2015 – A year of the property buyer

Following the footsteps of 2014, this year seems like it will continue to be a buyer’s market. Some property hotspots have sprung up over the course of last year, as new MRT stations and areas of redevelopment were announced.

Twin Fountains Executive Condominium in Woodlands.

Twin Fountains Executive Condominium in Woodlands.

For buyers looking for a good deal, there will be sellers out there who are willing to let go of their property as not all are able to have the holding power to last out the year. Many HDB upgraders who are moving to private properties may have to sell their HDB flats, and due to a mortgage restriction, some private residential property investors may also be looking to move units in exchange of a healthier bank balance.

For buyers looking for immediate to medium term property returns, areas near upcoming MRT stations may be their ticket. These include those along the North-East Line (NEL) and Eastern Region Line. Other further flung districts which are experiencing an influx of amenities and new properties such as the Jurong Lake district, Woodlands Central, Buona Vista and Paya Lebar, may also pique the interest of investors. And for those who are not in a hurry to reap the benefits from their property purchase, property analysts are expecting districts which have not been included in previous upgrading and redevelopment plans, to get a major face lift within the next decade or so. Woodlands could be the next area to watch.

Thomson MRT Line's alignment. Are you already area-spotting for the best property investment?

Thomson MRT Line’s alignment. Are you already area-spotting for the best property investment?

Starting from the second quarter of the year, sales are expected to pick up, and industry experts’ advice for buyers are to keep a clear idea of what they are looking for, search for sellers who are sincere about selling, and hit the iron while it’s hot.

Good class bungalows still in demand

The private property, and perhaps more so landed property sector, has been the doldrums for most of the year. But the niche market for Good Class Bungalows (GCBs) has been thriving.

e704119a11f840b8865a9fb67a23b14eA total of 26 Good Class Bungalows were sold this year, with the total sales figure coming up to a whooping $587.75 million. Though it is nothing compared to the 133 sold for $2.38 billion at the height of the industry in 2010, it is comparable to the 29 sold last year for $682 million. But the average sf prices for GCBs have risen this year to $1,454 sf as compared to last year’s $1,388 psf. The Belmont Park, Chatsworth Park, Chestnut Avenue, Dalvey Estate, Raffles Park and White House Park areas received the most attention in 2014.

There are only 2,700 GCBs over 39 designated areas in Singapore, though the number may have increased slightly in the 1980s when GCB areas were gazetted. This resulted in some sites entering the good class bungalow market even though they are smaller than the usual 1,400 sq m size.

But property experts have noticed that the drop in transactions for these high-end properties were largely due to the  MAS-imposed TDSR (total debt servicing ratio) framework and ABSD (additional buyers’ stamp duty). Most buyers of these properties are likely to already have existing properties and the increased stamp duties will total up to a rather substantial sum.

They are expecting this market to fare similarly next year as the property cooling measures remain. But with buyers’ consideration possibly turning into long term value appreciation, the Good Class Bungalow sector will certainly stand its own.

The future of Singapore’s property market – Looking outwards or inwards?

The property industry experts are hoping that the Government will take crucial and timely steps to aid the country’s property and construction sector should trouble loom.

8scape Malaysia property

Photo: 8scape Residences in Malaysia.

Redas (Real Estate Developers’ Association of Singapore) president, Mr Chia Boon Kuah recently mentioned that the impact on the property sector could similarly transfer to an impact on the country’s overall economy. The vacancy moving forward is expected to hit 10 per cent as the number of new properties reach 68,000 in the next few years. Transaction volume has declined by half of last year from 18,000 to 9,000.

There were also talks about the languishing luxury property market here. The stricter measures and higher taxes may be reasons for wealthy investors looking elsewhere in the region for property investment opportunities and even draw Singaporeans away from investing within their own country.

However, with possible interest rates hikes and stimulus slowdown in the United States, interest in overseas property investment may be waning. As the local property market cools, and prices start coming down, some may also choose to take the wait-and-see stance, possibly holding their horses for a good future run in the local markets. How will the market fare in 2015 and will buyers be drawn to local or foreign properties?

Commercial properties – Promising future?

As the noose tightens around the residential property market, investors may consider shifting their focus onto commercial properties, in particular office spaces. Q3 figures have shown that selling prices and rental of office spaces have been growing at a record pace.

In land-scarce Singapore, the growing number of businesses means the demand for office space will continue to rise. And as space decreases, prices increase. In Q3 alone, office space rental prices rose by 1.6 per cent. Part of the reason could be that major buildings such as the NOL Building and Havelock II have been undergoing renovation and thus the office space crunch has led to businesses having to look for alternative spaces within a short time period.

Havelock 2 OfficeDespite luxury properties in the downtown and CBD areas faring poorly of late, Grade A office rents in these areas have been travelling the opposite direction – upwards. Office spaces in the central region have been more in demand than rentals in other regions despite the higher rental prices. Central districts office rentals have risen 2.8 per cent while those at the fringe of the city have risen 1.9 per cent.

Retail space however, is another creature altogether. As most retail space income comes also from the tenant’s sales and margins have been narrow due to higher operating and labour costs. And with the introduction of many more mixed-use developments come 2016, supply may overtake demand and reduce the rarity of these spaces. Especially as online shopping takes off in a big way locally, retail spaces, unless in high traffic areas or exclusive trendy enclaves, may find themselves fighting for the same audience.

New Thomson MRT Line will benefit East Coast residents

Not only will property owners in the North reap the benefits of the new stations of the up-and-coming Thomson MRT line, but those in the East Coast will also see the value of their properties rise in the long run as the new MRT stations run through Tanjong Rhu, Katong Park, Marine Terrace, Siglap, Bayshore, Bedok and Sungei Bedok.

LTA - TELPhoto credit: Land Transport Authority (LTA)

The Thomson-East Coast Line (TEL) will connect more areas in the Northern and Eastern parts of the country to the city centre and cut travel time considerably. There are a number of exclusive and boutique private residential properties in the East as it has been a popular area for expatriates, but a boost is expected when the TEL commences service in 2019. Property analysts are already expecting a 5 to 10 per cent rise in property prices, if the response to the North-east Line (NEL) stations are anything to go by. And upon completion of the MRT line, they foresee a rise of up to 12 per cent.

Some of the properties which may enjoy the most out of the announced realignment of the TEL includes condominium developments in the Tanjong Rhu area such as Casuarina Cove, Tanjong Ria, Meyer Residence, The Belvedere and Water Place. Properties nearer the already existing Bedok and Tanah Merah mrt stations may not see as significant a change.

Marine BlueNearer Siglap and Bayshore are private apartments such as Lagoon View, Laguna Park, Elliot at East Coast, Bayshore Park, The Bayshore and Costa Del Sol. Cote D’Azur, The Palladium and The Seaview along Marine Parade could also see a rise in home prices in the future.

How will developers price new properties in the area which have yet to launch? Will they release units are higher prices or will they keep to the current market values? New launches coming up include the 124-unit Marine Blue and 109-unit Amber Skye.

HDB flat rentals stay low

The play between supply and demand never gets old. And the tug-and-push continues as rental demand for HDB flats remains lacklustre possibly for the rest of the year.

Immigration policies seem to be the main factor at play, keeping foreign workforce numbers low and thus affecting the demand for rental properties. According to the Singapore Real Estate Exchange (SRX) figures, the HDB rental index has fallen 2.3 per cent.

But is this the deepest pit of the slowdown or will it continue? Industry experts are predicting this as only the beginning of the rental drop. Sales prices of HDB resale flats have already begun on their downhill journey and though the drop is not drastic, it is rather significant for the year. Most property analysts are expecting a 4 – 7 per cent drop by the end of 2014.

Woodlands HDBNaturally, areas which are further away from transport nodes such as bus stops, main expressways or MRT stations are most affected. HDB flats near MRT stations will continue to hold their prices, whether in sales or rent. Some of the flats fetching the highest rent are in the Central, Bukit Merah and Queenstown estates. Prices range between $2250 for a 3-room flat to $2, 900 for a 4-room flat.

Although Woodlands seems far to many, the area is favoured by many tenants, perhaps due to its proximity to the causeway. Rental prices of flats in the area is lower, between $1,700 to $2, 000 for a 3- or 4-room HDB flat, but demand is higher and the ease of finding will benefit flat owners in the area.

Another reason for the falling rental rates might be the increase in the number of properties available for rent across the board. With some private suburban condominiums reaching completion and some in popular HDB estates, the competition will definitely heat up. 2014 seems pretty set its way for now, but there is always 2015 to look forward to.

Property market slump continues

Resale home sales and rental prices have continued to soften as we reach the middle of Q3. July proved to be rather quiet for the resale private home market as prices reached a 21-month low, according to the Singapore Real Estate Exchange (SRX) figures.

LakevilleAs more new private properties reached their completion dates and entered the rental market, the number of units for rent increased, which caused the rental market to become more competitive. And as immigration rules tightened, the supply and demand scale tipped in favor of tenants. Rental prices were at a 38-month low last month. And the blow is felt not only in the private property market but also the HDB resale market with prices dropping to a 30-month low in July.

The areas with the largest price decline is the city center, with prices dropping 4 per cent. This is followed by the city fringe areas with a 1.1 per cent dip and the suburban districts with a 0.6 per cent drop. Property experts say that the drop in rental prices could be one of the reasons contributing to the slipping resale prices.

With property prices so closely linked to immigration policies in this small nation, how will the authorities balance the issues of housing and population?

Deflating rental prospects hurt home sales

Buying a property and collecting rent used to be one of the most popular ways to start your investment journey. Usually the case for cosmopolitan cities, the situation may have changed in this developing country. Rental rates have continued to deflate as immigration policies were adjusted.

According to URA data, vacancy rates have reached the highest point since 2006. City centre and luxury homes have been hardest hit as expatriates are now choosing to live further away from the city with more and cheaper housing options. And as sentiments go, the less lived in a property, the less others will want to live in it. And it’s a cycle which if not arrested soon, may be detrimental to the market.

But most of the unsold units reside in the prime districts 9, 10, 11. Further away in Sentosa, the Cape Royale is 100 per cent unsold with its 302 units still on the market. It was completed last year. Developers IOI and Ho Bee are going with the decision to rent the units out instead of trying to sell them.

The Interlace at Depot Road.

The Interlace at Depot Road.

And as more developments were finished in 2014, the number of unsold homes in completed projects continues its climb. Some of these include The Interlace at Depot road, Starlight Suites in River Valley, TwentyOne Anguilla Park and Concourse Skyline on Beach road.

Developers have been steadily offering discounts or cutting prices in order to bring the buyers and tenants back into the market. As shown by recent sales at The Vermont, where slashing the prices have sold 30 of its 37 unsold units. From $2,400 psf, it dropped to just a little over $2, 000 psf.