Singapore Property News This Week #72

Residential

Q3 private home price index increased by 0.5%

The overall private home price index increased by 0.5% in Q3, compared to the 0.4% increase in Q2. The Outside Central Region, Rest of Central Region and Core Central Region posted an increase of 1%, 0.7% and 0.2% increase in Q3. This brings the year-to-date increase to 0.9% and the full-year increase is expected to be 1.5-2%, leading to record sales of 20,000 to 22,000 private homes (excluding executive condos) by end 2012, compared to 2011’s 15,904 units and the previous record of 16,292 units in 2010.

Some believe that URA’s private home price index could increase by 10% in 2013, since GLS sites have been fetching higher winning bids, with those in Pasir Ris, Bedok, Farrer/Jervois Road and Alexandra Road having increased by 15-27%. Since land price takes up 60% of the total development cost, and these costs may be passed on to the selling prices, prices in these places may increased by 9-16% in 2013. Others however predict only a 2-4% increase, citing the 18.5% estimated increase in supply in the next three years, buyer resistance to the record prices and the possible cooling measures in responses to price increase.

(Source: Business Times)

HDB resale prices in Q3 increase, index likely to be 5 or 6% higher than 2011

The prices in the public housing resale market rose 2% in Q3, compared to 3.8% in Q3 2011, 0.6% and 1.3% in Q1 and Q2 respectively this year. This increase brings the increase year-to-date up by 3.9%, and the increase is likely to hit 5-6% by end-2012. The prices are unlikely to moderate, since there is an imbalance in the market.  The increase in resale prices would also mean an increase in overall median cash over valuation (COV), which saw an increase from $26,000 in Q2 to $30,000 in Q3 this year. The highest increase in median COVs came from three-room flats which saw an increase of 18.18%. The median COV increased by 11.11% to $30,000, 14.66% to $33,250, and 9.14% for four-room flats, five-room flats and executive flats respectively.

Meanwhile, HDB will release 2,000 more BTO units this year, bringing the total to 27,000 to meet the housing needs of first-time buyers. There are also 7,200 units available under Sale of Balance Flats (SBF) exercises this year, up from 2,800 units last year. However, it will take time for this new measure to ease the upward price pressure, when the BTO flats and ECs launched now are complete since buyers who currently own a HDB flat would have to sell it then, increasing the supply of resale flats. Furthermore, the increase in resale prices is due more to downgraders (from private property), HDB upgraders, and singles who do not qualify for new flats as well as PRs. While some expect the HDB resale price index to climb by 4-5% next year, others said that it is unpredictable since as it depends on the increase in the proportion of BTO flats allocated to second timers.

(Source: Business Times)

Freehold Villa Des Flores up for sale again in the en bloc market

Freehold Villa Des Flores, previously asking for $165m but failed to attract bids of this price, is back on the collective sales market again with the same asking price. The 104,370 sq ft site at Whitley Road is re-launched with the confidence that the market can support the $1,581 psf price with no development charge following the successful en bloc sales of Thomson View Condominium, Chateau Eliza and Green Lodge. It can be developed into 2-storey mixed landed housing, either detached, semi-detached, terrace housing or a combination of such, based on conventional housing types or as a cluster housing development. If developed into a cluster landed project, the site can potentially support 24 strata bungalows, 48 strata semi-detached or 64 strata terrace houses. It is likely to be popular, given its proximity to the proposed Mount Pleasant Station on the new Thomson Line and the lack of supply of mid- to large-sized sites for landed housing developments in District 11.  The tender closes on October 23 at 3pm.

(Source: Business Times)

Freehold Amber Residences’ penthouses sold at $1,100 psf

All of the six penthouses at the freehold Amber Residences had been sold for $1,100 psf, below the May’s quotations of $1,600 psf and its 2007 preview price of $1,900 psf. The six penthouses (4,100 sq ft to 6,700 sq ft), each spanning three levels, includes a roof terrace with a swimming pool.

(Source: Business Times)

EC market may see a supply glut with the increase in EC sites

With 25 EC sites (from both Confirmed and Reserve list) released under the GLS between H1 2010 and H2 2012, 11 sites on the confirmed list in 2012, the EC market is likely to see a supply glut. Of the 11 in 2012, one at Upper Serangoon View/Upper Serangoon Road has been launched, another five sold and the remaining five either yet to be launched or waiting for the tender to close. The last 10 sites are expected to generate 5,600 units by 2013, resulting in an average annual supply of 4,500 units, compared to 3,600 units in the past two years, with average take-up of 3,300 units. Other reasons for the supply glut could be competition from existing unsold and uncompleted mass-market condos and EC developments in the vicinity, the 27,000 BTO flats launched in 2012, as well as the restrictions on potential EC buyers. EC buyers must be a married Singaporean couple with a combined household income of no more than $12,000, and cannot own both a HDB and an EC, thus limiting the pool of buyers.  However, some believe the demand for ECs may remain strong despite competition from BTO flats, as evident by past sale results. Others believe that the demand for ECs will moderate, with buyers increasingly concerned about location and design.

(Source: Business Times)

New round of cooling measures to be on housing loan tenures

In the newest attempt the control the rising housing prices, MAS is making changes to both the tenures residential property loan and the loan-to-value (LTV) ratios.  The tenure of all new residential property loans cannot exceed 35 years while the combined tenure of the refinancing facility and the number of years since the first home loan for that property was disbursed cannot exceed 35 years. The LTV ratio for new home loans to individual borrowers will be lowered to from 80% to 60% for a borrower with no outstanding residential property loan, and from 60% to 40% for a borrower with one or more outstanding home loans, if the tenure exceeds 30 years, or the loan period extends beyond the retirement age of 65 years. It will also be lowered to 40% from 50% for non-individual borrowers.

The earlier average tenure had increased from 25 years to 29 years over the past three years, with over 45% of new home loans exceeding 30 years. A long tenure loan is risky for both lenders and borrowers. Borrowers may overestimate their ability to service the loans and borrow much more than they can afford, and a long tenure loan would mean a heavier debt repayment burden for the borrower since interest accumulates over a longer period. They may eventually be unable to repay the loans when interest rates rise and banks may also end up holding bad loans if the prices of properties fall.

While some believe that the new rules would not have much impact on the residential property market, citing the fact that only a small proportion of buyers take long tenure loans, others believe that there may be a moderation in resale transactions since buyers with existing loans will be affected by the lower LTV ratio.

(Source: Business Times)

SRX: Resale prices of non-landed private home climbed by 3.2% despite fall in transaction volume

Resale prices of non-landed private homes increased by 3.2% to $1,156 psf in Q3, despite a 7.3% fall in transaction volume to 3,296 transactions compared to 3,555 transactions in Q2. The increase in resale prices were driven mainly by the 7.1% increase in the rest of central region (RCR) to $1,199 psf. The outside of central region (OCR) saw a 3% increase to $921 psf while the core central region (CCR) registered a 0.75% to $1,738 psf. The fall in transaction volumes, however, was the greatest in RCR, with a 10.9% fall to 854 transactions. The decline in transaction volumes in CCR and OCR are 6.2 % to 662 transactions and 5.8% to 1,780 transactions respectively.

The fall in transaction volumes for the primary market was even greater at over 50% to 5,394 transactions, primarily because of the lack of new launches in Q3, as well as buyers’ reluctance to purchase new homes in the lunar seven month.

Rental volumes also saw a 5.2% decline to 7,723 transactions in Q3, driven by the 8.5% fall to 2,777 transactions in OCR, and the 6.2% fall to 2,523 transactions in CCR. RCR, however, registered a 0.25% increase to 2,423 deals. Rental yields remained at 4% in Q3 though the overall rental prices climbed 2.9% to $3.87 psf in Q3.

(Source: Business Times)

Commercial

Freehold strata industrial units at Century Warehouse up for sale

The 31 freehold strata industrial units in Century Warehouse which comes up to 50,489 sq ft of strata area is asking for $40 million or $800 psf. The successful buyer will have 89.3% ownership of the eight-storey building zoned “Business 1” with surface and basement car park lots in addition to naming rights to the building. It is likely to draw much interest from both investors and industrialists given the reduction of the maximum tenure for industrial sites under land sales programme to 30 years.

Also up for sale by private treaty is a 6,760 sq ft freehold retail space at Katong Shopping Centre. The rectangular retail space with two access points is located at the north-eastern part of the basement retail floor and can also potentially be subdivided into smaller units.

(Source: Business Times)

Murray Terrace to be sold for $75 million

AEW is said to have given exclusivity to a local investor for doing due diligence for a potential acquisition of Murray Terrace, a row of 14 conserved shophouses at 2 to 28 Murray Street just off Maxwell Road and opposite the URA Centre. The investor may convert the block zoned for commercial use into a hotel. Murray Terrace, with its total NLA of 50,000 sq ft and 17,000 sq ft per floor, could potentially support around 100 hotel rooms. Located within the Chinatown (Tanjong Pagar) Conservation Area and near Tanjong Pagar MRT Station, the property sits on a 25,151 sq ft site with a remaining lease of about 60.5 years.

AEW is also selling 2 Havelock Road (2HR) at around $300 million. 2HR sits on a 54,560 sq ft site zoned for commercial use with a remaining lease of around 70 years. The seven-storey building comprises an attic and 96 carpark lots in two basement levels, and 175,300 sq ft of NLA, with 36,200 sq ft of retail space and 139,100 sq ft of offices. It could be redeveloped into a 12-storey hotel, which will have 217,000 sq ft of GFA of which at least 60% will be for hotel use and the remaining 40% for commercial space. The new development could potentially yield some 400 to 450 hotel rooms and 75,000 sq ft of saleable commercial area, which could be strata-titled for sale. Another alternative is to retain the property as it is, since it is 97% occupied with an average passing rental of $5 psf a month and would provide a 3% net yield including carpark income based on the price of $300 million or $1,711 psf on NLA. This is likely to increase with lease renewals and new leases since the current market rentals in the location are thought to average around $7 psf. It could also be strata-titled sold individually, subject to approval from the authorities.

(Source: Business Times)

Anchor tenants NTUC and Shaw to take up 62,500 sq ft in Waterway Point

NTUC FairPrice Finest and Shaw Organisation are the two anchor tenants secured by four-storey Waterway Point, the retail component of Watertown, an integrated waterfront residential and retail development linked to Punggol MRT station. NTUC FairPrice Finest, a 24-hour branch, will occupy 30,000 sq ft in the basement while Shaw Organisation’s theatres which will include a 1,000-seating-capacity Imax hall, will occupy another 32,500 sq ft. The tenant mix of the rest of the mall (370,000 sq ft NLA) will be 40% retail, 30% food and beverage, with the rest for entertainment and other service providers. 97% of the 992 units housed in the 11 residential towers of 13 and 14 storeys in the residential component of Watertown have been sold, with another 34 units overlooking Punggol Waterway still available. These units are mainly three- and four-bedroom units ranging from 1,173 to 1,550 sq ft, with a 1,195 sq ft three-bedroom unit starting from $1.68 million. New buyers will receive FairPrice Finest vouchers ranging from $8,000 to $10,000.

(Source: Business Times)

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