Indian cities top in list of Asia’s property investment hotspots

India may not have previously come up as a potential goldmine for property investors, but real estate in some Indian cities have been creeping up the popularity charts and can now be viewed as some of Asia’s most prime investment real estate.

mumbaipropertyJust like in China, a huge country like India will no doubt have some cities which shine over the others. Mumbai and Bangalore have come up tops in a comparative table of 22 Asian markets. With many multi-national companies setting up regional headquarters or back offices in India, it comes as no surprise that commercial properties are key when it comes to real estate investment in India. The migration of locals from smaller cities and townships into these main cities and business hubs also mean a demand for rental properties are on the rise.

Singapore has fallen from its 11th place to 21st as residential property prices declined for 12 consecutive quarters. Even Tokyo, which topped the list at first place this year, have fallen to 12th place for next year as low interest rates see sellers holding on to their properties despite low vacancy rates. Japan’s declining economy also has a part to play in the market sentiments there.

newyorkapartmentThe mainland Chinese investors are some of the largest players in real estate markets across the globe, but they have begun to turn their attention away from Asia to markets further north such as London and New York. Property prices in China are soaring, and their yearning for foreign footholds and connections have brought them into both established markets in the West and emerging ones in the region.

Resale private property prices slip further in October

Following the dip in resale prices in September, last month saw a further slip of 0.7%. Resale prices of private non-landed properties were apparently at a 50-month low.sycamoretreeSales volume of resale private properties also fell 15.2 per cent with 586 transactions clocked in October, in comparison to the 691 in September. In the peak of April 2010, 2050 units were sold, 71.4 per cent higher than the current numbers. September’s numbers may have been slightly more positive due to the pent up demand from the lack of major launches in the second quarter and the Hungry Ghost month in August.

Some districts fared better, with more than 10 resale transactions recorded – namely district 10 where the median selling price was $10,000 more than the computer-generated market value. But in most regions, sellers have found themselves having to offer prices up to $10,000 below the market value in order to close deals and attract buyers. In district 21 in fact, selling prices went as low as $23,000 below the market value.

HighlineResidences2Property prices in the city fringe, normally where selling and buying is the most active, have fallen 2 per cent. In the suburbs, prices also fell 3.3 per cent. Prime district properties however enjoyed a 4.9 per cent price increase, though it might only be sufficient to consider it a rebound from previous lull months.

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.

 

China real estate sector – impending bubble by 2018?

Property analysts are wary of a possible property bubble in China, especially after property prices in Shenzhen rose 60 per cent in a year. Despite the government’s attempts at curbing the rapid price rise, consumer fervency has spread from first and second tier cities to third and lesser-known cities and townships. The speed and extent at which China’s real estate sector is growing has economists concerned about an impending bubble and possible market crash. Some analysts have pegged 2018 as the year when things might take the turn for worse.

rafflescityshenzhenPhoto credit: CapitaLand

The fact that China’s banking sector is closely tied to the real estate industry, any shift in the dynamics may rattle the country’s economy. Akin to the property bubble in the United States in 2008, the fact that loans have increased to take up 71 per cent of new lending, up from 24 per cent within 8 months, indicates an increase that could be based on many gaps in the system.

Property prices are climbing so quickly that concerns for a sharp and drastic fall are well-founded. The unsubstantiated value of homes may cause an eventual collapse of the banking system as it becomes riskier for banks to loan such large amounts of money without a certain way of recouping the losses should the market fall. Having assets at hand which have no value or are not in demand will not bode well for individual property owners, funds nor banks.

 

 

Small apartment units spell affordable prices

Despite small private condominium apartments having fallen out of favour with buyers of late, 2 upcoming launches will feature these smaller units heavily.

forestwoodsForest Woods, a 519-unit condominium project in Lorong Lew Lian developed by a joint venture between City Developments (CDL), Hong Leong Holdings and TID, will launch this week with almost 89 per cent devoted to smaller units below 1,184 sq ft. The property configurations will vary from one- to three-bedroom units and pricing is expected to range between $668,000 for a one-bedder to $1 million for a 3-bedder. Forest Woods is located in prime suburban location, near interchange-MRT station, Serangoon, Nex shopping mall and schools such as Paya Lebar Methodist Girls’ School and Yangzheng Primary School.

The other development with 96 per cent of their units configurered as three-bedders and smaller units is The Alps Residences in Tampines. Prices are highly affordable with 80 per cent of the units priced below the $1 million sweet spot,  at $491,000 for a one-bedder to $918,000 for a three-bedder. About 30 per cent of the units at Forest Woods will also be priced below $1 million.

thealpsThe Alps Residences will also be launched this weekend, and if the 6,000 visitors who have since showed up at their showflat preview last weekend is anything to go by, the pent-up demand for new condo units in Tampines will bring out the buying mood in property seekers.

Singapore property market on the mend?

Is Singapore’s property market finally bottoming out? Are current property prices the lowest they can go?

WhitehavenHong Kong and Singapore are 2 of Asia’s most expensive residential property markets, and while both countries’ governments have implemented property cooling measures to help abate the tension, prices remain high. Though Singapore’s property price spike of 92 per cent in the decade between 2003 and 2013 was not as drastic as Hong Kong’s 370 per cent in the same time period, housing cost has increased considerably and was much fodder for debate during the past 2 elections. While home prices have fallen 1.2 percent in Singapore and 13 per cent in Hong Kong since September 2015, the fall will have to be much more drastic for the situation to return to what it was before 2003.

Taking inflation, economic growth and global economics into consideration, property analysts feel that Singapore’s property cycle has almost reached its bottom or turning point as it is in a much more advanced state than Hong Kong’s. Considering the gentle slope of decline in Singapore’s property prices, a sharp rebound seems unlikely. Will there however be a glimmer of hope for a gradual increase upon policy changes and changes in the demand and supply scale?

Suburban private home prices waver


Parc EleganceNovember saw a 0.6% fall in private home prices, pulled down mainly by falling figures in the shoebox apartments segment. These units sized below 506 sq ft fared 1.2 per cent better in October than in November.

Property analysts are expecting some selling action in the months ahead, particularly in the non-central suburban private home segment as the surge of completed units and increased interest rates may force the hand of investors who have overstretched themselves. However, the number of sellers may outweigh the number of buyers as competition toughens up.

Properties in the central regions or prime districts of 1 to 4 and 9 to 11 could have fared better as well, with a 4.5 per cent fall in prices in a year-on-year comparison. That is a drop of 13.1 per cent from the peak in May 2013. Industry players have reasoned that properties in the central regions are generally larger in size, which means they also have a higher total quantum price, which makes them harder to find buyers for. Foreign buyers are also expected to pay a 15 per cent ABSD (Additional Buyers’ Stamp Duty), which may have turned some investors off the Singapore property market.

The Boutiq Killiney

Photo: The Boutiq Killiney

As the target audience for the central and non-central regions are quite different, sellers and buyers alike may need to alter their expectations of the market in 2016. In the central regions, some sellers may be ready to let go of their properties as the economy slows, but prices are not expected to fall drastically as the owners usually have the holding power to hang on to their properties till the price is right. In the non-central regions however, where owners and buyers are usually salaried workers, pricing may be more dependent on external forces such as the overall rate of economic growth, employment and mortgage rates, rental potential and debt ratios.