Issue 152

Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.

CONTENTS
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Will New Home Sales Recover From Here?
Singapore Property News This Week Resale Property Transactions (April 2 April 4)

FROM THE

EDITOR

Welcome to the 152th edition of the Singapore Property Weekly. Hope you like it!

Mr. Propwise

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SINGAPORE PROPERTY WEEKLY Issue 152

Will New Home Sales Recover From Here?

By Mr. Propwise Okay, we know that March home sales were bad. Very bad. According to the URA data, private new home sales fell from 2,793 units in March last year to 480 units in the same month this year a whopping 83 percent decline. The total number of units sold in 1Q2014 fell to 1,791 from 2,568 in the previous quarter and 5,412 in 1Q2013, a 30 percent and 67 percent decline respectively.

Whats driving the slump?

Analysts have attributed this to the impact of the government cooling measures and Total Debt Servicing Ratio (TDSR) framework, as well as the lack of launches by developers.
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SINGAPORE PROPERTY WEEKLY Issue 152 Launch volumes in the first quarter of this year were the lowest since the Global Financial Crisis (GFC) in 2008. The Santorini and Ascent@456 were the only two projects launched in March. But many analysts believe that new home sales could pick up starting from the second quarter due to an expected surge of new launches over the next few months. Up to 11 new projects could start going on sale from now till the end of June (versus just seven major launches in the first quarter), which should boost new home sales. So look out for headlines shouting of a recovery in new home sales from April onwards, which is not difficult given the low base effect of March. But does that signal a market recovery? No, I do not think so. While developers can continue to push units
Back to Contents Figure 1 Monthly Residential Sales Volume (source: PropertyMarketInsights.com)

onto lazier and more gullible buyers with some marketing glitz and gimmicks, the crickets are chirping for homeowners who want to sell their unit.

In fact, the situation is even worse in the resale market than in the primary market.

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SINGAPORE PROPERTY WEEKLY Issue 152 From Figure 1 we can see both that total residential sales (the blue plus red bars) have collapsed since early 2012, and that secondary market sales (the blue bar) have collapsed even more. Total residential sales at under 1,000 units for the past four months are way below the average of 2,500 to 3,000 units per month.

Figure 2 Developer Sales as a Percentage of Total Sales (source: PropertyMarketInsights.com)

Furthermore, developer sales as a percentage of total sales have been steadily increasing since late 2009.

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SINGAPORE PROPERTY WEEKLY Issue 152 Thus the recovery since the GFC has been mainly driven by the flood of ever-shrinking units of new launches, while resale market volumes have been steadily declining over this period. Who will be buying and renting the flood of upcoming homes?
Pipeline as of 4Q13 (source: PropertyMarketInsights.com)

This trend begs the question as these new units start to get completed in large numbers over the next few years, who will the buyers and renters of these units be? The resale market has dried up as the spread between sellers asking prices and what buyers are willing to pay grows larger, and the pool of buyers shrink due to the TDSR rules. And the rental markets growth is now constrained as the immigration taps are gradually tightened (and Id imagine theyd stay tight till at least after the General Election in 2016).

Figure 3 Private Residential Supply Back to Contents

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SINGAPORE PROPERTY WEEKLY Issue 152 Developers are under increasing stress too developers sell versus how many they launch) is also falling, suggesting a growing inability of developers to sell out at launches, and the likelihood of the increasing use of marketing tricks and hidden discounts to move inventory.

Figure 4 Developer Monthly Sell-Through Rate (source: PropertyMarketInsights.com)

And while many analysts blame the poor March sales on the lack of new launches, the Sell-Through Rate (how many units
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Figure 5 Developer Inventory Levels (source: PropertyMarketInsights.com)

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SINGAPORE PROPERTY WEEKLY Issue 152 Weve seen developer inventory levels creep up since January 2013 to a tad under 7,000 units at the end of March, getting close to their all-time highs. Combined with weakening sell-through rates and a poor outlook due to the prospect of rising interest rates in the medium term, developers are likely to be cautious when buying new land. And thus we see land prices moderating, as in the recent example of the tender of a 99year leasehold residential site at Prince Charles Crescent (Parcel B). The winning bid price for the Parcel B site was $820.65 psf ppr, 15 percent lower versus the $960.28 psf ppr paid for the adjacent Parcel A site just two years ago. To conclude, while we may see developer sales volumes recover strongly from April due to the impact of new launches, it may be an empty recovery. You have to dig deeper into the numbers to see whats really going on.

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SINGAPORE PROPERTY WEEKLY Issue 152

Singapore Property This Week

Residential
Residential investments cooling measures dragged by

further weaken residential investments.

(Source: Business Times) Fewer private homes sold in March According to the Urban Redevelopment Authority, private home sales fell from 2,793 units in March last year to 480 units in the same month this year. Total units sold in Q1 2014 fell to 1,791 from 2,568 in the previous quarter and 5,412 in Q1 last year. Launch volumes in Q1 this year is the lowest since the global financial crisis in 2008 and 2009. The Santorini and the Ascent@456 were the only two projects launched in March, as cooling measures weakened sales.

Total real estate investments in Q1 amounted to $4.7 billion, a 24 per cent increase from the previous quarter. While 41 to 45 per cent of real estate investments in Q1 are from residential transactions, this is expected to fall. Also, total real estate investment volumes are likely to drop 13 to 20 per cent from last years $28.6 billion, as the introduction of cooling measures and the Total Debt Servicing Ration (TDSR) framework drags private residential sales. Restrictions in supply of residential sites in the first half of this year, and increased interest rates will
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(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 152 Lower bids at Prince Charles Crescent Governments cooling measures and the Total Debt Servicing Ratio (TDSR) framework severely impacted the tender of a 99-year leasehold residential site at Prince Charles Crescent (Parcel B). Bid price for the Parcel B site was at $820.65 psf ppr. However, its adjacent site at Parcel A was sold for $960.28 psf ppr two years ago. UOL Venture Investments and Kheng Leong were the highest bidders for the Parcel B site, and plan to develop it into 750 new units. The Crest, at the Parcel A site will be launched next quarter. Housing Scheme (PPHS). While 80 per cent of the 1,150 PPHS flats are occupied, applications have fallen from 409 in September last year to 81. Married and engaged couples who booked uncompleted Build-To-Order flats last year can apply under the PPHS. (Source: Channel NewsAsia) Developers increase marketing efforts to attract buyers 850 private residential homes will be launched in Queenstown next month, and close to 1,000 units will be launched near Tanglin Road and Tiong Bahru. While condominium supply has surged, developers are unlikely to lower prices. Instead to attract buyers, developers have stepped up marketing efforts. Prices are not expected to fall as interest rates remain low.

(Source: Business Times)

Fewer couples applying for larger PPHS flats To encourage couples to take up larger flats, the government may allow couples to co-rent flats under the Parenthood Provisional
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(Source: Channel NewsAsia)

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SINGAPORE PROPERTY WEEKLY Issue 152 Commercial Sale of shophouses slows as demand shrinks from H2 of 2013. Major office investments in Q1 2014 include the acquisition of the OUE Bayfront by OUE Commercial Reit; Low Keng Huat (Singapore) Ltd and Sun Venture Homes Pte Ltds $579.4 million purchase of CapitaLands Westgate Tower; and a $123.8 million acquisition of a 50 per cent stake in Finexis Building. (Source: Business Times) More shop and factory space available in next three years Doubling the average annual demand for shop and factory spaces, an average of 500,000 sq m of multi-user factory space will be made available yearly for the subsequent three years. This move is expected to stabilise rental price, which account for about 3 to 7 per cent of business costs for small and medium-sized enterprises.
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Commercial shophouse transaction volumes plunged from $921.7 million in H1 last year to $346.5 million in H2. According to CBRE, 26 shophouses sold for a total of $197.2 million in Q3 2013, but sales fell in the next quarter to $149.3 million, and further shrank to $118.4 million in Q1 this year. Tightened property loans, following the implementation of the Total Debt Servicing Ratio framework, and steep property prices have muted sales. (Source: Business Times)
Non-residential investments increase this year likely to

Office investments are expected to soar this year, as rents improve and interests surge
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SINGAPORE PROPERTY WEEKLY Issue 152 While rental rates dropped during the global financial crisis in 2007, prices have since crawled into recovery in 2009. (Source: Business Times) Hotel on Sentosa managed by Accor undergoes renovation The Sentosa, A Beaufort Hotel, currently known as the Singapore Resort & Spa Sentosa is undergoing a $20 million makeover. To be completed in Q3 2015 as Sofitel Singapore Sentosa Resort & Spa, the hotel was purchased for $210.85 million by Royal Group from HKR International. The hotel is currently managed by Accor, and continues to operate despite renovations. (Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 152

Non-Landed Residential Resale Property Transactions for the Week of Apr 2 Apr 4

Postal District 1 5 9 9 9 10 10 10 11 13 13 14 15 15 15 15 18 18 18 19 20 21

Project Name THE SAIL @ MARINA BAY KENTVIEW PARK THE ORCHARD RESIDENCES CAIRNHILL CREST LUMA THE MONTANA THE TESSARINA BLISSFUL VIEW TRILIGHT EURO-ASIA PARK PARC MONDRIAN KEMBANGAN COURT THE SOVEREIGN AMBER RESIDENCES THE MAKENA COSTA RHU DOUBLE BAY RESIDENCES SAVANNAH CONDOPARK THE TROPICA SUNGLADE THE GARDENS AT BISHAN CLEMENTI PARK

Area (sqft) 893 1,313 2,174 2,013 743 549 1,367 1,518 1,163 2,260 2,368 786 3,305 1,163 1,582 990 1,313 1,453 990 1,044 1,658 1,873

Transacted Price ($) 1,750,000 1,475,000 8,800,000 4,388,000 1,330,000 1,220,170 2,070,000 1,868,888 2,413,900 2,300,680 2,200,000 880,000 6,000,000 1,700,000 2,150,000 1,250,000 1,510,000 1,340,000 886,000 1,208,000 1,525,000 2,008,457

Price Tenure ($ psf) 1,959 99 1,123 FH 4,047 99 2,180 FH 1,791 FH 2,223 FH 1,514 FH 1,231 FH 2,076 FH 1,018 FH 929 FH 1,120 FH 1,816 FH 1,462 FH 1,359 FH 1,262 99 1,150 99 922 99 895 99 1,157 99 920 99 1,072 FH

Postal District 21 21 22 23 23 28

Project Name THE RAINTREE THE RAINTREE PARC VISTA MERAWOODS MAYSPRINGS MIMOSA PARK

Area (sqft) 1,335 1,335 1,249 1,345 1,399 2,164

Transacted Price Tenure Price ($) ($ psf) 1,340,000 1,004 99 1,320,000 989 99 1,240,000 993 99 1,330,000 988 999 1,090,000 779 99 1,628,000 752 FH

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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