Singapore Property News This Week #36

Residential

Strong sales at Watertown project in Punggol

215 of the 596 released units at 99-year leasehold 992-unit Watertown project was sold over the Chinese New Year long weekend, bringing the total number of units sold to slightly above 500. The units sold so far have a price range of $980 to $1,500 psf and was sold mainly to locals, with Singaporeans making up 90% of the buyers. The mixed residential-and-retail project will include 11 13- to 14-storey towers as the residential component and a four-storey retail component connected to the Punggol MRT station. The latter, named Waterway Point, will consist of two basement levels and two other levels that make up 370,000 sq ft worth of net lettable area with a 40-30-15-15 tenant mix for retail, food and beverage, entertainment and others such as educational institutions, banks and community amenities.

Evidence that ABSD is achieving its intended effect

Sales figures for recently launched projects have shown that the ABSD is achieving its intended effect of curbing foreign demand. In the recently launched Watertown project in Punggol, over 90% of the units sold were purchased by Singaporeans, up from an average of 80% of similarly suburban condos sold in 2011, such as The Tennery and The Greenwich. In another recent launch, The Hillier in Hillview area, 80% of the buyers were Singaporeans. The higher proportion of non-Singaporean buyers may be due to the location, which offers easy access to Bukit Timah and better-known schools such as Nanyang Girls School and Hwa Chong Institution.

An upcoming slew of property launches

There are several property launches to look out for, including ECs and private condos.

99-year leasehold five-storey Parc Rosewood located in Woodlands, a private residential project consisting of 689 units has been launched. The units are likely to go for an average price of $1,000 psf, with one-bedroom units starting from 431 sq ft priced at around $400,000, two-bedroom units at $570,000 and the rarer three-bedroom units for almost $800,000.

The Tampines Trilliant, an EC project developed by Sim Lian, is set to be released soon. The project will consist of 670 units in 12 15- and 16-storey towers, with mostly three-bedroom or three-bedroom-plus-utility units with 127 units of the first ranging from 872 to 1,141 sq ft and 397 units of the latter with a size of 1,001-1,378 sq ft. Other units will either be four-bedroom units ranging from 1,302-1,593 sq ft or penthouses.

Another upcoming EC is 728-unit Twin Waterfalls located near Punggol MRT which will be launched in February. Developed by Fraser Centrepoint, the project consists of 17-storey towers housing 914 sq ft three-bedroom units, 1,378 sq ft four-bedroom dual key units and penthouses with sizes up to 1,928 sq ft, with an estimated average price of around $700 psf.

Another project under Fraser Centrepoint due for release soon, either within Q1 or early Q2, is the 99-year leasehold seven-storey Palm Isles at Flora Drive in the Upper Changi area, which will consist of 450 units to be sold at an estimated price of $900-950 psf.

Other upcoming projects include 103-year leasehold 62-unit Greenwood Mews, a cluster housing development located near Bukit Timah, and 99-year leasehold 416-unit Hillsta, a condominium development in Choa Chu Kang as well as 99-year leasehold 702-unit Bartley Residences, a condominium project located near Bartley MRT Station.

Sim Lian launches 99-year leasehold EC The Tampines Trilliant

The 670-unit development sits a 236,805 sq ft site located along Tampines Central 7, and will consist of 12 blocks housing 127 three-bedroom units ranging from 872 sq ft to 1,141 sq ft, and 397 three-bedroom-plus-utility units with sizes of 1,001-1,378 sq ft, with the rest being four-bedroom units ranging from 1,302-1,593 sq ft and penthouses of sizes 1,841 – 2,465 sq ft. Prices start from $682,000 or $782 psf for a 872 sq ft three-bedroom unit and $971,000 or $746 psf for a 1,302 sq ft four-bedroom unit. Being located near Tampines MRT Station and shopping malls such as Tampines 1, Tampines Mall and Century Square, it is expected to draw much interest.

Lower COVs indicating a weaker HDB resale market

Q4 2011 showed lower cash-over-valuation (COV) figures, with the median COVs falling for all flats except for five-room and executive flats in some towns. This shows that the HDB resale market is weakening. This decrease can be attributed to buyers being more conscious of the additional costs required to renovate resale HDB flats, particularly in light of the negative economic outlook.

The large supply of build-to-order (BTO) flats have also helped to stabilise HDB resale prices, which increased by 1.7% from Q3 to Q4, compared to 3.8% from Q2 to Q3. The median resale prices have also decreased for mainly four-room and five-room flats in more mature estates such as Bukit Merah. While prices of resale flats in other estates have continued to increase, they may fall as supply of new fats increases. Other possible reasons for the potential fall in prices is the relative attractiveness of the BTO flats, which are affordable and now afford a high rate of success and shorter waiting time.

Resale volumes have also fallen, for in Q4 2011, resale transactions increased by 0.3% from Q3, and brought the total transactions for the year to 24,633, a 24% decrease from 2010’s figures.

Generally, COVs are expected to fall to around $25,000-40,000 and sale transactions are expected to fall by 3-5%.

Prices and rents for private properties stagnate

According to data released by URA, Q4 2011 saw a 0.2% increase from Q3’s benchmark private home price index and 5.9% year-on-year increase from 2010 to 2011, lower than the 17.6% increment from 2009 to 2010. The landed property sub-index increased by a mere 0.1% from Q3 to Q4 with the price index for semi-detached houses falling by 0.6%, when the non-landed property sub-index increased by 0.3%. Nevertheless, the differential price fall for semi-detached houses in different regions (some 1.6%, some 1.3%) showed that there is price resistance in some regions.

For the overall rental index for private homes, it registered a 0.4% q-on-q increase from Q3 to Q4, lower than the 0.8% increase from Q2 to Q3. Similar to the trend for the price index, the rental index increment for 2011 was also much smaller than that for 2010, 3.8% compared to the earlier 17.9%.

Some analysts believes that prices will fall by 5-15%, with the luxury sector taking the brunt of it and the mass-market sector less affected, particularly with the ABSD and the uncertain economic outlook to curb demand. Other analysts however, believe that it is hard to conclude whether the peak has been reached. This is because there are many large developers who are able to resist price cuts. Furthermore, earlier cooling measures implemented in the last couple of years did not manage to cool the market, making it hard to predict and conclude whether prices will fall. Some believe that while the ABSD will lead to a price fall, prices are just as likely to increase again as interest rates are expected to remain low.

The much lower sales volume in the secondary market (decrease of 27.6% in 2011) compared to that in the primary market (a fall of 2.4%) could also worsen the price decrease. The latter is more attractive to buyers because of the showflats and advertisements by developers and installment payment plans buyers can choose, not an option when purchasing property in the secondary market. The increase in the supply of ECs has also hampered the growth of rental rates.

Commercial

Industrial rents to decrease as supply booms

After reaching the peak of its growth in 2011, where multi-user and warehouse price and rental indices have increased by 16% and 22% respectively, growth of industrial rents and capital values may slow down or even fall this year, with an upcoming supply of 9.59 million sq ft worth of industrial space. This is not helped by the negative economic outlook for the year, which would further discourage demand for industrial spaces. A fall of 15% is predicted as demand for both existing and upcoming spaces decreases.

Tepid bidding in tenders and sales have also shown developers’ care in choosing and purchasing plots for developers, one example being the low no. of bids and low top bid for a site in Woodlands in September last year. With more land expected to be released under the Industrial Government Land Sales Programme (IGLS), some with shorter tenures, the situation is not expected to improve. New conditions such as restrictions on strata subdivision on selected plots of land will further discourage higher bid prices.

However, capital values may not be affected as much since the recent cooling measures in the residential market may result in investors turning their attention to the industrial market, particularly to multi-user factory space and high-specs buildings.

Singapore takes the 6th spot in JLL’s Top 30 list for commercial property investment

In Jones Lang LaSalle’s list of top 30 cities for direct commercial real estate investment for 2010 to Q3 2011, Singapore takes the sixth spot, having about US$15 billion worth of such transactions in this period. Direct commercial real estate investment includes office, retail, industrial, hotel and mixed-used properties but excludes land deals, residential properties and all transactions below US$5 million.