CHINESE buyers acquired more homes here than any other group of foreigners in the first three months of the year, bypassing Malaysians, the traditional leaders, in the process.

Mainland Chinese – including permanent residents (PRs) – snapped up 241 homes this quarter, according to caveats retrieved to March 30 by Jones Lang LaSalle (JLL). This comprised 8 per cent of all non-landed sales and 22 per cent of all purchases made by foreigners in the three months.

Experts say tighter home-buying policies in China, such as restrictions on residents in major cities buying a second or third home, have prompted more Chinese buyers to look further afield.

Mr Jack Teo, a GPS Alliance agent who recently sold a Bishan Loft unit to a Chinese PR, said he has received more inquiries from Chinese buyers looking for apartments.

‘There are a lot of Chinese immigrants here and their mindset is that renting is expensive and so they would rather buy,’ he said.

‘With the measures, they have the extra cash now and some parents might be looking for affordable homes of less than $1 million to buy for their kids studying here.’

The trend was already evident in the last quarter of last year, according to a DTZ Research report that found that Chinese buyers had overtaken Indonesians for the first time and were closing in on Malaysians.

The Malaysians were supplanted this year, with Indonesians in third place and Indians close behind.

Experts also note that Chinese buyers occupy two extreme ends of the market. The JLL analysis found Chinese buyers this quarter dominating both the mass-market segment and the ultra-posh sector of homes priced at $5 million or more.

They bought 151 mass-market units priced between $500,000 and $1.5 million, or 8 per cent of homes in the segment, JLL said. They were followed closely by Malaysians.

The firm defines mass-market as districts outside of the prime, central and east coast areas.

Chinese buyers also acquired 17 of the 54 units priced over $5 million sold to foreigners in the central and prime districts this quarter.

The rest were bought by buyers from Indonesia, Britain and Malaysia, among other nations.

Foreigners played a key role in the overall market this quarter, buying 32 per cent of the 3,090 non-landed homes sold, JLL added. This includes all new sale, subsale and resale transactions.

Experts say the increasing ranks of Chinese home buyers is no surprise given that Singapore provides a safe environment for cash-rich Chinese to acquire secure assets like property.

OrangeTee’s executive director of residential, Mr Steven Tan, said that after ‘drastic measures’ to restrict home purchases were introduced, the Chinese were eager to invest abroad, not just in Singapore but in countries like Australia.

‘We have noticed a clear trend since the limitations were introduced and can already feel things changing this quarter… This trend is likely to continue, with the Chinese increasingly significant in their buying power.’

While mass-market homes might have been bought for owner-occupation by PRs, the high-end homes were probably bought by cash-rich businessmen for investment purposes, Mr Tan added.

JLL’s South-east Asia research head, Dr Chua Yang Liang, said prices are likely to stay up thanks to continued interest from foreign buyers, especially those from China and the region.

‘The surge in Chinese buyers in Singapore coincided with the policy tightening in China,’ said Dr Chua. ‘We can expect the number of Chinese buyers to continue at a healthy level… as the fiscal and monetary policies in China remain conducive to overseas investment by the wealthier Chinese.’

The Shanghai authorities, for example, announced on Monday that it will limit gains in new home prices to no more than the pace of economic growth and average income expansion.

Source: Straits Times, 31 Mar 2011

URA data also shows nearly half of them will be in the core central region

CLOSE to half of the estimated 8,430 new private homes that are slated to be completed in 2011 will be in the upmarket core central region, according to fresh data released by the Urban Redevelopment Authority (URA) yesterday.

The government agency has also bumped up its estimate for the projected supply of private homes due to be completed this year by 25 per cent from three months ago. In October 2010, URA estimated that 6,766 new private homes will be completed in 2011.

Sources told BT that URA has been surveying developers more closely over the last few months in a bid to compile more accurate pipeline supply figures. The agency computes the estimated supply of private housing units in the pipeline through a quarterly survey of developers.

In response to a query from BT, URA said it will continue to work closely with developers to ensure that they submit up-to-date estimations of the expected completion dates of their projects.

‘URA’s survey of the developers’ completion (for 2011) is only starting to increase. The increase from Q3 2010′s forecast for 2011 completions to Q4 2010′s forecast is a significant 25 per cent. Over the next few quarters, we expect to see further upward revisions,’ said Ku Swee Yong, chief executive of real estate firm International Property Advisor.

Looking at the latest completion estimates, analysts once again warned that home-buyers need to brace themselves for a very large supply of private residential units due to be completed each year from 2011 to 2015.

URA currently estimates that 8,116 units will be completed in 2012; 17,111 units in 2013; 17,421 units in 2014; and 13,453 units in 2015.

In fact, 2010′s number of newly completed private homes, which stands at around 10,400 units, is already higher than the historical average annual increase in housing supply of around 6,400 private units over the last decade, Mr Ku pointed out. For 2011, a total of 3,874 homes will be added to the housing supply in the core central region, which includes the prime districts 9, 10 and 11, Marina Bay and Sentosa Cove. This will make up 46 per cent of the islandwide housing supply of 8,430 new private homes.

Another 2,265 private homes will be completed in the rest of central region, while in the outside central region, 2,291 units will be completed this year.

URA also said that as at the end of Q4 2010, there was a total supply of 65,699 uncompleted units of private housing from projects in the pipeline. Of these, 32,776 units were still unsold.

Source: Business Times, 29 Jan 2011

URA’s sub-index for detached homes soars 37.6%, boosting overall index’s gain to 17.6%

IN a year fuelled by strong liquidity and economic growth, bungalows were the stars that led the surge in the Singapore property market in 2010. Latest data from the Urban Redevelopment Authority shows that its price index for landed homes climbed 30.8 per cent last year. The sub-index for detached houses, or bungalows, soared 37.6 per cent against a 5.6 per cent rise in 2009.

The index for non-landed private homes rose 14 per cent last year, following a 0.5 per cent gain in 2009. The biggest price hike in 2010 in this segment was for completed non-landed homes in Core Central Region, which climbed 19.5 per cent last year, although prices of uncompleted units in the same region rose at a much slower rate of 10.6 per cent in 2010.

URA’s overall price index for private homes swelled 17.6 per cent last year, after posting a 1.8 per cent rise in 2009. It rose 2.7 per cent quarter on quarter in Q4 2010.

Knight Frank chairman Tan Tiong Cheng observed that the index has appreciated by about 65 per cent over the past five years, translating to an average annual increase of 13 per cent. ‘This is a very significant increase considering that we had the biggest financial crisis during this period,’ he added. Developers sold a record 16,292 private homes (excluding executive condos) last year, up 10.9 per cent from 2009 and busting the previous high of 14,811 units in 2007.

The other sectors of the property market also saw sharp turnarounds last year, according to the latest URA numbers. For instance, the office price index rose 18.9 per cent in 2010, against a 16.4 per cent drop in 2009. Flatted factory and warehouse prices, too, shot up 23.7 per cent last year, compared with respective declines of 14.2 per cent and 16 per cent in 2009.

Looking ahead, market watchers expect some wind to be taken out of the residential sector following the latest property cooling measures. Investors are channelling their money to the commercial and industrial property segments, which were not the target of the cooling measures announced on Jan 13.

DTZ’s SE Asia research head Chua Chor Hoon is predicting a minus 5 per cent to 0 per cent change in URA’s overall private home price index this year. Others are more sanguine. Colliers International director of research and advisory Tay Huey Ying forecasts a 5-8 per cent rise with the increase led by mid and high-end properties.

Prices of mass market homes are expected to stay relatively unchanged or ease by up to 2 per cent given the ample new supply in this segment, she said.

As for the landed segment, RealStar Premier Property managing director William Wong, who had earlier predicted an average 10 per cent rise this year in Good Class Bungalow (GCB) prices – the creme de la creme of landed homes on mainland Singapore, now expects prices to hold in 2011.

‘Transaction volumes are expected to fall 20-30 per cent over the next 3-6 months. Owners are not prepared to adjust prices downwards while buyers are waiting for prices to go down. This may not happen.’

Another bungalow specialist, KH Tan, managing director of Newsman Realty, said that some sellers have started to withdraw GCBs from the market following the latest cooling measures as they would face longer holding periods on any replacement bungalows they may purchase because of the hikes in seller’s stamp duties.

Nevertheless, he predicts an increase of about 10 per cent in GCB prices this year, following last year’s appreciation of about 35 per cent, because of the limited stock of GCBs, wealth effect from new ultra high net worth citizens and low interest rates. On Sentosa Cove, where foreigners may buy landed homes, the price gain this year could be higher, about 15 per cent, as ‘there are still a lot of rich Chinese foreigners coming in’. Bungalow prices on Sentosa climbed 30 per cent last year on average, he estimated.

On URA’s numbers, CB Richard Ellis executive director Li Hiaw Ho observed that while the price index for uncompleted non-landed homes in Outside Central Region (where mass-market condos are located) has surpassed the peak in Q2 2008 by 19.1 per cent, the equivalent index for Core Central Region (which covers the traditional prime districts, financial district and Sentosa Cove) is still 7.1 per cent below its Q1 2008 high.

Meanwhile, the National University of Singapore’s Singapore Residential Price Index (SRPI) flash estimate shows that prices of completed non-landed private homes in Singapore’s Central region (postal districts 1-4 and 9-11) appreciated 7.8 per cent last year, while the sub-index for the Non-Central region rose 15 per cent. As a result, the overall SRPI increased 11.9 per cent in 2010. In 2009, the three indices posted respective gains of 27.3 per cent, 19.5 per cent and 22.2 per cent.

URA’s data showed that 10,399 private homes were completed last year – close to the 10,488 units in 2009 and 10,122 units in 2008. The overall private residential rental index rose 17.9 per cent last year, a sharp reversal from the 14.6 per cent slide in 2009.

Savills Singapore director for residential leasing Patrick Lai said that overall residential rents may increase a further 5 per cent in 2011. ‘We believe that the rental rates for super high-end condominiums and GCBs will remain robust and are likely to increase by 6-10 per cent as more top executives relocate to Singapore.

‘For example, we have just leased out a 2,852 square foot unit at The Orchard Residences for $20,000 per month. We also recently handled the leasing of a GCB in the Peirce Villas/Swettenham Road neighbourhood for $40,000-45,000 per month.’

Source: Business Times, 29 Jan 2011

PRIVATE home prices may have moved up 17.6 per cent last year, eclipsing historical peaks and setting new highs across various segments in the process, but this year is expected to be far less exciting.

Analysts say price growth is expected to slow, and the volume of sales is set for a significant fall.

There was more evidence of this in new data released by the Urban Redevelopment Authority (URA) yesterday, which saw prices moderating across most segments as the property market continued to take a breather four months into the Government’s Aug 30 property market cooling measures.

Fourth-quarter home prices gained 2.7 per cent, slightly down from the 2.9 per cent in the previous quarter and unchanged from flash estimates released earlier this month, the URA said.

However, certain segments – in particular, condominiums and detached homes – showed signs of defying gravity even after three rounds of cooling measures.

This may have contributed to the Government’s decision to introduce another round of tougher-than-expected cooling measures two weeks ago, experts said.

Prices of detached homes continued their upward march with an 8.5 per cent jump in the fourth quarter – just eclipsing the already impressive 8.4 per cent gain in the quarter before. Detached home owners saw the value of their properties rise by a hefty 37.6 per cent last year alone – the most out of any segment.

Prices of landed homes in general, however, moderated to a 5.5 per cent rise, from 7.7 per cent in the third quarter.

This was owing to slower price gains in the semi-detached and terrace segments, with a 3.1 per cent and 3.7 per cent rise in prices respectively. This follows a buoyant 7.5 per cent and 7.2 per cent price growth in the quarter before.

An uptick was also noted in the non-landed home segment, which recorded a price rise of 1.8 per cent, up from a gain of 1.6 per cent in the quarter before.

URA data shows that price growth in this segment has been falling since the second quarter of last year.

Other indexes also suggested that non-landed home prices were creeping up again as buying interest returned to the market in the later months of last year, after buyers initially retreated when the Aug 30 measures were first introduced.

The National University of Singapore’s Singapore Residential Price Index, which tracks only the prices of completed non-landed projects, posted a 0.9 per cent month-on-month rise last month – the first increase after two months.

Homes in non-central areas recorded an even larger gain of 2.2 per cent.

Ms Tay Huey Ying, Colliers International’s director of research and advisory, noted that price gains of suburban homes also strengthened to 2.1 per cent, up from the initial estimate of 1.6 per cent.

‘This indicates the continued uptrend in prices for transactions that have taken place in the last two weeks of the quarter, which probably is one of the triggers for the introduction of further cooling measures in January,’ she added.

Robust sales were seen in suburban projects such as The Lakefront Residences in the Jurong Lake district, Waterview in Tampines Avenue 10 and The Tennery in Bukit Panjang in the fourth quarter.

Experts said, however, that despite impressive gains last year, this year will be a more sobering one for the market in the light of this month’s measures, which caught many by surprise.

CBRE Research executive director Li Hiaw Ho said: ‘Prices are likely to remain unchanged in view of this stand-off, but sales volume could fall in the short term. Selectively, new projects that are well-located and with good access will still see a good response.’

Source: Straits Times, 29 Jan 2011

A study has found that prices (in psf) increases by 3% for every 1km closer to the CBD

WHEN property owners or investors make their decisions to buy or to sell, they usually form expectations of how prices of property are changing in general over time. These changes are driven by common perception of the scarcity of land, the number of developments in the pipeline and estates under construction; by shifts in the rate of interest or inflation; and by political measures.

Such factors put property as an asset class in bright sunshine, or at times, in dim light. But concluding whether a particular real estate object is to be considered cheap or expensive requires a second line of reasoning.

In Singapore, like in all other countries, property is a heterogeneous asset class. Although condos can have up to a thousand units, the units differ in size, view, and other characteristics. Among the many estates in Singapore, their heterogeneity refers to the location, to the age, the reputation of the developer and other features of the condominium. Such particularities are mirrored in relative prices.

Relative prices, for example, consider the multiple of the per square foot (psf) of a condo in the central business district to the psf in suburban areas. Likewise, relative prices reflect the relation between the psf of a freehold condo to one having a 99-year lease or the typical relation of the price of a condo in walking distance to a MRT station, to the psf of a condo that is further away from public transport facilities.

Thus, a prospective owner or investor should also take note of whether the condo under consideration looks cheap or expensive with respect to the typical relative prices. Relative prices appear to remain stable over a longer period of time, although they might be different in Hong Kong or London from Singapore.

Relative prices can be determined with hedonic models, which were developed by American economists 30 years ago. Although hedonic models are regularly used to explore particularities of the real estate markets in America, England, Hong Kong and other markets, we can present a few new insights by adopting the model to Singapore.

Our model considers structural attributes such as the age, project characteristics such as tenure and facilities, the type of sale (at launch or subsale), and characteristics of accessibility and neighbourhood such as the distance to the Central Business District (CBD), to schools and shopping centres.

All 9,029 transactions (2009) of 470 different condominium projects, reported by the Real Estate Information System (Realis), have been used as inputs to the hedonic model.

The study confirmed that distance to the CBD is among all other factors the most important characteristic in influencing the price of a condominium. Based on the results, the price of a condominium (in psf) increases by 3 per cent for every 1km closer to the CBD.

In addition, prestige of the neighbourhood, age and tenure of a condominium are found to be major determinants in explaining condominium prices. An interesting finding is that for every 10 per cent increase in percentage of private properties in the neighbourhood, the price of a condominium increases by about 4 per cent.

In other words, buyers are willing to pay 4 per cent more for a condominium if the percentage of private properties in the neighbourhood increases by 10 per cent.Buyers might perceive a neighbourhood with high concentration of private properties as a form of prestige or they take this as a signal of more lifestyle facilities being nearby.

Launch discount As expected, the price of a condominium decreases by about 1.5 per cent per year on average as it ages. This could be due to depreciation of the condominium such as its design and electrical systems, thus incurring higher maintenance, renovation and repair fees. The difference between freehold or 99-year leases accounts for 8 per cent.

Our study also revealed the magnitude of the price discount associated with buying at launch. In Singapore, it amounts to 7 per cent.

A person who is buying later in a subsale has the advantage of selecting condos with successful launches. Thus, the price discount of 7 per cent compensates the early bird for the uncertainty of how a development will be accepted during the several launches.

Our research also looked at proximity to premier primary schools. The price of a condominium located within 1km radius of at least one primary school is on average 3.9 per cent higher than one without close proximity to a top primary school.

A subject of many discussions in Singapore is low-rise versus high-rise. The model shows that the ground floor condominium is subjected to a price discount, meaning that home buyers on average are less willing to pay for a ground floor condominium compared to other floors. Furthermore, home buyers are willing to pay more for high-floor units (16th floor and above), compared to middle floor units (7th to 15th floor). We also confirmed that superstition for unlucky floor units is capitalised into the price of condominiums.

The number four is commonly known as an unlucky number among the Chinese. The price discount could also be explained by the fact that home buyers avoid staying on an unlucky floor as they are worried that it may harm the future resale price of the unit.

There is only weak empirical confirmation of the hypothesis though, that selling a unit on the eighth floor yields a hefty extra premium in a subsale. If you are not superstitious and plan to sell in a subsale, don’t pay a fee for the eighth floor when you visit a launch event.

The writers are, respectively a professor at the University of St Gallen and an analyst at Goldman Sachs

Source: Business Times, 28 Jan 2011

Trend reflects Singapore’s place as globalised city and investment centre: analysts

(SINGAPORE) As more condos and apartments are being bought by foreigners, analysis shows that the increase in the number of homes being bought by non-permanent residents is outpacing that of their PR compatriots.

In a trend led by Chinese and Indian nationals, the number of non-landed private homes picked up by foreigners who were not PRs jumped 37.1 per cent last year to 3,988 units – compared with the 12.1 per cent rise to 4,317 of such homes bought by PRs, shows an analysis of URA Realis caveats data by Knight Frank.

Market watchers say this reflects Singapore’s ongoing transformation into a more globalised city and investment market.

The study shows a 90.4 per cent jump in the number of apartments/con- dos bought by Chinese nationals who were not PRs to 817 last year – against a 31.5 per cent increase in the number of such homes picked up by Chinese citizens who were Singapore PRs last year to 794 units.

It was a similar trend among Indian citizens who acquired non-landed homes in Singapore in 2010. Those who were not PRs posted an almost 50 per cent upsurge in the number of units bought last year to 238 – compared with a 16 per cent rise in the number of such units bought here last year by Indians who were PRs to 788.

‘China and India are clearly the economic powerhouses of the world and Singapore has always been seen as an attractive country to invest in, due to transparency of law, absence of capital gains taxes and no entry barrier for apart- ment/condo purchases,’ said Knight Frank chairman Tan Tiong Cheng.

The trend of bigger increases in non-PR foreign buying of non-landed private homes in Singapore is expected to continue, predicts Ong Choon Fah, head of consulting & research (SE Asia) at DTZ. ‘As Singapore becomes a more international, vibrant place with more entertainment and other attractions, it is being seen as a more desirable place to live in, and for a second home,’ she adds.

Knight Frank’s analysis also showed substantial percentage increases in the number of condos/apart- ments here bought last year by UK citizens – both PRs and non-PRs.

The number of units picked up by UK citizens who were not PRs increased around 58 per cent to 185 units, while the number of units bought by Brits who were PRs here rose 48.5 per cent to 153.

Mr Tan suggests that some British expats may be moving to Singapore from Hong Kong, which is becoming too expensive and suffers from air pollution. ‘Some Brits may also have decided to move out of the UK to Singapore, where the weather is warmer, the cost of living and taxes lower, and more opportunities abound.’

Combining PR and non-PR foreigners, Chinese citizens overtook Indonesians to emerge as the second biggest group of foreign buyers of apartments and condos in Singapore last year. They lodged a total of 1,611 caveats last year, ahead of the 1,555 caveats by Indonesian buyers. However, Malaysians held on to their pole position, with 1,858 caveats. Indian and UK citizens maintained their fourth and fifth positions with 1,026 and 338 caveats lodged respectively.

Knight Frank also uncovered a divergence in buying preferences for non-landed homes between PRs and non-PRs within some nationalities last year.

For instance, Malaysians who are PRs here preferred suburban locations like Districts 14 (which includes Eunos and Geylang), 18 , 19 and 23 . On the other hand, their compatriots who are not Singapore PRs here tended to zoom in on ‘investment-grade’ locations – like Districts 4 (which includes Sentosa Cove), 9, 10, 11 (Singapore’s traditional prime districts) and 15 (which includes the Meyer Road and Katong vicinity).

‘Perhaps Malaysian buyers who are Singapore PRs and working here have smaller budgets or may want to settle down here. So they’re looking for a home in the suburbs, while the Malaysians who don’t live here are more likely to buy a Singapore residential property for investment,’ Mr Tan suggests.

There was also some evidence that Singaporeans had a higher propensity to buy small-format apartments than foreign buyers. In District 15, where many shoebox developments are being built, about 46 per cent of Singaporean buyers last year picked up units priced between $500,000 and $1 million.

In contrast, only about 29 per cent of PR buyers and 21 per cent of non-PR foreign buyers purchased units in this price range.

Source: Business Times, 28 Jan 2011

But new housing could see oversupply in next few years, notes DTZ
HOME sales are expected to drop in the wake of the Government’s recent cooling measures, although prices should hold up fairly well, according to a new report.

But DTZ Research pointed out that the substantial supply of new housing in the pipeline could outstrip demand in the next few years, leading to prices and rentals coming under pressure.

It also flagged the challenges posed by sluggish Western economies and the possibility of more cooling measures.

The property consultancy’s report was focused partly on the possible effects of cooling measures introduced on Jan 13.

It tipped that sales volume would fall as short-term speculators would be weeded out of the market by the hefty seller’s stamp duty of up to 16 per cent for homes sold within a year of purchase.

But not all investors will withdraw. Some may find the 4 per cent seller’s stamp duty on homes sold in their fourth year of purchase to be surmountable.

They could shift their focus to buying unfinished units with completion dates three to four years ahead.

Prices this year are expected to be largely stable with a decline of not more than 5 per cent, said Ms Chua Chor Hoon, DTZ’s research head for South-east Asia and one of the report’s authors.

‘(Prices are) underpinned by economic growth, low interest rates, strong holding power of developers, the appreciation of the Singapore dollar, and the inflow of foreign purchasers due to the property market clampdown in mainland China and Hong Kong,’ she added.

Landed homes, small units and high-end apartments are expected to be less affected by the measures.

Said DTZ executive director (residential) Margaret Thean: ‘Small units with their low price quantum will continue to attract investors with spare cash or singles wanting their own units.’

She also said the seller’s stamp duty will have little impact on landed homes as most are purchased for owner-occupation, while high-end apartments will continue to attract foreign interest.

Other challenges come in the form of a potential oversupply.

A spike in completed units is expected in the next two to three years, with the Government putting out a record number of homes through public housing and land sales programmes.

‘There is also uncertainty over the strength of recovery of the major Western economies. If they recover well, interest rates will move up and reduce the affordability of mortgage payments,’ the report added.

‘On the other hand, if they continue to languish, this will have an effect on the Singapore economy and optimism in the property market eventually.’

With the residential market facing numerous challenges, investors are likely to identify opportunities in other property sectors and alternative investment products, DTZ said.

Source: Straits Times, 28 Jan 2011

PRIVATE home prices in 2011 could fall by up to 5 per cent but will be largely stable, says a new report by DTZ Research.

The firm expects recent government cooling measures to reduce sales volume, but not cause a significant fall in prices.

Sales volume is expected to fall as short-term speculators will be weeded out by the hefty seller’s stamp duty (SSD) of up to 16 per cent within the first year of purchase. However, not all investors will withdraw from the market as some may find the 4 per cent SSD by the fourth year of sale to be surmountable. They could shift their focus to buying uncompleted units with completion dates three to four years later, said DTZ.

The property consultancy expects prices this year to be underpinned by economic growth, low interest rates, strong holding power of developers, the appreciation of the Singapore dollar and inflow of foreign purchasers due to the property market clampdown in mainland China and Hong Kong.

In particular, landed homes, small apartments and high-end apartments will be be less affected by the measures, said DTZ’s executive director for residential, Margaret Thean.

‘Small units with their low price quantum will continue to attract investors with spare cash or singles wanting their own units. The four-year seller’s stamp duty will have little impact on landed homes as most purchase them for long-term owner-occupation. And high-end apartments will continue to see foreign interest,’ Ms Thean said.

But DTZ does not rule out the possibility of more government measures should demand remain at a high level after a period of cooling off.

The report also noted other challenges in the form of a spike in the number of completed units in a few years’ time as the government is releasing a record high number of homes through the public housing and government land sales programmes. There is also uncertainty over the strength of recovery of the major western economies. If they recover well, interest rates will increase and reduce the affordability of mortgage payments. On the other hand, if they continue to languish, sentiment in Singapore’s property market could eventually be hit.

Source: Business Times, 28 Jan 2011

Demand is still there, at least for smaller units, say experts
THE impact of the latest property cooling measures could soon be tested as developers and marketing agents muster interest for three new property launches.

Far East Organization has been marketing The Cape, its 76-unit development at Amber Road, as ‘the pairing of cosmopolitan sensibilities with idyllic sensitivities’.

At the District 15 freehold property – right next to the firm’s Silversea project – a one-bedroom unit of 600 sq ft to 650 sq ft is going for about $1.2 million, based on indications from some property agents. This would work out to about $2,000 per sq ft (psf).

A two-bedroom unit would set a buyer back by about $1.7 million. The prices will probably be subject to change until the project goes on sale – the timing is expected to be around Chinese New Year.

Far East is offering some early-bird buyers a 5 per cent cash rebate, which will be paid out only when the project is completed. The Straits Times understands this move is in line with the company’s aim of building a stronger base of long-term buyers.

Also coming up is La Fleur, a ‘shoebox’ development in Geylang, which is expected to hold a preview today. All the 58 units are one-bedders, with sizes ranging from 409 sq ft to 646 sq ft. Prices start at an estimated $490,000 – or roughly $1,200 psf – based on marketing material obtained by The Straits Times.

The District 14 project, which consists of two eight-storey blocks, is being developed by Teambuild Properties.

Over at Balestier, Okio Residences by SDB Asia – a subsidiary of Malaysia-listed Selangor Dredging – will be previewed on Thursday.

Half of the 104 units in the 18-storey freehold project are shoebox apartments of less than 500 sq ft. It also has two-bedroom units, with sizes ranging from 570 sq ft to 667 sq ft, and four penthouses that go up to 1,098 sq ft.

Agents said a 420 sq ft apartment would cost an estimated $650,000.

Separately, at d’Leedon, CapitaLand’s 1,715-unit project at Farrer Road, the showroom was reopened to the public over the weekend after the company sold 232 of the 250 units released during the initial launch last month.

Experts said projects with smaller units were still being launched because the purchase price of such units remained manageable for buyers.

Mr Colin Tan, a research and consultancy director at Chesterton Suntec International, said that even though buying sentiment had been affected by the cooling measures, there was still demand from home buyers.

‘Developers can’t push sales and prices at the same time – something has got to give. But demand is still there, so it’s up to the developers to be creative in enticing buyers,’ he noted.

Source: Straits Times, 24 Jan 2011

Developers likely to offer more strata-titled homes to intensify land use

LANDED homes are a rare commodity, and the crunch is expected to get worse in the coming years, going by the limited stock available.

In the past 10 years, the number of landed homes has gone up by just 6 per cent, while the number of apartments has risen by 47 per cent.

Out of a total of 256,513 private homes, 69,701 were landed, as of the third quarter of last year, data compiled by Credo Real Estate showed.

The shortage is likely to mean that developers would look towards intensifying their land use, possibly offering more strata-titled landed homes instead.

These homes, also known as cluster homes, combine the posh appeal of conventional landed homes with shared condo-style facilities like pools and security.

But they come with strata titles, so owners cannot renovate or rebuild their homes like in conventional landed homes.

They are also a blessing for developers faced with a dwindling stock of land.

Developer Tong Eng Brothers could have built 32 landed homes in its Poets Villas development near Peirce Reservoir, but will instead build 40 strata-titled semi-detached houses. One of its houses, with a built-up area of 3,200 sq ft, will cost about $2.2 million.

Managing director Teo Tong Lim told The Straits Times: ‘Despite the changes in the rules, I can still fit in more strata-titled units than conventional units, so it’s a more optimal and intensified use of the land… which means that it’s also more profitable.’

He was referring to the Urban Redevelopment Authority re-introducing a minimum plot size rule in 2009 for strata-titled landed developments, as such estates had become dense and congested.

Landed homes made up 27 per cent of the private residential market as of the third quarter last year, down from 34 per cent in 2000. And while about 60,000 private apartments have been built here since 2000, only 4,000 landed homes have been added, according to Credo.

The scarcity of land is frustrating for developers as demand for landed homes has shot up due to the booming economy.

Of the estimated 250 transactions of private residential sites over the past five years, only 15 plots were for the development of landed properties, said Credo.

The last large government site sold for landed homes was in Jurong West in 2009. It attracted a staggering 32 bids. An auction of 14 parcels for landed homes in the third phase of Sembawang Greenvale last October was also hotly contested, with prices well above expectations.

The supply-demand squeeze is behind strata-titled homes’ rising popularity.

Credo managing director Karamjit Singh said these homes allow developers to create more units that make use of common facilities on a site, without having to sacrifice land for roads.

Mr Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield, said the scarcity of landed homes may push some buyers into strata-titled property instead – a trade-off that gives up exclusivity and a land title for a newer home with shared facilities.

‘Shared facilities can be cost saving for the owner, who does not have to develop the facility,’ he added.

Price is never far from the equation. Conventional landed homes still tend to cost more because of their separate title and individual land space, said Ms Christine Sun, senior manager at Savills Research & Consultancy. The average quantum price of a conventional landed home is $3.8 million, while a strata-titled home fetches about $2.2 million, she added.

The difference is more stark when capital gains are taken into consideration.

Conventional landed homes have shot up by 107.5 per cent since early 2009, compared with a gain of 27.9 per cent for strata-titled homes. Many strata-titled homes are leasehold properties.

Source: Straits Times, 8 Jan 2011