En bloc sales take centre stage this year

Yet another former HUDC estate has been put up for collective sale. Serangoon Ville situated in Serangoon Ave 1 has been made available for en bloc sale and the selling price is expected to be between $400 million and $430 million. The costs will be high for this land site as an additional $200 million to $220 million is required to intensify the land and to refresh the land lease by 99 years. The estate was privatised only in 2014 and has 69 years of lease left.

SerangoonVillePhoto credit: Google Maps Singapore

Property players and watchers are expecting developers to bid efficiently for this land site that averages out to be $720 psf per plot ratio, particularly since recent sales of ex-HUDCs such as Eunosville and Rio Casa were closed successfully and above asking prices. Currently, Serangoon Ville houses 7 blocks of 244 apartment units, including some maisonettes, with sizes ranging between 1,625 sq ft and 1, 733 sq ft. One redeveloped, the 296,913 sq ft plot could potentially yield 750 to 900 units.

2 other former HUDCs – Tampines Court and Florence Regency – are already in the process of putting their estates up for sale. The latter is planning to commence signing of their collective sale agreement in July this year. This year’s healthy new home sales has possibly boosted developers’ confidence in the market’s stabilisation and future recovery.

But with the number of private land sites being sold and private estates sold en bloc, one cannot but help to wonder how Singapore’s real estate sector will look like in 3 to 4 years’ time. Add the Bidadari township into the mix, the market might be seeing a huge entry of public and private housing within the next 5 years. Rents have been sliding due to the increased number of completed and available properties in the recent couple of years, how will the market react then?

Land a landed property despite softer market?

Despite the softer real estate market, landed properties remain rare and in demand, particularly in land-scarce Singapore. Would this then be a good time to invest in one in preparation of a market recovery? How will the value of landed properties hold up in tough times?TanahMerahGreenHOUSEIn terms of availability, as of Q4 of 2016, only 1,352 new landed residential properties will be built by 2021. Sales volume for landed homes have also risen by 0.8 per cent in the last quarter of 2016. That said, the landed property market is recovering more quickly than expected. And perhaps despite sentiments of a flailing sector, sales figures have shown that the number of homes sold last year was close to that in 2013. The number of private homes sold overall have shown a 30 per cent dip from 2013.

The Total Debt Servicing Ratio framework implemented in 2013 has had some impact on the market, overall with landed residential property price index falling 14.1 per cent, likely due to the high stamp duties and price quantum. The demand for freehold landed properties have remained strong with prices of such properties in prime districts falling only 6.6 per cent. Most of the price decline came from leasehold terraces in non-prime districts and in the secondary market.

Thomson Grand condo project along Upper Thomson Road.

Freehold landed homes in or near the Central Region will continue to be popular amongst buyers and investors this year due to their accessibility, scarcity and potentially higher capital returns. Property analysts do however caution buyers to think beyond location and accessibility. Other factors such as growth prospects of the area, development potential in the surrounding township and rebuilding and construction costs should also be taken into serious consideration before closing the deal.

Resale condominium prices slide in February

The latest private resale condominium sales figures seem to slightly challenge industry experts’ expectations of the market bottoming out this year.

Marina One ResidencesFebruary’s resale condominium prices fell 0.3 per cent following a 0.1 per cent in January from December last year, indicating further decline in the private non-landed resale property sector. While the numbers could mean the market has yet to bottom out, the slower rate of decline does point towards a state of stabilisation.

The biggest impact was felt in the central region (made up of districts 1 to 4, 9 and 10, the financial district and Sentosa Cove) where a 1 per cent fall was registered following a hopeful 0.5 per cent rise in January. Even in the small-apartments (units 506 sq ft and below) segment, prices fell 0.6 per cent. Resale units outside of the central region however fared better, coming back up top with a 0.3 per cent rise following a 0.6 per cent fall from December.

Oceanfront Sentosa Cove CondoThough market sentiment has been picking up, the overall economic outlook and rising interest rates may not be enough to completely turn the market on its head. Recent tweaks in the property cooling measures may give the industry a little push towards to the direction of recovery, but property analysts are still expecting a 3 to 4 per cent price-decline by end of 2017.

Resale private home prices up for 4th consecutive month

3 months into the new year and things seem to be looking up for the resale non-landed private home sector. Prices have been on the rise for the fourth consecutive month with a 0.9 per cent climb last month, following a 0.6, 0.3 and 1 per cent rise respectively in the months counting up from December last year.

ParkInfiniaRecent industry figures have shown a slight recovery in both prices and sales volume in the resale market, mostly due to an overall more upbeat atmosphere boosted by a series of successful new launches within the first 3 months of the year. Approximately 694 private non-landed residential units were resold in February albeit it being the shortest month of the year. That is 31.2 per cent higher than the 529 units which exchanged hands in January though that could have been because of the Chinese New Year holidays.

Comparing year-on-year, resale prices in February this year clocked at 1.8 per cent higher that the last and resale volume was 77.9 per cent higher than the 390 units sold the same month last year. Compared to the price peak in 2014, resale private non-landed home prices is still lagging by 6 per cent, but considering the lull which took over the real estate sector for the past 2 to 3 years, price increases across the island in this segment is a step in the right direction. Prices in the prime districts rose 1 per cent while inching up 0.8 per cent in the city fringes and 0.9 per cent in the outside central regions.

 

Stamp Duty changes bring cheer to real estate market

With the recent Sellers’ Stamp Duty (SSD) changes, the real estate market is beginning to feel more upbeat all around.

PLQThe most significant changes were the SSD rates and the fact that sellers who let go of their properties after 3 years will no longer have to pay the sellers’ stamp duty. The Total Debt Servicing Ratio (TDSR) threshold has also been relaxed for properties with  loan-to-value (LTV) limits of 50% and less. The latter move is aimed at helping retirees monetise their properties as many could be sitting on their assets while having trouble with cash-flow or liquidity. Some property owners may wish to cash out on their properties in order to start businesses or send their children for overseas education but find themselves unable to loan enough as the TDSR framework limits the borrower only to amounts totalling up to 60 per cent of their gross income.

All these changes will give buyers a higher sense of security, knowing that they will have more flexibility in managing their finances without having to hold on to their properties should they urgently require liquidity. The crowds at the Paya Lebar Quarter’s (PLQ) residential project – Park Place Residences a couple of weekends ago were a positive affirmation of the improving sentiments in the property market. Property agents reckon that the SSD changes will motivate more people to buy as they now have less restrictions to take into consideration.

 

Singapore no. 2 destination for Asian property investors

A recent study has found Singapore to be No. 2 in a list of top destinations for wealthy Asian investors. The Wealth Report compiled by Knight Frank has placed Singapore second, after only Britain, as a country high net worth Asians are favouring as a property-investment destination.

BishopsgateResidencesExcluding their primary residence, these individuals are defined by their portfolios of at least US$30 million (S$42.3 million). They are also more likely to apportion most of their assets to real estate investments. This could come as good news to developers and property marketing agencies, helping them narrow down their target audiences and structure more focused marketing strategies which are more essential now than ever as the economy languishes.

While Chinese investors are the mainstay of the real estate scene, Indian and Malaysian buyers are making an increasingly obvious presence. Property analysts are expecting the proportion of foreign home buyers in Singapore to rise to between 25 and 28 per cent this year. Their numbers currently stand at 24.7 per cent. Singapore’s slower rate of property growth allows investors to take stock of their investment and stake calculated risks without having to grapple with the rapidly increasing price growth in cities in China, Australia and Canada.

Some of the other countries which are also gaining traction in the real estate investment arena are China and Vietnam. Singapore’s stable political and business environment has however continued to make it a choice pick amongst Asian investors.

Rise in new private home sales volume

The number of new private homes sold last year have risen on the back of declining prices in the primary private home sales market. Fighting against predictions of a languishing private residential sector, new private home sales have held up in 2016 with 8,136 new units sold, 9.4 per cent higher than 2015’s 7,440.

SantoriniBuyers have been picking up units directly from developers, aided by a couple of pushes from low interest rates an and lower selling prices. Though 2016 was a slow year for Singapore’s real estate industry in terms of home prices, the number of transactions clocked have surprisingly went against all odds. While private home prices have fallen over the past 3 years, market sentiments have begun to pick up last year and increased interest and availability of one- and two-bedroom units whose total quantum prices were more palatable for the general buying public and investors alike.

In Q4 of 2016, 2,480 new units were sold, the highest number in a quarter for the year. Despite the year end’s usual market lull and only 90 new units launched in the last quarter, December’s sales were positive with suburban projects leading the way with 231 sales, followed by 112 in the city fringes and 24 in the core central region. Last month’s best seller was The Santorini in Tampines which sold 26 units at an average price of $1,046 psf.

MAS relaxes income cap on loans

Interest rates have been flying low for sometime now. At less than 2%, home loan rates are even lower than the 2.6% offered by the Housing Development Board (HDB). Though the latter offers stability despite inflation, the small difference is considerable for the large purchases real estate surmounts to.

And though there has been talks of rate hikes, a sharp increase has not yet happen and while interest rates have plunged to near-zero in 2011 and not surged since then, many have been favouring the floating-rate loans which are pegged to the Singapore Interbank Offer Rate (Sibor). But at the same time, the property cooling measures rolled out in waves by the Monetary Authority of Singapore (MAS) and Inland Revenue Authority of Singapore (IRAS) have restricted the ability of many to refinance their previously high-interest home loans.

MAS has since adjusted the total debt servicing ratio (TDSR) framework as of 1st September, and more home owners and new buyers will find that they now qualify to refinance their loans or service a less taxing one. Now all home owners are exempt from the 60 per cent income cap. Previously, the monthly repayment amount for total household debt can only be of and less than 60 per cent of the household income.

As the goal of this regulation is to prevent a property bubble and to stop buyers from overextending themselves and running into debt, property investors may still find themselves restricted by the rule, but now with the change, less so. The loan threshold may be surpassed if they pass the bank’s credit checks and they also have to commit to repaying at least 3 per cent of the outstanding bank loan within a 3-year period. This may still keep errant property investing in check while allowing those we have done their risk calculations carefully an opportunity to plan their financial growth.

The property market has been gradually cooling for a few years now and while no change downwards or upwards has been sudden nor drastic, and although the authorities say this is in no way a relaxation of the property cooling measures, this is nevertheless a good start on the pathway to building a more structured and robust real estate industry.