Our top Singapore and regional property stories.
New rules for transfer of flat ownership
HDB flat owners who wish to relinquish their ownership in favour of another family member are no longer permitted to do so, except on certain grounds based on the new rules introduced by the Housing Board, reported The Straits Times.
Under the new rules which came into effect in late April, transfer of ownership is only allowed for divorce, marriage, medical reasons, death of an owner, financial hardship and renunciation of citizenship, said an HDB spokeswoman.
It covers those who are terminally ill who wish to bequeath their flat, as well as those who require assistance from other family members to pay off the housing loan. Those falling outside the aforementioned circumstances will be considered on a case-by-case basis, she added.
Previously, owners could freely transfer their unit to their spouse or an immediate family member, and many did so to avoid paying the seven percent Additional Buyer’s Stamp Duty (ABSD) when purchasing a second home in Singapore.
According to experts, this is a common industry practice known as ‘decoupling’, whereby one spouse surrenders his or her co-owner status to become an authorised occupier of the flat.
“Agents were going around teaching people how to do this, and it was all above board,” noted Chris Koh, Director of property agency Chris International.
The practice became even more widespread after January 2013 when the ABSD was imposed on second-time home buyers in a bid to control rising property prices.
Between 2012 and 2015, the Housing Board approved an average of around 6,000 ownership transfers a year. The most common reasons were divorce, marriage, death of an owner and financial hardship.
79% of Singaporeans satisfied with services of property agents
Nearly four out of five Singaporeans are pleased with the performance of property agents here, according to the latest survey conducted by the Council for Estate Agencies (CEA).
Around 79 percent of respondents said they are satisfied with their agents, but this is slightly lower than the 81 percent seen in 2012.
The marginal drop comes after the percentage of satisfied resale clients fell from 87 percent in 2012 to 82 percent last year, while that of rental clients remain unchanged at 75 percent.
Those polled said they are most satisfied in the area of service excellence, giving high marks to property agents for politeness, responsiveness and for reasonably accommodating customers’ needs.
However, respondents gave low marks in three areas, namely that their agents did not clearly explain the commission amount for brokering the deal, may have been forceful in pressuring them to complete the transaction, or did not do their best to secure the best price for the client.
The study also found that more people are undecided about whether to engage a property agent for future transactions. Compared to 24 percent in 2012, 31 percent said they do not know if they would use their services.
Nevertheless, the proportion of respondents intending to work with a property agent is still high at 60 percent, versus 66 percent four years ago. Those planning to handle their own transactions also fell from 10 percent to nine percent.
“The findings provide us with useful insights to plan and develop initiatives that will further raise professional standards in the industry, as well as promote consumer awareness of industry practices. It also serves as a useful report card for property agencies and agents to review and improve their practices,” said CEA’s Executive Director Lee Kwong Weng.
The survey was conducted from November 2015 to February 2016, involving a total of 2,113 consumers. Of this number, 448 had not dealt with a property agent before, while 1,665 had used their services.
Singapore remains most attractive for infrastructure investment: report
Singapore has retained its position as the world’s most attractive market for infrastructure investment, according to the third edition of the Global Infrastructure Investment Index, published by global design and consultancy firm Arcadis.
The city-state ranked highly across business, risk, infrastructure and financial indicators, and despite a slightly lower score for economic factors, it maintains a strong overall economic environment.
Although most projects here are publicly funded, work is now underway to make infrastructure as an asset class more attractive to private institutional investors, such as through the development of new benchmarking tools.
Currently, Singapore invests around five percent of its GDP in infrastructure (US$20 billion in 2015), and this continues to rise. By 2020, it aims to invest six percent of GDP (US$30 billion).
Several big projects have been planned for healthcare and transport, including the expansion of Changi Airport through the construction of a fifth terminal.
Elsewhere in Asia, Malaysia rose to fifth place in the rankings. Its strong economic performance and continued long-term investment in infrastructure, such as the capital’s metro system, have made the market attractive for investment.
Still, there are several risks of investing there, including its currency depreciation against the dollar and a high-profile corruption scandal that has delayed some projects.
In terms of economic score, China was first among the 41 countries analysed, yet its less attractive business conditions and higher risk environment saw it ranked 17th on the index.
“In the region as a whole, there is clearly a lot of social and public need for new infrastructure. There is a whole host of project ideas and plans out there, but they are not investible or bankable enough, which is the basic problem,” said Graham Kean, Head of Client Development at Arcadis Asia.
“The key to unlocking investments in the region hinges on making the projects bankable, an area which we have been supporting,” he added.
High EC e-applications won’t guarantee good sales
Sales at recently launched executive condominiums (ECs) have not been stellar despite the large number of e-applications received.
However, many property experts believe it is still acceptable in today’s market if 20 to 30 percent of e-applications translate to sales.
But seven out of the 14 EC projects launched since 2014 failed to achieve even the minimum conversion rate during their launch weekend, reported The Business Times.
The latest EC to launch was the 628-unit Parc Life. Jointly developed by Frasers Centrepoint Limited and Keong Hong Holdings, it only sold 51 units during its recent launch despite recording over 700 e-applications.
Prior that, Qingjian Realty’s The Visionaire sold 158 units out of 632 units, even though it attracted 859 e-applications.
In comparison, the number of e-applications some EC projects received during the market’s heyday in 2011 to 2013 easily surpassed the volume of units offered by two times, said Tan Tee Khoon, Managing Director of KF Property Network.
According to Nicholas Mak, Executive Director of SLP International, the low take-up rate is due to the large supply. “It’s just too much for the market to digest in that span of time (as) demand for ECs in suburban areas tend to be limited to upgraders or people who live in the area.”
This is especially true for developments being built in the same area and launched at roughly the same time, as they are competing for the same pool of eligible buyers who most likely submitted e-applications for multiple ECs.
For example, Parc Life and The Visionaire are both located in Sembawang, in the same neighbourhood where The Brownstone made its debut in July 2015. In Yishun, The Criterion was unveiled last October, followed closely by Signature At Yishun.
Meanwhile, Century 21 Chief Executive Ku Swee Yong believes the weak sales “are conclusive evidence that demand is exhausted” for this type of property. Based on the current pace of EC transactions, he thinks the market needs at least two years to absorb the remaining unsold units fully.
Luxury home prices up 5.4% in Q1
Singapore recorded the eighth largest growth in luxury home prices in Knight Frank’s latest Prime Global Cities Index, with values rising 5.4 percent in Q1 2016 from a year ago.
“The annual price increase signals ‘green shoots of recovery’ for the ultra-luxury segment, as high-net worth individuals see rising value proposition for Singapore luxury homes after a prolonged two-year period of price declines,” said Alice Tan, Research Head at Knight Frank Singapore.
In fact, a number of these prime units were sold at prices surpassing market expectations in the first quarter, she noted.
Tan explained that the return of wealthy buyers shows their preference for Singapore homes and their confidence in the country’s long-term outlook. This is on the back of its safe haven status, stable economic fundamentals and growing importance as a key gateway city in Asia. Another plus factor is the premium quality of high-end homes here, which now offer greater value compared to most gateway cities.
Similarly, data from the Urban Redevelopment Authority (URA) shows that luxury home prices in Singapore’s Core Central Region (CCR) edged up by 0.3 percent quarter-on-quarter, driven by healthy sales in well-located projects in the prime districts.
However, it remains unclear if the price recovery in the high-end residential segment can continue over the next three quarters as volatility in the global economy persists.
“With the Singapore economy facing strong headwinds, businesses could see weakening earnings which can possibly impact the buying appetite of entrepreneurs and high-net worth individuals for (expensive) homes going forward into end-2016,” Tan added.
Meanwhile, Vancouver topped Knight Frank’s global index with a 26.3 percent surge in luxury home prices, followed by Shanghai (20.3 percent) and Sydney (12.3 percent).
UK still a big draw for Asian property investors
UK-based Select Property Group recently opened an office at CapitaGreen in Singapore, to take advantage of the ongoing demand for lucrative investment properties in Britain.
“Asia is one of the most important growth markets for Select – more than 18 percent of our investors come from this region,” said Group Managing Director Adam Price.
Of this, Hong Kong, Singapore, China and Malaysia account for more than 15 percent of total investors, with Singaporeans making up approximately five percent as of December 2015.
“The establishment of our Singapore office allows our growing team to better cater to our investors in the region and ensure we provide them with exceptional service,” noted Elliot Vure, Select’s Sales Manager for Asia and the head of operations here.
The company currently markets three brands – Vita Student, CitySuites and Affinity Living.
Vita Student is its accommodations provider for students while CitySuites offers luxury serviced apartments. The company’s recently launched Affinity Living brand provides quality accommodation in the city centre for Generation Y clients.
Prices for Vita Student units range from £99,916 (S$193,035) to £224,829 (S$434,364). CitySuites’ prices range from £168,000 (S$324,572) to £383,000 (S$739,947), while units at Affinity Living cost between £150,000 (S$289,797) and £350,000 (S$676,192).
Meanwhile, the group revealed that buyers who have invested in buy-to-let properties in the UK have reaped huge returns of as much as 1,400 percent over the past two decades.
Economists at Wriglesworth Consultancy revealed that an average investment of £1,000 (S$1,932) in a rental asset in Q4 1996 was worth £14,987 (S$28,955) during the last three months of 2014.
However, due to complaints that property prices in London are being driven up by overseas investments, Chancellor George Osborne recently pledged to curb lending to buy-to-let landlords and increased the stamp duty on such properties.
Despite this, Select Property intends to continue its build-to-rent business.
According to Group Director Giles Beswick, this business model aims to meet the demand of the 7.2 million households that are expected to rent in the UK by 2025, based on a forecast by PwC.
It also intends to leverage on Knight Frank’s research, which shows £50 billion worth of investments are expected to enter the build-to-let sector over the next four years.
Dismal outlook for commercial property market: RICS
Rental demand for commercial property in Singapore has declined at its fastest pace in Q1 2016 since the financial crisis in 2009, according to a report from the Royal Institution of Chartered Surveyors (RICS).
Amidst the city-state’s sluggish economy and growing supply of available space, the appetite for retail, industrial and office premises fell sharply last quarter for both tenants and investors.
Consequently, many market players surveyed by RICS believe that rents and capital values will continue to decline during the year. In fact, 64 percent of its respondents expect rents to drop further in the next quarter while 65 percent believe that the downtrend would extend into 2017.
Over the next 12 months, rental prices are forecasted to contract by 5.8 percent, with all sectors likely witnessing a significant decline.
Due to the bleak outlook, developers have temporarily stopped launching new commercial projects, especially those involving retail and industrial properties. Also, only 20 percent have started the construction of more office developments.
Meanwhile, those polled witnessed a drop in investment enquiries from foreign buyers for all types of commercial properties for the third consecutive quarter.
Across all sectors, capital values are projected to weaken further on a quarterly basis, with respondents forecasting a 2.7 percent fall over the next 12 months.
“The office sector is expected to underperform all others, and RICS lead indicators suggest the price drops will accelerate in the coming quarters,” it said.
Despite the dismal outlook for Singapore’s commercial property market for 2017, the medium-term outlook is slightly more optimistic, with respondents anticipating a capital value growth of 0.6 percent per annum over the next three years.
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