31 May Singapore Property News: 16th to 29th May 2015
Property Market Activities
Proximity to MRT stations not essential for high rental yields: study (BT, 27 May 2015)
Projects in close proximity to MRT stations do not necessarily command high rental yields, according to a study by real estate agency OrangeTee. 20 of 34 projects identified to have high rental yields are not within walking distance – defined as 400 metres or less – of an MRT station. The report notes that rental yields for suburban projects may be higher as prices, a main determinant of rental yield, are lower in the suburbs compared to the central region. Its proximity to major job centres and education clusters has also contributed to the healthy rental demand in the area, said the report. Leasehold properties are considered to be the most attractive when comparing rental yields as a 99-year leasehold has a lower relative price per square foot upon purchase compared to freehold property. Looking at rental yields is one way of filtering out mispricing in the market, and may sometimes reveal undervalued properties.
Singapore high-end homes back in vogue with foreigners (BT, 25 May 2015)
The proportion of private homes bought by foreigners that are priced more than S$5 million has gone up in April shows a caveats analysis. Singapore high-end homes look more attractive, as they have posted a bigger price drop compared with properties in the suburbs. Moreover, private residential property prices on the island are relatively more attractive compared with Hong Kong – and this has sparked a revival in buying interest from mainland China buyers in Singapore. The absolute volume of transactions is still low, though numbers are expected to go up as more caveats are lodged. Despite facing higher stamp duties to buy properties in Singapore, foreign investors continue to be drawn to the Republic’s transparent property market. Prices are still at a low point and there are a lot of savvy, rich people on the lookout for good investment opportunities to take a position just before the market turns.
Developers face hefty extension charges over unsold units (BT, 20 May 2015)
Property developers may incur up to S$90 million in extension charges for unsold units in their condo projects, followed by S$238 million in 2016 if market conditions persist. As at the end of the first quarter, developers had paid about S$119 million in extension fees for unsold units. Condos completed before that were mostly fully sold in the property market boom. The huge jump is partly due to the way such Qualifying Certificate charges are calculated, also due to more projects completed in 2014. Since foreign developers are required to sell their units within two years of completion, more would be incurring these charges in 2016. If the QC company has a few units left, it might wish to consider selling the units off at a bargain discount. After all, such units will contribute to profits and it makes sense to just clear them and move on. The two other options are to go the “Hiap Hoe route” (ie selling units to the parent firm) or the “SC Global route” (ie delisting).
Access to private property sales data from June 5 (ST, 19 May 2015)
Home buyers will soon have details about private property sales and prices at their fingertips under reforms aimed at improving safeguards and market transparency. Developers will have to submit a range of transaction data every week to the Controller of Housing, the Ministry of National Development said. These details will include sales volumes and transacted prices of individual units as well as the value of any benefits extended to buyers, such as cash rebates, legal or stamp fee absorption, rental guarantees or furniture vouchers. Another change – the Housing Developers (Show Unit) Rules also starts on that date. This aims to ensure all show units are accurate depictions of the apartments for sale.
Developer sales in April hit 11-month high (ST, 24 January 2015)
Developer sales of private homes, surged in April to an 11-month high of 1,124 units but the volume is expected to ease dramatically again this month. Property consultants stressed that the 83.4 per cent increase in developer sales from 613 units in March, as well as the 47.5 per cent year-on-year improvement from 762 units in April 2014, was due to two large project launches – North Park Residences and Botanique at Bartley. With sales of 486 units and 254 units respectively, the two projects accounted for nearly 66 per cent of April’s volume. Buyers are extremely price and product sensitive, as most are affected by the loan curbs such as the total debt servicing ratio, and demand-side measures such as the additional buyer’s stamp duty. For May, if there are no major launches, primary-market sales volumes could drop to about 300-400.
HDB launches record 9,431 flats for sale (BT, 28 May 2015)
The Housing & Development Board (HDB) launched a record 9,431 new flats for sale in 24 HDB towns and estates under its joint build-to-order (BTO) cum sale of balance flats (SBF) exercise. With housing grants, the selling prices of two-room, three-room, four-room and five-room BTO/SBF flats start from S$15,000, S$102,000, S$203,000 and S$354,000 respectively. Some 4,044 BTO flats will be offered across four projects in the non-mature towns of Punggol and Sembawang, and two projects in the mature towns of Clementi and Tampines. Consultants expect the Clementi Crest project to attract the most interest, given its good location within Clementi Town Centre, with many retail amenities nearby and walking distance to the MRT station to boot. HDB will additionally offer 5,387 balance flats in 11 non-mature and 13 mature towns/estates in this exercise.
Brisk sales and hefty gains at Pinnacle@Duxton (ST, 27 May 2015)
Singapore’s tallest public housing project Pinnacle@Duxton is defying the sluggish property market with brisk sales -and hefty windfall gains – thanks to its prime location and sweeping views. More than 60 units at the 50-storey project have been sold in the five months since owners started meeting the five-year minimum occupation period in December last year. There have been 59 resale transactions at Pinnacle@Duxton to date, as shown on the Housing Board website. The 42 resale transactions for four-room flats have fetched an average of $857,230, while the 17 transactions for five-room flats have fetched an average of $983,092. Sellers of five-room units would have netted a windfall of more than $500,000 as they paid $345,100 to $439,400 when the project was launched in 2004. Prices for four-room units went for $289,200 to $380,900 then.
Government Land Sales
Moderate bids seen for EC plot in Choa Chu Kang (BT, 20 May 2015)
An EC site along Choa Chu Kang Avenue 5 was launched and is expected to fetch moderate land bid prices, due to a combination of factors. These include the site’s far-flung location, some 1.8 km from Choa Chu Kang MRT Station and mounting supply of ECs as well as a significant build-up in Choa Chu Kang. Property consultants expect the site to fetch between three and seven bids. Their forecast of the top bid is in the S$250-330psf. The 4.9-hectare, 99-year leasehold EC site is estimated to generate 490 units. The last EC site sold in the area was a much more choice location, about 600 metres from Choa Chu Kang Station. It fetched a winning bid of S$361 psf ppr from Sim Lian Land at a tender last September. As this is not the most attractive site, it is almost 2km by road to the nearest MRT station. There are no major retail facilities in the vicinity and there is a lack of attractive scenery around the site.