Marina Bay Link Mall phase one take-up rate at 80%

Marina Bay Link Mall said it has leased 80 per cent of the retail space for phase one of its development, while phase two has also seen healthy take-up at 66 per cent.

The mall which will open in November this year is expected to serve over 50,000 workers and residents in downtown Marina Bay.

More high-end homes like The Sail and Marina Bay Residences are being built in the downtown area, and Marina Bay Link Mall said its tenant mix will cater to these residents.

And among the tenants is the Four Season Market Place – a European-style market – which is making its debut in Singapore.

Apart from the residential developments, Marina Bay Link Mall said the new offices in the area will also help generate higher customer traffic.

“Firstly, One Raffles Quay and Marina Bay Financial Centre offer a daily catchment of over 60,000, not including the potential of a residential market for the first time in CBD – residences who will come from The Sail (and) the Marina Bay Residences. And of course, One Shenton in time to come, and more residential development within the CBD area,” said Rose Tong, director of Marketing, Retail, with Raffles Quay Asset Management.

Phase two of the development spans 82,000 square feet and it will open in mid 2012.

All in, the two phases of Marina Bay Link Mall will add 175,000 square feet of retail space in the downtown area.

But nearby City Link Mall said it is unlikely to pose a threat to its business.

The two underground malls are served by different MRT stations, namely City Hall and the Downtown station.

“I don’t see any cannibalisation between the two malls. They are at opposite ends of the Marina Bay, and they serve a distinctly separate set of customers,” said Robert L Garman, executive director of Hongkong Land.

Still, retailers like New Urban Male at City Link Mall expects slower sales initially when competitors at Marina Bay open in November, while Sakae Sushi hopes Marina Bay Link Mall will offer a good mix of stores to compliment its business.

To retain and attract new tenants, City Link Mall will undergo a significant renovation programme soon. It also plans to launch a range of promotions to draw customers there.

Meanwhile, the two underground malls expect retail rentals in the Marina Bay district to trend up.

According to Jones Lang LaSalle, the average prime retail rent stands at S$22.75 per square feet.

This could increase marginally by some 0.5 per cent by end 2010.

Source : Channel NewsAsia – 3 Jun 2010

Resale private homes on the rise

Resale private properties are getting more popular with home buyers.

According to the latest data from the Urban Redevelopment Authority (URA), one in two private homes sold this year is a resale unit, up from 30 per cent in 1997.

While the sale of new private homes remained strong in the first 7 months of the year, analysts said resale private properties are also changing hands at a faster rate.

Private resale units now make up 50 per cent of total private home sales, compared to 30 per cent 13 years ago.

“The resale (private property) market likely to continue ease upwards, we’ve seen that happening over the last few quarters, starting from Q3 of 2009. Median price for resale (property) has been easing up, averaging about 3-5 per cent per quarter. I think the trend will likely continue, (but) the rate of increase has slowed down a little,” said Dr Chua Yang Liang, head of Research and Consultancy at Jones Lang Lasalle.

Analysts said new prime districts have emerged in the non-landed private resale market, displacing popular areas like Orchard Road, Bukit Timah and Thomson.

In the second quarter this year, median prices of private resale homes in the new Marina downtown and Tanjong Pagar of districts 1 and 2 respectively out-stripped those in the traditional prime districts.

Dr Chua said: “You’re looking at the remaking of Singapore story that has taken a new form now. District 1 downtown area, and these projects (at) the Marina, The Sail… have actually moved prices. Downtown living has caught on for the last few years, gathered momentum now, and it’s likely to continue.

“What’s prime in Singapore now is more diverse, it’s a sign of a maturing real estate market,” he added.

Industry players said the recent property cooling measures will affect the sales of new private homes and resale units.

But some analysts believe resale properties offer better value if buyers are priced out by newer projects.

Other experts said there’s also an upside potential of adding value to an old unit through renovations.

“If you buy a single storey, 20-year-old landed property, there’s a potential for you to adapt, reuse, and refurbish it into a two-storey development. Through the value-add process, you will be able to gain much higher capital appreciation, versus a project under construction,” said Donald Han, Regional MD of Cushman and Wakefield.

Source : Channel NewsAsia – 4 Sep 2010

Private property rental rates set to rise with the expected arrival of 80,000 foreign workers

Rental rates in the private property market are poised to rise with the expected influx of some 80,000 foreign workers this year.

Analysts said this is because of the shortage of private housing. And the supply situation may not improve this year, as only 5,000 private housing units are expected for completion by the end of the year.

The Government’s forecast on the number of foreign workers here comes on the heels of an expected boom in the job market. And as housing needs for these foreign workers increase, rental rates are likely to follow.

Mr Nicholas Mak, executive director of research and consultancy at SLP International, said: “(The influx) would actually still support the rental market in Singapore. And this could cause rentals to rise anywhere from 2 to 5 per cent for the second half of this year.”

Second quarter figures from the Urban Redevelopment Authority showed private property vacancy rates were at 5.4 per cent.

Analysts added that private residential property rental yields are currently 3 to 4 per cent. With the rise in foreign workers, they expect rental yields for non-landed properties to increase by about 1 per cent by the end of this year.

“With the inflow of foreign workers into Singapore, we expect rental yields to probably be at a steady level because of the rent take-up,” said Mr Eugene Lim, associate director of ERA Asia Pacific.

“Typically, the rental market in Singapore is pretty stable. It will only drop, for example, in times when the economy is undergoing recession. That is when big numbers of foreign workers may then leave the country,” said Mr Lim.

Source : Today – 20 Sep 2010

High-end home auctions hit $13m in Q1

More high-end homes surfaced at auctions in the first quarter of this year, mostly involving owner sales, the latest figures from Colliers International show.

About $13.4 million of such properties changed hands at auctions in Q1, higher than any quarter of last year.

The total value of all properties sold at auctions in the first three months of this year, meanwhile, surged to $45.3 million. This is an increase of about 16 per cent from the preceding quarter and 2.5 times the $17.94 million in Q1 last year.

Upmarket homes have been drawing bids not just from Singaporeans but also foreigners such as Malaysians and Indonesians, says Grace Ng, deputy managing director (agency and business services) and auctioneer at Colliers.

She defines high-end residential properties as prestigious and good-quality developments in prime locations. Ms Ng also said high-end homes located near the integrated resorts and apartments in the central business district (CBD) and around Tanjong Pagar were well sought after in Q1.

‘The strong market response seen for new projects such as 76 Shenton has spilled over to other residential developments in the vicinity such as Icon, One Shenton, as well as apartments in older developments like International Plaza,’ Ms Ng reckons.

Residential properties made up 51 per cent of auction sales in the first three months of the year.

Jones Lang LaSalle head of auctions Mok Sze Sze has also observed an increase in demand for both commercial and industrial properties at her firm’s auctions in Q1. She attributes this to office rents starting to stabilise and people looking to take advantage of higher rental returns attributed to commercial property.

Owner sales continued to dominate auctions. Colliers figures show that nearly 83 per cent of the total 160 properties put on the auction block in Q1 2010 were offered by their owners. The number of mortgagee properties put up for auction remained low in view of continued economic recovery and improvement in the job market.

Ms Ng says that compared with the same period last year, auctions in Q1 this year were marked by more positive market sentiment and a stronger appetite for property investment, with healthy participation on the auction floor and interest even from foreign bidders for high-end properties.

‘In Q1 2009, when the property market was still reeling from the effects of the financial crisis, auction rooms were packed but buyers were looking for bargains. So bidding levels and activity were low and there was a big price gap between sellers and buyers,’ she recalls.

The total value of properties sold at auction rose from about $15.8 million in January and $9.1 million in February this year to nearly $20.4 million in March.

‘There is general interest from Singaporeans to park their money in properties due to high liquidity and paltry returns on bank deposits,’ says Ms Ng.

Owner sales will continue to dominate auctions, say auctioneers.

However, owners are jacking up prices following the price increases achieved by developers. ‘In some cases, owners are asking around 20 per cent above valuation,’ according to Ms Ng.

Shaun Poh, DTZ senior director of auction & investment advisory services, says the buyer-seller price gap for auction properties has widened from about 5-10 per cent in Q3 last year to 10-15 per cent currently. ‘This is the single biggest challenge for the auction market.’

Enquiries for residential properties put up for auction have quietened down significantly in the past few weeks as buyers have been drawn to property launches.

‘Financing packages are also more attractive for new properties at launches than for completed ones, so it’s easier on the wallet to buy a home from a developer than through an auction,’ Mr Poh notes.

Source : Business Times – 9 Apr 2010

Space at MBFC Tower2 almost fully taken

A small percentage of space is reserved for existing tenants’ expansion

MARINA Bay Financial Centre (MBFC) Tower 2 is close to being fully leased, after a new tenant came on board and an existing one took on more space.

Prudential Asset Management (Singapore) will be leasing one and a half floors at the building, which works out to around 37,000 square feet of space. It will move in next year on a nine-year lease.

Meanwhile, Barclays Capital, which already signed a lease at MBFC Tower 2, has asked for more space.

It committed to rent four floors at the building, or around 100,000 sq ft of space, in April 2008. It has more than tripled its commitment to 14 floors or around 350,000 sq ft of space. This confirms a BT report early last month.

Barclays Capital will move to MBFC Tower 2 in Q1 2011 and its lease lasts 10 years. It now has offices at One Raffles Quay (ORQ) and it will retain its space there.

Both ORQ and MBFC are managed by Raffles Quay Asset Management. Barclays Capital director Quek Suan Kiat said: ‘Our existing relationship with the landlord, and the proximity of MBFC Tower 2 to our current office space at ORQ, were key factors in our choice of location.’

Raffles Quay Asset Management said yesterday that MBFC Tower 2 is fully leased ‘except for a small percentage of space reserved for existing tenants’ expansion’.

It declined to say how much space it is setting aside, and which tenants could take on more space. Other tenants at MBFC Tower 2 include BHP Billiton, Macquarie and Nomura.

‘Monthly rents at MBFC are in line with the current market rates,’ Raffles Quay Asset Management told BT. According to a CB Richard Ellis (CBRE) report last week, Grade A office rents averaged $8 per square foot (psf) per month in Q1 2010, down slightly from $8.10 psf per month a quarter ago.

CBRE office services executive director Moray Armstrong said in the report: ‘As we emerged from the recent recession, occupiers that had necessarily held off decisions on premises started to gear up to take advantage of competitive rents.’

The consultancy was involved in getting Nomura, Barclays Capital and Prudential Asset Management to secure space at MBFC.

MBFC Tower 2 will receive Temporary Occupation Permit (TOP) in Q3. Nearby, Marina Bay Residences and Marina Bay Link Mall will obtain TOP in the next two weeks and in Q3 respectively.

The mall is likely to open its doors in Q4 after the area sees more office workers and residents.

Source : Business Times – 8 Apr 2010

Roxy-Pacific takes stake in group buying Marina House

ROXY-PACIFIC Holdings has taken a 20 per cent stake in the consortium started by Melvin Poh of Fission Group which recently signed a deal to buy Marina House at Shenton Way for $148 million.

BT reported the sale of Marina House late last month.

Besides Roxy-Pacific and Fission Holdings, the other three shareholders in the consortium are Macly Capital, Pinnacle Assets and Chee Hsian Sing.

Mr Chee, an architect by training, has been involved in several joint developments with Fission Group. Macly Group was set up by its managing director, Herman Chang, a civil engineer by training. Macly’s property developments include Thomson V and Newton Edge. Pinnacle Assets, set up in 2007, is headed by Victor Soh, a partner in Fortune Development.

All five shareholders in the consortium buying Marina House hold an equal stake of 20 per cent each.

Marina House is being sold by Hong Leong Group, which in February this year, obtained provisional permission to redevelop the property into a 42-storey block comprising about 150 apartments and ground-floor commercial space.

The site has a balance lease term of about 60 years. However, the state has yet to agree to top up the site’s lease to a fresh 99-year term.

The $148 million purchase price works out to about $970 per square foot of potential gross floor area inclusive of an estimated $30 million payment to the state if it agrees to upgrade the site’s lease.

The $970 per square foot per plot ratio unit land price takes into account 10 per cent additional gross floor area (GFA) allowed for balcony space. A differential premium is not payable for the residential conversion based on Sept 1, 2009 development charge rates as the provisional permission was secured before the revision in DC rates that took effect from March 1, 2010.

The proposed GFA inclusive of the 10 per cent balcony allowance would be lower than the building’s existing GFA.

Once the purchase is completed, the consortium will review the scheme for the proposed project. ‘We will seek to increase the saleable area and possibly increase the number of units. We’ll also have to do the detailed designing,’ said Roxy-Pacific executive chairman and CEO Teo Hong Lim.

‘On a worst-case scenario, assuming the authorities don’t approve a lease upgrade on the site (and we hence don’t redevelop the site to residential use), the purchase price of the existing commercial space is below current replacement cost. The $148 million works out to about $740 psf based on existing GFA of nearly 200,000 sq ft. There is scope to increase the lettable area,’ said Mr Teo.

Based on Marina House’s existing net lettable area of about 130,000 sq ft, the $148 million price works out to about $1,130 psf.

DTZ brokered the sale of Marina House.

Mr Poh clinched the option to buy Marina House just days before the preview of 76 Shenton nearby. The 202 apartments were sold out in two days at prices ranging from about $1,600 psf to $2,600 psf. Hong Leong Group is developing the apartments on the former Ong Building after securing a lease upgrade on the site.

Last year, Fission teamed up with Yi Kai to buy the freehold VTB Building along Robinson Road for $71 million. They are also partners in the purchase of Aviva Building in Cecil Street and the next-door Cecil House for a total of $101 million.

Mr Poh told BT yesterday that a 37-storey residential project (with shops on the ground floor) on the VTB Building site is slated for launch by the third quarter of this year.

Source : Business Times – 6 Apr 2010

Developers’ landbanks running low

Many caught by surprise by strong home sales; trend likely to continue this year

Major developers, caught by surprise by strong home sales in the past year, are now faced with fast depleting landbanks.

Research compiled by property firm DTZ shows that out of 16 major developers in Singapore, half had less than 1,000 residential units left in their landbank as of end-February this year. Another five developers had between 1,000 and 2,000 units.

The numbers do not take into account strong home sales in March – which means that many developers’ landbanks would have shrunk further by the end of last month.

Sales in March include all 202 units in Hong Leong’s 76 @ Shenton. At Sentosa Cove, Ho Bee Investment recently launched Seascape, and City Developments, The Residences at W Singapore Sentosa Cove.

Analysts said that developers put off buying sites during the downturn, when the outlook for the property market was bleak.

‘During 2008 and 2009, many developers did not add sites to their landbanks,’ said Chua Chor Hoon, head of DTZ’s South-east Asia research team. ‘Hence some were suddenly low on inventory when demand rose and they brought forward their launches.’

In late February, Real Estate Developers’ Association of Singapore (Redas) president Simon Cheong warned that many developers are now facing depleting land banks following brisk home sales in recent months. Developers, he said, were surprised at the speed of the recovery in the property market.

The hunt for fresh residential sites has led to a spike in both the price and the number of bids for state land tenders.

In December last year, for example, a landed housing site at Jurong West put up for sale by the government drew a whopping 32 bids. The winning bid of $38.5 million, or $254 per sq ft of land area, came from Chappelis, a unit of Wee Cho Yaw’s privately held Kheng Leong. At other tenders, the top bids were sharply higher than analysts’ estimates.

In response to the intense competition for sites, the government has in recent months stepped up land sales. More residential sites are also likely to be added to the second half 2010 government land sales programme.

‘Tender bids last year were aggressive,’ noted Ms Chua. ‘We expect competition to be less aggressive this year as can be seen from the less aggressive, though not low, bids in the first quarter.’

But the hunt for new residential sites is likely to continue unabated in the short term.

Boutique property group EL Development, which launched and sold-out a few high-profile projects last year, has just one more development (with 32 units) left in its portfolio.

‘We have been looking to acquire new sites for a while now but we have not been successful so far,’ said managing director Lim Yew Soon. ‘It (business sustainability) is really a pressing issue for us. We have been looking very aggressively for new sites over the last few months.’

UOL Group’s chief operating officer Liam Wee Sin also said that his group is looking to replenish its landbank. But he said that his group gets its income from a variety of sources such as residential sales, rental income from its commercial properties and its hospitality business. So the company’s need is not as compelling.

‘We will look at the merits of each and every site put up for sale and then consider if we need to replenish,’ Mr Liam said. UOL has 1,074 units left in its landbank, according to DTZ.

Other developers are worse-off. DTZ’s research shows that Singapore Land had just 206 units left in its landbank as of end-February while Wheelock Properties had 209 units.

The 16 developers’ landbanks amount to 21,886 units in all, which means that they hold over half of all the unsold residential supply in the pipeline.

Official figures from the Urban Redevelopment Authority show that there were 34,234 unsold, uncompleted units of private housing in the pipeline as of end-2009. But this number does not include projects without planning approvals.

For the year ahead, developers expect home sales to remain strong. Some 1,480 new homes were sold in January this year, followed by another 1,196 units in February – pushing the estimated number of new home sales in Q1 to about 4,000 units.

Demand for new homes is expected to be around 3,000 units for the second quarter, analysts said.

The buying activity has however moved slightly to the high-end and luxury segments, where developers have a higher proportion of unsold units, says Tay Huey Ying, Colliers’ director for research and advisory.

That will work in some developers’ favour. ‘Low landbanks are really an issue for the mass market but for the high-end segment, developers still have ample supply because of all the collective sale sites they bought during the last boom,’ Ms Tay said. ‘But high-end landbanks will also run out if sites are hard to come by.’

Source : Business Times – 5 Apr 2010

Watch out for rising interest rates

Mass market home prices have surpassed the previous 2008 peak.

But because home loan interest rates remain at an all-time low, these homes are still seen as affordable, property consultancy DTZ said.

Its head of South-east Asia research, Ms Chua Chor Hoon, said its mass market affordability index shows that such homes at the end of the first quarter of this year were more affordable, compared with the period between the first quarter of 2006 and the third quarter of 2008.

But this does not mean that home buyers in this segment – which includes public flat owners upgrading to private property – will continue to find such homes affordable for long, if prices or interest rates move up.

It is only a matter of time before the low interest rates head north, said DTZ.

The questions are when that will happen and how much the rise will be, said Mr Alvin Liew, an economist with Standard Chartered Bank.

He said that the three-month Singapore Interbank Offered Rate – now at 0.65 per cent – is expected to be ‘very benign in 2010′.

Many home loans are pegged to Sibor, which is the rate at which banks lend to one another.

‘We see rates picking up slightly by 5 to 10 basis points from the first half of 2011, in anticipation of the United States Federal Reserve hiking its rates,’ he said.

‘By the tail-end of 2011, it could rise to 0.8 per cent. The year 2012 is when we expect to see a rapid hike.’

The three-month Sibor rate will likely rise to 3 per cent that year, Mr Liew said.

Ms Chua said mass market housing could become generally less affordable if the interest rate rises by one percentage point with no change in prices.

This will be the case too if prices rise by 5 per cent with a 0.5 percentage point increase in interest rates, or if prices rise by more than 10 per cent this year, she said.

For the first quarter of this year, the Urban Redevelopment Authority’s flash estimate showed that private home prices have continued their climb, moving up 5.1 per cent, compared with 7.4 per cent in the previous quarter.

Ms Chua advised potential buyers to look beyond the current interest rates to assess their ability to repay the monthly mortgage payments over the next 20 to 30 years, as interest rates will go up.

‘Buyers also have to be cautious as there’s still a lot of economic uncertainty now, unlike in 2005 and 2006, when the outlook was very clear.

‘If the recovery is not as strong as expected, any anticipated capital appreciation may not materialise,’ she added.

Mr Justin Chiu, executive director of Hong Kong’s Cheung Kong (Holdings), told The Sunday Times that interest rates are one key risk factor here.

‘If the rates rise, they may rise very quickly,’ he said.

He was in town for the launch of his company’s well-received West Coast project, The Vision.

Buyers should make sure they can still afford to pay their loans even if interest rates go up to 3 per cent to 4 per cent, he said. If not, they could be overstretched.

Source : Sunday Times – 4 Apr 2010



Prices rise, with a hint of unease

Price resistance may be setting in as private homes, resale flats register small increases

PRICES of private homes as well as public housing resale flats registered smaller quarter-on-quarter increases in the first quarter of this year compared with Q4 last year, government flash estimates show. Market watchers say this could reflect price resistance starting to set in following non-stop increases for several quarters. Behind the rosy picture of brisk developer home sales and price gains, a quiet unease seems to be setting in the market, with uncertainty looming for the second half of this year.

There are concerns about how sustainable the recovery in the housing market is given worries about the US and European economies, among other factors. On the other hand, if the home buyer fever in Singapore does not abate, there are fears of further government measures to cool the property market. Urban Redevelopment Authority’s official price index for private homes appreciated 5.1 per cent in Q1 2010 over the preceding quarter, slower than the 7.4 per cent quarter-on-quarter rise in Q4 last year.

The latest flash estimate also reflects an increase of 24.5 per cent year on year.

URA’s price indices for non-landed private homes in the three geographical sectors too rose at a slower clip. Quarter-on-quarter increases of 4.5 per cent in Core Central Region, 7.2 per cent in Rest of Central Region and 3.9 per cent in Outside Central Region were posted in Q1 – against respective Q-on-Q hikes of 7.3 per cent, 9.5 per cent and 6.3 per cent in the fourth quarter of last year.

Housing & Development Board’s resale flat price index rose 2.7 per cent Q-on-Q in Q1, a smaller gain compared with the 3.9 per cent Q-on-Q rise in Q4 2009. The latest Q1 flash estimate reflects a 12 per cent year-on- year increase and takes the index to a new high.

HDB stressed that seen over a 10-year period (Q1 2000 to Q1 2010, the index has risen at a more modest pace of 3.5 per cent per annum on average.

It also revealed that the number of resale applications for Q1 2010 is about 8,500, about 5 per cent lower than the Q4 figure. The median cash over valuation (COV) amount for Q1 2010 (up to March 21) ‘has stabilised’ at $25,000, an increase of $1,000 over Q4 2009. In contrast, the figure of $24,000 for Q4 last year was double the $12,000 for Q3 2009, it said.

HDB also revealed it is launching a total 12,300 Build-To-Order (BTO) flats in the first nine months of this year, and promised to launch more BTO projects in the fourth quarter if demand remains strong. Last year, the board launched 9,000 BTO flats.

HDB offered 3,700 BTO flats in Q1 this year and will release a further 1,200 flats in Punggol in April. From May to September, it will launch another 7,400 BTO flats in a ‘good geographical spread, covering areas such as Sengkang, Jurong West, Yishun, Bukit Panjang and Woodlands’.

HDB reiterated that the BTO supply will be supplemented by flats under the Design, Build and Sell Scheme as well as executive condos (a hybrid of public and private housing) for higher-income buyers.

ERA associate director Eugene Lim said: ‘The number of BTO flats to be launched by HDB this year in a variety of locations is expected to take some steam off the resale market. It simply makes more sense for first-timers to buy direct from HDB as most, if not all, resale transactions involve COV.’ He predicts that resale price increases for the subsequent quarters of 2010 will be marginally less, resulting in the HDB resale price index rising 5 to 8 per cent for the year.

PropNex is also forecasting 5-8 per cent growth in HDB’s resale price index this year.

In the private residential segment, developers have achieved brisk sales in Q1 – of about 4,000 units or double the preceding quarter’s numbers, according to CB Richard Ellis’ estimates.

Industry players expect developers to continue launching projects to try and ride the current wave of home buying.

Knight Frank chairman Tan Tiong Cheng explains: ‘Is the global economy out of the woods? Nobody can say. If you’re a developer, and you’re assured of profits if you launch your projects now, it makes sense to sell now.’

Agreeing, Ho Bee Investment’s executive director Ong Chong Hua says: ‘During 2008, it was very tough, prices kept coming down and there was no way for sites bought at higher prices, developers would be able to sell and make a return. Even if they had chopped prices at that point, the sentiment for buying was just not there.’

The price recovery over the past year and resurgence in home buying sentiment have presented an opportunity for developers to roll out projects they had held back, he added.

Knight Frank’s Mr Tan observes that in some instances, developers are choosing to launch projects sooner rather than later to beat their competition. ‘If you know another site or project is coming up in your location, and the captive audience in that location is only X number of buyers, it’s better to try and release your project ahead of the pack.’

However, prices are expected to remain firm. As an industry observer put it: ‘It’s better to maintain prices even if that means taking a longer time to sell than to sell quickly and then rush to replace land at much higher prices, at tomorrow’s prices, on the basis that prices will continue to rise at the same pace as we’ve seen in the past 12 months. The fundamentals are not sustainable.’

CBRE said yesterday that as the government releases more residential sites and supply begins to catch up with demand, price increases for private homes may assume a more moderate level in the second-half this year.

Source : Business Times – 2 Apr 2010

Sales of new private homes double to nearly 4,000 in Q1

Overall prices rise 2-5%, with new highs in resale prices in some segments

Demand for new private homes in the first quarter of 2010 more than doubled compared to Q4 2009, according to a new report. Close to 4,000 new units were sold in Q1 2010, compared to only 1,860 in the previous quarter.

The report, by CB Richard Ellis (CBRE), also said that overall private home prices rose by 2-5 per cent in Q1 2010. The price growth was supported mainly by resale transactions as developers maintained the prices of new launches in the same locations at last quarter’s levels.

In fact, resale prices in some segments hit new highs in Q1. Research from DTZ shows that resale prices of freehold landed homes as well as leasehold apartments outside the prime districts (a proxy for mass market homes) saw new peaks in Q1 2010.

Buyers continued to be out in force despite compressed yields, government measures and the large number of new land sites released during the quarter by the government.

‘Many investors are buying in anticipation of future rises in rents and prices as the economy is improving and the long-term fundamentals of Singapore are strong,’ said DTZ’s executive director for residential Margaret Thean.

In the prime districts of 9, 10 and 11, the average resale price for freehold landed homes rose by 5.7 per cent to reach a new high of $1,529 per square foot (psf) in Q1 – a 28.2 per cent rebound from the bottom one year ago. Resale prices of landed properties have now climbed for three consecutive quarters.

Prices of leasehold homes outside the prime districts (mass market homes) also hit a new peak. Non-landed resale home prices rose 2.1 per cent to $623 psf in Q1 2010, surpassing the $615 psf achieved in Q4 2007.

But the resale prices of luxury and prime freehold non-landed homes are still some 10.7 per cent and 1.9 per cent respectively below their previous highs, DTZ said. Prices of luxury homes rose 4.2 per cent to $2,500 psf in Q1, while prices of prime homes climbed by a smaller 3.7 per cent to $1,456 psf.

The two segments still have room to gain as market interest has shifted from mass market to luxury and prime freehold homes.

‘Most of the new launches in the first quarter were freehold projects located in prime districts 9, 10 and 11,’ noted Joseph Tan, CBRE’s executive director for residential. These included Cube 8, Holland Residences, The Laurels and Waterscape. Sales were also strong for upmarket projects in the central business district. In Tanjong Pagar, the takeup at Altez and 76 Shenton Way was brisk because of their city locations and composition of small apartments.

The buyer profile for new units also changed substantially in Q1. Based on caveats lodged to date, about 33.7 per cent of the buyers in the first quarter of 2010 were HDB addressees (who can be considered HDB upgraders), CBRE said. The proportion of HDB upgraders in Q1 is lower than the 63.7 per cent of HDB upgraders who bought new homes a year ago in the first quarter of 2009, after the lull in 2008.

Added Mr Tan: ‘Most of the new launches then were mass-market type projects such as Caspian, Double Bay Residences and Mi Casa. In the first quarter of 2010, most of the projects launched were more upmarket and are located in the prime districts of Sentosa Cove and in the Downtown Core.’

Foreigners bought around 23.5 per cent of the new homes in Q1 2010. The top three nationalities were Indonesians, Malaysians and PRC Chinese.

CBRE expects the take-up of new homes to fall to around 3,000 units in the second quarter of 2010. Home prices are expected to rise at a gradual pace, held in check by the government measures.

Chua Chor Hoon, head of DTZ’s South-east Asia research unit, likewise said that if the buying fever and price increase continue or intensify, more government measures are likely to be introduced. She expects private home prices to climb by 5-15 per cent in 2010.

Source : Business Times – 31 Mar 2010