Singapore Property News This Week #165

Residential

Resale condo transactions on the rise but prices still dipping

Data from Singapore Real Estate Exchange (SRX) revealed that while there was a 7.9 per cent increase in resale volumes for private condominium units in the June from May, resale prices have fallen by 1.4 per cent month-on-month, across all regions. Condo resale prices in June this year are the lowest since December 2012. The total number of resale transactions made this June is also 23.8 per cent lower than in June 2013. Ong Kah Seng from R’ST Research believes that property owners are adjusting their prices to fit buyers’ demand. Furthermore, he believes that sales have been affected by the June holidays and the World Cup season. Data from SRX showed that condo units in the Rest of Central Region (RCR) suffered a 3.2 per cent fall in prices—the largest decline among all regions. Also, condo units in the Core Central Region (CCR) saw a 1.7 per cent dip in prices, while those in the Outside Central Region (OCR) only suffered from a 0.3 per cent price fall. Eugene Lim from ERA Realty said that loan restrictions, increase in developer stock, and a weak rental market could have affected the resale market in the CCR region.

(Source: Business Times)

Experts expect weak demand for condos in H2

Although developers have lowered condo prices, market experts still expect condo demand to remain low. Data from URA showed that developer’s sale of private condos have fallen by 68 per cent to 482 units in June from May. Mohd Ismail from PropNex predicts that 600 to 800 condo units will be sold per month in the second half of 2014. Similarly, Chia Siew Chuin from Colliers International also expects the market for condos to shrink as buyers are less willing to commit. Nonetheless, developers’ price cuts in the previous months have captivated the interest of some price conscious buyers. At the re-launch of The Panorama at Ang Mo Kio in May 2014, Wheelock Properties have cut prices by 10 per cent to push sales. 100 units were sold at the discounted median price of $1,241 psf, proving that discounts may attract price-sensitive buyers. However, sales have cooled for other projects such as Kallang Riverside and Waterfront @ Faber. Ong Teck Hui from JLL said that the overall weak demand for condos was due to the Total Debt Servicing Ratio. Furthermore, Nicholas Mak from SLP International expects the total number of private homes sold by developers in 2014 to be less than 11,000 units if demand remains weak.

(Source: Business Times)

Spring Grove selling for $1.39b

In an en bloc sale, Spring Grove condominium which is located at Grange Road is asking for $1.39 billion or $2,512 per square foot per plot ratio. The condominium which is marketed by Knight Frank has a maximum gross floor area of 553,377 square feet. Located within the Core Central Region (CCR), Spring Grove currently has three blocks of 20-storey apartments with 325 units. Its tender will close on September 10, 2014. Besides the large land space and its prime location, analysts believe that Spring Grove’s own unit owners, who may have demanded for higher compensation, may have pushed its selling price up. Due to the hefty price tag, market analysts are not optimistic about the sale. Not only so, previous billion-dollar sales that are similar in nature have failed to attract committed buyers. Nonetheless, if it is successfully sold, Spring Grove will triumph Farrer Court’s $1.34 billion en bloc sale in 2007. Nicholas Mak from SLP International said due to the hefty land cost, developers may have to partner up in a joint venture to purchase Spring Grove so as to spread risks.

(Source: Business Times)

Commercial

Real estate investments fell 11 per cent in Q2

According to a report by DTZ, the overall real estate investments in Q2 have fallen by 11 per cent from the previous quarter to $4.4 billion. Non-residential investments such as investments in office units have also fallen by 6 per cent to $2.9 billion. However, market experts believe that non-residential deals will continue to push investment activities for the rest of the year. While the total non-residential transactions made in Q2 have driven real estate investment volumes in H2 of 2014 to $9.4 billion, it is still 17 per cent lower year-on-year, compared to 2013. According to a report by Colliers, the fall in residential investment sales could be due to weak investor interest in en bloc sales and strata-titled properties. However, interest in commercial properties is expected to increase as the office rental market recovers from its slump.

(Source: Business Times)