Singapore Property News This Week #163

Residential

HDB resale prices fall 1.3% in Q2

HDB resale prices have fallen again for the fourth quarter due to cooling measures implemented by the government, said market analysts. According to flash estimates by HDB, housing prices were down by 1.6 per cent in Q1 this year; and prices have fallen by another 1.3 per cent in Q2. Ong Kah Seng from R’ST Research believes that the revised mortgage servicing ratio, which caps loans to 30 per cent of borrowers’ monthly income, limits potential buyers’ ability and willingness to make purchases. Echoing Ong’s opinion, Mohamed Ismail, PropNex chief, said that it is more difficult for buyers to purchase larger flats because of the smaller loans. According to Ong, resale prices have fallen by 5.1 per cent from Q2 2013, and prices are expected to continue falling for a total of 4 to 8 per cent by the end of the year. Nonetheless, the price fall is expected to be gradual, said Ong.

(Source: Business Times)

Private homes price index rise in May

According to the National University of Singapore’s (NUS) price indices, the price index for non-landed private homes has risen by 0.8 per cent month on month in May, after falling one per cent from March to April. Since August 2013, this was the first time that the price index has appreciated. Nonetheless, a year on year comparison shows that May’s index this year is still lower than the previous year by 6 per cent. Lum Sau Kim from the Department of Real Estate at NUS said that the higher price index in May 2014 could be due to more sales in the primary market that month. However, he predicts that the overall Singapore Residential Price Index will shrink in June. This view is corroborated by Nicholas Mak from SLP International who said that demand in June may fall due to the school holidays and the World Cup season.

(Source: Business Times)

Private home prices to come down further

The private home price index has slipped by 3.2 per cent, following three straight quarters of decline this year. According to flash estimates by the Urban Redevelopment Authority (URA), there was a 1.1 per cent quarter on quarter fall in private home prices in Q2 this year. URA’s subindex has also showed that landed home prices have fallen by 1.5 per cent in Q2 this year. Mohamed Ismail from PropNex believes that the Total Debt Servicing Ratio has muted private home sales. CBRE executive director Joseph Tan agrees and said private home prices in Q2 are slipping as developers have brought down prices in the primary market. Tan also believes that prices in the secondary market have fallen as property owners are lowering their prices to reflect the market’s demand and supply. Adding on, Eugene Lim from ERA explains that the weakening rental market could have contributed to the falling home prices.

(Source: Business Times)

Commercial

Woodlands industrial plot sold for lower-than-expected price

An industrial plot at Woodlands Avenue 12 was sold at a lower-than-expected price, despite already conservative price estimates. The site which can yield about 1 million square feet of industrial space, did not garner high price estimates previously due to its large size. According to Nicholas Mak from SLP International, larger land plots do not fetch higher prices as the developer may take a longer time to sell off all the strata units in it. Also, the supply of industrial space zoned for Business-1 development in the North region was high. Thus, consultants had estimated a conservative price for the winning bid. Yet, the winning bid, which was made by Wee Hur Development for $76.9 million or $72.86 per square foot per plot ratio (psf ppr), was still $80 to $100 psf ppr lower than what property consultants predicted.

(Source: Business Times)

Strata-titled industrial market shrinks

Demand for strata-titled industrial land has shrunk according to property consultants from DTZ Research. In Q2, 224 strata-titled factory units have been sold, which brings the total resale transactions in H1 2014 to 523 units. This is 57 per cent lower than the number of transactions made in H1 last year. Nonetheless, according to DTZ Research, there was negligible price movement for conventional industrial spaces such as the traditional factories. The conventional industrial average capital values for first-storey spaces in Q2 remained at $627 per square feet and $470 per square feet for those in the upper storeys. On the other hand, prices for industrial properties with shorter tenures are falling, as they are seen to be less appealing than units with longer leases.

(Source: Business Times)

99.4% occupancy rate in Shenton Way

Demand for office spaces in Q2 is high according to Colliers International. Grade A office micro-markets across Singapore are at least 95 per cent occupied while the occupancy rate at Shenton Way/Tanjong Pagar is the highest at 99.4 per cent. This was up from 97.2 per cent in Q1. Not only so, there are interests in new office projects such as the CapitaGreen, which has a 12 per cent pre-commitment rate in June. According to Marcus Loo from Colliers International, the higher office occupancy has pushed up rental prices. This has led to an increase of 3.5 per cent in rental growth island-wide. Nonetheless, Loo said that higher rents may discourage tenants from relocating. Chia Siew Chuin, Colliers International’s director of research and advisory predicts that the office property market will continue to expand with the economy. Chia said that the limited office space supply till 2016 is also expected to push rental prices further thus benefiting existing landlords.

(Source: Business Times)

Club Street shophouses priced at $22m

Five shophouses along Club Street, which have land tenures of about 80 years left, have gone on sale for $22 million. The shophouses are located at Nos 1, 3, 5, 7 and 9. The former three are three storeys high and have an attic while the latter two are only two storeys high. Marketed by both JLL and Historical Land Pte Ltd, the shophouses are sold as a package for $3,230 per square foot for its 6,800 square feet. Under the Urban Redevelopment Authority’s (URA) Master Plan 2014, the Club Street shophouses have been rezoned for commercial use recently. Nonetheless, according to a June 10 circular by URA, shophouse owners and tenants are still encouraged to use the upper storeys of the shophouses for residential or institutional use.

(Source: Business Times)

Property alliance formed to compete with larger competitors

SLP International, OrangeTee, HSR International and Dennis Wee Realty have banded together to form an alliance to rival traditional powerhouses, ERA Realty and PropNex Realty. The alliance will expand its buyer reach and focus on local residential projects. According to Anne Tong, chief executive officer from HSR International, the alliance will benefit the agencies as they will have access to a wider network of home buyers and resources. However, PropNex believes that given its track record, it will continue to be the choice marketing agency. Its chief, Mohamed Ismail, believes that the alliance may run into teething problems as its officers may have to report to different key executive officers.

(Source: Business Times)