Singapore Property News

Residential

Effect of ABSD is only temporary, rental market benefits in the short term

Consultants say that the effect of the ABSD is temporary, as foreign buyers are still on the lookout for attractively-priced properties. However, since some of these buyers are expatriates who brought their families along when they came to work in Singapore, they need a temporary accommodation and this is where the rental market comes in. This includes private homes for rent, serviced residences and long stay accommodations, whose demand have increased after the ABSD though the increase in demand for such accommodations may be due to other factors. With the developers absorbing part of if not all of the ABSD and offering furniture vouchers to attract buyers and Singapore’s strong property market and reputation for safe investments, foreign buyers may continue to invest in the property market.

Number of HDB upgraders increase

The number of HDB flat owners purchasing non-HDB residential homes has increased to 13,910 in 2011, breaking the previous record of 13,769 in 2010. This figure is equivalent to 42% of the total sale transactions in the non-HDB market segment. ECs were the most popular, having seen 2,407 purchases from upgraders, an increase of 123% from 2010. The large supply launched in 2011, and the new projects developed to attract these buyers, the location of these projects are driving the demand for ECs. Furthermore, the increase in HDB resale prices also leaves the upgraders with more cash to purchase the ECs. This trend is likely to continue, albeit dependent on the attractiveness of the non-HDB property, in terms of design, concept and location.

Tampines Trilliant and Parc Rosewood see strong sales

670-unit Tampines Trilliant sold 149 units over the weekend including 32 two-storey penthouses, 24 of which were sold to first-time home buyers. The 48 penthouse units ranging from 1,841 to 2,465 sq ft, has four-bedrooms and a personal open terrace that can be accessed via the master bedroom. The prices for the penthouses start from $1.1 million. The project also includes 127 872 to 1,141 sq ft three-bedroom units, 397 1,001 to 1,378 sq ft three-bedroom-plus-utility units and 98 1,302 to 1,593 sq ft four-bedroom units. 42% of the 1,000 applications received were from first-timers and the rest were from second-time buyers, many of whom are HDB upgraders.

Meanwhile, 689-unit 99-year leasehold Parc Rosewood has sold more than 280 units with the addition of 110 more units it sold over the past week. The project which consists of one-bedroom, two- bedroom, three-bedroom, and penthouse units, are offering its units at prices decreased by 8-10% to woo buyers who might have been deterred by the ABSD.

Prices of residential properties set to fall

Historical data compiled by Credo Real Estate showed that in the past years (2008, 2000, and 1983) where there had been consecutive quarter-on-quarter near-zero adjustments of prices, there will be a fall in prices of residential properties. Given the most recent quarter-on quarter increase of only 0.2%, the fall in prices is very likely. There is also a tendency for the price fall to go hand-in-hand with economic downturns and falls in GDP. If there is a recession, or the situation is likely to lead to recession, the residential property prices will definitely fall. While some predict a weakening market, citing the economic outlook, increased supply and the ABSD, others foresee a slight slowdown in the market if the economic situation is not as bad as predicted, with the mass-market segment performing better and the prime residential segment less so with the ABSD.

The effects of ABSD on foreign buying

As the effects of the ABSD sets in, we may see fewer investments in property from Indonesians, a slowdown in the small format homes segment of the market, and mainland Chinese who buys these properties turning to investing in the office, retail or industrial properties instead. However, a large scale switch to other segments of the property market is unlikely since a slowdown in the residential market is likely to be felt in these other markets eventually. Furthermore, the foreign buyers may not choose to do so because of their lack of experience in these markets. Nevertheless, foreign-buyers with very deep-pockets who can invest long-term may continue to purchase properties, in particular mainland Chinese and Indonesian nationals who can afford over $5 million purchases.

Commercial

Potential sale price of Twenty Anson is over $400m

20-storey Twenty Anson, a Grade A office tower located near Tanjong Pagar MRT Station, may be sold to CapitaCommercial Trust (CCT) for more than $400 million. The Platinum LEED certified tower, which sits on a site with a remaining lease of about 95 years, has a total net lettable area of about 202,700 sq ft and floor plates of about 13,000 sq ft. Ongoing discussion about the price is around $2,200 psf of net lettable area with income support and $2,120 psf without, with the net yield at 4% with income support and 3% without. It will also offer income potential from lease renewals, with many leases up for renewals in 2013/2014. The current average monthly rental is $6.50 psf per month, below the $8 psf per month market rate for a Grade A building in this location.

StanChart sells space at Peace Centre

Standard Chartered Bank has sold its 5,600 sq ft two level corner space at Peace Centre, a building located near Selegie and Sophia Roads for around $11 million or $1,970 psf. Seven-storey Peace Centre sits on a site with 57 years of remaining lease with the Peace Mansion apartments behind it.

Tat Hong sells One Howard to Malaysian Dairy Industries

Freehold five-storey One Howard, an industrial building located near MacPherson and Howard Roads has been sold to Malaysian Dairy Industries for $30.3 million or $402 psf ppr. Malaysian Dairy Industries owns the adjacent properties, and may eventually amalgamate the lands it now owns to redevelop the site in the long term, especially since the new site does not require any development charge for redevelopment. Furthermore the sites, zoned Business 1, are located near the Tai Seng MRT Station and have a 2.5 plot ratio. The 30,157 sq ft One Howard site in itself can be potentially redeveloped further, since its estimated GFA of around 54,000 sq ft is a far cry from its 75,393 sq ft potential. However, Malaysian Dairy is likely to renovate the building when existing tenancies in the building expire and move into the building itself in the short term.