Indications of cooling property market
After five rounds of cooling measures to discourage speculative demand and the increase in housing supply as part of the measures to cool the property market, results can be seen in the slight decrease in private home prices in Q1 2012, the fall in the proportion of sub-sales (an indicator of speculative demand) to 4%, as well as the fall in the proportion of private residential property bought by foreigners and companies to 7%. The resale prices for HDB flats have also slowed down, increasing by a mere 0.6% in Q1 2012.
However, the increasing number of shoebox units and rising mass market prices remained problematic. As of end-Q1 2012, the 2,500 completed shoe-box units made up 1.2% of the 210,000 non-landed private housing units and the figure is expected to hit 9,700 by 2015. 80% of these completed units are located centrally, but many new units are located in suburban areas where the demand for such units is unknown. Mass market property prices outside the Central Region have also sustained their rising trend despite the moderation of prices in the central region.
Increased private home sales the current trend
Judging from the sales figures from the past few months, increased sales figures may be the current trend in the market. There were doubts that strong sale figures in February and March could be sustained, but the strong sales in April proved otherwise, with a total of 2,487 private homes excluding ECs sold in April, a 4% increase from March, and a slight increase from the 2,417 units sold in February. It was also 38% higher than the figure in April 2011. The demand for private homes excluding ECs exceeded the supply in April since the total number of units launched is only 2,386. EC sales, however looked more dismal with no new launches, leading to a sale figure of only 173 units in April, compared to 639 units the previous month. This results in the 12% decrease in the total private sales volume (including ECs) to 2,660 units.
The core central region (CCR) showed the highest increase in demand, with the 106 units sold in the region in April almost twice that of March. The median prices of new sales in the outside central region (OCR) have been increasing faster than that of CCR, resulting in a smaller gap of 1.8 times between the two compared to the 2.5 times gap in June 2007 and prompting more buyers to purchase homes in the CCR. Number of units sold in the rest of central region (RCR) has also increased by 70% from March to April to 867 units while the sale figures for mass market homes in the OCR fell by 17% to 1,514 in the same period.
The demand for private homes is likely to continue to rise, driven by bumper supply, and these may eventually lead to a record-high sale figure of over 16,800 units for the year of 2012.
5 residential sites released; 1 confirmed, 4 reserve
The government is releasing a total of five 99-year leasehold private residential sites under the GLS programme, out of which one is on the confirmed list and the remaining on the reserve list. The sites could potentially yield a total of 2,100 units. On the confirmed list is a parcel located at Pheng Geck Avenue near Potong Pasir MRT Station. It is expected to achieve a top bid in the range of $550-810 psf ppr out of 10-15 bids, with an expected average selling price for the development at around $1,450 psf. The tender closes on June 28.
Located near the confirmed list site is a reserve list plot at Tai Thong Crescent, which is zoned for residential use with commercial use on the ground floor. It is expected to achieve a high psf ppr price since the project developed on the site can be a mixed-use development, meaning that the commercial component can achieve a higher price than the residential units, which can already fetch higher prices if they are part of a mixed development. The top bid for the site is predicted to be around $550-800 psf ppr from 10-15 bids, if the site is triggered in the present market.
Also on the reserve list are the sites at Kim Tian Road located near Tiong Bahru MRT Station and Tiong Bahru Plaza, at Prince Charles Crescent which is 400-500 metres from Redhill MRT Station and at Sengkang West Way near the H2O Residences condo project.
The site at Kim Tian Road is expected to be the most popular among the four reserve list plots, given its central location and its surroundings consisting of eateries, shops and conservation apartments. If triggered now, the site could possibly achieve a top bid of $580-870 psf ppr.
Meanwhile, the site at Prince Charles Crescent is expected to fetch a top bid of $650-900 psf ppr while the site at Sengkang West Way plot is expected to achieve a top bid of $336-440 psf ppr. While the latter is not located near transport amenities such as an MRT or LRT station, being located in a growth area means it may see demand from upgraders.
99-year leasehold Tampines site attracts $252.78 m top bid
The 99-year leasehold residential site located at Tampines Avenue 10 attracted a total of 3 bids with the top bid at $252.78 million or $417.86 psf ppr, within analyst’s expectations of $350-465 psf ppr. The lukewarm participation in the tender reflects the less-than-ideal location of the plot, since it is not located near the MRT station or the Tampines Regional Centre, though it is near Bedok Reservoir Park and Temasek Polytechnic. The possibility of the adjacent reserve-list site being triggered would also have affected the tender participation. The top bid was won jointly by Far East, Frasers Centrepoint and Sekisui House, which will develop the site into a 670-unit condominium with eight 15-storey blocks. The expected breakeven price and average selling price ranges from $800-850 psf and $900-1,000 psf respectively.
Far East plans two new hotels in Far East Square
As part of the collaborative effort with Frasers Commercial Trust (FCOT) and Great Eastern to revitalise the China Square area, Far East Organisation plans to develop a 37-room designer boutique hotel from some offices on the upper floors of the conservation shophouses and a 28-storey 292-room hotel on an empty part on the site. The collaborative The China Square Precinct Master Plan also includes the development of a $14 million covered linkway that will connect the three properties together and to the upcoming Telok Ayer MRT station. In addition, there will be new building markers, directional and circulation signs, and mural artwork added to the region and activities, events and promotions planned to rejuvenate the area. There will also be a “Heritage Trail” that showcases heritage sculptures.
Singapore’s office rents remains 3rd highest in Asia Pacific
Singapore’s prime office rents in Q1 2012 remained the third highest among 28 cities in the Asia-Pacific region at US$81.59 psf despite the 1% fall in annual gross rent from Q4 2011. CBD Grade A office space’s average monthly gross rents dropped by 4.3% from January to March this year compared to the 1.6% fall from October to December 2011, probably a result of the uncertain economic outlook. The fall in rents is predicted not to exceed 15% and may reach US$70 psf in 2013. Meanwhile, supply of office space in 2012 and 2013 is expected to hit 745,246 sq ft and 141,759 sq ft respectively. This, together with the likely increase in sub-leased shadow space, is the reason for the decreasing rents. The average vacancy rate is also likely to remain around 8.5%.
Gemshine Investments bought Compass Point at $519m or $1,925 psf
Compass Point mall located in Sengkang was sold to Gemshine Investments (a joint venture between Prudential’s Asia Property Fund (APF) and Frasers Centrepoint) at a price of $519 million or $1,925 psf based on the 269,546 sq ft net lettable area and a 5.6% net yield based on the estimated net operating income of $29 million. The mall which is five-storey high and located next to Sengkang MRT Station is almost fully occupied.
Separately, freehold 29-storey Tower 15 at Cantonment Road was sold to Fragrance Group at $360 million or $1,420 psf of GFA based on its 253,455 sq ft GFA. No development charge would be payable for a new project on the 39,336.67 sq ft site if it does not exceed this GFA. Klapsons The Boutique Hotel occupies the second to fourth levels while the offices occupies the fifth to the 29th level.