Singapore Property News This Week #186

Residential

Rents falling at Private Condos and HDB Flats

Rents of private condominiums continue to soften and are expected to continue to do so next year due to a looming excess of supply. SRX Property flash estimates indicate a 0.8% drop in rental prices, continuing the trend in decline of rental prices. The rental decline is more severe in the suburbs at 1.2%; with a decrease of 0.3% for city apartments and 0.7% for fringe units. Accompanying this rental decline is also a drop in the number of available units for rent, with older units being affected more than newer units.

On the other hand, the HDB rental market is performing better due to shrinkage of expatriates’ housing budgets, as well as the restriction faced by new Singapore PRs due to a 3 years waiting period. SRX property shows HDB rents decreased by 0.1%, an improvement compared to the 0.5% fall in October.

(Source: Business Times)

Private property rents and prices forecast to fall 5 to 10 percent in 2015

As it is unlikely for the property cooling measures to be removed anytime soon, market watchers have predicted that property prices could fall by another 5 to 10 percent in 2015. Developers have so far not aggressively cut prices, but could do so next year to boost sales as they sold less than half the units in the first 10 months of this year versus 2013.

But as some of the land parcels acquired during 1H13 and 1H14 in the Government Land Sales were highly priced, and developers have diversified their business outside of the residential segment in Singapore, prices may be sticky downwards. Some developers may decide to rent out unsold units, pay extension fees, or set up separate companies to buy the unsold units to avoid having to cut prices.

(Source: Business Times)

Mortgagee Sales expected to increase in 2015

An increasing amount of properties went under the hammer this year, including mortgagee sales which consultants believe is a sign of increasing difficulties among borrowers to finance their mortgages.

A total of529 properties were auctioned, amongst which 32 of them were sold at a total value of S$36.9 million. Residential properties accounted for over 70% of the total value sold. Most market players expect the situation to worsen next year as borrowers find it more difficult to service their loans due to rising interest rates and decreased rental opportunities as the number of new homes increase next year.

According to Annie Chan, Director of Auction and Sales from Colliers International, there is little cause for anxiety currently as the number of mortgage listings has not reached levels seen during the 2008 and 1998 financial crisis as well as the market downturn in 2004.

This year, landed homes make up 11.9% of mortgage listings, while non-landed homes still comprise the majority of mortgagee listings at 65.4%. While high-end properties in the prime districts were hit hard by the property cooling measures, there have been signs of shoebox apartments surfacing in the auctions as well.

(Source: Business Times)

Number but not prices of shophouse deals are falling

The number and dollar value of shophouse transactions have fallen by about half year on year due to tighter loans, falling yields and investor interest. But prices in the CBD have not fallen as sellers are not stressed.

A CBRE analysis shows that total shophouse transactions year to date have hit $548 million over 101 caveats, versus $1.27 billion and 206 caveats in 2013. Current prices in Districts 1 and 2 in the CBD are between $2,200 and $2,500 psf of GFA, depending on land tenure, up from the $1,800 to $2,200 psf around May to June last year. Net yields have fallen for such properties from the 3 to 3.5 percent of 1Q13 to the current 2 to 2.5 percent.

(Source: Business Times)

HDB to revise Resale Price Index

Starting from 4Q14, the HDB is expanding coverage of its Resale Price Index (RPI) to all towns and flat models, and adopting a new method called “stratified hedonic regression” to calculate the RPI, which should more accurately measure price changes. JTC and URA are also looking into reviewing their indices.

HDB’s last revision was in 2002, and the latest change was driven by the fact that a wider range of flats are being transacted, with more resales in newer towns and a greater age variance across flats. Past values of the RPI will not be re-calculated using the new method, but the RPI’s based period will be changed from 4Q98 to 1Q09.

(Source: Business Times)

Commercial

Thong Sia Building up for sale, pricing expected to be at S$400-420m

For the first time since it was built in 1981, freehold commercial and residential property Thong Sia Building has been put up for sale. Vendors are expecting offers from between $400 million to $420million.

According to Karamjit Singh, JLL international director, a study has shown that only 50 non-residential buildings are located along Orchard Road. Of these 50,31 of them are freehold or on a 999 year leasehold, and 22 out of these 31 freehold assets are large scale strata-titled developments owned by real estate investment trusts and long term investors.

The chances of these assets being available for sale are low, leaving only limited number of freehold assets available for sale around Orchard Road.

(Source: Business Times)

The Verge and Chill @ The Verge offered for sale for $320 to $350 million

This eight-storey mall with 238,527 sqft of retail GFA located in Little India is being offered for sale with an indicative pricing of $320 to $350 million. The overall occupancy rate is above 80 percent and the mall has Sheng Siong as an anchor tenant.

Submissions of Expressions of Interest are due on Jan 27, 2015 at 3pm, and JLL has been exclusively appointed for the sale.

(Source: Business Times)

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