Revival of private resale?

Market watchers have said the private resale property market is seeing a gradual recovery after a drop in transaction volume in the first quarter this year following the introduction of cooling measures in January.

Based on preliminary estimates, some analysts said sales could potentially double in the second quarter compared to the first quarter.

New private homes may continue to pull in the buyers, but some analysts said the resale private property market is also picking up.

Real estate agency PropNex said it has seen resale transaction volume jump 20% in April and May. Enquiries and turnout at viewings of resale units have also improved, largely because buyers believe resale properties offer better value and comparable rental yield.

Mohamed Ismail, CEO of PropNex, said: "Sky Habitat at Bishan... is $1,600 psf (per square foot). Bishan 8, opposite, goes at $1,100. In other words, when you buy a resale unit, you are going to pay lower per square foot... absolute quantum is going to be lower, which means you pay lesser ABSD (additional buyer's stamp duty) to the government."

SLP International Property Consultants estimates that some 3,600 to 4,300 units of both completed and uncompleted units in the resale market could change hands in the second quarter.

This is up from about 2,200 units sold in the previous quarter.

Based on caveats lodged, analysts said that about 3,500 resale units have been transacted from January to early May this year.

About two-thirds of them are "family-sized" units above 100 square metres.

They added that the resale property market is likely to see a sustainable recovery, but there are potential risks as well.

Nicholas Mak, executive director of SLP International Property Consultants, said: "If prices continue to increase and rental yields continue to be compressed, one of the risks is that if interest rates were to increase this year or next year, we could see that this would actually discourage investors, because if rental yield is compressed to such a low level, any increase in interest rates would make that investment property less attractive."

Mr Mak said that currently, the average rental yield for private homes in Singapore hovers between 1.8% and 2.2%.

Some analysts said that prices in the resale market are catching up with prices of units in new launches. For the whole year, they said that prices of resale private properties could go up by as much as 8%, barring any additional cooling measures.

Some analysts added that the total units of resale private homes sold in 2013 should be comparable to the 15,136 transacted last year.

Source: Channel News Asia

What the report did not mention is that as more and more new developments get completed and come on stream from 2014 onwards, rental yields are likely to be further depressed even if prices of new and resale units do not increase significantly.

The wife and I feel that rental yields for both luxury apartments and smaller-sized units in suburban projects that were launched over the past 2 years are especially vulnerable with the expected large influx of new apartments into the market over the next 2 - 3 years.

Have a great weekend, everyone!

SRPI: Resale prices up 1.9% in April

Resale prices of private homes in Singapore rose at a faster rate of 1.9% in April, compared to the previous month's 1.1% price increase.

The Singapore Residential Price Index (SRPI) flash estimates were published by the Institute of Real Estate Studies at the National University of Singapore on Tuesday.

The price increase was led by private homes outside the central region, which rose 2.4% in April, reversing the 0.2% drop in March.

Prices of small units, defined as 506sqft and below, also trended upwards from 0.8% in March to 1.8% last month.

Meanwhile, resale homes in the central region bucked the trend as price growth moderated.

The SRPI for homes in the central area rose 1.3% in April, down from the 2.8% increase seen in March.

Source: Channel News Asia

Visit to Sentosa Cove: Quayside Isle & The Residences at W

The wife and I decided to spend the Vesak Day long-weekend with our son on a "staycation" in Sentosa.

And between visits to the new "Adventure Cove" water park and iFly, we decided to go check out Quayside Isle at Sentosa Cove. This is the latest F&B hotspot across from One degree 15 Marina Club, which primarily serves those rich (and some famous) people that live in their villas and humongous apartments around Sentosa Cove.

 

For those who has not been to Quayside Isle (yet), the area has really blossomed into quite a hip and happening place, littered with many restaurants, bistros and bars. You will find some familiar names like Picotin and Brussels Sprouts as well as other quaint little joints.

 

 

And while dining at the restaurants, one gets the full view of the Marina with its many boats and crafts of various makes and sizes. 

 

The 240-room W Hotel, which opened its doors in September 2012, is located next-door to Quayside Isle.

And situated across the road from Quayside Isle is The Residences at W. This is the 228 units ultra-luxurious condominium project developed by CDL. Other than the usual frills, e.g. concierge service, valet parking, spa facilities etc., a total of 34 berths (that can accommodate yachts of up to 12-metre in length) are available for residents that own boats in addition to their fleets of Lamborghinis and Ferraris.

However, many of the apartments seem to be vacant from what we can see. But at an asking price of between $2,500 - $3,000psf, we are not overly surprised!

The number of vacant apartments became more pronounced as darkness fell. So we reckoned parking (for cars, that is) is not a major issue for residents at the moment.

 

 

 

 

 

Returned condos at its highest!

The number of returned condominiums is at its highest in about a year, according to property research firm Square Foot Research.

Data shows there were 152 units returned in April. This slightly pips the previous high of 150 units returned in May 2012.

It also brings the total number of units returned for the first four months of this year to 415, about 10% higher than the same period in 2012 - there were 378 units returned in the same period last year.

Buyers who choose to return their units have to forfeit 1.25% of the property's price.

Some analysts attribute the increase to the record high private home sales in March, where 2,793 units were sold. The government's property cooling measures, may have also led some buyers to back out of their purchases.

Analysts added that those who made impulse buys could have also contributed to the high figure.
David Poh, senior director at PropNex, said: "Even before you view a property, you know you'll be influenced by salespeople and advertisements. So it's best to do your homework and financial planning, and know what you can afford before viewing a place."

Source: Channel News Asia

 

Sign of the times...?

 

Vesak Day-inspired piece...

Being Vesak Day, the wife and I with our little son in tow were at The Singapore Buddhist Lodge, a rather large temple located at Kim Yam Road, to perform our annual "bathe the Buddha" ritual.

While waiting in line with about 40 people ahead of us, we cannot help but notice the residential development situated next to the temple.

 

The development concerned is Waterford Residence, a 999-year leasehold condominium consisting of 118 units completed in 2011. As you can see in the photo, the condo is built literally next to the temple.

 

While we all know that the 3 main criterias for property purchase (whether for own-stay or investment) is "location, location, location", the wife and I cannot help but wonder if many people will consider beyond the usual "District Number", "Proximity to MRT stations and amenities" and "within 1-km of choice schools".

 

We do not know how many of the occupants within the 118 units at Waterford Residence are Buddhists. However, if you decide to purchase an apartment next/nearby to a temple (and a rather huge and popular one for that matter), you better be mentally prepared for the "inconveniences" that are typically associated with having large number of people moving in and out of the building next-door to yours, and the ocassional frustrations of double-parking along the 2-lane Kim Yam and Martin Roads. This is especially so during the first and fifteenth day of each Lunar Calendar month and major Buddhist festivals.

 

But if you ARE a Buddhist (more so if you are a devout one) however, you will probably find calm and peace from the constant Buddhist chants from next-door. And on every Vesak Day, you will probably be the first in line for "bathing the Buddha"! 

 

 

On the flip side, you must also be prepared to tolerate people using the ledge of the water feature oustide your condo as a resting place while waiting for taxis or transports.

 

 

So the next time you go house hunting, you may want to add "Is the condo located next to a building of religious worship?" to your list of considerations.

 

And just so we are clear, the wife and I are firm believers of religious tolerance and harmony. But we are not big fans of crowds and heavy traffic along our front yard.

 

Now back to "bathing the Buddha"....

 

 

Have a great long weekend everyone!

 

 

Mixed-developments = Convenience of amenities at your door-steps?

There has been keen demand for small retail units in recent years, especially those in mixed development projects as investors look to park their funds in real estate sectors unaffected by cooling measures.

However, analysts warn that getting tenants to rent these shops may get increasingly challenging.
27-year-old Zoey Che opened a nail parlour at ICON@Changi, near the Eunos MRT station in May. In the past three weeks, she has served just seven customers, despite having spent about $1,000 to market her services. She is renting this 140-square-foot shop for $1,600 a month for a year.

She said: "Most likely for the first half of the year it is actually losses... This is my first month here, I'll see how it is in six months. I am not upset. It is predictable considering the emptiness of the shops around here."

The majority of the shops around the basement unit she leased are empty and Ms Che said shopper traffic is almost non-existent for now.

Channel NewsAsia understands that ICON@Changi was ready for occupation towards the end of December 2012.

Analysts said filling shop spaces is never easy.

Ku Swee Yong, CEO of International Property Advisor, said: "Depending on the location of your unit and whether your unit comes fitted with taps and sinks and drainage, then it is suitable for certain type of retail, so you might be hard-pressed to get any tenant in at a reasonable price.

"You will be under competition from the rest of the strata retail shop owners, so you might have to hold the shop empty for six months or worse, in some cases we are seeing more than 12 months of empty space."

According to property consultancy Knight Frank, about four million square feet of net lettable area of retail space will come on stream by the end of 2016. That is equivalent to about four VivoCity malls -- and under a quarter of that space is strata-titled commercial premises.

Analysts said strata-shop owners may also have to fight it out with wholly-owned malls for tenants.

Alice Tan, senior manager of consultancy and research at Knight Frank, said: "Such landlords have the resources to do more concerted marketing efforts and they have stronger strategies to organise and plan and strategise their tenant mix for the mall. And in so doing they are able to put forth a compelling retail experience and therefore able to attract retailers."

Meanwhile, property agency HSR expects about 2.8 million sqft of retail space to be completed in 2013 and 2014, with 70% of the spaces located in the suburbs. HSR said the average absorption rate for retail space between 2008 and 2012 is about 546,000sqft per annum.

As the Singapore economy undergoes restructuring, analysts said issues like rising business cost and the manpower crunch could also crimp growth in the retail sector, and that is something investors must consider as well.

To curb the proliferation of shoebox retail units, the government introduced new rules on the minimum average size of retail units and minimum corridor widths on March 27, 2013.

Source: Channel News Asia

Coincidenally, one of our readers wrote to us recently asking for our opinion on a certain newly-launched mixed-development located in the suburbs.

Other than the fact that we find the 2-bedder unit (about 660sqft) a tad too small, we feel that mixed development (where there are both commercial and residential units) is somewhat of a "hit and miss". This is especially when the commercial units within the development are strata-titled - this means that the units are bought by private owners (mainly investors) whom will rent these out to whoever that wish to setup shop. As such, there is usually little control on the tenant-mix or the quality of the tenant. So you may end up with a situation whereby the shops are either empty or leased by establishments that do not provide you with the amenities that you need/desire.

New project sales status: Stratum, Whitehaven & Corals

Following are sales status of new projects that were launched or previewed last week:

Stratum

The 380-unit Stratum in Pasir Ris moved about 190 apartments on Saturday and Sunday. Nearly 250 units were released in the first phase.

 

Units at the 99-year leasehold apartment were launched at around $900psf. Sizes range from 432sqft for a studio to 2,446sqft for a five-bedroom duplex penthouse.

The Elias Road project is being developed by Elitist Development, which is related to the Lim family behind the Sin Soon Lee Group.

 

Whitehaven

The 121-unit project developed by Roxy-Pacific Holdings sold nearly 70 units over the weekend.

The average price at the five-storey freehold project was between $1,470 and $1,480psf.

 

Corals at Keppel Bay
The 99-year leasehold project by Keppel Land, which is near Harbourfront MRT,  saw more than 80 of the 100 units released snapped up after the preview began on Friday. Buyers are believed to be mostly Singaporeans.

Prices at the 366-unit Corals are said to have ranged from $1,800 to $3,000psf.

Keppel Land said most units sold have been one- to three-bedders. There are also four-bedroom units and eight penthouses. Sizes range between 600sqft and 3,500sqft.

The lease for Corals starts from 2007. It is not subject to rules that stipulate that the developer has up to five years to build the project and then has to sell all the units within two years of obtaining the temporary occupation permit.

Corals is the third residential project by Keppel Corporation and Keppel Land on the former Keppel Harbour site, after the 969-unit Caribbean at Keppel Bay and the 1,129-unit Reflections at Keppel Bay.

Corals at Keppel Bay will be officially launched this weekend.

 

 

Want a piece of Corals at between $1,800 to $3,000psf?

According to our de facto Business newspaper, Keppel Land will be previewing its latest condo project, Corals at Keppel Bay, today. Pricing for the first batch of 100 apartments is said to be between $1,800 and $3,000psf. 

The project – being developed on a site with 99-year leasehold tenure starting February 2007 – has a total of 366 units in 11 blocks of between 4 and 10-storeys high.

Nearly 45% of the units are one and two-bedders. Corals at Keppel Bay will have one, two, three and four-bedroom apartments sized between 600sqft and 3,600sqft. There will also be 8 penthouses of between 4,800 to 7,800sqft.

The absolute prices start from $1.31 million for a 624sqft one-bedder ($2,100psf) and the priciest apartment is said to cost around $10.7 million for a four-bedroom deluxe unit of nearly 3,600sqft ($3,000psf), which has a full waterfront view.

 

 

Number of private home transacted (Jan'12 - Apr'13)

The sluggish resale market continues...

Source: URA

April new private homes sales halved on-month!

Sales of new private homes, excluding executive condominiums, halved to 1,375 units in April, compared to March.

This was down from the record 2,793 units sold by developers in March, the highest monthly sale volume since June 2007.

According to the latest figures released by the Urban Redevelopment Authority, the April 2013 figure was also lower than the 2,497 new home sales recorded a year ago.

The drop was mainly due to the fewer units moved in the suburbs and city fringes in April.

URA data showed that developers sold 727 new private homes in April, down 60% from 1,814 in March. The number of new units moved in the city fringe region declined 43% to 470 units.

But the number of new private homes sold in the city area bucked the trend, rising by 13.4% to 178 units in April, compared to the month before.

Source: Channel News Asia

So what is the acquisition cost when buying an apartment in Hong Kong?

The following is provided by IP Global, a firm set up in 2005 to provide clients with an end-to-end real estate investment service.

The data assume a foreign investor's (non permanent resident) costs on a US$ 1 million purchase. All costs are in US$.

Hong Kong
$240,000 or 24% of property value, comprising:

·         $75,000 stamp duty

·         $150,000 special buyers stamp duty

·         $5,000 legal fees

·         $10,000 agent fees

 

 

Singapore
$178,639 or 17.9% of property value, comprising:

·         $25,640 stamp duty

·         $150,000 special buyers stamp duty

·         $3,000 legal fees

 

 

 

New York
$44,250 or 4.4% of property value, comprising:

·         $18,250 transfer tax

·         $10,000 mansion tax

·         $16,000 legal fees

 

 

 

 

London
$43,400 or 4.3% of property value, comprising:

·         $40,000 stamp duty

·         $3,400 legal fees

 

Kuala Lumpur
$37,607 or 3.8% or property value, comprising:

·         $31,607 stamp duty

·         $6,000 legal fees

So it actually cost more for an investor to buy a property in Singapore than New York and London. And as per always, it is the lawyers in the Big Apple that make the biggest bucks..

Resale markets continue to slow in April

Singapore's resale property market continues to slow as buyers remained on the sidelines after the government's latest round of property cooling measures.

Flash figures from the Singapore Real Estate Exchange (SRX) revealed that transaction volumes in both private and HDB resale markets fell last month.

Prices stayed fairly resilient as the overall median price of resale HDB flats inched up, while prices of resale private homes declined marginally in April compared to March

Meanwhile, analysts say a continued drop in HDB cash-over-valuation (COV) and slowing volumes are indicative of an imminent correction in HDB prices.

COV for HDB flats fell for the third consecutive month in April, according to SRX.

At $30,000, April's COV is at its lowest value since September 2012.

Still, overall median resale price of HDB flats inched up 1.1% to reach $465,000 in April. Resale volumes of HDB flats remained stable, with 1,271 units sold.

Year on year, transaction volumes slumped 36%. There were 2,000 HDB resale flats transacted in April 2012.

Earlier this year, the government lowered the mortgage servicing ratio (MSR), from 50 to 30%.

Mohammad Ismail, CEO at PropNex, said: "On average, banks would give 50% of someone's income to finance the monthly installment but that has been reduced to 30% and that's a drastic drop...and that causes a lot of people to think twice. It is very glaring that the public housing is heading for a correction in price. In another word, the heyday of double-digit growth is over. For that matter, even last year's 6-over percent growth is not likely to be repeated. Moving forward, public housing will probably experience low growth of probably 3 to 4%.

"The first quarter recorded the lowest volume of transactions in 15 years. We only recorded about 4,300 transactions whereas last year the average was in the tune of 6,500."

Meanwhile, resale transaction volumes for non-landed private homes in April slowed to 572 units, compared to the 614 units sold in March.

Year on year, this represented a more than 50% drop. There were 1,240 non-landed resale units in April 2012.

Donald Han, CEO of HSR Property Group, said: "This is directly impacted because of government measures on January 11. Investors who have properties are more reluctant to release these properties into the marketplace and because of that there has been a lack of supply for secondary markets that are available for transaction.

"A lot of investors are holding back the selling of secondary market property because if they sell it, it would be harder for them to buy back again because they would be imposed 10% ABSD for the second property."

Month on month, prices of resale private homes dipped 0.4% in April.

Resale prices of suburban private homes climbed 1.0% to end at $1,022PSF. But this was more than offset by declines in the city area and city fringes.

Both CCR (core central region) and RCR (rest of central region) saw equivalent price drops of 1.9% over the previous month to reach an average per square foot of $1,772 and $1,267 respectively.

This is the fourth consecutive monthly drop for CCR since its price peaked in December 2012.

Analysts say this is due to falling demand from foreign investors and permanent residents - who typically buy property in the core central region - as they have been affected by the additional buyer's stamp duty, where they are charged between a 7 and 15% tax.

Analysts say the resale private property market is likely to remain quiet as buyers continue to turn to new sales.

Source: Channel News Asia

 

 

On a related note, our de facto business newspaper has reported that overall rental prices slipped 1.0% in April. rental prices fell by 4.4% in RCR and by 0.9% in Outside Central Region (OCR) areas. But in CCR, rents picked up 2.1% to $4.79psf.

 

Rental yields softened in both RCR and OCR, while yields in CCR continued their climb to reach 3.25%. Despite yields softening, RCR still showed the highest gross yield of 3.73% as at April, followed by OCR's 3.68%.

 

Looking ahead, rents may soften further as more projects are completed, and as the tightened quota on foreign workers kicks in, leading to fewer of them coming here and needing accommodation.

Further, given that the supply of suburban homes has significantly increased, this will keep suburban rental prices down.

 

Not so good news for property investors...

 

 



Enbloc news: Yi Mei Garden

A freehold residential site at Tampines Road has been put up for collective sale by public tender.

The 14-storey development, Yi Mei Garden, is located near Kovan MRT and Heartland Mall.
ERA Realty Network, the marketing agent for the property, said the indicative price range for the plot is between $132 million and $135 million.

ERA said the development charge payable would work out to be between $750 and 758.00psf ppr.
The site occupies a land area of 78,030sqft and has a gross plot ratio of 2.1, according to the Master Plan 2008.

It can potentially yield an achievable proposed gross floor area (GFA) of 163,864sqft, which can potentially be re-developed into two towers.

Source: Channel News Asia

 

 

Photos of Keppel Bay

The photos were taken from the Jewel Box on top of Mount Faber this evening, where the wife and I were celebrating our son's 9th birthday.

Now for Corals at Keppel Bay to complete the picture...

Have a great week ahead!

And you think the biggest beneficiary of ABSD are first-time home buyers...

Our de facto English newspaper reported today that the raft of cooling measures imposed to tame the red-hot property market has delivered more than $1 billion in additional levies to the taxman.

The surge in revenue was bolstered following the additional buyer's stamp duty (ABSD) of up to 15% that was rolled out in January.

About $158 million in ABSD was netted in February and March, bringing the total until March to $1.03 billion since the tax was introduced in December 2011, according to the Inland Revenue Authority of Singapore (Iras).

The January measures - the seventh since September 2009 - also marked the first time that Singaporean investors buying their second homes were penalised with an additional tax.

Foreigners have forked out $580 million in ABSD for 3,041 homes from December 2011 to March this year, while Singaporeans and permanent residents (PRs) have stumped up $386 million for 7,269 homes, Iras noted. Non-individuals such as companies paid a further $66 million in levies for 285 units.

Home owners have also paid $66.6 million in seller's stamp duties since that levy was introduced in 2010.

This tax of up to 16% is meant to curb speculation and applies to those who sell their homes within four years of purchase.

Experts say the new-sale market has continued to be healthy despite the measures as developers dangle discounts and other incentives to alleviate the ABSD's sting.

Savills Singapore research head Alan Cheong estimates that 30 to 40% of buyers at new launches since the January measures came in are second, third or subsequent home buyers.

"They are creating reasons to buy. It could be for rental income when the population grows to over six million, capital gains or to hedge against the possibility of their children not being able to afford homes in the future," he said.

Iras said Singaporeans and PRs bought 1,031 homes subject to the ABSD in February and March, contributing $97.7 million in additional taxes. They are subject to ABSD rates ranging from 5 to 10%.

Foreigners, subject to a 15% ABSD for all purchases, bought 232 homes with a total of $58.2 million in ABSD collected in the same period. Non-individuals acquired 13 homes with a total of $1.84 million netted.

Foreigners seem to have retreated from the market after the applicable ABSD rate of 10% was increased to 15% in January.

In February and March last year, when only the 10% levy applied, they bought 315 units, according to caveats lodged with the Urban Redevelopment Authority, 36% more than this year.

So everytime you buy a car, our "cheng hu" makes money. And when you buy a  second or more private homes these days, our "cheng hu" makes even more money. So is this what the Chinese termed as "鹬蚌相争，渔翁得利" (The fisherman will benefit from the fight between the Mussel and Snipe)..?

And just in case your wondering where the Chinese idiom "鹬蚌相争，渔翁得利" came from:

Seven states were locked in battle at the end of the Warring States Period (220-280 AD). The Duke Hui of the State of Zhao wanted to conquer the State of Yan (Real Bad). That is, until he talked to Su Dai, one of those advisers.

Su said: "One fine day, a mussel went out to the beach to sunbathe. Meanwhile a snipe (which is a kind of bird that looks like a sandpiper with a long bill) caught sight of the tasty tidbit. He plunged to bite the meat. But the mussel immediately closed up, meaning the snipe could not pull out its beak out of the shell. Both of them became locked in mortal combat. Along came a fisherman and bagged them both.

"If you go to conquer Yan now, Zhao and Yan will be like the mussel and the snipe. Meanwhile the strong Qin State will be make like the fisherman and gobble up both territories."

And so Duke Hui never ate seafood again (just kidding). The idiom of course refers to a mutually-destructive battle between two parties, especially one involving unshakeable principles, thus leaving the coast clear for a third party to swoop in late and sweep up the spoils.

Explanation courtesy of SOHU.com

 

Private home resales made profit for past 5 quarters!

It was reported in our de facto Business newspaper that a total of $107 million in gross profit was pocketed by non-landed private home owners from quick resale over the five quarters of Q1 2012 to Q1 2013. This is according to a report released by real estate firm OrangeTee.

The overall private residential price index, which includes private condominiums and apartments but excludes Housing and Development Board (HDB) executive condominiums, is now 60% above the trough in 2009.

Between Q1 2012 and Q1 2013, a total of 103 projects obtained TOP, according to data from the Urban Redevelopment Authority (URA) and Building and Construction Authority (BCA). Out of these, 68 projects had transactions in the same quarter upon completion, making up a total of 348 transactions.

Only one out of the 348 transactions was unprofitable, and this was described as a "one-off occurrence".

The report also highlighted that, over the same period, each newly completed unit yield an average return of 33%. The most profitable non-landed private residential segment was the Outside Central Region (OCR), which made an average profit of 41%, compared to 31% for the Rest of Central Region (RCR) and 25% for the Core Central Region (CCR).

In all three regions, however, shoebox units, measuring 50sqm or less, were less profitable than their non-shoebox counterparts. Average profitability per unit was $132,000 or 25% in the last five quarters, lower than that of the overall market.

Over the last five quarters, average gross profitability peaked at Q3 2012, when owners saw an average return of 43% per unit. However, since then, average profitability has been falling as the rate of appreciation in private home prices moderated, and such profitability may not be repeated in the future. This is especially when the full effect of the cooling measures starts to sink in.

Ultimately, the report expressed optimism for the future of the market, referring to sustained foreign capital inflow, low interest rates, and "record land prices" in recent Government Land Sales (GLS).

 

The million$ question is: for HOW LONG will foreign capital inflow and low interest rates be sustained....