Issue 36

Copyright 2011-2012 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2 p9
Singapore Property News This Week Property Prices at a Turning Point

FROM THE

EDITOR

Welcome to the 36th edition of the Singapore Property Weekly. Hope you like it! Mr. Propwise

p14 Resale Property Transactions

(January 7 January 13)

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SINGAPORE PROPERTY WEEKLY Issue 36

Singapore Property This Week

Residential
Strong sales at Watertown project in Punggol 215 of the 596 released units at 99-year leasehold 992-unit Watertown project was sold over the Chinese New Year long weekend, bringing the total number of units sold to slightly above 500. The units sold so far have a price range of $980 to $1,500 psf and was sold mainly to locals, with Singaporeans making up 90% of the buyers. The mixed residential-and-retail project will include 11 13- to 14-storey towers as the residential component and a four-storey retail component connected to the Punggol MRT station. The latter, named Waterway Point, will consist of two basement levels and two other levels that make up 370,000 sq ft worth of net lettable area with a 40-30-15-15 tenant mix for retail, food and beverage, entertainment and others such as educational institutions, banks and community amenities. Evidence that intended effect ABSD is achieving its

Sales figures for recently launched projects have shown that the ABSD is achieving its intended effect of curbing foreign demand. In the recently launched Watertown project in Punggol, over 90% of the units sold were purchased by Singaporeans, up from an

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SINGAPORE PROPERTY WEEKLY Issue 36 average of 80% of similarly suburban condos sold in 2011, such as The Tennery and The Greenwich. In another recent launch, The Hillier in Hillview area, 80% of the buyers were Singaporeans. The higher proportion of non-Singaporean buyers may be due to the location, which offers easy access to Bukit Timah and better-known schools such as Nanyang Girls School and Hwa Chong Institution. An upcoming slew of property launches There are several property launches to look out for, including ECs and private condos. 99-year leasehold five-storey Parc located in Woodlands, a private project consisting of 689 units launched. The units are likely to Rosewood residential has been go for an average price of $1,000 psf, with onebedroom units starting from 431 sq ft priced at around $400,000, two-bedroom units at $570,000 and the rarer three-bedroom units for almost $800,000. The Tampines Trilliant, an EC project developed by Sim Lian, is set to be released soon. The project will consist of 670 units in 12 15- and 16-storey towers, with mostly three-bedroom or three-bedroom-plus-utility units with 127 units of the first ranging from 872 to 1,141 sq ft and 397 units of the latter with a size of 1,001-1,378 sq ft. Other units will either be four-bedroom units ranging from 1,302-1,593 sq ft or penthouses. Another upcoming EC is 728-unit Twin Waterfalls located near Punggol MRT which

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SINGAPORE PROPERTY WEEKLY Issue 36 will be launched in February. Developed by Fraser Centrepoint, the project consists of 17storey towers housing 914 sq ft threebedroom units, 1,378 sq ft four-bedroom dual key units and penthouses with sizes up to 1,928 sq ft, with an estimated average price of around $700 psf. Another project under Fraser Centrepoint due for release soon, either within Q1 or early Q2, is the 99-year leasehold seven-storey Palm Isles at Flora Drive in the Upper Changi area, which will consist of 450 units to be sold at an estimated price of $900-950 psf. Other upcoming projects include 103-year leasehold 62-unit Greenwood Mews, a cluster housing development located near Bukit Timah, and 99-year leasehold 416-unit Hillsta, a condominium development in Choa Chu Kang as well as 99-year leasehold 702-unit Bartley Residences, a condominium project located near Bartley MRT Station.

Sim Lian launches 99-year leasehold EC The Tampines Trilliant

The 670-unit development sits a 236,805 sq ft site located along Tampines Central 7, and will consist of 12 blocks housing 127 threebedroom units ranging from 872 sq ft to 1,141 sq ft, and 397 three-bedroom-plus-utility units with sizes of 1,001-1,378 sq ft, with the rest being four-bedroom units ranging from 1,3021,593 sq ft and penthouses of sizes 1,841 2,465 sq ft. Prices start from $682,000 or $782 psf for a 872 sq ft three-bedroom unit and $971,000 or $746 psf for a 1,302 sq ft four-bedroom unit. Being located near Tampines MRT Station and shopping malls

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SINGAPORE PROPERTY WEEKLY Issue 36 such as Tampines 1, Tampines Mall and Century Square, it is expected to draw much interest. median resale prices have also decreased for mainly four-room and five-room flats in more mature estates such as Bukit Merah. While prices of resale flats in other estates have continued to increase, they may fall as supply of new fats increases. Other possible reasons for the potential fall in prices is the relative attractiveness of the BTO flats, which are affordable and now afford a high rate of success and shorter waiting time. Resale volumes have also fallen, for in Q4 2011, resale transactions increased by 0.3% from Q3, and brought the total transactions for the year to 24,633, a 24% decrease from 2010s figures. Generally, COVs are expected to fall to around $25,000-40,000 and sale transactions are expected to fall by 3-5%.

Lower COVs indicating a weaker HDB resale market

Q4 2011 showed lower cash-over-valuation (COV) figures, with the median COVs falling for all flats except for five-room and executive flats in some towns. This shows that the HDB resale market is weakening. This decrease can be attributed to buyers being more conscious of the additional costs required to renovate resale HDB flats, particularly in light of the negative economic outlook. The large supply of build-to-order (BTO) flats have also helped to stabilise HDB resale prices, which increased by 1.7% from Q3 to Q4, compared to 3.8% from Q2 to Q3. The

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SINGAPORE PROPERTY WEEKLY Issue 36 Prices and rents for private properties stagnate According to data released by URA, Q4 2011 to Q4, lower than the 0.8% increase from Q2 to Q3. Similar to the trend for the price index, the rental index increment for 2011 was also much smaller than that for 2010, 3.8% compared to the earlier 17.9%. Some analysts believes that prices will fall by 5-15%, with the luxury sector taking the brunt of it and the mass-market sector less

saw a 0.2% increase from Q3s benchmark

private home price index and 5.9% year-onyear increase from 2010 to 2011, lower than the 17.6% increment from 2009 to 2010. The landed property sub-index increased by a

mere 0.1% from Q3 to Q4 with the price index

for semi-detached houses falling by 0.6%, when the non-landed property sub-index increased differential by 0.3%. fall Nevertheless, for the price semi-detached

affected, particularly with the ABSD and the

uncertain economic outlook to curb demand. Other analysts however, believe that it is hard to conclude whether the peak has been reached. This is because there are many

houses in different regions (some 1.6%, some

1.3%) showed that there is price resistance in some regions. For the overall rental index for private homes, it registered a 0.4% q-on-q increase from Q3

large developers who are able to resist price

cuts. Furthermore, earlier cooling measures implemented in the last couple of years did not manage to cool the market, making it hard to predict and conclude whether prices

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SINGAPORE PROPERTY WEEKLY Issue 36 will fall Some believe that while the ABSD will lead to a price fall, prices are just as likely to increase again as interest rates are expected Commercial Industrial rents to decrease as supply booms After reaching the peak of its growth in 2011, The much lower sales volume in the where multi-user and warehouse price and rental indices have increased by 16% and 22% respectively, growth of industrial rents secondary market (decrease of 27.6% in 2011) compared to that in the primary market (a fall of 2.4%) could also worsen the price decrease. The latter is more attractive to buyers because of the showflats and advertisements by developers and installment payment plans buyers can choose, not an

to remain low.

and capital values may slow down or even fall

this year, with an upcoming supply of 9.59 million sq ft worth of industrial space. This is not helped by the negative economic outlook for the year, which would further discourage demand for industrial spaces. A fall of 15% is predicted as demand for both existing and upcoming spaces decreases.

option when purchasing property in the

secondary market. The increase in the supply of ECs has also hampered the growth of rental rates.

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SINGAPORE PROPERTY WEEKLY Issue 36 With more land expected to be released under the Industrial Government Land Sales Programme (IGLS), some with shorter Singapore takes the 6th spot in JLLs Top 30 list for commercial property investment In Jones Lang LaSalle's list of top 30 cities for

tenures, the situation is not expected to

improve. New conditions such as restrictions on strata subdivision on selected plots of land will further discourage higher bid prices. However, capital values may not be affected as much since the recent cooling measures in the residential market may result in investors turning their attention to the industrial market, particularly to multi-user factory space and high-specs buildings.

direct commercial real estate investment for

2010 to Q3 2011, Singapore takes the sixth spot, having about US$15 billion worth of such transactions in this period. Direct commercial real estate investment includes office, retail, industrial, hotel and mixed-used properties but excludes land deals, residential properties and all transactions below US$5 million.

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SINGAPORE PROPERTY WEEKLY Issue 36

Property Prices at a Turning Point

By Mr. Propwise From the URAs recent release of the 4Q2011 private residential property index, property price increases in Singapore have almost

screeched to a halt. Prices were up just 0.2%

in 4Q2011 on a quarter-on-quarter basis and 5.9% on a year-on-year basis. At the current levels the price index is 16.2% above the previous 2Q2008 peak, and 13.7% above the previous all time high in 2Q1996. Figure 1 URA Property Price Index

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SINGAPORE PROPERTY WEEKLY Issue 36 What is interesting to note is that the rate of growth of the PPI has been slowing for 9 quarters, i.e. property price growth has been decelerating continuously, and is already close to zero. This is likely due to concern over the slowing economy, worrying global economic situation especially with the troubles in Europe and weak growth in the I believe that residential property prices in Singapore are at a turning point and we are likely to see a quarter-on-quarter decline in the next 1Q2012 Property Price Index disclosure. Some analysts have estimated that prices were already down on a monthon-month basis in December 2011. The uncertainty is whether we will see a

US, combined with the dampening effect of

multiple rounds of government measures.

sharp decline as during the 1997-1998 Asian

Crisis and 2008-2009 Financial Crisis, or whether it will be a more gradual decline as we saw during the 2000-2004 Post-Dotcom Bubble and SARs era.

Figure 2 Change in Property Price Index

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SINGAPORE PROPERTY WEEKLY Issue 36 Can Low Interest Rates Prop Up Property Prices? However some believe that the abundant global liquidity situation could blunt or even reverse the decline in Singapore property prices. Led by the European Central Bank and Fed, governments around the world have been easing monetary policy and keeping interest rates low to prevent another crisis triggered by too much debt. Weve already seen a New Year rally in the Straits Times Index, and if you believe that the stock market is a leading indicator for the property market, then we could see property prices supported in the coming quarters. Anecdotally, mass market launches are still going strong and local investors appetite for property is still strong even as the Additional Buyers Stamp Duty has kept most of the foreigners away. For example, the recent launch of Parc Rosewood (by Fragrance Group and World Class Land) in Woodlands saw 165 of the 236 launched units sold at the $925-998 psf price range, 8-10% lower than initially guided. This followed the strong take up of Watertown in Punggol. But dont forget that this decelerating price growth trend preceded the property bear

Figure 3 Straits Times Index

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SINGAPORE PROPERTY WEEKLY Issue 36 markets that began in 3Q2000 and 3Q2008 (but not the one in 3Q1996). So regardless of whether you are more a technical or fundamental investor (or both), it pays to be cautious in this market. Supply in the Pipeline is at a Record High Supply, at 77,089 uncompleted private residential units from projects in the pipeline, is at an all-time high since the URA started recording this data in 1999. At the same time volumes are falling 4Q2011 sales of 3,603 new units (down 15% quarter-on-quarter) and 2,962 units (down 24% quarter-on-quarter) are both significant decreases. Of this record supply, 39,184 units remain unsold as at 4Q2011 this could present an overhang on the market for many quarters to come. Weve also seen widespread declines or Cash Over Valuations in the HDB market, which is a foreshadowing of a weaker private property market. How Much Could the Market Fall? I did a study of the previous 3 property market corrections and found that the PPI corrected in the range of 19.9% to 44.9% and that the correction lasted from 4 to 15 quarters: 2Q1996 Peak to 4Q2008 Trough 44.9% decline over 10 quarters 2Q2000 Peak to 1Q2004 Trough 19.9% decline over 15 quarters 2Q2008 Peak to 2Q2009 Trough 24.9% decline over 4 quarters

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SINGAPORE PROPERTY WEEKLY Issue 36 If history is anything to go by, what this means is that the correction could be longer and stronger than what most people are expecting. However, I believe that we will only see similar levels of price declines if there is an external crisis to cause a sense of panic, which we had in each of the previous 3 declines (e.g. Asian Crisis, Dotcom Bubble, Global Financial Crisis).

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SINGAPORE PROPERTY WEEKLY Issue 36

Non-Landed Residential Resale Property Transactions for the Week of Jan 7 Jan 13
Postal District 15 16 21 19 19 15 9 3 19 15 17 23 23 27 5 9 20 17 12 Project Name ONE AMBER COSTA DEL SOL MEADOWLODGE PARRY COURT PEOPLE'S GARDEN WATER PLACE RIVERGATE THE ANCHORAGE THE SUNNYDALE BLU CORAL CARISSA PARK CONDOMINIUM THE MADEIRA NICON GARDENS EUPHONY GARDENS ONE-NORTH RESIDENCES LEONIE STUDIO CLOVER BY THE PARK BLUWATERS 2 BALESTIER PLAZA Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,270 1,644,650 1,295 FH 1,475 2,060,000 1,397 99 1,335 1,323,000 991 99 1,098 848,000 772 999 1,195 941,888 788 999 1,216 1,267,000 1,042 99 1,507 2,789,800 1,851 FH 1,604 1,680,000 1,047 FH 1,216 875,000 719 99 2,110 1,650,000 782 FH 1,324 1,050,000 793 FH 1,249 950,000 761 99 2,013 908,000 451 99 1,184 780,000 659 99 592 980,000 1,655 99 689 1,300,000 1,887 99 1,292 1,268,000 982 99 1,206 1,280,000 1,062 946 1,001 900,000 899 FH

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data. Page | 14

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