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.

New private homes still receiving buyers’ love

As expected, even in the real estate downturn, property buyers still know what’s value for their money and properties near MRT stations are always the first to draw the crowds.

The 845-unit Commonwealth Towers near Queenstown MRT station sold 175 homes in the first day of its launch alone last weekend. Most of the units sold were one- and two-bedders, which may signify a change in the buying trends amongst property investors. As buying power decreases due largely to the restrictions in loan limits, buyers are favouring smaller units going for a lower quantum price.

Waterfront@FaberPrices ranged from $721, 000 for a one-bedder to $2.2 million for a four-bedroom apartment. With its prime location, it goes without saying that most investors would be looking at renting out their units. And with its considerable proximity to schools, universities, hospitals and other amenities, this is a good spot to grab.

Waterfront@Faber over in Clementi won over some buyers with its more exclusive 210-units. Prices ranged between $1, 100 to $1, 250 psf. The minimum size for apartments here are 721 sq ft two-bedders. The largest are 2, 292 sq ft four-bedders. There are 11 strata-landed homes in the development, with the remaining 199 being apartment units.

Going by the loving buyers have shown these 2 recent launches, will upcoming launches such as the Coco Palms condominium in Pasir Ris, The Crest at Prince Charles Crescent and Amber Skye at Amber Road receive the same or heightened attention?

Kampong Bugis gets new life

With the introduction of a new 212-unit condominium project, The Kallang Riverside, the quiet township of Kampong Bugis is getting a new lease of life.

As Singapore undergoes a major revamp with URA’s draft masterplan 2013 to revitilize various areas island-wide,  districts which are close to bodies of water are particularly attractive to property developers and investors. As the former Kallang Airport and the land between Kallang Road and Crawford street makes way for new homes and businesses, the Kampong Bugis area will see much more activity when it is established as the waterfront residential area it is intended to be.

Kallang RiversideYet to be launched, the Kallang Riverside condominium is set to have its prices pegged at around $1, 500 to $1, 700 psf. Price comparisons may be tricky as there have been very few resale properties in its vicinity. Considering its prime city fringe location, it’s a wonder it is not a hive of real estate activity yet. But its lack of competition could mean a worthy investment as rentals are relatively stable as compared to some suburban properties. One of the few new residential projects nearby is the Southbank mixed-use development, with only 3 resale units registered last year at between $1, 639 and $1, 940psf. At the Citylights condominium apartments nearby, prices were around $1, 276 to $1, 684 psf.

As the area promises up to 4, 000 new homes, commercial businesses and even a school when it is up and running after 2016, buying now could mean positive short-term investments and possibly even better long-term ones.

What makes a property tick – Exclusive address and prime location

Though the prognosis for real estate this year may not seem positive, some properties may still sell well. With bigger mass-market condominium projects slashing prices to bring in the sales, smaller developments with lesser units at a prime location and an exclusive address may take the cake this year.

Cluny Park ResidenceA recent million-dollar condominium at the Cluny Park area has garnered strong interest from buyers with thickly-padded pockets. With only 52 units for sale, the freehold Cluny Park Residence has already sold 20 – 6 two-bedders and 14 four-bedders. The project slated for completion in 2016 only has two- and four-bedders and is designed by SCDA Architects, the same people behind The Marq on Paterson Hill and Botanika at Holland Road.

Developers are upbeat about the ultra-rich still buying up properties with well-thought-out concepts, attractive locations and a strong potential for development in the area. In other words, those looking for long-term investments will still be on the lookout and may purchase whenever they come across a project worthy of their money.

Surprisingly, bigger units were the draw. A 754 sq ft two-bedder at Cluny Park Residence is going at $2.3 million and up to $8.3 million for a 2,842 sq ft four-bedder penthouse. The next exclusive mixed-use project to be launched is likely to be Ascent @ 456 on Balester Road this weekend. Prices for its 28 three-bedders of 689 to 829 sq ft are expected to be between $900,000 to $1.2 million and may be perfect for the beginner investor.

Banking on new condominium Riverbank @ Fernvale

Even as Singapore’s aerospace and aviation industry takes off, so do the real estate surrounding these hubs. Properties surrounding the Seletar Aerospace Park are increasing gaining speed and may take off in big ways in the future.

At the new Riverbank @ Fernvale private residential development developed by UOL, interest is running high. The 555-unit condominium began selling units last Friday. Situated near the Layar LRT station, with riverfront views of the Punggol reservoir and next to the Lush Acres executive condominium development, it seems reasonably priced, especially since the EC sold at an average of $1, 000 psf when it was launched in July 2013. Selling prices at Riverbank @ Fernvale is expected to hover around $785 psf.

Riverbank Fernvale condoThe project has a range of apartments available, from the $480, 000, 495 sqft one-bedder to the $1.3 million, 1,389 sqft five-bedder. Perhaps riding off the popularity of neighbouring Punggol, Sengkang properties are also basking in a little of the waterfront-lifestyle sunshine. Just one of the few upcoming properties to be built near the Punggol reservoir, it provides inland waterfront living. Nearby, Rivertrees Residences will host a few selected duplex homes which will be one of the only waterfront landed properties besides those in the offshore island of Sentosa.

Residents of the Riverbank can expect a life amidst greenery and a outdoor living environment with the inclusion of a riverside trail. In concrete jungle of a city, this may be the welcome with open arms home buyers wish to go home.

Real estate market fluctuations hard to predict

It might be a matter of long and in-depth research. Or perhaps a intuitive touch to reading the markets. Maybe it’s a matter of luck. Whichever it is you possess, perhaps even a combination of all three, the property market has always been a delicate and somewhat temperamental creature to handle. As we reach the end of the first quarter of 2014, many may be wondering if this year of the horse may gallop into the horizon or merely trot on the spot. The three factors creating the most effect on the current real estate market are:

  • Property curbs
  • Weak demand
  • Oversupply of homes
Property-related rules may be updated often, thus it would be helpful to keep track of new or amended rulings.

Where are home prices headed?

For buyers looking for a place to live, it might be a good time to jump in. Those waiting for a market crash to scoop up the best deals may be waiting in vain as that is rather unlikely. Singapore’s growing population will make for a constant demand for housing, and since home buyers usually have a fixed idea of which areas they would rather live in, other factors such as location, proximity to transport and schools, may still determine the price they pay.

Property upgraders may find themselves in a good spot as well. As the private property market becomes increasingly competitive, the price difference between their current and desired property may be diminishing, thus in turn save them a rather substantial amount.

Property investors may be those finding themselves most in a bind as mortgage limitations and rising interest rates create boundaries which may hinder their progress. Analysts advice against hasty decisions as properties may not be the easiest to manage within an investment portfolio. They suggest that investors look at all possible angles when considering a property, such as the number of bathrooms, size and shape of the unit, hidden spaces which may not suit the taste of most buyers etc. All-in-all, investors need to plan for future interest rate hikes, the possible lack of tenancy, financial holding power and governmental policy changes.

Drop in government land supply

And this will happen come 2014. As numbers in both public and private property markets signal a soon-to-be oversupply, developers are cutting back on the number of land plots they bid for, and the authorities are getting the hint and hence cutting back on the supply of land.

A wise move perhaps to prevent a property bubble, though the first major move could be the tightening of loan limits implemented middle of the year. Only enough land for 11,600 new homes will be released in Q2 of 2014. That is 17.3 per cent lower than Q2 of 2013. The warning signal came in November from the Real Estate Developers’ Association (Redas) and it seems the Ministry of National Development (MND) has kept their ears open and made an announcement on Wednesday regarding the reduction.

THe CrestEven so, the market can expect 65,000 new residential properties to enter the market within the next 3 years. And this is expected to fulfill the housing demands of the population without sacrificing sales figures. 8 plots of land will be put up for sale in the first half of next year, and most of them will be in suburban areas such as Yishin, Sembawang, Sengkang and one at Prince Charles Crescent in Redhill next to The Crest. These plots will also yield some 2, 2000 executive condominiums (ECs).

The market will see the building of more executive condominiums, which may slow the private property market down a little, but still keep the number of new homes in the black. However, these hybrid homes will become available in the open market in 5 years’ time and this slowing down of supply in this sector may be a well-timed move.

Reduced BTO launches will not affect resales market

2013 was a year of new BTO HDB flats. With a sales launch almost every couple of months, it may have taken the shine off resale HDB flats. Coupled with the decreasing COV prices, will this mean a a weakening resale market?

National Development Minister, Mr Khaw Boon Wan recently announced that starting 2014, HDB’s “massive construction programme” will slow as the pent-up demand for public housing units have been largely elevated by the continuous supply of BTO flats over the past 3 years. Industry analysts are not expecting the resale market to be overly affected by this announcement, especially since the pool of buyers usually have different motivating factors. Most BTO flat applicants are young families and first-time buyers. Now that application rates have fallen from 5.3 to 2 in 2 years’ time, there seems reason enough for the authorities to put the brakes on the building programme.

East Lawn Canberra HDB FlatIn comparison, the resale market has suffered slightly, with stricter loan limits, competition from the private property market, and recent COV prices have come to show for it. With the median at an all-time low, many are wondering if the cease of supply of new HDB flats will once again bring resale flat prices up. But this may be unlikely, at least for the next half year or so. As long as the loan limits and private residential options remain and especially since demand has been largely fulfilled,

It will be an interesting year for Singapore’s real estate sector. Which way will the wind blow?