singapore property weekly issue 152

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CONTENTS

p2 Will New Home Sales Recover From Here?

p8 Singapore Property News This Week

p12 Resale Property Transactions

(April 2 – April 4)

Welcome to the 152th edition of the Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR

mailto:[email protected]

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SINGAPORE PROPERTY WEEKLY Issue 152

Page | 2Back to Contents

By Mr. Propwise

Okay, we know that March home sales were

bad. Very bad. According to the URA data,

private new home sales fell from 2,793 units

in March last year to 480 units in the same

month this year – a whopping 83 percent

decline. The total number of units sold in

1Q2014 fell to 1,791 from 2,568 in the

previous quarter and 5,412 in 1Q2013, a 30

percent and 67 percent decline respectively.

What’s driving the slump?

Analysts have attributed this to the impact of

the government cooling measures and Total

Debt Servicing Ratio (TDSR) framework, as

well as the lack of launches by developers.

Will New Home Sales Recover From Here?



Launch volumes in the first quarter of this

year were the lowest since the Global

Financial Crisis (GFC) in 2008. The Santorini

and Ascent@456 were the only two projects

launched in March.

But many analysts believe that new home

sales could pick up starting from the second

quarter due to an expected surge of new

launches over the next few months. Up to 11

new projects could start going on sale from

now till the end of June (versus just seven

major launches in the first quarter), which

should boost new home sales. So look out for

headlines shouting of a recovery in new home

sales from April onwards, which is not difficult

given the low base effect of March.

But does that signal a market recovery?

No, I do not think so.

While developers can continue to “push” units

onto lazier and more gullible buyers with

some marketing glitz and gimmicks, the

crickets are chirping for homeowners who

want to sell their unit.

In fact, the situation is even worse in the

resale market than in the primary market.

Figure 1 – Monthly Residential Sales Volume

(source: PropertyMarketInsights.com)

http://propertymarketinsights.com/



From Figure 1 we can see both that total

residential sales (the blue plus red bars) have

collapsed since early 2012, and that

secondary market sales (the blue bar) have

collapsed even more. Total residential sales

at under 1,000 units for the past four months

are way below the average of 2,500 to 3,000

units per month.

Figure 2 – Developer Sales as a Percentage of

Total Sales (source:

PropertyMarketInsights.com)

Furthermore, developer sales as a

percentage of total sales have been steadily

increasing since late 2009.




Thus the recovery since the GFC has been

mainly driven by the flood of ever-shrinking

units of new launches, while resale market

volumes have been steadily declining over

this period.

Who will be buying and renting the flood

of upcoming homes?

Figure 3 – Private Residential Supply

Pipeline as of 4Q13 (source:


This trend begs the question – as these new

units start to get completed in large numbers

over the next few years, who will the buyers

and renters of these units be? The resale

market has dried up as the spread between

sellers’ asking prices and what buyers are

willing to pay grows larger, and the pool of

buyers shrink due to the TDSR rules. And the

rental market’s growth is now constrained as

the immigration taps are gradually tightened

(and I’d imagine they’d stay tight till at least

after the General Election in 2016).




Developers are under increasing stress

too

Figure 4 – Developer Monthly Sell-Through Rate

(source: PropertyMarketInsights.com)

And while many analysts blame the poor

March sales on the lack of new launches, the

Sell-Through Rate (how many units

developers sell versus how many they

launch) is also falling, suggesting a growing

inability of developers to sell out at launches,

and the likelihood of the increasing use of

marketing tricks and hidden discounts to

move inventory.

Figure 5 – Developer Inventory Levels (source:






We’ve seen developer inventory levels creep

up since January 2013 to a tad under 7,000

units at the end of March, getting close to

their all-time highs. Combined with weakening

sell-through rates and a poor outlook due to

the prospect of rising interest rates in the

medium term, developers are likely to be

cautious when buying new land.

And thus we see land prices moderating, as

in the recent example of the tender of a 99-

year leasehold residential site at Prince

Charles Crescent (Parcel B). The winning bid

price for the Parcel B site was $820.65 psf

ppr, 15 percent lower versus the $960.28 psf

ppr paid for the adjacent Parcel A site just two

years ago.

To conclude, while we may see developer

sales volumes “recover” strongly from April

due to the impact of new launches, it may be

an empty recovery. You have to dig deeper

into the numbers to see what’s really going

on.



Singapore Property This Week


Residential

Residential investments dragged by

cooling measures

Total real estate investments in Q1 amounted

to $4.7 billion, a 24 per cent increase from

the previous quarter. While 41 to 45 per cent

of real estate investments in Q1 are from

residential transactions, this is expected to

fall. Also, total real estate investment volumes

are likely to drop 13 to 20 per cent from last

year’s $28.6 billion, as the introduction of

cooling measures and the Total Debt

Servicing Ration (TDSR) framework drags

private residential sales. Restrictions in

supply of residential sites in the first half of

this year, and increased interest rates will

further weaken residential investments.

(Source: Business Times)

Fewer private homes sold in March

According to the Urban Redevelopment

Authority, private home sales fell from 2,793

units in March last year to 480 units in the

same month this year. Total units sold in Q1

2014 fell to 1,791 from 2,568 in the previous

quarter and 5,412 in Q1 last year. Launch

volumes in Q1 this year is the lowest since

the global financial crisis in 2008 and 2009.

The Santorini and the Ascent@456 were the

only two projects launched in March, as

cooling measures weakened sales.




Lower bids at Prince Charles Crescent

Government’s cooling measures and the Total

Debt Servicing Ratio (TDSR) framework

severely impacted the tender of a 99-year

leasehold residential site at Prince Charles

Crescent (Parcel B). Bid price for the Parcel B

site was at $820.65 psf ppr. However, its

adjacent site at Parcel A was sold for $960.28

psf ppr two years ago. UOL Venture

Investments and Kheng Leong were the

highest bidders for the Parcel B site, and plan

to develop it into 750 new units. The Crest, at

the Parcel A site will be launched next

quarter.


Fewer couples applying for larger PPHS

flats

To encourage couples to take up larger flats,

the government may allow couples to co-rent

flats under the Parenthood Provisional

Housing Scheme (PPHS). While 80 per cent

of the 1,150 PPHS flats are occupied,

applications have fallen from 409 in

September last year to 81. Married and

engaged couples who booked uncompleted

Build-To-Order flats last year can apply under

the PPHS.

(Source: Channel NewsAsia)

Developers increase marketing efforts to

attract buyers

850 private residential homes will be

launched in Queenstown next month, and

close to 1,000 units will be launched near

Tanglin Road and Tiong Bahru. While

condominium supply has surged, developers

are unlikely to lower prices. Instead to attract

buyers, developers have stepped up

marketing efforts. Prices are not expected to

fall as interest rates remain low.

(Source: Channel NewsAsia)



Commercial

Sale of shophouses slows as demand

shrinks

Commercial shophouse transaction volumes

plunged from $921.7 million in H1 last year to

$346.5 million in H2. According to CBRE, 26

shophouses sold for a total of $197.2 million

in Q3 2013, but sales fell in the next quarter

to $149.3 million, and further shrank to $118.4

million in Q1 this year. Tightened property

loans, following the implementation of the

Total Debt Servicing Ratio framework, and

steep property prices have muted sales.


Non-residential investments likely to

increase this year

Office investments are expected to soar this

year, as rents improve and interests surge

from H2 of 2013. Major office investments in

Q1 2014 include the acquisition of the OUE

Bayfront by OUE Commercial Reit; Low Keng

Huat (Singapore) Ltd and Sun Venture

Homes Pte Ltd’s $579.4 million purchase of

CapitaLand’s Westgate Tower; and a $123.8

million acquisition of a 50 per cent stake in

Finexis Building.


More shop and factory space available in

next three years

Doubling the average annual demand for

shop and factory spaces, an average of

500,000 sq m of multi-user factory space will

be made available yearly for the subsequent

three years. This move is expected to

stabilise rental price, which account for about

3 to 7 per cent of business costs for small

and medium-sized enterprises.



While rental rates dropped during the global

financial crisis in 2007, prices have since

crawled into recovery in 2009.


Hotel on Sentosa managed by Accor

undergoes renovation

The Sentosa, A Beaufort Hotel, currently

known as the Singapore Resort & Spa

Sentosa is undergoing a $20 million

makeover. To be completed in Q3 2015 as

Sofitel Singapore Sentosa Resort & Spa, the

hotel was purchased for $210.85 million by

Royal Group from HKR International. The

hotel is currently managed by Accor, and

continues to operate despite renovations.


http://www.moneymatters.sg/



Non-Landed Residential Resale Property Transactions for the Week of Apr 2 – Apr 4

NOTE: This data only covers non-landed residential resale property

transactions with caveats lodged with the Singapore Land Authority.

Typically, caveats are lodged at least 2-3 weeks after a purchaser

signs an OTP, hence the lagged nature of the data.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 THE SAIL @ MARINA BAY 893 1,750,000 1,959 99

5 KENTVIEW PARK 1,313 1,475,000 1,123 FH

9 THE ORCHARD RESIDENCES 2,174 8,800,000 4,047 99

9 CAIRNHILL CREST 2,013 4,388,000 2,180 FH

9 LUMA 743 1,330,000 1,791 FH

10 THE MONTANA 549 1,220,170 2,223 FH

10 THE TESSARINA 1,367 2,070,000 1,514 FH

10 BLISSFUL VIEW 1,518 1,868,888 1,231 FH

11 TRILIGHT 1,163 2,413,900 2,076 FH

13 EURO-ASIA PARK 2,260 2,300,680 1,018 FH

13 PARC MONDRIAN 2,368 2,200,000 929 FH

14 KEMBANGAN COURT 786 880,000 1,120 FH

15 THE SOVEREIGN 3,305 6,000,000 1,816 FH

15 AMBER RESIDENCES 1,163 1,700,000 1,462 FH

15 THE MAKENA 1,582 2,150,000 1,359 FH

15 COSTA RHU 990 1,250,000 1,262 99

18 DOUBLE BAY RESIDENCES 1,313 1,510,000 1,150 99

18 SAVANNAH CONDOPARK 1,453 1,340,000 922 99

18 THE TROPICA 990 886,000 895 99

19 SUNGLADE 1,044 1,208,000 1,157 99

20 THE GARDENS AT BISHAN 1,658 1,525,000 920 99

21 CLEMENTI PARK 1,873 2,008,457 1,072 FH

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

21 THE RAINTREE 1,335 1,340,000 1,004 99

21 THE RAINTREE 1,335 1,320,000 989 99

22 PARC VISTA 1,249 1,240,000 993 99

23 MERAWOODS 1,345 1,330,000 988 999

23 MAYSPRINGS 1,399 1,090,000 779 99

28 MIMOSA PARK 2,164 1,628,000 752 FH

singapore property weekly issue 152

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