Jurong Lake District – New sparkling Gem of the West

In less than 2 decades, the landscape of Singapore’s west-side could be said to be almost completely transformed. From the largely industrial factory districts to far-flung housing estates and only a few schools, new shopping malls, transport hubs, commercial and office spaces, private residential homes and spanking new build-to-order (BTO) flats now dot the scene.

Juronglakedistrict

Photo credit: URA

Jurong, once a busy but secondary commercial district, has been slated for development as Singapore’s second central business district (CBD). Every large city is almost certain to have one secondary commercial hub, as big and functional as the town-centre CBD, but newer and with more space for development. Just thing of Shanghia’s Pudong or London’s Canary Wharf. The Urban Redevelopment Authority (URA) is looking to transform the Jurong Lake District into a eco-friendly, futuristic township with homes, offices, hotels and filled with greenery and waterways.

LakeGrandeWith the Kuala Lumpur-Singapore high speed rail in its midst and as the convergence point of a number of new and existing MRT lines, there seems to be quite a far breadth for value appreciation of residential and commercial properties in the Jurong Lake district.

With Punggol and Jurong both set to include many good, new things may be coming the country’s way in the next decade or two.

The En-bloc secret

Could you possibly be sitting on an En-bloc golden egg and not know it? Or before you make an investment, do you know if your purchase could earn you a tidy sum in the  future?

Laguna Park

Laguna Park

En-bloc sales of older properties can often be the windfall property owners are looking for and having an idea of the process could be the start to planning for the future. Not every development will have the same potential and often the wait could be longer than the photos yields, but there is money to be made this way.

The first step involves securing 20% of the total share value of 25% or the total number of owners. But should the first bid at a collective sale fail,  50% of the previously mentioned total share value or total number of owners will be required to requisition a extraordinary general meeting (EOGM) within 2 years. Then there is the election of the collective sale committee (CSC). They will then draft the proposed a reserve price as part of the collective sales agreement (CSA). Though a high reserve price may increase the probability of securing sufficient signatures go the sale, the high price may also turn potential buyers away. Developers do after all need to take the time and money to conduct feasibility studies and land surveys of the site.

Then there is also the issue of valuation per unit. The criteria for share allocation as recommended by the Singapore Institute of Surveyors and Valuers are valuation, strata area and share value. In addition,  80% of the owners must also agree on the method of apportionment before the bid can happen.

ShunfuVilleOnly then will  public tender be made and a property valuation be made by an independent valuer on the closing date of the tender. In the 10-week period after the tender closing date, the CSC is still able to enter into a private treaty with a buyer. The process is often long and could take years, such as in the case of the Pearl bank apartments or Laguna Park.

 

Money still to be made in property rental market

Despite falling property rental prices across the board as the market slump continues, home owners and investors are finding that there is still profit to be made in the home rental sector, at least earning them more than simply leaving their properties empty or waiting for money in the bank to earn them interest.

The AmstonA sudden and deep plunge in rents is quite improbable, and with slight adjustments of expectations, landlords will still find that there are tenants to be had in the current market. The median gross rental yield in May this year stood at 3.2 per cent, with median prices at $1,223 psf. Median monthly rents were down from $3.45 psf in April to $3.26 psf in May. The districts with the highest yields were 1, 2, 4,5 and 17 with the highest median prices at $1,960 psf in district 1 and 2 – in Chinatown, Raffles Place and Tanjong Pagar.

Property analysts are however expecting further reduction in yields as the foreign workforce plays musical chairs with the abundant number of rental units in the mark. Areas with fewer residential properties, such as in districts 1, 2 and where property prices are lower such as in district 17 (Changi, Loyang and Pasir Ris), rental demand tends to be stronger. Rents have however plunged in districts 20 and 8 of Ang Mo Kio, Bishan and Little india and Farrer Park respectively.

To buy or not to buy.

That is the question. When rental prices fall and rise according to property prices, which in turn are directed by local economies of scales and indirectly impacted by global economies and general market sentiment, that is often the question home-seekers ask themselves.

In the current market, is it wiser to buy or rent? Under what circumstances should you definitely choose one option over the other? Property analysts advice against renting while speculating on market direction as the uncertainties may not always work in your favour. Instead, the main factor should be whether renting or buying best suits your needs.

KembanganSuitesSingapore may very well be one of the cities in the world where most people own their homes. In many other cosmopolitan cities, rental is a more-than-common way of life. While renting may suit those who are not willing to be tied down by fixed monthly outlays such as mortgages, taxes and condominium maintenance fees, it also means that the money that goes into your rent does not ultimately accumulate into owning the roof over your head. There is also the danger of rental rates being raised and frequent moves.

Buying a property is not a small decision, and market advisors caution against doing so when you have not yet made sound financial calculations. The price differences in purchasing a freehold versus a leasehold property could also be considerable in the long run as most freehold properties tend to appreciate over time.  This then brings you to the considerations of when to buy and sell your property. While it is true that leasehold properties tend to depreciate, factors such as location and the competitiveness of neighbouring properties could also lend weight to the depreciation process, slowing it down considerably.

Increase in Foreign property purchases

The local property market is looking a little zestier as more foreign buyers picked up units in the first quarter. This affirms the continued popularity of properties in Singapore as compared to those in other major Asian cities, or global cities for that matter.

Kingsford HIllview PeakProperty prices in Singapore are still relatively affordable, and the number of purchases made by non-Singaporean residents rose by 5.4 per cent, while purchases made by permanent residents rose by 2.6 per cent in Q1. The Additional Buyers’ Stamp Duty (ABSD) initially dampened sales, but as foreign property investors find themselves having similar, it not even higher, fees levied upon them in other markets, their return is not particularly surprising. While there are other emerging markets with even lower property prices, the stability and proven track record of Singapore’s properties has done the market justice.

Most of the properties foreign buyers hunt down are priced between $1.5 to $3 million. They bought 79 units at Cairnhill Nine and 38 units at Kingsford Hillview peak. Most of the foreign buyers were Mainland Chinese or Malaysians. Property analysts are keeping positive about the market’s prospects for the rest of the year despite the number of local buyers falling 18.2 per cent, though it could be due to the Chinese New Year holidays falling in the middle of Q1.

 

 

More collective sales in the pipelines?

Following the successful en bloc sale of Shunfu Ville, the property market is once again energised. It has reignited the fire for some developments which have been unsuccessful with previous collective sale attempts, while also pushing some properties to reach out to property firms and developers for quotes. The minimum approval for a property to be sold en bloc is 80 per cent.

TheCapriAt a former HUDC in Potong Pasir Avenue 1, blocks 110 to 112, 60 per cent approval has already been secured. Another similar HUDC property in Tampines have begun drafting a sale agreement while Eunosville on Sims Avenue is also looking to restart the collective sale process. As most of these HUDCs are older establishments in mature estates, their potential value may heavily outweigh the units’  current condition and value.

ShunfuVilleThe recent collective sale of Shunfu Ville garnered each owner an average of $1.78 million each, that is almost 50 per cent more than what each unit would have received when sold individually in the current market. Other properties which are also trying their hand at the process are Changi Garden and The Capri. In the commercial property realm, Katong Shopping Centre has reached the 80 per cent minimum approval criteria and will be launching the site for sale soon.

To balance off the government’s recent diminished land sales, these private collective sales could be attractive to developers looking for an opportune time to  strike it out in the market.

Singapore prime properties considered reasonably priced 

Singapore properties are expensive. But compared to other major global cities such as London, New York, Paris, Tokyo and Hong Kong, perhaps they are simply reasonably priced, particularly in the category of prime district properties. The government-implemented property cooling measures might have helped keep prices down.

Marina One ResidencesAccording to the Monetary Authority of Singapore’s (MAS) Financial Stability Review from November 2015, Singapore’s home prices very well could have been 17 per cent higher than they are now if not for the property curbs implemented since 2010. The ratio of home prices to income for Singapore is now 5.6 per cent, lower than the 8 to 9 per cent for most major cities. Mortgage rates (at between 1.6 to 2 per cent) are approximately the same as average rental yields for prime properties, which are currently at 1.8 per cent.

Average luxury prime district home prices are hovering around $1,991 psf at the moment, about 20 per cent lower than the segment’s peak in 2011. Though sales volume has been low in the past year, as the year moves ahead, property analysts are expecting rental rates to increase after this year as the supply of prime properties dwindle. For savvy investors, the time to purchase may be soon, before property curbs are lifted and demand rises once more.

 

Developers’ incentive schemes under scrutiny

As competition in the private property market heats up and sales slow down, developers have been coming up with creative ways to sell their unsold stock. Some have offered rebates, vouchers and even tiered payment plans. The Urban Redevelopment Authority (URA) has however been picking up on some creative incentive schemes which may have tripped up on regulations.

Lloyd Sixtyfive

Take the newly launched Gem Residences as an example. There is currently a 5 per cent minimum booking fee for purchases of a new home, and the developers of Gem Residences have tried to ease the burden for their buyers by offering cheques of $7,500 to $10,000 to offset their booking fee under a “specimen cheque scheme”. As this would circumvent the fulfilment of the minimum booking fee requirement, the developers have instead offered rebates or direct discounts accumulating to the same amount originally to be offered in the cheques.

Another project with a creative scheme is Lloyd Sixty Five in River Valley. Its developers had originally come up with an “experiential purchaser scheme” which offers the buyer the opportunity to stay in the unit with only a downpayment, and the option to purchase will only kick in 2 years later. The scheme is under review by the Controller of Housing as it is essentially a tenancy scheme.

Twin Peaks2Uncompleted residential projects in particular were under URA’s scrutiny. Completed projects with unsold stock enjoy slightly more leeway as they will already have obtained their Certificate of Statutory Completion and are no longer restricted by the Housing Developers Rules. Developers of OUE Twin Peaks were for example able to successfully offer deferred payment schemes which allowed buyers to pay 20 per cent of the purchase price up front, with the remaining amount payable only 2 to 3 years later. Buyers who may be banking on the lifting of property curbs, in particular the total debt servicing ratio (TDSR) by then may find this scheme favourable.