Boo!

The Hungry Ghosts may provide their usual scare, but the real menace for developers lurks deeper. They could be sailing into a perfect storm.

Even before this month kicks off on July 31, several other factors are already weighing down private home buying sentiment. “The Ghosts’ month will provide developers with a good excuse if sales slow down even further in the next few weeks,” said one developer.

Colliers International’s analysis shows that since 2007, developers’ private home sales have dipped anywhere from about 19% to 70% month-on-month in the calendar months during which the Hungry Ghosts Month falls. The property consultancy used the monthly sales data that developers have been submitting to URA since June 2007, excluding ECs.

Official stats released by URA on Friday showed that developers’ sales slipped 25% month-on-month in June, following May’s 12.7% month-on-month drop.

Market watchers say that while traditional Chinese may avoid buying homes during the Ghosts’ Month, the younger generation are less likely to observe the taboo. When the property market is hot, the dip in sales during the Ghosts’ Month tends to be less marked; however, when sentiment is weak, the drop in sales tends to be more pronounced, say property agents.

As DTZ’s SE Asia research head Chua Chor Hoon puts it: “It’s an additional factor that will affect sentiment in a weak market.”

She points to a whole host of factors which are already weighing down sentiments – including resistance to high prices, economic uncertainty in the US and Europe, cautionary market pronouncements by the National Development Minister and uncertainty about the impact of the increase in the supply of new HDB flats on the private housing market. Analysts also say the sharp slowdown in Singapore’s economic growth in Q2 will affect sentiment among home buyers.

Said one developer: “Hopefully we’re not sailing into a perfect storm. Things have been quiet in the past few weeks. The market has come off a bit… In the past, when there were property cooling measures by the government, there was a knee-jerk reaction and after that, buying recovered. This was the case even with the last round of measures in January.

But this time, the slowdown may be for real. Even the sales of some of the shoebox projects have been affected,” he added pointing to The Interweave at Kim Keat Road in the Balestier area. The freehold development has 169 units, including about 110 one-bedders (from 344sqft to 441sqft). According to URA’s data, 59 units were sold in May, when the project was first released, followed by 19 units in June. BT understands that so far this month, about half a dozen units has been sold. The project is priced at an average of $1,390psf.

This year the Ghosts’ Month, or the seventh month of the Chinese lunar calendar, stretches from July 31 to Aug 28, just before the one-week September school holidays begin on Sept 3.

Some developers like Hoi Hup usually do not release new projects during Hungry Ghosts’ Month. However, Colliers’ research and advisory director Chia Siew Chun observed: “In recent years, it is becoming apparent that projects with strong attributes and those which are attractively priced can perform well even if launched during the Ghosts’Month.

“For example, Trevista at Lorong 3 Toa Payoh and The Trizon (in the mount Sinai area) were launched during the Ghosts’ Month in 2009 and had encouraging take-up rates – of 90% of 460 units released for Trevista and 100% of the 99 units released for Trizon – during the month of launch.” Trevista is a 590-unit development while Trizon comprises 99 units. (* This is probably a typo, as Trizon has 289 units in total).

Source: The Business Times

Here's hoping that this year's Hungry Ghosts’ Month will not drag the private home market into property hell…

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Shoebox apartments: Good for developers & retailers?

The following article appeared in last Friday's edition of the TODAY paper:

'Shoebox' trend a boon for developers and retailers
By: Tan Chin Keong

One quirk of the current recovery in Singapore's residential property market is the rising popularity of small-sized apartments, better known as "shoebox" units.

Since early 2009, when the current home market up-cycle began, private property developers have sold a number of projects consisting mainly of "shoebox" units. These include The Alexis, which kicked off the "shoebox" trend and Suites@Guillemard, which probably holds the smallest apartment at 258sqft.

In fact, the percentage of non-landed private residential units with floor space of less than 650sqft (our definition of a "shoebox" unit) sold by private property developers has risen from 12% in 2009 to 38% year-to-date in 2011.

We also notice a downsizing trend in public housing over the last few years. Based on data from the annual reports of the Housing and Development Board, the percentage of smaller flats (four-room and below) sold by the board went up from 46% in the fiscal year ending March 2005 to 67% in the year ending March 2008. This ratio further rose to 83% in the year ending March 2010.

However, this trend is also driven by the rising popularity of four-room flats versus five-room and executive flats. But it has to be noted that with floor space of around 970sqft, four-room flats are not really that small.

So it can be seen that the downsizing trend is more pronounced in the private property market. While shoebox units help keep private homes within the reach of many by keeping the total purchase quantum affordable, it has also allowed developers to raise their projects' prices on a per-square-foot basis and is likely one of the drivers of the currently high prices.

One unintended consequence of this trend may be to increase the propensity of "shoebox" unit residents to shop and raise their retail spending. This is because many of the units come with small or no kitchens and there may be no room for a proper dining area. Thus, residents are likely to dine out more often and engage in more post-meal shopping.

In addition, residents of these units may feel a greater urge to go outdoors to avoid being cooped up in their homes for extended periods. Indeed, this is one of the reasons often given by my Hong Kong friends when I ask them about their love for shopping.

Due to their generally smaller homes, Hong Kong residents feel the need to stay outdoors and engage in shopping more frequently. This could be one of the drivers behind Hong Kong's higher retail sales of around US$5,900 (S$7,180) per capita last year versus Singapore's US$4,900. However, with the burgeoning shoebox trend, it may not be very long before Singaporeans catch up with their Hong Kong counterparts when it comes to shopping.

So, in addition to the private property developers, retailers could end up as beneficiaries of this trend. However, before some of our female (and also male) readers try to use this to justify shopping for more shoes, do keep in mind that your "shoebox" unit may not have any space for bigger shoe racks.

Tan Chin Keong is an analyst at UBS Wealth Management Research.

The wife and I always believe in the notion that "a man's (woman's) home is his (her) castle" - a place where we will always enjoy returning to after a long day at work. So it is rather sad to think that one has to "escape" to the streets/malls in order to avoid feeling claustrophobic in his/her tiny apartment...








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Skyline Residences: Wanna know the views you be getting?

The photos were taken at the viewing gallery located on the 11th floor of an existing block at Fairways Condominium.

Here are the type of views you can expect from the various units in Block 608, i.e. the outer-most of the 3 blocks along Telok Blangah Road.

Our review of Skyline Residences will follow... soon.

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More on the June private home sales...

A sharp slowdown in private home sales last month also carried with it a stark message for developers: they will have to keep a close watch on pricing if they choose to roll out more projects in the months ahead.

This view was echoed by property consultants after official numbers yesterday from the URA showed that the number of private homes (excluding ECs) sold dropped 25% month-on-month to 1,182 in June. This marks the second consecutive monthly decline and takes the figure for the second quarter to 4,562 units. The final tally (factoring in returned units) will be released by URA on Friday, July 22.

The preliminary Q2 figure (compiled from adding up monthly sales from April to June) is nearly 27% ahead of the final figure for the first quarter of 3,595 units. The 8,157 units sold in H1 is in the ballpark of the 8,413 private homes sold in H1 last year and 7,879 units in H2 last year.

Market watchers were not surprised by June’s slower sales – which they attributed to the mid-year school holiday season when many families are overseas, price resistance and buyer caution. As Jones Lang LaSalle SE Asia research head Chua Yang Liang puts it: “Home buyers are holding back their purchases, confident that the new National Development Minister Khaw Boon Wan’s leadership would bring home prices to a more affordable level in the near future.”

Some players also said that greater “price sensitivity” has set in among buyers. Colliers International analysis showed that nearly half of the 1,182 private homes which developers sold in June were priced at no more than $1,000psf. The Outside Central Region (OCR) continued to make up the lion’s share, accounting for 70.5% of units sold. It also made up nearly 70% of the 1,614 private homes that developers launched last month. That is the result of the substantial amount of land sold at state tenders, which provide private housing land mostly in OCR to cater to strong demand for suburban entry-level private homes.

Credo Real Estate executive director Ong Teck Hui says: “Going forward, it could be a more difficult period for developers as they decide on whether to launch new projects and at what prices. Some may prefer to wait and see and pull back on new launches if they assess that demand is being adversely affected by current market conditions. If this happens, it will increase the build-up in unsold inventory.”

On the other hand, it is precisely to avoid being forced to launch projects later, when market conditions may worsen, that some developers may still go ahead with launches in the coming months, he reckons. “Pricing will be key; if you are prepared to price realistically you can still move units.”

Wendy Tang, Knight Frank executive director of residential services, also points out that developers will still have to roll out projects as soon as possible, especially those on sites which they had bought at state tenders due to the stipulated five-year timeframe for project completion.

“But developers may slow down when it comes to tendering for new sites. They may become more selective about the sites they bid for and more cautious with their land bid prices, taking into account an expected increase in construction costs – partly due to the ramping-up in building of public housing flats. Also, developers may not be able to raise selling prices on their projects as buyers are more cautious.”

Analysts point to worries about the economic situation in the US and Europe, the sharp slowdown in Singapore’s economic growth in Q2 and concerns about the impact of the record supply of public housing on the upgrader demand in the private housing market.

CB Richard Ellis executive directors (residential) Joseph Tan acknowledges that affordability remains a concern in the mass-market segment. “Developers will manage this by keeping three-bedroom family-sized units compact at around 1,000sqft and priced below $1 million.”

URA’s numbers show that the 1,614 private homes (excluding ECs) that developers launched in June was 32.8% higher than the 1,215 units they released in May.

Developers did not launch any new EC projects last month. However, they continued to sell units in earlier projects such as Belysa in Pasir Ris (153 units sold in June) and Austville Residences in Sengkang (28 units). Total sales including ECs was 1,394 units in June, a 23% drop from May’s sale volume of 1,825 units.

Excluding ECs, the top-selling private housing project last month was Woodhaven in the Woodlands area (155 units at a median price of $981psf), followed by The Miltonia Residences in Yishun (149 units at a median price of $877psf), Seastrand in Pasir Ris (120 units at a median price of $879psf) and Sims Edge at Lorong 33 Geylang, a shoebox development which saw 77 units transacted at a median price of $1,329psf.

The priciest unit sold by a developer in June was $4,362psf for a unit at Wing Tai’s Le Nouvel Ardmore in the posh Ardmore Park area. UOL also found buyers for the last three units at its 100-unit Nassim Park Residences at $3,642-$3,997psf. Wheelock Properties sold a Scotts Square unit for $3,690psf. SC Global Development sold a unit at Seven Palms Sentosa Cove at $3,606psf.

Source: The Business Times

Our “take-away” from the above report:

• Developers will continue to rush to roll out new projects in anticipation of the property market heading south.


• Apartment owners in Pine Grove, Laguna Park, Pearlbank Apartments and Tulip Garden should probably not hold their breaths waiting for their developments to go en bloc anytime soon.

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No, we are not crossing over to the "dark side"...

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The wife and I have received several requests from property marketers who are interested in working with us. These are parties that specialize in sale/rental of specific condominium projects that we have talked about in our blog.

How this works is that we will include a contact form (see sample) in some of our reviews. If you have read our reviews and are interested to buy/rent an apartment in that specific project, you may wish to drop us a contact together with any queries that you may have. Your contact/queries will be forwarded to the property marketer concerned, who will get in touch with you and attend to your needs.

If you have a question about xxxx (project's name),
please drop us a contact below:

foxyform.com

By doing so, we hope to provide an extension of services via our blog, i.e. linking potential buyers/renters with the “correct” property marketers. And given that these people specialize in marketing that specific project, they will be better qualified to answer your questions than us.

So what’s in it for us? We do not know at this juncture really. The wife and I reckon there may be some kind of “referral fee” in the event of a successful introduction. However, this is unlikely to make us rich or allow us to quit our day jobs. Whatever money we receive (if it happens) will be used to maintain our blog site. It may also come in handy to fund certain enhancements (to the blog) that we have been thinking about.

But one thing's for sure: Irrespective of how well (or badly) the collaboration turns out, the wife and I will strive to remain unbiased and objective in our opinions and reviews. This is one of the main aims of SG PropTalk and something that our readers have come to appreciate.

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