Shoeboxes: Challenging times ahead..?

Sales of small private apartments, commonly known as shoebox units in Singapore, have taken a downward turn. Data compiled by analysts show that new sales fell about 57% in September from the previous month to 99 units.

The fall in the sale of shoebox units occured after the government announced that it will moderate the number of shoebox apartments entering the market.

Analysts said buyers are now taking a "wait-and-see" approach in response to the measures. This caused new sales of shoebox units to drop across the board last month.

Vicinities under the "Outside Central Region" category were hit the hardest, with sales falling some 80% to only 24 units sold in September. This is also the region where the new government regulations apply.

On September 4, the Urban Redevelopment Authority (URA) issued new guidelines that capped the total number of units that can be built on a site for non-landed private residential developments outside the Central Area. The new rules are to curb developers' enthusiasm to build shoebox units in 'suburban neighbourhoods' which are largely designated for families.

But analysts said the impact on buyers' appetites are only temporary. They said shoebox unit buyers are largely investors, and they may bounce back more quickly after each round of cooling measures introduced by the authorities.

Alan Cheong, director of research and consultancy at Savills, said: "Although we have one or two stories where people have decided to put off their purchases, we believe the market will revert to some sense of normalcy in a shorter period of time than it had been for the past five rounds of cooling measures.

"People have now got used to measures being thrown into the market, every year probably two or so."

Analysts added that recent launches in the last three months like Sky Green, Parc Centros and Skies Miltonia, still reflect "brisk" demand.

Sky Green, located in McPherson, sold all 68 studio units within a single day during its pre-launch last week. Parc Centros in Punggol and Skies Miltonia in Yishun, have sold out 88% and 75% of their units respectively.

They added that this trend is unlikely to change as long as investors hold enough cash to splash around.

Mohamed Ismail, CEO of PropNex, said: "They sell mainly because of two reasons. One being the fact that the quantum of such properties are relatively low, coupled with today's liquidity and low interest rate."

Moving forward however, analysts said the appeal of holding a shoebox unit as an investment is likely to wane.

Eugene Lim, key executive officer of the ERA Realty Network, said: "I think buyers are becoming more aware that there is actually a huge supply that is going to be completed in 2014, 2015. And that would mean this would put pressure on rental. It is this type of investments that is actually losing flavour."

About 11,000 shoebox units are expected to hit the market by 2015.

Source: Channel News Asia

Property spotlight: Toa Payoh

Located close to the Toa Payoh MRT station and within a 15-minute drive to Orchard Road, two private condominiums, Oleander Towers and Trellis Towers, both of which are located along Lorong 1 Toa Payoh, have seen a pick-up in buyer interest.
 

Oleander Towers is a 318-unit, 99-year leasehold condo developed by Wing Tai Holdings and completed in 1998. The project contains a mix of two- to four-bedroom units and penthouses. A 1,464sqft, four-bedroom unit on the 21st floor of the development changed hands at $1.55 million ($1,059psf) in late September. The original owner had purchased the unit in 1998 at $1.19 million ($815psf).

When Oleander Towers was launched in the peak of the property boom of 1995/96, prices had averaged $800psf, says Kelly Ye, executive advisor, Knight Frank Property Network. Although the price was considered high at the time, the units were quickly snapped up as it was the first private condo launched in Toa Payoh, an established HDB state located in the city fringe, recalls Ye. In the last two years, she has brokered the sale of 10 units in Oleander Towers on the resale market, and she sees a good mix of investors and end users.

Given the strong reception to Oleander Towers, property giant City Developments Ltd (CDL) launched Trellis Towers towards end-1996. The 384-unit freehold Trellis Towers is located just across the street from Oleander Towers. Given its freehold tenure, the condo was launched at an average price of $900psf, although there were some high-floor units that crossed the $1,000psf level.

The launch of Trellis Towers took place just a few months after the government introduced anti-speculative measures on May 15, 1996. These included stamp duty, capital gain tax for those who sold within the first three years of purchase and a cap on the borrowing limit of up to 80% loan-to-value ratio.
 

Completed in 2000, Trellis Towers contains a mix of studios, two- to four bedroom units and penthouses. Most recently, an 840sqft, two-bedroom unit on the 27th floor of Trellis Towers changed hands for $1.22 million ($1,453psf). The unit was transacted twice prior to this. The first time was in December 1996, when the original owner bought the unit from the developer for $882,570 ($1,051psf). It was sold in March 2006 for $638,000 ($760psf).

While Trellis Towers appeals to both investors and owner occupiers, interest is tilted towards investors because of its freehold tenure, says Ethan Ang, senior associate manager, C&H Properties, who specialises in marketing units in District 12. Oleander Towers, on the other hand, appeals mainly to young families with school going children, given its proximity to CHIJ Toa Payoh Primary and Secondary School. Pei Chun Public School, located in Lorong 7, is also nearby.

The latest private condo in Toa Payoh is the 99-year leasehold Trevista, launched in August 2009 - a good 13 years after the first two were launched. The condo is made up of three 39-storey towers and has a total of 590 units. The development is located at the junction of Lorong 2 and Lorong 3 Toa Payoh, and is a little further from the Toa Payoh Hub and Toa Payoh MRT station compared with Oleander Towers and Trellis Towers.

However, there was strong interest when Trevista was launched due to pent-up demand. At the preview, 410 of a total of 460 units were snapped up at prices averaging $898psf, which were then adjusted to $920psf as higher floor units were released.

 

"We were afraid that response at Trevista would be poor as the preview coincided with the Hungry Ghost Festival," recounts Ye, who was one of the marketing agents of Trevista when it was launched.

Singaporeans made up the majority of the buyers at Trevista. The project was developed by NTUC Choice Homes and completed last year. Resale transactions last month saw units changing hands at prices ranging from $1,227psf for a 1,141sqft second level unit to $1,631psf for a 463sqft studio unit on the sixth floor.

Given that it's the newest private condo in Toa Payoh, Trevista is said to have the most up-to-date facilities among the three, says C&H's Ang. The development contains three swimming pools, sauna, steam room, putting green and rock-climbing wall.

With only three private condos in the area, demand for units has so far outstripped supply, observes Knight Frank's Ye. She adds that most investors prefer smaller units as it is easier to rent out. Most of the enquiries from investors are for the two-bedroom apartments.

Toa Payoh these days sees a good mix of local and foreign investors. Most of the foreign investors come from China and Indonesia. Anecdotal evidence is that an Indonesian national turned Singapore Permanent Resident is one of the most active investors in Trellis Towers, having accumulated units as and when they come on the market. She is said to invest exclusively in Trellis Towers when it comes to Toa Payoh given the good layout of the units, notes Ang.

 

Rental yields of private condos in Toa Payoh today are hovering around 4%, he estimates.

The area has been on investors' radar of late as the mature estate is located right at the city fringe, and is within a short distance of Orchard Road and the CBD. "Renting a studio apartment in the Orchard area is around $5,000 a month," says Ang. "For the same rent, you can get a three-bedroom unit in Toa Payoh."

Source: THEEDGE SINGAPORE

The wife and I had actually seen several 4-bedder units at Trevista after the development received its TOP. While we quite liked the apartment layout and finishing, we found the bedrooms too small for our liking. In addition, we found the bay windows within the master bathroom a tad too exposed especially for those facing opposite units (unless you enjoy being the exhibitionist). So window-blind makers should have a field day at Trevista.

Click on link below to read our review on Trevista:
http://sgproptalk.blogspot.sg/2010/01/trevista-review_2724.html

Q3 private home sales: Blame it on the Hungry Ghosts...again!

According to our de facto local English newspaper, the number of private home sales in Q3 2012 was 5,934. This is sharply down from the 10,780 transactions recorded in Q2.

And the lunar seventh month is (again) being blamed as the 'culprit'. It is said that superstitious home seekers avoid buying homes during the inauspicious lunar seventh month period, which cuts across half of August and September.

New home sales were down more than 50% - from 6,007 in Q2 to 2,659 in Q3.

However, some projects managed to buck the trend.  The 154 units at One Dunsun Residences in Jalan Dunsun were almost sold out within two weeks despite launching towards the end of August. Kovan Regency in Kovan Road has also sold more than 90% of its 393 units, while Riversails in Upper Serangoon Crescent moved more than 200 units last month.

Sales involving permanent residents (PRs) were less badly affected in the quarter than other buyer groups such as Singaporeans and foreigners. Transactions involving PRs fell about 37% compared with the previous quarter, while other groups registered declines of more than 45%.

Sales of new executive condominiums (EC) have also slowed in Q3, possibly because of the increased number of Build-to-Order flats and EC launches.

About 27,000 flats are expected to be launched this year.

On the resale side of things, 2,850 units were transacted in Q3 versus 4,062 units in Q2. For sub-sale, 425 units were transacted in Q3 down from 711 in Q2.

 

 

 

It's my balcony and I'll build if i want to..? Think again!

The following article by Seah Sin Tong appeared in the "voices" page of the TODAY paper today:

Buying a condo or a penthouse with 'open balcony'?

Potential buyers should be aware of the issues involved when buying condominium units and penthouses with an open balcony design, to avoid a situation where what they see in the showroom may not be what they get.

I moved last year into a new penthouse near Upper Bukit Timah Road and soon found a few problems with the open balcony.

No awning can be built over the balconies, as the developer has used up the allotted Gross Floor Area (GFA). Adding new awnings mean additional GFA, for which levies borne by the owners must be paid to the Urban Redevelopment Authority.

Another issue is developers' use of a trellis for balconies. Due to GFA limit, our trellis was not covered with material such as polycarbonate, causing water to spill in when it rains.

After appealing to the URA, it kindly agreed to give an exemption for the trellis to be covered with no GFA implication.

One would expect the developer to help cover the trellis, but it did not, citing that the condo was built according to the plan submitted to the authority and that there was thus no design defect.

Potential buyers should be prepared to ask questions and do research on the developer's track record before taking the plunge, particularly if an open balcony design is used, to avoid additional bills which could crop up after they take over the units.

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The wife and I reckon that unless the developer has deliberately misrepresented themselves by displaying the awning or "covered" trellis in their showflats or their marketing representatives have indicated that these can be installed during their sales pitch, when in fact such structures are actually not allowed, it is primarily a case of caveat emptor.

The same goes with those "lofts" that are supposedly allowed for apartments with "double-volume" ceiling - we have been to new projects in the past whereby such loft was actually displayed in the showflat and we were told that owners can freely erect these in their units. But in actual fact, the erection of such loft are subjected to approvals from the condo management and Building Construction Authority (BCA).

So when in doubt, ASK!

Too many buyers too few homes? Not for long...

26,800 Housing and Development Board (HDB) flats and 22,400 non-landed private housing units are projected to be completed in 2014.

The numbers are significantly higher than those projected for this year -- 11,300 HDB flats and 12,500 non-landed private housing units are expected to be completed in 2012.

The National Development Ministry revealed these figures in a written response to questions posed by Pasir Ris-Punggol Group Representation Constitutency (GRC) Member of Parliament (MP) Gan Thiam Poh in Parliament on Monday.

Speaking in Parliament, National Development Minister Khaw Boon Wan said there is a significant supply of housing - both public and private - that will come onto the market over the next two years.

He said HDB has ramped up its Build-to-Order (BTO) supply significantly, and will keep up the pace of new flat supply into 2013.

He said this is to provide more options to suit individual housing needs and budgets.

Holland-Bukit Timah GRC MP Liang Eng Hwa had also asked if there are enough flats to meet unanticipated demand, such as those from singles.

He asked: "We may not always get the demand and supply right, so is HDB building some surplus to meet those unanticipated demand?"

Mr Khaw said the ministry is looking into the matter.

He answered: "We're still mulling over it. (It is) very hard to put a figure on how much should we cater for singles."

Mr Khaw added that strong demand for residential property in Singapore is likely to persist as interest rates stay low.

While residential property prices may be stabilising, Mr Khaw said, Singapore is not yet "out of the woods".

The Resale Price Index has seen an uptick in the third quarter this year, with a two per cent growth from the second quarter of 2012 based on flash estimates.

"With the recent announcements of further monetary expansion in both US and the eurozone, the current low interest rate environment is likely to persist," said Mr Khaw.

"This will continue to contribute to the strong demand for residential property, which could cause prices to rise beyond sustainable levels."

He added the recently-announced new curbs on loan tenures are to encourage greater financial prudence among property purchasers in both the public and private housing markets.

The new curb is also a calibrated step to prevent excessive speculation.

According to analysts, the increased number of HDB flats to be completed in 2014 does not come as a surprise, as the government has been ramping up HDB flat supply in the past years.

Analysts say most of the flats should have been taken up by then, as typically about 70 per cent of units have been booked. Remaining units are also sold under the Sales of Balance Flats programme.

"Also, the BTO is a scalable programme; the government can always scale down the number of units that's being launched once the needs of the home buyers have been met," added Mr Eugene Lim, key executive officer of ERA Realty.

The higher number of HDB units is not expected to have a significant impact on the resale market, if the flats are sold after the minimum occupation of five years in 2019.

Mr Lim said: "It is a bit far ahead to predict the impact on the resale market but I would suspect not all these flats' owners will be selling their flats at the same time. Therefore the impact on the resale market prices will not be significant."

But it could be a different story for the private housing market.

According to Mr Lim, an oversupply is possible, and investors renting out units could be affected.

"We are already reducing foreign manpower and if this were to continue in the years to come, then we'll find that in the year 2014, there may not be as much foreign manpower to take up the rental units," said Mr Lim.

"And when you have so many new units being completed in the market, then we might have a slight oversupply situation and that would lead to reduced rentals."

The National Development Ministry says about 39,600 units of private homes from projects in the pipeline remain unsold as of June this year.

Source: Channel News Asia

It looks like the magic number is indeed 2014!