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No easing of property curbs until 2017, say experts
Although home prices may start bottoming out in the next few quarters — which could prompt a moderate recovery from 2018— the easing of property cooling measures is not expected until next year at the earliest, according to property experts at the Real Estate Developers’ Association (Redas) property market seminar on Tuesday (12 July).
Dr Chua Yang Liang, Research Head at JLL Southeast Asia, said the potential recovery range will likely be driven primarily by a pickup in the prime residential market, and in line with GDP growth.
“(Singapore’s housing prices) are close to a trough, with economic conditions steady and physical market conditions balancing. The gap between the prime and non-prime markets has narrowed, and when economic conditions improve, we should expect the high-end market to pick up,” he said.
Meanwhile, growth in demand within the mass market will continue to be slow, with gradual price adjustments, considering the policy measures and supply overhang. Chua also expects the residential rental market to remain soft.
Since 2009, the government has enforced a slew of property cooling measures and loan curbs to rein in the runaway property market, with the Total Debt Servicing Ratio (TDSR) framework and Additional Buyer’s Stamp Duty (ABSD) being the most significant. Despite repeated calls from real estate agents and property developers for the measures to be eased, the government has been reluctant to do so.
Singapore saw private home prices soar by more than 60 percent following the 2009 Global Financial Crisis, peaking in Q3 2013. Since then, home prices have fallen by 9.4 percent over 11 consecutive quarters, its longest losing streak on record, based on the Urban Redevelopment Authority’s (URA) latest flash estimates.
Nonetheless, property experts do not expect the property cooling measures to be eased anytime soon. “I think the earliest we may see some unwinding of measures will be 2017 because we have not quite reached the double-digit price correction that they want,” said Selena Ling, Head, Treasury Research and Strategy, OCBC.
URA flash estimates released this month show that the private residential property price index dropped by 0.4 percent in Q2, a slight improvement from the 0.7 percent decline registered in the first quarter.
Developer sales down 50% in June
Excluding executive condominiums (ECs), property developers sold 536 new private homes last month, down 50 percent from the 1,065 units sold in May, according to fresh data released by the Urban Redevelopment Authority (URA).
The significant drop in sales can be attributed to the lack of new units launched in June. Only 234 units were released to buyers, a drop of over 80 percent from the month before. According to JLL, the only new project launched during the month was an eight-unit landed housing development in East Coast Terrace.
Desmond Sim, Head, CBRE Research, Singapore and Southeast Asia, said the absence of significant new launches saw buyers turning to existing projects. The best-selling condo project in June was Kingsford Waterbay at Upper Serangoon View, which sold 34 units at a median price of $1,185 psf, followed by The Glades at Tanah Merah (32 units at a median price of $1,402 psf).
Looking at the first half of the year, 73 percent of the units sold were from projects that had been launched more than six months ago, noted Sim. “This is a continued positive sign for the market, as the unsold stock inventory is slowly but steadily being reduced. The creative pricing of projects by developers was the key to successful sales.”
Meanwhile, developers moved 3,763 units in the first half of 2016, 9.8 percent higher than the 3,427 units disposed in H1 2015, said JLL. “Although sentiments have become more positive, demand improvement is gradual, with many buyers remaining cautious and price-sensitive,” said Ong Teck Hui, National Director of Research & Consultancy at JLL.
“On the one hand, there is improved optimism arising from increased transactions and the perception that the market may be bottoming out, while on the other (hand), concerns remain due to the economic uncertainties and more recently, the aftermath of Brexit.
“However, barring shocks from the external environment, a sanguine outlook for the private home market is likely for the rest of the year, with developer sales in 2016 probably exceeding that of 2015,” he added.
Mohamed Ismail, CEO of PropNex Realty, expects sales numbers to hover at an average of about 500 to 700 units for the rest of the year. “For the whole of 2016, we envisage sales volume to be between 7,000 to 8,000 units in all,” he said.
Weak sentiment continues to hurt S’pore property market
Real Estate Developers’ Association of Singapore (Redas) President Augustine Tan believes weak market sentiment continues to weigh down on Singapore’s property market, reported The Straits Times.
He noted that since the government introduced the property cooling measures in 2009, demand for private homes has dropped significantly on the back of large supply.
In fact, 57,597 new private units and 12,077 executive condominiums (ECs) are in the pipeline as at May 2016. While only 15,000 units remain unsold, the supply is still significant considering the prevailing weak demand, Tan said at a property market seminar on Tuesday (12 July).
“With the cooling measures still in force, the real estate market continues to face disruptive forces on multiple fronts — from weak demand and hefty supply to manpower constraints and challenging business environment,” said Tan, who also serves as Executive Director of Property Sales at Far East Organization.
He revealed that developers had slashed prices by around five to 25 percent in some projects to move units. Sales at new property launches have also petered out following the initial launches. “Industry experts estimate full-year sales to come in at between 7,500 and 8,000 units this year, a level well below what would sustain a healthy property market,” said Tan.
Pressure continues to loom for projects affected by the Additional Buyer’s Stamp Duty (ABSD) and the Qualifying Certificate (QC) rules. Tan expects the QC rules to affect about 1,100 to 1,200 unsold units from 17 developments by end-2016, while around 5,300 unsold units in 47 projects (excluding ECs) will be affected by the ABSD remission clawback from end-2016 to 2018.
Initially introduced in December 2011, the ABSD require developers to build and sell all units in a project within five years from the site’s contract purchase date or pay a 10 percent levy, which was raised to 15 percent for sites acquired from 12 January 2013 onwards.
The QC rules, on the other hand, require foreign developers to sell all units at their projects within two years from obtaining the Temporary Occupation Permit (TOP). Failure to do so means developers must pay extension charges pro-rated according to the proportion of unsold units.
According to Tan, property markets are driven by both market sentiment and economic fundamentals. Market conditions have become more fast-moving and property cycles are now shorter. As such, he believes that keeping abreast of the latest development trends and market events is critical in retaining a competitive real estate advantage.
Source: URA
URA launches request for proposal for new CBD in Jurong
The Urban Redevelopment Authority (URA) launched a Request for Proposal (RFP) on Monday (11 July), inviting multi-disciplinary teams to develop master plan proposals for the Jurong Lake District.
The RFP indicates the first step in the district’s transformation into “a district of the future”, and Singapore’s second central business district (CBD). The URA and the district’s steering committee have laid out a set of goals to guide the master planning.
For instance, Jurong Lake District’s core area around the Kuala Lumpur-Singapore High-Speed Rail (HSR) terminus should provide “flexible and adaptable work spaces for a good mix of complementary businesses and services”.
The district will also be an inclusive and vibrant 24/7 hub offering retail, entertainment and leisure options outside working hours, as well as new homes, inclusive public spaces and recreational facilities. It will also be a car-lite district, with a comprehensive public transport mode share higher than the national target of 75 percent by 2030.
Jurong Lake District’s distinctive identity will be shaped and defined by its natural and heritage assets, such as the Jurong Lake and Jurong River, as well as the former Jurong Town Hall building and current Science Centre building.
Meanwhile, the future Jurong Lake Gardens, current and new Science Centre, and future recreational facilities will position Jurong Lake District as a leisure destination for both Singaporeans and tourists. Innovative urban infrastructure will also be used to strengthen district-level sustainability, productivity and manpower efficiency.
Desmond Sim, Head, CBRE Research, Singapore and Southeast Asia, noted that the proposed strategies behind the development of Jurong Lake District are “in line with the government’s push to bring jobs closer to home in the West and the wider sub-region, including the Jurong Innovation District further northwest”.
Interested teams are required to submit information on their team composition and organisation, track record, and a Statement of Planning and Design Intent and Approach by 5 September.
Up to five teams will be shortlisted to develop the Concept Master Plan. The team with the best Concept Master Plan will be appointed in February 2017, and work with the URA and partner agencies to draw up the Draft Master Plan for the district.
Members of the public will be invited to give their feedback on the Draft Master Plan during its exhibition, which will be held in Q3 2017.
Thereafter, the URA will work “closely with the appointed team to refine the Draft Master Plan, based on the feedback received”.
“The implementation of the Jurong Lake District Master Plan will then be studied carefully, taking into consideration various factors including the broader plans of surrounding areas, development of other projects in the District, and the needs of the community,” said the URA.
Woman fined $16,000 for unlicensed estate agency work
A 41-year-old Singaporean woman was sentenced on Wednesday (13 July) to pay a fine of $16,000, in default six weeks’ imprisonment, for acting as an unlicensed estate agent in rental transactions involving rooms in HDB flats.
Prior to May 2013, Yee Jye Ying had pasted room rental advertisements at HDB blocks around her neighbourhood in Yishun. In May that year, a flat owner engaged Yee as her agent to rent out one of the rooms in her Yishun flat for a monthly rental of $500 to $650, depending on the number of tenants. A few weeks later, Yee received a call from a Bangladeshi national who wanted to rent a room with his friend.
On 9 June 2013, Yee arranged for the two Bangladeshi nationals to view the room. When they met, the two men showed Yee their work permits, but they bore the names of other people. She then brought them to the flat and introduced them to the flat owner.
Yee eventually closed the rental transaction at a monthly rent of $600, and collected a commission of $300 each from the flat owner and tenants. In August 2013, Yee assisted another two Bangladeshi nationals to rent a room in another Yishun flat.
On 3 September 2013, Immigration & Checkpoints Authority (ICA) officers conducted checks on the two HDB flats, which revealed that the four Bangladeshi tenants were immigration offenders. Thereafter, the ICA lodged a complaint with the Council for Estate Agencies (CEA) about Yee’s role in the rental transactions.
Subsequently, investigations by the CEA showed that Yee did not have the authority to carry out estate agency work as she was not a licensed estate agent. Under the Estate Agents Act, it is an offence for individuals to act as estate agents and salespersons in any property transaction if they are not licensed by and registered with the CEA.
Yee had also failed to carry out the due diligence checks, which includes checking the tenants’ original immigration / work and other passes for forgery, cross-checking the particulars on the passes with potential tenants’ original passports, and checking the photographs with the actual persons.
Property agents are also required to check with the Ministry of Manpower (MOM) or employers on the validity of work permits.
Office space demand muted in Q2
New demand for Singapore office space remained muted in the second quarter of the year, with few expansions and more modest space requirements from limited new entrants, as global economic concerns continue to dampen the country’s business outlook, a recent CBRE report revealed.
According to CBRE, island-wide net absorption stood at -74,741 sq ft in Q2 2016, its fourth consecutive quarter of contraction. However, CBRE said a significant increase in leasing activity was seen in the past quarter as bolstered by a “flight to quality” movement, as well as occupiers taking advantage of attractive terms on offer.
The deals were mainly focused on new projects. As such, CBRE noted that these might result in some secondary vacancies as the tenants involved in these deals are likely to relocate from older buildings. Sectors which contributed to “occupier movement included the info-communications and technology, financial and professional services industries”, according to CBRE.
With no new completions this quarter, CBRE said island-wide vacancy remained relatively stable, registering a marginal increase to 5.9 percent. However, CBRE expects vacancy levels to increase sharply in the next six to nine months, with the completion of various new developments which collectively offer a significant amount of space available for lease.
With these imminent completions, property developers have been proactive in structuring pre-lease deals as the battle to secure tenants intensifies. “Rents continued to come under pressure. Grade A CBD Core rents declined for the fifth consecutive quarter, contracting 4.0 percent quarter-on-quarter.”
Moving forward, CBRE expects a further rental decline as pipeline projects come on line.
“In particular, landlords of existing buildings that have hitherto enjoyed high occupancy levels will face greater challenges to retain tenants. While rent levels agreed in the pre-lease deals referenced above look representative of the market trough, existing buildings will likely face further adjustments,” it said.
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