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JLL: Home price recovery in 2017
Singapore’s annual population growth fell from 3.2 percent in the 2006 to 2012 period to 1.2 percent in 2015, implying that annual housing demand plummeted from 38,000 to 16,000 units, according to property consultancy JLL.
Nonetheless, housing supply remains high at 50,000 units per year from 2014 to 2018. This comes as the government looks to compensate for the low supply recorded till 2013. JLL expects most of the new supply to be developed in the suburbs. Public housing units will account for 73 percent of the total stock, down from 80 percent in 2000.
Meanwhile, the slew of property cooling measures rolled out by the government has dampened the mood in the housing market. From 2011 to 2012, home loans grew by 17 percent and 13 percent per annum for owner-occupied and investment properties respectively, but the number of housing units grew by only two percent per annum.
Loan growth fell to 4.7 percent for owner-occupied properties and zero percent for investment properties in 2015, after a cap on the Total Debt Servicing Ratio (TDSR) was imposed. Primary sales fell 60 percent as the capital base shrunk.
The presence of the Additional Buyer’s Stamp Duty (ABSD) also saw foreign purchases within the central region shrink to 10 percent, from 20 to 25 percent.
Moreover, prices of high-end homes fell by 20 percent following the introduction of the ABSD in 2011, while the implementation of the TDSR in 2013 has resulted in mass market home prices dropping by 12 percent.
Looking ahead, prime and mass market prices are expected to fall five to 10 percent more before recovering in 2017. The report noted that the government could consider replacing the various additional buyer and seller stamp duties with higher property taxes in order to push up transactions and remove friction in the market.
“Currently, non-owner occupied residential taxes do not differentiate between residents and foreigners, and this can be tweaked,” added JLL.
HDB, condo prices fall further
Prices of private residential properties fell 3.7 percent last year after a 4.0 percent decline in 2014, the latest figures from the Urban Redevelopment Authority (URA) revealed.
For the whole of 2015, prices of non-landed properties in the Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR) fell by 2.5 percent, 4.3 percent and 3.7 percent respectively. Prices of landed properties declined by 4.1 percent.
Meanwhile, rental prices for private residential properties fell by 4.6 percent for the whole of 2015. Specifically, rentals of non-landed properties in the CCR, RCR and OCR declined by 3.8 percent, 4.9 percent and 5.6 percent respectively. On the other hand, rentals of landed properties fell by 4.5 percent.
Separately, resale HDB flat prices fell by 1.6 percent in 2015, the latest resale price index (RPI) from the HDB shows.
The number of resale transactions for the year reached 19,306, up 11.5 percent from 2014. As of 31 December 2015, 50,264 HDB flats had been sublet.
In 2016, the HDB plans to launch four Build-To-Order (BTO) exercises, with a total supply of about 18,000 new flats. These flats will be spread across various locations, so home buyers can choose flats that best meet their budgets and needs.
The first BTO exercise will be held next month, where about 4,150 flats in Bidadari, Bukit Batok and Sengkang will be offered.
Chinese buyers shun Singapore
Discouraged by the high taxes in Singapore, fewer foreigners are purchasing private homes here, leaving the market to rely on local buyers.
In a Reuters report citing DTZ data, it said foreigners, including permanent residents, purchased 499 homes in Q4 2015. This accounted for around 16 percent of total transactions, down from 30 percent recorded in Q3 2011 just before the introduction of the Additional Buyer’s Stamp Duty (ABSD).
Acquisitions by Chinese buyers, considered one of the biggest foreign buyers of Singapore private homes, fell 40 percent from a year earlier to 151 units. DTZ noted that the figure is also down 80 percent from its peak in Q3 2011.
The figures were based on caveats lodged as of 15 January, with the land planning authority maintaining an online database.
“Chinese money is being attracted by Australia and the UK,” said Alan Cheong, Research Head at Savills Singapore.
He noted that the stamp duties should be rolled back to a level where the city-state can still capitalise on Chinese funds without attracting too much hot money. “If we continue to sit by with all these measures, we are just going to miss the boat,” he said.
And with the benchmark three-month Singapore Interbank Offered Rate (SIBOR) on an uptrend, local buyers may also become cautious. The SIBOR, which is used to set interest rates on mortgages, rose to 1.254 percent this week, the highest since October 2008.
Famed developer sells $25m bungalow
Luxury property developer Simon Cheong recently sold a good class bungalow (GCB) he had built along King Albert Park, within the Bukit Timah / Clementi Road vicinity.
In a report by The Business Times, the property was sold for $25 million, which works out to $1,493 psf based on the freehold land area of 16,750 sq ft.
Completed in late 2012, the two-storey bungalow has a built-up area of around 10,000 sq ft and comes with a swimming pool. The property is currently being tenanted.
The buyer, Absolute Kinetics Consultancy founder Fang Koh Look, is expected to occupy the property following the end of the existing lease, the report said.
Known for building luxurious condos under the SC Global Developments brand, Cheong also develops landed properties under SC Homes. He owns several GCBs on Peirce Road and is believed to be open to selling them at the right price.
Meanwhile, a wholly-owned unit of Soilbuild Group Holdings has acquired an old, two-storey bungalow along Wilkinson Road for $19.28 million. This translates to $1,203 psf based on the land area of 16,031 sq ft.
Soilbuild Executive Chairman Lim Chap Huat noted that the freehold property could easily be 40 to 50 years old, and was “bought from a family”.
He revealed that the group plans to redevelop the site, which is zoned for two-storey bungalow use, into two new bungalows set to be completed in two years.
Mega project the size of Ang Mo Kio launching soon
A S$58.3 billion township the size of Ang Mo Kio is set to rise near the Tuas Second Link in the Johor Strait.
The first phase of Forest City, a 14 sq km mixed-used development comprising four man-made islands, will launch in Singapore, China and Malaysia in the first quarter of 2016, but the sales gallery is already open for bookings.
Aside from condominium units and high-rise coastal residences, Forest City also consists of hotels, retail centres, parks and leisure attractions, which will be developed in nine phases over 20 years.
The master developer, Country Garden Pacificview, is jointly owned by Chinese property giant Country Garden Holdings and Johor’s Esplanade Danga 88.
As part of long-term planning, Country Garden is said to be in discussions with the Malaysian government to set up dedicated entry points to Forest City, such as a light rail transit system and a ferry network that will link to Singapore and to the planned high-speed rail (HSR) between Singapore and Malaysia.
This is the biggest overseas development undertaken by Country Garden, which has more than 200 projects globally.
At a global press conference held in Singapore recently, the Hong Kong-listed developer said that the project is still under construction and prices of the residential units have not yet been set, but will likely cost around RM1,200 psf (S$400 psf) on average. Comprising two- to four-bedroom units, sizes range from about 818 sq ft to 1,915 sq ft.
Meanwhile, a Straits Times report last year stated that the project could house around 700,000 people. So far, 700 residential units at Forest City have been approved for sale, excluding the 336,000 new private residential units in the pipeline for Johor.
Country Garden is also developing a waterfront project in Danga Bay featuring 9,000 residential apartments. Covering 50 acres, phase one and two have launched with more than 6,000 units already sold. More than 50 percent of the units were sold to overseas buyers from Singapore, Indonesia and the Middle East, said the developer.
Developers cut prices as ABSD deadline looms
Singapore developers are starting to slash condo prices as the deadline for the Additional Buyer’s Stamp Duty (ABSD) looms.
Under the ABSD rules, developers are given five years within which to complete a housing project and sell all units. Otherwise, they must pay the ABSD, which was initially set at 10 percent of the site’s purchase price, and subsequently raised to 15 percent on 12 January 2013.
Since it was first introduced on 8 December 2011, the first deadline comes up at the end of this year.
According to a report from The Straits Times, projects such as The Trillinq, which is believed to be the first site to come under the ABSD rules, saw median prices drop to $1,329 psf in Q4 2015, from $1,545 psf in Q1 2013 during the project’s launch. The 755-unit project had sold 220 units as of end-2015.
Over at Mon Jervois, which is set to incur ABSD from early-2017, median prices for units stood at $1,852 psf in Q4 2015, down from $2,087 psf in Q2 2013. As of end-2015, the project moved 46 out of its 109 units.
Also poised to incur ABSD from early next year is Kingsford@Hillview Peak. The project sold 242 of 512 units as at end-2015, with median prices falling from $1,340 psf in Q2 2013 to $1,288 psf in Q4 last year.
Another source of pressure for developers is the Qualifying Certificate (QC) rules, the report said.
Under these rules, non-Singaporean developers should finish building a housing project within five years of acquiring the site and sell all the units within two years from the date of completion. Developers looking for more time on either deadline can pay extension charges. But unlike the ABSD, the amount is pro-rated for QC based on the number of unsold units.
“As the ABSD charges will kick in first, developers are now given a shorter timeline to clear the units if they want to avoid the hefty fine,” said Cushman & Wakefield Research Director Christine Li.
She noted that ABSD charges will still apply even if developers only have one unsold unit. This is “in stark contrast with QC extension charges, which are more progressive, especially in the first year”.
Office, retail rents down in 2015: URA
Office rents fell further in Q4 2015, posting a 1.8 percent decline from the previous quarter, when it recorded its biggest drop of 2.9 percent for the year. For the entire year, office rents fell by 6.5 percent. Meanwhile, office space prices moderated slightly by 0.1 percent in Q4, after registering the same decline in Q3.
For the whole of 2015, prices of office space declined 0.1 percent.
“Office leasing activity remained lacklustre in the fourth quarter due to a slump in business sentiment amid weak macroeconomic conditions,” said Christine Li, Director and Head of Reseach at Cushman & Wakefield. “The office leasing market continues to face challenges in the short term, as the impact of China’s slowing growth and continued volatility in the Chinese stock market reverberates throughout the global economy.”
“Despite the fall in rents, office prices remained resilient with both a quarter-on-quarter and year-on-year dip of just 0.1 percent in Q4. The resilience could be attributed to sellers maintaining their asking prices due to the scarcity of prime assets available for sale, and buyers who are willing to pay a premium for well-tenanted properties with established cash flows,” she added.
As of the end of Q4, a total supply of about 993,000 sqm GFA of office space was in the pipeline, URA data shows. As of the same period, there was a total supply of about 993,000 sqm GFA of office space in the pipeline.
Over on the retail front, rents declined by 1.3 percent in Q4, following the 2.0 percent decline in the previous quarter. Meanwhile, retail space prices decreased by another 0.1 percent in Q4, after declining 0.3 percent in Q3. For the whole of 2015, prices of retail space had declined by 0.8 percent, while rentals had declined by 4.1 percent.
According to Desmond Sim, Head of CBRE Research, Singapore and East Asia, the decline in retail rents reflects “the outpacing of supply over demand, (and) weak demand for space due to headwinds, with more tenants choosing to consolidate rather than expand”.
“The retail market is restructuring in response to the changing patterns in consumer spending with the use of technology in retail,” he added.
As of the end of Q4, there was a total supply of 808,000 sqm GFA of retail space from projects in the pipeline, said the URA.
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