Residential

No more strata landed homes in condominium projects

To prevent foreigners from purchasing strata landed homes built in condominium projects, such homes can no longer be built in projects with ‘condominium’ status. Earlier, foreigners buying strata landed homes within such projects do not need permission from the Singapore Land Authority’s Land Dealings (Approval) Unit.  Foreigners wishing to purchase any other type of landed homes will need LDAU’s approval. This new rule is probably a result of the increase in number of foreigners purchasing strata landed homes in condominium projects – 97 of such housing units were sold by developers last year, of which 90% were bought by foreigners (including PRs), an increase from 60% of 16 such units in 2010. Despite this new rule, foreigners can still purchase strata landed homes in existing projects and those that have yet to be built but already approved by URA.

HDB resale market suffers with large BTO supply

With more choices offered to buyers in the form of BTO flats, the HDB resale market is beginning to suffer. In just Q1 2012, a total of 8,076 BTO flats were released, with a total of 25,000 BTO flats to be released by end-2012. This has already taken its toll in the HDB resale market, with the price index increasing by only 0.6% from Q4 2011, compared to the 1.7% increase in the previous quarter. The increase in chances to 15% for second-time buyers interested in BTO flats also meant that more second-timers are turning away from resale flats. Sales volumes of larger units such as 5-room and executive flats have declined faster than other flats because the potential buyers could purchase an EC instead, given the increase in income ceiling. Resale prices are expected to slow, with additional pressure from the falling cash-over-valuation figures, and may even eventually fall, drawing buyers back again.

Bartley Homes Pte Ltd bought Bartley Grove Apartment at $74.1m

Bartley Homes Pte Ltd, a subsidiary of Top Global Ltd, has purchased 25-unit Bartley Grove Apartment and three adjoining terrace houses located along Bartley Road for $74.1 million or $810 psf ppr.  The combined freehold site zoned ‘residential’ has a 65,305 sq ft land area, with Bartley Grove Apartment making up 55,286 sq ft and the terrace house making up the remaining 10,019 sq ft from the terrace houses. The site also has a 1.4 gross plot ratio and can be built up to five-storeys.

99-year Fernvale EC site attracts $245m top bid

Peak Living, a subsidiary of Kheng Leong Group, offered $245 million, or $295.60 for the 99-year leasehold EC site located at Fernvale Lane, beating out three other bidders in the process.  The relatively small number of bidders for the 236,804 sq ft site with 3.5 plot ratio and 828,816 sq ft GFA could be due to the lack of an MRT station and amenities located in the area and its proximity to a land parcel reserved for B2 industrial use. The breakeven price is expected to be between $550 – $660 psf with a targeted selling price of $670-720 psf.

Oxley Holdings buys freehold Joo Chiat site at $8m

The 606-sqm site stretching from 339, 339A, 339B to 339C Joo Chiat Road is zoned for residential and commercial use. Oxley plans to redevelop the property into a mixed residential and commercial development. The $8 million was decided after considering current market prices of neighbouring property and its redevelopment potential.

Things looking bright for the bungalow market

Based on the caveats logged so far, under $200 million of Good Class Bungalow Area (GCBA) deals have been transacted in Q1 2012. Q4 2011 saw $239.7 million worth of such deals and the whole of 2011 saw $1.16 billion worth from 57 deals. Notable transactions in Q1 2012 include a vacant freehold plot at Nassim Road sold at $47.842 million or $2,000 psf based on the 23,922 sq ft land area.

Non-GCBA deals include an old single-storey bungalow at Jalan Tupai, which sold for $21 million or $2,005 psf based on its  10,476 sq ft land area, and another at Boscombe Road which sold for  $21.7 million or $1,025 psf on a 21,167 sq ft land area. A 28,675 sq ft freehold plot located at Lim Tua Tow Road was sold for $23.6 million while a semi-detached house at Ming Teck Park sold for $5.15 million or $1,540 psf based on its 3,343 sq ft land area.

A three-storey bungalow on Coral Island at Sentosa Cove was also sold at $17.68 million or $1,821 psf on a 9,700 sq ft land area.

Residential auctions see less activity

Only one out of the three successful auctions in Q1 2012 was for a residential property, down from 14 out of 23 and five out of 17 in 2010 and 2011 respectively. The three successful auctions out of the 84 put up for auction include a residential property, a petrol station along Jalan Ahmad Ibrahim and a factory in Woodlands. This work out to a 4% success rate compared to 18% and 14% in 2010 and 2011 respectively. While demand for residential property has fallen, demand for industrial and commercial properties have remained strong.

Current property trends: rapid project launches and shoebox units

Developers are trying to capitalise on current strong demand by rapidly launching their projects, especially since HDB is releasing more land for residential development. To reduce the risks, developers are trying to compress the turnaround time from 12 to 18 months to around 9 to 12 months.

Shoebox units are also increasingly popular with a record 2,037 new shoebox units purchased in 2011 but some fear that investors who are buying such units may find it hard to find tenants since demand for units of such size in suburban areas in unlikely to be high.

While some believe that developers are becoming more selective and cautious, others believe that bid levels and participation in recent GLS tenders reflects optimism in developers.

There are also worries that URA will implement more cooling measures as a result of the large number of private homes sold in February, 2,413 private homes excluding ECs, a 29% increase from January’s figures. Including ECs, the figure would be 3,138, a 51% from 2,077 units in January. URA is also proposing new measures to help potential buyers make more informed decisions, which will be implemented later this year.

Commercial

Rents of Singapore’s prime warehouse the fourth highest in the world

Singapore has climbed two spots to become the world’s fourth most expensive place to rent a prime warehouse in H2 2011 despite the slower growth.  The rental rate increased by 6.8% to $2.03 psf per month from June to December 2011, largely driven by demand from companies relocating and expanding. However, the growth is slowing, with the 6.8% growth much lower than the 12.4% growth in H1 2011. Bulk warehouse space has also slowed to $1.44 psf per month end-2011 compared to $1.37 psf per month in H1 2011. The slowdown may be due to companies’ unwillingness to keep large inventories and expand given the uncertain economic outlook, and the rents may be reaching their peak soon. The average monthly gross rents of prime factory and warehouse space increased by 0.5% and 0.8% respectively in Q1 2012 compared to the up-to-2 % increase in Q4 2011.

99-year EON Shenton proves popular

All 23 street-level shops (129 -377 sq ft) at EON Shenton have been sold at a price range of $4,000-$4,980 psf , while over 30 of its 50 released office units have also been sold. The released office units  (out of a total of 98) on levels 7-13, 16, 18 and 20 range from 506 sq ft to 1,765 sq ft were priced at $2,150 – $3,000 psf during its preview and have since been increased by 2%. Meanwhile, 66 of the 132 apartment units (527 – 1,249 sq ft) located on levels 23-32 have been released with over 40 sold. The 66 units released range from $2,200 – $2,750 psf, with those boasting a sea view priced at 20% higher than city-facing units. Some units at the project at 70 Shenton Way proved so popular that ballots had to be held.

Slow investment sales in Q1

With the uncertain economic outlook, investment sales have dropped by nearly half from $7.4 billion in Q4 2011 to $3.7 billion in Q1 2012. Local investors such as property developers and real estate investment trusts (Reits) were the main investors, with 80% of investment deals in Q1 coming from the developers. Industrial Reits were the most active while funds did not make any purchase but instead sold their holdings. This may be due to the funds looking to invest in other countries where returns may be higher. However, investment sales are expected to improve in Q2, with the predicted economic recovery and interest from private buyers from the region. Strata-titled industrial units and office space may also draw interest from investors turning away from the residential sector.

Hotels have potential for growth

Hotels in Singapore can still grow further, given the increased demand and constrained supply of rooms. Room rates could also increase as a result of rising costs. In 2011, the average room rate and average occupancy rate were $245 and 86% respectively, with the revenue per available room being $212. An increase in hotel room supply to 20,000 more rooms is possible, but an increase in room rate may have repercussions on the MICE industry.  Meanwhile, the hotel room supply could increase by 20% by 2016, with a potential increase of 9,228 rooms to add to the current 49,719 as of 2011.

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