Sparks of hope in property market

Despite the prolonged property lull, analysts are hopeful that a few sparks of recovery will begin to rejuvenate the market this year. The office sector may boost the commercial market while high-end luxury homes will hold up the residential property segment.

dleedonAs far as regions go, the core central region is heating up in terms of foreign interest in both residential and commercial properties. The sliding private home prices, by 11 per cent since 2013, have brought investors back into the luxury homes market. Currency valuation will however continue to play a part in the movement of investment money, and Singapore will still have to compete with other cities such as Melbourne, Sydney and Shanghai for investors’ attention.

Compared to other major cities such as Hong Kong, New York and London however, apartment prices here have fallen and will become more appealing to foreign buyers as the potential for yields in the medium term is considerable, especially as these specific market segment is expected to perform well this year.

skylineorchardboulevardThe collective sales market is another to watch in 2017, as developers are expected to collaborate to build up their store of land sites for long term yields. There might also be acquisitions of smaller developers by larger ones in order to participate in the government land sales programme. Property prices are expected to remain stable but depending on a property’s rental yields as a means of investment or profit could become less attractive as investors find it more difficult to find tenants in an increasingly competitive market.

Luxury Apartment prices broke $5, 000 psf

But property analysts are not bringing out the champagne yet.

Although selling prices for luxury condo apartments have broken the $5, 000 psf record, it may not yet be significant enough to indicate a rebound of the previously lacklustre luxury apartment sector. The lack of interest from potential buyers, renters and investors have signaled a continuing weak top-end property market. Low leasing demand may be the main reason for the lull.

Hamilton Scotts

Hamilton Scotts

In view of the volatile and somewhat fragile global economy, companies which hire expatriates are more cautious about providing generous housing allowances. In addition, senior expatriates are increasingly more willing to cut frills and opt for less spacious, more functional properties. These same companies may also have cut back on the number of expatriates offered relocation packages.

TwentyOne Angullia Park. Photo by China Sonangol.

TwentyOne Angullia Park. Photo by China Sonangol.

The properties which went for more than $5, 000 psf? The first was a 2,756 sq ft unit at the Hamilton Scotts apartments at the edge of Orchard Road. The unit went for $13.8 million at $5,001 psf. Considering most units were going only at $3, 401 psf prior to January’s cooling measures, a $5, 001 psf selling price meant kudos to the developers.

Further into the heart of Orchard, the freehold TwentyOne Angullia Park sold not one, but two units above the $5, 000 psf mark. One went for $5, 099 psf and the other at $5, 5600 psf in May. Prior to this year’s top high-end apartment sellers, the last apartment unit which sold above the $5, 000 psf mark was one at the Skyline @ Orchard Boulevard in September 2012. After that, prices had hovered around $4, 000 psf.

It will be a real feat to keep the high prices going, and if they do, what does that mean for Singapore’s real estate sector? How does that affect the average Singaporean?