Slowdown in HDB resale prices growth in Q1

The Resale Price Index (RPI) for HDB flats saw a 1.2% increase to 205.4 in Q1 2013, compared to the 2.5% increase in Q4 2012. Reasons for the slowdown include the capping of MSR at 30% and 35% of gross monthly income for loans granted by financial institutions and HDB, respectively, the large supply of alternative housing options in the forms of BTO flats and ECs. Another possible reason was a fall in demand from singles, who are now eligible to purchase new 2-room BTO flats in non-mature estates. However, supply of HDB resale flats could remain limited since singles are not eligible for ABSD concessions and PRs may be reluctant to sell their flats given the increased ABSD rates and the new rule that require them to sell their HDB flats within six months of buying a private home.  Looking ahead, resale prices are expected to grow by 3-7% in 2013.

(Source: Business Times)


Strata retail space popular in Q1

As a result of the cooling measures in the residential sector diverting investment to the commercial sector, the average capital values for prime strata-titled retail space in Orchard Road saw a 3% increase from Q4 2012 to $6,806 psf in Q1 while the average capital values for retail spaces in regional centres saw a 5% gain to $4,276 psf. The frequent rental revisions, coupled with limited supply are other factors for the increased interest in strata retail space. However, rents for both regions fell in Q1 2013, as a result of retailers’ resistance against increased rents.

Looking ahead, retail rents are expected to remain stable with falls of no more than 5%. Strata-titled retail sales are also expected to continue to see demand, with average capital values in the Orchard Road region to increase by at least 5% and those in other non-central regions to increase by even more.

(Source: Business Times)

Rising speculative activity in strata retail units

Of the total of 3,315 caveats of strata retail units (excluding collective and bulk sales) between 2008 and Q1 2013, there were 2,045 caveats for resale transactions, with 1,127 which previous caveats can be traced. Of these, the proportion of those which were transacted within 3 years of the previous transaction has increased from 42% in 2012 to 55% in Q1 2013 while the proportion of those sold within a year increased from 16% in 2012 to 25% in Q1 2013. This has led to a fall in average holding period in resale deals from5.8 years in 2012 to 4.7 years in Q1 2013. There were also 54 subsale transactions from projects launched from 2010 to Q1 2013, of which 45 were sold within a year of their purchase from their respective developers. The rise in properties sold within one to three years of the previous transaction points to an increase in speculative activities, which may eventually result in cooling measures in the retail market.

(Source: Business Times)

Increased supply leads to fall in CBD office rents in Q1

As a result of increased office spaces from upcoming projects and increased vacancies from existing developments in the CBD, the average monthly gross rents for Premium and Grade A office spaces fell by 0.7% to $8.41 psf from Q4 2012 to Q1 2013. Rents in the city fringe and suburban micro-markets, on the other hand, remained stable at $7.60 psf and $4.53 psf respectively. The fall in occupancy rate for Grade A space in the CBD from 93.3% in Q1 from 94.5% in Q4 2012 at the same time as the increased occupancy rate for Premium space from 88.5% to 90.2% also points to a tenant shift from Grade A office spaces to Premium spaces, probably as a result of a fall in rents of Premium office space. Capital values of both Grade A and Premium office spaces in Raffles Place/New Downtown remained steady at $2,390 psf and $2,640 psf respectively in Q1 as a result of strong demand driven by the low interest rate and cooling measures in the residential and industrial sectors. Looking ahead, capital values are likely to continue rising while rents fall. This is since supply is expected to increase to 9.3 million sq ft by 2017, with 6.4 million sq ft in the CBD.

(Source: Business Times)

Retail resales proved profitable

96-100% of the 260, 291 and 51 resale transactions in 2011, 2012 and Q1 2013 respectively made an average percentage gain of 72%, 91% and 75% in profits respectively. Of those that made a profit, the most profitable was a sixth-floor unit in Lucky Plaza which was first bought for $17.6 million in 2007 and sold in 2012 for $32.6 million or a profit of $15.05 million. The biggest loss of $600,000 was from a fourth-floor Sim Lim Square unit which was first sold in 2007 at $2.3 million and sold again in 2011 at $1.7 million.

For subsales, all but three of the 54 subsale transactions in the same period made a profit.  The most profitable was a ground-floor unit in Parc Elegance in Telok Kurau which was sold in 2010 for $1.13 million and sold again in 2012 for $1.95 million or a 73% gain. The three losses were from a third-floor unit at Oxley tower, which was purchased at $670,000 in June 2012 before being sold for $567,600 in August, a unit at Viva Vista in South Buona Vista Road and another at The Arizon in Geylang Road.

(Source: Business Times)

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