Mass-market and mid-tier projects are hot, but it is taking longer to sell investment properties

The upbeat sentiment in the new private home market has lured out the sellers in the sub-sale market.

Sub-sales – the sale of uncompleted homes by their buyers – of non-landed private properties tripled to 1,200 units in the second quarter, according to a DTZ quarterly report.

This time, though, it is mainly the mass-market and mid-tier projects that are popular sub-sales. In 2007, it was the higher-end projects that found favour with buyers.

Also, the sellers are taking longer to sell their investment properties.

The DTZ study found that a few mass-market projects made their way to the Top 10 list of projects with the most sub-sales. These included Casa Merah, located near the Tanah Merah MRT Station, The Centris in Jurong West and The Quartz in Compassvale.

For instance, there were 54 sub-sales in Casa Merah in the second quarter, and the median sub-sale price rose from $658 psf in the first quarter to $734 psf in July and August.

The most popular sub-sale project in the second quarter was Rivergate, located at Robertson Quay.

The median price of its sub-sale units rose from $1,200 psf to $1,400 psf, and 105 of its 545 units changed hands in the second quarter alone. Prices have since risen further – deals done in July and August ranged from $1,400 to $1,880 psf, according to caveats lodged.

Two perennial favourites are The Sail @ Marina Bay and Icon, prime projects in the central locations of Marina Bay and Tanjong Pagar respectively.

Despite being launched between 2003 and 2005, they still remain popular in the sub-sale market. Their median prices rose 27 per cent and 17 per cent respectively from the last quarter.
Sub-sale buyers tend to be true investors, said HSR Property Group executive director Eric Cheng.

Upgraders, he said, prefer not to buy sub-sales as they do not wish to pay a premium. Those who do, however, find mass- to mid-tier market projects more affordable.

Analysts say that the higher number of sub-sales could be due to the many units that were completed this year.

Ms Chua Chor Hoon, DTZ’s head of South-east Asia research, says there is normally a high level of sub-sales for a project when it is nearing, or just after, completion.

‘In 2006, 6,250 units were completed. This year, 11,367 units are expected to be completed,’ she said.

Mr Cheng pointed out that projects sell out very quickly in today’s market, and some buyers who missed out on the chance of buying a unit do not mind paying a small premium to get a unit if the price is not too far away from the launch price.

These buyers often have compelling reasons, said Mr Cheng. They might have family living nearby, or even on the same unit level.

Despite the higher number of sub-sales now, the number of properties bought and sold within a short span of time is not as high as during 1996 or 2007, said Ms Chua.

‘The number and percentage of units bought and sold within a six-month period in the first half of the year is a lot less than those in 2007 and 1996,’ she said.

Citing data from Realis, she said 88 units were ‘flipped’ in the first half of this year, compared to 517 in 1996 and 835 in 2007.

Flipping occurs when someone buys a property and resells it quickly for a profit.

‘Buyers now tend not to buy another unit so quickly because they often have a choice of other surrounding units that are being sold as well,’ said Mr Cheng.

‘There are a lot of short-term investors who would like to resell for a profit, but might not be able to because they ask for too much. There are also a lot of launches coming up.

‘Market fundamentals are not that strong even though market sentiment is, and we might see a pull-back effect,’ he said.

Source: Sunday Times, 30 Aug 2009

THE median subsale price of non-landed private residential properties increased 18.1 per cent from $813 psf in Q1 this year to $960 psf in Q2, an analysis of caveats by DTZ shows. It attributed the increase to more higher-end properties transacted in Q2 as well as price appreciation in the quarter.

The most popular subsale project in the April to June 2009 period was Rivergate, with 105 units changing hands – or nearly a fifth of the total 545 units in the freehold project located in the Robertson Quay area. The project obtained Temporary Occupation Permit in Q1.

Rivergate’s median subsale price increased from $1,200 psf in Q1 2009 to $1,400 psf in Q2. Caveats for subsales in July and August are starting to stream in and the deals have been done at prices ranging from $1,400 to $1,775 psf, or a median price of $1,600 psf.

The next most popular subsale project in Q2 was City Square Residences at Kitchener Road – with 57 deals done at a median price of $893 psf, up 13 per cent from the $791 psf median price on 43 units transacted in the first quarter. In July to August, three units at the freehold condominium were sold, at prices ranging from $1,000 psf to $1,104 psf.

Median subsale price at Casa Merah, a 99-year leasehold condo near Tanah Merah MRT Station, has gone up from $658 psf in Q1 to $691 psf in Q2 to $734 psf in July to August. The latest price is 11.6 per cent above the Q1 level. Twenty subsales were done in the project in July to August – probably helped by the sellout preview of Optima @ Tanah Merah nearby a few weeks ago.

Over in the Buangkok MRT vicinity, 11 units were sold at The Quartz in the subsale market in July to August at a median price of $699 psf, 15.7 per cent higher than the Q1 median subsale price of $604 psf.

In the Katong area, the median subsale price for One Amber rose from $830 psf in Q1 to $1,015 psf in July to August – or a 22.3 per cent price gain. In the same period, the median subsale price for Icon in the Tanjong Pagar area appreciated 26.2 per cent from $1,144 psf to $1,444 psf.

Subsales are secondary market deals in projects that have yet to obtain Certificate of Statutory Completion.

Source: Business Times, 27 Aug 2009

With 1,423 private homes sold in H1, it is far ahead of all other developers

THE bumper private property sales recorded in February were no fluke.

For a second straight month, home hunters defied the weakening economy to buy more than 1,000 units last month.

Property consultants say buyers are attracted to what they regard as good buys in the moderately priced mass market.

Still, they warn that these strong buying levels are probably not sustainable.

Last month, property developers sold 1,220 new private homes, just shy of the 1,332 units sold in February.

It was the first time in over a year that the market has seen two consecutive months with more than 1,000 units sold. Sales for both months were a stunning contrast to the dismal 108 in January.

Another striking figure: First-quarter new private home sales hit 2,660 units, representing 62 per cent of all new homes sold during the whole of last year.

February sales – boosted mainly by two new launches Alexis and Caspian – were the highest since August 2007.

Figures compiled by the Urban Redevelopment Authority also showed 832 new housing units were launched last month, compared with 1,072 units in February and just 204 units in January.
Most units sold last month were in the mass market, along with a few city-fringe small-format apartments at condominiums such as Domus and The Mercury.

HDB upgraders were the hottest group of buyers. CBRE Research said that last month alone, they bought 550 to 600 units at mass market projects such as Caspian, Double Bay Residences, Kovan Residences, Livia, Mi Casa and The Quartz at median prices of $610 per sq ft (psf) to $740 psf.

A survey of first-quarter caveats lodged for this market segment indicated an average price of $695,000, said CBRE Research executive director Li Hiaw Ho. ‘This is probably a good time for HDB home owners to upgrade to private property as the price gap between private properties and HDB resale flats has narrowed.’

Said Colliers International director for research and advisory Tay Huey Ying: ‘Developers have lowered their price expectations for new launches and generally cut prices of unsold units. Buyers are biting as there is pent-up demand.’

The top three sellers in March were Double Bay Residences, Mi Casa and The Arte. About 85 per cent of units sold last month were priced below $1,000 psf, said PropNex chief executive Mohd Ismail.

The high-end showed some life with 70 units launched and some sales, including one Orchard Scotts unit at $2,220 psf.

But overall, only 100 prime units were launched in the first quarter, or just 4.7 per cent of all units launched, well down from the 39.4 per cent of all units launched in the fourth quarter last year.

Knight Frank director of research and consultancy Nicholas Mak said this was partly due to the retreat of foreigners from the luxury market.

Preliminary data suggests foreign deals stood at 16.8 per cent in the first quarter – a level last seen when Sars badly hit the market in 2003, he said.

Market analysts say it is a good start to the year, but they do not expect the strong buying to continue long-term.

‘In the short term, this rate of buying can continue provided developers lower or maintain their prices,’ Chesterton Suntec International’s research and consultancy head Colin Tan said of March sales.

But in the long term, it is not sustainable, he said. ‘The last time the market sold so many new units (14,811 units) was in 2007. That was when the deferred payment scheme was available. And it has since caused indigestion in the top end of the market.’

Unless the Singapore economy and employment market improve significantly this year, only 6,000 to 7,000 new private homes are expected to be sold, said Mr Mak.

He said healthy demand for mass market homes is likely to continue only as long as average HDB resale prices do not fall by more than 7 per cent year on year.

‘Many in the mass market segment are buying now and banking on their future earnings to service their loans as they are afraid of missing the boat,’ said Mr Mak.

Source: Straits Times, 16 April 2009

With over 80 new housing projects islandwide, buyers have more choices but completion delays will keep prices stable

Home buyers keen to upgrade from a Housing Board flat to a private condominium will have plenty of choice this year. That is going by data compiled by real estate services company CB Richard Ellis.

A total of 82 projects are currently ready to be put up for sale throughout this year, said CBRE, an international company with a research team in Singapore.

From the coastal areas of Pasir Panjang and Punggol to the residential zones of Simei and Sixth Avenue, there is a private apartment development waiting to be launched in almost every corner of the island.

Most are in the non-landed condominium category, aimed at Housing Board upgraders and young family starters.

CBRE’s list defined the projects on the list as those that are ‘launch-ready’. By this, it means projects that have all the necessary permits from the authorities so they can be marketed, although construction work may not have started.

Already, four have been launched – including the latest, Mi Casa condominium at Choa Chu Kang, whose units went on sale this weekend. A further two are expected to be launched within the next two months.

With private property prices falling when HDB resale flat prices are still holding fairly steady, it is music to the ears of those who want to upgrade but have not been able to amid high prices and not so many mass-market launches in recent years.

Writer Ng Hui Hui, 28, who is looking for a private apartment but finds prices a bit high now, feels the high number of launches will increase her chances of finding one at the right price.

‘I’m more hopeful because the number of launches offers a lot of choices. There’s more for me to consider,’ she said.

HDB upgraders have flexed their muscle at condo launches so far this year, buying many units at The Caspian beside Lakeside MRT station, Double Bay Residences in Simei and The Quartz in Buangkok, for example.

Mr Joseph Tan, CBRE’s executive director, residential, notes: ‘If there are a number of HDB upgraders who are ready to enter the market, the sales momentum can be sustained.’

Over at the 18-storey The Mercury in Shanghai Road launched three weeks ago, all 67 units – priced from over $700,000 for a 635 sq ft apartment – were snapped up.

Mr Victor Soh, director of the developer, Fortune Shanghai Road, said: ‘There was no delay in launching the project despite the bad market – we launched it when the project was ready. There were quite a number of people waiting for us to launch.

‘All our units have already been sold and we’re ready to start construction.’

While house-proud Singaporeans will enjoy poring over the launch-ready list, imagining their dream home, most projects may not actually go up for sale soon, as developers wait and see how the economy goes.

Only 10 out of the 82 could name a date or period, but even they said their dates are subject to change.

Still, judging by the small amount of dates given, the hold-out may not go beyond this year or the early part of the next, as the furthest indicated date a developer gave was the first half of next year.
Such delays also mean prices will not plummet too sharply, said a spokesman for listed developer City Developments.

He said: ‘This has helped to balance current demand and supply by mitigating the supply of new apartments entering the market.’

The tough economic times are weighing on some developers, with Ms Chua Chor Hoon, a senior research director for global real estate adviser DTZ, saying: ‘Some have been responding to the slow market by deferring projects that are due for completion to later years.’

A spokesman for residential project Verdure – a planned 75-unit, freehold development in Holland Road – said: ‘The market is so bad, we can’t launch it.’

Another, representing the exclusive 26-unit The Verv @ River Valley, said it was putting off its launch, explaining: ‘Blame it on the economy.’

Both spokesmen declined to be named.

The experience of upcoming mid-market, 24-unit Evergreen View at Geylang Lorong 36 echoes this.

Mr Thomas Sim, associate manager of real estate firm PropNex Realty, which is the selling agent, said: ‘We’ve only had the soft launch last month so far because the show unit is only slated for completion in May, and also partly because the market is poor now. As it is, the reaction from the soft launch wasn’t very good.’

A key part of marketing a condo is to build a show flat to entice prospective buyers. Another reason some projects are being delayed is that developers are reviewing their plans in order to reconfigure units to a smaller size, say industry players. The smaller sizes make the units more affordable.

Knowing about the list of 82 ‘launch-ready’ projects is good news for the likes of home-hunter John Yeo, 38.

The sales manager says: ‘This means I have time and don’t have to rush. I can take my time to choose. But of course, price and location must also be right.’

‘I’m more hopeful because the number of launches offers a lot of choices. There’s more for me to consider’ Writer Ng Hui Hui, a house hunter who finds prices too high now

‘This means I have time and don’t have to rush. I can take my time to choose. But of course, price and location must also be right’ Sales manager John Yeo, who is happy with the list of 82 launch-ready projects

Source: Straits Times, 11 April 2009

More are buying new private condo units as prices come down

Property transaction volumes rebound in Feb, but analysts warn surge may not last

AFTER almost half a year of dismal sales, the private property market staged a rebound last month with 1,323 new units sold — about10 times :the 108 units sold in January.

But while the surge had the mass market segment to thank, the current enthusiasm may not be sustainable, say analysts.

Some 60 per cent of February’s sales — a month that saw the highest volume of transactions since August 2007 — came from high-profile, mid-tier projects such as Caspian and Alexis, according to Government statistics released yesterday. Third on the list was The Quartz, which sold 168 units (see box above).

Located near MRT stations and generally priced below $1,000 per square foot, the three projects appealed to HDB upgraders who had been holding back during the property bull run between 2006 and 2007, said CBRE Research executive director Li Hiaw Ho.

Overall, 70 per cent of all units sold last month were below $1,000 psf, noted PropNex chief executive Mohamed Ismail — a sign that most of the sales were to HDB upgraders.

Discounted prices also lured in buyers. Units at The Quartz, for instance, were relaunchedlast month at around $417 to $684 psf, lower than December’s transacted range for the project of $766 to $814 psf.

While February’s strong sales are a shot in the arm for the beleaguered market, analysts do not think they point to a broad recovery.

“As the real estate market is expected to continue to soften this year, such a burst of buying activity may occur from time to time,” said Mr Nicholas Mak, Knight Frank’s consultancy and research director. “They may not be sustainable in the medium term unless there is an overall improvement in the economy.”

Jones Lang LaSalle’s South-east Asia’s head of research Chua Yang Liang concurred, saying the strong showing last month was probably a “short term blip” in the larger scheme of things. He said: “The pricing of projects within the affordable total quantum range has coincided with preceding periods of stable and strong public housing prices … supporting the renewed buying interest.”

With the economy expected to slow further, “hardcore incentives” such as pricing discounts and rental guarantees may be required to maintain the same number of sales, he added.

This month, newly-launched mid-end projects are expected to keep private home sales at an encouraging level — as shown by recent sales of Double Bay Residences at Simei and Suites@Kembangan.

PropNex’s Mr Mohamed Ismail predicts March sales to be about 800 units, which would be lower than February but still a big improvement from the preceding months.

Overall, CBRE’s Mr Li sees the year as presenting “a window of opportunity where the gap between private home prices and HDB resale prices is narrow”.

Source: Today, 17 Mar 2009

Analysts ask if February spike from new heartland condos can be repeated

(SINGAPORE) Developers sold 1,323 new housing units in February – eleven times more than in January.

Urban Redevelopment Authority figures show sales hit their highest level since the previous peak of 1,723 units in August 2007, leading some to say that market momentum has returned.

Colliers International’s director for research and advisory Tay Huey Ying said that if developers stick with current pricing and product strategies, ‘this trend will stay’.

‘We have always said there are buyers waiting to buy,’ she said, adding that smaller units at lower prices ‘are within a buyer’s risk appetite’.

DTZ senior director Chua Chor Hoon said: ‘Despite the credit crunch there is still plenty of liquidity in the market. Many people have not committed to purchases in the past two years, and savings interest rates are so low now.’

Barclays Capital economist Leong Wai Ho also reckons low interest rates could be a factor in the sales spike, saying ‘abysmally low loan and deposit rates remove the incentive to keep idle balances in cash’.

Still Mr Leong does not think February’s momentum is sustainable. ‘The risk going forward is that HDB upgrader demand is likely to unravel as the pain from rising joblessness and lower wage payouts starts to bite,’ he said.

He also noted that two new launches accounted for the spike in February. ‘Take those two projects out and you have a good idea what is happening in the broader market,’ he said.

The two projects are the 712-unit Caspian at Jurong and the 293-unit Alexis @ Alexandra, which sold 517 and 293 units at median prices of $603 and $1,083 psf respectively.

Other significant transactions in February were at the 625-unit The Quartz, with 168 units sold at a median price of $591 psf; the 38-unit Palmeria Residence with 22 units sold at a median price of $775 psf; and the 31-unit D’Chateau @ Shelford with 21 units sold at a median price of $1,000 psf.

PropNex CEO Mohamed Ismail believes more than 50 per cent of February’s sales involved HDB upgraders, as 70 per cent of the units sold were under $1,000 psf.

‘Developers have slashed prices, accepting minimal profits,’ he said. ‘This makes it irresistible for serious buyers, be they investors or HDB upgraders.’

Jones Lang LaSalle’s local director and head of research (South-east Asia) Chua Yang Liang said all regions registered strong take-up rates, with 102 units sold in the Core Central Region, 840 sold in the Outside Central Region and 381 units sold in the Rest of Central region.

But he doubts the rally can be sustained. ‘The strong market showing in February is likely to be a short-term blip in the overall larger scheme of things,’ he said.

While February sales were healthy, returned units from speculators without the means to hold could become a dampener. Already, classified advertisements have appeared for sub-sales at Caspian and Alexis.

DMG Research analyst Brandon Lee thinks speculation is still ‘subdued’, with most buyers either Singaporeans or permanent residents purchasing units to occupy.

‘Volume in the sub-sale market remains tepid, at less than 100 units transacted in February,’ he said.

Selling 1,000 units a month will be hard to achieve, he feels. ‘A more reasonable figure would be 500-600 units for the next three months. After that, the picture would possibly revert back to a normal 200-300 units as the economy worsens and the HDB resale market softens.’

March sales have already hit about 300 units, with 210 sold at the 646-unit Double Bay at Simei, as well as about 25 at the 104-unit Domus in Novena. It is also understood that the 60-unit Kembangan Suites project is fully sold.

Knight Frank’s director of research and consultancy Nicholas Mak said that leaving aside Caspian and Alexis, February’s sales of 513 units were the strongest in seven months.

But he cautions that there is a ‘limited’ pool of buyers for small units, and says HDB upgraders could become more discerning. ‘If an HDB upgrader moves from a four or five-room HDB flat to a one or two-bedroom condo, it’s not really upgrading,’ he said.

Source: Business Times, 17 Mar 2009

SINGAPORE: Singapore homebuyers can expect more private residential properties to be launched in the coming months and at lower prices.

Analysts said that’s because developers are now torn between accepting either weaker profits or high costs of holding on to land.

Brisk sales seen in recent property launches like the Caspian can be credited to lower prices being offered by developers. Units there were sold at about S$600 per square foot, or S$50 per square foot less than earlier planned.

Analysts said developers have little choice but to cut prices to move sales as the the cost of holding onto a piece of land can be expensive as well.

A typical plot of land for mass market homes could chalk up more than S$500,000 of interest annually, including other costs. Interest on land cost is typically about four to six per cent.

Developers normally take a 60 per cent loan on land.

This means a mid to mass market plot of land bought for S$20 million will accrue more than S$500,000 of interest in a year.

There are other costs too. Cheang Kok Kheong, COO, Development & Property, Frasers Centrepoint, said: “It’s very good price for the present economic situation and it really meets the kind of needs and budgets our customers have right now.

“We have committed our construction costs. We have gone ahead and developed it and we are looking at our cashflow to ensure that we can build the project on time with little financial difficulties.”

Frasers also wants cash for possible land acquisitions in the near term.

Other developers which have turned to cutting prices include City Developments. It recently launched a new phase of its Livia project in Pasir Ris at about S$620 per square foot, down from S$650 per square foot.

Meanwhile, GuocoLand relaunched its development near Buangkok MRT – the Quartz – at an average price of S$595 per square foot, more than eight per cent lower than the initial launch in 2007.

Another developer, MCL Land, recently made provisions to value its land near current market prices.

Analysts said this is normally a prelude to a relaunch at lower prices.

But they noted that developers will not keep prices low for too long.

Donald Han, managing director, Cushman & Wakefield, said: “Some obvious strategy would be to go out there, launch as much as you can, depending on where the quota is. “Then once you hit a certain sales quota, you stop and then you relaunch it when the project can be launched at a better market sentiment and hopefully at a higher price as well.”

Most analysts believe the market will start to pick up in mid-2010.

Source: Channel News Asia, 2 Mar 2009