Singapore Property News This Week #169

Residential

Seller’s stamp duty curbs speculation  

According to a study by Ngee Ann Polytechnic, subsales for non-land high-end private homes that were lodged for H1 were from units that were bought between 2009 and 2010. Similarly, in the mass-market segment, 73 per cent of subsale transactions involved properties bought in 2009 and 2010. Since subsales reflect the level of speculation within the market, this trend which shows that subsales involve long-holding transactions, suggests that cooling measures such as the seller’s stamp duty (SSD) have been effective in reducing speculation. Following the SSD scheme, residential properties that were bought from 2011 onward and sold within four years had to incur a maximum of 16 per cent stamp duty fee. According to the study by Ngee Ann Polytechnic, 75 per cent of the 40 subsales in the core central region made profits, while 97 per cent of the 142 subsales in the outside central region profited. Market analysts believe that property sales will remain weak as long as cooling measures are not eased.

(Source: Business Times)

Unit at Goodwood Residence subsold for $11.5 million

Located at Bukit Timah Road, a unit at Goodwood Residence was subsold for $11.5 million or $2,456 per square foot this year. Previously, it was purchased by GuocoLand for $8.5 million or $1,815 per square foot in April 2010. With a $3 million net gain, the sale of Goodwood Residence is the most profitable subsale transaction in H1 this year. Data from Ngee Ann Polytechnic’s study of the property market showed that two other units at Centennia Suites at Kim Seng Road also profited from a subsale gain of about $500,000 each. On the other hand, 25 per cent of the non-landed private homes in the core central region suffered a loss. According to Ong Choon Fah from DTZ, first-time buyers may stand to gain from the current weak market. Also, he predicts that subsale transactions will continue to involve long holding properties.

(Source: Business Times)

Resale volume of private homes still low

While private home resale prices have fallen 1.3 percent in July from June, the number of units that have changed hands remained flat, according to Singapore Real Estate Exchange (SRX). In June, 427 private residential units were transacted, while 431 units were transacted in the following month. Data from SRX showed that high-end condominiums, especially those located in the core central region, experienced the largest decline in resale prices as resale prices fell by 4 per cent in that region. On the other hand, resale prices of private homes in the rest of central region fell by 1.1 per cent while those outside central region were the least affected as their resale prices dipped by just 0.6 per cent. Market analysts believe that both the Total Debt Servicing Ratio framework and the imposition of stamp duties have negatively affected demand in the resale market for private homes and have also weakened the leasing market. Ong Kah Seng from R’ST Research said that home owners need to lower their prices even further in order to attract buyers. Also, Eugene Lim from ERA Realty said that buyers are less willing to make purchases now as they expect prices to fall even further.

(Source: Business Times)

Property consultants say it’s time to lift cooling measures

Property consultants believe that the government’s refusal to lift cooling measures will result in an inflationary effect on the property market as buyers and investors continue to speculate prices. Dennis Yeo, who spoke at the National Real Estate Congress, argued that cooling measures such as the additional buyer’s stamp duty (ABSD) and the seller’s stamp duty (SSD) are less relevant today and should be lifted to reduce property transaction costs. Eugene Lim from ERA Realty, who also spoke at the congress, echoed Yeo’s concerns. He said that the SSD should be removed as subsales across all property types have been slow. Also, he added that while the ABSD imposes a higher tax on foreigners, Singaporeans are still affected by it and may be less able to invest in additional properties. Market experts expect the demand in overseas properties to increase as the cost of local property increases. Nonetheless, Sing Tien Foo from the National University of Singapore believes that it is still unclear how the upcoming increase in residential land supply will affect the consumer behaviour.

(Source: Business Times)

Commercial

Office and retail space will continue to attract investors

Since the commercial market is not affected by cooling measures such as the additional buyer’s stamp duty (ABSD) and seller’s stamp duty (SSD), investors are more likely to invest in the office and retail market, said market analysts. According to Mary Sai from Knight Frank, Singapore’s low unemployment rate and the strength of its dollar are among the many pull factors that have attracted foreign investors. Also, she said that commercial properties are popular among investors as the absolute sum of capital to be paid is often affordable. She added that 43 per cent of transactions made for the strata-titled retail space at Alexandra Central were below $1 million. Furthermore, data from Knight Frank showed that in H1 this year, strata-titled office transactions had picked up as the number of transactions rose from 204 to 248 from H2 2013. Nonetheless, the average price for office space has fallen from $2,957 per square foot to $2,331 per square foot. However, Tan Hong boon from JLL predicts that investment activities in the commercial market will continue to grow as office land supply remains limited.

(Source: Business Times)

Singapore’s office rental gains highest in Asia

Data from JLL showed that in Q2 of 2014, Singapore had the highest quarterly gains in office rentals in Asia. Trailing behind Hong Kong Central and Beijing’s Central Business District, Singapore’ average rental for Grade A office space is US$828 per square metre per year. Chua Yang Liang from JLL said that rentals have risen due to the limited supply of office spaces in Singapore. However, Chua said that rental growth is expected to slow down as more offices are expected to be completed by 2016. Nonetheless, Chua believes that growth in the Asian economy will continue to drive the office rental market in Singapore. According to JLL, Singapore has experienced a 4.6 per cent increase in office rentals this quarter as compared to the previous quarter. Not only so, Singapore’s office rentals have increased 15.9 per cent from Q2 2013.

(Source: Business Times)

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