Our top Singapore and regional property stories.
HDB deficit rises to over $2 billion
The Housing Board suffered a deficit of $2.02 billion for the fiscal year ended 31 March 2015, the agency’s latest audited financial results revealed.
According to a report by The Straits Times, this is not only higher than the $1.97 billion loss during the same period last year, but also surpassed the $797 million and $443 million deficit recorded in previous financial years.
HDB posted this loss even though its homeownership programme, which accounts for most of the deficit, declined to $1.75 billion from its historic high of $1.93 billion in FY2014; this was due to falling surpluses in other areas.
For instance, the surplus from its rental and related businesses segment dropped from $745 million to $679 million. Moreover, the Additional and Special Central Provident Fund (CPF) Housing Grants disbursed to home buyers rose to $263 million from $162 million previously.
It is noted that in a parliamentary session in January, National Development Minister Khaw Boon Wan said the agency’s deficit is expected to remain high in the next few fiscal years, as flats launched from 2011 to 2013 — a period when supply was raised — are still being completed and delivered to their owners. In addition, about 26,000 HDB flats are projected to be ready this year, while another 25,000 units are expected to be completed annually over the next two years.
HDB incurs losses on home sales as it subsidises the selling prices of flats to keep them affordable, instead of adding a premium on top of their development cost. To keep it operating in spite of the deficit, the agency receives a grant from the Ministry of Finance every year.
REDAS to work with government on oversupply fears
The Real Estate Developers’ Association of Singapore (REDAS) revealed that it is ready to engage with the government to address the impending oversupply of private residential units, reported Channel NewsAsia.
Excluding executive condominiums (ECs), REDAS expects around 67,000 new homes — almost 20 percent of the total current stock — to enter the market by 2019.
Meanwhile, only 6,500 private homes changed hands in the 12 months leading to June 2015. REDAS believes the low demand and high supply of private units may lead to a downward spiral of property prices.
“We intend to engage government agencies to give our constructive input and explain where we think the market could be trending, and that we want to avoid the hard landing,” said REDAS President Augustine Tan at its Mid-Autumn Festival Lunch.
Home prices continue to fall
Singapore’s residential property market continues to lose steam, with house prices falling 3.38 percent during the year to Q2 2015, revealed a global house price survey by Global Property Guide.
The report stated that this is the seventh consecutive quarter of house price declines in the city-state, while on a quarterly basis, prices fell 0.69 percent in Q2.
Meanwhile, demand and supply continues to drop, as the number of private units sold fell 24 percent to 1,999 units in the second quarter from a year ago, according to data from the Urban Redevelopment Authority (URA). The number of uncompleted private homes launched also declined by about 26.2 percent to 2,099 units over the same period.
Looking ahead, the continual slowdown in Singapore’s economy, impending interest rate hikes, and macroeconomic uncertainties are expected to put downward pressure on prices. Singapore’s economy is expected to grow between 2.0 and 2.5 percent this year, after a growth of 2.9 percent in 2014, 3.9 percent in 2013, 2.5 percent in 2012, and 6.0 percent in 2011, added the report, citing figures from the Ministry of Trade and Industry.
GCB off Holland Road for sale
A freehold Good Class Bungalow (GCB) re-development site located at 2 Queen Astrid Park has been put up for estate sale by tender, revealed marketing agent Colliers International.
The 35,011 sq ft site zoned “Residential” is located off Holland Road, at the junction of Queen Astrid Park and Coronation Road West. It is currently occupied by a single-storey detached house, but can also be sub-divided into two smaller plots. “The subject property would not have been made available for sale had it not been an estate sale,” said Grace Ng, Deputy Managing Director of Colliers.
“(The) indicative price for the subject site is $49 million to $51 million, which works out to be some $1,399 psf to $1,456 psf. This is an inviting price, if we compare it to the peak median price of $1,749 psf recorded in Q2 2014.
In a statement, Colliers said that GCBs are highly coveted in Singapore due to their scarcity. Across the island, there are only around 2,500 such properties. As of Q2 2015, the median price for detached houses with land areas of 15,000 sq ft and above in districts 9, 10 and 11 is $1,410 psf, the consultancy added.
The tender exercise will close on 12 November.
Cooling measures to stay even after PAP victory
Analysts believe the property cooling measures are unlikely to be eased this year, even after the ruling People’s Action Party (PAP) romped to a strong election victory, a RHB Research said.
While the strong mandate received by the PAP provides it with more room to ease the measures, a Singapore Business Review report said the consultancy does not expect policymakers to relax any curbs this year, as property prices remain relatively high.
“Despite expectations building up for more pro-growth policies, we do not think any easing particularly for property) will be done this year, as the property price index (PPI) is still only -6.7 percent from its peak in Q3 2013, and -3.7 percent year-on-year. There may also be push-back from the populace if asset prices spike right after elections,” it said in a report.
RHB Research expects the new cabinet to take a measured, data-dependent and gradual approach in loosening the measures.
“We think the probability of lifting some of the ABSD cooling measures next year when island-wide property prices have fallen 12 to 15 percent certainly looks more palatable at this stage,” the report added.
Malaysia properties still popular with Singaporeans
Despite challenging market conditions, some 10 units amounting to RM$8.65 million were sold in just two days at PropertyGuru’s Malaysia Property Show earlier this month.
Close to 400 visitors attended the event, which displayed several residential, commercial and mixed-use developments from across the country.
PropertyGuru believes a combination of factors, including restrictive cooling measures in the domestic market, a favourable exchange rate and the upcoming Singapore-Kuala Lumpur High Speed Rail (HSR) contributed to the healthy demand. Property across the causeway has become even more affordable for Singapore-based investors as Malaysia’s weakened ringgit now stands at RM3.03 per Sing dollar.
A series of educational seminars, such as the strong impact of the Singapore dollar on Malaysian property investment and financing strategies, were also conducted on both days. Meanwhile, feedback from exhibitors and visitors was extremely encouraging, said the property portal.
Mah Sing sales representative Ng ChongShiuan, said: “Leveraging on PropertyGuru’s leading market position in the region and strong brand equity has allowed us to consistently engage with property seekers searching for Malaysian properties. We are very happy with the results, such as the leads and sales volume generated for our selected developments showcased, all thanks to PropertyGuru.”
REITs trade above historical averages amid rise in SIBOR
While the rise in the Singapore 10-year government bond and three-month Singapore Interbank Offered Rate (SIBOR) have compressed the yield spreads of REITs, most them are still trading above their historical averages, revealed Credit Suisse.
Notably, the weakness in the Singapore dollar saw the Singapore 10-year government bond and three-month SIBOR increase by 25 basis points to 2.86 percent and 1.14 percent respectively over the last 1.5 months, it said in a report. Compared to historical yield spreads, the Swiss financial institution said CDL Hospitality Trust, Keppel REIT and CapitaLand Commercial Trust offered the biggest buffer.
“Most REIT yields are one standard deviation above historical averages, with CMT (CapitaLand Mall Trust) as the highest above amongst retail REITs, KREIT in office, AREIT in industrial and CDL HT in hospitality,” it said.
In fact, 61 to 99 percent of REIT borrowing costs have already been fixed, and will be largely protected from the recent rise in SIBOR.
“Based on the current gearing levels and fixed debt, KREIT, Suntec and OUEHT would be the most vulnerable to rising borrowing costs — we estimate that a 100 basis point increase will lower DPU by 3.4 to 4.2 percent. CT, MINT and KDC REIT would be the least impacted,” said Credit Suisse.
“Current valuations suggest that the REITs are pricing in some expectations of higher rates, and our preference is for the suburban retail REITs, CMT and FCT. This is followed by the industrial REITs, where we like KDC REIT, MINT and AREIT,” it added.
M+S unveils Marina One anchor tenants
Marina One owner M+S unveiled on Friday (18 September) the line-up of its anchor retail and Food & Beverage (F&B) tenants including Virgin Active, Cold Storage and Cookhouse by Koufu, ahead of the development’s expected issuance of its temporary occupation permit (TOP) in 2017.
According to M+S, the company’s retail strategy will “continue to focus on introducing new, refreshing lifestyle and retail experiences which appeal to a sophisticated and cosmopolitan audience”. Other tenants include Japanese restaurant Teppei Syokudo, “third-wave” specialist coffee house Jewel, and 4 Fingers Crispy Chicken.
According to M+S, Virgin Active will occupy a total of 26,000 sq ft — spanning two levels — at Marina One, while the Cold Storage there will be the largest supermarket in Marina Bay. Marina One’s retail podium, The Heart, accounts for a total of 140,000 sq ft of net lettable space of the integrated development.
Owned 60:40 by Khazanah and Temasek respectively, M+S was set up in June 2011 to develop two integrated developments in Singapore — Marina One and DUO.
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