buyer remains delicate. Which way will the scales tip?

CBD Living on the rise

Despite restrictions in the property market and decreasing sales in the private property sector, more buyers are looking to purchase apartments in the CBD (Central Business District).

Tanjong Pagar CentreLiving just a walk away from the office has its positives. But recent interest has dawned from the promise of change. New mixed-use developments such as GuocoLand’s Tanjong Pagar Centre, will bring live into the sleepy after-hours districts of Shenton way, Raffles Place and Tanjong Pagar and change the fact that CBD living often comes with its fair share of inconveniences such as not having schools, supermarkets or shopping centres which open beyond the normal office hours in the vicinity.

Tanjong Pagar Centre will feature Grade A office spaces, luxury serviced apartments – Clermont Residences and other commercial businesses. It will be linked to the Clermont Singapore Hotel. Just a little way off are other residential options – the Marina One residences. This project will go on sale later this year, and prices are expected to start at $2, 800 psf. There are other new private apartment developments in the pipeline, giving this city-nation a new meaning to city-living. Skysuites @ Anson, 76 Shenton and Altez, just to name a few of the many which have come up in the last 10 years.

76 ShentonWith news of the Southern Waterfront development under URA’s draft masterplan 2013, the area looks set to be booming with activity within the next decade. Considering the fact that rental yields now are already at 4 to 4.5 per cent, higher than the island-wide average of 3.8 per cent, it will be no wonder what the future will bring.

More looking to rent private property

Immigration rules have shrunk the pool of foreign workers here in Singapore, and that also meant a lower demand for home rentals. Closely linked to this are the prices and sales of private homes,  which have been on the decline for sometime now.

But the market is starting to look up as the previous quarter saw a increase in demand for private rental homes. The growth is expected to continue into the second half of the year. Though figures are somewhat positive, the number of vacant rental units available in the market also means tenants will have more to choose from and competition will be fierce.

Shore-Residences-Amber-Road.jpgTenants seemed to favour the city fringe areas, as rental budgets have been largely reduced, and price-conscious expatriates are now more stringent with their spending. The Rest of Central Region districts received the most loving from rental home seekers, including areas such as Bishan, Toa Payoh, Little India, Queenstown and Geylang. New private condominium developments in these areas have accounted for renewed interest. Slightly further west, Ascentia Sky, Waterbank at Dakota and The Interlace all in the Alexandra, Depot road region meant up to 2,500 new units, some of which no doubt will join the rental pool. In the East, Waterview in Tampines, Vacanza@East and The Shore Residences will be completed in the first quarter of 2015.

The Loft at Nathan, situated in River Valley on the city fringe.

The Loft at Nathan, situated in River Valley on the city fringe.

Landlords of high-end apartments may continue to see a lack of movement in the rental front. And units are already expected to add to the mix, with the completion of Suites @ Orchard and Loft@Nathan next year.

Landed home prices set to rise

The spotlight has been on new and resale private mass-market homes recently. But with that market reaching saturation, attention is now turned onto landed private homes. Everyone knows how rare these types of property are in land-scarce Singapore, but prices have been falling due to the consumers’ diminishing ability to purchase these expensive properties.

Loyang Rise HouseBut the decline may ease up by end of this year. Analysts are expecting prices of landed homes to pick up next year. This may mean more home owners will hold on to their properties in wait for better prices. This restriction of supply could also be the start of rising prices. In the long run, landed homes do generally hold up in terms of prices better than condominiums. The drop in landed homes prices was only 0.7 per cent, compared to the overall private home prices of 1.3 per cent.

Meanwhile, buyers looking for a worthy landed property to purchase could look at areas such as Bukit Batok, Loyang, Jurong or Sembawang. Terrace houses are usually more affordable than semi-detached or bungalows, and they are usually the first to rise in prices when the property market bounces back.

One possibly glitch is the rental prospects of landed homes. Compared to apartments, they are harder to find tenants for.

Private home sales – Will the decline continue?

The property market has been softening. The decline seemed inevitable, especially as completed new private homes flood the market in the upcoming year or two.

Not surprisingly, shoebox apartments saw the largest dip in sales as the number of units are somewhat saturated. Buying power is also now lower and buyers who were initially looking at these units for investment may no longer be able to get the loans they need.

 

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.

Rental issues such as the age, functionality and location of resale units now have to compete with the newer and sometimes faster property models. In the central districts, the decline in rents and sales of apartments were most evident. This could be due to the number of unsold high-end properties in these areas. Even suburban condominiums are feeling the heat as many expatriates shun them as they often do not provide the convenience and exclusivity they desire.

Whether the effect will transfer to the HDB resale market also awaits to be seen. As HDB upgraders who are moving to their completed units will have to let go of their HDB units within a specified time period, many may be in a hurry to let go of their units and possibly at lower prices than before as the market gets competitive. Pair this up with a diminishing market for smaller units as singles are now able to purchase new flats from HDB directly, as well as a smaller pool of permanent residents, the property market seems to be in for quite the turn this year.

Even as more new property launches are promised, how private home sales fare the next quarter may set the mood for the rest of the year.