Success of collective sales continues

2017 continues to be a good year for the collective sales market with Shunfu Ville given the go-ahead from the Court of Appeal last week and the sale of One Tree Hill Gardens site for $65 million this year.

OneTreeHillGardensThe Lum Chang Group has purchased the latter freehold landed residential development site near Orchard Road at $1,644 psf. Its proximity to Orchard Road makes it a prime site that is rare also because of its freehold status. It is of sizeable land ratio and developers have expressed considerable interest. The site was initially put up for sale at $72.8 million. Despite the $7.2 million shortfall, individual owners of the 6 maisonettes and 7 apartments will still receive $4.3 to $9.1 million depending on the size of their units.

Under a 2014 masterplan, the freehold site is zoned for 2-storey semi-detached residential use within a 39,063 sq ft land area. What it could potentially yield are 8 semi-detached houses, 5 bungalows or 10 semi-detached homes and 3 bungalows. With such landed properties near Orchard Road a scarcity, the freehold homes will no doubt receive much interest from investors and high net-worth buyers.

venturaheightsWhile the market is still tender from the previous years of slow growth, developers are beginning to replenish land stock and collective sales may be their means to the ends as the government has recently cut back on the release of land plots. Though price-sensitivity continues to rule developers’ bids, the collective sale market will be active this year especially with more home owners enquiring about en bloc sales and the sale of Eunosville and Rio Casa last month.

Luxury market makes for a suitable investment playground

Recent news of veteran banker and one of Singapore’s richest men, Wee Cho Yaw’s latest property purchase of 45-units at the luxury property, The Nassim for $411.6 million, may have reignited interest from potential buyers of high-end luxury apartment units.

Seascape at Sentosa Cove.

Seascape at Sentosa Cove.

Although property prices have fallen last year, the rate of decline has slowed and the luxury market has fared considerably better than the other property segment. Prices of high-end properties in prime districts, particularly in the Central Business District, Orchard road and Tanglin areas, have fallen 1.2 per cent last year. But the fall is still lesser than the 2.8 and 3.4 per cent in the city fringe and suburbs respectively. This segment also clocked more transactions last year, an increase of 48.7 per cent from 2015. Home sales in the city fringe and suburbs rose by 27.2 and 3.7 per cent.

Meyer Road Bunaglow2Property analysts are confident that the luxury market will find its footing more firmly this year as the supply of high-end properties will increase in the next few years. Though rents have fallen, those who have the holding power will come out tops in the long run, when the property cooling measures are relaxed. Most sellers put a 15 to 20 per cent premium on the value of freehold properties. Property auctions and en bloc sales could be activities to watch this year, especially for those with cash to spare and the financial endurance to last through at least the next few years.

 

Status quo for landed property market this year

Though figures from the last quarter indicated that landed home prices have risen 0.9 per cent, that was following a 2.7 per cent fall in Q3. Property analysts are careful not to yet call it a market rebound as 2017 may pose a difficult year for the economy.

bishopsgateThe landed housing market may continue to feel the pressure this year as cooling measures remain and the economic outlook seems uncertain. In a year-on-year comparison with Q3 of 2013, prices have fallen 14.8 per cent. Overall landed home prices fell 4.4 per cent last year and 4.1 per cent in 2015. The lowered prices could however have been a factor in bringing buyers back. Should sales volume and landed home prices continue to stabilise, the price index may inch up albeit gradually.

There were several considerable transactions in the detached landed house segment and this could have boosted numbers in Q4. One notable sale was for a property in Bishopsgate, at $26.8 million and a couple of others in Holland Park and White House Park at $25.5 million each. Though the Total Debt Servicing Ratio (TDSR) framework implemented in 2013 has limited buyers for private properties across the board, it has more effect on the higher-priced property segments as investors here may have more financial commitments.

whitehouseparkDespite a muted landed housing market last and possibly this year, landed homes remain much sough-after and investors in these segments may be bolder in their attempts to close deals this year.

Promising year ahead for landed properties?

At least in the Good Class Bungalow (GCB) segment apparently. Property analysts are predicting a 5 per cent price growth this year following promising response in the first quarter alone.

Despite economic slowdown and stock market volatility earlier in the year, this luxury landed property sector has seen a pick-up in sales volume as Singaporean investors are turning their sights on home ground once more, after a few seasons of investing in overseas propeties. Property agents have reported buyers making serious offers as compared to just a quarter ago in the latter part of 2015.

Leedon Road GCBRecent sales of GCBs included one at Swettenham Close at $1,354 psf. A total of 33 GCBs were sold in 2015, a similar number is expected for this year. Perhaps property owners have lowered their expectations and asking prices, and buyers are also enticed by the rarity and land area these bungalows provide. Many are upgraders or investors while sellers tend to be those whose children have flown the coop and are looking to downsize to more manageable properties. Rental yields for these large-sized properties have been diminishing, and these properties also tend to have higher property taxes and maintenance requirements.

Buyers may be more willing to take the bite this year as prices have already fallen 15 per cent since its peak in 2013, and further price declines will be unlikely. As these landed properties are also far and few in between, they may be quicker to pounce on a deal as it will not be easy finding similar options.