Singapore Property News This Week #229

Residential

HDB resale prices fell by 0.4% while resale transactions increased by 3.9% in September

Data from SRX Property showed that as HDB resale prices fell by 0.4% month-on-month in September, resale transactions rose by 3.9% to 1,504 units in September, up from the 1,447 units that changed hands in August this year. Market experts said that the fall in prices is gradual and stable, and they believe that a slow moderation of prices is expected to continue for the rest of the year. On the whole, market experts predict that there will be a 2% to 3% drop in resale prices this year. Ong Kah Seng from R’ST Research said that in H2 2015, price changes have been minimal; with just fluctuations of 0.5% month-on-month. Ismail Gafoor from PropNex added that more buyers are entering the market as the current price point is attractive for young couples and upgraders.

(Source: Business Times)

MOF: no change to 5-year deadline for developers to complete and sell off a project

According to the Ministry of Finance (MOF), there will be no change to the 5-year deadline for developers to complete and sell of a residential project. If developers fail to meet this deadline, they will have to pay 15% additional buyer’s stamp duty with interest calculated at 5% per annum starting from 14 days after the date of contract or agreement. According to MOF, this measure was intended to encourage the supply of housing units and to help moderate residential property prices. Due to the sluggish real estate market, developers have been struggling to meet the deadline, and several had requested for an extension. The tight deadline also meant that developers are less willing to take up bigger projects as they may not be able to clear stock in the midst of a weak market. In response, a spokesperson from MOF said that the government will continue to monitor the market and review policies accordingly.

(Source: Business Times)

Competition for land is healthy despite cautious bidding by developers

While developers may be bidding more cautiously, the competition for land remains healthy. According to a report by BNP Paribas, like-for-like comparisons on plots sold this year compared to earlier sites in the vicinity show that bidding prices have fallen but demand remains intense, as an average of 9 bids per site were recorded since the start of the year. This is up from the average of 7.3 bids last year. According to the report, supply cuts in the Government Land Sales programme may have fuelled developer’s demand. Particularly, competition for land is still steep from non-traditional developers, such as foreign developers, boutique local developers and construction-related firms. Yet, the report noted that net margins of developers’ new projects had fallen to 11.8% in 2014, down from 12.6% in 2013.

(Source: Business Times)

Commercial

CBD office rents falls in Q3 by 4.1% quarter-on-quarter

According to DTZ, the average monthly gross rents in the CBD have fallen by 4.1% quarter-on-quarter to $10.40 psf in Q3. In particular, the average monthly gross rents in Marina Bay fell 5.5% to $13 per sq ft per month while rents in Raffles Place fell by 3.4% to $10.45 per sq ft per month in Q3 from the previous month. In the city fringes, a 2.1% drop in rents was observed over the same time period. DTZ believes that the economic slowdown could have affected the office rental market. Cheng Siow Ying from DTZ added that as landlords compete to retain and attract tenants, leasing incentives have increased. Also from DTZ, Lee Nai Jia predicts that office rents in the CBD will continue to fall as the global economy remains uncertain.

(Source: Business Times)