March media

S’pore private apartment prices climb to record high in first quarter - CNA- 30 Mar 2011

Average values of properties are now at S$1,935 per square foot for prime areas, and S$1,043 for non-prime areas, the highest since the first quarter of 2008, according to a release from Jones Lang LaSalle.

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Private home prices down slightly in February: NUS Index - CNA – 28 Mar 2011

The NUS Private Residential Price Index is a transactions-based indicator that tracks the month-on-month price movements of private, non-landed residential properties in Singapore.

Cooling measures taking effect; say analysts  Today - 29 March 2011

I am no statistician, but it seems like a meaningless exercise tracking and comparing transaction prices on a month-to-month basis and reporting it in the media. After all, it is only ever a rise or a fall, in endless rotation.    One swallow does not make a summer.

Far more productive to track on a longer timescale, wherein trends can be deduced.

Resilient or waning market?

Despite Government cooling measures, there has been respectable take-up and optimistic land bidding
Whenever the Government imposes measures to cool the residential property market, there would be knee-jerk reactions resulting in potential buyers hesitating and adopting a wait-and-see attitude.
This behaviour was obvious after the Aug 30 measures were announced but the short-lived patience of buyers resulted in a strong market comeback last November. Again, after the latest set of measures were announced in mid-January, many buyers retreated to the sidelines to see how things unfold before deciding to act. And what have they seen so far?


Respectable take-up
The recent release by the Urban Redevelopment Authority on units launched and sold by property developers last month was eagerly awaited as an early indicator of the state of the residential property market after additional cooling measures were imposed by the Government on Jan 14.
Being the month of the Chinese New Year, one would expect lower sales activity as festivities and celebrations took centre stage.
The 1,101 private units (excluding ECs) sold in the second month of the year was 8.9 per cent lower than the 1,209 private units sold in January and the lowest in a four-month downtrend from last November, which saw 1,915 units sold.
Proponents of a weakening residential property market have inferred that the market is indeed slowing in response to the latest round of market cooling measures.
This inference may be premature. Firstly, 1,101 units sold in a festive month with market downtime is a decent figure. It translates to more than 13,000 units annualised, which would be a respectable take-up compared to the 16,292 units last year.
Secondly, the 1,101 units sold last month topped the 911 and 1,066 units sold last September and October respectively. What does that mean?
In spite of the harsher Jan 14 cooling measures and a slower festive February, more units were sold than either of the two months after the Aug 30 measures. It would seem that the residential property market has been no less resilient after the January measures than it was after the August measures.
Among the fresh sales launches last month, URA data shows varied sale performances. Of the 44 units launched at Loft @ Stevens, 43 were sold (S$1,577 to S$2,092 psf), while Palmera East sold 31 of the 32 units offered (S$891 to S$1,355 psf).
Moderate take-up was seen for some of the launches which had more units marketed. My Manhattan put out 150 units for sale with 69 taken up (S$962 to S$1,462 psf), while 56 of the 116 units at Suites @ East Coast were sold (S$1,103 to S$1,495 psf). Waterfront Isle, which was first launched in January, released its remaining 350 units last month, achieving 282 sales (S$850 to S$1,165psf). About 67 per cent of last month’s sales were attributable to those in the “Outside Central Region”, i.e. mainly the more affordable mass market housing segment.

Optimistic land bidding
After the latest round of market cooling measures by the Government in January, the market also awaited response to the residential sites offered under the Government Land Sales (GLS) programme.
The first residential tender closing of this year was that of the Bishan site last month. It was an opening salvo that took many by surprise.
A total of 19 developers tendered for the prime suburban site, resulting in a top bid of S$550 million (S$869 psf per gross plot ratio), which suggested that future launch prices of units would be targeted above current levels.
Keen bidding continued for two other GLS residential sites at Bedok Reservoir and Sengkang Square, drawing top bids of S$465 and S$502 psf/gpr, respectively. With these top bids, the intended sale price of units would be least similar or higher than current prices.
These observations on residential land sales coupled with resilient figures on units sold by developers could be interpreted by buyers as signs that the residential market is holding up well in spite of the latest cooling measures.
Although the sales take-up has been reasonable, the number of units unsold is increasing. Last month, the total unsold units (comprising units launched but unsold and units not launched) reached 19,033, a 19-per-cent increase from January’s figure and markedly higher than last year’s monthly figures. This figure does not include additional units which would eventually come on stream from sites which have been sold.
Unless sales take-up improves, there is a risk of the inventory of unsold units growing, which could lead to over-supply.
Recent external events such as the crisis in Japan following the recent earthquake, tsunami and nuclear fall-out and the continuing unrest in the Middle East/North Africa could weigh on market outlook this year.
Uncertainties related to oil prices, inflation, macroeconomic tightening and stock market risks have begun to raise concerns. The initial preoccupation with the impact of the January cooling measures on the residential property market seems to be gradually over-shadowed by external conditions, which, if they worsen, could impact on market sentiment negatively.
These have occupied centre stage in the market environment and will determine the fate of the residential market in the months to come.
By Ong Teck Hui – executive director of research and consultancy at Credo Real Estate 
25 Mar 2011

Competition for quality land sites expected to heat up

March 22, 2011

It’s all about location for property developers who are on the lookout for quality land parcels.

Recent land tenders of government land sites close to MRT stations or regional centres have seen bids as high as S$550 million or S$869 per sq ft per plot ratio.

Market watchers say competition among developers for such sites will heat up, now that developers are churning out projects at a much faster rate.

The government land sales (GLS) programme for the first half of this year comprises 10 land parcels near MRT stations or regional centres.

Five of the land sites have already been released for sale.

Recently, Keppel Land won a tender for a Sengkang site for S$287 million. The site attracted about 11 bids.

A Bedok Reservoir site attracted eight bids earlier this month, with United Venture Development putting in the top bid of S$320 million.

And Capitaland submitted the highest bid of S$550 million for a reserve-list Bishan site. The tender attracted a record 19 bids.

Analysts say the remaining land sites should see keen interest from developers, now that the property boom is tapering off and developers are re-entering the land market in a big way to deploy their cash.

Colin Tan, head of research & consultancy at Chesterton Suntec International, said: “For the past two years, most of the developers have been highly profitable. This is a dilemma now. They have lots of cash and what do they do with it? That’s why you see quite a good participation rate for most of the state land sales.”

Analysts say competition for quality land sites will strengthen, as developers buy prime land sites to hedge against the risk of further government cooling measures and as home sales moderate. This is because a convenient location is a key selling point for property projects.

Nicholas Mak, executive director of research at SLP International, said:”(Previously) the developer might require anywhere from 12 months to 18 months from the time they acquire the land to the time they launch (homes) for sale. But nowadays this process may be shortened from 7 months to 12 months. What the developers are doing is try to reduce the risk of future market turbulence…if they are able to bring the product to the market as soon as possible.”

But land sites located near public transport hubs and everyday amenities do not come cheap.

Analysts say smaller developers may be priced out of such land tenders.

They will have to made do with public housing sites, which are less profitable than private land sites. Or, they will have to buy land at enbloc sales — which are time-consuming and often contentious.

Source : Channel NewsAsia – 22 Mar 2011
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‘Location, location, location’ to ‘decisions, decisions, decisions’

 March 18, 2011

Gone are the days when location fundamentally mattered in most private residential purchases.

While the recent aggressive bids in Government land tenders for centrally- located suburban sites showed the importance of location and how location still underpins a property’s value, home buyers are now increasingly open to properties in more diverse places.

There are also many people who have ventured to buying homes in new locations, including some at the extreme corners of Singapore that had traditionally received limited buying interest.

If the location of a property has waned as an overriding factor, what prevails in the home buyers’ decision?

Several factors have now become more clearly noticeable than before in a home buyer’s decision – the product’s concept, the scarcity of the property and the opportunity to benefit from owning the property.

With so many factors to consider compared to only “location”, the overall home buying process is now more complicated. Home buyers are expected to critically evaluate properties based on various factors which they feel will justify their worth.

The criteria can rank differently between home buyers, resulting in some properties favoured even if they apparently have weaker underpinnings, for example, a less accessible location.

Why has the importance of location diminished?

Improved connectivity

With new MRT stations in more locations, the connectivity of many areas has been improved, especially those which were once considered remote.

Properties which have benefited from improved connectivity include those near North-East Line MRT stations which were completed less than a decade ago, those in the completed phases of the Circle Line and some new locations where the further phases of the Circle Line and Downtown Line will be completed.

With the improved transport infrastructure, residents will find it easier to travel across Singapore.

Revitalisation plans

The common question asked by home buyers is no longer how expensive a property will be, for prices of suburban private residential properties are already at record highs. It is, instead, what opportunities there are that can lead to a property’s growth potential.

The easiest way is to look for properties that can benefit from neighbourhood or regional rejuvenation plans.

The more comprehensive and longer the plans are, the more the opportunities that may be realised from purchasing the property.

These include properties in the western corridor of Singapore, which may benefit from the Jurong Lake and Jurong Gateway master plans; those in the Seletar area, which may become more vibrant after the completion of the Seletar Aerospace Park; and the north-eastern corridor of Singapore, which is continually developing with more lifestyle choices and a variety of housing options.

Home buyers who are advanced in their assessment of future investment returns are seen to be higher risk-takers who buy into these “unpolished gems”.

Dwindling new choices in built-up areas

Home buyers are now looking beyond properties in well established towns. They are seeking potential, instead of favouring homes in central locations, which are in any case priced higher since the investment returns are seemingly absolute.

Additionally, a number of mature housing areas are fairly densely built, offering wider choices of resale properties than new properties. While new housing estates do not have as many amenities as mature ones, they have space to accommodate more exciting new amenities to cater to residents.

Product sophistication and innovation

With non-landed residential properties in the same locality often considered homogenous products, developers are now increasingly focused on product design to differentiate their offerings.

To stand out from the competition and ensure that newer products justify a price premium over existing products, the quality and design must be exclusive and significantly superior. Previously, exclusive lifestyle concepts were mainly seen in properties at higher price echelons but unique product design is becoming important for suburban private residential properties, partially to offset some developments’ weaker locations or to complement the project to achieve the best home buyers response.

Critical Decisions

Buying a private residential property is a major affair, involving a huge amount of capital and often requiring a lifetime to finance the purchase. It is especially so now, with the record prices of suburban condominiums. The decision also hinges on one’s objective in buying the property – for owner occupation, for resale in the longer horizon, or for medium-term investment.

The buying of properties in less popular districts probably calls for tougher decision-making, for it requires more confidence that the purchase will appreciate in view of opportunities such as new transit stations and upcoming malls and amenities.

Purchasers of private homes in estates with rejuvenation plans are buying into the success of such plans, as well as the benefits of such transformation for property values. Nevertheless, a buyer for owner occupation may be less affected should the rejuvenation not yield the desired result, as it may not necessarily cause a dent in his property venture and profit expectations.

Against the backdrop of the latest government property cooling measures, the home buyer has to consider many more factors in the decision process.

In addition to ascertaining the potential of a property, the home buyer will now have to determine an optimal time to purchase. He will also have to recognise possibilities which will affect his financing capability as he is unlikely to sell his property within the first few years of purchase if he wishes to avoid paying sellers’ stamp duty.

Recognising one’s financial capability is fundamental to one’s home buying decision and this has been underrated by prospective buyers before the recent cooling measures. While the typical home buyer will now have to go through a tougher decision process, the private home purchase is expected to be more sustainable.

By Ong Kah Seng – senior manager, Research, Asia Pacific at Cushman & Wakefield

Mass, Mid-tiers still to hog limelight  Business Times - 3 Mar 2011
Signs of a quieter en bloc cycle  Business Times- 10 Mar 2011 
Pine Grove's DC may deter property developers: analysts  CNA – 10 Mar 2011
Residenza buys Camay Court for $30.5m  CNA - 11 Mar 2011
When your agent does not act in your interest
3rd Collective bid by Pearlbank Apartments 
Amber Glades sold for 118.8m