Tag Archives: Q2

Resale volumes of condos plunge in Q2 ’14

In yet another sign of a stalemate between buyers and sellers, resale volumes of private condominiums have fallen to levels last seen during the Global Financial Crisis, with the bloodbath of declines seen splattered islandwide.

While sellers with strong holding power seemed unwilling to let go of their units at much-lower prices, District 18 in the east and District 27 in the north appear to have held up well in resale volumes for the second quarter.

District 18, which comprises Tampines and Pasir Ris, saw resale volumes inch up 5.6 per cent in the second quarter this year to 57 transactions compared to the year-ago period before the total debt servicing ratio (TDSR) kicked in on June 29, 2013.

Resale volumes of private condos in District 27, which covers Yishun and Sembawang, were flat at 18 transactions in the second quarter, compared to the same quarter last year.

Their resilience came against a plunge in resale volumes islandwide.

Total resales of private condos stood at 1,314 units in the second quarter, accounting for 31.9 per cent of all private non-landed residential transactions. This is moderately higher than the 29.9 per cent in the same quarter last year but lower than the 40.9 per cent in the fourth quarter of 2012.

District 7 comprising Middle Road and Golden Mile and District 19 covering Serangoon Garden, Hougang and Punggol saw the biggest falls in resale volumes across districts. Transactions in District 7 fell to two units in the second quarter from 12 in the second quarter last year while that in District 19 plummeted to 57 units from 164.

The comparisons of resale volumes before and after TDSR are based only on caveats lodged, which typically represent some 80 per cent of the market. This illustration excludes new sales as they are driven mainly by new launches that may not have taken place in certain districts. The heterogeneity of property units also prevent direct comparisons on price movements over time without controlling for quality differences through constructing an index, a weighted scheme or tracking repeat sales.

Nicholas Mak, executive director of SLP International, noted that much of the resales caveats were for family-size units. “The marketing activities of new projects in that district could have attracted buyers, who may have later decided to buy resale properties as they were cheaper in per square foot (psf) terms.”

New launches in District 18 included City Developments’ Coco Palms in Pasir Ris, which has moved over 560 units at a median price of S$1,020 psf since its launch in May. MCC Land managed to sell more than 100 units at The Santorini in Tampines since its launch in April at a median S$1,113 psf, according to URA’s developer sales data. In comparison, median prices of resale units in District 18 stood at S$897 psf in the second quarter.

The lack of new launches in certain districts could also have the converse effect on the resale market – as seen in Districts 19 and 12 (Balestier, Toa Payoh, Serangoon), Mr Mak added.

R’ST Research director Ong Kah Seng noted that buying interest for homes in Pasir Ris is supported by well-tested leasing demand, especially from the Changi Business Park. The decentralisation of the banks’ non-core back-office operations to the business park and increased foreign professionals in the technology sector have also expanded the potential tenant pool in the eastern part of Singapore, he noted.

At the other end of Singapore, District 22 (Jurong) also registered a marginal 4.3 per cent year-on-year drop in resale transactions of private condos in the second quarter, possibly finding some support from renewed interest in the area given URA’s masterplan to transform Jurong Lake District, consultants observed.

All transactions (new sales, resales and subsales) involving private condos have slumped 40.7 per cent year-on-year in the second quarter to 4,118 – similar to the levels last seen during the 2008-2009 Global Financial Crisis.

Based on the URA property price index for non-landed homes, prices of private condos transacted in the second quarter have fallen to levels last seen in the fourth quarter of 2012. Prices in the Core Central Region (CCR) fell by a larger magnitude to a level similar to that in the fourth quarter of 2010.

OrangeTee head of research and consultancy Christine Li noted that the drop in foreign purchases due to the additional buyer’s stamp duty (ABSD) has hurt the CCR market segment, as foreign buyers make up a significant portion of this segment.

“Secondly, the implementation of loan restrictions such as loan-to-value limits and the TDSR framework have hurt properties with high quantums,” she added. “As such, CCR properties have not held up as well as RCR (Rest of Central Region) and OCR (Outside Central Region). This trend is likely to persist until current cooling measures are tweaked.”

But given the exuberant run-up in property prices since the second half of 2009, sellers who sold their units recently are unlikely to have suffered a loss, though they could be making less profits than if they had sold their units last year, consultants noted.

A random sampling by SLP International on resale transactions in the second quarter showed that most of the sellers did not incur losses in the resale market because a majority of them bought their units more than three years ago when the prices were cheaper and they did not have to pay the seller’s stamp duty for properties that they have held for more than four years.

BT_20141007_LKMAP_1304586 BT_20141007_LKMAP7A_1304814


Why cooling measures are not removed yet: rise in caveats in Q2

Here’s a possible reason why the authorities are not inclined to remove any property cooling measures just yet: There was an across-the-board increase in caveats lodged for private home purchases in the second quarter compared to the previous quarter.

DTZ’s analysis of URA Realis caveats database shows a 37.1 per cent quarter-on-quarter increase in the total number of private homes transacted to 3,369 units in Q2.

A segmental breakdown showed that the number of units picked up in the resale market climbed nearly 41 per cent or 386 units to 1,328 units in Q2 from 942 units in Q1 – ending three consecutive quarters of decline.

New sales by developers too rose by 511 units or 36.8 per cent to 1,898 units. In the subsale market, 143 units changed hands in Q2, up 11.7 per cent from Q1.


Office deals fire property deals

Straits Times 15 Jul 2014:

OFFICE deals were the main driver of property investment sales in the second quarter and will likely stay at the forefront in coming months, consultants said. They noted that a resurgence in rents has led to keener interest from investors in the office sector. Buyers were mainly Singapore-based property firms and real estate investment trusts (Reits), although some from other parts of Asia such as China and Japan are also on the lookout, they added.

The total volume of real estate investment sales was around $4.4 billion in April through June, consultancy DTZ noted yesterday. DTZ did not provide the transaction volume for office sector deals but a CBRE report last week put the figure at around $1.8 billion in the second quarter. Investment sales refer to transactions worth $5 million or more but they exclude about $553 million worth of sales of single residential units and sites that cannot be redeveloped or subdivided into more than one plot.

The level of investment sales in the second quarter was 11 per cent lower than in the preceding three months, DTZ said. But it noted that there were more big deals worth between $500 million and $1 billion in the second quarter than in the first, including the sale of Equity Plaza, the sale of a 92.8 per cent stake in Prudential Tower, as well as two state land tenders, one in Woodlands and one in Sims Drive.

Keppel Land and its fund management arm Alpha Investment Partners sold Equity Plaza for $550 million last month to Plaza Ventures, a consortium led by Mr Sam Goi’s GSH Corp. Keppel Reit also agreed to sell its 92.8 per cent stake in Prudential Tower for $512 million in May, to a consortium made up of Lian Beng Group, KOP Limited, KSH Holdings and Centurion Global.

Property companies were the largest buyers of real estate in the second quarter, accounting for $3.1 billion or about 71 per cent of investment activity, DTZ said. It added that though Reits sold more properties than they bought in April through June, that was likely to reverse this quarter due to the listing of Frasers Hospitality Trust.

The trust’s initial portfolio will consist of six hotels and six serviced residences. These include InterContinental Singapore and Fraser Suites Singapore, which the trust will buy for $824.1 million in total. “Reit activity and developer acquisitions will continue to support investment activity going forward,” said Ms Swee Shou Fern, director of investment advisory services at DTZ. However, consultants differed on the outlook for the investment sales market. “As global real estate markets start to improve, investors and funds are becoming more positive about the performance of the real estate market.

This could see them increasing their allocations to real estate and Singapore could benefit, being one of the most liquid markets in the region,” Ms Swee said. CBRE Singapore research head Desmond Sim also said in a report last week that “investment activity is likely to be nudged ahead by the office sector with investments in completed strata office properties as well as some en-bloc office buildings”. However, he expects the investment market to slow down due to “overall cautious sentiment” due to property curbs and the reduction in state land parcels up for tender in the next six months.