Balestier: Up & coming city fringe estate..?

The historical Balestier area is going through a makeover, with swanky new residential projects and several hotels now seen lining its streets.

It is also attracting high demand from young couples and professionals looking for a convenient city fringe property.

Still, home prices in Balestier are not rising as fast as other city fringe areas, but analysts say this trend may change once government works to spruce up the area are complete.

According to data from the Urban Redevelopment Authority, home prices in Balestier are growing more slowly than those in other city fringe areas, increasing by 9% on-year compared with the overall city fringe price growth of 11% on-year.

The Viridian, a 23-storey condominium, is Global Orion Properties' maiden residential project.

The industrial property developer chose the historical Balestier area - the former home to Singapore's early immigrants - for the freehold development on Jalan Ampas, just off Balestier Road.

The property will have 108 units, ranging from 500 to over 3,300sqft each, and amenities like a swimming pool and a recreational terrace.

Satia Narjadin, director of Global Orion Properties, said: "In terms of amenities and location, it really can't be beaten - we are just outside of the city area itself. From here to Orchard Road, it's just 5 minutes.

"If you take a walk outside, there is food aplenty, you have places to do grocery shopping, (and) it is conveniently located within walking distance to the MRT".

Prices at The Viridian are going at $1,550psf - typical for new developments in Balestier like The Interweave, SkySuites 17 and Okio Residences.

Analysts say the massive 421,000sqft Zhongshan Park hotel and retail project in Balestier will boost its attractiveness even further.

The government has also announced plans to revamp the Balestier area, including building new footpaths and creating a heritage trail.

Liang Thow Ming, head of residential services, Credo Real Estate, said: "You will find that similar properties within the city on a 99-year leasehold will be costing you anything from $2,000psf upwards.

"Therefore, if you look at a freehold Balestier (property), at about $1,400 or $1,500psf, that is value for money - for them to buy or even for investors who will probably be buying so that they can rent it out."

The Viridian will sit on a former en bloc factory site, bought for S$27.5 million, while Skysuites 17 will be rebuilt from an old residential property, Diamond Tower.

Analysts say the Balestier area holds much en bloc potential for developers as the old gives way to the new.

Source: Channel News Asia

If only they will get rid of the numerous budget hotels and karaoke bars along Balestier Road as well...

Interesting data on property "flips"

.
Below is a report that appeared in The Business Times last week. But due to a slew of property-related news that was released over the past week, we were unable to post this till today.

So this is for those who missed the report.
====================================================

It pays not to flip properties too frequently, according to a study of subsale transactions by Savills Singapore.

The average holding period of subsales in the first three months of 2011 increased to its longest in at least three years, while the average gain from profitable subsale deals in the quarter was also at its highest since Q3 2008.

Savills’ study, which traced caveat matches to work out holding periods and gains or losses from subsales since Q1 2008, revealed that the average holding period for subsale transactions in Q1 2011 was 2.31 years.

This was longer than the 2.07 to 2.23 years average holding period for subsales in various quarters of last year and the longest since Q1 2008, when the average holding period for subsale deals was 1.64 years.

Some 97.4% of matched subsales in Q1 2011 were profitable and, of these, the average gain per profitable subsale deal climbed to $315,043, surpassing the $283,498 to $289,004 for Q1 – Q4 last year and the highest figure for any quarter since Q3 2008.

Steven Ming, executive director of investment sales at Savills Singapore, said: “The bigger average gain from profitable subsale deals is in sync with the upbeat market sentiment, which has seen prices of non-landed private homes rebounding strongly from the trough in 2009 and even surpassing its previous peak in 2008.”

“The longer holding period of subsales transacted in Q1 2011 indicates that short-term speculation was stifled by the government’s various cooling measures announced since February 2010, particularly the stringent seller’s stamp duty introduced on Jan 13,2011,” he added.

Indeed, there were no instances of units bought in Q1 this year and flipped within the same period.

“These results support (the view) that real estate should be a mid- to long-term investment rather than short-term speculation,” concludes Mr Ming.

The most profitable subsale in Q1 2011 yielded a profit of $3.44 million; it involve a ground-floor unit at Nassim Park Residences that was previously bought for around $12.1 million from the developer in June 2008and sold in March 2011 for $15.56 million.

The biggest subsale loss, of $723,200, was for an apartment at The Orchard Residences.

Subsales, often used as a proxy of speculative activity, refer to secondary-market deals in projects that have yet to receive a Certificate of Statutory Completion and where property titles for units sold have yet to be transferred to buyers.

“Transaction volume in the subsale market is expected to moderate over the next 24 months and the average holding period (lengthen), following the imposition of steep seller’s stamp duty (SSD), which compels any real estate investor to think mid- to longer-term to ride out the four-year SSD period to reduce costs,” said Mr Ming.

Savills’ analysis showed that the average subsale gain for profitable deals was highest at $445,313 in Q1 2008 – during the heyday of the previous property boom when anecdotal evidence of people flipping properties within a short period for handsome returns was not uncommon. Back then, 98.2% of all subsales made money and the average holding period for subsale deals was just 1.64 years.

Then came Lehman’s collapse and during the low point of the property market in Q1 2009, only 67.5% of subsales were in the black while their average gain sank to $105,663. From that point, the proportion of profitable subsales quickly began to recover, reaching 90.7% in Q3 2009, 97.5% in Q4 2010 and 97.4% in Q1 2011

Savills examined URA Realis caveats data for subsale deals and tried to find previous caveat records for the same units; where it found matches, it worked out the holding period for the subsales and the profit or loss. The latter was calculated as the difference between sale and purchase prices, without taking into account agent fees, stamp duties and other expenses.

For instance, of the total 584 caveats for subsales of private condos or apartments in Q1 2011, Savills found previous caveat records for 506 units, of which 493 (or 97.4%) made gains and 13 made losses.

The projects with the most subsale caveat matches in Q1 2011 were Livia in Pasir Ris and Double Bay Residences in Simei – with 24 and 22 deals respectively, all profitable.

Savills said subsale interest in these two projects was probably fuelled by recent launches in the respective locations such as NV Residences and My Manhattan, given that the average price in the subsale market is relatively lower than that for new launches.

As for 2010, the projects with the most subsale matches were The Parc Condominium in West Coast (150 units), One Amber (132), Caspian in the Jurong Lake area (93), Marina Bay Residences (75) and Sky@Eleven (63).

Some of these projects were completed last year, and it is often around this time that a flurry of subsale activity occurs as projects then have added appeal to buyers seeking properties that they can move into or rent out soon.

But Savills noted that even projects which are slated for completion around 2013 such as Caspian and Kovan Residences were active in the subsale market last year.

“Matched results showed that most units in these mass-market projects made gains through subsales, riding on the strong price growth in the mass-market segment,” Savills observed.

Source: The Business Times

.

The analysts speakth...

Market watchers have said there may be an oversupply of private homes in two to three years' time, when most developments are completed.

They cautioned that while a good economy may see these units gradually taken up, a downturn will send the property market into a depression.

National Development Minister Khaw Boon Wan issued a "health advisory" on his blog, urging investors and upgraders to think hard before buying a new home. He warned that "sharp property prices cannot go on forever".

Those hoping to make a profit by re-selling or renting out apartments may find themselves competing in an increasingly crowded market.

By some estimates, as many as 93,000 new homes could hit the market over the next five years.

SLP International's Executive Director of Research and Consultancy, Nicholas Mak, said there are roughly 80,000 homes currently under development. He added that this does not include government land sales parcels sold and en-bloc sales in the last six months, which can yield another 13,000 new homes.

Mr Mak said: "Those people who may have a bit of spare cash and are thinking of buying any property, perhaps as a hedge against inflation, I would sound a word of caution that they should look very carefully, look at their own finances, and also to see the property they are choosing, is it something that can be easily rented out when it's completed."

Others are optimistic that the property market will be boosted by investors from neighbouring countries.

David Poh, Senior Group District Director of PropNex, said: "Asian economies will continue to grow very strongly in the next few years, especially major foreign buyers market like China and India.

"So with these strong economies over there, with [Singapore's] good infrastructure, good government, good environment, I'm quite sure they will continue to invest in properties in Singapore."

Source: Channel News Asia

.

Have MRT will sell?

Property developers may be less aggressive in their bids for government land in the second half of this year. This is according to analysts, who have said that most developers will be more selective in their choices as well.

Developers may only have eyes for sites which are the most profitable in the government land sales programme, such as those at Alexandra Road and Bishan Street 14, which analysts said are the most attractive.

One of the sites on the government land sales (GLS) programme for the second half of this year is the land parcel at Alexandra Road. With a gross plot ratio of 4.9 yielding 524,300 square feet of gross floor area, the land's minimum price is estimated at $420 million to $445.7 million or $800 to $850psf, and is slated for sale in October.

It is on the confirmed list of the GLS programme for the second half of this year and it can yield an estimated 545 residential units.

Located within a short walk from Redhill MRT station, analysts said it is likely to be one of the most hotly contested sites in the GLS programme.

Nicholas Mak, Executive Director of Research and Consultancy at SLP International, said: "Because of the high price that this sites could attract, it may only appeal to some of the bigger developers, and even the mid-sized ones will join forces as a consortium to go in. Some of the newer condominiums around the Redhill MRT station could be transacting at prices of $1,300 to $1,400psf, especially for the smaller ones."

Ascentia Sky, the property adjacent to the land parcel, is selling at $1,422psf and 299 out of the 373 units have been sold.

While there are risks of oversupply going forward, analysts said the GLS programme can be adjusted according to future demand.

But for now, demand is robust, especially for residential sites near MRT stations. For example, the Bishan Street 14 site, which will be up for sale by September if its minimum price is met by bidders.

Analysts said it will be no surprise if CapitaLand bids for the site.

Dr Chua Yang Liang, Head of Research (Southeast Asia) with Jones Lang LaSalle, said: "We have good location, good amenities in there, good shopping areas, good schools in the neighbourhood and there will be a lot of interest by the end consumer.

"So developers would be watching closely...we won't dismiss the possibilty of CapitaLand again. Looking very closely, I believe since they have won the adjacent area, they may be looking at this as well to create a more continuous development."

CapitaLand won the adjacent Bishan Street 14 site in February with a top price of $550.1 million, beating the next highest bidder, Keppel Land, by 27%.

Analysts said GLS sites at Punggol Central and Bartley Road are also attractive as they are located within walking distance to MRT stations. With these choice locations, properties in such areas will be a hit with families and HDB upgraders.

Source: Channel News Asia

See the news report on video:



.

2013: Market crash or ghost towns?

Following is a column by Collin Tan, research and consultancy, at Chesterton Suntec International, as appeared in today's TODAY paper:

In the past few months, there have been more warnings of a glut in the private housing market and the calls have become more strident.

More recently, this warning has been blared out as one of several events that could lead to the perfect storm that the market is headed for. This is the worst-case scenario which could unfold as early as 2013 if all the events - more supply, falling demand and higher interest rates - occur together to trigger a market crash.

Why 2013? Well, this is because an unprecedented number of housing units are expected to enter the market then. Official figures show that 32,359 units will be completed over 2013 and 2014. This is 85% more than the 17,501 units expected this year and next year.

Meanwhile, demand from foreign buyers could fall as concerns about high housing prices and the influx of foreigners were magnified during the General Election and will be a catalyst for the review of immigration and housing policies.

Foreign buyers have been a big boost to the local property market in recent years. More recently, by one industry estimate, they accounted for a high 16% of new housing sales in the first quarter of this year.

Interest rates in Singapore are presently at record lows because lending rates here track United States monetary policy. That has allowed buyers to pay less than 1% on the first year of their mortgages. Most banking analysts, however, expect interest rates to begin rising later this year.

Finally, while growth forecasts for Singapore over the next five years at 4 to 6% annually will underpin support from local buyers, a major unforeseen external crisis could still lead to a market crash.

How realistic is this scenario? For one, there are limits to how quickly the construction sector can expand its capacity to meet all of the new building demand. Remember, we are also ramping up our public housing stock and building ahead of demand. So, although the numbers will still be high compared to before, the supply will be more spaced out and not as announced.

The private residential leasing market also appears to be healthier than expected. Already, the number of leasing contracts for the first four months of this year is about 8% higher than the corresponding period last year.

However, a word of caution here. Judging from the feedback I get from housing agents, I suspect more and more of the new tenants are locals and not expatriates. This shows that a growing number of locals are taking a position on the housing market cycle - they are renting for the time being, waiting to pick up units when prices correct.

As for interest rates rising this year, when have we heard this line before? About a year ago, I suspect, or even earlier. In fact, rates have declined further since the first call.

Yes, there is much stronger resistance from US law-makers to another round of quantitative easing but what happens if the US economy does not pick up in the second half of the year? Do we expect President Barack Obama who is seeking re-election in 2012 to sit back and do nothing? Personally, I would not bet a single dollar on it.

More and more, the US Federal Reserve's experience is beginning to be like that of the Bank of Japan, which has engaged in roughly two decades of quantitative easing. It is beginning to look like US rates will stay unusually low for far longer than many investors expect.

With the Fed, Bank of Japan and European Central Bank having rates at or near all-time lows, Asia, including Singapore, will be on the frontline of the struggle with cheap money and unprecedented liquidity.

Even if a private housing glut were to occur in 2013 or earlier, there is little incentive for the majority of investors to sell off their properties so long as housing loan rates and holding costs remain low. And if there is little or minimal change to our private housing policies, I suspect we are more likely to see ghost towns in 2013 than experience a market crash.

 

For the sake of those who has helped to chase up the market so far, we certainly hope that Collin is right....









.