Luxury property market gearing up for bigger and better H2

In less than 10 days’ time, a new luxury property in Robertson Quay will be launched, and hopefully to continued positive response from buyers.

MartinMOdernThe demand for upmarket luxury properties have been encouraging this year, after a few quarters of falling prices and lacklustre sales. GuocoLand’s Martin Modern will perhaps hit the market at just the right time as buyers have been gradually filtering back into the market. The 450-unit property is one of the larger-scale high-end residential to launch in the Robertson Quay area for the last 8 years and units are expected to be released in phases.

Projected to launch on July 22, the 99-year leasehold Martin Modern condominium is situated between Martin Place and River Valley Close. Prices of the units are expected to hover around $2,300 psf with the smallest apartments starting at $1.8 million, higher than the average transacted price of $1,969 psf for units at the neighbouring Martin Place Residences.

MartinPlaceResidencesThe development will hold two 3o-storey towers with apartments ranging from 2-bedders to four-bedders. The 150 two-bedroom units will be sized at 764 sq ft, while there are also other options such as two-bedders plus study, three-bedders, premium three-bedders and four-bedders. The largest units being the four-bedders, will range from 1,701 sq ft to 1,798 sq ft.

The targeted completion date will be in 2022, and by then the Great World MRT station on the Thomson East-Coast line, which is just a 5-minute walk away, will be ready and in action.  The developers are expecting a proportionate mix of owner-occupiers and investors picking up units at the launch.

Landed properties selling well as prices fall

Activity in the landed property sector seems to be picking up as the fall in landed property prices have brought buyers back into the market.

Watercove1

Photo credit: Bukit Sembawang Estates Limited

This renewed interest in landed homes has translated into an increase in sales at Bukit Sembawang Estate’s Watercove development in Kampong Wak Hassan, Sembawang. With units priced at $2.3 million, the developer has sold 18 of its 80 freehold strata terrace homes just recently at an average of $738 psf. Boasting sea views and situated near Sembawang Park, the developers have confidence that the only way the potential of their property will go is up.

Despite its current seemingly out-of-the-way locale, its exclusivity and upcoming transport links is expected to push its value for appreciation upwards. The project consist of a mix of terrace, corner terrace and semi-detached houses sized between 3,200 and 4,400 sq ft each. The North-South Expressway and Canberra MRT station are expected to be up and running by 2020 and will be able to service the residents efficiently in the near future. Rental yields is expected to rise when that happens and the capital appreciation will be substantial.

Watercove2

Photo credit: Bukit Sembawang Estates Limited

The 80 homes along the seafront will feature an impressive suite of lifestyle fittings such as marble tiles, imported kitchen appliances from Miele and De Dietrich and bathroom installations from Villeroy & Boch and Hansgrohe. The freehold cluster housing project will also have a pool, barbecue corner and outdoor dining areas for the residents to enjoy.

The developer, Bukit Sembawang Estates, has many other land plots in Ang Mo Kio, Seletar and Sembawang yet to be developed – 2.8 million sq ft to be exact. It will be an exciting wait to see what else they have to often in the Northern region in the next decade or so.

Competition from smaller homes affect GCB sales

Owners of Good Class Bungalows (GCB) are finding them harder to move in the current market as competition from smaller landed homes in the vicinity has proven to be strong – on the mainland that is. In Sentosa Cove, sales of landed properties have increased from 4 to 7 this year.

BinjaiParkGCB1Across the segment, sales volume has however fallen from 11 to 10 this year according to caveats filed. Under the Urban Redevelopment Authority (URA) zoning districts, 39 are names as “Good Class Bungalow areas”. The most well-known are the Bukit Timah and Tanglin districts though there are some in the Bukit Panjang and Binjai Park areas as well. A GCB is defined as a bungalow with a minimum plot size of 1,400 sq m.

Smaller landed homes, some being bungalows, are gaining buyers’ attention with 20 transactions sealed thus far in the year, totally a sales value of $432.2 million, almost 45 per cent higher than last year’s. Most of the buyers are corporations or high net-worth entrepreneurs, mostly being new citizens from China.

HillviewEstate BungalowMore landed homes are however being sold as buyers pick up deals following a fall in landed home prices and their potential long-term value due to limited supply. A total of 538 land homes were sold and landed residential prices have fallen 0.4% in Q2. Interest in landed homes have been on the rise, though property analysts are modest in their expectations for the GCB market segment, with an estimate of 30 to 35 transactions for the whole of 2017. As there are limited number of GCB in prime locations for sale, the lower numbers could come from a place of circumstance rather than ability.

Home prices fell slightly in Q2. Bottom could be in sight.

Home prices of private residential properties fell by 0.3% in the last quarter, though it is nothing to fret over as it is the smallest dip since Q4 of 2013, which was when prices started to show a decline.

Thomson Grand3Since the April 2013 peak, private home prices have fallen 11.6%. Nothing too alarming considering the rate of its fall, but nothing to scoff at either. After a year or so of buyers retreating from the market in wait of prices falling further, new launches this year have brought them out of the shadows and the overall market sentiment has been positive thus far.

The first indication of a possible market recovery in the near future is the slowdown in rate of decline of property prices. This could indicate that the bottom is nearing and may draw even more buyers into actually committing to a purchase – when the price is right.

Non-landed private residential properties in the “rest of central region” such as Marine Parade and Bishan fared the best last quarter, with a 0.5% growth. The core central region saw the steepest fall of 0.9% as most of the transactions recorded were from older establishments and from mortgagee sales.

Activity in the landed property market is surprisingly heightened last quarter, with 527 units sold, a whooping 56.8 per cent higher than in Q1. In the resale HDB flat front, prices fell very slightly at 0.1%, a smaller decrease compared to the 0.5% in Q1, though sustained interest may be questioned here as more buyers could be considering upgrading into the private property market as older HDB flats with fewer years left in their lease may mean fewer takers.

CapitaLand Capitalising on integrated developments in China

Singaporean developers are looking to China in their search for market expansion opportunities.

RafflesCityChongqingPhoto credit: CapitaLand China

CapitLand for one is hoping to leverage on their expertise in developing integrated developments, which are harder to replicate than residential, retail or commercial office projects, to help them get ahead in China’s intensely competitive real estate sector. They believe these cross-segment developments have their place in the Chinese property market and while they are in knowledge of the need to constantly improve quickly or risk falling behind, are confident enough to invest significantly. CapitaLand currently has the largest portfolio of integrated developments of any foreign developer in China.

RafflesCityHangzhou1Their next project is for a 24 billion yuan (S$4.9 billion) Raffles City Chongqing, their biggest yet in China. The project is expected to be ready by H2 of 2018. In the meanwhile, they already hold 1 million sq m over 4 integrated developments which opened in April this year – Raffles City Shenzhen, Raffles City Changning, Raffles City Hangzhou and CapitaMall Westgate in Wuhan.

The “Raffles City” brand is doing well thus far and the CapitaLand group has set their sights high but wise, with plans to invest $2.1 billion into integrated developments in China’s gateway cities such as Shanghai, Beijing, Guangzhou and Shenzhen.

Third time lucky for Tampines Court?

One of the biggest collective sale of a privatised ex-HUDC of the decade may go down should developers go for the $960 million sale price put by for Tampines Court.

TampinesCourtLaunched just this Tuesday, the development has secured 82 per cent approval from the residents and each owner will stand to received $1.7 million from the sale. The 702,000 sq ft Tampines street 11 site currently holds 560 apartment units across 14 residential blocks but could potentially yield 2,100 new private homes in the future. Tampines Court is located in a mature estate with very good possibilities of being redeveloped into an eco-establishment suitable for families.

Property analysts are hopeful for a successful sale this third-time round as the collective sale sector has shown itself to be performing exceedingly well in the last few quarters. This is despite of the $348 million additional charges required to intensify land use and to top up the lease to 99 years. But the home owners are optimistic about current market sentiments. The most recent collective sale tenders include the private property The Albracca in Meyer Road and another ex-HUDC, Serangoon Ville in Serangoon North Avenue 1 and a Stirling road site was recently sold for $1 billion.

There may be a small window of opportunity before the market becomes too saturated with sales bids and also as the government intends to ramp up supply of land sites in H2. Success or not, it may all come down to timing.

3-month short term rental of private homes now allowed

Though the short-term lease of properties on sites such as Airbnb is still not legal in Singapore, leasing of private homes for a period of 3 months is now allowed. Under previous regulations which was implemented in 2009, the minimum rental contract period was 6 months. 

Cavenah LOdgeLandlords and tenants alike may rejoice as this means greater flexibility in terms of negotiating lease arrangements. For tenants looking for an option to serviced apartments or hotels, an entirely new market has opened up as those who were in between housing options (e.g. renting a place while waiting for renovation work to be done in their current or future home) or in Singapore for short-term study or work purposes. 

This welcome change stems from a public consultation exercise in 2015 which showed a majority of its respondents supporting a shorter minimum lease period. This new move may bring good cheer for some private home owners though it may not be much of a change for agents specialising in rental properties as the yields for short-term rents are considerably lesser than say a one- or two-year contract. Property analysts are not expecting much change in the rental market as landlords may still favour longer contracts as it saves them the trouble of waiting on new tenants. 

The rules are already in place and take effect immediately. Violations of the regulations may warrant fines of up to $200,000. 

Release of new land sites in H2 may not satisfy developer demand

After holding back for the past few quarters, 16 new land sites will be released under the Government Land Sales (GLS) programme in the second half of this year. That is in addition to other private land sites which might go on sale as well during the same period.

CUscadenResidencesDespite this ramped up supply of land plots, property analysts expect continued aggressive bidding from developers as they seem to be on the hunt for resources to replenish their land banks and especially as the demand for new homes has grown steadily in the last few months. As the nation’s population continues to grow, the authorities also recognise the need to keep up with the demand for new private housing in the years ahead.

The 16 sites from the GLS programme can potentially yield up to 8,125 private homes. And yet, analysts still consider this allocation inadequate in meeting developer demand. The sites most likely to draw the most number of bids are those in Jiak Kim StreetFourth Avenue and Cuscaden Road due to their locations. New record high bids are expected for these sites.

With  the possibilities of more joint ventures between developers and funds, the potential for higher bids for limited land plots may very well drive land prices up. Could that mean eventual increases in property prices, even if not now then sometime in the future? How would that then affect the market then?