Singapore Property Weekly Issue 230

8/20/2019 Singapore Property Weekly Issue 230

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Issue 230Copyright © 2011-2014 www.Propwise.sg. All Rights Reserved.

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CONTENTS

p2 Why the Government Should Tweak

the Property Cooling Measures

p11 Singapore Property News This Week

p15 Resale Property Transactions

(September 29 – October 6 )

Welcome to the 230th edition of the

Singapore Property Weekly .

Hope you like it!

Mr. Propwise

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 230

Page | 2Back to Contents

By Paul Ho (guest contributor)

Although Singapore runs a surplus almost

every election cycle, this surplus does not

include land sales. Hence Singapore runs a

much larger “surplus” than reported in the

budget. While the IMF treats Land Sales as

revenues, Singapore’s Ministry of finance

treats land sales as Capital Receipts. What

this means is, any land sales are added into

Singapore’s past reserves as capital

gains/losses.

Why the Government Should Tweak the PropertyCooling Measures


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According to the URA, from Jan 2011 to Sep

2015, the proceeds from just Commercial,

Hotel, White, Industrial, Residential

(excluding landed housing) and other sites

amounted to some $24 billion in land sales.

And this has not included land sales by the

HDB for EC, BTO and DBSS sites.

Still 40,000 unsold non-landed residential

units in the pipeline

According to the URA, there are 64,437private non-landed units and 2,774 Landed

Units to be completed between 2H2015 and

2019, based on the 2Q15 forecast. Figure1: Pipeline Supply of Private

Residential Units, Q2, 2015, Property Market

information, URA.


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On the other hand, the actual demand over

the past decade for private non-landed

homes averaged only 8,000 units annually,

based on the change in occupied stock for

non-landed homes.

This pipeline of supply is coming on the back

of a vacancy rate of 7.9% (25,071 units) in

2Q15.The Total Stock is 318,524 while

Occupied Units are 293,453.

As for sales, between Jan 2014 to Dec 2014,there were only about 8,000 units of new sale

Private residential units being transacted with

a subsale of 500 units (including EC).

As of 2Q15, there were some 24,435 units of

unsold uncompleted residential units versus64,437 (Non-landed Private residential –

Excluding EC).

Figure 2: Number of Unsold Private

Residential Units from Projects with PlanningApprovals, URA, 2Q 2015, URAAnnex B-1.

In short, this means there are 40,002 of

unsold private non-landed residential units in

the pipeline competing to be sold.


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Who will be staying in all these upcoming

units?

Figure3: Population Change versus housing

stock change (URA, Singstat, Century21,

iCompareLoan.com)

From 2005 to 2014, Singapore’s population

increased by 1.3million and the housing stock

increased by 171,870 units. This indicates

7.58 people per household. This is more than

double the average Singaporean’s household

size of 3.5 to 3.6. Part of the reason could be

attributed to workers staying in dormitories,

domestic helpers staying with their

employers, or room rentals.

Figure 4: Average Household size of

Singaporeans and PR households (Singstat)


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If we are working on 64,437 units becoming

ready from 2H 2015 through 2019. That

means an average of 15,000 units a year

while our current new unit sales trend is about

8,000 to 10,000 units. This indicates a

possible build-up of unsold units to the tune of

25,000 to 30,000 units in fouryears’ time. This

adds to the already elevated private

residential unsold rate.

Can foreigners fill up these units?Based on 7.58 people per household, 30,000

vacant units will need about 227,000 in

population growth (with the same foreigner

mix) within the next three to four years to fill

them up, either to rent and stay or simply to

buy and stay.

Foreigners will find it costly as the Additional

Buyer Stamp Duty (ABSD) is punitive at 15%.

Except for the ultra-high-income expatriates,

the likelihood of them being able to save an

additional $180,000 for a $1m property to pay

stamp duties is low. Many foreigners will most

likely end up renting a place in Singapore,

supporting the rental market.

Will homeowners experience negative

equity levels in the next 5 years?

Singapore’s housing prices have been

gradually dropping at around three to five

percent a year since 2014.

Figure5: Price Change in Non-landed

Properties, URA

SINGAPORE PROPERTY WEEKLY I 230


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Let’s assume an annual price drop of 4% per

year and a price drop of 20% in five years.

Figure 6: Amortization using 1.7% mortgage

rates for the first three years. (Assumption:

interest rates are static)

A property bought at $1.25million with a loan

of $1million (at an 80% Loan To Valuation)

would be worth $1m in five years. The loan

balance will be ~$870,000 if interest rates

stay at the same level. We would have aproperty valued at $1m and loan outstanding

of $870,000. Loan to Value has increased to

87%, but is still not in the dangerous negative

equity zone, as long as the economy is not

severely impacted and interest rates increase

moderately.

Why help the property developers?

While we could argue that developers only

have themselves to blame for bidding high

prices for land only to be stuck with unsold

stock, developers are merely proxy “tax” or

“capital receipts” collectors on behalf of the

government who is the largest landlord andcontrols immigration policies.

Perhaps the root cause is the over-eagerness

of the Singapore government to release as

much land supply as possible during

attractive pricing to fill the reserves while

constricting supply during periods of low land

prices, when what was needed was a

constant and measured supply to smooth out

market volatility.

SINGAPORE PROPERTY WEEKLY I 230


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The government should allow developers to

delay their completion of the development

without incurring penalties so as to shift some

of these property supply to the later years in

2017, 2018, 2019 and beyond. Or they couldallow developers to return the land to the

government and indefinitely shelf the building

plans with a penalty payable based on the

number of years delayed, or simply cancel

the contract outright with a penalty. This

would enable developers to cut loss and

move out of this difficult situation.

The government should act to solve this

problem

As property prices are dropping and rentals

weakening at the same time, there is a needto solve the vacancy challenge.

The Singapore government is keen to bring in

a higher population to solve many problems,

but with the weakening economy,

employment growth may be muted for

foreigners as well as Singaporeans and PRs.

At the very least the ABSD needs to be

reduced for foreigners as well as for

Singaporeans and PRs buying their second

or greater property as long as they meet the

TDSR guidelines.

Ideas to tweak the Total Debt Servicing

Ratio (TDSR)

The TDSR is a good policy and should stay to

ensure financial prudence. However, the

TDSR is artificially reducing the demand for

property not due to its limitation of

indebtedness, but due to the huge paperwork

burden it places on the property buyer just for

the bank to check and comply with the TDSR.

This includes obtaining car loan statements,

credit card statements, etc.



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Banks and financial institutions do not

necessarily print and deliver monthly

statements and calling their hotline will set

you back by thirty minutes, while printing a

statement will cost you $20.

Financial institutions are not helping to

provide the timely release of statements

required for housing loan applications.

Perhaps the MAS could coordinate a bureau

where such information are shared in a better

manner so that banks can check with a

central bureau to obtain the information they

need instead of burdening the buyers to fulfill

the onerous paperwork requirements. A

suggestion could be that a Buyer simply signs

an authorization form to a bank to allow abank to seek the information from the other

banks to retrieve the statements, freeing up

the burden on the home buyer.

The MAS could also mandate all financial

services providers to provide monthly

statements within three days upon a request

by customers who require this for bank

financing purposes.

The TDSR could potentially be relaxed for

people with high income and/or small

business owners to allow them greater

flexibility in leveraging and having access to

funds to create employment.

Increasing transparency will help

developers and consumers

Developers need help too. Going forward, the

government could make known its plans in

immigration and regulation pertaining to any

piece of land. By providing more transparency

on the land parcels to be released five years

ahead of schedule,



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developers will then know the five year land

supply forecast and bid responsibly.

End consumers will also likely end up with

property prices that do not swing wildly. The

government has the Reserves to do it and

should not simply restrict land supplies to

hold out for the highest prices, only to release

massive parcels of land when it hit the price

sweet spot, as this simply becomes a land tax

which ripples across industries, raising

business costs and making Singapore

uncompetitive and home prices unaffordable.

By Paul Ho, holder of an MBA from a

reputable university and editor of

www.iCompareLoan.com , Singapore’s first

Cloud-based Home Loan reporting platform used by Property agents, financial advisors

as well as Mortgage brokers.


http://www.icompareloan.com/http://propertymarketinsights.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/http://www.icompareloan.com/


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Singapore Property This Week


Residential

Condo resale price increase by 2.8% in

prime areas in September

In the core central region, non-landed private

home resale prices have increased by 2.8%

in September from the previous month. In the

rest of central region and the outside central

region, resale prices fell by 1.4% and 0.9%

respectively over the same period of time.

Not only so, the SRX’s overall resale price

index for non-landed private homes also fell

by 0.1% month-on-month in September.

Eugene Lim from ERA Realty said that the

increase in resale prices in the core central

region could have been due to the lack of

new launches within that region. Buyers may

have thus entered the resale market to seek

properties.

(Source: Business Times)

Condo rents fall by 0.3% in September

According to SRX Property, rents of private

non-landed residential units have fallen by0.3% month-on-month in September. Rental

volumes have also fallen by 4.1%. SRX

Property estimates that there were 3,758

rental transactions made in September, down

from the 3,919 made in August. Year-on-year,

there is a 17.7% increase in rentaltransactions in September. According to

Eugene Lim from ERA Realty, this could be

due to existing tenants taking advantage of



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lower rents by signing shorter leases and

moving around.


341 private homes sold by developers in

September

Data from the Urban Redevelopment

Authority showed that only 341 private homes

were sold by developers in September this

year. This makes it the lowest recorded figure

since the start of the year. Excludingexecutive condominiums, the number of

private homes sold by developers is 34%

lower than in August. The slump in sales may

be attributed to a reduction in developer

launches, the Hungry Ghost month and other

festivities during H2 of the year. Apart fromthat, market experts believe that the erratic

stock market could have also dampened

buying sentiments. Ong Teck Hui from JLL

said that the softening of the economy and

difficult business environment were likely

factors that contributed to the slow sales.


Normanton Park up for collective sale

Located near Kent Ridge Park, the

condominium, Normanton Park will be put up

for collective sale after the requisite of 80%

majority consent was secured from owners.

Yet, due to the expansiveness of the site,

developers may not be as keen to take up thissite, said market experts. This is because it

may be difficult to sell off all units, in light of

the additional buyers’ stamp duty which will be

applied to unsold units five years after the

land purchase date. Nicholas Mak from SLP

International believes that the reserve price of$840 million may be high for developers. The

site’s tender will close on Jan 19, added the

Business Times.




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More BTO flats to be released next year

To meet higher demand arising from recent

policy changes, more HDB flats may be

released next year. National Development

Minister Lawrence Wong said that HDB will

look into supplying more flats. Nonetheless,

Wong said that the government will continue

to taper the housing programme and make

temporary adjustments to accommodate

higher demand. He added that the

government will take into consideration the

responses of next month’s BTO sale

exercise, when planning the supply of flats for

the coming year. Not only so, he added that

the cooling measures will be retained as price

adjustments observed so far have been

moderate.


Commercial

Rental growth in business parks and

factories eases in Q3

Data from DTZ showed that the averagemonthly gross rents of first-storey and upper-

storey conventional factory space have fallen

by 2.3% and 2.9% respectively in Q3 from the

previous quarter. Rental growth in business

parks in Q3 remained constant at $5.10 psf

quarter-on-quarter in Q3. For the past 13quarters, the monthly gross rents for business

parks and high-tech sectors have increased

by an average of 0.8% quarter-on-quarter

and 0.7% quarter-on-quarter. Cheng Siow

Ying from DTZ said that leasing activities are

slower as occupiers are opting to renew theirleases or seek expansion space within the

existing building.



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In addition, experts believe that overall, rents

are unlikely to increase in 2016.


Prime-office rents may fall by 3% in next 3 years

According to market experts, prime-office

rents may fall by 3% over the next 3 years

due to a 7.6 million sq ft increase in supply of

gross floor area. The new supply of office

spaces planned especially in the centralbusiness district, is likely to limit rental

growth, said Alice Tan from Knight Frank.

Premium-grade offices with large floor plates

of over 10,000 sq ft are most likely to suffer

the largest cut in terms of rental growth.

According to Tan, an estimated 10% drop in

rents for large premium-grade office space

next year is expected.



http://www.moneymatters.sg/


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Non-Landed Residential Resale Property Transactions for the Week of Sep 30 – Oct 6

NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore Land Authority.Typically, caveats are lodged at least 2-3 weeks after a purchasersigns an OTP, hence the lagged nature of the data.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 MARINA BAY SUITES 2,691 6,500,000 2,415 99

1 THE SAIL @ MARINA BAY 614 1,070,000 1,744 99

5 THE VISION 904 1,190,000 1,316 995 THE MAYLEA 969 1,200,000 1,239 FH

5 FLYNN PARK 2,024 2,420,000 1,196 FH

5 BLUE HORIZON 1,152 1,120,000 972 99

8 MERA SPRINGS 1,044 1,370,000 1,312 FH

9 THE VERV @ RV 1,130 1,838,000 1,626 FH

9 OLEANAS RESIDENCE 1,238 1,860,000 1,503 FH

9 UE SQUARE 1,959 2,650,000 1,353 929

9 TRIBECA 3,907 5,000,000 1,280 FH

10 VALLEY PARK 1,356 2,090,000 1,541 999

10 THE MARBELLA 1,464 2,180,000 1,489 FH

10 THE LEGEND 1,464 1,850,000 1,264 FH

11 ROCHELLE AT NEWTON 1,012 1,488,000 1,471 99

11 TEN @ SUFFOLK 1,206 1,600,000 1,327 FH

12 BLISS LOFT 452 650,000 1,438 FH

12 DE PARADISO 1,238 1,370,000 1,107 FH

12 AVA TOWERS 1,227 1,038,000 846 FH

13 LEICESTER SUITES 484 788,000 1,627 FH

13 WOODSVILLE 28 1,195 1,300,000 1,088 99

13 THE ACACIAS 1,378 1,420,000 1,031 FH

14 MELOSA 506 678,000 1,340 FH

14 ATRIUM RESIDENCES 1,001 970,000 969 FH

15 SILVERSEA 1,518 2,500,000 1,647 99

15 THE MAKENA 1,636 2,050,000 1,253 FH

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

15 RIVEREDGE 1,335 1,600,000 1,199 99

15 BLU CORAL 1,087 1,140,000 1,049 FH

16 CASA MERAH 990 1,200,000 1,212 9916 COUNTRY PARK CONDOMINIUM 1,313 1,420,000 1,081 FH

16 TANAMERA CREST 1,195 1,000,000 837 99

19 A TREASURE TROVE 775 850,000 1,097 99

19 THE YARDLEY 1,270 1,380,000 1,086 FH

19 CASA RIVIERA 1,378 1,375,000 998 FH

19 RIO VISTA 2,454 1,720,000 701 99

20 SKY HABITAT 1,066 1,717,920 1,612 99

20 SEASONS VIEW 1,141 1,070,000 938 99

20 BRADDELL VIEW 1,615 1,350,000 836 99

21 THE CASCADIA 1,916 1,850,000 966 FH

21 PINE GROVE 1,765 1,239,800 702 99

22 THE CENTRIS 1,884 1,785,000 948 99

23 THE MADEIRA 1,055 995,000 943 99

23 HILLINGTON GREEN 1,356 1,262,000 930 999

23 MI CASA 1,259 1,120,000 889 99

23 CASHEW PARK CONDOMINIUM 1,475 1,288,000 873 999

23 THE WARREN 1,238 1,035,000 836 99

23 REGENT HEIGHTS 1,173 900,000 767 99

25 PARC ROSEWOOD 431 528,000 1,226 99

26 CASTLE GREEN 947 833,000 879 99

28 SELETAR SPRINGS CONDOMINIUM 1,302 870,000 668 99

Singapore Property Weekly Issue 230

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