Market News

12 Dec 2018

Home prices expected to remain flat or dip next year

Just when Singapore's residential property market was reviving after a four-year slump, government moves to curb the exuberance might play spoiler going into the new year. Home prices that are forecast to climb as much as 10 per cent this year could remain flat next year, and may decline as much as 3 per cent, estimates from property brokers compiled by Bloomberg News show. Home sales that lagged behind 2017 levels this year may once again be below that mark next year, according to forecasts. "The market has come to a standstill," said Mr Lee Nai Jia, Knight Frank's head of research in Singapore. "The Government is unlikely to introduce additional curbs or rollbacks as the market is stabilising." The pace of residential property price increases is slowing after the Government added measures to cool the market in July. Those curbs were prompted after prices rose about 7 per cent in the first six months of the year, fuelled by aggressive land bids from developers and collective or redevelopment transactions. Additional guidelines that limit the number of "shoe-box sized" apartments developers can build, plus anti-money laundering safeguards that restrict builders, are further constrictions. The Government said earlier this month it also plans to slow its release of land sales for residential use in the first half of next year, citing a spike in supply and a cooling in demand. The authorities' constant tweaking of rules and taxes surrounding the property market is a worry for home builders, Smartkarma analyst Tan Kok Keong said. It could increase developers' costs and reduce the island's appeal for international players.   Still, the Government maintains it needed to intervene and prevent a property bubble. Private home prices may have risen as much as 15 per cent this year had the authorities not acted, National Development Minister Lawrence Wong said in a speech last month. "Let me be very clear that the Government cannot and will not take a hands-off attitude to the property cycle," he added. "So there should not be any surprise when we intervene in the market, because that is our approach and attitude." The Monetary Authority of Singapore said in its annual financial stability review last month that sharp property price increases, if left unchecked, could have run ahead of economic fundamentals and raised the risk of a destabilising correction later. "Had the Government not introduced the additional curbs, this bull run in the residential market would have continued for three years," said Mr Nicholas Mak, an executive director at real estate asset manager ZACD Group. He expects prices to remain flat next year in a best-case scenario, but said declines of up to 3 per cent could occur. Aggressive land bids from developers are also expected to ease next year. Collective sales have totalled $10.8 billion from 37 transactions so far this year, according to CBRE Group. That is expected to fall to about one-tenth of that value next year, said Mr Desmond Sim, CBRE's head of research for Singapore. "Given the sizeable supply pipeline from public land tenders and private collective sale sites accumulated before the curbs, developers are likely to be more cautious," said Ms Tricia Song, head of research for Singapore at Colliers International Group. Developers "may pace out their launches to ensure the market remains sustainable in the coming year". Source from BLOOMBERG 12 Dec 2018    

07 Dec 2018

Variety of choice sites on H1 slate; seven of total 14 sites are new

The Ministry of National Development's first-half 2019 Government Land Sales supply may be subdued but still offers a selection of choice sites. In all, there are five sites on the confirmed list and nine on the reserve list. Seven of the total 14 sites are new. Some property consultants rate the most attractive plot as the one along Tan Quee Lan Street, on top of the Downtown Line Bugis MRT Station. It was just made available for application on the current-half reserve list but is being transferred to the H1 2019 confirmed list. JLL head of research and consultancy Tay Huey Ying said the move indicates the authorities' desire to build on the rejuvenation momentum in the area - referring to the completion of DUO and South Beach, and the upcoming Guoco Midtown. The Tan Quee Lan site can generate some 580 homes and about 2,000 sq m gross floor area (GFA) of commercial space. The Bernam Street site near the future Prince Edward Station is also expected to garner interest. It can yield about 250 homes and 2,000 sq m commercial GFA. Tricia Song, head of research for Singapore at Colliers International, said: "This a rare fresh site in the mostly built-up Shenton Way CBD and near the future Greater Southern Waterfront development. The last time a residential site was offered in this area was back in 2007 - two sites in Enggor Street which have been developed into Altez and Skysuites @ Anson, respectively." She forecasts a top bid of S$1,700 per square foot per plot ratio (psf ppr) for the Bernam Road plot. Another favourite is a land parcel in one-north Gateway that can yield 170 homes, making it a relatively small and palatable offering.The site is next to one-north Residences. Ms Song predicts a top bid of S$960 psf ppr. Savills Singapore research head Alan Cheong expects the top three bids for the plot to fall in the S$1,200-1,250 psf ppr range, pointing to the relatively small size of the development "plus the attractive work-play topology of the one-north district can makes this a trendy and chic development". Lee Sze Teck, head of research at Huttons Asia, said the timing of this site's offering is opportune, given that the number of residences in the locale has remained stagnant while the number of professionals working there have been rising over the years. The Canberra Link executive condominium (EC site) is expected to be hotly contested, given the tight supply for this public-private hybrid housing. The site is next to another EC plot that was awarded in September for S$558 psf ppr and attracted nine bids. Of the sites in the reserve list, Colliers' Ms Song rates the Dunman Road private housing site near Dakota Station to be the most attractive. It is also near good schools. "One concern, however, could be its large size - it can yield some 1,070 units," she added. This is one of three new residential sites on the reserve list; the other two are a private housing site in Hillview Rise and an EC site in Fernvale Lane in the Sengkang area. MND has also introduced a new hotel site to the reserve list. Located in Sims Avenue next to PLQ, it can generate about 575 hotel rooms and 2,000 sq m commercial GFA. Ms Song predicts a top bid of S$1,170 psf for this site. Existing sites that are being rolled over to the H1 2019 reserve list include three private housing plots in Bartley Road, Canberra Drive and Dairy Farm Walk. Two white sites in Marina View and Woodlands Avenue 2 will also remain on the next-half reserve list. The Woodlands Avenue 2 site is imposed with a minimum office quantum of 45,000 sq m GFA and a retail cap of 33,000 sq m GFA. Source from The Business Times 7 Dec 2018

06 Dec 2018

MND cuts private housing supply for H1 2019 Government Land Sales Programme by about 20%

THE government has decided to moderate the total supply of private residential units for the first-half 2019 Government Land Sales (GLS) Programme, citing the significant growth in pipeline supply while demand has started to moderate following the introduction of the July property cooling measures. The Ministry of National Development (MND) said on Thursday  morning that the H1 2019 GLS Programme will comprise five confirmed list sites and nine reserve list sites. These sites can yield about 6,475 private residential units (including 910 executive condominium or EC units), 86,000 square metres gross floor area (GFA) of commercial space and 1,115 hotel rooms.  The private housing supply works out to be 19.5 per cent lower than the 8,040 private residential units (including 1,210 EC units) in the confirmed and reserve lists of the current H2 2018 slate. The commercial space supply for H1 2019 will also be lower than the 124,200 sq m GFA of commercial space for H2 2018. However the hotel supply is higher than the 930 hotel rooms for the current half. Through the H1 2019 confirmed list, the MND will release about 2,025 private residential units (including 385 EC units) and 4,000 sq m GFA of complementary commercial space. In comparison, it is releasing land for 2,705 private homes (including 695 EC units), 42,200 sq m GFA of commercial space and 390 hotel rooms in the current H2 2018 slate. Confirmed list sites are launched according to schedule regardless of demand. On the reserve list, the government will offer land for about 4,450 private residential units (including 525 EC units), 82,000 sq m GFA of commercial space and 1,115 hotel rooms. This compares with H2 2018 reserve-list supply of 5,335 private residential units (including 515 EC untis), 82,000 sq m GFA of commercial space and 540 hotel rooms. Reserve-list sites are launched only upon successful application by a developer or when there is sufficient market interest in a site. In its statement, the MND noted that the supply of private housing units in the pipeline has grown significantly and is currently at 45,000 units. This comprises around 31,000 unsold units from GLS and en-bloc sale sites with planning approval, and an additional 14,000 units from sites that are pending planning approval. In addition, there are around 28,000 existing private housing units that remain vacant. In contrast, demand has started to moderate. Following the introduction of the property market cooling measures in July, overall transaction volumes have declined, while developers’ demand for land has also moderated. "Given these factors, the government has decided to moderate the total supply of private residential units for the H1 2019 GLS Programme. Together with the supply in the pipeline, this will sufficiently cater to the housing needs of our population. The government will continue to monitor the property market closely and adjust the supply from future GLS Programmes, as necessary." The H1 2019 reserve list will have a white site along Woodlands Avenue 2 for a mixed-use development. “This will help to sustain the development momentum of Woodlands Regional Centre as a major commercial node outside the city, in line with the government’s objective of bringing job opportunities closer to homes.” the MND said. The site is imposed with a minimum office quantum of 45,000 sq m GFA and a retail cap of 33,000 sq m GFA. A new hotel site in Sims Avenue will be added to the H1 2019 reserve list. “Together with the existing white site at Marina View carried over on the reserve list from the H2 2018 GLS Programme, there will be ample opportunities for developers to initiate additional supply of hotel rooms over and above the current pipeline supply,” it added. Source from The Business Times 6 Dec 2018

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