Our top Singapore and regional property stories.
Could property cooling measures be permanent?
Unless residential property prices plunge dramatically, the government may not lift the cooling measures, reported Singapore Business Review, citing a Maybank Kim Eng report.
“Singapore households have $840 billion of capital, or 209 percent of GDP tied up in residential property. This has resulted in lower disposable income, which has impeded consumer spending and muzzled entrepreneurship. Another less obvious implication of property ‘overinvestment’ is that home price appreciation fuels wage inflation, reducing Singapore’s cost competitiveness,” the report said.
While income returns have been meagre in recent years, residential properties remain a popular investment class, with investors setting aside the bulk of their savings in the hope that they can one day buy a house once prices eventually drop.
The report noted that Singapore households are sitting on a “cash pile of $374 billion, which has surged since property curbs were rolled out in 2009”.
“We believe that residential properties are sucking in surplus capital, with an increasing number of Singaporeans buying their second and third properties. This is economically non-productive.”
Maybank believes the economy will be better off if Singaporeans use this idle capital elsewhere, such as improving consumer spending and boosting entrepreneurship.
Singaporeans have to be weaned from their long-held aspirations of becoming landlords earning passive rental income, while investors should let go of their belief that investment properties are the best asset class to own, it said.
“To ensure Singapore’s long-term survival, we believe the government should not remove (the) property cooling measures. A sustained and gradual easing of property prices is necessary to restore business competitiveness, in our view. If part of the monies that has been locked away in anticipation of a bottoming of the property cycle flows towards productive assets or even consumption, we believe entrepreneurship can be enhanced and thrive,” added Maybank Kim Eng.
DTZ relaunched as Edmund Tie & Company
Property consultancy DTZ Debenham Tie Leung (SEA) has been relaunched as Edmund Tie & Company, following Cushman & Wakefield’s sale of its majority stake to Edmund Tie & Company Holdings.
PropertyGuru understands that in Singapore and other Southeast Asian countries, the company’s logo will be changed to reflect the new name.
Under the new organisational structure, real estate veteran Edmund Tie will continue to lead the firm as Chairman, while Ong Choon Fah will remain as Chief Executive. Ong also heads the research and consulting departments.
According to Tie, the origins of the company go back to 1995 when it was one of the first local property consultancies. Soon after, it expanded overseas, joining forces with C Y Leung & Company in North Asia and DTZ Debenham Thorpe in Europe.
“The strategic decision to once again operate under the Edmund Tie & Company brand is motivated by our longstanding commitment to form a firm driven by a distinctly Asian business philosophy, yet offering international standards of expertise,” said Tie.
The move comes amid slowing economic conditions and a muted property market. But the firm remains optimistic about the region’s future.
“The formation of the ASEAN Economic Community, of which Singapore is a member country, is expected to boost the competitiveness and connectivity of the region, leading to greater efficiencies and output,” said Ong.
“As more foreign trade agreements are being put in place, combined with an increasingly affluent population and growing middle class, Southeast Asia will become increasingly attractive to investors. As the region’s gateway city, Singapore will have a key role to play,” she added.
Edmund Tie & Company has about 500 staff across the region, with operations in Malaysia and Thailand. It is currently in negotiations with several major international real estate firms to expand its global reach.
PropertyGuru launches VR showroom, an industry first
In a move that could very well be a first in Singapore, leading real estate portal PropertyGuru is exploring new opportunities in the field of virtual reality (VR) technology.
On Monday (27 June), the group launched its first mobile showroom in a VR truck parked at Raffles Place. Passers-by were provided with VR goggles to view condo showflats, while property agents were on hand to provide consultations.
According to Bjorn Sprengers, Chief Marketing Officer of PropertyGuru, the idea for a VR truck came after the group began experimenting with new technologies such as drone videos and VR on different platforms, which they found was more engaging to consumers.
“We merged the concept of a property pop-up store and VR into that of the VR showroom,” he said. To bring the concept to life, PropertyGuru consulted with creative agency Brilliant on the brand message and creatives, while MediaCorp worked on the production of the truck.
Sprengers noted that the move into VR technology aims to serve the new homes segment, which according to research, is currently underserved. He stated, “The disadvantage of new homes is that they have not been built yet.” He gave the example of how a VR showroom can be effective when a project’s showflat has been demolished and the developer still has unsold units.
Other advantages of VR technology include its more immersive experience than virtual tours or 2D photos, he said. “We are definitely looking to enrich the content on PropertyGuru, and VR is one way,” he said, adding that more products and services will be rolled out in the next 12 to 18 months.
PropertyGuru’s VR truck will head to Century Square in Tampines this Saturday (9 July), and Jurong Point on Sunday (10 July), from 11am to 6pm.
Brexit: UOB suspends London property loans
United Overseas Bank (UOB) has suspended its loan programme for London properties after Brexit pushed the pound to a 30-year low and spooked global markets, reported Reuters.
Singapore’s third biggest lender is the first bank here to turn cautious on London property loans, even though it is not a big amount. “We will temporarily stop receiving foreign property loan applications for London properties,” said a UOB spokeswoman.
“As the aftermath of the UK referendum is still unfolding, and given the uncertainties, we need to ensure our customers are cautious with their London property investments.”
Meanwhile, DBS Bank, Singapore’s biggest lender, revealed it is still offering financing for London property purchases. However, it is advising its customers to remain cautious.
“For customers interested in buying properties in London, we would advise them to assess the situation carefully before committing to their purchases as there could be potential foreign exchange and sovereign risks,” said Tok Geok Peng, Executive Director of Secured Lending, Consumer Banking Group (Singapore) at DBS Bank.
Since the referendum, the Singapore dollar has gained 10 percent against the British pound. “There have been London properties available for the last few months before the Brexit. The question is whether these properties can still continue to receive buyers in the short-term,” said Alice Tan, Research Head at Knight Frank Singapore.
Property consultants noted that data on the number of properties purchased by Singaporeans in the UK is not closely tracked, while banks do not disclose lending data for property purchases in the UK. UOB said it is closely monitoring the situation and would regularly review it to determine when it could resume its loan programme for London properties.
According to UOB’s website, the bank runs an international property loans programme which also covers properties in Malaysia, Thailand, Australia and Japan.
About 520 e-applications for Treasure Crest EC
Treasure Crest, Sim Lian Group’s executive condominium (EC) project at Anchorvale Crescent in Sengkang, witnessed robust demand over the weekend, with e-applications outnumbering the number of units, reported The Straits Times.
The 504-unit development received 520 e-applications as at 5pm on Sunday (3 July). E-applications for the project will close on 10 July, while bookings start on 16 July.
The 99-year leasehold development comprises 84 three-bedroom units, 364 three-bedroom premium units and 56 four-bedroom units spread across eight 15-storey residential blocks. Unit sizes range between 958 sq ft and 1,345 sq ft, while prices range from $735 psf to $755 psf on average. A source close to the developer revealed that larger units emerged as the popular choice among e-applicants.
Set to receive its TOP by 2019, the EC project is close to the Sengkang MRT station and bus interchange. Nearby schools include Nan Chiau High School, Nan Chiau Primary School and CHIJ St Joseph’s Convent.
Last week, Kuik Sing Beng, Executive Director of Sim Lian, said he expects the project to appeal to new home buyers and upgraders alike, since it is located in a “well-connected, bustling new town”.
Aside from Treasure Crest, four other ECs have gone on sale in recent months, including Northwave in Woodlands, Parc Life and The Visionaire in Sembawang, and Wandervale in Choa Chu Kang, another project by Sim Lian.
HDB resale prices up, private home prices down in Q2
Prices of resale HDB flats rose by 0.1 percent in Q2 2016 from the previous three-month period, according to latest flash estimates of the Housing Board’s resale price index (RPI).
This reverses the 0.1 percent fall in the RPI during Q1 2016 from the quarter before. The HDB will release more detailed public housing data for the second quarter on 22 July. Meanwhile, 5,000 Build-To-Order (BTO) flats in Hougang, Sembawang, Tampines and Yishun will be launched for sale in August this year, said the HDB.
Meanwhile, prices of private residential properties fell 0.4 percent in Q2 2016, compared to the 0.7 percent decline recorded during the previous quarter, according to latest flash estimates from the Urban Redevelopment Authority (URA). This represents the 11th consecutive quarter of price falls, the longest losing streak on record.
The Core Central Region (CCR) and Rest of Central Region (RCR) saw non-landed private home prices increase by 0.2 percent and 0.3 percent respectively, while the Outside Central Region (OCR) registered a 0.7 percent drop in prices. Prices of landed properties fell 1.3 percent, compared to the 1.1 percent decrease in the previous quarter.
“The latest price indicators are mixed across the various regions, but there are signs that the market is approaching a trough,” said Desmond Sim, Head of CBRE Research, Singapore and South East Asia. In fact, the 0.2 percent price increase in the CCR could be an indication of “flight to value”.
“The CCR has been tracking two quarters of increases in the price index, buoyed by the new project Cairnhill Nine in Q1 2016, as well as sales of completed projects in the higher price bands, despite the fact that the CCR covers a wide geography,” noted Sim.
He expects the increase to continue and “eventually prop up the overall price index for the next quarter to hover at the region of zero percent”.
At the same time, the success of new projects such as Sturdee Residences and Gem Residences, as well as completed projects on the resale market, have helped to boost price levels in the RCR, added Sim. The URA’s flash estimates were compiled based on transaction prices given in contracts submitted for stamp duty payment and data on new units sold by developers up till mid-June.
OCBC puts two conservation shophouses up for sale
OCBC is placing a pair of conservation shophouses along Bukit Pasoh Road up for sale, with a guide price of around S$20 million, reported The Business Times.
This translates to around S$2,350 per sq ft based on the property’s gross floor area (GFA) of 8,503 sq ft. Zoned for commercial use, 11 and 13 Bukit Pasoh Road have three storeys as well as a mezzanine level.
The bank has owned the two freehold shophouses since 1935. The last major refurbishment on the property was done in 2012. “From time to time we review our property holdings for opportunities to unlock value. If we receive a good offer for any of our properties, we will consider selling it,” said a spokeswoman for OCBC.
Held by OCBC’s property unit, these historical properties are not mortgagee sales, she added. Moreover, 11 and 13 Bukit Pasoh Road were not part of the portfolio of 38 strata shop units and shophouses that OCBC put up for sale in April 2015. The bank has appointed JLL as the exclusive agent to market the sale of the two adjacent shophouses via a tender that will close on 2 August.
Situated within the Chinatown Historic District (Bukit Pasoh) Conservation Area, 11 and 13 Bukit Pasoh Road have a combined land area of 2,926 sq ft, and is fully leased to six tenants. The S$20 million price reflects a gross yield of almost two percent, based on the property’s current rental income.
Investors looking to add value to the property could do internal refurbishment works and improve tenant mix, said Clemence Lee, manager, capital markets at JLL. In fact, he expects the shophouses to attract strong interest from family offices, boutique property funds and high-net-worth individuals in search for an asset class that is rich in historical value and limited in supply.
Foreigners are also eligible to buy the property as the site is completely zoned for commercial use. There is also no Seller’s Stamp Duty and Additional Buyer’s Stamp Duty on said properties.
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