Pressure for prices to go up

Developer GuocoLand has trimmed the number of units put up for sale at its latest condominium, Martin Modern, in what is seen as a bet on private residential prices reversing course after years of decline.

Other developers also appear to share the same sentiments.

Earlier this week, Chinese developer Qingjian Realty said it is holding back the second phase of sales launch at its Le Quest project in anticipation of possible upturn in the property market. Upcoming executive condo launches include Anchorvale Lane EC, Rivercove EC while existing ones include Parc Life, Signature at Yishun,  Brownstone EC, Visionaire EC, Inz Residence, The Criterion EC and Northwave EC, The Terrace EC,  The Vales EC, Hundred Palms Residences EC, Sol Acres EC and The Bellewoods EC. Rivercove Residences floor plans and Rivercove Residences EC details will be available shortly.

Lendlease had also put off placing new units at Park Place Residences at PLQ on the market after launching 217 apartments for sale in March – in the hope of pricing the remaining units at a higher price subsequently.

GuocoLand told The Straits Times that it sold 110 of the 450 units at luxury condo Martin Modern in Martin Place within about two weeks of its launch last month. The developer said there is potential to raise the selling price next year.

“We have already started to moderate the releases… You want to achieve a good start so there is confidence in the project. I think we have already achieved that. We should not be selling too much too fast,” said Mr Cheng Hsing Yao, group managing director of GuocoLand (Singapore).

Average selling prices at Martin Modern, the first major launch in the Robertson Quay neighbourhood in eight years, range from $2,009 psf to over $2,500 psf.

Mr Cheng declined to speculate by how much the prices might rise next year but he acknowledged there will be “pressure for prices to go up” in view of recent aggressive land bids and fewer condo completions.

“The margin is already quite thin among developers, and land constitutes 60 per cent to 70 per cent of total cost, so when the land cost goes up so much, it is not a choice for the developers not to sell higher.”

GuocoLand is seeking opportunities to acquire plots, with a focus on mixed development as well as good-quality sites for homes. However, Mr Cheng said the firm will “keep a level head” on land bids.

The developer has three other projects with unsold units: the ultra luxe Wallich Residence at Tanjong Pagar Centre, Leedon Residence off Farrer Road and Sims Urban Oasis in Aljunied.

The 99-year leasehold Wallich Residence, which will be ready in the fourth quarter, is spread across levels 39 to 64 in Singapore’s tallest building. The project caught the public eye recently after news broke of its $108 million super penthouse.

Mr Cheng said 19 apartments at the 181-unit luxury condo project have been sold at an average price of $3,100 psf. The 21,108 sq ft super penthouse is not ready for sale.

The Straits Times understands that the super penthouse, spanning three floors, will have a dedicated lift and is highly customisable.

Below the Wallich Residence sits 890,000 sq ft of Grade A office space, Guoco Tower, of which 93 per cent has been leased. The firm is in talks to lease the remaining office space, including 27,000 sq ft on level 37, at higher rents.

Property consultants have been forecasting a bottoming out of rents in the commercial property market this year as sentiment improves.

“A lot of the tenants at Guoco Tower are MNCs with regional headquarters here, and they are growing. Less than a year into moving here, five tenants are already expanding,” said Mr Cheng.

About 40 per cent of tenants at Guoco Tower are in the technology, media and telecoms sectors, and they include Uber and Agoda.

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Strong confidence in the long-term growth prospects

SINGAPORE – Sales of new private homes have seen a resurgence, the latest being an executive condominium (EC) project in Hougang that sold out within a day – a feat not seen since 2014.

Hundred Palms Residences EC in Yio Chu Kang Road shifted all its 531 units at an average of S$836 per square foot (psf) within seven hours of their launch on Saturday (July 22). The last time a new project sold out in a day was in January 2014 with The Hillford in the Bukit Timah area, a mixed development which was marketed as a “retirement resort”. Upcoming executive condo launches include Anchorvale Lane EC, Rivercove EC while existing ones include Parc LifeSignature at Yishun,  Brownstone EC, Visionaire EC, Inz Residence, The Criterion EC and Northwave EC, The Terrace EC,  The Vales EC, Hundred Palms Residences EC, Sol Acres EC and The Bellewoods EC. Rivercove Residences floor plans and Rivercove Residences EC details will be available shortly.

Another project, Martin Modern, a luxury condo in Martin Place, sold 90 out of 450 apartments over the weekend at the price range of S$2,009 psf to more than S$2,500 psf.

Rising optimism in the market, arising from the recent tweak in certain cooling measures, a healthy stock market and still-low interest rates, has helped to spur developers’ sales.

Despite the increase in sales volume, analysts say it is premature to declare that the property market has turned around as the recovery is not broad-based.

“The good performances of recent launches indicates that there is pent-up demand for Singapore properties… (But) prices have stubbornly continued to decline. So it might be too soon to say that the market has finally turned a corner,” noted Mr Wong Xian Yang, head of research and consultancy at OrangeTee.

Private home prices fell over the last three years but the pace has been slowing, with a 3.1 per cent drop last year after declines of 3.7 per cent in 2015 and 4 per cent in 2014.

The Government’s latest flash estimates show that private home values dipped 0.3 per cent from the first to the second quarter of this year, easing slightly from the 0.4 per cent drop from the fourth to the first quarter.

With prices moderating, sales have climbed.

More than 6,500 new private homes (excluding ECs) were sold in the first half of the year, up a significant 72 per cent from the 3,814 homes sold a year ago.

Mr Wong noted that the robust sales reflect “strong confidence in the long-term growth prospects” of the Singapore property market.

Analysts expect the brisk buying activity to continue but highlighted that site attributes will drive demand and not every project will be a sell-out.

International Property Advisor chief executive Ku Swee Yong said: “New launches are selling well mainly because of marketing hype… If the property market was so hot, why are we not getting lots of viewings for resale homes? Prices in the secondary market are still weak; many owners are selling at losses.”

Apart from the relatively weaker resale market, the rental market remains challenging and vacancies are still high.

However, there are other trends that could support the recovery of the property market. These include the fervour in land bidding by developers in both public land tenders and the collective sale market.

Given the bullish prices paid for development sites and more positive sentiment, analysts project that home prices could start to inch up next year, after a 15-quarter losing streak since the fourth quarter of 2013.

Ms Tricia Song, research head at Colliers International Singapore, said: “We expect private home prices to be relatively flat in the second half of 2017 and anticipate a pickup from the beginning of 2018, to maybe approximately +3 per cent for the full year 2018.”

The Urban Redevelopment Authority is expected to release the final property price and take-up data tor the second quarter on Friday (July 28).

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Developers to continue to remain aggressive in land bidding

THE recent pick-up in residential sites acquired by Singapore developers suggests that they have finally come around to the prospect of a more decisive recovery in Singapore’s residential market, and the downside of a depleting landbank.

Despite earlier concerns of gung-ho foreign developers crowding out local developers for residential sites sold by the government, Singapore developers are coming out in force in the collective-sale market and other private land deals. Upcoming executive condo launches include Anchorvale Lane EC, Rivercove EC while existing ones include Parc Life, Signature at Yishun,  Brownstone EC, Visionaire EC, Inz Residence, The Criterion EC and Northwave EC, The Terrace EC,  The Vales EC, Hundred Palms Residences EC, Sol Acres EC and The Bellewoods EC. Rivercove Residences floor plans and Rivercove Residences EC details will be available shortly.

So far, local developers make up seven of the top 10 developers with the largest residential landbank and leftover unsold units in launched projects, based on The Business Times’ compilation across developers. Two of the top 10 developers – MCL Land and GuocoLand – are technically foreign developers by virtue of controlling shareholding, but have operated in Singapore for a long time. More than half of all residential inventory is in the hands of the top 10 developers.

Among Singapore players, Sim Lian Group came out on top in terms of residential landbank in one fell swoop when it purchased a former Housing and Urban Development Company (HUDC) estate that can yield more than 2,000 residential units.

Oxley Holdings also made a swift comeback to its home market this year after a flurry of overseas ventures: it snagged six residential sites comprising three sites under private treaties and three via en bloc deals; of the three en bloc deals, two were for large sites secured with consortium partners. This brings its share of the residential landbank, based on its equity share of those sites, to more than 1,200 residential units – making it third in terms of landbank and fifth in overall inventory, including unsold units in launched projects.

Ong Teck Hui, JLL’s national director of research and consultancy, told BT that the earlier success of some foreign developers in securing sites under the government land sales (GLS) could have been driven by their thirst to secure market share and establish themselves, especially since they could be pure residential players.

Major Singapore developers, on the other hand, are more diversified in their business and are in other real estate sectors besides residential.

“It was a matter of time before the local developers upped their game plan,” said Mr Ong. “If their reading is for unit prices to rise, they will push up their land bids to tie in with higher future prices. Margins need not be sacrificed, if the anticipated selling prices are high enough relative to land prices.”

JLL’s analysis shows that of the eight private residential sites (excluding the Bidadari mixed-use site) sold under the GLS so far this year, half went to Singapore developers – a proportion unchanged from last year.

But foreign developers (excluding local-foreign consortiums) have secured more sites this year than the last – half the eight private residential GLS sites so far – compared to two out of six sites last year and four out of nine sites the year before.

In the collective sales market, which is less popular with foreign developers, Singapore developers swept six of the seven deals with a residential component; one site was snagged by MCL Land. Most other private land deals this year have also been secured by local developers.

Savills Singapore research head Alan Cheong said: “Singapore developers will continue to remain aggressive in their land bidding – the reason being their need to recycle their capital and keep operations going.

“When land prices are rising, they may sacrifice margins if they are motivated to get the site but when the project is ultimately launched a year down the road, selling prices are likely to have increased, thereby pumping their margins up again.”

Oxley Holdings executive chairman and CEO Ching Chiat Kwong told BT that the group’s return to the Singapore residential market is stoked by what it sees as a market revival characterised by rising purchasing demand and diminishing housing stock. Its motivation to rejuvenate older estates into new developments fuelled its interest in en bloc sites, he said.

City Developments has the most residential inventory (share of unsold units and landbank) here among listed developers, followed by Oxley Holdings and Bukit Sembawang.

Some large Singapore developers, which are diversified across asset classes and markets, are sitting on small residential inventory compared to their smaller peers after years of derisking their residential portfolio in response to property cooling measures.

Among them, CapitaLand has signalled a more aggressive approach to residental land-banking here. Its president and group CEO Lim Ming Yan had said in a results briefing last month that the group is prepared to be “aggressive but disciplined” when tendering for residential land. CapitaLand has 197 unsold units in launched projects as of end-July.

Based on official figures, unsold private residential units were at a historical low of 16,929 as of end-June, fewer than half of the 40,430 units at the last peak of Q4 2011.

Going by the new sales pace of 10,336 units in the past 12 months, it may now take only 1.6 years for developers to clear the unsold stock. This is half the average pace of 3.1 years in the past 10 years.

Displaced owners of en bloc sites that have been sold this year may constitute some 1,500 households looking for replacement units, and this may accelerate the paring down of developers’ unsold stock, though those looking for another unit to live in may go for the resale market, market watchers say.

Knight Frank head of consultancy and research Alice Tan observed that local developers have been cautious for much longer than their foreign peers. As they step up to the plate, competition from foreign developers is unlikely to ease.

“Foreign developers see increasing attractiveness of Singapore residential market, as Hong Kong and Australia apply more onerous requirements on foreign buyers. They are now on the lookout for alternative markets, so Singapore is a potential market given its long-term positive prospects in terms of price recovery,” Ms Tan said.

Wang Lian, managing director of Fantasia Investment, a subsidiary of Chinese property developer Fantasia Holdings, told BT that the company is still interested in residential sites here.

It is now training its eyes on high-end projects, as it sees a resurgence of demand from buyers who recognise the value of high-end homes.

Fantasia is keen on both en bloc and GLS sites, and will likely participate with joint-venture partners, he added.

Savill’s Mr Cheong said that foreign developers – excluding those who have operated here for much longer – tend to focus mainly on GLS sites as they are still unfamiliar with the en bloc process, and do not want to risk further market uncertainty if residents appeal to the Strata Title Board.

Agreeing, executive director of research consultancy ZACD Group Nicholas Mak felt that GLS sites with attractive locations and access to transport nodes will continue to pull in aggressive bids from developers; moreover, they can take possession of GLS sites much sooner than collective sales sites, and the GLS tender process is a lot more transparent.

Some market watchers believe that alternative land supply from the collective sales market and other private land deals could help to rationalise developers’ land-bidding behaviour.

Maybank Kim Eng property analyst Derrick Heng believes the resurgent en bloc market could ease upwards pressure on land prices.

Besides the six sites on the second-half 2017 GLS confirmed list that will add 2,800 units to inventory, another 5,000 units on the reserve list could also be triggered by developers, he estimated.

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Buyers back in the market to make purchases before prices rise too much?

SINGAPORE — After several years in the doldrums, the recovery of the Singapore property market will be in full swing in 2018, experts say.

The jury is still out on whether concerns over a potential supply glut are warranted, but experts point out that how the market shapes up next year will depend very much on demand from buyers. This, in turn, hinges on the one major lever which the Government could yet call upon: The cooling measures, several of which — including the Total Debt Servicing Ratio (TDSR) — have remained in place since 2013. Upcoming executive condo launches include Anchorvale Lane EC, Rivercove EC while existing ones include Parc Life, Signature at Yishun,  Brownstone EC, Visionaire EC, Inz Residence, The Criterion EC and Northwave EC, The Terrace EC,  The Vales EC, Hundred Palms Residences EC, Sol Acres EC and The Bellewoods EC. Rivercove Residences floor plans and Rivercove Residences EC details will be available shortly.

“(Property) prices are picking up because of… the higher economic growth, low unemployment and stronger buyer confidence,” said ERA Realty’s key executive officer Eugene Lim.

Mr Ong Teck Hui, national director of research and consultancy at JLL, added: “Many buyers are back in the market to make their purchases before prices rise too much. This phenomenon is typical during the recovery phase of the market cycle when sentiments are positive and demand is healthy.”

ABUNDANT SUPPLY

Analysts first saw signs of an upturn in market sentiment at the beginning of this year when units at new project launches were snapped up quickly. The unexpected relaxing of the cooling measures in March also breathed new life into a market which had previously contracted for 15 consecutive quarters.

The partial easing entailed adjustments to the Seller’s Stamp Duty (SSD) and TDSR, with the holding period for the SSD shortened and the rates lowered because speculative flipping of properties had declined significantly. Mortgage equity withdrawal loans with loan-to-value ratios of 50 per cent or less were also excluded from the TDSR framework to give home owners greater flexibility to monetise their properties for retirement needs.

Transaction volume this year is expected to hit around 21,000 to 23,000 (excluding executive condominium transactions) units, according to analysts, which is almost 30 per cent higher than last year’s 16,378 units.

For next year, the analysts expects transaction volume to grow 10 to 30 per cent. “Sales volume should be buoyant given that more en bloc redevelopment will result in a spike in the number of units,” said Ms Christine Li, director of research at Cushman and Wakefield.

Developer sales volume could end 2017 at around 10,500 to 11,000 units, said Mr Ong.

Latest Urban Redevelopment Authority statistics showed that unsold residential stock has fallen by about half in the last four years, from more than 32,000 units in the third quarter of 2013, to 17,421 units as of the third quarter this year, Mr Ong added. If the “buying momentum” is sustained into 2018 and 2019, the unsold stock of 17,421 units would be depleted “in less than two years”, he noted.

Describing recent Government Land Sales (GLS) programmes as “conservative”, Mr Ong said the potential supply from the redevelopment of collective sale sites which were sold since the middle of last year would be “timely in augmenting the supply”. He added: “This should have the effect of avoiding an under supply situation, and allowing prices to appreciate more moderately rather than rise sharply.”

While the Government has flagged the risk of an oversupply — with the Monetary Authority of Singapore last month urging developers, potential buyers and banks to “proceed cautiously” — some analysts have played down such fears. They pointed out that the redeveloped properties from the recent surge in en bloc sales would only come onstream in 2020 and 2021. For example, a report released earlier this month from Maybank Kim Eng analyst Derrick Heng said it was “far too early” to worry about a potential oversupply of private homes.

However, ZACD Group executive director Nicholas Mak questioned whether there would be enough demand to absorb the supply, including in a few years when units from the redeveloped properties are completed. He noted that the high demand and elevated top bids for recent private residential land tenders were driven by developers eager to build up their land banks.

Policymakers will be watching the market and they could intervene if there are runaway increases in prices or a potential supply glut, said Mr Mak.

“Perhaps a policy to increase the minimum size of an apartment for example (which would limit the number of units at redeveloped sites)… It could be an urban planning measure,” he added.

ROBUST DEMAND

The en bloc fever this year, coming almost a decade since the last one, had surprised many analysts. They noted that the sales commanded higher than expected prices.

Mr Ong said: “To-date about S$8.5 billion worth of residential en bloc deals have been concluded in 2017, which is the highest sales value since 2007 when a record total en bloc sales value of S$11.9 billion was achieved.”

He attributed the frenzy to “developers’ hunger for fresh sites”, the limited supply of land from recent GLS programmes and the impetus of a market recovery.

Overall, the developments in the market showed that confidence is returning, the analysts noted.

Redbrick Mortgage Advisory director Eugene Huang said the company has seen enquiries on potential new property purchases increased by 25 per cent in the fourth quarter of this year compared to the same period last year.

He noted a concern among prospective home buyers about the continued interest rate hikes by the United States Federal Reserve.

The three-month Singapore Interbank Offered Rate (Sibor) – the benchmark rate for most residential property loans here – has risen from 0.969 per cent on Jan 3, to 1.212 per cent as of the middle of this month. It is expected to go up further, in line with the Fed interest rate hikes next year.

Mr Huang noted that about seven in 10 of his customers are choosing to take up fixed rates. “They seem more concerned about property price (increases) next year and are choosing to make their purchases now,” he added.

The company is seeing a higher number of applications with property purchase prices that are higher than previous transactions. “This phenomenon is usually evident in an up trending market,” he said.

Mr Huang predicts a “very vibrant” market next year. “Developers will start launching plump, prime sites which they acquired last year – most of which are in mature estates. We should be seeing aggressive marketing by developers right after Chinese New Year, when the market usually awakens after the year-end lull,” he said.

Describing buyers’ sentiment as a “self-propagating phenomenon” to some extent, Mr Lim said: “As more people buy, it sends the signal that there is optimism in the market, and this prompts more people to join in the buying.”

In the wake of the en bloc fever, analyts expect a wave of money to be injected into the market next year — particularly in the second half of the year — by home owners who received a windfall from the collective sales.

Ms Li said: “We are expecting (owners who sold their units in the en bloc sales) to return to the market with their proceeds looking for replacement homes. Displaced tenants will also return to the leasing market. This could help to reduce vacancy rates in the residential market in the face of dwindling supply completion.”

PRICES SET TO SPIKE

With the market poised for a full recovery, analysts said property prices are expected to increase by between 5 and 10 per cent in general next year, with those in selected areas such as estates near upcoming MRT stations on the Thomson East Coast Line going up by as much as 15 per cent.

In comparison, prices are expected to rise this year by between zero and 1 per cent, reversing a decline of 3.1 per cent last year.

Ms Li noted that 2018 will be a better time for owners looking to sell their properties, although they could face keen competition for new homes from those who sold their units in recent en bloc sales.

Predicting a “sellers’ market” next year, she said: “Home buyers should consider scouting around for existing launches or resale properties because the prices have generally been quite stable especially for larger units.”

For those looking to upgrade, Mr Huang advised them to make their purchases first, and try to sell their properties later. “Home buyers should really start shopping soon, before the market does into exuberance,” he said.

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Series of aggressive land deals by developers

The Singapore’s authorities are concerned the property market could be setting itself up for a fall.

A series of aggressive land deals by developers, against the backdrop of rising apartment sales and the first quarterly rise in private home prices for four years, was enough to prompt a recent warning from the nation’s central bank to lenders, homebuyers and real estate firms. Upcoming executive condo launches include Anchorvale Lane EC, Rivercove EC while existing ones include Parc LifeSignature at Yishun,  Brownstone EC, Visionaire EC, Inz Residence, The Criterion EC and Northwave EC, The Terrace EC,  The Vales EC, Hundred Palms Residences EC, Sol Acres EC and The Bellewoods EC. Rivercove Residences floor plans and Rivercove Residences EC details will be available shortly.

There should be vigilance about risks “including the impact of rising interest rates, geopolitical developments, and excessive exuberance in the property market”, deputy managing director of the Monetary Authority of Singapore (MAS) Ong Chong Tee said last month.

Persuading people to be more cautious could be a tough sell.

Local and foreign investors have waited years for signs that prices are bottoming out, and developers want to make sure they have a pipeline of projects.

Real estate investors’ animal spirits have certainly been reviving.

Singapore is looking relatively cheap compared with some other major property markets in the region – where prices have been surging almost without a pause in recent years.

The property companies have been paying record sums to buy government land and existing apartment blocks, which they plan to knock down and rebuild with developments that have more units.

A November report by consultancy Cushman & Wakefield estimated developers paid a 22 per cent average premium for the top five residential sites this year over comparable sites in the past.

The authorities say recent sales could add 20,000 new private housing units, which will more than double the number of unsold units in the pipeline within the next one to two years. But developers are hungry for land because their unsold inventory is close to record lows, official data shows. And any physical oversupply is still some time away as apartments take four to five years to build.

The authorities’ fear is that buying fervour will run ahead of an anticipated increase in housing supply, which could create an imbalance and lead to price declines with resulting losses for those involved. The Government followed up last week by restricting the amount of land it will sell in the first half of next year to about the same level it made available in the second half of this year, versus some expectations for a hike. While this risks helping to drive land prices up further it will at least reduce the chances of overbuilding.

“The Government is concerned about the manner and speed with which land prices are rising,” said Mr Desmond Sim, research head for Singapore and South-east Asia at CBRE. “The Government wants to keep Singapore property affordable for Singaporeans.”

For now it is all jawboning, but analysts say the Government and the central bank could intervene if they see market instability.

Potential measures could include more stringent terms for buyers, curbing bank lending to developers or guidelines that may limit the units in a development.

“There have been calls for relaxation of measures, but it could be the other way around now – tightening,” said head of research at Knight Frank Singapore Alice Tan.

City Developments (CDL) and Keppel Corp’s real estate unit told Reuters separately that they would continue to look for potential opportunities to buy land in Singapore.

“The underlying demand from owner occupiers will still be there and this will contribute to a healthy market,” CDL chief executive-designate Sherman Kwek said.

The optimism can also be found among potential home buyers.

First-time buyer Rahi Shah, 30, has waited on the sidelines since 2014 when he perceived prices were “way too high”.

He bought a three-bedroom condominium in August for over $1 million. “I got it at the right time; prices were the lowest I had seen.”

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Resale flats to be popular among buyers who are not eligible for new flats

SINGAPORE – HDB resale prices edged down 0.2 per cent in the final quarter of last year, making for a full-year price drop of 1.5 per cent, according to flash estimates from the Housing and Development Board (HDB) on Tuesday (Jan 2).

This means the decline in HDB resale prices last year was steeper than the 0.2 per cent dip in 2016.

HDB also said on Tuesday that  it will launch its first Build-To Order (BTO) exercise for 2018 in February, with an offering of about 3,600 flats in Choa Chu Kang, Geylang, Tampines and Woodlands. Upcoming executive condo launches include Anchorvale Lane EC, Rivercove EC while existing ones include Parc LifeSignature at Yishun,  Brownstone EC, Visionaire EC, Inz Residence, The Criterion EC and Northwave EC, The Terrace EC,  The Vales EC, Hundred Palms Residences EC, Sol Acres EC and The Bellewoods EC. Rivercove Residences floor plans and Rivercove Residences EC details will be available shortly.

As announced last month, HDB said the total BTO flat supply for 2018 will be about 17,000 units, keeping the supply of flats on a par with last year’s.

Commenting on the latest HDB data, PropNex Realty’s chief executive Ismail Gafoor said the price decline in 2017 was mostly due to the greater number of HDB owners selling their properties in pursuit of upgrading to private property this year.

He noted that while the figures make for a fifth straight quarter of decline, the 0.2 per cent dip in the fourth quarter was “encouraging”, when compared with the 0.7 per cent drop in the previous quarter.

“With the positive sentiment in residential market as well as huge number of en bloc sales in 2017, we reckon a greater demand for HDB resale properties with some en bloc owners considering resale flats. There is a likelihood that HDB prices may well experience a positive growth of 1 to 2 per cent in 2018,” said Mr Ismail.

ERA Realty key executive officer Eugene Lim said he expects HDB resales to stabilise, with any price increase in 2018 not likely to exceed 1 per cent for the full year.

He noted a series of developments in 2017 that have likely impacted demand for HDB resale flats, such as the increase in housing grants, the shorter waiting time for BTO flats in certain housing estates and the introduction of the Re-offer of Balance flats.

There was also the impact of comments last year from Minister for National Development Lawrence Wong that not all HDB flats will be chosen for the Selective En bloc Redevelopment Scheme and that those flats which are not selected will eventually have to be returned to the state.

Said Mr Lim: “The increased awareness of this stark reality has made older resale HDB flats less appealing to home buyers who have longer term considerations.”

Still, ERA said it expects resale flats to be popular among buyers who are not eligible for new flats or have urgent housing needs.

ERA also expects more resale HDB transactions in 2018, with the introduction of the HDB Resale Portal, which can halve the processing time for resale HDB flats from 16 weeks to eight weeks.

But with the new resale portal, buyers remain price sensitive and would want to ensure that the price they have negotiated and agreed with the seller is at a value that can be confirmed by HDB as the market value, ERA noted.

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Sales of big-ticket property transactions surged to highest level in a decade

SALES of big-ticket property transactions of S$10 million and above in 2017 surged to their highest level in a decade. This, however, was short of the record achieved in 2007, show latest figures from Savills Singapore and CBRE released separately to The Business Times.

According to Savills Singapore’s preliminary tally as at Dec 27, investment sales of property reached S$35.64 billion, up 57.3 per cent from the S$22.66 billion in 2016. This was the best since the record S$41.1 billion during the 2007 property boom. Upcoming executive condo launches include Anchorvale Lane EC, Rivercove EC while existing ones include Parc LifeSignature at Yishun,  Brownstone EC, Visionaire EC, Inz Residence, The Criterion EC and Northwave EC, The Terrace EC,  The Vales EC, Hundred Palms Residences EC, Sol Acres EC and The Bellewoods EC. Rivercove Residences floor plans and Rivercove Residences EC details will be available shortly.

Based on JLL’s figures, the surge in 2017 was supported by a strong revival in collective sales to S$8.6 billion from just over S$1 billion in 2016.

Also boosting last year’s investment sales tally were state land sales in choice locations. These included a coveted commercial and residential site in the new Bidadari Estate that went to a tie-up between Singapore Press Holdings and Kajima Development; and a residential site in Stirling Road clinched by a partnership between Logan Property from China’s Guangdong province and Chinese conglomerate Nanshan Group.

However, property consultants think that 2017’s stellar figures will be a tough act to follow.

For one thing, collective sale transactions are expected to ease amid an expected widening in price gap between owners and developers, said JLL Singapore’s head of research and consultancy Tay Huey Ying.

She said: “Many developers are still trying to secure land for fresh private housing development. However, there is a risk that collective sale owners will become more optimistic in their price expectations while demand becomes increasingly satisfied as more sites are sold… ”

Desmond Sim, CBRE Research head of Singapore and South-East Asia, said that in the commercial (office and retail) segment, a strong year of sales – which included Asia Square Tower 2’s office and retail space; PwC Building in Cross Street; Jurong Point mall; and a half stake in One George Street – has reduced investible stock.

“So what we are likely to see in 2018 may be smaller deals.”

Agreeing, Savills Singapore research head Alan Cheong said: “The prime office and retail assets that have been sold in the past couple of years are not likely to return to the market anytime soon because they have been acquired by long-term investors.”

He predicted investment sales to ease to around S$25-27 billion this year – above the 2016 level of S$22.7 billion.

Mr Sim said that he would not be surprised if 2018’s total investment sales tally returned to 2015-2016 levels of S$18-23 billion going by CBRE data.

He envisaged a trend of some property investors – local and foreign – looking for niche assets to seek higher returns.

For instance, if investors’ area of interest is logistics, they could zoom in on a specialised segment such as cold-store. Similarly one stands to reap a higher return from investing in a data centre, which requires greater technical expertise, than a typical industrial property.

He cited rising interest rates among the risk factors for investment sales this year. “If the new Fed chair’s reading of the US economy is more bullish than Janet Yellen’s, then there will be more upward pressure on interest rates in the US, which will have a domino effect on Singapore mortgage and lending rates.

“This will have a greater impact on private home purchases as well as the investment sales market. We should also take heed of the Singapore government’s warnings about rising private residential land bids by developers, and the market heating up.”

On prospects in the en bloc sale market, JLL’s Ms Tay said: “With the spike in potential supply of new homes arising from 2017’s robust collective sales activity, developers might start to become more selective and exercise greater caution when evaluating large sites.”

In any case, fewer large sites are likely to be transacted in 2018, given that many of the big ex-HUDC plots have already been sold.

CBRE director of capital markets Galven Tan said that as most en bloc sites transacted last year were in the suburbs, there may be more focus in the prime areas or Core Central Region in 2018.

Savills’ Mr Cheong said that given the hoops that developers now have to jump through to secure big en bloc sale sites – including traffic impact studies and prospects of rising development charges payable to the state for some sites – large developers may be more willing to trigger the release of sites on the state’s reserve list.

Savills’ analysis shows that last year, the residential sector accounted for the biggest share – 48.7 per cent – of the total S$35.64 billion investment sales pie. The S$17.34 billion of big-ticket residential property transactions in 2017 was a jump of 134.2 per cent from S$7.41 billion in 2016.

There were also large deals in the office, retail and industrial segments.

The commercial property segment, comprising offices and retail space, had a 34 per cent share. The transaction value rose 30.4 per cent to S$12.1 billion from S$9.28 billion in 2016.

Said Mr Cheong: “The coincidental availability of rare and good-quality investible grade assets such as Jurong Point, Asia Square Tower 2 and One George Street made investors pounce on the opportunity.”

The industrial property segment’s contribution to investment sales rose 43.8 per cent to S$3.78 billion in 2017, giving it a 10.6 per cent share.

The mixed development segment had a 6 per cent share at S$2.14 billion, down from S$3.1 billion in 2016.

 

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