Surge in demand sees buyers paying higher prices, but rate of increase likely to slow

More buyers are picking up landed homes and paying higher prices amid the strong economic recovery, said a recent Savills Singapore study.

It found that 2,198 caveats were lodged for landed houses between January and June this year, which is more than 57 per cent of the 3,832 caveats lodged last year.

And the total value of these transactions reached about $7.2 billion, which is about 75 per cent of the value of what was sold last year, it said.

Savills noted that more homes priced $5 million and above were traded this year.

‘The surge in demand could be that purchasers are seeing better value in landed homes, as condominium prices have soared beyond peak levels,’ said its prestige homes and investment director Steven Ming.

Also, compared with prices of their non-landed counterparts, prices of landed homes were relatively stable during the recent economic downturn, he said.

Median landed home prices have increased by 6.2 per cent from $745 per sq ft (psf) in the first quarter to $791 psf in the second, according to data from Savills.

The rise over the past year has been 31.4 per cent, it said.

Last Friday, the Urban Redevelopment Authority released data showing that landed home prices are still climbing, but at a slower rate of 6.2 per cent in the second quarter this year, compared with 8.3 per cent in the first.

Prices of detached houses saw the highest rise of 6.8 per cent among the landed housing types, while terrace house prices rose by 5.6 per cent.

Two to three years ago, buyers could easily find a typical freehold landed home of around 1,600 to 1,800 sq ft for about $1.3 million to $1.5 million, said Colliers International’s deputy managing director (agency and business services) and auctioneer, Ms Grace Ng.

Today, they must be prepared to pay a higher amount of $1.6 million to $1.8 million, she said.

However, there are still bargains to be found in the resale market if ‘you spend time doing your homework’, she said.

These are likely to be run-down houses that need a lot of work.

Or they could be old houses that were bought a few decades ago at relatively low prices, such that the owners may be happy to sell around today’s valuation price instead of above it, she said.

Property consultants say the attraction of landed homes lies in the scarcity factor, as there is limited supply.

Even the recent floods won’t affect landed home values – that is, in the long term.

‘Floods won’t affect values in the long term, but in the short term, buyers may turn away,’ said Ms Ng.

For instance, in the Bukit Timah area, where only the main roads were flooded, homes remain attractive because of their proximity to schools and the city, she said.

Unless the floods become a common occurrence, they won’t weigh down on prices, she added.

Landed home prices are likely to continue rising, though the rate of increase could slow further as price resistance has set in, said Ms Ng.

Savills senior manager of research and consultancy Christine Sun believes that more buyers are likely to enter the market as the economy continues to improve.

‘Landed home prices will still increase, but unlikely at the 10 per cent rate that we saw around the middle of last year,’ she said.

‘We believe that price rises will hover around 5 per cent to 6 per cent per quarter for the rest of the year.’

Source: Sunday Times, 25 Jul 2010

In the biggest collective sale this year, an apartment block of 27 units has raised eyebrows for garnering 100 per cent ‘yes’ votes.

But more than 20 units there were actually owned by an extended family, the Lims, for decades.

At one point, three generations were living under one roof.

Meng Garden Apartments in Lloyd Road, off Killiney Road, has been sold to boutique developer TG Development (TGD) for $137 million.

The deal was sealed last Friday after the developer put down a 10 per cent deposit.

The majority of the apartments in the eight-storey block belonged to the 10 children of patriach Lim Siew Meng.

The former deputy managing director of local trading firm Lim Teck Lee bought the 35,639 sq ft plot of land from the Alkaff family before he died in 1976.

The Lims were living in a two-storey house, the original residence of the Alkaffs, in Lloyd Road before building Meng Garden in 1985.

Mr Alwi Alkaff, 82, said his father, Mr Syed Mohamed Alkaff, sold the house to the Lims as ‘the Alkaff family was getting bigger and every member wanted his own house’.

The Lims declined to be interviewed.

TGD managing director Ong Boon Chuan told The Sunday Times that an upmarket development similar to those it developed in Sentosa Cove will be built there.

The freehold site is zoned for residential use. It has a 2.8 plot ratio and a 10-storey height control.

At about $1,380 per sq ft (psf) per plot ratio, it is ‘a good deal’, said Mr Ong. ‘The land is squarish and easy to design, and it is near Somerset MRT.’

This is not the first time residents have put the property up for collective sale. In 2007, they asked for $1,488 psf per plot ratio, but there were no takers.

CB Richard Ellis brokered this collective sale. The tender, put up last month, was reported to have attracted six bidders, said The Business Times.

Age has taken its toll on the property. Pieces of discarded furniture were seen lining one end of the lift lobby.

The security guard house, near the lift lobby, looked dusty and reeked of stale cigarette smoke.

Property consultancy Cushman & Wakefield’s managing director Donald Han said that an old development is like an old person whose health-care costs go up with age.

‘In some cases, it is not worth repairing the water-proofing of floors or lifts,’ said Mr Han.

In addition, a collective sale today can give home owners a 30 to 50 per cent premium over the selling price in the second-hand market, he said.

Source: Sunday Times, 25 Jul 2010