Residential

Shanda gaming empire co-founder buys GCB

Shanda gaming empire co-founder buys GCB

The Chinese turned Singaporean co-founder of Shanda Group is understood to have picked up a Good Class Bungalow (GCB) along Cable Road for S$23 million.

The price works out to S$1,518 per square foot (psf) based on the freehold land area of 15,148 square feet.

Singapore Property Resources News - Shanda gaming empire co-founder buys GCB

Singapore Property Resources News – Shanda gaming empire co-founder buys GCB

Chrissy Luo, who bought the bungalow in trust, is the wife of Chen Tianqiao. The couple, who now reside in Singapore, in 1999 founded Shanda Interactive Entertainment Limited, which expanded to a big-time online entertainment developer and publisher in China before it became a privately-owned global investment group a few years ago.

Shanda Group is now headquartered in Singapore, with “main offices” in Shanghai, Beijing, Hong Kong and Menlo Park, according to information on the group’s website. It invests across a variety of asset classes, including venture capital (VC), private equity, public securities and real estate, primarily focused on the financial services, technology and healthcare sectors. It is the single largest shareholder of three famous US listed companies – Legg Mason, Lending Club and Community Health Systems.

Shanda’s VC portfolio comprises 11 advanced tech companies (eight in the US, two in Israel and one in Iceland), and more than 120 Chinese companies primarily focused on Internet and mobile applications. The group’s property arm has operations in China and the US. “We are also one of the largest timberland owners in North America,” Shanda said on its website.

Having made their fortune, the Chens are also active in philanthropy. Through the Tianqiao and Chrissy Chen Institute, they have been working with leading universities and research institutions in the US and China on fundamental brain research with a particular focus on brain discovery, treatment and development. Last month, the Chens were in the news in the US for a US$115 million donation to the California Institute of Technology or Caltech in Pasadena to set up a neuroscience research centre.

The couple made the donation after viewing a news clip of a Caltech scientist helping a quadriplegic use his thoughts to control a robotic arm so that – for the first time in more than 10 years – he could sip a drink unaided, the Los Angeles Times reported.

Mr Chen is chairman and CEO of Shanda Group and his wife, the vice-chairman.

The Singapore bungalow along Cable Road that Ms Luo bought recently is within the Chatsworth Park GCB Area. Spanning two storeys and with five bedrooms, it was developed in 2005 by The Straits Trading Company, which sold it later in the same year for S$9.2 million to a Japanese family who are Singapore permanent residents (PRs). They held it for 11 years before selling it recently to Ms Luo; the transfer was registered early last month.

Inclusive of this deal, 2016 ended with 37 transactions in GCB Areas totalling S$788 million – an improvement on the 33 deals totalling S$715 million in 2015 and 28 deals amounting to S$626 million in 2014.

Despite the steady improvement in GCB sales volume, last year’s showing is way shy of the recent high in 2012, when 54 bungalows totalling S$1.17 billion changed hands in GCB Areas.

Bungalows in GCB Areas are the most prestigious form of landed housing in Singapore, with planning conditions to preserve their exclusivity and low-rise character.

Only Singapore citizens are allowed to buy landed residential properties in GCB Areas under a policy change that took effect in the second half of 2012. Prior to that, Singapore PRs could seek the Singapore Land Authority’s approval to acquire such properties provided the land area did not exceed 1,393.5 square metres (around 15,000 sq ft).

Adapted from: The Business Times, 20 January 2017

HK housing curbs may be a boon for Singapore property

HK housing curbs may be a boon for Singapore property

Singapore’s three-year decline in home prices could see relief from an unexpected quarter in 2017: Hong Kong.

HK housing curbs may be a boon for Singapore property

HK housing curbs may be a boon for Singapore property

So say analysts who expect the slide in the city-state’s home prices to end this year as foreign investors turned off by Hong Kong’s move to increase the stamp duty for overseas buyers look to Singapore instead.

One of them said that Singapore house prices are approaching their trough, with a forecast price move of flat to minus 2 per cent. Another forecasts Singapore prices to rise one per cent on average this year.

The fallout from the stamp duty could be beneficial for Singapore as Singapore is always seen as a place where you can preserve capital and interest from foreign nationals is expected to come back.

Hong Kong’s November increase in stamp duty to 30 per cent for foreigners makes Singapore’s 18 per cent rate more attractive to overseas buyers, particularly mainland Chinese who are seeking investments abroad to help shield them from a further weakening of the yuan.

That will help limit the decline in Singapore property values to about 1.5 per cent this year, according to the average estimate of five analysts surveyed by Bloomberg. Home prices have fallen 11 per cent since 2013, when the government implemented the strictest of its own cooling measures.

The outlook for Hong Kong is more bearish, with prices in the secondary-housing market seen dropping 8 per cent, according to the average of seven analyst forecasts. While figures for new homes aren’t available for Hong Kong, early indications are that prices in this segment will be more resilient as developers offer incentives to offset higher stamp duties.

Adapted from: The Business Times, 20 January 2017

Bayshore District may offer 6,000 new HDB flats

East Coast may offer 6,000 new HDB flats

Home hunters could soon get a shot at new Housing Board flats with coveted sea views along Singapore’s East Coast.

Singapore Property Resources News - Bayshore District may offer 6,000 new HDB flats

Singapore Property Resources News – Bayshore District may offer 6,000 new HDB flats

The Government is looking into creating a new Bayshore district, which includes 6,000 HDB flats – a huge change for the overwhelmingly private estate area located on reclaimed land. Another 6,500 units will be set aside as private homes.

If they materialise, these Bayshore flats would be the first HDB homes built along the East Coast since the old-generation Marine Parade flats constructed in the 1970s, some of which have fetched more than $900,000 on the resale market in recent months.

The potential development is detailed in tender documents put up by the Urban Redevelopment Authority (URA) and which were reported by Lianhe Zaobao yesterday, calling for consultancy firms to develop a master plan for the plot.

The Bayshore district spanning 60 ha is surrounded by Bayshore Road, the East Coast Parkway, Bedok Camp and Upper East Coast Road.

With parts of it currently occupied by a forest, it is about two-thirds the size of Bidadari.

The plot is located between two MRT stations on the upcoming Thomson-East Coast Line (TEL) – Bayshore and Bedok South – and is expected to have facilities and services such as schools, shops and an integrated transport hub.

The tender will be conducted in two phases and the appointed firm will submit its final proposal in December this year, URA said in the documents.

But a URA spokesman told The Straits Times that parts of the area will be used for the construction of the TEL for several years, and that “implementation will not be in the near future”. The two stations are expected to open by 2024.

Rather, the invitation to private sector consultants is meant to generate “new ideas for (Bayshore) to be developed into a future public and private housing precinct that supports car-lite living, with a strong sense of community and environmental sustainability”, the URA spokesman added.

“The number of public and private housing units has been projected as 6,000 public units and 6,500 private units, and is still under study.”

Some observers are concerned that the increase in population in the area would put a strain on its transport networks and amenities.

The total of 12,500 residential units translates to 42,375 people, going by Singapore’s average household size of 3.39 persons.

National University of Singapore urban planning expert Steven Choo welcomed the development, as a new HDB town with its “thoughtful design and technological advances” could increase the property value of landed property in Upper East Coast Road.

But he was surprised to hear about the development, given that the Government announced last October that it was looking into ways to mitigate the “lottery effect” of public housing in prime locations.

For instance, some owners of Pinnacle@Duxton flats in Cantonment Road made nearly up to $500,000 when they sold their assets after the five-year minimum occupation period ended in 2014.

But for student and Upper East Coast resident Bryan Lee, 19, the HDB flats would make the hope of living near his parents in the future more achievable.

He said: “This is a good location, very peaceful and near the park. But, more importantly, I hope to get this place if I get married, so that I can be near my parents and take care of them.”

Adapted from: The Straits Times, 19 January 2017

Developers to stick to realistic price game this year

Developers to keep playing quantum price game this year

Developers sold 8,136 private homes last year, up 9.4 per cent from the 7,440 units they moved in the previous year – and the best showing in three years. The pick-up is a reflection of improved sentiment and demand, say analysts.

Developers to keep playing quantum price game this year - iNz ResidencesThe executive condo (EC) market posted even more spectacular sales growth. Preliminary government numbers show that developers found buyers for 4,018 EC units last year – up 57.6 per cent from the 2,550 units in 2015 and a four-year high. Realistic pricing by developers has been cited as a key factor for the improved primary-market sales of ECs, which are a public-private housing hybrid.

The 2016 sales figures are preliminary, based on the December developer housing sales data released on Monday by the Urban Redevelopment Authority. The numbers will be finalised on Thursday next week when the URA releases its full Q4 2016 private housing statistics.

For this year, property consultants polled by The Business Times mostly forecast sales of 8,000 to 9,000 private homes and 2,300-3,500 EC units in the primary market.

In terms of developers’ pricing strategy for 2017, affordability will rule the day. Developers will have to be mindful about pricing because it’s still a price-sensitive market on account of the property cooling measures and rising interest rate environment.

Unemployment is expected to rise in 2017 while GDP (Gross Domestic Product) will see muted growth.

The pricing strategy for developers remains pretty much a quantum play. Developers need to hit the sweet spot of S$1 million or below to achieve sales volumes. Given that land prices have risen in the past 12 months, the clear denominator to play around with would be the unit size – in terms of maintaining the sweet spot.

Although developers who paid for higher land prices last year are now stuck with less elbow room to price their projects attractively, construction costs have fallen due to the slow economy, which helps to alleviate cost pressures for developers.

A developer who declined to be named said that construction costs have eased about 10 per cent in the past six months as contractors are hungry for work. “So where the construction cost used to be S$300 per square foot (psf) on gross floor area half a year ago, it is now S$270 psf.” He also noted that “projects in good locations and priced reasonably can still move”.

URA’s latest data – collated from licensed housing developers – shows that they sold 367 private homes in December 2016, less than half the 860 private homes in November 2016 but close to the 384 units in December 2015.

Despite the subdued December sales figure amid the year-end holiday period, the preliminary number of private homes sold by developers in Q4 2016 was 2,480 units – the strongest quarterly volume since Q2 2014.

Coupled with the 9.4 per cent increase for the whole of 2016, this reflects a moderate strengthening in demand – driven by a perception of the market bottoming out, pent-up buying, more realistic prices and acceptance of the cooling measures as a norm.

Last year, developers launched 7,853 private homes – up 11.3 per cent from 2015.

In the EC segment, 213 units were sold by developers last month, down slightly from the 251 units in November, but an improvement on the 124 units in December 2015.

The 57.6 per cent jump in EC sales last year was despite a 26.7 per cent contraction in the number of new ECs launched to 2,749 units. The pick-up in sales was attributed to more realistic pricing, which resulted in median prices of new ECs easing about 5 per cent between Q1 2015 and Q4 2016.

Demand for both new private homes and ECs is still there. Buyers are coming round to the view that there is limited benefit in waiting for further price declines at new launches, and those who can afford it would be inclined to enter the market.

That said, the number of units developers manage to sell this year will be more a function of supply.

According to ERA Realty Network’s data, only two new EC projects totalling around 1,000 units are slated for launch this year – Qingjian Realty’s iNz Residence in Choa Chu Kang Avenue 5 and a project by Hoi Hup in Yio Chu Kang Road. In addition, there are about 3,000 unsold units in EC projects that are already on the market, ERA noted. The agency’s key executive officer Eugene Lim predicts primary-market sales of 2,500 to 3,000 ECs this year.

Transaction volume could be sustained due to the still relatively benign interest rate environment, good attributes of pipeline projects and ample liquidity in the market.

There will be some additional demand from foreign buyers, particularly from the mainland Chinese after Hong Kong recently raised the stamp duty rate on non-residents who buy residential properties from 15 per cent to 30 per cent.

Adapted from: The Straits Times, 17 January 2017

One Tree Hill Garden to be up for en bloc sale

One Tree Hill Garden to be up for en bloc sale

A boutique prime freehold residential development site in District 10 will come on the market when the collective sale of One Tree Hill Garden is launched within the next week.

SPR News - One Tree Hill Garden to be up for en bloc saleBT understands that the reserve price in the collective sale agreement signed by the majority owners of the three-storey walk-up apartments is about S$70 million. This translates to S$1,792 per square foot based on the land area of 39,063 square feet. An architect has been appointed by the owners to verify the building’s existing gross floor area and to ascertain the development baseline for the property, which will determine whether or not a development charge is payable to the state.

The site is zoned for residential use within a two-storey semi-detached area in the Urban Redevelopment Authority’s Master Plan 2014. Potentially, the plot may be redeveloped into a new project comprising 10 semi-detached houses and three bungalows.

On site are 13 apartments ranging from 1,916 sq ft to 4,682 sq ft.

Based on the reserve price for the proposed collective sale, the owners are expected to receive 60 per cent more for their units than if they were to sell their units individually.

One Tree Hill Garden, which was built more than two decades ago, is less than 500 metres from the future Orchard Boulevard Station on the Thomson-East Coast Line.

The site also boasts triple road frontage – towards One Tree Hill, Jalan Arnap and Jalan Kelawar.

In the past two years, three old semi-detached houses in the vicinity with site areas of between 3,391 sq ft and 4,628 sq ft have been sold at S$1,679-2,097 psf.

Adapted from: The Business Times, 13 January 2017

More Condos Offers Deferred Payment Plans

Deferred payment plans at more condos

Developers of completed condominiums are again offering sweeteners to home hunters that proved successful in shifting unsold apartments last year.

Deferred payment scheme at more condos - Sky Habitat is one of them

Deferred payment scheme at more condos – Sky Habitat is one of them

Real estate agents told The Straits Times that one of the latest projects to offer a deferred payment plans – an attractive proposition to many buyers – is TG Development’s The Peak@Cairnhill II.

Two other projects that have been on the market for some time – CapitaLand’s Sky Habitat and Ardmore Three by Wheelock Properties – also rolled out such a scheme recently to woo buyers.

The Peak@Cairnhill II, a 60-unit freehold condo near Orchard Road, was launched for sale on Monday, offering a 15 per cent discount and an enhanced deferred payment scheme.

Under the scheme, buyers pay a 20 per cent down payment to secure an option to purchase, but have two years to exercise the option.

In the meantime, they sign a master tenancy agreement with the developer which allows them to rent out the unit and get a rental income.

The property tax and maintenance fee payable during the two-year period will also be absorbed by the developer.

All units at The Peak@Cairnhill II are two-bedders, with the smallest unit type, at 829 sq ft, going for $2.085 million. The average selling price after factoring in the discount is about $2,550 per sq ft.

Good response to creative marketing schemes, including deferred payment plans, at OUE Twin Peaks last year had sparked similar moves by other developers to move unsold units at completed projects.

Since its sales relaunch last April, the 462-unit OUE Twin Peaks sold about 220 apartments as at the end of last month, according to caveats lodged.

Last June, CapitaLand rolled out its own version of a deferred payment scheme, known as the stay-then-pay programme, at two mega projects, d’Leedon and The Interlace.

It allows Singaporeans and permanent residents to make a 10 per cent down payment within eight weeks to exercise the option to purchase, live in the unit and pay the other 90 per cent a year from exercising the option. For foreign buyers, the down payment is 15 per cent.

CapitaLand said the programme, which was “well received”, was extended to its 509-unit Sky Habitat project in Bishan this month.

There were 128 unsold units at Sky Habitat as at Sept 30 – the developer was unable to disclose the updated figure before its next quarterly earnings announcement.

Units available under the stay- then-pay plan include two- to four-bedroom apartments ranging from 1,012 sq ft to 2,228 sq ft.

“The average selling price is $1,500 psf (nett after discount), with prices starting from $1.5 million,” said a CapitaLand spokesman.

Wheelock Properties this month also introduced a deferred payment scheme at its high-end condo Ardmore Three – which still had about 25 unsold units as at the end of last month.

A buyer has the option to defer 80 per cent of the price for two years.

The developer started offering discounts and rebates at Ardmore Three last year, with selling prices at more than $3,000 psf.

Two other projects being marketed by ERA Realty Network – Corals at Keppel Bay and One Balmoral – are also providing incentives to sweeten the deal.

Luxury development Corals at Keppel Bay is taking $50,000 off prices of selected units, such as those without a waterfront view. ERA said the average selling price works out to about $1,850 psf after the discount.

Meanwhile, One Balmoral – a freehold 91-unit condo in prime District 10 by Hong Leong Holdings – offers a 13 per cent discount on the prices of all units. The cost of a one-bedder starts from about $1.4 million, with average prices of units around $2,150 psf to $2,200 psf.

Despite the prospect of more completed projects coming on the market with innovative sales schemes, analysts do not expect demand for newly launched condos to be hard hit.

The completed projects make up a very small percentage of the primary sales market, said ERA key executive officer Eugene Lim. “New launches will continue to form the bulk of the sales in that market.”

Adapted from: The Straits Times, 13 January 2017

Surprisingly bullish bids swamp 2017’s first housing land tender

Surprisingly bullish bids swamp 2017’s first housing land tender

Bullish bids poured in for the first tender closing of 2017. But property consultants can’t decide among themselves if it is a sign of market optimism or developers’ need for work.

SPR News - Surprisingly bullish bids swamp year's first housing land tender

SPR News – Surprisingly bullish bids swamp year’s first housing land tender

Construction company Low Keng Huat beat 10 other competitors with its unexpectedly bullish bid for a residential site along Perumal Road which comes with first-storey commercial space.

At a tendered sale price of S$174.08 million, it translates to S$1,000.72 per square foot per plot ratio (psf ppr), greatly surpassing some consultants’ expectations of bids ranging from S$800 to S$850 psf ppr.

When contacted, Low Keng Huat declined to comment on its plans for the plot of land for now. Its share price added half a cent to finish at S$0.565 on Tuesday.

China Construction (South Pacific) Development came in second with a bid of S$166.7 million or S$958.29 psf ppr. Allgreen Properties came in third with a bid of S$161.5 million or S$928.4 psf ppr.

Competition was more crowded than consultants had expected. At 11 bidders, it exceeded the seven to 10 bidders that most were expecting. Many of the bidders were small and medium-sized developers and construction-backed contractors.

The bullish bidding reflects a positive market outlook. Bidders could have been encouraged by the higher transaction volume and moderating price declines in the property market.

At S$1,001 psf ppr, the top bid is optimistic, exceeding the S$787 psf ppr paid for the (nearby) Sturdee Residences site by 27 per cent (in March 2015).

This could be due to the subject site’s closer proximity to Farrer Park MRT, and cost savings that contractor-developers enjoy, such that they can afford to bid higher.

The strong participation by 11 bidders was also a sign of contractor-developers’ need to secure fresh development opportunities.

Developers are clearly looking to replenish their depleting inventory and the Perumal plot offers the added bonus of a small size and therefore an affordable quantum of S$174 million.

In terms of psf ppr, the top bid was the second highest among all the submitted bids for government land sales residential sites since 2009 in the Rest of Central (or city fringe) region.

Such a high land price and strong participation rate among developers indicate their urgent need to replenish their land bank. It could also indicate that some developers are betting on the government relaxing the cooling measures in the near future.”

Either that, or at least an imminent price recovery. The exuberance displayed by the bidders is not congruent with market performance, which showed private home prices falling 3 per cent in 2016 (according to latest flash estimates), after falling 3.7 per cent in 2015.

This may imply that more developers are expecting prices to bottom out in 2017 and will see prices increase from 2018 onwards when the project is ready for launch.

The site at Perumal Road was offered for sale on a 99-year lease term under the second half 2016 government land sales programme. With a maximum gross floor area of 16,161 square metres, it can yield about 200 units and about 500 square metres of commercial space.

Located right beside Farrer Park MRT station, the site is also accessible to the Central Expressway and Pan Island Expressway for private transport, as well as commercial amenities such as City Square Mall, Mustafa Centre, Farrer Park Hospital and Medical Centre, One Farrer Hotel and the upcoming Centrium Square.

Adapted from: The Business Times, 11 January 2017

Siglap condo with sea views likely to make a splash

Siglap condo with sea views likely to make a splash

A highly prized rarity on the local property scene – the first new project with sea views to be built along East Coast Parkway (ECP) in 15 years – is going on sale soon.

Siglap condo with sea views likely to make a splash

Siglap condo with sea views likely to make a splash

Frasers Centrepoint Singapore is launching the 843-unit Seaside Residences condominium at the end of April.

The East Coast plot housing the project was the first government land sale site along the ECP since 2001. It is next to Victoria School.

Frasers had led a consortium to win the hotly contested tender for the 207,847 sq ft plot for $624.18 million in January last year.

True to its name, the developer said the units at Seaside Residences are being designed to maximise the sea views, with 70 per cent of units orientated towards the sea.

The project will have four 27-storey blocks. The units range from one- to five-bedroom types and penthouses, with floor areas between 424 sq ft and 2,690 sq ft.

The developer told The Straits Times yesterday that the condo will have a 115m-long infinity pool and a sky terrace – boasting a three storey-high ceiling – between the 14th and 16th floors.

Frasers Centrepoint Singapore chief executive Christopher Tang called the project “a unique development that will cater to home buyers seeking a seaside home outside the bustling city centre”.

Analysts expect strong demand for the units, given the rarity and attractive attributes of the site. It is less than 1km from East Coast Park and just a three-minute walk to the future Siglap MRT station.

There have been no new sites on the East Coast since 2001.

The last government land sale site in the area was also won by Frasers Centrepoint, in 2001 , and developed into the 612-unit Cote d’Azur condominium.

Based on history, demand for developments in these mature estates tends to be very high. One example is Gem Residences (in Toa Payoh), which sold about half its units in a day before the public launch.

The Seaside Residences site has a rare combination of sea views and proximity to the future Siglap MRT station on the Thomson-East Coast Line, which runs through the city and is set for completion in 2023.

Some analysts expect a 50 per cent take-up rate of units within six months of the launch.

Competition is not as intense due to the lack of supply pipeline in the vicinity as the area is unlikely to see successful collective sales and did not host any site under the Government Land Sales programme in the last year.

Thus, investors looking to purchase new developments would have limited choices.

Adapted from: The Straits Times, 11 January 2017

Two-tier housing market likely in 2017

Two-tier housing market likely this year

Two-tier housing market likely this year

Two-tier housing market likely this year

The Urban Redevelopment Authority’s (URA) private residential index turned out to be surprisingly resilient, dropping a mere 3 per cent for the whole of last year, while the Housing and Development Board’s (HDB) resale price index ended the year almost where it began.

While it appears that policy measures have managed to stabilise prices in the residential market, a deeper look at the numbers reveals that the overall B-grade result was achieved through A grades in a couple of subjects and B, C and D grades in other subjects. Examining the performance of the various regions and sub-types such as landed housing, we might conclude that 2016 was a directionless market. Several factors point to a continued search for direction in 2017.

ON ONE HAND, UPWARD PRESSURE ON PRICE INDICES

More than a dozen HDB flats transacted above the S$1 million mark in 2016 and many more set new area records above S$900,000 to help hold up the overall HDB resale index.

Developers also contributed to the upward shift in the private residential price index. A few projects that have gone quiet for more than a year started selling briskly when developers offered discounts and attractive payment schemes. Even with the discounts, the prices achieved for these relatively new apartments were higher than the average prices in their respective neighbourhoods, nudging the index upwards.

The Monetary Authority of Singapore and the Inland Revenue Authority have, as of January 1, implemented the Common Reporting Standard (CRS) with 46 countries, and the first automatic exchange of information will commence in 2018. This is an agreement among participating countries to share information about residents’ gross financial assets, a move to deter and detect tax evasion through the use of offshore bank accounts.

The key element in the exchange is the disclosure of the value of the bank accounts of high net worth individuals.

Some foreign high-net-worth individuals might not feel comfortable that their accounts are being disclosed to their home country’s taxman. Some of them can be expected to trade their financial assets for real assets such as luxury properties.

It seems that there is plenty of liquidity among high-net-worth investors and prudent owner-occupiers who did not place property bets in the frothy market three years ago. And perhaps these reasons contributed to the Government’s reluctance to relax the cooling measures.

On THE OTHER HAND, MORE DOWNWARD PRESSURE

Investors with little holding power have sold their properties with losses or defaulted on their mortgages. According to research by The Edge Property, the proportion of unprofitable deals rose from 10 per cent (447 of 4,687) in 2015 to 17 per cent (873 of 5,264) in 2016. These figures refer to resale transactions of condominiums and apartments where the previous caveats can be traced.

Defaults on residential mortgages increased from 2014 through to 2016 and are likely to rise further as retrenchments and vacancies increase, rentals decline and interest rates rise in 2017.

Developers avoiding penalties imposed for not selling out their new projects will probably slash prices for bulk investment deals, and offer attractive payment schemes and stamp duty absorption to clear the remaining units.

Adding to the pressure is an increasing supply in the second-hand market. An increasing number of families who treat HDB flats as investments are eligible to sell their flats after the five-year Minimum Occupation Period (MOP).

The situation is similar for executive condominiums (EC), which have an MOP of five years, and for private residences, which are “discharged” from the four-year Seller’s Stamp Duty liability. Due to the massive ramp-up in residential developments after the Lehman crisis, the supply of resale HDB flats, ECs and private homes is expected to increase in the next few years, putting more downward pressure on prices.

This is good news for buyers who are looking for good-value picks. Property agents may also look forward to potentially higher transaction volumes.

A TWO-TIER MARKET LOOMS

Barring seismic shifts in global political and economic events, what might happen when the upward pressure of excess liquidity combines with the potential increase in the number of resale residences? Last year presented us with a hint: A two-tier market will develop in both the public and the private housing segments.

The massive supply and weak rental demand in the outskirts of Singapore is expected to bring prices down. Meanwhile, cash-rich investors looking for gems in the market will focus on centrally-located properties. These trends could continue for the next three years and price gaps will widen.

As the market waits out the supply glut to be absorbed through population growth, investors might do well to appoint a property agent to help sift out the well-built, undervalued, freehold private residences in Districts 9 and 10. When the next economic boom hits Singapore, the value of these properties will jump. Bargaining power is enhanced with scarcity.

Adapted from: TODAY, 6 January 2017

Likely fall in home prices a lure for bargain hunters

Likely fall in home prices a lure for bargain hunters

Likely fall in home prices a lure for bargain hunters

Likely fall in home prices a lure for bargain hunters

Housing prices are set to come under considerable pressure this year as consumers concerned about a subdued economic environment and rising interest rates tighten their purse strings. But with analysts projecting a fourth consecutive year of price decline since the Total Debt Servicing Ratio (TDSR) framework was implemented in 2013, bargain hunters on the scout for cheap properties in good locations could help push transaction volume higher.

Analysts TODAY spoke to are projecting prices for private residential properties to decline by about 3 per cent this year. The fall in home prices — similar to the estimated fall in 2016 but far shy of the 60 per cent surge between 2009 and 2013’s peak — could draw potential buyers and push transactions higher for the third consecutive year.

Analysts are projecting that private home sales could range between 17,000 and 19,000 units this year, surpassing 2016’s projected three-year high of 15,000 to 17,000 units.

But even at the high end of the estimate, 2017’s home sales would still be only about half the nearly 38,000 units sold in 2012.

The fundamentals of the residential market have not improved, with GDP growth slowing in the coming quarters, a potential interest rate hike and increased volatility in the financial market. However, transaction volume could still inch up by a single digit from 2016 levels, barring external shocks.

Official data this week showed that Singapore’s economy grew 1.8 per cent last year, its weakest performance since 2009, when gross domestic product (GDP) contracted 0.6 per cent.

The Government has also indicated that it does not expect the economy to pick up significantly this year, with Prime Minister Lee Hsien Loong speaking of “difficult and uncertain times” in his New Year message.

At the same time, the United States Federal Reserve last month also raised its key rates target by 25 basis points to between 0.5 and 0.75 per cent, and projected another three rate hikes this year. With interest rates in Singapore expected to rise in tandem with US interest rates, repayments of loans will become more expensive, potentially affecting buying sentiment.

SUBURBAN HOMES THE MOST RESILIENT

North Park Residences - Facsade

North Park Residences – Facsade

Pending final real estate statistics by the Urban Redevelopment Authority (URA) for 2016 due later this month, developers here sold 5,656 private homes between January and September, while the resale market saw 6,337 units change hands. These are higher than the 5,837 and 5,081 transactions recorded in the same period in 2015.

The Outside Central Region (OCR), or suburbs, looks set to dominate sales given the larger available supply and more affordable prices. Several developments that are expected to be launched for sale this year are situated in this area, including The Clement Canopy at Clementi Avenue 1, as well as projects on Siglap Road and New Upper Changi Road.

The Rest of Central Region (RCR) and Core Central Region (CCR), or city fringes and city centre, are likely to see a slower pick-up as these segments are more affected by the cooling measures given their high price quantum. Nevertheless, there are several launches worth watching here, such as the one to be built in Martin Place in River Valley and Park Place Residences at Paya Lebar Quarter (PLQ).

Mr Richard Paine, managing director of PLQ by Lendlease, said: “With the property cooling measures likely to remain, and a slowing economy anticipated for 2017, we can expect a relatively soft property market. However, residential sentiments are slowly improving … We are optimistic that buyer interest will continue to improve … as price expectations between buyers and sellers stabilise.”

Analysts agreed that projects that are well-located and priced attractively will continue to draw buyers. This could help to lower unsold inventories, which has fallen to 22,500 as of the third quarter of last year, from 32,200 units three years ago.

However, there could be an increase in launched projects as developers trigger more sites on the Government Land Sales’ Reserve List. Additionally, there is great interest in en bloc sites. Hence, the increase in launched projects might offset the decline in unsold units in the inventory.

With a high amount of supply coming into the market, vacancy rates of private homes here look set to climb further. Vacancy rates for non-landed private homes may hit 11 to 13 per cent in 2017 from the 10 per cent at the end of 2016’s third quarter.

Adding to the woes of rising vacancy rates is a subdued rental market, with supply likely to continue to outweigh demand in the coming year. URA statistics showed that overall rents have fallen by 10.7 per cent in the third quarter of last year from the peak in the third quarter of 2013.

Though the number of incoming completions would have peaked in 2016, the number of expected completions is still above the 10-year average annual completions, from 2006 to 2015, of 11,890 units for landed and non-landed.

The effects of the high number of completions in recent years are expected to persist. Demand remains capped as the economic outlook remains weak and foreign labour continues to be restrained.

KEEPING THE EQUILIBRIUM

Despite the soft outlook for the private housing market, analysts said that cooling measures and loan curbs still have a role to play in keeping the market at an equilibrium state. This is especially so when buying demand has improved despite risks in the economy.

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The Monetary Authority of Singapore (MAS) last year refined the TDSR framework to allow all homeowners to be exempted from meeting the 60 per cent threshold when refinancing mortgages of the home they reside in, regardless of when the property was purchased. Previously, only owner-occupied homes bought before the introduction of TDSR were exempted from meeting the threshold.

Nonetheless, the tweaks to the TDSR are merely a fine-tuning by the MAS. The Government, in several announcements last year, has reiterated that it is premature to relax the cooling measures and we can expect that as the status quo in 2017, especially with improving demand despite economic risks.

Although the macroeconomic data doesn’t seem to support the fundamentals of the housing market, there is a risk of capital inflows due to more severe property curbs in Hong Kong and China.

Should more foreign demand be diverted to Singapore, the Government might even step up efforts to cool the market. However, at this juncture, such punitive measures are not likely to be implemented.

Adapted from: TODAY, 5 January 2017