SINGAPORE, 22 July 2015 - PropertyGuru Group ("PropertyGuru" or the "Group"), Asia's leading online property portal group, announced the launch of its property outlook report for the second half of 2015, predicting a continued slowdown in price decline for resale HDB and non-landed private property for the rest of 2015. Prices for both property segments are expected to bottom out by the end of this year, leading to a boost in transaction volumes.
"With the flattening out of prices for both the HDB resale and non-landed private properties, potential buyers are convinced that there are near-term buying opportunities. The market has stabilised in terms of pricing and barring any further changes to the cooling measures, there is a sense of renewed optimism in the market," said Steve Melhuish, Chief Executive Officer of PropertyGuru.
HDB Resale: Resurgence in Buyer Interest
For 2015, the overall price decline is expected to slow to 3-5 percent compared to 6 percent in 2014 to reach a bottoming out point. An increase in resale flat supply due to HDB second timers selling their flats for new BTOs is likely to keep prices low. Although the HDB resale market saw significant declines in transaction volumes to average around 3700 - 4000 units per quarter in 2014, a resurgence in buyer interest has caused transaction volumes to climb 7.2 percent in H1 2015, as buyers are gradually spurred to enter the market due to the low prices. We anticipate the volume of transactions in 2015 to garner a total of 16,000 - 18,000 units and prices to decline further by 3 -5 percent from end of 2014.
Non-Landed Private Property: Path to Recovery
Prices flat-lined in H1 2015 at just 1.9 percent correction from the end of 2014; there is a strong likelihood of a "bottoming-out" point being reached by end of 2015. Market trends continue to follow PropertyGuru's predictions earlier in the year, with an average of 2,000 non-landed private properties sold per quarter for H1 2015; actual transactions recorded were 2,572 and 2,050 for the first and second quarter of 2015. With more mass-market private homes launched in the Outside Central region (OCR) and developers refraining from setting benchmark prices against previous projects for new launches, subdued prices are expected to lead to a rebound in transactions in the fourth quarter of 2015. We expect the total number of transactions in 2015 to close with 9,000 - 11,000 units, at least a 20 percent drop from 2014, and for prices to reach an overall decline of 4 - 6 percent from the end of 2014.
Rental market: Turbulence on the horizon
Leasing volume in H1 2015 saw a total of 36,068 non-landed private property units rented out; an estimated 21 percent more than the 26,450 recorded in 2014. For the HDB market, a total of 20,820 rent transactions were recorded in H1 2015, which was more than half of the total recorded in 2014. Rental prices of non-landed private homes and the HDB rental market dipped by 2.8 percent and 2.4 percent year-on-year in H1 2015, respectively.
Private homes and HDB flats completion are expected to exceed 50,000 units this year, while the uptick in demand for the past one year was just over 15,000; creating a demand-supply imbalance. New supply of private homes have diversified to the OCR where prices are more affordable. With expatriate packages becoming leaner due to localisation of contracts, rental prices will continue to remain subdued. Therefore, it is likely to remain a tenants' market for the rest of 2015.
A Muted Outlook for the Commercial Market
Rents and prices of office spaces in Singapore are expected to stay relatively flat in H2 2015 amid softening demand for office space and growing concerns over the rise in office space supply over the next two years. Transactional activity in H2 2015 is expected to pick up slightly due to supply-led demand from the launches of new strata-titled office units such as GSH Plaza.
Overseas Property Market Outlook
Away from Singapore, emerging countries such as Vietnam and Cambodia represent an attractive investment alternative to established markets. On 1 July 2015, new laws passed in Vietnam relaxed foreign housing ownership, potentially triggering a wave of foreign investor interest. All foreigners granted a visa to Vietnam will be allowed to buy residential properties, with only two major restrictions: a leasehold tenure of 50-years on purchased
properties, and a maximum of 30 percent of units in a condominium project is available for foreign investment. High-end condominium yields for Ho Chi Minh in Vietnam average around 8 percent, which is higher than surrounding ASEAN cities such as Bangkok.
For Cambodia, high-end condominium yields for Phnom Penh average around 7 percent1. Its pro-business outlook and relaxed restrictions on foreign home ownership mean that 70 percent of freehold condominiums can be foreign-owned. A GDP growth of 7.3 percent in 2015 compared to 7 percent in 2014 is expected to buoy the property market.
"If there is one thing property investors are on the prowl for, it has to be a lucrative purchase that can reap the highest returns. And with Singaporeans remaining Asia's top buyers for international real estate, it opens up questions as to whether it is worthwhile to invest in a mature or developing property landscape be it in Singapore or overseas. Our Property Outlook Report H2 2015 seeks to answer these questions, against the backdrop of real estate continuing to be a favoured asset class among many investors," added Steve.
To get the full report: http://content.propertyguru.com.sg/singaporepropertyoutlook
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For media queries, please contact:
Rachel Lim
Hill+Knowlton Strategies
6390 3315
rachel.lim@hkstrategies.com
Jack Chong
Hill+Knowlton Strategies
6390 3329
jack.chong@hkstrategies.com
1 Source: CBRE Vietnam
2 Source: International Monetary Fund Regional Economic Outlook: Asia and Pacific 2014 http://www.imf.org/external/pubs/ft/reo/2014/apd/eng/areo0414.pdf
About PropertyGuru Group
PropertyGuru Group is Asia's leading online property portal group used by more than 11 million property buyers, viewing over 104 million property pages and generating over 500,000 enquiries for real estate developer and agent advertisers - every month - across Singapore, Malaysia, Indonesia and Thailand.
Headquartered in Singapore, PropertyGuru was founded in 2006 by two entrepreneurs with a vision to simplify the property search process and help buyers, sellers and investors make better property decisions faster. Taking advantage of Asia's growing affluence, property demand and online explosion, PropertyGuru has become market leader in Singapore, Thailand and Indonesia. The Group received S$175million investment - the largest in the technology sector in Southeast Asia this year - to support its innovation, marketing and further expansion in the region.
The Group's continued focus on innovation has been a key enabler to its success. PropertyGuru has developed and launched 15 mobile applications in four countries and three languages. At present, the Group records over 2.5 million downloaded mobile apps. PropertyGuru was also the first to integrate its website with social media and first to launch Singapore's only dedicated property newspaper, read by more than 100,000 readers island-wide every month. PropertyGuru has also developed a property events platform with approximately 20 shows held annually across four countries, addressing 20,000 potential property buyers on the ground.
PropertyGuru offices in the region include:
PropertyGuru.com.sg in Singapore
PropertyGuru.com.my in Malaysia
DDProperty.com in Thailand
Rumah.com in Indonesia
ABOUT STEVE MELHUISH
Co-Founder and Chief Executive Officer
Steve is an award-winning entrepreneur. In the last two decades, he built profitable companies throughout Asia and Europe. He co-founded PropertyGuru due to his personal frustrations at trying to find a new home in 2006. Today, PropertyGuru is the leading online property group in South East Asia used by over 11 million property seekers and 31,000 property advertisers every month.
Prior to Steve's current role, he held advisory roles at various firms including Skype, AOL, Virgin Media, Vodafone, Extreme Media, iPass and Ariadne Capital. He also led global teams and a US$500 million turnover business unit for Cable & Wireless. In 2007, Steve was awarded the Spirit of Enterprise Award in recognition of his contributions to entrepreneurship in Singapore. Steve has invested in four digital media firms and is passionate about Asia + Digital.