Singapore Real Estate Market Review November 2008

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MONTHLY PROPERTY MARKET DIRECTION UPDATE

 

Introduction

 

November 2009 will be remembered for central bank interventions in the real estate market throughout the world.

 

The US Federal Reserve has added one more provision onto the objectives of a central bank – which traditionally deals only with monetary policy including economic growth, inflation, and stability of currency – to include monitoring of property price movements.

 

Monetary Authority of Singapore (MAS) quickly followed the big brother’s foot step. The de-facto central bank has said that further action may be needed to cool the property market if the recent measure* to dampen property speculation prove insufficient.

 

The Singapore Government had cancelled the use of interest absorption scheme (IAS) and interest-only loans (IOL) for property purchasers in September 2009. Except for some new home projects that have already received the green light, all purchases of new home units are subject to the normal progress payment scheme of old which requires the purchasers to pay according to the construction progress.

 

Will private property investors bear the brunt of yet another round of ‘anti-speculation’ curb measures? Are property prices really unsustainable? Can the two Integrated Resorts save us from the miseries? These are questions that need to be asked and answered before more potential buyers head back to the property showrooms again.

 

 

 

(A) OVERVIEW OF THE LARGER ECONOMY

 

 

 [A.1] HOME PRICES IN ALL MARKETS MAY HAVE REACHED BUBBLE LEVEL

The recent half-a-year property rally in Singapore mirrored those in other countries, including the US and other major Asian cities such as Shanghai, Hong Kong, and South Korea. Policymakers in these countries are contemplating tightening lending standard to tame the spiking home prices.

 

§   IN THE UNITED STATES

 

In the US, home prices in certain areas, e.g. Minneapolis and San Francisco, have risen by double digits over the past four months. When considered on an annualised basis, the home prices appear to be in 'bubble territory'.

 

US home prices in August 2009 rose for the fourth straight month. The Standard & Poor's/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2% in August from July 2009.

 

According to the same index, prices in the top 10 US metropolitan areas gained 1.3% in August 2009 after a 1.7% rise the previous month.

 

§   IN HONG KONG

 

In Hong Kong, home prices have climbed 26% so far this year. For example, a one-bedroom, 816 sq ft apartment in Kowloon district was sold for HK$24.5 million (S$4.3 million) in September 2009.

 

The rampant price hike had spurred the HK authorities to tighten down-payment requirements for luxury homes. The authorities have also reduced loan-to-value ratio of private homes costing more than HK$20 million from 70% to 60%.

 

The Hong Kong Mortgage Corp, a government-backed home-loan insurer now only insures owner-occupied homes.

 

§   IN SOUTH KOREA

 

South Korea's financial regulator said on Oct 8 2009 that it planned to tighten regulations on lending to households; and the authorities have cut loan-to-value ratios in mortgages to 50% from 60% in some Seoul areas.

 

§   IN SINGAPORE

 

The sharp rise in private home prices in the third quarter (Q3) of 2009 [see page 6 – 12 – Overall Performance of Private Home Segment] could have precipitated the increase of residential sites in the government land sale (GLS) programme for 2010. [Page 13 – 15 on Government Land Sale Programme]

 

While there has been no announcement of any similar tampering of the property market like the other countries, property speculators are still on tenterhooks waiting for the ‘unexpected’ to happen. The unusual involvement of the central bank in monitoring price swing of private homes – an add-on to the traditional role of a central bank – may have ruffled some feathers among the speculators.

 

§   IN PRC

 

Official statistics showed that from January to October 2009, real estate investments in China had gone up by 18.9%, compared with a mere 1% rise in the first two months of the year.

 

Large Chinese banks have been told by the central bank to increase write-offs against bad loans and maintain their capital adequacy.

 

The Chinese central bank has also recently called for immediate halt of the country’s real estate stimulus policies which include low down-payments, low mortgage rates and tax cuts or risk a housing bubble.  Some Chinese officials share the concern that home prices in some areas may not be affordable to ordinary citizens.

 

 [A.2] HAVE PRICES GONE TOO HIGH?

 

Is there genuine cause for concern over the price-run in the private home segment? Well, judging from the recent sub-sale activities so far, many speculators seem to have adopted the ‘safety-first’ approach this time round.

 

 [A2.1] Sub-sale activities subdued compared with last bull run

 

In terms of sub-sale, the barometer for market speculation, 2009 has been a much quieter year so far with only 2,780 sub-sale deals from January 2009 to September 2009.  In the same period in 2007, a total of 4,193 home units had been sub-sold by the end of Q3 2007.

 

The tables below show the comparison of sub-sale volume between the 2009 rally with the earlier property rallies in 1996 and 2007.

 

Table [1] – Comparison of 2009 sub-sale volume with the peak of the rally in 1996 and 2007

Period	Sub-sale	Sub-total of sub-sale at peak of Rally	Total Sub-sales	Total Sales Transaction
Q1 1996	1,238	2,888	2,888	31,921*
Q2 1996	1,650
Q1 2007	766	3,427	4,863	40,654
Q2 2007	1,892
Q3 2007	1,535
Q4 2007	670
Q1 2008	435	N.A	1,830	13,642
Q2 2008	562
Q3 2008	566
Q4 2008	267
Q1 2009	414	2,366	2,972	25,793
Q2 2009	1,309
Q3 2009	1,057

Source of data: URA website

 

*1996 figures include New Home Units sold by developers and sold in the secondary market which accounted for 19,699 units and caveated sales of 12,222 completed units. Both sets of figures have been culled from URA website.

 

All three periods, i.e. 1996, 2007 and 2009, were marked distinctly by extremely high sales volume in the new private home segment. However, the following compares the difference between the three rallies:

 

ü  At the peak of 1996 bull-run, sub-sale deals transacted at the height of the rally amounted to 2,888 deals.

ü  The height of the 2007 bull-run witnessed 3,427 sub-sale deals.

ü  In 2009, the peak of the rally produced 2,366 sub-sale deals. This makes 2009’s rally a relatively quieter one.

 

 

 

§   IN PERCENTAGE TERM

 

In fact, the percentage of sub-sale deals in relation to overall sales had maintained at double digit level since Q2 2007, until Q3 2009. (See Table 1.1 below)

 

Table [1.1] – Percentage of sub-sale deals to overall sales volume

Period	Percentage of sub-sale deals to overall sales volume
Q1 2007	7.5%
Q2 2007	12.8%
Q3 2007	15.0%
Q4 2007	12.4%
Q1 2008	12.8%
Q2 2008	12.9%
Q3 2008	13.3%
Q4 2008	16.3%
Q1 2009	10.0%
Q2 2009	12.9%
Q3 2009	9.0%

Source of data: URA website

 

As such, Q3 2009 was considered one of the quieter quarters in recent history with sub-sale deals accounting for only 9% of all home sales, compared to 12.9% in Q2 and 10% in Q1 2009.

 

§   MORE END-USERS BUYING

 

One of the reasons why sub-sale activities were much subdued in 2009 could be due to the fact that the vast majority of the original purchases of mass market homes were done by home owners who are HDB flat dwellers.

 

Savills Singapore’s analysis published on 23 November 2009 in Business Times showed that HDB dwellers accounted for 39% of the 1,300 private sub-sale deals in Q2 2009 and 36.6% in Q3 and 33.7% in October 2009 alone.

 

Comparatively in 2007, HDB residents' shares of sub-sale deals were much lower at 20.8% and 23.1 % share of sub-sale deals done amidst the property bull-run in Q2 and Q3 2007. It has been an established fact that the 2007 bull-run was characterised by high number of foreigners buying luxury homes.

 

§   PROJECTION OF SUB-SALES FOR 2010

 

The overall sub-sale level is likely to stay firm for the next 2 to 3 quarters if the following factors remain:

 

ü  market value of HDB resale flats remain firm;

ü  rents for HDB flats remain at current high level.

 

Other supporting factors include the gradual recovery of the global economy and the advent of foreign employees at the two upcoming Integrated Resorts (IRs) which are due for opening in 2010.

 

§   CHALLENGES AHEAD

 

However, there are valid concerns for speculators as the market awaits further moves by the central bank to further depress soaring property prices.

 

Coupled with the falling private home rents, speculators may fear the cost-cushion being pulled off from their feet as holding costs, as well as the risks of rental void are now correspondingly higher.

 

 [A2.2] The Difference between the two bull-runs

 

Though both 2007 and 2009 were spurred by spectacular rallies in the new home segment, the combined value of the new home units sold in 2009 is estimated at $11.2 billion - which is a far cry from the $23 billion worth of new homes sold in the 2007 bull-run.

 

A recent market analysis published by CBRE showed that the median quantum per unit sold by developers in 2009 was $930,000, compared with $1.18 million for 2007. The median per-square-foot price of new home sold so far this year was $863, compared with $928 for 2007.

 

The highest price for new home unit transacted in 2009 was $13.89 million for a third-floor apartment at Seven Palms Sentosa Cove; while the top price in 2007 went to a 19th-floor unit at The Marq On Paterson Hill which sold for $31.40 million.

 

§   HOUSES BECOME SMALLER

 

The median size of units sold by developers also went down from 1,292 sq ft in 2007 to 1,206 sq ft this year. Because unit sizes have fallen, the total quantum of the home price is lower and the market value of transactions in 2009 actually remains at about the same level as last year which only sold slightly more than 4,000 new home units in a year.

 

§   POORER TAKING FOR IRAS

 

This can also be seen from the modest amount of stamp duty collected by the Inland Revenue Authority of Singapore (IRAS) so far this year.

 

According to the Department of Statistics (DOS), the IRAS took in $1.37 billion in stamp duty from January to September 2009, though almost 25,800 private homes were sold in the same period.

 

The Government received $3.8 billion in stamp duty in the whole of 2007; and $1.84 billion in 2008. (Note: 98% of stamp duty comes from real estate transactions)

 

 

 

§   FEWER FOREIGNERS

 

Likewise, the number of foreign buyers has also shrunk in the aftermath of the financial tsunami. So far, only 651 foreigner buyers were accounted for new home purchases in the first three quarters of the year. At the same period in 2007, a total of 1,736 foreign buyers were accounted for new home sales.

 

The drastic drop in private home rents may also have deterred many foreign buyers as more quality condo units are slated for completion eventually in the first six months of next year.

 

 

(B) OVERALL PERFORMANCE OF PRIVATE HOME SEGMENT

 

According to the recent URA report, private home prices increased by 15.8% in Q3 2009, compared with the 4.7% price fall in Q2 2009.

 

In Q3 2009, apartment prices went up by 16.2%, while condo prices shot up by 15.8%.

 

 [B.1] NON-LANDED PRIVATE HOME PRICES BROKE 20 YEAR RECORD

 

In the Core Central Region (CCR) which comprises the prime districts such as Districts 9, 10, 11 and Sentosa Cove, non-landed home prices climbed by 15.2% in Q3 2009; while the same in the Rest of Central Region (RCR) and Outside Central Region (OCR) increased by 18.5% and 16.1% respectively

 

Landed home also became dearer by 14.9% in Q3 2009, compared with the 4.7% fall in prices in Q2 2009.

 

Prices of detached, semi-detached and terrace houses increased by 15.6%, 13.4% and 15.1% respectively in Q3 2009.

 

The comprehensive increase in home prices has not been seen for more than 20 years in Singapore, despite the fact that Singapore is now in one of the worst economic recessions since Independence.

 

 

[B.2] RALLY IN LANDED HOME SEGMENT RECEDED IN OCT/NOV PERIOD

 

 

Thanks to the sudden upsurge of home-buying activities, landed homes enjoyed a brief revival reminiscent of the vintage 2007 bull-run. For example, between June and August 2009, more than 450 landed homes were transacted. The transaction volume, especially detached houses, was quite close to April 2007 (see Table 2.1 below).

 

However, the sales volume seems to have receded after the IAS and IOL were scrapped in September 2009.

 

 

Table [2] – Overall sales volume of Landed homes between January and November 2009

2009	Detached	Semi-D	Terrace	Total
Jan	13	35	49	97
Feb	8	22	57	87
Mar	20	50	138	208
Apr	40	87	134	261
May	55	97	171	323
Jun	106	158	246	510
Jul	71	116	350	537
Aug	70	109	271	450
Sept	94	100	191	385
Oct	55	100	179	334
Nov	*12	*32	*66	*110
Dec	-	-	-

Source of data: SISVRealink

*November sales figures are incomplete due to lag in caveat time.

 

In good years, such as 2007, the monthly sale volume of landed homes would stay above 200-unit level; and sometimes breaching the high-700-unit level, such as in May 2007. (See Table 2.1 below)

 

Table [2.1] – Overall sales volume of Landed homes in 2007

2007	Detached	Semi-D	Terrace	Total
Jan	83	106	188	377
Feb	55	110	194	359
Mar	59	130	213	402
Apr	105	168	317	590
May	128	211	439	778
Jun	106	213	374	693
Jul	123	184	382	689
Aug	70	116	258	444
Sept	38	57	160	255
Oct	48	88	230	366
Nov	52	83	177	312
Dec	31	56	104	191

Source of data: SISVRealink

 

In normal times, such as 2008, the monthly sale volume of landed homes would stay below the 200-unit level. As such, 2009 can be considered a jolly good year with monthly sales figures going beyond the 200-unit level in most months.

 

Table [2.2] – Overall sales volume of Landed homes in 2008

2008	Detached	Semi-D	Terrace	Total
Jan	34	47	116	197
Feb	20	38	101	159
Mar	18	37	119	174
Apr	21	39	107	167
May	31	56	108	195
Jun	17	39	114	170
Jul	21	41	115	177
Aug	9	33	91	119
Sept	15	40	88	143
Oct	12	28	60	100
Nov	12	17	55	84
Dec	8	17	47	72

Source of data: SISVRealink

 

In the final analysis, much of what will happen to the landed home segment would depend on the impact of the withdrawal of the Job Credit Scheme in July 2010. The massive stimulus cash-handout programme to employers has been credited as the main force behind the recent property rally. However, with employers facing the bleak prospect of a fragile economic recovery, more landed homes may be made available on the resale market; and that may be music to prospective landed home seekers but a bad news to those who are selling.

 

 

[B.3] PRIVATE HOME RENTS ON A LOSING STREAK

 

According to URA’s Q3 2009 rent figures, the 15.8% surge in private home prices was not matched by any increase in rental income for landlords.

 

In fact, private home rents have been in decline for the fifth consecutive quarter, losing a further 2.2% in Q3 2009.  Private home rents had dropped a massive 5.2% in the previous quarter.

 

Rentals of non-landed private homes in CCR, RCR and OCR fell by 2.1%, 2.3% and 2.3% respectively in Q3 2009.

 

In all, private home rents have fallen over 15% since Q1 2009.  This could mean that the current rally in the private home segment is not being supported by economic fundamentals and the soaring prices may be considered speculative. In other words, if there are no significant improvements in the larger economy, the down-side to private home prices will remain huge.

 

 

[B.4] NEW HOME SALES WENT BELOW 1,000 UNITS IN OCTOBER 2009

 

After 8 consecutive months of strong showing, the mass market home segment has begun to show signs of weariness, losing 55.17% over the previous month’s sales volume.  The statistics below show the sluggish performance of the new home segment in October 2009.

 

 

Table [3] – Comparison of new home units sold in the past 10 months of 2009

2009	Total Number of Units in Project	Cumulative Units Launched to-date	Cumulative Units Sold to-date	Cumulative Units Launched but Unsold	Units Launched in the Month	Units Sold in the Month
January	48,128	32,197	27,870	4,327	204	107
February	48,371	33,244	29,168	4,076	1,069	1,323
March	48,902	34,048	30,314	3,734	832	1,220
April	48,821	34,645	31,025	3,620	1,083	1,207
May	49,223	35,802	32,656	3,146	1,161	1,668
June	50,490	37,371	34,389	2,982	1,637	1,825
July	50,884	39,893	36,898	2,995	2,878	2,767
Aug	53,047	41,269	38,256	3,013	1,641	1,699
Sept	52,803	41,989	38,832	3,157	1,413	1,143
Oct	54,068	42,505	39,557	2,948	566	811
Total New Home Units Sold so far						13,770

Source of Data: URA website

 

Table [3.1] below shows that despite the two-fold increase in new home units sold in the Core Central Region (CCR) in October 2009, the overall percentage of transactions in prime districts still fell below the 25% mark, accounting for only 22.8% of all new home sales; while the mass market homes still dominated the proceedings with 42.9%.

 

Table [3.1] –   Sale volume of the three regions i.e. CCR, OCR & RCR over the past 10 months

2009	JAN	FEB	MAR	APR	MAY	JUN	JUL	AUG	SEPT	OCT	TOTAL	%
CCR	13	102	133	322	617	526	514	449	152	311	3,139	22.80%
RCR	49	381	300	362	609	867	751	722	431	249	4,721	34.30%
OCR	45	840	787	523	442	432	1,502	528	560	251	5,910	42.9%
TOTAL	107	1,323	1,220	1,207	1,668	1,825	2,767	1,699	1,143	811	13,770 UNITS

Source of Data: URA website

 

§   [B.4.1] Sale of New home units in Core Central Region (CCR) jumped two-fold

 

Below are two tables showing the sales performance of new home units in the Core Central Region (CCR) in October 2009.

 

Table [3.2] – New home units sold in CCR in October 2009

	Project Name		Units launched so far but UNSOLD	Units Sold in the Month	Lowest Price ($psf)	Highest Price ($psf)	Median Price ($ psf)
1	Cyan		9	81	1,712	1,983	1,821
2	Trilight		22	58	1,639	1,836	1,684
3	Lincoln Suites		3	53	1,530	2,365	1,845
4	Vivace		0	28	1,445	2,111	1,906
5	Sophia Residence		35	10	1,141	1,605	1,452
6	Madison Residences		3	9	1,639	1,754	1,677
7	Estrivillas		31	8	494	862	616
8	Shelford Suites		11	8	1,158	1,457	1,431
9	Nassim Park Residences		2	5	2,774	3,480	3,89
10	VIVA		3	5	1,548	1,801	1,755
11	Alba		12	4	2,310	2,531	2,488
12	Icon		9	3	1,430	2,022	1,921
13	Luma		13	3	1,696	1,768	1,725
14	The Trizon		77	3	1,352	1,523	1,396
15	Villas @ Gilstead		6	3	658	906	763
16	8 Rodyk		13	2	1,416	1,503	1,460
17	D'Ixoras		19	2	1,150	1,175	1,163
18	Latitude		20	2	1,640	1,758	1,699
19	Lush on Holland Hill		8	2	1,465	1,465	1,465
20	Martin No 38		0	2	2,048	2,722	2,385
21	The Orange Grove		3	2	2,101	2,300	2,201
22	Volari		1	2	1,856	2,077	1,967
23	Boulevard Vue		1	1	4,150	4,150	4,150
24	Dukes Residence		4	1	1,531	1,531	1,531
25	Jia		13	1	1,366	1,366	1,366
26	Marina Collection		26	1	1,872	1,872	1,872
27	One Devonshire		1	1	1,912	1,912	1,912
28	Parc Mackenzie		13	1	1,146	1,146	1,146
29	Seven Palms Sentosa Cove		0	1	3,429	3,429	3,429
30	Signature At Lewis		10	1	1,307	1,307	1,307
31	Skyline 360° at St Thomas Walk		0	1	2,125	2,125	2,125
32	The Greenwood (Phase 5)		32	1	952	952	952
33	The Lincoln Residences		33	1	1,708	1,708	1,708
34	The Promont		2	1	2,096	2,096	2,096
35	The Wharf Residence		8	1	1,496	1,496	1,496
36	Ventura Heights		4	1	675	675	675
37	Vida		33	1	2,498	2,498	2,498
38	Watten Residences		0	1	780	780	780
311 (152 in September 2009)

Source of Data: URA website

 

ü With the increase in sales volume, the median price of new home units in CCR had also risen to $1,684 psf from $1,666 psf in September 2009.   ü  The highest transacted price also rose to $4,150 psf from $3,353 psf in September 2009.

 

 

§   [B.4.2] Sale of New home units in Rest of Central Region (RCR) receded in October

 

New home sales in the Rest of Central Region (RCR) further receded from 431 units in September 2009 to only 249 units in October 2009.

 

Table [3.3] – New home units sold in RCR in October 2009

	Project Name		Cumulative Units Launched but Unsold	Units Sold in the Month	Lowest Price ($psf)	Highest Price ($psf)	Median Price ($psf)
1	Suites @ Guillemard		0	66	896	1,514	1,234
2	City Loft		0	40	880	1,280	1,181
3	Silversea		92	21	1,189	1,647	1,381
4	Clover By The Park		132	17	673	895	784
5	The Interlace		115	14	728	1,110	1,046
6	Trevista		73	13	905	1,083	1,013
7	Reflections at Keppel Bay		13	11	1,528	2,097	1,685
8	Bliss Loft		18	10	951	1,052	1,018
9	Concourse Skyline		40	8	1,553	2,063	1,781
10	Ascentia Sky		19	5	1,240	1,477	1,282
11	The Peak @ Balmeg		18	5	982	1,098	1,007
12	Vista Residences		3	5	1,158	1,257	1,174
13	Prestige Heights		8	4	1,250	1,400	1,322
14	The Serennia		14	4	681	1,006	836
15	Dakota Residences		8	3	943	982	977
16	Floridian		53	3	1,327	1,380	1,360
17	Ritz Regency		20	3	940	994	979
18	The Seafront On Meyer		34	3	1,253	1,281	1,261
19	Ventura View		1	3	772	823	809
20	Amber Residences		15	1	1,060	1,060	1,060
21	D'Fresco		4	1	825	825	825
22	Esterina		0	1	685	685	685
23	Evergreen View		1	1	596	596	596
24	Goodman Crest		1	1	776	776	776
25	Oasis Garden		1	1	870	870	870
26	Parc Aston		9	1	870	870	870
27	Parc Seabreeze		26	1	1,210	1,210	1,210
28	Stillz Residence		15	1	941	941	941
26	The Arte		5	1	943	943	943
30	The Verve		4	1	734	734	734
249 (431 in September 2009)

Source of Data: URA website

 

ü  The median price of new home units in RCR had slide to $979 psf from $995 psf in September 2009.   ü  The highest transacted price also fell from $2,482 psf to $2,097 psf in September 2009.

 

 

§   [B.4.3] Sale of New home units in Outside of Central Region (OCR) halved in October

 

Sales of new home units in OCR took a tumble in October losing more than 50% of the volume in the previous months.

 

The withdrawal of the Interest Absorption Scheme (IAS) and Interest-Only Loans (IOL) appeared to have impacted HDB upgraders harder than it did wealthier buyers of high-end homes – who in October 2009 came out in force to buy more new home units and along the way sent the highest psf price to cross the $4,000 psf mark in October 2009.

 

 

 

 

Table [3.4] – New home units sold in OCR in October 2009

	Project Name		Units launched so far but UNSOLD	Units Sold in the Month	Lowest Price ($psf)	Highest Price ($psf)	Median Price ($ psf)
1	Hundred Trees		24	52	799	1,029	799
2	Mi Casa		109	43	635	780	685
3	Livia		28	18	572	683	641
4	Prestige Loft		3	16	1,013	1,159	1,109
5	Elliot at the East Coast		14	14	731	1,074	810
6	Wembly Residences		19	14	675	997	801
7	Oasis @ Elias		17	13	599	730	648
8	Meadows @ Peirce		53	10	737	1,126	920
9	Double Bay Residences		17	8	686	746	717
10	Pavilion Park (Phase 2)		2	7	766	941	891
11	Waterfront Key		94	6	748	888	761
12	Waterfront Waves		21	6	696	931	727
13	Cubik		0	5	1,219	1,332	1,264
14	Rosewood Suites		4	5	493	586	572
15	Centro Residences		86	4	1,134	1,229	1,217
16	Envio		20	4	955	975	965
17	Breeze By The East		0	2	707	712	710
18	Chateau La Salle		0	2	621	632	627
19	D'Pavilion		28	2	876	921	899
20	Hillvista		70	2	1,079	1,085	1,082
21	St Patrick's Residences		7	2	905	1,031	968
22	The Gale		29	2	778	793	786
23	Verdana Villas		46	2	630	649	640
24	Coastal Breeze Residences		15	1	533	533	533
25	D'Almira		0	1	695	695	695
26	Dunsfold Residences		4	1	468	468	468
27	Fontaine Parry		7	1	910	910	910
28	Kovan Residences		31	1	887	887	887
29	Landed housing		6	1	814	814	814
30	Serangoon Garden View		4	1	657	657	657
31	Suncottages		1	1	800	800	800
32	The Amery		24	1	922	922	922
33	The Lattiz		9	1	812	812	812
34	The Lenox		15	1	1,163	1,163	1,163
35	The Parc Condominium		35	1	950	950	950
251 (560 in July 2009)

Source of Data: URA website

 

ü  Though the sales volume in OCR had suffered, the median price of new home units in OCR had actually risen to $899 psf from the low of $741 psf in September 2009.   ü  However, the highest transacted price fell from $1,550 psf in September 2009 to $1,332 psf in October 2009.

 

 

 

(C) PERFORMANCE OF NON-RESIDENTIAL SEGMENT

 

At the height of the bull-run in 2007, Grade A office space went at $18.80 psf/pm.

 

However, with the key occupiers of Grade A office space still nursing the bruises afflicted on them by the global economic crisis, the average Grade A office rent has slipped to $8.80 per square feet per month (psf/pm) in Q3 2009.

 

In general, office prices and rents had fell by 2.1% and 4.1% respectively in Q3 2009. Likewise, shop prices and rents also dropped by 1.2% and 0.9% respectively in Q3 2009.

 

With the substantial supply pipeline of about 7.7 million sq ft of offices slated for completion from Q4 this year to end-2012, office rents look set to head south for a few more quarters.

 

 [C.1] LATEST PSF/PM PRIME OFFICE RENTS

 

The following shows the latest office rents in the central business district in the first 6 weeks of Q4 2009:

 

ü In the Shenton way area, prime office rents fell 0.8% to $5.99 per sq ft (psf) per month (pm) from $6.04 psf/pm in Q3 2009.   ü In the City Hall area, prime office rents dipped 0.4% to $6.77 psf/pm from $6.80 psf/pm in Q3 2009.   ü At the Orchard Road area, prime office rents are down a cent psf from $6.90 psf/pm in Q3 2009 to $6.89 psf/pm.   ü At Raffles Place area, Grade A rents fell 3.5% to $7.85 psf/pm, from $8.13 psf/pm in Q3 2009. Prime rents there also dropped 2.6% to $7.60 psf/pm, from $7.80 psf/pm in Q3 2009.

 

In the prime office arena in the CBD, there is no escaping the fact that the 2.2 million sq ft of new prime office space in 2010 must be absorbed first before any hope of a recovery in prime rents can be realised.

 

 

(D) GOVERNMENT LAND SALE (GLS) PROGRAMME

 

The Government announced in November 2009 that at least eight residential sites - and as many as 26 - will be offered to developers in 2010 under the government land sale (GLS) programme. In all, the 26 sites can yield a total of 10,500 private homes in the next two to three years.

 

All the 26 new residential sites to be released for tender are in the outside central region (OCR) and rest of central region (RCR) where common folks live.

 

[D.1] DEVELOPERS SNAPPING UP LAND PARCELS

 

A local developer, Treasure Well Investments, has placed the top bid of about $251.3 million or $533.34 per square foot per plot ratio (psf ppr) for a 99-year leasehold condo plot at Upper Thomson Road. The next highest bid was $438.83 psf ppr by Far East Organization.

 

The tender attracted just six bids in total - about half the 12 to 15 bids received for each of the other four GLS sites in the reserve list in the past few months.

 

The Upper Thomson Road site boasts a good location opposite the Singapore Island Country Club's Island Golf Course and Lower Peirce Reservoir. Freehold units at Meadows@Peirce nearby are being sold at about $900 psf

 

§   [D.1.1] Developers seeking to enrich own land-bank

 

Recently, the government land sale tenders had attracted a lot of interests from housing developers.

 

ü 13 bidders were attracted to the tender of Chestnut Avenue in August 2009. The eventual successful bid price was $143.7 m or $280 psf ppr.   ü 13 bidders vied for Dakota Crescent in September 2009 and UOL clinched the site with $329 m or $508 psf ppr.   ü In September 2009, Far East Organisation edged out 11 other bidders to win the site at Seletar/Yio Chu Kang Roads with the successful bid price of $119.1 m or $376 psf ppr.   ü In October, 15 developers competed for a site at Serangoon Ave 3 which is right above the Lorong Chuan MRT station. Eventually, a unit from Hong Leong Holding clinched the deal at $221.2 m or $529 psf ppr.

 

Rightly or wrongly, the keen competitions are clear signs that housing developers are optimistic of the near future and are afraid to lose out in their bids. However, the real test of the market hinges on how potential buyers and prospective tenants react to the generous supply of the thousands of ‘ready-built’ quality condominium units in 2010 and beyond.

 

§   [D.1.2] Landed housing sites on reserve list set for sale

 

An unidentified developer has triggered for public tender a government landed housing site with a minimum bid price of $15 million or $99 psf ppr for the 99-year leasehold parcel on Westwood Avenue, Jurong West. This site has an area of 14,098.9 sq m and is surrounded by other landed estates such as Westwood Park and The Floravale condominium.

 

About 60 terrace houses with a minimum plot size of 150 sq m can be built on the site and the eventual sale price of completed units should be around $1.1m to $1.2m.

 

A search with URA website reveals that terrace houses at the adjacent Westwood Park changed hands at $454-510 psf, or $850,000 to $1.13 million.

 

Due to low bid prices, the govt had rejected two earlier bids of $11.8 million and $10.33 million for the same site at Westwood Avenue.

 

 

(E) NEWS ON COLLECTIVE SALES

 

The first successful en bloc sale for 2009 was sealed sometime in late November 2009. Dragon Mansion at 18 Spottiswoode Park Road has been sold in a collective sale arrangement for $100.8 million or $863 per sq ft per plot ratio (inclusive of development charge).

 

On the other hand, the residents of Laguna Park have thrown in the towel in late November 2009 and withdrew from the collective sale market after yet another failed attempt to secure a good enough offer.

 

 

(F) CONCLUSION

 

It is still early day to gauge the impact of the withdrawal of the interest absorption scheme (IAS) and interest-only housing loans (IOL).  There is also no point second-guessing the central bank’s intention in watching the price swing of private homes. Whatever follows next may well be a reaction to a global event beyond any player’s calculation or fancy.

 

However, at home the private home prices may have fallen due to ‘fatigue’ suffered by buyers after the 6-month rally. Traditionally, the house-hunting season has been overtaken by Christmas shopping; and the buyers deserve a good holiday breather.

 

For whatever reasons it is worth, the Minister for National Development, Mr Mah Bow Tan has come out saying that he is pleased with the weakening in private home prices. He explained that the government’s aims are to curb erratic price hikes arising from excessive speculation, inaccurate information or market manipulation, but ultimately prices have to be determined by market forces, based on genuine demand from home buyers and investors.

Buy, Sell, Rent, Invest, In Singapore

 

Mindy Yong 杨雯诗

CEA Registration Number : R021232Z

Tel: (+65) 91002985
Fax: (+65) 64021826

mindy@mindyyong.com

 

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