Singapore gains traction as property investment safe haven

A little red dot, almost invisible in the huge map of the world. But as political and economic turmoil rock the majority, Singapore is increasingly considered by many global investors as a safe haven for foreign funds.

Asia SquareThe strength of the SingDollar, coupled with a relatively stable political climate has provided foreign investors with the assurance that their monies are well-protected. Thus far, $8.85 billion has reportedly been spent by foreign investment on Singapore property, a 62 per cent increase from last year, the highest in 9 years and making up 41.7 per cent of total property spending in 2016. In 2015, the total foreign monies invested in the local property market was $5.46 million and in 2014, $4.67 million. Qatar Investment Authority was a major foreign player this year, putting in $3.4 billion for Asia Square Tower One. Also in the Marina Bay area, a white site in Central Boulevard has been bid on and won by Wealthy Link of IOI properties at $2.57 billion. Projected to be up for sale next year are Jurong Point Mall and Asia Square Tower Two.

Though the commercial property rental market has dulled slightly, the lack of new office spaces being developed within the next 3 to 4 years might help the rental market eventually gain traction. 2020 might be the watershed year when the market is projected to rebound significantly and most investors are willing and able to financially wait out the next few years ahead.

marina-bay-suitesIn the residential market, a number of en bloc sales were successfully tendered this year, with Qingjian Realty’s $638 million for Shunfu Ville taking the spotlight. The sharp increase in interest this year could be the fact that other markets in Asia have been on the upturn in the past decade, and although Singapore has been priced out in terms of capital gains due to an economic slowdown during this time, she has more than made up for lost time with this year’s results.

 

Last GLS site of the year drew 14 bids

Perhaps because it was the last land plot for sale under the Government Land Sales (GLS) scheme for 2016, or that the 22,195 square metre site is situated near both the Commonwealth and Queesntown MRT stations in an area which has not seen new private home launches for awhile, but the latest Margaret Drive site saw an active bidding war between 14 developers with MCL Land lodging $238.38 million as the highest bidder.

queenspeakcondoThe highest bid is almost 8 per cent higher than the second highest of $220.9 million that came from Allgreen properties, and 14.5 per cent higher than the price of the land site on which Queens Peak condominium will stand. The site was originally on the Urban Redevelopment Authority’s (URA) reserve list but was triggered for sale when the minimum bidding price was met. A developer had originally committed to bid at least $184.758 million.

Commonwealth TowersCompared to the $483.2 million and $562.8 million previous wining bids on the neighbouring Commonwealth Towers and Queens Peak residential developments, the $238.39 million for this new site could yield 300 highly affordable units in the future. Property analysts deem the bullish bids as a sign that developers are keen to add new sites to their development lists, and truthfully, land is not easy to come by in this tiny island.

 

Economic slowdown affects industrial property market

2016 has seen quite a few political shakeups and the economy has been suffering the aftershocks. The  gas and oil market have been slightly flailing, with some companies stripping down to the minimum or moving out entirely hence the pickup for new industrial units or renewal of older leases have been lesser than optimal.

az-paya-lebar-industrial-propertyIn Singapore, industrial property prices and rental demand have declined in the third quarter, in particular sites or units with 30- and 60-year leases. Following the recent Trump win in the US elections, global uncertainty continues as countries question what future moves the newly elected US president in terms of trade agreements. With one of the most fast-moving industries of late begin e-commerce, which may not require as much space as manufacturing, storage and smaller boutique spaces could be the next wave.

Economic analysts say that global trade needs some rejuvenating or the industrial and warehousing sectors may continue to decline. Freehold industrial developments saw the smallest fall in prices of 1.4 per cent while 60-year leases fell 4.7 per cent and 30-year leases, 2.1 per cent. Rental demand is lower than supply and it continues to be a tenants’ market.

jtcinternationalbusinessparkThe only plus is the increase in interest in business park units, with rents expected to increase by 3 to 5 per cent next year. The International Business Park in Jurong East has seen a rise in average monthly rent of $0.10 psf with 25 leases signed in Q3 alone.

In the industrial sales market however, fewer industrial properties exchanged hands as most companies are holding back their expansion plans in lieu of the economic slowdown. Property analysts are expecting a further 5 per cent dip in industrial rents come end of 2016.

525 potential new residential units near city fringe and nature reserve

hertford-collectionNear Little India and off Toh Tuck Road, the Urban Renewal Authority (URA) has released 2 residential sites that may culminate to a total of 525 private homes. Both sites are released under the Government Land Sales GLS) scheme and have 99-year leasehold tenures.

The first site off Perumal road near Farrer Park MRT station may be of particular interest to developers due to their city fringe location, proximity to a MRT station and its yet unfounded potential. The area is also close to the new medical hub off Farrer park and Novena. The tender for this site closes at noon on Jan 10 and is expected to fetch $280 to $295 million at $800 to $850 psf. The bids may come in strong as there has been a lack of new launches in the area for sometime now, which could mean buyers will be looking for something new to put their money in when the time is right.

connexion-farrer-parkThe only con for this site might be the proximity to the Sri Srinivasa Perumal Temple which could mean a higher noise level especially during festivals. But its location and depending on what other facilities or incentives the new property offers, may overcome all that.

Though the Toh Tuck Road is on the reserve list, should a developer be able to meet the minimum bid set by the authorities, it should still be able to fetch up to $225 million. This site is near the Bukit Batok Nature Reserve and Nature Park plus schools such as Pei Hwa Primary and Ngee Ann Polytechnic which could be rental fodder for expatriates or foreign students.

Chinese top buyers of Singaporean properties

Foreign interest in local properties have not waned despite rising prices and supply over the past half a decade. Their appetite have not diminished, if at all. Transactions may have shrunk slightly due to the additional costs involved in foreign-purchases of properties in Singapore, put in place by the series of property cooling curbs rolled out since 2011, but they buyers are back in the market in search of potential sites and units, in particular buyers from mainland China.

skyline-residencesIn a year-on-year comparison, foreign property transactions were up 11.8 per cent and this excludes purchases by permanent residents. Besides the Chinese, other major buyers hail from Malaysia, Indonesia and the United States. Each group have their preferences as the numbers show. Chinese buyers mostly favoured suburban properties while Malaysia and Indonesian buyers went for core central region units. 68 per cent of Indonesian buyers and 40 per cent to Malaysian buyers purchased homes in the prime districts while 58 per cent of transactions from the Chinese were for homes outside of the core central districts. Most Indonesia buyers are willing to pay $2,000 psf and above for prime properties while Chinese buyers usually went for properties priced between $750 to $1,700 psf.

Marina ONe iprop watermarkThe Additional Buyers’ Stamp Duty (ABSD) may have been a deterrent at one point in time, but as the government made clear that the measures are here to stay, acceptance is beginning to truly sink in and buyers are willing to spend the additional amounts in exchange for long-term capital gains. Buyers from the United States are exempt from the ABSD due to a free-trade agreement and this has raised the number of buyers up from 1.1 to 7.3 per cent over the past 5 years.

 

Property market slowdown reflected in stamp duty collected

In 2014, the property stamp duty assessed was at $4.11 billion. This year, the total amount for the period ending March 31 was 28 per cent lower at $2.96 billion. Property prices and transaction volume have also fallen since the peaks of 2009 and 2013.

TheOceanfrontThe real estate market here has hit a number of speed bumps over the past 3 to 4 years and with the various cooling measures in place, buyers and investors have shied away from this previously almost-surefire means of investment. Introduced almost 5 years in December 2011, the Additional Buyers’ Stamp Duty (ABSD) has gradually taken effect on the market, perhaps in particular the luxury property sector which used to attract mostly foreign investors. With the 15 per cent ABSD imposed on them, and 7 to 10 per cent on Singaporeans, many may have thought twice about buying a second or subsequent property as the additional monies to be paid are considerable.

Much of the ABSD assessed came from share transfer from bulk purchases by non-Singaporean entities or shareholders who may have to let go of unsold units before they are hit by the Qualifying Certificate (QC).

marinacollectionBut with the current financial and economic climate hazy at best, the future of other investment products fairly volatile, and local property prices having fallen to affordable quantum levels, could more buyers be picking off units to secure more stable future yields?

 

October’s new home sales up 128 per cent this year

With more that 1,252 new private homes sold in October, new home sales have risen 145 per cent from the 509 units sold in September and 128 per cent in a year-on-year comparison with 2015 when 549 units were sold.

thealpsresidences4The sudden spike may have been due to pent up demand after the slower months of the June school holidays and Hungry Ghost month in August, plus the launch of major projects in the later part of Q3. The 2 new property launches which garnered most of the sales were The Alps Residences in Tampines and Forest Woods in Serangoon Central. Each sold more than 300 units which made up 55.7 per cent of October’s sales. Other projects which consumers actively seemed out such as Stars of Kovan, The Trilinq and Kingsford Waterbay all sold only 30 units each, though understandably as these are much older launches.

Property analysts put the sudden rise in sales, a 15-month record high in fact, to the affordable prices put out by developers. Despite the slower economic outlook, consumers know a good deal when they see one and are willing to invest in what they consider to be long-term investment-worthy properties. Forest Woods is situated close to the Serangoon transport hub – the MRT station, bus interchange and NEX shopping mall – which could account for its popularity.

forestwoodsForest Woods was the top seller last month, with 364 units going at an average of $1,078 psf. Smaller units were purportedly gaining traction with buyers once more. Shoebox apartments, though aplenty in the market, remain affordable and property analysts report a direction change from investors who have turned their attention from riskier financial products back to the more stable property market.

 

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.