Singapore Private home prices may have peaked

Singapore Private home prices may have peaked 

URA estimates show mere 0.4% rise between April and June, the lowest growth in 4 years

By Fiona Chan, Property Reporter 

 
GROWTH in private home prices ground to a halt in the second quarter, dragged down by dismal market sentiment and a poor showing in the luxury segment.
But things were cheerier among cheaper homes, with prices of suburban condominiums and HDB resale flats continuing to climb.

Private home prices inched up 0.4 per cent between April and last month, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.

This is the smallest rise in about four years and a stark drop from the 3.7 per cent rise recorded in the first three months of the year.

On the supply side, there were 67,700 private residential units as at the first quarter, of which 56,500 are expected to be completed between this year and 2011. Some 42,700 units, or 63 per cent, in the pipeline are unsold.

Experts were divided on whether the market has peaked. While home sales have been in the doldrums since late last year, recent launches - at lowered prices - have been encouraging.

Some consultancies, like DTZ Debenham Tie Leung, predicted that private home prices are ’set for further corrections’ with bigger developers likely to follow in the footsteps of smaller ones and cut prices to move sales.

Prices will come under pressure from two other factors - speculators dumping units and more homes coming on the market as construction ends, DTZ added.

Its analysis of selected projects showed that prime freehold flats actually fell in price by 4.7 per cent in the second quarter while values of suburban and landed homes were unchanged.

Ms Chua Chor Hoon, DTZ’s senior director of research, said: ‘This is just the beginning of a decline. Prime properties have started to come down and while the mass market is still holding, we’re no longer seeing increases.’

URA data showed that condos in the prime central region led the slowdown in the second quarter, with prices creeping up just 0.2 per cent. City-fringe home prices rose 0.7 per cent while those of suburban condos increased by 1.3 per cent.

The star performer was the HDB resale market, where prices climbed 4.4 per cent - more than the 3.7 per cent growth in the first quarter.

Mr Colin Tan, head of research and consultancy at Chesterton International, said the demand for HDB flats was likely boosted by too-high prices of private homes.

But the private home market ‘has probably peaked and prices will come down, if not in the next month, then in the following months’, he added.

Mr Nicholas Mak, Knight Frank’s director of research and consultancy, added: ‘If sales volumes don’t pick up much and if the United States posts very weak economic growth, we could see a price decline by December.’

But other consultants painted a brighter picture.

CBRE Research executive director Li Hiaw Ho noted that 1,200 to 1,400 new homes were sold between April and last month, almost double the 762 sold between January and March.

Most of the projects that sold well were mid-tier or mass market condos, with average prices between $775 per sq ft (psf) and $1,225 psf, he said.

‘Despite prices softening a little, volume has improved in the last four weeks and this might encourage more developers to launch products.’ This could boost transactions in the next two quarters, which may lead to a strengthening of prices, Mr Li added.

Dr Chua Yang Liang, Jones Lang LaSalle’s head of South-

east Asia research, was more cautious. ‘Demand remains favourable in the suburbs, thanks to strong economic growth and a rise in average wages in the first quarter,’ he said. But the market is expected to ‘continue to swing from month to month till we see a clear stability in either volume or price level’.

Source : Straits Times - 02 July 2008

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Prices of Singapore HDB resale flats still climbing

Prices of Singapore HDB resale flats still climbing 

4.4% jump in second quarter, given strong demand, tight supply and higher valuations

By Jessica Cheam 
 
THERE is a buzz in the property market and it is in the heartland.
HDB homes are continuing their bull run - even as private home prices stagnate - with prices rising 4.4 per cent in the second quarter.

This is according to flash estimates released by the Housing Board yesterday.

The latest jump is higher than the 3.7 per cent first-quarter rise in HDB flat prices.

Housing experts point to an underlying healthy level of demand for resale flats, tight supply and higher valuations as key reasons for the rise.

The onward march of HDB flat prices comes after prices rose 17.4 per cent last year.

In contrast, private home prices inched up only 0.4 per cent this quarter, compared to 3.7 per cent in the previous quarter, flash figures from the Urban Redevelopment Authority showed.

Last year, private home prices soared 31 per cent.

One reason public flats are outperforming private homes now is that HDB price rises are still lagging behind those of private homes which shot up in the housing boom, say market watchers.

Knight Frank director of research and consultancy Nicholas Mak said HDB prices still have room to rise as they were slow to take off at the start of the recent property boom.

Higher valuations of resale flats are also likely to have contributed to the price rises, said PropNex chief executive Mohamed Ismail.

He expects public-housing prices to continue their rise, by another 5 per cent, for the rest of this year. That would mean a full-year jump of about 13 per cent.

Both men agreed that the tight supply of HDB flats is another factor keeping the market buoyant, with demand from upgraders, downgraders and permanent residents.

‘With Singapore’s economic fundamentals still intact, the buzz in the HDB resale market is expected to continue in 2008,’ said ERA Realty’s assistant vice-president Eugene Lim.

‘A buoyant HDB resale market is good news for developers of mass-market condominium projects as HDB upgraders are their primary target market,’ he added.

However, with the stream of new flats coming into the market, some demand will move away from the resale market to new flats, he said.

During the first half of this year, HDB launched 4,524 new flats.

Subject to demand, HDB said in a statement that it plans to offer about 3,900 new flats under the Build-to-Order system over the next six months, in towns such as Punggol, Sengkang and Bukit Panjang.

The full data for the second quarter will be released at the end of the month.

 
Source : Straits Times - 02 July 2008

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Mapletree, Arcapita in real estate JV

Mapletree, Arcapita in real estate JV

Fund to hold $1.7b portfolio of industrial properties
By EMILYN YAP

MAPLETREE Investments has entered a joint venture with Arcapita Bank to form a private real estate fund called Mapletree Industrial Trust (MIT). The fund will hold the $1.71 billion portfolio of high-rise, ready-built industrial properties acquired from JTC Corporation.
 
Sealing the partnership: Hiew Yoon Khong, CEO of Mapletree Investments (left) and Martin Tan, executive director, co-global head of real estate, Arcapita Bank, at the Toa Payoh North industrial estate 
Mapletree will hold a 25.1 per cent stake in MIT, while Arcapita will hold 56.5 per cent. Mapletree Industrial Fund, a pan-Asian private real estate industrial fund sponsored by Mapletree, will own the rest.

‘We will explore the possibility of listing this portfolio as a Reit in due course, possibly in combination with other Mapletree industrial assets,’ Mapletree’s CEO Hiew Yoon Khong said yesterday.

MIT took official control of the industrial properties yesterday. The portfolio comprises 39 blocks of flatted factories, 12 amenity centres, six stack-up buildings, one ramp-up building, three multi-tenanted business park buildings and one warehouse building. Mapletree’s wholly owned subsidiary Mapletree Industrial Fund Management will manage the properties.

Mr Hiew said Arcapita’s involvement as a joint-venture partner in MIT supports ‘our view that this is a high quality portfolio of real estate’.

Headquartered in Bahrain, Arcapita provides syariah-compliant alternative investments and counts high net worth individuals and institutions among its investors. The bank opened its Singapore office in January.

‘The properties in the portfolio are attractive and well-diversified in terms of tenancy, location and asset type, and are well placed to continue to perform strongly,’ Mapletree and Arcapita said in a joint statement yesterday.

The partnership marks Arcapita’s first major investment in South-east Asia and its first venture with Mapletree. ‘The acquisition of this JTC portfolio, given its scale and quality, is an excellent start for Arcapita’s Singapore office as we seek to increase our investments and presence across Asia,’ said Arcapita CEO Atif Abdulmalik.

 
Source : Business Times - 02 July 2008

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Singapore Tampines site to anchor H2 industrial land sales

Singapore Prime property districts’ prices show 1st fall in 4 years: DTZ

Singapore Prime property districts’ prices show 1st fall in 4 years: DTZ

Downward pressure may increase as speculators dispose of units, it says
By ARTHUR SIM
(SINGAPORE) Property prices in the prime districts of District 9, 10 and 11 have registered their first fall in four years and DTZ Debenham Tie Leung believes that this downturn in sentiment could spill over to the non-prime districts.
 
 
In an analysis of resale prices based on its own basket of properties, DTZ found that prices of private residential properties in Q2 this year reflected the first correction in the past four years, led by non-landed residential units in the prime districts.

DTZ’s basket of properties for prime freehold non-landed resale residential homes include Cairnhill Crest, The Pier at Robertson and Botanic on Lloyd and capital values averaged $1,410 per square foot (psf) in Q2 2008, reflecting a 4.7 per cent quarter-on-quarter (qoq) decline. Capital values had remained at $1,480 psf for the two previous quarters.

While it should be pointed out that luxury home prices have reached new heights in recent years, DTZ said that it also tracks a separate basket of luxury properties which includes premier developments like Ardmore Park.

Outside the prime districts, capital values of freehold and leasehold non-landed resale residential units remained unchanged, averaging $750 psf and $610 psf respectively, holding steady at this level for three consecutive quarters after both sectors registered 7 per cent increases in Q4 last year.

And the outlook for rest of the year is likely to be challenging.

 
‘Besides smaller developers, some of the bigger developers are also likely to reduce selling prices to move sales especially for developments that have been on the market for some time.’
 
- DTZ 
 
 
 
 
DTZ said that with high inflation compounding the expected economic slowdown globally, prices of private residential properties are set for further corrections.

‘Besides smaller developers, some of the bigger developers are also likely to reduce selling prices to move sales especially for developments that have been on the market for some time.’

‘In addition, the sub-sale market is expected to be active with speculators disposing their units, especially those who have purchased multiple units on Deferred Payment Schemes and are most likely to dispose some or all units to avoid stretching their financial limits,’ it added.

While some speculators may feel that renting remains an option for them, DTZ said that as rentals come under pressure in 2009-2011 due to the surge in new home completions, it is unlikely that speculators will want to hold on to their units for rental income.

DTZ does believe that there was significant wealth creation in the run-up to the recent ‘economic boom’ of 2006 and last year, and there is ‘pent-up demand’ from many who have been waiting for an opportune time to buy. ‘Take-up will eventually pick up when the market senses that prices have bottomed,’ it added.

On the pick-up in sales towards the end of Q2 2008 for ‘attractively located and reasonably-priced projects’, DTZ’s executive director (Residential) Margaret Thean said: ‘At the end of the second quarter, we began to witness the return of market confidence and an improved buying sentiment. Some residential projects are enjoying sell-out status while others are being are well-received. This is clearly indicated by the sell-out status of projects such as Suites 123 while Nassim Park, Parc Sophia, Dakota Residences and Clover by the Park received encouraging response.’

Source : Business Times - 02 July 2008

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High returns, strong S$ spur investment in US

High returns, strong S$ spur investment in US

Singapore’s direct investment in US hits new highs
By CHUANG PECK MING

(SINGAPORE) The United States is back prominently on the radar screens of Singapore companies looking to acquire or set up businesses overseas.
Direct investments from Singapore surged suddenly from some US$20 million in 2006 to US$6.27 billion last year, according to the latest figures released this week by the US Department of Commerce.

And these exclude the US$5 billion bailout Temasek pumped into Merrill Lynch, or the US$6.88 billion that the Government of Singapore Investment Corporation sank into a distressed Citigroup. Those count as portfolio investments.

The big jump in direct investments from Singapore to the US in 2007 came a year after returns on them bounced back, hitting a five-year high of US$174 million. It will bring Singapore’s cumulative direct investments in the US to some US$8.68 billion.

The increase could also result from the rise in the Singapore currency against the US dollar, which makes it cheaper for Singapore companies to invest in the US. Between end-2006 and end-2007, the Singapore dollar rose 6.2 per cent against the greenback, appreciating from S$1.5415:US$1 to S$1.4463:US$1.

The surge in direct investments in the US last year did not come just from Singapore. ‘Outlays by investors from the Asia and Pacific region rose substantially in 2007, as outlays by investors from Australia, Singapore and (South) Korea increased significantly,’ the Commerce Department says in a report.

Led by Australia - which saw its investments rise nearly three times from the year before to US$15.22 billion - the region’s direct investments in the US more than doubled from US$15.76 billion in 2006 to US$36.93 billion last year.

European investments went up 37 per cent to US$146.5 billion, with the increase more than accounted for by the British.

‘Outlays by investors from Australia in the real estate and rental and leasing industry more than tripled,’ the Commerce Department says.

The investments from Singapore - the third largest from the Asia-Pacific, after Australia and Japan, went into the manufacturing, wholesale trade and finance and insurance sectors, excluding banks.

For the region as a whole, the biggest chunk of the investments - US$15.48 billion - were sunk in manufacturing, followed by real estate and rental and leasing (US$11.65 billion).

Globally, US$276.8 billion in foreign direct investments flowed into the US last year, up 67 per cent from 2006. They were the second largest on record and the highest since 2000, when new investments peaked at US$335.6 billion. In 2006, investments jumped 81 per cent.

‘The increases in both years (2006 and 2007) were significantly larger than the overall increases in US merger and acquisition activity and broke a pattern of more moderate annual growth from 2002 to 2005,’ the Commerce Department says.

‘The strong growth in spending in 2006 and 2007 coincided with declines in the value of the dollar against many major currencies.’

 
Source : Business Times - 02 July 2008

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Singapore Mass market stays buoyant as buyers find price is right

Singapore Mass market stays buoyant as buyers find price is right

Flash estimates for Q2 show overall private home prices flattening; steady HDB resales keep mass market more active
By ARTHUR SIM

(SINGAPORE) Flash estimates for property price indices are in with numbers suggesting that price-sensitive buyers are bargain hunting or scaling down their expectations altogether.
 
 
The Urban Redevelopment Authority (URA) released estimates for the Q2 2008 price index for private residential property yesterday with prices rising just 0.4 per cent - a mere crawl compared to the 3.7 per cent increase in the previous quarter.

While this represents the slowest growth in four years, Jones Lang LaSalle’s local director and head of research (South East Asia) Chua Yang Liang also notes that it is the, ’steepest’ quarterly rate of change since Q3 2000.

Much of the activity was in the mid and mass-market as reflected by URA’s index for three geographical regions. Prices of non-landed private residential properties increased by just 0.2 per cent in Core Central Region (CCR) and 0.7 per cent in Rest of Central Region (RCR), but climbed a more robust 1.3 per cent in Outside Central Region (OCR).

Dr Chua added that demand remained favourable in the OCR supported by average nominal wage increases in the Q1 2008 and ‘dislodged residents of collective sale sites’.

 
‘The market is not short of buyers and many astute investors have been shopping around, looking to scoop up value buys.’
 
- ERA Realty Network assistant vice-president Eugene Lim 
 
 
 
 
Also robust was the Housing and Development Board’s (HDB) resale market with estimates for the quarter revealing that the HDB Resale Price Index increased by 4.4 per cent over the previous quarter, and higher than the 3.7 per cent increase in Q1 2008.

Knight Frank director (research and consultancy) Nicholas Mak said that the mass market is ‘influenced’ by HDB’s resale market and added that, ‘the resale market has been steady’.

Indeed, while HDB resale volume did fall to 6,360 units in Q1 2008, a 6 per cent drop compared to Q4 2007, it actually increased by one per cent on a year-on-year (y-o-y) basis.

By comparison, secondary market private property transactions of 2,304 units in Q1 2008 was a fall of about 40 per cent, quarter-on-quarter (q-o-q) and a fall of 57 per cent, y-o-y, while primary market transactions of about 762 units was a fall of about 48 per cent in Q1 2008 q-o-q, and a fall of 84 per cent y-o-y.

ERA Realty Network assistant vice-president Eugene Lim also believes that a buoyant HDB resale market could boost HDB upgrader sentiment, but he pointed out that the strength of the HDB resale market can be attributed to ‘upgraders, downgraders and permanent residents’. On the last group, Mr Lim estimates that based on in-house data, permanent residents account for about 20 per cent of the buyers in the HDB resale market.

And attention is likely to continue to be diverted away from high-end products.

‘The market is not short of buyers and many astute investors have been shopping around, looking to scoop up value buys,’ added Mr Lim.

CBRE Research executive director Li Hiaw Ho noted that in the private property market, most of the transactions were mid and mass-market projects with the majority of transactions in the $750-$1,000 psf price bracket.

As such, Mr Li expects sales volume of new launches to rise to between 1,200-1,400 units in Q2 2008, compared to just 762 units in Q1 2008.

Property consultants have so far been careful to not use the ‘F’ word to describe home prices. Most believe prices have ‘plateaued’ or ’softened’, but not ‘fallen’.

Colliers International director (research and advisory) Tay Huey Ying even believes that home prices have, ‘remained stubbornly resilient to the extent that they continue to post a y-o-y increase of 20.4 per cent’.

Ms Tay also added that for the first six months of the year, home prices rose by 4.2 per cent. ‘(Developer’s) current pricing strategy can be described as competitive, that is either similar to current market prices or marginally lower than competitors,’ she added.

Ms Tay believes that home prices will continue to resist ‘downward pressure’ and expects prices to hold steady or decline marginally by not more than 3 per cent in Q3 2008.

Saying that mass-market prices have generally not been ‘chased up’ or preyed upon by the ’speculative element’, Ms Tay believes this sector could be the best performing for the rest of the year.

This however needs to be put in context.

Knight Frank’s Mr Mak does point out that prime property prices have increased by 52.4 per cent over the last two years. ‘On this basis, it is not surprising that this market segment will lead the slowdown in price growth,’ he added.
Source : Business Times - 02 July 2008

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