RESIDENTIAL MARKET

 

Downpayment for new flats halved for some rightsizers

The Housing & Development Board (HDB) on Wednesday launched 4,630 new build-to-order (BTO) flats in September's exercise.

These flats are spread across six projects in the non-mature towns of Bukit Batok, Hougang and Jurong West, and the mature town of Kallang Whampoa. Application for these new flats can be submitted online from Sept 24-30.

Starting from this BTO exercise, existing flat owners who rightsize to a new two-room or three-room flat in a non-mature town can choose to pay half the downpayment for the new flat when they sign the lease agreement.

This is to help flat owners who wish to rightsize to a new flat but have their funds tied up in the existing flat, HDB said.

"For those who are not taking up a loan or who are taking up an HDB loan, they need to pay only a 5 per cent downpayment upfront, instead of the current 10 per cent.

"For those who are taking up a loan with financial institutions, they need to pay only a 10 per cent downpayment upfront, instead of the current 20 per cent," HDB said.

The remaining half can be paid together with the balance purchase price of the new flat when they collect the keys for the new flat.

National Development Minister Khaw Boon Wan in a blog post on Wednesday said he was "glad" with this policy change.

"At Meet-the-People sessions, I sometimes meet elderly residents who intend to rightsize to a smaller flat but face some cash-flow difficulties in the process.

"HDB told me that, in 2013, 47 elderly cancelled their new flat bookings, because they were unable to raise the downpayment. They must have felt disappointed, having to abort their plans because of a cash-flow problem," he wrote.

With the change, sale proceeds from the existing larger flat will be enough to pay for the new smaller flat, provided that buyers sell their flat first to raise the funds for the new purchase.

The policy tweak is expected to be welcomed by the elderly, and even more so by adults who are approaching their retirement years in a decade's time.

Recently, the government fine-tuned the lease buyback programme by adjusting the tenure that different elderly can retain upon opting for a lease buyback. This will inject flexibility into the scheme (announced on Wednesday).

Retirees-to-be will now likely be more open to rightsizing . . . An adult in his 50s who adopts this option might still be able to monetise his asset through lease-buyback 15-20 years later when he reaches around 70 years. Such a two-pronged asset-monetising approach is possible as our elderly profile gets more financially savvy and open-minded.

Flat buyers do not need to apply for the staggered downpayment scheme. HDB will extend it to those who are eligible.

In November, HDB will offer about 4,290 BTO flats in Sembawang, Sengkang, Tampines and Yishun. Another 3,000 flats will be offered in a concurrent Sale of Balance Flats (SBF) exercise.

Source: Business Times – 25 September 2014

 

Investment sales of property up in Q3

Investment sales of property - big-ticket transactions of at least S$10 million - have risen this quarter, on the back of a more than tripling in the value of hospitality assets sold, mainly in connection with the listing of Frasers Hospitality Trust.

Moreover, office transactions have continued to post stellar performance with rental recovery firmly in place and expected to continue amid tight supply.

Nearly S$5.4 billion of investment sales were transacted this quarter up to Sept 23. This is 13.6 per cent higher than the Q2 figure of S$4.7 billion and the best showing in four quarters. However, the Q3 number is 61.2 per cent down from a year ago.

The first nine months figure is slightly over S$14 billion.

The forecasts would be significantly lower than the annual figures hovering around S$30 billion for each of the past four years. Investment sales are often seen as a gauge of developer and property investor confidence in the medium to long term. Overall sentiment in the property market has been dented by the total debt servicing ratio framework announced in late June 2013.

That said, the office market continues to shine. About S$1.94 billion of office deals have been sealed this quarter, up from S$1.25 billion in Q2. This quarter's number marks the best performance since Q4 2012, when the figure was S$2.75 billion. Major transactions in Q3 include Straits Trading's divestment of its namesake building in Raffles Place, and Keppel Land's sale of its one-third stake in Marina Bay Financial Centre Tower 3 to Keppel Reit.

Office buildings have continued to be sold this quarter at higher prices, reflecting the optimism that the market has for offices due to the recovery in rents, which is well in place - driven predominantly by shrinking vacancy and tight supply. There are only two major office projects to be completed from now till late 2016.

Additional demand is expected to be generated by the impending displacement of tenants at Equity Plaza, which has around 250,000 square feet of net lettable area, as the building's new owners have served notice to tenants to vacate the building by March 2015 ahead of an extensive renovation.

Despite the quarter-on-quarter rise in office investment sales, transactions of commercial properties as a whole (including retail) have slipped 14.6 per cent to S$1.97 billion. The fall is due to no commercial sites released under the Government Land Sales Programme as well as lack of retail block transactions for the quarter.

Commercial property made up the largest share, 36.7 per cent, of this quarter's total investment sales.

Meanwhile, the residential sector saw a 31.7 per cent drop in transaction value to S$1.14 billion. It accounted for 21.3 per cent of total investment sales.

As long as the residential cooling measures are in place, home sales will suffer from inertia, which in turn will restrain developers in land bids at state tenders.

Transactions of hospitality real estate jumped to S$834 million this quarter, from S$248 million in Q2. The bulk is due to the InterContinental Singapore in Bugis and Frasers Suites Singapore arising from the listing of Frasers Hospitality Trust in July.

Looking ahead, we anticipate continued interest in the Singapore investment market as there are some signs of bid-ask gaps closing in the private sector. This is the result of investors who need to deploy their capital and sellers who are seeking to divest for various reasons - whether fund-maturity concerns or to recycle their capital into other opportunities.

Besides continuing interest in the office sector, it was highlighted interest in bulk purchases of residential units, especially in the high-end segment. Although the near-term outlook remains hazy, the thesis for a strong capital value recovery over the mid-to-long term is gaining credibility.

Akey challenge to Singapore real estate deals these days is competition from overseas property.

Source: Business Times – 25 September 2014

 

2 sites released for sale to yield 1,000 homes

The Urban Redevelopment Authority (URA) and the Housing & Development Board (HDB) are releasing two sites under the H2 2014 Government Land Sales Programme.

Jointly, they are expected to yield about 1,000 units.

The first is a residential site, with its first storey allocated for commercial activity, located along Upper Serangoon Road. It is for sale under the Confirmed List and is expected to yield about 340 housing units.

The 99-year leasehold plot has a site area of 10,097 square metres (108,685 square feet), and a permissible gross floor area (GFA) of 30,292 sq m (326,060 sq ft). The maximum permissible commercial GFA is 2,500 sq m (26,910 sq ft).

One key attraction for this site is its close proximity of about 150 metres to Kovan MRT station, which is only a stop away from Serangoon MRT interchange station.

However, it is more challenging to develop this site due to its triangular shape and that it is fronting two very busy roads, namely Upper Serangoon Road and Tampines Road. Furthermore, this site is also next to the underground MRT line which may lead to higher construction cost.

Analyst is expecting the site to attract 10 to 15 bids, with the winning bid coming in the region of S$670 to S$721 psf ppr, or between S$218.5 million and S$235 million.

The tender for the site closes at noon on Nov 13.

The second site, a 99-year leasehold residential plot in Dundee Road near Commonwealth Road, was available for sale on the Reserve List fromThursday.

The 10,516.1 sq m (113,194 sq ft) site, with a maximum GFA of 51,529 sq m (554,653 sq ft), is expected to yield 645 units.

It is a few minutes' drive from established schools like Crescent Girls School and the ISS International School.

Source: Business Times – 26 September 2014

 

Waterfront@Faber to be relaunched

With sales at Waterfront@Faber tapering off since its launch in May, the developer World Class Land is drumming up interest again through a relaunch to mark its release of prime-facing units.

Its showflat will be re-opened this weekend ahead of the re-launch two weeks from now.

But there will be no major slashing of prices for the already released units. The relaunch will focus mainly on the unreleased units, according to the marketing agents who are starting to collect expressions of interest.

According to one of the marketing agencies, new indicative price quantums translate to about 7 per cent discount from the original price list, on top of the earlier discounts dangled during the preview.

For the new released units, marketing materials show that indicative mid-level prices start from S$910,000 for a dual-key two-bedder of 753 sq ft; S$1.28 million for a pool-facing three-bedder of 1,066 sq ft or S$1.308 million for a river-facing three-bedder of the same size; and S$1.53 million for a river-facing four-bedder of 1,281 sq ft.

There is also the three-bedroom compact of 1,033 sq ft that starts from S$1.195 million. Booking for the new release will start from Oct 4.

World Class, the property development arm of listed jewellery group Aspial Corporation, has deployed four marketing agencies for this project which includes ERA.

Seventy-seven units were sold at the 210-unit project based on caveats lodged as of Aug 25, with a median price of S$1,247 per square foot. The two bedders were fully sold.

Elsewhere, World Class Land is jointly developing City Gate, on the site of Keypoint building, with Fragrance Group. The project has moved 51 units as of Sept 10 since its launch in late July, according to the caveats lodged.

Another condo project that will be launched this weekend is Forte Suites, a 106-unit freehold project on 88 Mergui Road in District 8. According to its developer, it is within ten-minutes walk to the Farrer Park MRT Station and a five-minute drive to major expressways.

Forte Development Pte Ltd, a member of the JForté Group of companies, said on Thursday that it has already moved 20 per cent of all units at Forte Suites during a "soft launch".

ERA is marketing this project, with prices starting from S$1,600 psf at the soft launch on Sept 6.

Close to half the buyers are foreigners, specifically the Europeans, Indians and Chinese, given the project's central location, said a spokesman for Forte Development.

These buyers include frequent medical tourists who are drawn to the project's proximity to the upcoming Connexion medical centre and hospital in Farrer Park, Health City Novena as well as the Orchard Road-Tanglin Road medical belt.

Jason Lee, chairman of JForté Holdings, said that Forte Suites is designed as a "hotel-style condominium replete with day concierge service, generous ceiling heights of up to 3.2 metres, as well as an en suite Jacuzzi in some premium two-bedroom units".

Source: Business Times – 26 September 2014

 

Auction market rebounds this quarter

Of the 44 properties sold at auction last year and so far this year, 80 per cent were successfully hammered upon their first appearance.

These include the two largest auction transactions so far this year: four strata office units at Orchard Shopping Centre that fetched S$8.55 million in March, and a freehold residential development site in Brighton Crescent that sold for S$9.1 million on Wednesday at an auction.

In March this year, too, a condo unit at Draycott 8 - in a prestigious residential locale - changed hands for S$5 million at its first auction.

The 44 properties comprised a good mix of owner sales and mortgagee sales. Sellers have become more realistic while buyers are more willing to bite at reasonable prices. As evidenced by the spontaneous bids and immediate sale of the successfully hammered auction properties, buyers are seeking quality buys and tend to be more decisive when price expectations are matched.

In terms of seller profile, the number of properties put up for auction by mortgagees (or lenders) has been on the rise. The figure in the first nine months of this year is the highest in five years since 2010.

This trend is also shows the number of properties put for auction by mortgagees climbing to 112 in the first nine months of this year from 20 in the same year-ago period.

On the other hand, the number of properties put up for auction by their owners has eased to 274 from 348.

The increase in the number of properties being put up for auction by lenders is due to the stricter regulatory and financing environment - as a result of which borrowers in default find it difficult to sell the property on their own. Buyers nowadays have to come up with higher cash outlay due to government measures such as the total debt servicing ratio (TDSR) framework and the additional buyer's stamp duty (ABSD).

Moreover, buyers continue to be cautious because of concerns of mounting supply of residential units and the impending rise in interest rates.

Many condo units in high-end residential enclaves in Districts 1 (such as Marina Bay) and 4 (Sentosa Cove), as well as 9 and 10 (including Orchard area, Scotts and Stevens roads) have featured strongly among mortagee listings because demand from foreigners has dried up due to hefty ABSD rates.

Combining mortgagee and owner sales, nine properties have changed hands so far this quarter for a total S$30.5 million at auction (the final number will be known on Tuesday (Sept 30) afternoon, after the last auction for the month, has been concluded.

This compares with nine properties transacted for a total S$9.3 million in Q2 this year and six properties that changed hands at S$17.9 million in Q1 this year.

The year to date total of S$57.6 million is shy of the S$87.7 million done in the first nine months of last year. The full-year 2014 figure is forecasted to be around S$80 million.

This would be lower than the S$91.6 million for last year - boosted by a strong Q1 showing of S$76.1 million. In the Jan-March 2013 quarter, there were several big-ticket properties that changed hands at auction, such as a Good Class Bungalow at Chee Hoon Avenue (S$22.9 million), and four adjoining shophouses along North Bridge Road (a total of S$15 million).

Source: Business Times – 26 September 2014

 

INDUSTRIAL MARKET

Grade A office rents 'to hit six-year high'

Singapore Grade A office rents are expected to rise to their highest levels since 2008 by year's end.

This comes as average Grade A overall rents have already risen to their highest in three years to S$10.20 per square foot per month - 2 per cent higher than a quarter ago, and 9.9 per cent stronger than a year ago.

The third quarter became the sixth consecutive quarter of rental increases, a result of the increasing scarcity of Grade A space in areas such as Marina Bay and Raffles Place.

New leases taken up during the quarter included advertising and marketing firm Publicis taking up 33,000 square feet (sq ft) of space at Income@Raffles.

Over at 6 Battery Road, insurance broker Willis signed a lease for about 22,000 sq ft of space; management consultancy firm Bain & Company took up an 18,000 sq ft unit in South Beach.

Strong leasing activity is expected in the fourth quarter, with the expected completion of CapitaGreen and South Beach, with net absorption on track to reach 800,000 to 900,000 sq ft this year.

A firmer take-up in Marina Bay Financial Centre lowered the vacancy rate for Marina Bay from 6.6 per cent to 6.1 per cent.

The average effective monthly rent for Marina Bay rose to S$13 per square foot (psf) per month, a 0.4 per cent increase from a quarter ago.

Rents at Raffles Place in the third quarter held stable at S$10.25 psf per month.

The average rent in Shenton Way crept up 0.6 per cent from the previous quarter to S$8.40 psf per month, while Orchard Road rents rose one per cent to S$9.80 psf per month.

Rents in the City Hall and Marina Centre areas increased 5.5 per cent to S$9.50 psf per month.

With prime rents expected to continue to rise, those tenants for which a Grade A location is not essential are likely to look further afield to the suburbs, which may lead to further decline in vacancy rates there.

Office vacancy in the suburbs declined from 2.5 per cent to 1.8 per cent, with financial institutions managing occupancy costs by consolidating space and relocating back-office functions to the suburbs.

Source: Business Times – 25 September 2014

 

Orchard-area retail rents seen softening

 

The average monthly gross rents for prime ground-floor retail space in Orchard Road will either stay flat or dip by one per cent for the rest of this year, following a mildly softer Q3 showing.

This is because malls there are highly dependent on the tourist dollar and the weak visitor arrivals since March is likely to exert some pressure on malls in Orchard Road.

Already, rents of prime retail space here have been kept in check this quarter - despite healthy leasing activities - as a result of weakness in tourist arrivals and weaker retail sales. The average monthly gross rents of prime retail space in Orchard Road softened by 0.5 per cent to S$36.25 per sq ft from the previous quarter.

Out in the regional centres, however, rents rose 0.3 per cent to S$33.72 per sq ft from the last quarter. Regional centres depend more on local traffic, so are expected to clock rental growth of one to two per cent for the year.

These trends further narrowed the rental premium prime retail space in Orchard Road commands over that in the regional centres, from 8.4 per cent in the second quarter to 7.5 per cent.

The challenging landscape presents a more acute problem for smaller brands.

Given the Darwinian survival-of-the-fittest nature of the retail sector, shopping malls might evolve to be primarily occupied and dominated by the stronger and larger brands in the likes of fast-fashion houses of Uniqlo and H&M.

In terms of the sales market, capital values remained flat in the third quarter of this year, as investment interest in retail units have remained languid and overall demand volumes falling.

The average imputed capital value for prime strata-titled retail space in Orchard Road remained at S$6,942 per sq ft, unchanged for the past six quarters; the figure for the regional centres has stayed stable for three quarters, trending at S$4,491 per sq ft in the third quarter of 2014.

In the strata-titled retail-space market including shops in mixed-use developments, demand and transaction volume are expected to be largely muted, with capital values expected to continue to trend laterally.

 

Source: Business Times – 25 September 2014