Property market keeps afloat: JLL report

The Asia Pacific property market remains resilient due to strong investment volumes, even on the back of uncertainties in the global economy, according to Jones Lang LaSalle’s (JLL) Asia Pacific Property Digest (APPD) for Q2 2012.

Despite this, the slowdown in leasing activity hints that the region “is not completely immune.”

Strong direct commercial property investment market in Q2 was highlighted by a 26 percent year-on-year increase in volumes to US$26 billion (S$32.55 billion). As stronger investment volumes came in, capital values also increased across most major markets.

On the contrary, office leasing activity dipped by about 10 percent in Q2 this year compared to 2011, mainly due to “corporate caution and the flow-on effects of ongoing economic uncertainty.”

Dr Jane Murray, Head of Research Asia Pacific at JLL, noted, “The Asia Pacific property markets are holding up relatively well given the global economic backdrop. Leasing activity levels should continue to trend moderately lower than last year’s record levels, while we expect investors will continue to search out opportunities, particularly in prime locations.”

That said, JLL expects capital values and rents “to grow in most markets, albeit at a slower rate than 2011.”

Jeremy Sheldon, Managing Director for Markets Asia Pacific at JLL, said, “There has been a decline in the established financial markets, however we are seeing strong demand in key South East Asian markets, and certain cities in China. While this pattern is likely to continue through to the remainder of the year, we are optimistic that leasing will remain largely stable.”

As for Singapore, Chua Yang Liang, Head of Research South East Asia at JLL, said the country “remains at the cusp of this shift and given cost savings as the modus operandi for most firms together with tighter immigration, the Singapore residential leasing market is likely to face further downside pressure.”

GCB for sale, price tag: S$106m

A Good Class Bungalow (GCB) at Nassim Road is on the market for a staggering S$106 million. If sold for that amount, it would be the most expensive home sold on mainland Singapore to date. 

Listed on PropertyGuru, the asking price for the GCB beats all previous records. The eight-bedroom house sits on a sprawling 42,500 sq ft freehold land site and is believed to be an old bungalow that has been on sale for around six months. 

The agent marketing the property who declined to be named added that it is being sold by a Singaporean and has received a few enquiries from potential buyers. 

Tejaswi Chunduri, Regional Analyst at PropertyGuru, said the fact that GCBs are in limited supply but see strong demand could be a contributing factor to the eye-popping price tag. 

“Until now, we have only seen such high asking prices for landed homes on Sentosa Cove. The highest price attained for a GCB on mainland Singapore was S$68 million for a bungalow at Ridout Road.” 

She added that “prices are expected to rise, although at different rates for different districts”. 

According to Chunduri, many genuine buyers prefer landed homes on freehold or 999-year leasehold sites as they can have almost full-ownership of the land. 

Meanwhile, there are 11 bungalows currently listed on PropertyGuru with an asking price of S$70 million and above, with the second priciest being an S$88 million GCB along Victoria Park Road.

CapitaLand Group to relocate to Westgate Tower from 2015

CapitaLand said Tuesday that the group will relocate to Westgate Tower in Jurong progressively from early 2015.

The group will occupy about 160,000 square feet across 11 floors of the new 20-storey prime office tower. It will also maintain a city office at Capital Tower as a flexible workspace to liaise with clients or business partners, it said.

The group, which includes CapitaMalls Asia, CapitaMall Trust, CapitaCommercial Trust, and Ascott Residence Trust, currently operates from different buildings in Singapore.

Mr Liew Mun Leong, President and CEO of CapitaLand Group, said: “The relocation will be a milestone for CapitaLand Group. For the first time, all business units in Singapore and the corporate office will operate from a single location. We want to create a conducive environment that will help to further improve productivity across the Group and achieve work-life integration.”

He added: “We are pleased that Westgate, sited within Jurong Gateway – the biggest commercial hub outside the Central Business District – will provide the ideal location for the Group to be housed under one roof. We look forward to playing a significant role in transforming the Jurong Lake District into a key regional business hub.”

Westgate, jointly developed by CapitaMalls Asia, CapitaMall Trust Management and CapitaLand, is to comprise a shopping mall and office tower. The 416,000-sq-ft lifestyle and family mall is expected to be opened by end-2013, while the 320,000-sq-ft office tower is slated for completion in end-2014.

Bright Hill site awarded to UVD

UVD Pte Ltd has won the tender for a residential site (pictured) at Bright Hill Drive after submitting the top bid of S$291.5 million, according to the Housing and Development Board (HDB). 

The 13,437.1 sq m plot is expected to yield 405 condo units or flats, or a combination of flats and strata landed homes subject to approval. However, the 99-year leasehold site cannot be developed into serviced apartments, noted the HDB. 

The tender for the site was launched on 20 June and closed on 7 August with a total of six bids received. 

In Land-Scarce Singapore, Good Class Bungalows(GCBs) Are Extremely Rare And Exclusive. GCBs Were Transacted At An Average Price Of S$24 Million In 2011

"In land-scarce Singapore, Good Class Bungalows(GCBs) are extremely rare and exclusive. GCBs were transacted at an average price of S$24 million in 2011."

1 - Singapore's ranking in the Easiest Places to do Business
4 - The number of official languages in Singapore
40 - Foreign Singapore Residents as a percentage of the population

Residences closest to the Orchard Road shopping belt are classified under prime districts 9 and 10. Standing in the heart of the area is The OrchardResidences, named for its location directly above the Orchard Mass Rapid Transit (MRT) station and its iconic mall podium, the ION Orchard. Jointly developed by CapitaLand and Sun Hung Kai Properties, the 56-storey residential tower was envisaged to be the tallest building and a focal point onOrchard Road.

Recent projects such as Hamilton Scotts, The Marq on Paterson Hill and Twin Peaks take luxury to a new level. At Hamilton Scotts, a biometric scan and elevator deliver cars up to the apartments' own car porches, termed an 'en suite sky garage'. Each residence at The Marq's Signature Tower has a private lap pool cantilevered outside the building. Developer SC Global also announced that a five-bedroom apartment at the project would be fully fitted by Hermès. In November 2011, a 3,003-sq ft apartment at the project fetched a record price of S$6,850 per sq ft, or around S$20.5 million. Separately, Twin Peaks became Singapore's first fully furnished apartment project, offering buyers a choice of designer fixtures. Luxury takes another form in projects such as Hilltops and Nassim Park Residences, which take advantage of local greenery to provide a tranquil retreat away from the bustling shopping district outside their gates. Prices of super luxury apartments and condominiums tracked by Savills averaged S$3,661 in Q4/2011.

The crème de la crème of the super-luxury home segment, however, is the Good Class Bungalow (GCB). These are bungalows with a minimum plot size of 1,400 sq m, located in 39 areas which are clearly demarcated and gazetted by the Singapore Government to preserve their character and overall ambience. The 39 areas are spread across prime districts 10 and 11, as well as districts 21 and 23, the latter being just off the prime districts. In land-scarce Singapore, GCBs are extremely rare and exclusive. GCBs were transacted at an average price of S$24 million in 2011. The catch is that foreign ownership of GCBs is restricted, as with most landed housing inSingapore.

Sentosa Cove is the only exception, where foreigners can own a landed home in Singapore. The residential enclave is situated on the eastern end ofSentosa, a resort island 15 minutes' drive from the CBD, which is also home to Resorts World Sentosa with its Universal Studios and casino. Five islands -Coral, Paradise, Sandy, Treasure and Pearl - have been carved out atSentosa Cove to offer homes with picturesque seafront views. Some residents also have private yacht moorings. Sentosa Cove is home to ONE°15 Marina Club, an exclusive local yacht club. Bungalows at Sentosa Covechanged hands at an average price of S$18 million in 2011.

Singapore's long-standing record of political and economic stability and an absence of natural disasters has also made it a safe haven for investors. Official projections expect the Singapore economy to grow by a healthy 5% in 2011. The island state has come under the international spotlight in recent years with the opening of its two integrated resorts and casinos - Marina Bay Sands and Resorts World Sentosa - and the hosting of several major events such as the inaugural Youth Olympics and Formula 1 Grand Prix. Although Indonesians remain the top overseas buyers of non-landed homes in prime districts 9, 10 and 11, the number of mainland Chinese buyers has been increasing steadily over recent years.

The Marq on Paterson Hill, District 9, Singapore
Site Area: 3,003 sq ft
Transaction Price: S$20.5 million (S$6,850 per sq ft)
Transacted Date: November 2011

Good Class Bungalow, Victoria Park Road, District 10, Singapore
Site Area: 32,078 sq ft
Transaction Price: S$48 million (S$1,496 per sq ft)
Transacted Date: November 2011

Sentiment for property development industry improves marginally

Sentiment for the property development industry in Singapore has improved marginally in the second quarter.

This according to the latest survey jointly developed by the Real Estate Developers’ Association of Singapore (REDAS) and the NUS Department of Real Estate.

According to the Real Estate Sentiment Index (RESI), the outlook for Singapore’s real estate market is showing a modest improvement compared to the previous quarter.

The Composite Sentiment Index, the derived indicator for overall real estate market sentiment in Singapore, stood at 4.7 in 2Q12, compared to 4.6 in 1Q12.

Meanwhile, the Current Sentiment Index, which tracks changes in sentiments over the past six months, rose to 4.9, up from 4.8 in 1Q12.

The Future Sentiment Index, which tracks market expectations for the next six months, increased slightly to 4.5 from 4.4 in 1Q12.

The survey was conducted through a questionnaire given to about 280 developers and real estate players in Singapore.

The survey scores, which range from 0 to 10, measure survey respondents’ perceptions and expectations of real estate development and market conditions in Singapore.

According to the RESI, the hotel sector is expected to continue its strong performance in the next six months, but the office sector is expected to continue underperforming in the near term amidst the lack of clarity in the global economic outlook.

The survey also found that fewer developers are likely to increase private residential unit launches, with 46 percent of the developers surveyed expecting more units to be launched in the near term, down from 77 percent in 1Q12.

Almost two-third of the respondents expect prices to hold at the current level over the next six months, up from 46 per cent previously.

Meanwhile, developers are also showing a higher level of concern for the rise in labour costs, land costs and building materials costs.

Busting the myth of a hot property market

[SINGAPORE] When you read about units being snapped up at a record pace, you might think that the property market is sizzling.

But buried beneath the headline numbers, two distinct trends appear to puncture this myth.

Not only is the average unit size sold by developers much smaller now, compared to the pre-global crisis peak year of 2007, but islandwide the average price per square foot is also much lower. That's because more units are being sold in the suburbs instead of the Core Central Region (CCR), where properties are costlier.

In fact, the state of the property market looks very different when viewed from the perspective of total square footage and total dollar quantum of apartments/condos sold by developers, rather than the number of units.

Although developers sold more non-landed private housing units last year and in 2012 (on an annualised basis) than in 2007, the total area of these units and their dollar value were lower than 2007's levels, according to a study by Savills Singapore.

That's because developers have taken to minting smaller units to keep lump sum unit prices affordable to buyers. Also, transactions in CCR, home to high-end properties, have shrunk.

"Contrary to conventional belief or market perception that the residential market is in a red-hot state, the numbers belie the fact that we are nowhere near or back to the levels in the go-go year of 2007 in terms of the total square footage and dollar value sold," said Savills Singapore research head Alan Cheong.

Savills' analysis, which was based on URA Realis caveats data, looked at primary market transactions (that is, developer sales) of non-landed private homes. Across Singapore, developers sold 13,910 units last year, up 19.4 per cent from 2007's figure of 11,647 units. The 2007 figure is also lower than the 2012 annualised figure of 15,824 units (based on caveats for 7,912 units lodged in the first half of this year).

However, the total area of 13.43 million sq ft in the non-landed units developers sold last year was about 19.2 per cent lower than the 16.62 million sq ft they sold in 2007.

Mr Cheong attributes the trend to developers building smaller homes post-GFC across all locations. The average size of private apartments and condos sold by developers in CCR - which includes the traditional prime districts 9, 10 and 11, the financial district and Sentosa Cove - has declined by 30.2 per cent from 1,639 sq ft in 2007 to 1,144 sq ft last year. It dipped further to 1,052 sq ft in H1 2012.

In the Rest of Central Region (RCR), the average size of units sold has shrunk almost a third from 1,338 sq ft in 2007 to 898 sq ft last year before contracting further to 831 sq ft in H1 2012.

In the Outside Central Region (OCR) - home to mass-market condos in suburban locations - the figure slipped 25.3 per cent from 1,292 sq ft in 2007 to 965 sq ft last year. In H1 2012, the figure was 876 sq ft.

Taken individually, the average psf primary market prices achieved in each of the three regions last year and in H1 2012 surpassed those in 2007. But the total islandwide dollar value of the units sold by developers in 2011 and 2012 (annualised), at $16.9 billion and $16.3 billion respectively, are shy of 2007's $22.7 billion.

This is because average home sizes have shrunk in all regions and volumes have dropped dramatically in CCR, where properties are pricier, while the action has swung to the suburbs.

Back in 2007, when foreign buyers were making a beeline for upmarket homes, drawn by the Remaking Singapore story and a strategy to draw high net worth individuals to the island, CCR and OCR each accounted for roughly 35 per cent of the number of non-landed private homes sold by developers.

It's a different picture now, with the exodus of buyers from CCR to OCR.

Only around 10 per cent (1,417 units) of the 13,910 units developers sold last year were in CCR; the share for H1 2012 was 4.3 per cent (337 out of 7,912 units sold).

On the other hand, OCR's share was a formidable 63.9 per cent in 2011 and 75 per cent in H1 2012, translating to primary market sale volumes of 8,884 units and 5,936 units respectively in the region.

"However, the volume increase in OCR for 2011 and H1 2012 could not offset 2007's concentration of transaction value in CCR, resulting in the drop in total sales value of units sold by developers," said Mr Cheong.

Commenting on the shrinking average home size, Roxy-Pacific Holdings executive chairman Teo Hong Lim observes this is due not just to a proliferation of shoebox units but a general contraction of unit size across the board - two, three, four bedders - as developers try to keep lump sum investment sums affordable to buyers.

He also highlights that since the 2009 rule change to include bay windows and planter boxes as part of gross floor area, the saleable area of an apartment has shrunk by about 5-6 per cent even if it has a similar internal layout as before.

Savills' Mr Cheong notes that with the drop in developers' total housing sales revenue compared with 2007 and with more players entering the fray, competition has intensified for land purchases, especially at state tenders. "There are now more fish swimming in a smaller pond."

Agreeing, DTZ's Southeast Asia chief operating officer Ong Choon Fah says: "Selling prices have gone up but land and construction costs have also increased. So developers have to look for ways to better manage costs and development risk."

These include pushing out launches as soon as possible and partnering construction companies. "They have to look for more efficient ways to develop and design their projects."