Singapore Property News This Week #172

Residential

More seniors eligible for Lease Buyback

According to Minister for National Development Khaw Boon Wan, the government is looking into making the Lease Buyback scheme more flexible. Previously, 35 per cent of elderly HDB households benefit from the Lease Buyback scheme, but with recent revisions, an expected 75 per cent of elderly HDB households will be eligible for the scheme. The revised scheme will take effect from April next year and aims to increase the flexibility on the length of lease to retain and the amount of proceeds to be used to top up the Central Provident Fund. Minister Khaw expects more households to take-up the scheme with the revisions implemented. However, Minister Khaw said that some residents he spoke to said they will not join the scheme now as they are still being supported by their children or have other forms of passive income. According to the Business Times, only 800 households have joined the scheme so far and out of the 800, 340 households have joined after some revisions were made in 2013. In the new scheme will be extended to four-room flats and the government will raise the household income ceiling to $10,000. Joint HDB flat owners may also receive more cash upfront as they are only required to top up to just half of the Minimum Sum.

(Source: Business Times)

Aug HDB resale price down 1.1%

Data from the Singapore Real Estate Exchange (SRX) showed that HDB resale prices in August has once again fell by 1.1 per cent from the previous month. Nonetheless, market experts have expected this gradual fall in prices following the implementation of the government’s cooling measures. They have expected that HDB resale prices would fall by five to eight per cent by the end of the year. Based on data from SRX, resale prices have slipped 7.1 per cent from August last year and 8.6 per cent from April 2013. This month, three room and four room flats were the main contributor to the fall in overall resale prices. Resale prices for three-bedders have fallen by 2 per cent while resale prices of four-bedders were down 0.9 per cent in August from July. Nonetheless, resale prices of executive flats and five-bedroom units have crept up 1.5 per cent and 0.8 per cent respectively. Ong Kah Seng from R’ST said that as it becomes more difficult to finance loans, fewer buyers are willing to purchase HDB flats. However, Eugene Lim from ERA Realty believes that the drop in demand for HDB flats could be due to the Hungry Ghost Festival.

(Source: Business Times)

Developers’ margins for condo falls

A study by Knight Frank said that developers’ profit margins for new condominium launches are half of that in 2013. According to the study, profits from new launches under the government land sales (GLS) programme have slipped 5 to 10.3 per cent. Market experts believe that the fall in prices and profit margins may be due to the implementation of cooling measures. Prior to their implementation, developers had reaped 15.6 to 22.5 per cent profit margins for new launches. The study which looked at twenty four 99-year leasehold condominium projects showed that the average take-up rate in condominium launches have fallen from 96.9 per cent in 2012, to 67.2 per cent in 2013, and 32.3 per cent in 2014. Alice Tan from Knight Frank said that profit yields may be further reduced if housing prices fall lower, as construction and financing costs have increased. Tan recommends developers to offer competitive prices and unique housing design innovations to capture the interest of buyers. Alan Cheong from Savills expects profit margins to shrink further for the upcoming launches this year. However, Ong Teck Hui from JLL said that developers may moderate land bids to reap higher profit margins.

(Source: Business Times)

Highline Residences to sell from $1,800 psf

Highline Residences condominium, which consists of two 36-storey towers, a 22-storey tower and four low-rise blocks, is located near TiongBahru MRT Station and TiongBahru Plaza mall. The condominium has 500 units ranging from 506 square feet for single bedroom units to 1,227 square feet for a four-bedroom dual key unit. Also, the condominium has six penthouses that are from 2,174 square feet to 2,260 square feet. The condominium is expected to be launched for sale on September 13. According to Keppel Land, the condominium is expected to be priced at an average of $2,000 per square foot based on responses from launch preview sessions that were held previously. However, market experts predict that the units would be priced between $1,800 per square foot to $1,900 per square foot as sales at other condominium projects such as The Crest have been slow. According to data from the developer sales, only 39 out of the 469 units at The Crest have been sold. Nonetheless, Highline Residences is located at a prime location and hence may be expected to generate better response than The Crest, said market experts.

(Source: Business Times)

Commercial

Singapore’s returns for office building investments among highest

Singapore trails behind Shanghai to clinch fourth place in a report by Arcadis that measured the attractiveness of investments in office refurbishment projects across 15 cities. According to the report, the rate of returns for minor office building refurbishment investments in Singapore is at 7.53 per cent. The report ranks 15 cities according to the best expected net rental income return. The report accounts for both major and minor refurbishment projects. Major refurbishment projects are defined as projects that extend the life of an office asset by fifteen to twenty years; while minor refurbishment projects extend the life of an office asset by up to five years. William Taam from Arcadis, a global asset design and consultancy firm, said that older office assets, that have not been adequately refurbished, are less likely to reap in higher rental yields. Nonetheless, Taam warns investors about investing highly in refurbishment projects in Singapore, as the office building market is competitive and businesses are moving to areas outside of the central business district. Thus, Taam recommends investors to revamp buildings in line with brand strategies of the buildings’ occupants. He also encourages minor revamps to attract new tenants and to retain existing tenants.

(Source: Business Times)

Samsung Hub sold for record price

The eighteenth floor of Samsung Hub has been sold for a record-high price of $3,225 per square foot or $42.35 million. Its price was higher than the price of the fourteenth floor, which was sold for $3,030 per square foot earlier this year. The building which consists of 30 storeys has a 999-year leasehold. The eighteenth floor, which comprises of six strata units, was bought over by an Asia-based oil and gas company. The total area of the six strata units amounts to 13,132 square feet. Last year, Buxani Group, which is the seller of the building, divested six strata units on the seventeenth floor for an average price of $3,210 per square foot. Previously, the sixteenth floor was sold for $3,000 per square foot in 2012 and the twentieth floor was sold for $2,800 per square foot in 2011. Market analysts believe that the minimum asking price of $2,800 per square foot for Samsung Hub’s neighbour, Prudential Tower could have raised prices for the transaction of Samsung Hub’s eighteenth floor.

(Source: Business Times)

TanjongKatong conservation shophouse for sale

A freehold plot at 370 and 370A TanjongKatong Road is opened for expression-of-interest exercise until October 7. The 1,484 square feet shophouse has a gross floor area of 2,478 square feet. It has been valued at $5 million or $2,017 per square foot. CBRE associate director of investment properties, Sammi Lim said that the conservation shophouse may attract the interest of buyers who are looking to create an iconic building after some refurbishment. Lim predicts that there will be a substantial pool of buyers as the property has been zoned for residential use with commercial land use on the first storey. Lim believes that there is limited supply for such buildings. Not only so, its freehold status would appeal to investors, Lim said. Besides that, interest may be further bolstered with an upcoming MRT station within five minutes walking distance from the shophouse.

(Source: Business Times)

Singapore: top source of Asian real estate capital

According to CBRE, Asian investments in global real estates have risen by 40 per cent year-on-year in H1. Singapore has accounted for 29 per cent of the active sources of Asian capital, thus triumphing Hong Kong, which stood at 25 per cent; China, which came in third with 23 per cent; and Malaysia who accounted for 5 per cent of the sources of Asian capital. Market experts believe that the weak domestic market in Singapore could have spurred Singaporean investors’ interest in overseas real estate. Ada Choi from CBRE Research Asia predicts that the full-year 2014 investments will surpass that in 2013. Data from CBRE showed that 63 per cent of Asian dollars were spent on office assets in H1 this year; 7 per cent was spent on retail assets and 3 per cent was spent in the industrial market.

(Souce: Business Times)