Negative take-up shrinks in Q2: URA

Negative take-up shrinks in Q2: URA

By KALPANA RASHIWALA

THE office market has posted a third consecutive quarter of negative take-up, according to government data for Q2. However, the negative take-up of 247,570 square feet in the second quarter was smaller than the 322,917 sq ft in Q1 and the 365,973 sq ft in Q4 last year.

CB Richard Ellis executive director Li Hiaw Ho expects take-up to remain in negative territory for the rest of the year. ‘The impact of downsizing will be felt in the office sector for the next six months at least.’

Urban Redevelopment Authority (URA) figures show that the islandwide vacancy rate for offices continued to increase, hitting 10.8 per cent as at end-Q2 2009, compared with 10 per cent at end-Q1 2009 and a low of 7.3 per cent in second half 2007.

The vacancy rate for Category 1 space - office space in buildings in the Downtown Core and Orchard Planning Area which are relatively modern or recently refurbished, command relatively high rentals and have large floor plate size and gross floor area - was 6 per cent at end-Q2, up from 5.3 per cent at end-Q1. The vacancy rate for Cat 2 space (the rest of Singapore’s office stock) rose from 11 per cent at end-Q1 to 11.9 per cent at end-Q2.

The median rental contracted in Q2 for Cat 1 offices was $10.59 per square foot per month, down 8.4 per cent from the preceding quarter. The drop was smaller than a 12 per cent decline in Q1.

However, the median rental for Cat 2 space fell 7.6 per cent to $5.11 psf per month in Q2 - a bigger fall compared with the 6.9 per cent drop in Q1.

Cat 1 median rental has eased nearly 28 per cent from the peak of $14.70 psf in Q2 2008. Over the same period, the Cat 2 median rental has slipped 21 per cent.

Looking ahead, property consultants are predicting gentler declines in office rents for the rest of 2009, while cautioning that the office market is unlikely to be out of the woods until demand turns positive.

In the retail property sector, the completion of ION Orchard and Orchard Central caused the vacancy rate for shop space in the Orchard Planning Area to spike to 16.2 per cent at end-Q2 from 4.7 per cent a quarter earlier. URA pointed to the lag time taken for tenants to retrofit and occupy the shop space in the newly completed malls.

CBRE’s Mr Li said: ‘These new malls already have high pre-commitment levels and vacancy rates in Orchard should move back to the 90 per cent level within a year, once tenants have moved in and started operations.’

The median rental signed in Q2 eased 2.4 per cent over Q1 in Orchard and Rest of City Area and fell a smaller one per cent in Outside City Area.

URA’s rental indices for flatted factories and warehouses slid 4.2 per cent and 9.2 per cent respectively in Q2 over Q1. Warehouse vacancy rate rose from 7 per cent in Q1 to 9 per cent in Q2. Factory vacancy increased from 7 per cent to 7.8 per cent over the same period.

Source : Business Times - 25 July 2009

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HDB resale flat prices surge to record high

HDB resale flat prices surge to record high
Some industry watchers are predicting further upside for the year

By EMILYN YAP

THE HDB resale market seems to be chugging along nicely despite the recession. Soaring demand for resale flats sent prices to a record high in the second quarter, and some industry watchers are predicting further upside for the year.

APPRECIATING BLOCKS
Upgrading activity aside, the inflow of permanent residents, many from China and India, also contributed to demand for resale flats

Data from the Housing and Development Board yesterday showed the resale price index rising 1.4 per cent from the previous quarter to 140.2 in Q2. This is the highest level seen since 1990.

The increase surpassed HDB’s flash estimate of a 1.2 per cent rise. It also reversed a 0.8 per cent fall in Q1 - the first slide after nine straight quarters of growth. The price dip in Q1 now seems like a ’statistical blip’, said property consultant Nicholas Mak.

Executive flats saw the biggest percentage rise in median resale prices, up 2.2 per cent from a quarter ago to $455,000.

Strong interest in resale flats helped sustain the market. Buyers and sellers filed 10,184 resale applications in Q2 - swelling 58 per cent from Q1 and 31 per cent from a year ago. According to HDB, the quarterly resale registration volume last crossed the 10,000-mark more than four years ago - it was 11,562 in Q4, 2004.

Most of the 10,184 applications in Q2 were for four-room flats, followed by three-roomers and then five-roomers.

However, applications for executive flats showed the greatest increase, doubling from a quarter ago to 753 in Q2. Those for five-room flats also jumped 80 per cent to 2,713. The sharp surge in resale activity involving larger flats suggests that there were more owners who sold their flats to buy private homes, said Mr Mak.

Market analysts have flagged HDB upgraders as a significant group of buyers who revived the private property market. Many went for units in mass-market projects such as Mi Casa and Double Bay Residences.

C&H Realty managing director Albert Lu pointed out that owners of smaller flats are also moving to larger flats. Prices of five-room and executive flats have languished in the last few quarters, making the move more attractive, he said.

Upgrading activity aside, the inflow of permanent residents (PRs) also contributed to demand for resale flats. HSR Property Group chief operating officer Dennis Yong observed that his firm has up to 10 per cent more resale transactions involving PRs in the last few months, and many of them are from China and India.

Buyers remained unwilling to pay high premiums for HDB flats. The median cash-over-valuation (COV) was $3,000 across all flat types in Q2, down slightly from $4,000 in Q1. Notably, most five-room and executive flats were still unable to command any COV.

In a way, the low COV sustained demand for HDB resale flats, said PropNex CEO Mohamed Ismail. ‘As the demand is strengthening quickly, sellers are expected to demand a higher COV.’ Mr Ismail expects the resale price index to gain around 3 per cent to 145 points by the end of the year. C&H Realty’s Mr Lu also projects a 2-3 per cent increase in resale prices.

Just a few months ago, property consultants had feared that HDB resale prices would drop as much as 10 per cent for the whole year. Signs of a stabilising economy and improved sentiment in the property market seem to have soothed nerves.

Statistics from the Urban Redevelopment Authority yesterday also painted a more calming picture. While prices in the residential, commercial and industrial sectors still fell in Q2, the declines were smaller than a quarter ago.

Source : Business Times - 25 July 2009

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Home supply pipeline shrinks, prices stiffen

Home supply pipeline shrinks, prices stiffen

However, URA price index for private homes still shows fall in Q2, confounding analysts

By KALPANA RASHIWALA

LATEST government numbers are offering clues as to why some developers are busy looking for land and nudging up home prices. The supply pipeline for private homes has shrunk, from about 71,600 units at end-Q2 last year to 62,600 units as at end-Q2 2009. The stock of unsold units in uncompleted projects with planning approvals has also contracted from about 43,500 units to around 38,500 units over the same period.

Developers had not acquired much residential land over the past year or so in the aftermath of the financial crisis but have enjoyed a spectacular revival in home sales over the past six months. Lately, however, two sites from the government reserve list were triggered for launch by developers.

Developers have also regained some pricing power of late. Urban Redevelopment Authority’s (URA) price index for private homes fell 4.7 per cent in Q2 over the preceding quarter. The fall was less steep than the 5.9 per cent decline for the period that URA’s flash estimate had shown earlier this month. The latest decline is also much less than the 14.1 per cent quarter-on-quarter price drop in Q1. While a debate rages on why URA’s Q2 price index lags the price gains seen in the market during the period, property consultants are expecting further price increases in the current half.

Related link:

Click here for URA’s news release

‘But we’re not going to see runaway prices as there will be price resistance from buyers, especially in the upgraders market as there’s the issue of affordability,’ says Knight Frank chairman Tan Tiong Cheng. ‘Developers will be mindful of competition from the secondary market as new projects are completed. From a consumer’s viewpoint, if prices get too high, they could either give the market a miss or look for alternatives - like picking up a home from earlier investors who can afford to sell below developers’ prices,’ he said.

‘There’s another reason why prices are unlikely to run away, at least not in the mass market - and that’s because the government has, under its reserve list, a substantial supply of land for this segment,’ Mr Tan added.

Giving a more bullish take, Credo Real Estate managing director Karamjit Singh says private home prices started to turn in April/May and estimates that depending on market segment, prices have increased anywhere between 15 and 30 per cent from the bottom in Q1. He forecasts the total increase between April and year-end could be in the order of 20 to 60 per cent, with the biggest hikes in the high-end segment. ‘So far, the home buying has been led mainly by Singaporeans and PRs. When foreigners and institutional funds buy in a bigger way, then momentum in the high-end residential sector will receive a boost.’

URA’s real estate data yesterday showed a 79 per cent quarter-on-quarter jump in private home sales by developers to 4,654 units in Q2 - the third highest quarterly figure on record, according to CB Richard Ellis (CBRE). Significantly, there was a more even spread of sales across the regions in Q2, unlike Q1, when developer sales were concentrated in the Outside Central Region (OCR), where mass-market suburban condos are located.

In Q2, the Core Central Region (CCR), which includes the prime districts 9, 10 and 11, financial district and Sentosa Cove, accounted for 31.2 per cent of homes sold by developers. The Rest of Central Region (RCR) had a 39.2 per cent share, thanks to projects such as 8 @ Woodleigh, The Arte, The Mezzo and Vista Residences; while OCR’s share was 29.6 per cent. The housing recovery is filtering up.

The momentum of sales in the secondary market was also strong, with 3,059 units sold in the resale market in Q2, almost three times the 1,144 units in Q1. Subsale deals more than doubled from 412 in Q1 to 940 in Q2. In the residential leasing market, 10,327 leases were contracted in the April-June period, 7.8 per cent above the 9,579 leases done in Jan-March, CBRE said. With more expats being hired on local terms or smaller housing allowances, rents continued to slide in Q2, albeit more moderately.

Source : Business Times - 25 July 2009

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Over 70% of units at Meadows@Peirce condominium sold

Over 70% of units at Meadows@Peirce condominium sold

By May Wong

SINGAPORE: Over 70 per cent or 180 units at the Meadows@Peirce condominium were sold at a private preview on Friday before the official launch next week.

In a statement, property developer UOL Group said a total of 250 units were offered at the preview. The developer had initially planned to release 150 units, but it added 100 more due to overwhelming response.

UOL said it will also bring forward its official launch by three days to next Tuesday instead of August 1. It will then release another 100 units at an average price of S$880 per square foot.

Meadows@Peirce is a 479-unit condominium located along Upper Thomson Road, opposite Peirce Reservoir. It occupies the previous Green Meadows condominium site.

UOL said it is one of the largest freehold sites to be launched recently. It occupies 43,000 square metres of land in the private residential enclave of Thomson, near Teachers’ Estate.

The last condominium launched in this area was in May 2005, located off Yio Chu Kang Road.

Sizes for the Meadows@Peirce units vary from 517 square foot one-bedroom unit to 3,068 square foot penthouse.

UOL will be offering interest absorption scheme to buyers of Meadows@Peirce, slated for completion in 2012. - CNA/vm

Source : Channel NewsAsia - 25 July 2009

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Private home prices fall 4.7% in Q2

Private home prices fall 4.7% in Q2

By Asha Popatlal

SINGAPORE: In data out on Friday, private home prices fell 4.7 per cent in the second quarter of this year, compared with the previous three months. This is the fourth straight quarter of falls, but it is much better than the record 14.1 per cent decline in the first quarter.

Homebuyers have been turning up in growing numbers at property launches and analysts said this is due to increasing optimism that the worst may be over for the economy.

Nicholas Mak, property analyst, said: “I think many market participants expect inflation to start creeping in over the next one to two years and real estate is seen as a good hedge for inflation.”

While overall prices have fallen, market watchers said they expect a bottoming out soon, with a rebound in the second half of this year.

In all, 4,654 new homes were sold last quarter, compared to a total sale of 4,264 units in 2008. But the number of transactions appears to be moderating.

Mr Mak said: “Sales have been very encouraging, with developers selling over 4,000 private homes. Reason is pent-up demand. Going forward, this kind of numbers in each quarter is not really sustainable.

“We will probably go back to 2,000-plus private homes sold in each quarter, which is what the market can probably sustain in the medium term,” said Mr Mak.

Market watchers see this as a bottom-up recovery, led by the mass market private condominium sector, with participation mainly by Singaporeans. However, they expect a shift to the mid- to high-end condominium sector, with greater participation by foreigners.

Meanwhile, HDB resale prices have bucked the trend of declines, with prices rising 1.4 per cent in the April to June period. The number of transactions crossed the 10,000 mark for the first time since the last quarter of 2004.

- CNA/so

Source : Channel NewsAsia - 24 July 2009

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Resale prices of HDB homes up 1.4% in Q2

Resale prices of HDB homes up 1.4% in Q2

By Asha Popatlal,

SINGAPORE: Latest data by the Housing and Development Board (HDB) showed on Friday that resale prices rose 1.4 per cent in the second quarter, reversing a first quarter dip of 0.8 per cent.

The actual number of resale transactions also increased, jumping 58 per cent to more than 10,000 cases from April to June. The last time the figure had crossed the 10,000 mark was in the last quarter of 2004.

After negative growth in the early part of this year, analysts said they see confidence returning to the market as the economy shows some signs of recovery.

The HBD resale market had an active last quarter, with most of the increase in transactions among the larger flats. Market watchers said this is a reflection of strong demand from HDB upgraders who sold their flats to buy private homes.

Eric Cheng, executive director, HSR Property Group, said: “Most of these purchases are by true investors or upgraders. The confidence level has beefed up. People are saying the Singapore residential market will have a good outlook for the next few quarters ahead.”

One of the factors that has been making HDB resale flats more attractive is that the median cash-over-valuation (COV) amount has been dropping since early last year. In fact, the COV for the last quarter was S$3,000, or S$1,000 less than the first quarter.

Looking ahead, analysts expect average HDB resale flat prices to enjoy modest increases as the confidence of home-buyers continues to grow. Meanwhile, URA data showed that private home prices went down 4.7 per cent.

Although that is the fourth straight quarter of falls, it is a far cry from the record 14.1 per cent plunge in the first quarter of the year.

Analysts said this clearly shows the pace of decline appears to be moderating, with many predicting that numbers will turn positive in the second half of the year.

- CNA/so

Source : Channel NewsAsia - 24 July 2009

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Eager buyers snapping up home deals

Eager buyers snapping up home deals

Lower prices, pent-up demand driving surge in sales of private homes

By Melissa Tan & Smita Krishnaswamy

THE current recession-defying surge in home sales is being driven by pent-up demand from local buyers with enough savings to swoop on lower-priced units and a determination to invest or upgrade.

These buyers are not acting on impulse but have been saving up for years.

Another key factor is the fear of missing the boat ahead of another property boom, The Straits Times has found after speaking to buyers and market analysts.

Last month, an all-time record of 1,825 private homes were sold, continuing a major upswing that started in February. The June figure exceeded that of August 2007 - the height of the last property boom.

On recent weekends, showflats have been crammed with families, couples and singles. Some want to buy a condo as an investment with prices still quite low; others wish to upgrade from HDB flats.

A few others have been renting condos in the hopes of picking up a bargain later, while another group is just browsing.

‘I think that now is the right time,’ said investor Therence Tay, an engineering firm owner in his 30s who bought a two-bedroom-plus-study unit at Changi condo The Gale on Sunday. He lives with his family in an HDB flat.

On average, such a unit is about 1,120 sq ft with a price tag of about $770,000, based on a price range of $650-$725 per sq ft (psf).

Mr Tay said in Mandarin that he had slogged for over a decade to save enough cash. ‘Interest is very low from bank savings now, so we might as well put our money somewhere more useful,’ he said.

A company chief operating officer, who asked to be known only as Mr Chan, 51, said he is in the middle of negotiations to buy a unit at Bukit Timah Road condo Ferrell Residences, where units are 1,840 sq ft on average and cost at least $3 million.

The Singapore permanent resident is mainly using his cash savings to buy the investment property. He will live there alone; his family lives overseas.

‘I missed the boat in the last boom,’ he said. ‘By the time I decided to buy, prices were already $1,800-$2,000 psf. By then it was out of reach, and I was kicking myself very hard.’

Property consultants say a combination of pent-up demand and lower prices has sparked this strong sales streak, in contrast to the previous boom.

‘The last property boom was fuelled by foreign demand for luxury and high-end homes from investors and speculators, which eventually filtered down to the mid- and mass-market segments,’ said Colliers International property consultant Tay Huey Ying.

Dr Chua Yang Liang of Jones Lang LaSalle said: ‘Some upgraders were excluded from the market during the last property boom due to high prices and there appears to be a correction now.’

Ms Chua Chor Hoon, a property consultant at DTZ Debenham Tie Leung, noted that the price gap between HDB flats and condos has narrowed.

For instance, an executive HDB flat in a prime location like Bishan costs up to $650,000, while some suburban condos with facilities are about the same price.

HDB upgrader Abdullah Muhamad, 50, a supervisor, who has a wife and four children, said that he wanted to buy a condo for his family while prices were still affordable.

He had saved for 20 years before buying a two-room condo unit on Sunday at Oasis@Elias in Pasir Ris, which had 190 visitors that day. Units there are going for $670 psf on average. Mr Abdullah’s unit cost him about $640,000.

‘We liked the facilities here, and were worried that property prices will increase further,’ Mr Abdullah said. Executive HDB flats in Pasir Ris have sold for over $500,000 in the past three months.

Also waiting for a good buy is Dr Phoon Kok Fai, 56, a professor at the Singapore Management University who is currently renting a condo.

He did not buy a unit in the last boom as he had other financial considerations on his plate then. But this year, Dr Phoon has set his sights on a Ferrell Residences unit, which he plans to move into with his wife.

‘This condo is within my reach and I have the security of a good location with reasonable value. I also sense that real estate prices have bottomed out,’ he said.

Many others have enough cash and are interested, but are in no rush. ‘In the last few weeks, buying sentiment has been very strong, but there is no panic,’ said Mr Eugene Lim of property firm ERA Singapore.

‘We can afford to wait,’ said prospective investor Raymond Ting, 40, who works in building maintenance and lives in a condo with his wife and 10-year-old son.

‘I expect prices to drop because there are so many new developments being released. What goes up will come down.’

Profile of showflat visitors

A weekend crowd at the showflat of The Gale on Flora Road, where about 80 per cent of the 329-unit development has been sold. — PHOTO: KNIGHT FRANK
1 PURE INVESTORS

Many investors have been waiting for an opportunity to jump into the property market - but timing is everything, and they have been waiting until the price is right.

Mr Ashok Veerappan, a 56-year-old manufacturing executive, wants to buy a unit at Parc Imperial on Pasir Panjang Road as an investment. One-bedders of about 400 sq ft cost around $550,000.

Some investors are in no hurry to buy. Ms Eunice Lee, 39, a customer service professional, is keen to invest but is holding back as she expects prices to fall further.

Another investor, Mr Chan, in negotiations to buy a condo unit, said banks are paying little interest. ‘Stocks are volatile but real estate is quite stable. I don’t think prices will go down because external investors from countries like Indonesia and China are still there,’ he said.

2 RENTERS

Many of those who are renting their current premises and other first-time buyers are also considering buying property despite the downturn.

Condo renter Sundaresan N., 46, a bank employee, recently visited The Peak @ Balmeg showflat.

A three-bedroom 1,500 sq ft apartment costs about $1.4 million.

‘Rents have gone up so much, so it makes sense to buy, but I will buy only if the price is right - I have no problem waiting and trying to squeeze a lower rent out of my landlord.’ He has been seriously searching for six months.

Mr Eddie Koh, 40, who owns a cleaning company, is renting a condo unit but is thinking of buying his own place to live in. ‘If prices are not very high, then it’s worth it, like now,’ he said in Mandarin.

3 HDB UPGRADERS/LONG-TERM INVESTORS

Some HDB upgraders want to buy property for both residential and investment purposes. Mr H.G. Cheng, a regional sales executive in his 40s, is keen to buy a unit soon and live there. ‘I’ll see in two to three years’ time whether to rent it out or stay on. If the price is high, I’ll sell it, otherwise I will live in it myself.’

He was viewing a showflat at Double Bay Residences in Simei, where units range from $850,000 for a three-bedder to $1 million for a four-bedder.

Mr E.C. Ho, 48, a construction industry worker, said his plan to buy a home is unrelated to the economy. ‘We are half-upgrading and half-investing. My family of three live in an HDB flat and we are considering buying a condo now only because we didn’t have enough money before,’ he said.

4 BROWSERS/SHOWFLAT-HOPPERS

Amid the furious buying, many people are just browsing at the showflats, curious about the recent property launches.

‘We happened to see so many developments all of a sudden, and thought we might as well look for one as a long-term investment and upgrade,’ said Ms Eileen Chua, a childcare centre worker in her late 40s with two teenage children.

Mr K. Leong, a 32-year-old banker who was at The Gale, is keen to buy but added: ‘I’m just trying to see the market pricing. There is a perception that the economy is getting better and that is probably why everyone is buying right now.’

MELISSA TAN & SMITA KRISHNASWAMY

A GOOD TIME TO BUY
‘I think that now is the right time… Interest is very low from bank savings now, so we might as well put our money somewhere more useful.’

Mr Therence Tay, an investor who bought a two-bedroom-plus-study unit at Changi condo The Gale

Source : Straits Times - 24 July 2009

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Preview of two condo projects planned for next week

Preview of two condo projects planned for next week

One is next to Ang Mo Kio Hub and the other beside Tanah Merah MRT Station

TWO 99-year-leasehold condominium projects next to MRT stations are slated to be previewed next week - Far East Organization’s Centro Residences next to Ang Mo Kio Hub and TID’s Optima@Tanah Merah.

Price expectations: Market watchers suggest Optima (above) could be priced at about $750-$800 psf on average, while prices at Centro Residences are tipped to start from $1,150 psf

Prices at the 34-storey Centro Residences are tipped to start from $1,150 per square foot (psf). Far East bought the site at a state tender in September 2007 for $601 psf per plot ratio. That was a record price for suburban condo land.

Analysts reckon Far East’s breakeven cost for the project could be close to $1,000 psf.

They suggest that Far East is releasing the project, which is along Ang Mo Kio Avenue 8, to ride on the current home buying momentum but it may release only about 100 or so units initially and sell the rest as construction proceeds to extract higher prices progressively. The condo has a total of 329 units.

Far East is starting its preview on Wednesday evening and will release two and three-bedroom units.

A typical two-bedder of about 800 square feet could cost about $900,000, while a typical three-bedroom apartment of 950 sq ft may be priced on average at about $1.15 million.

As for Optima, beside the Tanah Merah MRT Station, market watchers suggest it could be priced at about $750-$800 psf on average.

They based this estimate on current average pricing for Waterfront Key in Bedok ($735 psf) and Dakota Residences ($900 psf) and adjusted for locational differences.

The 297-unit Optima will be a 14-storey project comprising one-bedroom studio apartments as well as two, three and four-bedroom apartments plus 18 penthouses.

Developer TID is a joint venture between Mitsui Fudosan of Japan and Hong Leong Group Singapore.

Another Hong Leong unit, Tripartite Developers, previewed The Gale along Upper Changi Road two weeks ago. The 329-unit freehold project, priced at $650 to $725 psf, is over 80 per cent sold.

With the release of Centro and Optima, the pipeline of suburban condos on 99-year-leasehold sites bought at state tenders will shrink further.

This will increase impetus on developers to trigger the release of sites on the government’s reserve list, analysts say.

Already, the government has announced the release of two sites from this list this week - at Chestnut Avenue and Dakota Crescent.

Source : Business Times - 24 July 2009

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