Resale properties off to a good start

The year seems to be looking up for the resale private property market as prices inched up in January by 0.6 per cent. Despite a 7.2 per cent difference from the 2014 peak, the signs could be promising as there has been a corresponding increase throughout the core central region,  city fringes and also in the suburbs.

Parkview Eclat

Photo: Parkview Eclat apartments on Grange road

The largest price increase of 1 per cent was centred around the core central region. Depending on the price trends of prime properties in regional gateway cities, Singapore’s prime and luxury property sector may  fluctuate, especially when price differences become too apparent. City fringe and suburban resale private property prices rose 0.1 and 0.8 per cent respectively, but some analysts are projecting a downward trend this year with competition from completed new properties.

Resale volume has yet to increase significantly, but should it do so, with the global economic situation, interest rate hikes, property cooling measures thrown into the mix, the market might be looking more at a price stabilisation rather than a sharp rebound. As the year has just begun, January’s figures are not representative of the year ahead. No doubt, the first quarterly figures will be watched keenly by market players, buyers, sellers and investors alike.

 

EduCity and Medini – Iskandar’s Bright Spots

Albeit a sluggish 10-year development period for Iskandar, with some projects and real estate developments taking longer than expected to take off, some bright spots have emerged and investors are still hopeful for value appreciation.

The Iskandar Region Development Authority (Irda) estimates a 50 per cent materialisation of the RM187.96 billion already invested into the development. It’s ultimate target is to attract RM338 billion worth of investment monies into the region by 2025. For now, the main developments and attractions are education and healthcare.

MEdini SignaturePhoto: Medini Signature

In EduCity, the international education institution Malborough College Malaysia has brought about 823 students and their families to the region. The school is about a 10-minute drive away from the Tuas second-link in Singapore while also offering boarding facilities. Other tertiary institutions under the EduCity scheme include the Netherlands Maritime Institute of Technology and Newcastle University of Medicine Malaysia. Soon the Management Development Institute of Singapore (MDIS) and Raffles American School will also open, boosting the population and perhaps real estate growth in the vicinity.

Real estate in Nusajaya City could benefit from the EduCity development while the Medini Iskandar project looks to bring in investment monies through healthcare. Gleneagles Medini has already opened its doors in 2015 and soon Regency Specialist Hospital, Thomson Medical Centre and more KPJ Group healthcare centres will join the ranks.

TOP-ready properties come up tops

The common four- to six-year wait for a new property to be built can be quite a nerving time. It makes planning for the future a little tricky and may not make for the best short-term investment.

Tropika East

Photo: Tropika East condominium

Purchasing a property which has already attained its Temporary Occupation Permit (TOP) however, could save you a lot strife and worry. For buyers purchasing for occupation, TOP-ready units are available to move into right away and often with renovations all done. That saves not only time but money. And for those who are looking for investment opportunities, private properties which have attained their TOP can be leased immediately. This year will see a total of 27,149 private condominium units from 71 TOP-ready projects. Another plus point is that buyers can physically inspect these units for their pros and cons instead of doing guesswork from just looking at brochures and show flats which may leave a margin of error.

Jade ResidencesPhoto: Jade Residences 

Properties in some popular suburbs are finding ready buyers are euHabitat and Tropika East in the East,  Jade Residences in Upper Serangoon,  Echelon in Jurong, Bartley Ridge on Mount Vernon and Sky Green condominium in MacPherson. These residential projects with ready units are situated in prime city fringe or Outside Central Region districts. In the central regions, TOP-ready projects to look out for include The Scotts Tower, Robinson Suites and 26 Newton.

However, not all projects with TOPs are equal. It is always wise to do your research and understand that location is key, and getting a solid valuation done on the property using private and public research sources or engaging experienced property agents will help you get the best out of your property purchase.

 

Who’s the most expensive of them all?

Hong Kong. When it comes to housing affordability. According to Demographia, a United States-based urban planning research unit, Hong Kong has emerged as one of the most expensive cities out of 367 metropolitan areas in 9 countries. Second on the list was Sydney, followed by Vancouver, Melbourne and Auckland. Singapore was 5th on the list.

Hong Kong property

Photo: Apartment in Viking Garden, Hong Kong 

In Hong Kong, median home prices are almost 19 times the median annual gross household income. It is the largest year-to-year increase in pricing over the 12 years in which the research was conducted. A small shoebox apartment below 500 sq ft would cost almost US$75,000 (or S$1.1million) in Hong Kong. That is almost double the price of such an apartment unit in Singapore. In the United States, only 9 metropolitan registered highly affordable housing prices, with San Jose, San Francisco, Los Angeles and San Diego being some of them. 14 other cities in the United States remained under the affordable level, with Buffalo, Cincinnati, Cleveland and Rochester tied in first place.

SF FlatPhoto: San Francisco apartment

With the US interest rates rising this year however, property analysts are expecting some change in the global property markets. Hong Kong’s property bubble may burst should the authorities do good on their promise to meet housing supply demand.

In Singapore, housing prices are 5 times that of the median annual gross household income. Although still considered ‘severely unaffordable’ under Demographia’s rating scale, HDB has been making efforts in the last couple of years to increase supply and reduce demand for public housing. For now, the price of a new HDB flat is still $150,000 to $180,000 lesser than a resale unit in the same area.

 

Mortgage cap continues to limit resale HDB flat market

One of the more impactful property cooling measures implemented in recent years have been the Total Debt Servicing Ratio (TDSR) framework and the mortgage servicing cap for HDB flats, which limits the percentage of one’s gross income which can be used to service a loan for a HDB flat to 30 per cent.

SengkangHDB

Resale flat prices have been deflating for 2 years now and looks like it will be flatlining this year. Since its peak in April 2013, resale HDB flat prices have fallen 11 per cent and many transactions are now closed sans Cash-over-valuation (COV). The second half of last year did however see a slight increase in prices. With the selling prices of recent transactions quite transparently and clearly reflected by HDB, buyers are now more aware of the current market climate.

The number of transactions in January fell 121 units from December, and prices fell 0.5 per cent. But this may be due to the busyness which January brings for buyers and sellers and property analysts are not overly worried about the HDB market as prices and sales volume are only expected to remain level this year. The stability may be a good thing this may be the much-needed rest period before a market rebound.

 

Right time for luxury (property) shopping?

With the current property market lull, developers are offering many larger-sized luxury properties at discounted prices. Prime central district properties have also seen less activity as foreigners are buying fewer condominium units possibly due to the higher stamp duties and taxes levied on them. Could this be the right time to suss out a good investment deal?

Twin-Peaks3

Photo: Twin Peaks condominium on Leonie Hill

In fact, many developers are looking at doing bulk sales on their unsold stock in order to prevent paying the penalties such as  the Additional Buyers’ Stamp Duty (ABSD). Property funds may be the most likely buyers, though individuals or groups of individuals eyeing specific projects could also jump on the opportunity.

City Development Limited (CDL) for example has been trying to sell one of the two 24-storey towers at Gramercy Park and OUE is doing the same with their Twin Peaks development. Prices for Gramercy Park, a freehold condominium project, is expected to hover around $2,600 psf and will be ready for occupation by the Q2 of this year.

Though almost 92.9 per cent of their 174 units have been sold by last year, they still have a number of unsold stock to sell by 2018. Developers can file for extension of their Qualifying Certificate (QC) which allows them a bit more time to sell their stock. But developers will also have to weigh the charges and ABSD against the discounts they are able to provide buyers with bulk-buy offers.

 

DBSS flats fetching profits

DBSS – these 4 letters have previously caused quite the debate about whether these HDB flats are priced so high the only ones winning are the developers. Since 2011, the Design Build and Sell Scheme (DBSS) has been suspended.

CityViewBoonKengPhoto: City View @ Boon Keng DBSS HDB flats

Now, it seems buyers of these previously-launched private developer-built HDB flats are reaping in the profits, with recent reports of a 5-room DBSS flat at City View @ Boon Keng selling at $855,000. The unit is slightly above the mid-point of a 40-storey block and has a floor area of 109 sqm. The unit was originally priced at $627,000 in 2008. That makes a profit of $228,000.

Though the $288,000 profit is only a third of the launch price (the project previously launched at prices between $349,000 to $727,000), it is quite a reasonable sum considering the current dulling market.

With unblocked views of the Kallang river, card-access lift lobbies, bay windows, it’s city-fringe location and walking proximity to the Boon Keng and Bendemeer MRT stations, it’s easy to see how these units could have fetched such high prices. And more units might enter the market soon as they reach the end of their MOP (minimum occupation period).  In fact, industry players are expecting resale prices to possibly reach the $1 million mark, similar to HDB units at Pinnacle @ Duxton.

 

 

 

 

 

 

Waterfront Living moving inland

Moving away from the coastlines, waterfront living has become more available inland. Aligned with the Urban Redevelopment Authority’s (URA) Masterplan, Singapore’s landscape will evolve to include many man-sculptured green areas and waterways, with enhanced island-wide connectivity and a movement of population and property towards less mature districts and estates.

And it is only logical that building and property-development in these areas have ramped up in recent years. Besides government-built HDB flats, private condominiums have also been mushrooming in these developing districts.

Near Sungei Serangoon, just beside the Serangoon Park Connector, is the 1,165-unit Waterbay condominium. This 99-year leasehold condominium boasts a wide array of 1- to 5-bedroom apartment units, 2 swimming pools and even a childcare centre and 6 retail outlets. The waterfront views promise to bring a sense of living in a city but away from the buzz of a city.

In Punggol, there is the Watertown condominium, a mixed-use development that harnesses the beauty of nature and the Punggol Waterway while providing the convenience of city living with its extensive collection of integrated commercial and retail outlets.

With Punggol set to be the creative cluster in the North Coast Innovation Corridor which will also include Woodlands, Sembawang and the future Seletar Regional Centre, this outlier may soon be the latest town on the block to watch.