(B) Private property sales in Singapore
As pointed in the opening statement, Singapore is a picture of calm amidst the turmoil and unrest in other countries. The buying sentiment is likewise calm in the second quarter with the total sale figure standing at 3,027 residential units transacted. Given the time lag of around two to three weeks for caveat information to be available, the second quarter residential sale performance would very likely mirror the 3,200 transactions in the first quarter of 2008. In other words, despite the media hype surrounding the supposed successes achieved by the recent launches of a few mid-market home projects, the volume of private property transactions was actually very subdued in the second quarter.
Below describes the market performance of the various different property segments.
- (B.1) Performance of big-ticket properties
(a) Investment sales
Total investment sales of Singapore real estate had dipped to $3.7 billion in Q2 2008. In Q1 2008, the volume of investment sales stood tall at $8.9 billion. The hefty 58% slide reflects the gloomy confidence in the property sector.
Investment sales are defined as deals with a value of at least $5 million, comprising government and private sales, buildings and land, strata and en bloc. It also includes change of ownership of real estate via share sales.
(b) Good Class Bungalows (GCBs) sales
A total of 23 GCBs have changed hands so far this year for a total of $380 million. It is generally expected that there will be around 50 to 60 GCBs transactions for the whole of this year as the economy continues to stay on course for another year of moderate growth [See Annex A for an article on High Net Worth Individuals].
The estimated number of GCB transactions is lower than the 87 GCB deals totalling $1.15 billion transacted in 2007. In 2006, a total of 119 GCBs worth $1.23 billion were transacted.
(c) High end luxury apartment sales
At least 50 luxury apartments costing above $10 million each have been sold so far this year. So far, the highest-priced transaction is a $19.7 million ground-floor unit sold at Nassim Park Residences in June 2008.
The 50 transactions of high end apartments include units sold at Nassim Park Residences, Cliveden at Grange, The Tomlinson, The Grange and The Orange Grove condos.
From the look of it, this year’s transactions of luxury apartment is unlikely to follow last year’s act of 139 transactions.
- (B.2) Private new home prices easing
The ominous sign of a fierce ‘competition to sell’ has emerged. Major developers have started slashing prices to off-load the high inventories of unsold new homes.
(a)
High end projects
The more noticeable price reduction is seen at the Nassim Residences – one of the most prestigious addresses in Singapore. In June, 39 of 70 units launched were sold at a median price of $2,929 per square foot (psf). This is a far cry from the average $4,000 to $4,500 psf achieved by the Orchard Residences a year ago when the property market was red-hot.
(b) Mid-market projects
At the mid- range market, other examples include District 14 Dakota Residences in Dakota Crescent and District 10 Shelford Suites.
Units at Dakota Residences, a 348-unit 99-year leasehold project by Ho Bee Investment and NTUC Choice Homes are being offered at $950 psf compared to the targeted $1,000 to $1,100 psf.
Shelford Suites in Shelford Road by City Development Limited (CDL) has also started previews for its 77 units at about $1,600 psf on average lower than the previous target of $1,869 psf and $1,905 psf.
(c) More mass-market projects to be launched with reduced prices
With the help of the media hype, more developers are bringing out their armours from their closet before releasing more reduced-price mass to mid-market condo projects.
In the pipeline is Livia by CDL, a 740-unit condo in Pasir Ris which analysts are expecting to be offered at below $700 psf.
Also in the pipeline is The Dakota in Geylang. The 348 unit condo is expected to be priced at below $1,000 psf.
- (B.3) Developers turn landlords as rents and construction costs stay high
A new trend has emerged as a result of the property market slowdown. Some developers who had bought en bloc sites but are now postponing any redevelopment until the market has picked up again, are leasing out the properties in the interim.
This situation has been prompted by three separate market developments coalescing together, i.e.
- the market is still in demand for rental property with good qualities, such as convenient location, proximity to international schools, proximity to the Central Business District (CBD) and Orchard Road area etc.
- rental income is still very strong [See Annex B for current rent figures]
- the construction costs have soared to an unbearable point
For example, Koh Brothers who bought Lincoln Lodge for $243 million in June last year, decided to lease out the units for 6 months and thereafter on a monthly extension basis for about $2,700 to $4,500 per month.
Likewise, other major developers are also offering the rental option to their en bloc site sellers. GuocoLand offered residents short-term leases at Sophia Court in Adis Road last year, followed by Leedon Heights off Holland Road earlier this year. Frasers Centrepoint said it may offer short-term leases to the former owners of the 185-unit Flamingo Valley, a freehold site in Siglap Road that it bought for $194 million in February last year. And City Developments (CDL) has said it is still exploring the renting option.
- (B.4) Foreign buyers still buying into Singapore success story
A recent study has noted that foreigners (including permanent residents) accounted for 28% of overall private home purchases in Q1 2008, up slightly from a 27% share in the preceding quarter. This shows that interests coming from overseas are still strong and this finding gives a shot in the arm that is badly needed. The foreign buyers never give up Singapore.
Indonesians and Malaysians continued to be the biggest buyers, accounting for 18% and 15% respectively of private homes bought by foreigners in Q1 2008.
More buyers from India are buying Singapore real estate, accounting for 14% in Q1 2008. Their share of the purchase was 11% in Q4 2007. Koreans' share slipped from 8% to 5% over the same period.
[See A4 for inflow of overseas real estate funds into Asia]
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