Singapore Property Weekly Issue 163

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CONTENTS

p2 Is It Time to Roll Back the Property

Cooling Measures?

p8 Singapore Property News This Week

p13 Resale Property Transactions

(June 18 - June 24 )

Welcome to the 163th edition of the Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 163

Page | 2Back to Contents

By SG Proptalk (guest contributor)

The Total Debt Servicing Ratio (TDSR)

framework, which aims to deter borrowers

from accumulating too much debt, hit its one-

year mark recently. The measure, together

with the Additional Buyer's Stamp Duty

(ABSD), has hammered demand in the

market. New home sales in the first five

months of 2014 has plunged 52% to 3,894

units from the same period a year ago,

according to fresh estimates from URA.

Is It Time to Roll Back the Property Cooling Measures?



So is it an opportune time to review and make

adjustments to the cooling measures that are

currently in place?

NO, says our Ministry of National

Development, as it is too early, given that

prices have remained relatively stable despite

decreased home sales. MND noted that

private home prices have surged 60% during

the most recent market upswing that began in

mid-2009. Any premature removal of cooling

measures could result in a sharp increase in

demand and housing prices. And quoting

from the research head of a local property

agency: "Mass market units were about $700

to $800psf four years ago. The more

attractively priced units nowadays are already

nearly $1,000 psf. Upgraders from Housing

Board flats in particular will still prefer a

steeper price correction."

YES, says property developer Kwek Leng

Beng, who fears that Singapore could lose its

edge as an investment destination.

Foreigners were choosing to plough their

investment dollars into countries like Britain,

Australia and the US over Singapore, while

Singaporeans have been investing abroad.

This is despite the higher risk profiles

associated with these foreign properties. Mr.

Kwek had urged the Government during the

earlier part of this year to consider lifting the

hefty stamp duties imposed on foreigners and

locals as the measures had cooled the

market.

YES, says PropNex chief executive

Mohamed Ismail, as it is unlikely that more

speculative buying will be encouraged with

the removal of ABSD. This is because with

the TDSR, buyers already cannot overstretch

themselves financially.



Is there a case to review the cooling

measures?

Some have argued about the actual intention

of TDSR, on whether the objective and

implementation of the TDSR is really a

measure to cool the property market, or more

of a move to discourage Singaporeans from

overburdening themselves with more debt

than they can actually afford. To us at least,

this is immaterial. The fact remains that the

TDSR has had the single largest impact in

moderating property prices as compared to

the previous seven rounds of cooling

measures.

But as Mr. Ong Kian Teck at Jones Lang

LaSalle had pointed out, similar moves to

cool the property market in 1996 did cause

prices to ease gradually at first, but the

market crashed when the Asian financial

crisis hit in 1997. So the question becomes:

are we at the point of "overkill" in terms of

cooling measures being stacked on the

market that we are becoming vulnerable to a

major adverse event? The concern is

especially valid when 50,000 or so new

apartments are expected hit the market over

the next 2 years.

Do the ABSD and SSD still make sense?

We will leave this debate to the experts

(which we are not), but the wife and I would

like to offer the following food for thought: Are

the ABSD and SSD really the most

appropriate measures to "complement" the

TDSR in reining property prices going

forward? We said "complement" because

prior to the TDSR, both the ABSD and SSD

were not doing that good a job in curbing

price increases. Yes, demand had fallen

somewhat but prices continued to inch

upwards until the TDSR was implemented.



The ABSD and SSD were based on the

notion that “if you hit the buyers where it hurts

most, aka their pockets, they will think twice

about buying.” But given an environment

where interest rates are low, the market is

flushed with liquidity and there are few

investment alternatives with risks that the

average investor can understand/stomach,

people will continue to buy into the property

market despite the lower returns and longer

holding periods. There is also the pertinent

question (we are probably opening a can of

worms here) of whether the ABSD/SSD

actually did more good to increase the

Government's coffers than it did to cool the

market.

The wife and I concur that TDSR is probably

the way forward to curb escalating property

prices (although the 60% ratio should not be

set in stone). But instead of retaining the

ABSD/SSD and fiddling with these, are there

any other measures that can be explored as a

complement to the TDSR?

Two recommendations to replace the

ABSD and SSD

In this respect, the wife and I would like to

offer two "tongue-in-cheek" recommendations

as a complement to the TDSR:

1. Foreigners can only purchase private

homes in the resale market that are above a

certain size (e.g. 1,300sqft – arbitrary for the

sake of this discussion), while those units that

falls below can only be resold to locals/PRs.

This will certainly provide a test on the

resiliency of demand for small units

(especially shoeboxes). It may even alter

developers’ dynamics and their current

strategy of building primarily small units in an

attempt to prop up psf prices.



2. For new mass market projects (say,

$1,200psf or below – again arbitrary just for

this discussion), cap the number of units

within each development that foreigners/PRs

can purchase (say, 20% - arbitrary). This is

not only in-line with the “Singaporeans first”

call by a large majority of our locals, it will

also appease those who complained that

foreigners are jacking up prices. It may even

help promote better integration of

foreigners/PRs with our locals, given the

smaller foreigners/PRs-to-locals ratio within

each development.

Some may view the above as discriminatory

but so is the 15% additional duty currently

imposed on foreign buyers. And as someone

once told us: "No one said life was fair, now

get on with it!"

Ok, enough of our pipe dream. So when will

we finally see an easing of the current

property cooling measures? According to an

analyst on last night's "News 5 Tonight", this

will be "probably sometime nearer to the end

of 2015." The wife and I are waiting with

bated breath...

By The Folks @ SG Proptalk, a blog and

forum on buying Singapore property.

http://sgproptalk.blogspot.sg/









http://propertymarketinsights.com/



https://www.coassets.com/event/coassets/are-you-missing-out-on-the-opportunity-to-create-wealth-32/


Singapore Property This Week


Residential

HDB resale prices fall 1.3% in Q2

HDB resale prices have fallen again for the

fourth quarter due to cooling measures

implemented by the government, said market

analysts. According to flash estimates by

HDB, housing prices were down by 1.6 per

cent in Q1 this year; and prices have fallen by

another 1.3 per cent in Q2. Ong Kah Seng

from R’ST Research believes that the revised

mortgage servicing ratio, which caps loans to

30 per cent of borrowers’ monthly income,

limits potential buyers’ ability and willingness

to make purchases. Echoing Ong’s opinion,

Mohamed Ismail, PropNex chief, said that it is

more difficult for buyers to purchase larger

flats because of the smaller loans. According

to Ong, resale prices have fallen by 5.1 per

cent from Q2 2013, and prices are expected

to continue falling for a total of 4 to 8 per cent

by the end of the year. Nonetheless, the price

fall is expected to be gradual, said Ong.

(Source: Business Times)

Private homes price index rise in May

According to the National University of

Singapore’s (NUS) price indices, the price

index for non-landed private homes has risen

by 0.8 per cent month on month in May, after

falling one per cent from March to April.



Since August 2013, this was the first time that

the price index has appreciated. Nonetheless,

a year on year comparison shows that May’s

index this year is still lower than the previous

year by 6 per cent. Lum Sau Kim from the

Department of Real Estate at NUS said that

the higher price index in May 2014 could be

due to more sales in the primary market that

month. However, he predicts that the overall

Singapore Residential Price Index will shrink

in June. This view is corroborated by Nicholas

Mak from SLP International who said that

demand in June may fall due to the school

holidays and the World Cup season.


Private home prices to come down further

The private home price index has slipped by

3.2 per cent, following three straight quarters

of decline this year. According to flash

estimates by the Urban Redevelopment

Authority (URA), there was a 1.1 per cent

quarter on quarter fall in private home prices

in Q2 this year. URA’s subindex has also

showed that landed home prices have fallen

by 1.5 per cent in Q2 this year. Mohamed

Ismail from PropNex believes that the Total

Debt Servicing Ratio has muted private home

sales. CBRE executive director Joseph Tan

agrees and said private home prices in Q2

are slipping as developers have brought

down prices in the primary market. Tan also

believes that prices in the secondary market

have fallen as property owners are lowering

their prices to reflect the market’s demand

and supply. Adding on, Eugene Lim from ERA

explains that the weakening rental market

could have contributed to the falling home

prices.




Commercial

Woodlands industrial plot sold for lower-

than-expected price

An industrial plot at Woodlands Avenue 12

was sold at a lower-than-expected price,

despite already conservative price estimates.

The site which can yield about 1 million

square feet of industrial space, did not garner

high price estimates previously due to its

large size. According to Nicholas Mak from

SLP International, larger land plots do not

fetch higher prices as the developer may take

a longer time to sell off all the strata units in it.

Also, the supply of industrial space zoned for

Business-1 development in the North region

was high. Thus, consultants had estimated a

conservative price for the winning bid. Yet, the

winning bid, which was made by Wee Hur

Development for $76.9 million or $72.86 per

square foot per plot ratio (psf ppr), was still

$80 to $100 psf ppr lower than what property

consultants predicted.


Strata-titled industrial market shrinks

Demand for strata-titled industrial land has

shrunk according to property consultants from

DTZ Research. In Q2, 224 strata-titled factory

units have been sold, which brings the total

resale transactions in H1 2014 to 523 units.

This is 57 per cent lower than the number of

transactions made in H1 last year.

Nonetheless, according to DTZ Research,

there was negligible price movement for

conventional industrial spaces such as the

traditional factories. The conventional

industrial average capital values for first-

storey spaces in Q2 remained at $627 per

square feet and $470 per square feet for

those in the upper storeys.



On the other hand, prices for industrial

properties with shorter tenures are falling, as

they are seen to be less appealing than units

with longer leases.


99.4% occupancy rate in Shenton Way

Demand for office spaces in Q2 is high

according to Colliers International. Grade A

office micro-markets across Singapore are at

least 95 per cent occupied while the

occupancy rate at Shenton Way/Tanjong

Pagar is the highest at 99.4 per cent. This

was up from 97.2 per cent in Q1. Not only so,

there are interests in new office projects such

as the CapitaGreen, which has a 12 per cent

pre-commitment rate in June. According to

Marcus Loo from Colliers International, the

higher office occupancy has pushed up rental

prices. This has led to an increase of 3.5 per

cent in rental growth island-wide.

Nonetheless, Loo said that higher rents may

discourage tenants from relocating. Chia

Siew Chuin, Colliers International’s director of

research and advisory predicts that the office

property market will continue to expand with

the economy. Chia said that the limited office

space supply till 2016 is also expected to

push rental prices further thus benefiting

existing landlords.


Club Street shophouses priced at $22m

Five shophouses along Club Street, which

have land tenures of about 80 years left, have

gone on sale for $22 million. The shophouses

are located at Nos 1, 3, 5, 7 and 9. The

former three are three storeys high and have

an attic while the latter two are only two

storeys high.



Marketed by both JLL and Historical Land Pte

Ltd, the shophouses are sold as a package

for $3,230 per square foot for its 6,800

square feet. Under the Urban Redevelopment

Authority’s (URA) Master Plan 2014, the Club

Street shophouses have been rezoned for

commercial use recently. Nonetheless,

according to a June 10 circular by URA,

shophouse owners and tenants are still

encouraged to use the upper storeys of the

shophouses for residential or institutional use.


Property alliance formed to compete with

larger competitors

SLP International, OrangeTee, HSR

International and Dennis Wee Realty have

banded together to form an alliance to rival

traditional powerhouses, ERA Realty and

PropNex Realty. The alliance will expand its

buyer reach and focus on local residential

projects. According to Anne Tong, chief

executive officer from HSR International, the

alliance will benefit the agencies as they will

have access to a wider network of home

buyers and resources. However, PropNex

believes that given its track record, it will

continue to be the choice marketing agency.

Its chief, Mohamed Ismail, believes that the

alliance may run into teething problems as its

officers may have to report to different key

executive officers.




Non-Landed Residential Resale Property Transactions for the Week of Jun 18 – Jun 24

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.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

3 DOMAIN 21 1,281 1,765,000 1,378 99

4 HARBOURLIGHTS 732 1,050,000 1,435 FH

5 ONE-NORTH RESIDENCES 570 968,000 1,697 99

7 THE BENCOOLEN 883 1,220,000 1,382 99

9 THE ORCHARD RESIDENCES 2,465 9,736,750 3,950 99

9 HELIOS RESIDENCES 1,281 3,480,000 2,717 FH

9 ESPADA 667 1,775,375 2,660 FH

9 ESPADA 667 1,750,000 2,622 FH

9 THE REGALIA 1,216 1,830,000 1,505 FH

9 GRANGE HEIGHTS 3,025 3,800,000 1,256 FH

10 WHITE HOUSE RESIDENCES 3,595 8,500,000 2,364 FH

10 ONE JERVOIS 1,604 2,480,000 1,546 FH

10 VIZ AT HOLLAND 947 1,390,000 1,467 FH

10 DORMER PARK 1,690 2,400,000 1,420 FH

10 DUCHESS CREST 936 1,315,000 1,404 99

10 DUCHESS CREST 1,701 2,320,000 1,364 99

10 MILL POINT 2,067 2,750,000 1,331 999

10 GLENTREES 2,616 3,100,000 1,185 999

11 PARK INFINIA AT WEE NAM 2,002 3,800,000 1,898 FH

11 THE AXIS 1,141 1,600,000 1,402 FH

11 THOMSON 800 1,744 2,100,000 1,204 FH

12 SCENIC HEIGHTS 915 1,025,000 1,120 FH

14 LE CRESCENDO 1,173 1,360,000 1,159 FH

14 CASSIA VIEW 1,206 1,360,000 1,128 FH

14 THE TRUMPS 1,356 1,490,000 1,099 99

14 D'HERITAGE CASTLE 1,206 1,080,000 896 FH

15 THE BELVEDERE 1,259 1,950,000 1,548 FH

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

15 COSTA RHU 1,776 2,180,000 1,227 99

15 CELESTIA 872 980,000 1,124 FH

15 COTE D'AZUR 1,550 1,700,000 1,097 99

15 DUNMAN VIEW 1,216 1,188,888 977 99

15 THE GERANIUM 990 943,888 953 FH

15 THE PROMINENCE 1,163 1,000,000 860 FH

16 BAYSHORE PARK 936 960,000 1,025 99

16 TANAMERA CREST 1,173 980,000 835 99

16 KEW GREEN 3,843 2,575,000 670 99

18 OASIS @ ELIAS 980 955,000 975 99

18 RIS GRANDEUR 1,066 1,020,000 957 FH

19 RIO VISTA 1,238 1,010,000 816 99

20 CLOVER BY THE PARK 1,765 2,100,000 1,190 99

20 BISHAN 8 1,163 1,328,000 1,142 99

21 THE CASCADIA 1,421 2,415,700 1,700 FH

21 CLEMENTI PARK 1,959 2,060,000 1,052 FH

21 HIGH OAK CONDOMINIUM 1,023 970,000 949 99

23 HILLVISTA 947 1,215,000 1,283 FH

23 CHANTILLY RISE 1,270 1,238,000 975 FH

25 LA CASA 1,195 935,000 783 99

25 WOODGROVE CONDOMINIUM 1,184 830,000 701 99

26 THE CALROSE 1,572 1,880,000 1,196 FH

27 ORCHID PARK CONDOMINIUM 1,249 880,000 705 99

Documents

Singapore Property Weekly Issue 163