Prices for high-end homes likely to fall by 10-20%
As the average price gap between the high-end and the mass market residential market narrows from 98% (from Q1 2004 to Q1 2012) to 82% in Q1 2012, the high-end home prices will likely fall a further 10-20% as a result of the ABSD. The mass market and shoebox units, however, are benefitting from the low interest rates and increased liquidity, with the mass market residential prices potentially increasing up to 5% and the shoebox units sustaining the higher price premium of 7-9% over non-shoebox units though this may change in 2015.
Signs of change have already been seen, with transactions in the outside central region (OCR) and rest of central region (RCR) in the range of $1,200 – $1,300 psf and transactions in the core central region (OCR) in the range of $1,600 – $1,700 psf. The number of OCR shoebox units could inflate by 450% by 2015, potentially leading to a 10-20% fall in rents.
Six levels of AA Centre at River Valley Road up for sale by expression of interest
Together, the first six levels of freehold AA Centre at River Valley Road is asking for $90-100 million. The 32 vacant serviced apartments on these levels have a total strata area of 55,574 sq ft and are part of a 14-storey mixed-used development on a 33,751-sq-ft site with a 127,712 sq ft gross floor area. The building also includes 90 car parking lots located in the basement level for common use. Zoned for residential use with an allowable plot ratio of 2.8, the site can be built up to 10 storeys. The expression of interest closes on Aug 7.
Suburban condos above 506 sq ft saw 1.9% price increase
According to NUS’s Singapore Residential Price Index (SRPI) series, the sub-index for the Non-Central Region (excluding small units) increased by 1.9% from December 2011 to May 2012 while the sub-index for small units (up to 506 sq ft) islandwide and the Central Region (excluding small units) fell by 0.1% and 2% respectively. This may be due to the demand for completed suburban apartments from owner occupiers and investors catering to expats with a smaller budget. Units in the Central Region, however, are mainly catering to investors and foreigners with deeper pockets affected by the ABSD and the negative global economic outlook. Shoebox apartments remain attractive since their lump sum price is more affordable. The overall SRPI increased 1.5% in May from April, with the sub-index for small apartments islandwide having increased by 0.9% and the sub-indices for the Central Region and Non-Central Region having increased by 0.8% and 2.2% respectively.
99-year Pheng Geck private condo site draws $114.8m top bid
The site located at Pheng Geck Avenue near Potong Pasir MRT Station attracted a total of 13 bids with the winning bid of $114.8 million or $628.22 psf ppr from Santarli Corporation. The high number of bids reflects the developers’ confidence in sustained demand for developments near MRT stations. There is also a parcel of land opposite the plot which is zoned for commercial development and it could support a shopping mall the size of Nex. Santarli plans to launch a 240-unit 18-storey development with mainly two and three-bedroom units and some one- and four-bedroom units in nine months. The estimated breakeven cost and average selling price are around $1,000 psf and $1,300 psf respectively.
Faber Drive Bungalow up for sale at $12.5m
A two-storey bungalow with a swimming pool sitting on an 11,719 sq ft land at Faber Drive is up for sale by expression of interest, with an indicative price of $12.5 million or $1,067 psf. Located near The Clementi Mall, Clementi Bus Interchange/ MRT Station, and the National University of Singapore, the plot could be subdivided subdivided into two smaller plots with houses of at least 4,305 sq ft. The expression of interest will close on July 20 at 3pm.
Bugis Cube units selling well
85% or 77 out of the 91 units launched at 999-year Bugis Cube have been sold, with an average unit size of 355.2 sq ft. The remaining 14 units (27 sq m to33 sq m on average) can be found on the second and third floor. The development located opposite Bugis Junction and near Bugis Junction offers units ranging from 129 to 635 sq ft at $2,900 to $7,500 psf over six floors. Each unit offers a water point while F&B units will come with a grease trap.
Office capital values to fall by 5% in 2012
The average capital values of Grade A office space in the Raffles Place/New Downtown micro-market fell by 0.5% from $2,459 psf in Q1 to $2,447 psf by end June though the market has been seeing much activity from new releases and en bloc sales of strata office units. The whole of 2012 could see a 5% fall in office capital values.
Meanwhile, rents of Grade A office space islandwide fell by 1.2% in Q2, with the average monthly gross rents in the Raffles Place/New Downtown micro-market decreasing by 3% to $9.47 psf from Q1 to Q2 and rents in other micro-markets adjusting in the range of -2.4 – 0% in Q2. The rents are likely to fall by up to 15% in 2012, especially with the increase in supply of 150,000 sq ft of space released upon lease expiry.
Shadow office space on the rise
The stock of shadow office space has increased by 32% to 285,000 sq ft from Q1 to Q 2012 and is expected to grow by 73,000 sq ft to 360,000 sq ft at the end of this year. 48% of the 285,000 sq ft shadow space in Q2 was in Raffles Place where the average gross face rent for prime office space fell by 3.1% to $9.50 psf per month from Q1 to Q2. Rents on Shenton Way, Robinson Road and Cecil Street fell 2.6% to $7.55 psf per month in the same period. The rents in the CBD are likely to continue falling despite the below-average net increase in supply of 1.1 million sq ft of office space in 2012 since nearly 610,000 sq ft of existing office space will become available as occupiers vacate their current premises. The average occupancy rate for office space at Raffles Place fell 0.7 percentage points in Q2 to about 92% while the average occupancy rate on Shenton Way, Robinson Road and Cecil Street rose by 1.3 percentage points to 95% in Q2. The largest increase of 4.5 percentage points came from Marina Bay to 72%.