Residential Market News Extract - 25 June 2012

Several big bungalow deals done of late

Several big-ticket bungalow deals have been transacted recently - both in the Good Class Bungalow (GCB) market on mainland Singapore and at Sentosa Cove.

An old two-storey freehold bungalow at White House Park changed hands recently at $24.8 million, which translates to nearly $1,650 per square foot (psf) on freehold land area of about 15,036 sq ft.

At Jervois Hill, two vacant plots have been transacted in the past few months.

The more recent deal, at $21 million, is for a plot of 15,095 sq ft. Word in the market is that the unit land price of $1,391 psf is low for the area because there is an electrical substation on the site.

The sellers bought the property for $19 million in 2010 from Vincent Tan Kim Yong, group chairman and chief executive officer of Advanced Integrated Manufacturing Corp, which is listed on Singapore Exchange.

In February this year, Dr Tan was also granted an option for the sale of one of his other plots on the street for $32 million or $2,118 psf.

If that transaction is completed, it will set a new record for a Good Class Bungalow Area, surpassing the $2,081 psf achieved in July last year for 6 Chatsworth Road, diagonally opposite the Indonesian Embassy.

Over in the upscale waterfront housing locale of Sentosa Cove, an ocean-fronting bungalow along Cove Drive changed hands last month for nearly $22.2 million, which works out to around $2,787 psf on land of 7,963 sq ft.

It is understood that a few bungalow deals are brewing on Treasure Island, and at higher prices than the $1,766 psf fetched for a transaction about two months ago.

That deal, which involved a bungalow sitting on land of 8,496 sq ft, sold for $15 million.

As for Sentosa Cove, while there have been a lot of viewings including by Chinese investors, there have not been many transactions.

The 10 per cent ABSD payable by foreigners who are not Singapore permanent residents (PRs) on any residential property purchase in Singapore is probably the main deterrent.

Source: Business Times – 23 June 2012

Westvale Condo sold en bloc for $77.5m to Roxy Pacific unit

Freehold residential property Westvale Condominium has been sold to RL West Pte Ltd, a subsidiary of Roxy Pacific Holdings Ltd, for $77.5 million, or about $883 per square foot per plot ratio (psf ppr).

The 62,710 sq ft site, located along Pasir Panjang Road, comprises 32 apartments located in a four-storey walk-up block.

The plot is zoned for residential use under Master Plan 2008, with a gross plot ratio of 1.4, a maximum building height of five storeys, and a potential gross floor area of up to 87,798 sq ft.

With the collective sale, each individual owner will receive gross sale proceeds ranging from approximately $2.2 million to $3.1 million, a more than 50 per cent premium over the current market price.

A development charge for the plot is expected to be incurred should the new developer decide to utilise the additional balcony space, which constitutes another 10 per cent of gross floor area. This charge would amount to $625,000.

The development could yield 115 new homes with an average size of 800 sq ft.

Source: Business Times – 23 June 2012

Fewer tenants + Sky-high prices = Lower rental yields

Sky-high prices and a plentiful supply of stock have driven rental yields of private homes down to levels not seen for almost 12 years.

Overall gross yields were just 3.8 per cent in March, unchanged from December, according to property research firm.

Apart from a one-off dip last September, when yields hit 3.7 per cent, rental returns have not been this low since December 2000.

Levels vary across the island. While some mass-market projects are enjoying higher than average yields of 5 per cent or more, there are some inner-city apartment blocks with returns of only 1.9 per cent.

Especially in view of the expected slowdown in bringing in foreigners, a higher supply of completed units leads to a higher level of competition over a limited pool of tenants. This might result in a fall in rental rates if rental demand stays the same or dips.

But other experts say that while gross yields have been falling, net yields have remained fairly stable as interest rates are at record lows.

They add that while rental demand is expected to remain healthy this year, yields might come under pressure in 2014 and 2015 when a record number of homes are due for completion.

High-end flat market also faces competition from older landed homes.

Citing the increasing number of HDB flats meeting minimum occupation periods and the surge of private completions, there is a possibility of an oversupply.

The higher-yielding properties are mostly 99-year leasehold projects in mass market districts where capital values are lower.

For instance, there are still a handful of mass market properties that yield 5 per cent and above, such as The Madeira in Bukit Batok, and Lakeholmz and Lakepoint Condominium, both in Jurong West.

City centre projects posted the poorest yields, likely because larger firms have imposed cost-cutting measures that have included putting expatriates on local packages, which has dampened demand for expensive rental homes.

Source: The Straits Times – 23 June 2012

Condo buzz shifts to Jurong and Lakeside

The wait for new condominiums in Jurong and Lakeside will soon be over, with several new projects on the cards.

It has been a long time coming. The area has not had a condominium launch in more than a year, while suburbs across the island have been abuzz with construction.

That will change in the coming months, as the whole Jurong Lake District is primed to be the biggest commercial hub outside the city centre.

Last month, the tender closed for a residential site in Boon Lay Way that can yield about 600 units.

The 99-year-leasehold site is a short walk from the Jurong East MRT station.

Another site, which can host over 820 units, is due to be launched for sale later this year.

The plot is near Lakeside MRT station, one stop from Jurong East on the East-West line.

In all, over 2,000 new private homes are expected to be built in the Jurong and Lakeside areas by 2017, consultants estimated.

Despite Jurong being an established town, newer centres like Punggol, Sengkang and Pasir Ris have stolen a march on it when it comes to new executive and private condominium launches, noted Mr Alan Cheong, Savills Singapore research head.

But higher prices have been achieved in Jurong. Upcoming condos there command nearly $1,000 to $1,200 per square foot (psf), while those in the north-east and Pasir Ris are between $850 and $1,000 psf.

The Jurong Lake District is being engineered into a regional hub. Human density is expected to rise, with increasing population of foreigners probably wanting to rent there as more commercial developments take root.

Source: The Straits Times – 23 June 2012