Singapore Property News This Week #215

Residential

Q2 HDB resale prices fall by 0.4%

HDB resale prices have fallen in Q2 this year by 0.4%, following a 1% drop in the previous quarter. According to Chia Siew Chuin from Colliers International, buyers may be anticipating prices to fall even further, thus they may not be willing to make purchases now. Chia believes that property prices will continue to fall as there are a large number of unsold units in the recent projects. Not only so, developers are pacing out their launches. In Q2, non-landed private homes have fallen in the core central region by 0.5%; this is higher than the 0.4% fall that was recorded in the Q1. Prices of non-landed private homes in the rest of central region also fell by 0.5% while prices in the outside central region fell by 1.2%. Despite the falling prices, market experts are still uncertain if prices have stabilised. For example, Eugene Lim from ERA Realty believes that demand for BTO flats will increase due to a potential increase in income ceiling for new HDB flats.

(Source: Business Times)

GCB at Holland up for sale

A Good Class Bungalow that is located at Holland Road is up for sale through expression of interest. The two-storey house was built in the 1950s and is about 27,181 sq ft large. According to Knight Frank Singapore, the guide price for property along East Sussex Lane is approximately about $1,200 psf on land area. The vendors are open to offers, and the expression of interest will close on July 30. Knight Frank believes that the outlook for good class bungalows will remain positive as demand for them has been steady despite the implementation of cooling measures.

(Source: Business Times)

More large non-landed homes up for mortgagee sale in H1

In H1 this year, there has been an increase in the number of large apartments that has been put up for mortgagee sale. Large apartments are defined as residential units that are larger than 1,500 sq ft. Apartments of this size were popular during the market boom in 2007 and 2008. However, due to loan curbs and affordability concerns, demand for such units have been falling, said Grace Ng from Colliers International. Both local and foreign buying interest has fallen due to increasing interest rates and also smaller housing budgets among expatriates. Not only so, the number of newly completed homes for rent has been increasing. The weak rental market has resulted in difficulties for owners to service their mortgage loans; thus, resulting in more non-landed homes being put for mortgagee sales.

(Source: Business Times)

Non-landed private home prices fall by 0.6% in May from April

In May, the prices of completed non-landed private homes have fallen by 0.6% from the previous month according to the NUS Singapore Residential Price Index (SRPI). Shoebox units that are 506 sq ft or below suffered the biggest blow with a 1.3% fall in prices. Ong Kah Seng believes that the fall in shoebox apartment prices is due to the increase in supply of such apartments. Sales have also been slow due to diminishing buyer interest, said the Business Times.

(Source: Business Times)

Commercial

Transaction volumes in industrial units fell by 35% year-on-year

According to caveat data by JTC, in the first five months of 2015, the number of industrial property transactions by Singaporeans fell by 35% year-on-year to just 55 transactions in the first five months of this year. Also, there was a 27% year-on-year fall in the overall industrial transactions which were made by companies, Singaporeans and foreigners during the same period last year to 435 transactions. According to the Business Times, non-traditional industrial developers have been less interested in bidding for industrial plots in state tenders. On the other hand, the office market shrank by 78% year-on-year in the first five months of this year, while retail outlet transactions fell by 54% year-on-year in the same period of time. The Business Times believes that the implementation of the cooling measures such as the Total Debt Servicing Ratio framework had affected Singaporeans’ appetite for industrial and commercial properties. A lack of launches this year could have also resulted in the slow sales, said Alan Cheong from Savills.

(Source: Business Times)

Industrial project at Gambas Crescent to be launched in July

An industrial project, Proxima@Gambas will be launched in July this year. The site has a 30-year lease. It was purchased by NSS Group for $83.03 psf ppr, which is 19% lower than what Far East had paid for an adjacent land parcel. According to the Business Times, the canteen unit at Proxima@Gambas had already been sold for $2.05 million. Subsequently, a total of 299 units for light industrial use will be released. A 1,773 sq ft unit that is located on the 9th floor has been priced around $399,000 while a 1,841 sq ft unit on the 10th level will be price from $470,000.

(Source: Business Times)

10 industrial sites launched on Confirmed List for GLS

According to the Business Times, all of the 10 industrial sites that are launched on the Confirmed List for H2 Government Land Sales have a 20-year lease. This has raised questions on whether this will be considered the new standard for industrial land tenures. A spokesperson from the Ministry of Trade and Industry said that the ministry aims to lower upfront costs for industrialists who want to custom-build their own facilities. With the 20-year tenure, industrialists will have more options for affordable industrial spaces. Nonetheless, Nicholas Mak from SLP International questioned this. Due to the short land tenure, buyers may have difficulties obtaining sufficient mortgage financing, said the Business Times. Of the 10 sites released under the Government Land Sales, 9 are located in Tampines or Tuas, while, 1 is located at Tanjong Penjuru. All sites have been zoned for heavier industrial use.

(Source: Business Times)

Woodlands commercial site launched under Reserved List for GLS

Launched under the Government Land Sale programme, a commercial site in Woodlands has been slated to be released as part of the Reserved List. According to URA, 60% of the Woodlands site would be for office use. Up to 8,000 sqm or 10.2% of the site can be used for retail and F&B uses. On the other hand, 23,504 sqm will be reserved for serviced apartments or residential use. Nicholas Mak from SLP International believes that the expected supply of completed office space in the coming year will create a downwards pressure on prices, thus affecting sales of the Woodlands site. Not only so, the Total Debt Servicing Ratio framework is likely to affect demand from retail investors.

(Source: Business Times)

Higher vacancy and possible undersupply expected in business parks

According to CBRE, with no developments planned beyond 2016, there may be a potential undersupply in the business parks. Not only so, units within business parks may face higher demand. In Q2 this year, the vacancy rates for business parks have fallen to 9.1% from 10.4% in the previous quarter. According to the Business Times, the fall in vacancy rates is due to an increase in demand, especially in the pharmaceutical and tech industry. Rents for business park spaces in the city fringes and the rest of island submarkets have been maintained at $5.50 psf/month and $3.85 psf/month respectively. Michael Tay from CBRE added that occupiers who require business park space have very limited options, thus affecting vacancy rates.

(Source: Business Times)