Singapore Property News This Week #211

Residential

MOF: ABSD will be removed when necessary

According to the Ministry of Finance, cooling measures such as the additional buyer’s stamp duty (ABSD) may be removed when appropriate. Market experts believe that the measure should be lifted either fully or in part for Singaporean citizens as the market stabilises. The removal of such cooling measures may increase the affordability of homes, thus encouraging citizens to purchase another property, said The Business Times. While some experts anticipate the removal of the ABSD, others like Alex Toh from Withers KhattarWong believe that there would not be a total removal of the cooling measure. Lee Liat Yeang from Rodyk & Davidson Real Estate Practice Group added that it is still too early to lift the stamp duties completely.

(Source: Business Times)

Luxury condos in Singapore popular among foreigners

Luxury condos that are priced from $10 million are popular among foreign buyers this year, according to the Business Times. Sun Tongyu, Alibaba’s co-founder bought a penthouse in April this year for $51 million. In the same month, a Hong Kong businessman had paid $22.5 million, or $3,271 psf, for a penthouse at Nassim Park Residences. Other noteworthy foreign buyers include a regional executive who works at Facebook who purchased a 4,700 sq ft penthouse for $11.3 million this year. Not only so, luxury condos have also been quickly snapped up by well-heeled Singaporeans, said the Business Times. Andy Chua, the owner of Yun Nam Hair Care had purchased a $12.2 million penthouse at St Regis Residences in February this year. Alan Cheong from Savills Singapore believes that the competitive prices of high-end condos in Singapore compared to countries like Hong Kong have appealed to buyers.

(Source: Business Times)

Authorities expected to maintain private residential land supply in H2 this year

According to the Business Times, market experts believe that authorities will maintain private residential land supply in the second half of this year. Market experts believe that supply would be kept constant as a substantial number of new homesare being developed. Not only so, authorities may be encouraged to maintain supply as developers’ appetite for land at state tenders has been healthy. Nonetheless, other experts predict that supply may be cut slightly to avoid the problem of having an oversupply of residential properties. As demand for public-private housing hybrid is low, market experts believe that there is no need to release any executive condo sites on the confirmed list in the H2 2015 Government Land Sales programme. According to the Business Times, land supply for private homes on the confirmed list has fallen from 8,100 units in H2 2010 to around 7,000 units in H1 2012. More recently, the number of private homes supplied fell from 4,630 in H1 2014 to 3,335 units in H2 2014 and finally 3,020 units in H1 2015. Ong Teck Hui from JLL predicts that this trend will be maintained in the second half of the year as MND will take into consideration the problem of oversupply.

(Source: Business Times)

HDB resale volumes increases 19.3% year-on-year in May

Data from SRX Property showed that HDB resale volumes have increased by 19.3% year-on-year in May this year compared to May 2014. Nonetheless, resale HDB flat transaction volumes have fallen by 2.2% month-on-month from 1,610 in April to 1,575 in May. Wong Xian Yang from OrangeTee added that year-on-year increases in volumes have been observed in the first five months of this year, except in March. This indicates that the resale market is stabilising, said Wong. However, Wong said that cooling measures such as the mortgage servicing ratio cap and rising interest rates may still affect the demand for HDB flats. Not only so the increase in supply of build-to-order flats and executive condos will negatively affect demand for HDB resale flat units. According to the Business Times, resale prices of HDB three and four-room flats have fallen by 0.2% and 0.9% respectively in May from April this year. In mature estates, prices have fallen by 3.9% year-on-year while prices in non-mature estates have fallen by 6% in the same period, added the Business times.

(Source: Business Times)

Sophia Road development launched for collective sale

A 15-unit residential development at Sophia Road has been launched for collective sale by public tender. This follows two other en bloc sales tender at Amber Park Condo and at Thong Sia Building, which is a residential-cum-commercial building. Market experts believe that collective sales will not flourish as owners’ high expectations may not be met by the market’s demand. The owners of the development at Sophia Road are seeking offers of more than $45 million, or $1,169 psf ppr. The development has a land area of about 16,600 sq ft and has been zoned for residential use. It has a gross plot ratio of 2.1. To capitalise on the site, Yong Choon Fah from JLL said that buyers of the development may consider building small apartments that are between 40 and 50 sqm. The tender for the Sophia Road site will close on July 1.

(Source: Business Times)

Experts: sale of landed properties increasing due to pent-up demand

According to William Wong from RealStar Premier Group, the sale of landed properties has picked up due to pent-up demand, and also due to the anticipation that cooling measures will be lifted. Following the implementation of the total debt servicing ratio and other cooling measures, transaction volumes for landed properties fell up to 50 percent by the end of 2013, said Wong. Nonetheless, Wong believes that sales has picked up in the recent months as the number of enquiries from potential customers have risen. Not only so, RealStar Premier Group has moved $400 million in transaction sales since the start of the year, added Wong. Noteworthy transactions this year include two Good Class Bungalows at Bishopsgate and Swettenham Road, which were sold for $33 million and $23.52 million respectively, said Wong. Wong believes that if the cooling measures are lifted, the affordability of homes will increase and this would encourage demand.

(Source: Business Times)

Commercial

ERA Realty and PropNex reported substantial profits due to economies of scale

ERA Realty and PropNex have recorded a 10.6% and 3.8% increase in profits after tax respectively, as the organisations were able to reap the benefitsof economies of scale. According to the Business Times, larger agencies such as ERA Realty and PropNex are able to provide value-added services that are difficult to be replicated by smaller firms. Despite a 9.9% fall in revenue in 2014, ERA’s profits were propped up by higher-margin investment sales and commercial transactions. On the other hand, PropNex had reaped a $7.9 million profit due to a cut in headcount as it streamlined its processes. Yet, OrangeTee suffered a net loss of $690,000 for FY 2014. The agency has said it will improve on branding, training, project marketing and research to boost revenues. According to the Business Times, over 50 agencies and 4,000 real estate agents had exited the market in the last year as the market shrank. However, as of January 1st this year, there are 1,369 licensed agencies and 30,830 registered salespersons with the Council of Estate Agencies.

(Source: Business Times)