In the real estate scene, the government land sale programme which raked in billions of dollars last year has been given the cold shoulders in recent months. Private new home sales, though handed in a better-looking report card of 897 sales (compared with 801 sales in June), are having higher unsold inventories with developers rolling out more units than they could possibly dispose of (3,379 in June as compared with 3,841 in July).

In July, new home sales volume was down 35% year-on-year with 897 units sold, but does better month-on-month with 12% rise compared to June.

The worrying sign is that the ratio of new home sales to newly launched units increased to 1:1.47 compared to 1:0.9 a year ago and 1:1.33 in the previous month. As a result, the stock of unsold homes in the developers' inventory will gradually increase. This also means that the take-up rate was disappointing.

Still, the improved sales volume for July does suggest that there is underlying demand from owner-occupiers. This demand came from the Outside Central Region (OCR) in which 636 units were launched which accounted for 48.1% of launches in July.

The Core Central Region (CCR), in comparison, saw launches fall 40.7% month-on-month and accounted for only 9.9% of all launches in the month.

A case study was done on the price trend of new homes to ascertain the gravity of the situation and here are the findings.

• [B2.1] Central Core Region (comprising e.g. Districts 9, 10, 11 & Sentosa Cove)

Note: Units in Six (6) new home projects were sold for marginally lower median prices.

Note: Three (3) out of nine (9) projects enjoyed higher median sale prices for the units launched so far. Other projects in CCR not included in the table did not have any sales in July 2008.

• [B2.2] Rest of Central Region (comprising e.g. Katong, Bt Merah, Toa Payoh etc.)

Note: Units in the nine (9) new home projects were sold for marginally lower median prices.

Note: Six (6) out of 15 projects enjoyed higher median sale prices for the units launched so far.  Other projects in RCR not included in the table did not have any sales in July 2008.

• [B2.3] Outside Central Region (comprising e.g. Hougang, Woodlands, Yishun etc)

Note: The vast majority of the new home projects launched in July had marginally lower median sale prices.

Note: Seven (7) out of the 23 projects enjoyed higher median sale prices for the units launched so far. Other projects in OCR not included in the table did not have any sales in July 2008.

• [B2.4] Findings of the Case Study

A vast majority of the new homes launched in all the three regions in July 2008 were sold at lower prices. Below are other observations:

(a) OCR enjoys strong underlying demand from the HDB heartlands

The demand from Outside Central Region (OCR) remains healthy, probably due to many HDB dwellers living in the same or nearby neighbourhood taking advantage of the lower prices to upgrade themselves to better housing.

(b) Sub-sale prices will be affected

The trend of lower launched prices for new home projects in OCR will affect sub-sale prices later on in OCR, as well as the Rest of Central Region (RCR) if the location of the projects is not too ideal.

(c) CCR’s future remain uncertain

As for the Core Central Region (CCR), both the volume and prices have come down by a big margin; and with the global recession looming larger each day, the future performance of this particular region remains highly uncertain.

With more than 30,000 new private condominiums and apartments coming on stream in the next couple of years, prices of private non-landed properties in the outlaying areas are not expected to rise by a big margin, if at all.

The sale performance of secondary private homes is tracked by caveat searches and as such is affected by the inherent time lag in the caveat lodgement system. However, from the 3-week tally of the August sales figure, the situation does not look promising.

• [B3.1] Secondary non-landed home sale performance

The three-week total for the month of August was lacklustre with only 470 caveats recorded. In the same three-week period in July 2008, 662 caveats were lodged.

The full month sales figure in July 2008 was 972 resale transactions. The July sales figure was as follow:

Table [7] July secondary non-landed property transactions (by districts)

Total secondary sales in July (by caveat lodged) = 972

District 15 enjoyed the highest transaction volume with 111 caveats lodged in July; followed by District 10 with 77, District 20 with 76, District 14 with 71, and District 9 with 67 caveats lodged in July 2008.

• [B3.2] Secondary landed home sale performance

As for the secondary landed home sale market, the number of landed homes sold in the secondary market in July 2008 is as follows:

• Detached houses = 13 (compared with 11 in June)
• Semi-detached houses = 27 (compared with 29 in June)
• Terrace houses = 73 (compared with 69 in June)

As for the three-week total in August [up to 22 August 2008], the number of landed homes sold in the secondary market is as follows:

• Detached houses = 7
• Semi-detached houses =18
• Terrace houses = 43

Judging from the above statistics, it seems that landed homes have not lost their lustre. Though the sale volume might be marginally lower, the sales figures are still respectable given the current economic backdrop.

In the industrial space segment, the demand and supply situation mirrored that of the global economic situation. The economic slowdown in the developed economies has impacted the traditional manufacturing segment; however, demand for space in the Research & Development (R&D) and high-tech segments remains robust.

• [C.1] JTC Ready-build facilities keen sought after

According to the latest JTC data, the occupancy level for ready-built facilities (RBF) rose to a record 94.9% in the second quarter (Q2) of 2008. Out of this increase, a hefty 51% was contributed by the Business Park segment. The biggest contribution has come from newly built spaces such as Fusionpolis.

However, in the traditional manufacturing segment, demand for flatted factory space fell due to surrendering of leases by the electronics sector, which has been badly hit by the economic slowdown in the US and EU.  

• [C.2] Office occupancy costs in Singapore stagnate

Average occupancy cost of Grade A prime office space in Raffles Place grew only 1.1% quarter-on-quarter to $19 per square foot per month (psf pm) in Q2 2008. Apart from Raffles Place, Shenton Way/ Robinson Road/Cecil Street and decentralised areas, growth in occupancy costs in other areas like Marina Centre and Orchard Road was flat. 

As more new supply comes on stream, office occupancy is likely to ease, thus thwarting growth in occupancy costs in the Central Business District (CBD) for the rest of 2008. 

Besides, the cautious business outlook, the current market trend of companies gravitating towards cheaper premises like decentralised office buildings, industrial properties, business parks and disused state properties is also putting a downward pressure on office occupancies.

• [C.3] More state properties for International schools here

The continuing influx of expatriates into Singapore in recent years has resulted in an increased demand for places in foreign schools. In August, four state buildings and three land parcels were released to help alleviate the limited supply of places at the 19 International Schools which have been having long waiting lists.

The buildings are the former Upper Serangoon Secondary School in Upper Serangoon Road, Nan Chiau High School in Kim Yam Road, Fuchun Primary School in Woodlands Centre Road and Jurong Town Primary School in Hu Ching Road. The land parcels - at Yishun Avenue 1, Hougang Avenue 1 and Bukit Batok Road - have lease periods of 30 years.

Usually, residential properties near international schools tend to enjoy higher rents.

^ Back to top