Resale condominium market in gradual recovery

Could a slice of sunshine be sliding its way back into the local private property market? Resale condominium prices have risen 1.1% in January and it’s a bigger increase than the 0.5% in the last 2 months of 2016.

RivervaleCrestAnd as expected, non-landed private residential properties located in prime districts lead the way, with a 1.9% month-on-month increase. Central region properties also gained 1.5% in terms of prices while that of suburban properties rose by 0.4%. In a year-on-year comparison, resale prices were 0.3% higher than in the same period of 2016.

In some districts, resale properties exchanged hands at lower-than-market value, though the price difference at minus $4,000 is lesser that the $5,000 in December. District 23 posted more than 10 resale transactions in January alone and selling prices went as high as $2,000 above market value.

GrandeurParkResidencesThough the year is still young, it could be a budding sign of the things to come for the rest of the year. Property analysts are not expecting sharp rebounds anytime soon, though the stabilisation of prices and an increase in sales volume would already be sufficient to signify market recovery, albeit a gradual one. What could also be seen from the market data was that sellers were beginning to moderate their asking prices, possibly with pressure coming in from new property launches and completed new units entering the weak rental market.

 

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.

Banking on rents to cover mortgages increasingly risky

As the rental market strains against the backdrop of a general economic slowdown and job security wobbles on its feet, the old ways of banking on rental yields to cover mortgage loans and other outlays on invested properties may no longer be a sure thing.

Alexis @ Alexandra CondoThe imbalance may be getting dangerously so even as the Monetary Authority of Singapore (MAS) has publicly warned investors against the risks of putting all their eggs in the property basket. They mentioned both property and corporate bonds as emerging risks, especially as growth is weak and the political situations across the globe is uncertain.

Rising vacancy rates and declining rental demand are the more concrete and obvious factors investors should consider before closing a deal simply because the total quantum prices are too good to be true. Before investing in overseas properties, currency fluctuations and political stability are also serious considerations, not to mention the strength and longevity of property and rental demand in a country not in close proximity.

la-rivere-2Although MAS has noted that most households here are able to weather an economic storm, if it does occur, those who have bitten off more than they can chew may want to reconsider their financial holding power and set their sights in the long-term rather than counting on their eggs hatching early.

Rents down but sales of some projects up

Home rental prices have been slipping with a 0.4 per cent and 0.5 per cent fall in the private non-landed apartments and HDB flats markets respectively.

Cairnhill Nine CapitaLandPhoto credit: CapitaLand

But perhaps the decline in rent has increased rental volume. There was a 8.2 per cent increase across the board in rental volume with 3,686 units leased this October as compared to 3,408 from the same month last year. On the same year-on-year comparison, rental prices were however down by 4.5 per cent.

The increase in rental volume may also be reflected in the sales volume this quarter as stronger home sales may have lifted earnings for some developers. CapitaLand for example saw a 28.4 per cent rise in net profit in Q3. Locally, their private residential projects, The Nassim and Cairnhill Nine, have boosted sales, together with their new projects in China – namely Riverfront in Hangzhou, New Horizon in Shanghai and Vermont Hills in Beijing.

nassimhillcapitalandPhoto credit: CapitaLand

In Singapore, they have sold 206 units in the second quarter, and a total of $1.24 billion in total sales value in the first 3 quarters of the year. With the happy increase in number of launches within the last quarter, sales volume may hit a positive note and ring in the festive year-end cheer come end December.

New Vietnam properties hook buyers

It seems a few private residential ‘townships’ are coming up in Vietnam, and at the welcome of investors and those seeking a place to call home.

palm_cityOne of Singapore’s major developers, Keppel Land has been developing massive properties in Ho Chi Minh, where the expatriate population is growing and the rental demand for housing has increased by leaps and bounds in the last decade. 3 of Keppel Land’s major developments in the mamking are – Empire City, Palm City and Riviera Point.

Palm City on its own is already quite a force to be reckoned with. Jointly developed by Keppel Land and Tien Phuoc and Tran Thai, it covers a good 30 hectares of waterfront land, essentially an entire township itself. In Phase 1 of its development, all 135 landed terrace and detached houses have already been fully spoken for in their July preview. Now in Phase 2, they have launched the 816-unit Palm Heights apartments, with 570 units already booked at the average price of 32.6 million Vietnamese dong (S$2,017) per sq m.

riviera-pointOver at the 518-unit The View private apartments at Riviera Point, almost 33% of the 345-units launched have been sold. The selling price average at 37 million dong (S$2,302) per sq m. The developments in Ho Chi Minh seem be all be larger-sized high-rise ones. Yet another 500-unit private residential condominium project will be coming up within the year – Empire City, also a waterfront development in the Thu Thiem New Urban Area.

Rougher terrain for local leasing market

Property owners with rental units at hand have been finding it increasingly difficult to find tenants.

MartinPlaceResidencesForeigners make up approximately 60 per cent of the rental demand in Singapore, and as the financial and oil and gas sectors take a hit, demand has declined with the foreign workforce diminishing due to companies moving out of the country or simply because housing budgets have been cut as the sluggish global economic drags out. As of mid-2016, vacancy rates stand at 8.9 per cent and there were about 30,310 units vacant. The sudden influx of completed new homes hitting the market this year could not have helped things as well. This year, the number of completed properties entering the market outgrew the influx of a foreign workforce. Immigration and labour policies have changed since the last general election.

Rental rates in the suburbs fell the hardest at 1.2 per cent, followed by 0.6 per cent in the city fringes. Rents of core central region properties however increase by 0.1 per cent.

cavenaghlodge2017 will see the completion of even more residential developments and analysts are expecting rental demand to fall even further, particularly in the suburbs. Rents have dipped by up to 8.8 per cent in the suburbs and 4.5 per cent in the central districts. Some landlords have even give discounts of up to 30 per cent, just to secure a tenant. Others have found themselves going months without finding a suitable taker on the unit. Smaller one- and two-bedroom apartment units are however still faring well, especially those in the Central Business District (CBD), Marina Bay, Orchard Road, and River Valley areas.

 

Home rental market softening

Rents for both HDB flats and private condominiums have been falling. The number of leases transacted per month have also dipped.

olina-lodgeThe weakening economic situation might be lengthening its stay as the job market remains soft and the hiring of expatriates is on the decline as well, indirectly affecting rental demand. The influx of new completed private condominium units and increase in number of HDB flats being sublet have also pushed rental prices and volume down in recent months.

In September, private non-landed property rental prices fell 0.6 per cent while HDB flat rents fell 0.3 per cent. In a year-on-year comparison, prices have fallen 4.6 and 4.5 per cent in the previously-mentioned property sectors respectively. Weak rental demand have also impacted property sales as resale private condominium prices have been reported to be shrinking, especially with added pressure from new completed units and new project launches.

hdb-flat-rentalStrangely however, core region property prices have increased despite the district leading the drop in condominium rents at 1.8 per cent. City fringe properties bucked the trend with a 0.2 per cent rise as the quantum rental might be more affordable to foreign tenants who also want to live in convenient and popular locales.

In the rest of 2016, the rental market may stagnant while in wait for the new year. As most of the completed projects were rolled out this year, 2017 may be the turning point for both the rental and resale markets. Property analysts are expecting rents to fall by a further 5 per cent before a possible rebound.

Resale apartment prices falling

If anyone has found it increasingly difficult to find buyers for their private apartment, they may not be alone. Falling resale private non-landed property prices have heightened market competition, aided by the increase in completed new units hitting the market and the presence of major new launches in the past quarter.

visioncrest-residenceThe weak rental market has not helped as well. Property experts are expecting the rental demand to remain stagnant till 2017. In August, 830 units exchanged hands while only 683 were transacted in September. The drop in transactions were particularly apparent in the suburbs, once again possibly fuelled by the influx of completed units since 2014. The only bright spark came from the core central region resale properties, with a 0.6 per cent rise from August.

The volatility of the economic outlook and impending interest rates hike has also caused some edginess and those who may not have been able to handle the financial burdens of servicing their home loans may also be in a hurry to sell, thus pulling home prices down. Private resale apartment prices have fallen once more in September, this time by 0.9 per cent. In a year-on-year comparison, prices were 1.5 per cent lower than in 2015. City fringe home prices fell 1.3 per cent.