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Developer sales up 40% in May
Sales of new private homes in Singapore, excluding executive condominiums (ECs), rose by about 40 percent to 1,056 units in May from the previous month, revealed data released by the Urban Redevelopment Authority (URA) on 15 June.
This is the highest monthly sales volume since July 2015 when 1,655 units were sold, said JLL. The property consultancy noted that developer sales usually peak around April and May, just before the June holiday lull.
According to analysts, the increase in sales was largely due to two new projects, Gem Residences (in Toa Payoh) and Stars of Kovan.
“They contributed the lion’s share (36 percent) of all new launches in the month and certainly helped to prop up the sales volume in May,” said Mohamed Ismail, CEO of PropNex Realty.
Property developers launched 1,345 private units last month, up almost 50 percent from April.
The 578-unit Gem Residences sold 312 units at a median price of $1,431 psf. Jointly developed by Gamuda Berhad, Evia Real Estate and Maxdin, this is the first private condo to launch in Toa Payoh in seven years.
“About 89 percent of units sold in the development are one- and two-bedroom units, with the majority priced within an affordable quantum of around $1 million and below per unit,” said JLL.
Over at Stars of Kovan, Hong Kong developer Cheung Kong Property sold 76 of the project’s 395 residential units at a median price of $1,414 psf. Located at the junction of Upper Serangoon Road and Tampines Road, the development also features 46 British-inspired commercial shops on the ground floor.
Separately, there were no new EC projects launched in May, said JLL. As such, EC sales dropped by almost 40 percent to 332 units, from the 547 units sold in the previous month. Conversely, luxury home sales have improved in recent weeks due to the strong performance of OUE Twin Peaks.
“Prices have reached a level whereby they are highly attractive to potential buyers,” said Ismail. He expects developer sales to hover at an average of 500 to 700 units each month for the rest of the year, while total sales volume in 2016 could reach 7,000 to 8,000 units.
“In Q3, the upcoming launches of Northwave and Treasure Crest ECs, and Lake Grande, will boost volume as developers look to step up their launch activities before the Hungry Ghost Festival in August,” he said.
S’pore home prices down 3% from last year
Prices of non-landed private homes in Singapore fell by 3.1 percent in the first three months of 2016 compared to Q1 2015, revealed Knight Frank’s latest Global House Price Index.
The index, which compares the performance of 55 housing markets, ranked the city-state in 51st place, among the worst-performing countries. “A combination of sluggish economic growth, regulatory measures and new supply are restraining price growth,” said Knight Frank.
Globally, the index grew by 3.4 percent on average in the 12 months to March 2016. Turkey, which leads the rankings for the fourth consecutive quarter, has seen its rate of annual growth decline from 18 percent quarter-on-quarter to 15 percent, due to security concerns, Russian sanctions and mounting pressures on the lira, curtailing investment, said Knight Frank.
Meanwhile, Ukraine remains the world’s weakest performing market, with prices in Q1 falling 10.5 percent from a year ago.
Rising trend of deferred payment schemes among developers
In a bid to move units, more property developers are offering deferred payment schemes, reported The Straits Times.
Two more developers are now offering the option, following the recent success of OUE Twin Peaks, which offered the scheme. It partly bets on whether current loan-to-value (LTV) limits will be fine-tuned, since the majority of the buyer’s payment is usually required later.
OUE Twin Peaks has seen around 160 units snapped up since late March, when the deferred payment scheme was introduced, together with another incentive which offers buyers a longer option-exercise period.
CapitaLand recently introduced its version of the scheme at The Interlace and d’Leedon, where about 20 units have since been sold. Buyers at CapitaLand’s stay-then-pay plan enjoy a 15 percent discount, and can move into the unit once they have exercised the Option to Purchase (OTP). Buyers then make a 10 percent down-payment withn eight weeks, while paying the remaining 90 percent one year from the OTP.
In contrast, a standard payment scheme requires buyers to pay the remaining 90 percent within eight weeks from exercising the OTP. Foreign buyers, on the other hand, can pay a 15 percent down-payment when they exercise the OTP, and pay the remaining 85 percent one year from said date.
Buyers who take up the scheme are not allowed to rent out their units. As at end-March, CapitaLand had 99 unsold units at The Interlace and 181 unsold units at d’Leedon.
A similar plan is also being used by the developers of The Boutiq in Killiney Road. Under the plan, a buyer can pay a one percent option fee and four percent two weeks later, 15 percent eight weeks from exercising the OTP, 30 percent 18 months from the OTP, and 50 percent two years from the OTP date.
Savills Singapore Research Head Alan Cheong noted that the increasing use of deferred payment schemes indicates that the market is having difficulty clearing unsold stock. “Developer sales may have improved but there is still plenty of supply to be soaked up,” said Lee Liat Yeang, a senior partner in Dentons Rodyk’s Real Estate practice group.
New measures to enhance lift safety and reliability
The Building and Construction Authority (BCA) will introduce a series of measures to enhance lift reliability and safety, starting with the tightening of its maintenance regime from July 2016.
The move comes after a series of lift-related accidents over the past few months. The BCA noted that the current regulatory regime requires passenger lifts to be maintained at least once a month, and to undergo examination, inspection and testing once a year.
The BCA’s regular audit checks show that most lifts in Singapore are in good condition and safe to operate. However, it also said “investigations into recent lift incidents revealed that the overall standard of maintenance by lift contractors can be further improved”.
The new measures will see the BCA introducing specific maintenance standards tied to key outcomes, on top of the current regulatory regime for the maintenance of lifts.
“For example, having brakes that are well maintained will help to minimise the risk of incidents like uncontrolled movement of the lift cars. Lift owners and contractors are to ensure that the maintenance carried out on the lifts are done thoroughly and achieve these specified outcomes,” said the BCA.
It will also introduce a Permit-to-Operate (PTO) system. Current lift owners are required to engage an Authorised Examiner (AE) to conduct inspections and tests to ensure compliance with local standards, after which the AE will issue the lift owner a certificate.
Under the PTO system, every lift will require a BCA permit before it can operate, in addition to the current checks and certifications carried out by the AEs.
Starting in the second half of 2017, lift owners will be required to display the permit (which is to be renewed annually) inside the lift, indicating the lift contractor responsible for maintenance, and the name of the AE who inspected and certified the lift.
To ensure that lift contractors meet the maintenance requirements, the BCA will carry out audit checks on lifts and impose penalties on the lift contractor for any failure to comply. The BCA will also look into building industry capability throughout the entire supply chain, from lift technicians who are involved in maintenance, to professional engineers who test and commission lifts.
“This will ensure that the lift industry has the necessary capacity and resources to meet the new regulatory requirements and carry out its duties competently and effectively,” it said.
The BCA added that more details of the new measures, including training programmes and qualified lift personnel, will be announced later.
“The BCA takes a very serious view on lift safety. We have been engaging the industry and reviewing the lift regulations over the past year, and are now ready to make these changes. We will continue to update and implement new measures to further enhance lift safety in the short and longer term,” said CEO Dr John Keung.
HK developer lures buyers with 120% loan offer
In a bid to attract buyers, Hong Kong’s biggest developer by market value, Sun Hung Kai Properties, is offering mortgages of as much as 120 percent of a unit’s value at one of its projects, reported Bloomberg.
However, buyers of units at the Park Yoho Venezia must own another property within the city’s Yuen Long district, which will be pledged as security. The South China Morning Post earlier reported that a Sun Hung Kai spokesman had confirmed the offer.
The financing scheme aims to attract buyers in a market that has witnessed a price correction of more than 13 percent since property prices peaked in September 2015. Housing prices in Hong Kong soared by 370 percent from their 2003 level to the September peak before the start of the correction, spurred by a slowdown in China and a growing housing supply.
Sun Hung Kai’s financing scheme is also meant to circumvent the government’s cooling measures, which limits traditional bank loans on properties priced below HK$10 million (S$1.74 million) to 60 percent of the unit’s value.
“Overall, property developers are very aggressive and (are) trying to offload inventory because the outlook of the Hong Kong property market is not looking good,” said Australia & New Zealand Banking Group senior economist Raymond Yeung.
This year, ratings agency S&P expects average home prices in Hong Kong to drop by 10 to 15 percent. However, it believes the industry can withstand much worse.
Property companies in Hong Kong have been less active in buying government land this year, as they struggle to move existing units, and dangle discounts to lure buyers.
While it is not alone, Sun Hung Kai’s offer is among the most generous so far. Last year, Kowloon Development, Cheung Kong Property Holdings and Henderson Land Development began offering financing of up to 90 percent as home prices started to decline.
Singapore slips 4 notches in prime office cost ranking
Despite the strong demand for office space in key Asian cities, Singapore fell four notches to become the 20th costliest office destination in the world, said CBRE in its latest Global Prime Office Occupancy Costs report.
Notably, occupancy costs in Singapore dropped 13.8 percent to US$94.47 (S$127.5) psf per annum. Hong Kong (Central) emerged as the world’s most expensive office market with an occupancy cost of US$290.21 (S$391.55) psf per annum, replacing London-Central (West End), which dropped to second place.
Beijing (Finance Street), Beijing (Central Business District) and Hong Kong (West Kowloon) took the third, fourth and fifth spot respectively.
Also in the top 10 most expensive office markets are Tokyo (Marunouchi / Otemachi), London-Central (City), New York (Midtown Manhattan) and Shanghai (Pudong).
Unaffected by Q1 market jitters, global occupancy cost rose 2.4 percent in the year ending Q1 2016.
“In Asia Pacific, prime office occupancy costs, which reflect the highest-quality properties (typically the top 10 percent of Grade A stock) are growing at a faster pace than average Grade A rents, up 2.7 percent year-over-year compared to only 1.6 percent annual growth for Grade A rents,” it said.
It noted that an ultra-low vacancy rate fueled Hong Kong Central’s double-digit increase in occupancy costs due to a lack of new developments and continued demand for high-quality space in prime locations by mainland Chinese companies.
CBRE’s Global Prime Office Occupancy Costs survey measures and compares office occupancy costs in 126 markets across the world.
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