CNA: Property prices set for continued growth

Property prices set for continued growth

 

SINGAPORE: This year’s Hungry Ghost Festival, which is celebrated on the seventh month of the Chinese lunar calendar, comes at a time when the global economy is also slowing.

 

Traditionally, it means a quieter property market as investors and developers lie low during what they perceive to be an inauspicious occasion.

 

The Singapore property market is no exception, but experts said lower volumes may not be due to superstitions alone. According to market watchers, buyers in the market today tend to put bargains over and above bogeymen.

 

Eugene Lim, associate director, ERA Asia Pacific, said: “They tend to be less affected by their grandmother’s tales and all that kind of thing, and they basically make their decisions on what they see and the dollars and cents behind it. In that sense, they are more open to buying properties even during the Chinese seventh month.”

 

In fact, last year’s boom saw developers and buyers alike doing brisk business throughout the seventh month.

 

While no concrete data is available after just the first week of the seventh month, most market watchers expect volume to have slowed a little. But this does not mean prices will be heading south anytime soon.

 

Eric Cheng, executive director, HSR Group, said: “Developers out there will not price their prices even lower than the construction costs plus the land cost that they actually purchased.”

 

It would appear that the property industry as a whole has fewer reasons to be spooked.

 

Source: Channel NewsAsia

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ST: Rents falling at most condos

Rents falling at most condos 

New supply of homes and weak demand could mark start of downward trend

 

TENANTS, rejoice: rents have begun to fall at a majority of condominiums in Singapore on the back of fresh home supply and a turnaround in market sentiment.

Two in every three projects with a substantial number of leases saw rents drop in the second quarter from the previous three months, according to the latest data from the Urban Redevelopment Authority (URA).

 

This marks a reversal from the last two years, when private home rents soared, especially in expatriate-friendly areas, due to an insufficient supply of rental homes and an influx of expat tenants.

 

Now, rents are dipping in almost every location around the island, but particularly in the two areas most popular with expats – East Coast and the central region around Orchard Road.

 

This could mark the start of a downtrend that experts say may worsen with more home completions, especially in the prime areas, where rents have reached stratospheric levels.

 

URA’s data analysed rents in developments with at least 100 units and that have 10 or more leases each in the first and second quarters this year. Of the 124 projects in this category, 80 – or about 64 per cent – saw rents drop between the two quarters.

 

But URA also has a more comprehensive rental index that covers all rental transactions, including those at projects with fewer than 10 leases. This showed that rents across the country rose 2.5 per cent overall in the second quarter, the smallest rise in three years.

 

Rents are taking a hit largely because the stock of homes available for rental has risen, property consultants said.

 

Several major projects have recently been completed that were heavily bought into by investors planning to rent out their units. These include the 640-unit Icon in Tanjong Pagar, a 430-unit tower at Sail @ Marina Bay, the 600-unit Citylights at Lavender, and the 546-unit Sea View in Amber Road.

 

Ms Tay Huey Ying, director of research and advisory at property firm Colliers International, said the ‘peakish’ rents could also be due to the current run of high inflation, pushing up living costs in general and making expats more resistant to any rental rises.

 

Another source of rental demand, collective sale sellers, has also dwindled due to the delay in demolishing several en-bloc sale estates amid a slow property sales market, she added.

 

Colliers’ own research showed that monthly rents of luxury apartments fell 3 per cent in the first six months of this year. A 1,000 sq ft apartment was fetching $6,730 in June, down from $6,930 in December last year.

 

But Ms Tay said luxury rents are unlikely to fall by more than another 10 per cent in the second half, as Singapore remains attractive to expats.

 

Mr Colin Tan, head of research and consultancy at Chesterton International, agreed that the rental declines in the prime central districts will be ‘more gradual than elsewhere as their central location means there will be no lack of demand’.

 

‘At the other end of the rental market, in far-flung locations such as Changi and Pasir Ris, the declines are expected to be more pronounced as they will face the twin problems of weak demand and declining rentals,’ he added.

 

Source: Straits Times

Condo sales in S’pore hit by bad news from US

Condo sales in S’pore hit by bad news from US

 

THE bad news coming out of the United States last week took its toll on property sales in Singapore over the weekend.

Two newly released projects sold fewer than 20 units each, as homebuyers’ caution deepened after the collapse of US bank IndyMac and the forced rescue of mortgage giants Freddie Mac and Fannie Mae.

 

CapitaLand’s Wharf Residence in Tong Watt Road, which started taking bookings over the weekend, sold just over 10 units, sources said.

 

The 173-unit condominium off River Valley Road is priced between $1,500 per sq ft (psf) and $1,900 psf. Unit sizes start at about 1,000 sq ft, so a two-bedroom unit costs $1.6 million to $1.7 million.

 

Meanwhile, Frasers Centrepoint sold about 19 of the 48 units it released at Woodsville 28 near Potong Pasir MRT station.

 

But the developer, which priced the units at an average of $880 psf, said it was ‘quite encouraged by the take-up rate’.

 

‘It was above our expectations, given the general sentiment in the market,’ said a spokesman.

 

Woodsville 28 has two- and three-bedroom units, starting from 829 sq ft, with an average two-bedder costing about $755,000.

 

Sales also continued at a snail’s pace at other condos that have recently been launched, despite reports of large crowds at showflats.

 

OLA Residences in Mountbatten Road has sold only about 10 of its 50 units since sales began three weeks ago.

 

‘There are a lot of walk-ins but offers from buyers are coming in too low,’ said a property agent. The freehold project is priced at about $1,200 psf on average.

 

Two smaller projects, The Scenic@Braddell in Braddell Road and Jubilee Residence in Pasir Panjang, have sold about 10 units each in the last few weekends, putting them at the halfway mark in sales. The Scenic is priced at $820 psf to $850 psf, while Jubilee is going for $900 psf.

 

Cheaper projects are seeing better sales. Buyers have picked up more than 60 of the 212 units at Beacon Heights in St Michael’s Road for an average price of $800 psf, agents said. The 999-year leasehold condo developed by Kim Eng Securities started sales two weekends ago.

 

‘Buyers are still waiting to see if prices go down further, and this will continue until the US situation stabilises,’ said Mr Ku Swee Yong, director of marketing and business development at property firm Savills Singapore.

 

‘There are definitely buyers with enough money to buy new properties, but they are doing their homework these days.’

 

 

 

Source: Straits Times

Biz Times: Private home market stirs to life again

Private home market stirs to life again

Developers’ Q2 sales double to 1,542 from Q1 but still a far cry from 2007

 

(SINGAPORE) Developers sold 1,542 private homes in the second quarter, double the 762 units in the preceding quarter. This takes the total sold in the first half of the year to 2,304, according to the Urban Redevelopment Authority yesterday.

 

The Q2 number was shored up by the sale of 801 private homes in June alone – a huge jump from the 453 units sold in May and, in fact, the best monthly showing since August last year, when the impact of the US sub-prime crisis struck home.

 

Even so, the first-half sales – these numbers do not include executive condos – amounted to just about a quarter of the volume in the same period last year.

 

CB Richard Ellis predicts that full-year sales volume will come in at 4,000-5,000 units, less than half the record 14,811 private homes that developers sold in 2007.

 

BT’s analysis of URA’s data showed that the stock of private homes that could be launched for sale immediately but have been held back continued to mount, hitting 13,005 at end-June, up 20.5 per cent from the preceding quarter and 68.5 per cent higher than the 7,720 units as at the end of last year.

 

These units are in projects with the necessary approvals for sale – that is, they have secured sales licence and Building Plan approvals – and include projects under construction as well as those that have received Temporary Occupation Permit.

 

In addition, there were 3,379 units launched but unsold at the end of June this year – some 40.3 per higher than the end-2007 number.

 

‘Developers probably got more projects launch-ready by end-June, encouraged by the recent response at showflats,’ a property consultant said.

 

Looking ahead, this pool of yet-to-be-launched units is expected to be dynamic. ‘For the next one to two quarters, we could see the stock coming down if take-up remains encouraging. In turn, the encouraging sales may also spur other developers to get projects launch-ready and that could again add to the pool of yet-to-be-launched units,’ she added.

 

URA’s latest monthly survey of developers’ homes sales data in June showed ‘no consistent pattern of a downward adjustment in prices of new launches’, CBRE executive director Li Hiaw Ho said.

 

‘The differential between the prices contracted in June and in May or April could be attributed to adjustments for floor height and orientation. However, in line with the flash estimates, we expect only a marginal upside in residential prices in Q2.’

 

Developers launched 1,069 private homes in June, a jump of 125 per cent from 476 units in May.

 

For the whole of Q2, developers launched a total of 1,820 private homes, taking the figure for first-half 2008 to around 3,200 units.

 

Knight Frank’s analysis showed that, in June, most units were launched for sale in the Rest of Central Region (RCR) – which commanded a 57 per cent share or 612 units.

 

The region also accounted for 57 per cent of total private homes sold by developers in June. Successful project launches such as Dakota Residences and Clover By The Park helped boost RCR’s share in June.

 

For Q2, RCR also made up the lion’s share or 44.2 per cent of units launched, according to Knight Frank.

 

The highest-priced transaction in June came to $3,653 per square foot, for a unit at Nassim Park Residences, compared with $4,612 psf for a Scotts Square apartment in May. The lowest priced deal last month was $541 psf for an apartment at Sunflower Regency on Lorong 20, Geylang. In May, the lowest price of $518 psf was set by a unit at Palm Galleria in Telok Kurau.

 

Colliers International director (research and consultancy) Tay Huey Ying said: ‘As developers are increasingly forgoing aggressive pricing strategy in favour of competitive pricing strategy, cumulatively, this will result in a softening in price level for the general market.’

 

She expects developers to ramp up launches before the Hungry Ghosts Month starts on Aug 1, and predicts that launch volume could cross 1,300 units for July. As new launches are expected to be priced attractively, developers’ sales could possibly hit 1,000 units.

 

Source: Business Times

Straits Times: Up 77%: New private home sales

Up 77%: New private home sales 

Best showing since last Sept following US sub-prime woes, but market still cautious

 

SALES of new private homes shot up 77 per cent to 801 units last month, from just 453 in May, on the back of more project launches.

That was the best showing since September last year when the property market slowed in the wake of the United States’ sub-prime woes and stock market jitters.

 

But these numbers do not necessarily signal the return of the good times. The mood in the property market remains cautious, particularly as more bad news emerges from the US, market watchers say.

 

Last month, the total number of units launched by developers – mostly in the mass to mid-end segment – registered a dramatic jump of 124 per cent to 1,069 units, according to monthly figures released by the Urban Redevelopment Authority (URA) yesterday.

 

Developers are stepping up launches despite the weak sentiment as they want to launch ahead of the Hungry Ghost month starting on Aug 1, said Colliers International director for research and advisory Tay Huey Ying. Some home-hunters believe it is unlucky to buy at this time.

 

Some developers hope to clear stocks of 99-year leasehold properties which will become less attractive as the leases run down, she said.

 

Last month’s healthy sales figures were propped up, to a large extent, by the volume done at two large 99-year leasehold projects.

 

The 616-unit Clover by the Park in Bishan, alone accounted for 197 units sold – out of 308 units launched for sale – at a median price of $765 per sq ft (psf). The 348-unit Dakota Residences in Dakota Crescent sold 144 of 210 launched units at $978 psf.

 

Most of the properties sold last month were under $1,000 psf, indicating demand from upgraders, said the director of Savills Residential, Mr Ku Swee Yong. Only projects which were priced realistically sold fairly well, he said.

 

June sales show there is latent demand but buyers are price-sensitive, said DTZ executive director and regional head for consulting and research Ong Choon Fah.

 

Knight Frank director of research and consultancy Nicholas Mak said the number of launches has risen faster than sales figures, which could result in a gradual rise in the number of unsold housing stock.

 

If this stock builds up, it will be one of the factors that could weigh on prices.

 

But for now, this month’s sales figures are expected to be even stronger owing to more new launches, consultants said.

 

However, there should be a drop in next month’s home sales due to the Hungry Ghost month coupled with continuing fallout from the US housing crisis, said Mr Mak.

 

Price weakness, if any, will register only in the third or fourth quarter, he said.

 

The turnout at new showflats remains strong but potential buyers are very cautious when it comes to committing to a purchase, market watchers say.

 

‘There’s no push factor to buy now,’ said Mrs Ong. ‘Sentiment has been affected over the weekend by the US news. But affordability is still there.’

 

As developers are increasingly forgoing aggressive pricing strategies in favour of competitive pricing, cumulatively, the general market will see softer prices, said Ms Tay.

 

Colliers International’s research shows that luxury apartment prices already fell 3.9 per cent from the first quarter to an average of $3,049 psf in the second quarter, she said.

 

Meanwhile, the URA yesterday put up for sale a condominium site that is just next to the Tanah Merah MRT station.

 

Consultants expect a new 99-year leasehold project on the site to fetch average prices of between $700 psf and $800 psf.

 

Source: Straits Times

Biz Times: Condo sales at showflats tapering off

Condo sales at showflats tapering off

One developer blames Livia’s pricing for ‘spoiling’ other projects’ sales

 

WHILE City Developments managed to sell 96 units last week at its Livia condo at Pasir Ris, developers of most other projects suffered rapidly declining sales at their showflats.

 

At least one developer blamed Livia’s attractive pricing – $650 psf on average – for ‘spoiling’ sales of other projects, while others said a tapering off was to be expected given negative news flows from overseas on the state of the financial and stock markets.

 

Developers and property agents generally reported still strong turnouts at showflats last weekend, although take-up slowed.

 

Sim Lian sold 19 units last week at its Clover By The Park condo in Bishan, less than the 59-unit sales it achieved in the preceding week. To date, Sim Lian has sold 273 of the total 616 units in the project. ‘That’s almost 45 per cent of a large project in just three weeks; that’s quite an achievement given current market sentiment,’ Sim Lian Group executive director Diana Kuik said when approached by BT.

 

The 99-year leasehold project’s average price remains at $750 psf.

 

Sim Lian also sold a unit at The Amery, a freehold project in the Telok Kurau area, last week – again a less sparkling performance than the four units it sold a week earlier.

 

Next to Geylang River, NTUC Choice Homes and Ho Bee found buyers for another nine units at Dakota Residences last weekend. This brings total sales to 170 units in the 99-year project, which has an average price of about $980 psf.

 

Over in the Kovan MRT Station vicinity, the developer of Kovan Residences sold about 20 units last week, bringing total sales to over 100 units since the 99-year project was previewed at a private party on June 28. The average price is somewhere in the $870-900 psf range. Nearby, MCL Land sold another three units at its D-Pavilion, a freehold project priced at $900 psf on average last week. This was a slower sales rate than initial sales of 10 units the preceding weekend.

 

The stakes will go up for these two developers when Frasers Centrepoint previews this weekend its Woodsville 28 near Potong Pasir MRT Station – which is three MRT stops closer to town than Kovan MRT Station.

 

The 110-unit condo will have an average price of $880 psf. The 99-year leasehold development comprises two 17-storey blocks.

 

‘The two- and three-bedder units, with respective average sizes of 883 sq ft and 1,195 sq ft, are about 5 to 6 per cent smaller than conventional units as we’ve adjusted our sizes to fit the profile of the market we’re targeting – those just starting their families or young couples who want to stay near the city and even retirees.

 

‘Two-bedroom apartments start at $700,000 and three-bedders from just over $1 million,’ says Frasers Centrepoint Homes chief operating officer Cheang Kok Kheong.

 

CDL’s spokeswoman said Livia saw strong take-up of various unit types last week, especially two- and three-bedders. ‘The four-bedroom apartments were purchased either for owner occupation or rental potential in view of United World College’s East Campus coming up in the vicinity.

 

‘The project’s average price remains $650 psf, with prices for certain unit types and facing being upped by 1-3 per cent for the latest release of 120 units last weekend,’ she added.

 

The 96 units sold at Livia last week contrasted with sales of 160 units in the preceding week when CDL previewed the 99-year leasehold project, resulting in total sales of 256 units. So far, 320 of the condo’s total 724 units have been released.

 

A veteran property consultant said: ‘Crowds were generally still very good at showflats last weekend, though take-up has slowed. In any development, demand for 30-40 per cent of units comes from the surrounding population catchment. Usually that’s the case, good or bad times.

 

‘Once sales in a project launch hits a certain percentage from this catchment demand, developers have to attract people from other parts of Singapore. That’s a tougher job, with a lot more convincing to be done compared with selling to people who already know the area.’

 

Another problem is that buyers are unsure of the property market’s direction. ‘Even when there are attractively priced projects, potential buyers worry if property prices will go down further. They also ask themselves whether they really need to upgrade; they worry about the economy and their jobs. The bad news coming out from financial institutions in the US is a big concern,’ a property agent said.

 

On a more positive note, Sim Lian’s Ms Kuik said: ‘If you have a good product in a location where there’s a pool of buyers and if your pricing is reasonable, there will be take-up.’

 

Source: Business Times

Today: Simon says: Home prices have hit floor

Simon says: Home prices have hit floor

 

Head of property developer SC Global still bullish on the local real estate market

 

JUDGING from recent transactions, property prices appear to have hit or are near the floor, according to Mr Simon Cheong (picture), the president of the Real Estate Developers’ Association of Singapore (Redas).

 

As evidence, Mr Cheong, the head of high-end property developer SC Global, points to recent transactions of luxury apartments at Nassim Park and Goodwood Residences, which went for nearly $3,000 psf and $2,800 psf respectively.

 

“The high-end is the leading indicator. Why? Now you see the sophisticated investor coming in — people who spend $10 million, $20 million, $30 million (on a property) — these guys are no fools you know,” he says noting that during the 1997 financial crisis luxury flats like those at Ardmore Park were selling for just $1,000 psf.

 

Even mid-class units at developments like those at Dakota, Clover by the Park and Livia are enjoying brisk sales.

 

“Nett nett, property is still a great performer in the mid to long term. For example, the stock market index in 1998 was 800 and today it is 2900. Property appreciation is actually comparable, if not better, if one factors in rentals received,” Mr Cheong says.

 

The property market is driven very much by sentiment, and not just by the laws of supply and demand — the “feel good” factor, he says.

 

According to Mr Cheong developers’ prices have fallen by 30 per cent in all sectors of the market since their peak last year, but are still double those before the sub-prime problem kicked in last August.

 

“The current situation is timely, as since 2005 the property market has been climbing relentlessly for eight straight quarters according to URA (Urban Redevelopment Authority) figures. So, it’s time it took a breather.

 

“We developers were getting concerned that it was climbing so fast. So the sub-prime crisis, in a way hit at the right time and took some of the steam off the market. In a way it came as a relief to developers who were afraid that the steep climb in prices could tempt the authorities to take measures to curb speculation,” Mr Cheong told Today.

 

He also pointed out that it was not in the interest of developers to see prices going up too fast: “There is no reason why developers would like to see an exuberant market and see the bubble burst.”

 

But he claims that his positive outlook for the property market is also driven by fundamentals as interest rates are at present so low and the inflation rate so high it does not make sense to keep your money in the bank.

 

“What do I do if I have a lot of money in my bank account earning 0.6-per-cent interest while inflation is 6 per cent or more, and my money gets smaller and smaller by the day?” he asked.

 

One answer is to put your money in property as in the long run it is a better hedge against inflation than equities.

 

Furthermore, property rentals currently provide yields of 2 to 4 per cent, again better than putting your money in the bank.

 

And there is plenty of money around for when Standard Chartered Bank, earlier this month offered a promotional deposit rate of 2.28 per cent, it was so swamped that it had to withdraw the offer in just two days.

 

Mr Cheong expects interest rates to remain low over the next two years or so.

 

The supply of properties is also not as high as many people think. He pointed to a recent Citibank report which said that the bank sees no oversupply of homes over the next two years.

 

The report estimated that only 60 per cent of the 30,000 units forecast by the URA, will be completed during this period as by end March there were 6,000 en bloc flats that had yet to be demolished.

 

For en blocs to return, prices will have to be double what they are now, especially with no plot ratio increase in the recent announcement of the Singapore Master Plan by URA, Mr Cheong said.

 

High construction costs have also resulted in many projects being delayed. With the many building projects going on — both by the private (including the integrated resort projects) and public sectors — and high material costs caused by worldwide demand, constructions costs will remain for some years, Mr Cheong said.

 

He pointed out at the same time that construction costs here are currently higher than those of Dubai or Hong Kong.

 

“It takes three months to tear a building down but three years to put them up. Once you have taken it down, supply is taken off immediately but to put that supply back it will take three years,” he said.

 

Construction costs are now double what they were a year ago, with high end building costs between $600 and 800 psf and at the low end from $300 to $350 psf.

 

Sometimes Singaporeans also do not realise that market here being relatively small, it would take less than 1 per cent of the available global funds to see the market run up. So, it is not unreasonable to expect a strong turnaround when the sentiment improves, Mr Cheong said.:

 

He added that Singapore has also become a global city and price comparisons of property were now benchmarked against cities like London, Hong Kong, Shanghai and New York rather than against historical prices here.

 

“And contrary to market perception, funding is not an issue, There is no shortage of funding for end purchasers as evidenced by various bank packages (for mortgage loans),” he noted.

 

“My advice to potential buyers is that if you do not have high exposure to the property market, it is an opportune time to consider property”, he said.

 

Source: Today Newspaper