Residential Market News Extract - 10 July 2012

Asia Gardens back on market at lower price

Freehold condominium development Asia Gardens is up for sale again, and owners are setting their sights a little lower by asking for between $273.2 million and $300.3 million, compared with the $302.6 million to $307.7 million they wanted in January.

The property, located at Everton Road, has an allowable gross floor area of 201,765 square feet based on a plot ratio of 2.8, which works out to a cost of about $1,354 to $1,488 per square foot per plot ratio (psf ppr). The previous indicative price works out to $1,500 to $1,525 psf ppr.

A nearby development, Dragon Mansion, at 14 Spottiswoode Park Road, was sold for $1,202 psf ppr in November last year.

The 84-unit Asia Gardens, zoned for residential use, lies within an area which is undergoing major rejuvenation, with the proposed transformation of the former Tanjong Pagar KTM Station, Tanjong Pagar Container Terminal and the redevelopment of several high-rise apartments.

Source: Business Times – 10 July 2012

Lower COVs draw buyers back to HDB resale market

The number of Housing Board resale flats changing hands is creeping back up, according to estimates from property firms.

They said buyers are returning to the resale market now that cash premiums, known as 'cash over valuation' or COV, have fallen and stabilised.

There is also rising demand from second-time flat buyers, permanent residents and a burgeoning

According to agency data culled from several firms, overall median COVs are now about $26,000, compared to $35,000 in the fourth quarter of last year.

ERA Realty's key executive officer, Mr Eugene Lim, said this was because valuations, which are based on previously transacted prices, were catching up with selling prices.

COV is the difference between the selling price of a flat and its valuation. It is payable entirely in cash, making high COVs an impediment for HDB resale flat buyers.

Mr Lim also noted that lower COVs were enticing more second-timers back to the resale market, in spite of recently tweaked rules spelling higher chances for this group to purchase a new HDB flat.

In March, the quota for second-timers, or those who have already enjoyed a housing subsidy, went up from 5 per cent to 15 per cent for new flats in non-mature estates.

'Softening COVs mean that they have become comparable to the resale levy they fork out if they want a new flat,' he said.

Depending on flat type, the resale levy for a second-timer ranges between $15,000 and $50,000.

The steady rise of suburban condominium prices, including that of executive condominiums, has been another factor.

With three-bedroom units in far-flung areas like Sengkang and Pasir Ris crossing the $1 million mark, buyers are turning back to HDB resale flats which offer better value for money in terms of space.

The rise of private property prices has also led to another phenomenon: downgraders who cashed in the profits on their condominium units and now want to move back into HDB units.

ERA's Mr Lim said the proportion of HDB resale flat buyers with private property address has risen to 30 per cent now, from 25per cent last year.

In all, property experts say the market is calmer now, having digested the various government measures to ease the public housing crunch.

Source: The Straits Times – 10 July 2012

North-east region may see glut of homes, says report

A spate of project launches in the north-east has sparked concern that there will be an oversupply of homes in the coming years.

Sites that can yield more than 10,000 homes have been sold in Punggol, Buangkok and Sengkang alone since September 2009.

These have been developed into projects such as A Treasure Trove, Watertown, H2O Residences and The Luxurie.

If other north-east estates like Hougang, Seletar and parts of Upper Serangoon are included, almost 14,000 units on about 25 sites are on the cards. These units, which include executive condominiums (ECs), are expected to be ready from 2014 to 2016.

Three EC sites in Punggol that can yield about 1,415 homes are also up for grabs in the government land sales (GLS) programme for the current half of the year.

Factor in upcoming Housing Board (HDB) build-to-order launches as well - and you have a daunting set of numbers.

Experts say that while there remains demand from HDB upgraders for private and EC projects, the bumper supply of sites does look 'worrisome'.

Even if there is demand from the nearby Seletar Aerospace Park, competition for tenants will be fierce and investors might have to accept lower rents, and hence, lower rental yields.

The oversupply risk is also mitigated by the fact that 46 per cent of the upcoming flats in Punggol, Sengkang and Buangkok are ECs. This includes the EC sites to be sold in the later part of this year.

ECs have condo-like facilities and are an upmarket hybrid of public and private housing. They also have an MOP of five years and can then be sold only to Singaporeans and permanent residents.

This means it could take at least eight years - three years of construction and a five-year MOP - before they enter the secondary market. This staggered supply will reduce the chance of a glut.

Source: The Straits Times – 7 July 2012

Non-landed private resale deals surge

In a possible red flag to investors, while more non-landed private resale homes were sold in the second quarter, the number of leases inked fell, new figures show.

Singapore Real Estate Exchange (SRX) data found that 3,450 resale transactions were closed - the market's best showing in the past year.

Resale volumes shot up 64 per cent from the 2,108 units sold in the sluggish previous quarter.

Experts say higher prices at new project launches have diverted buyers back to the resale market.

Average prices for resale homes in the city centre also rose 5.4 per cent to $1,724 per sq ft, eclipsing prices in the previous three months, and are at their highest ever.

The non-landed private rental front, however, saw a more subdued performance. The number of rental contracts inked dipped 4 per cent to 7,198 leases in the three months to June compared with the previous quarter's figure.

Gross rental yields also declined across the board. Overall yields came in at 4.01 per cent in the second quarter, down from 4.26 per cent in the same period last year.

City centre homes posted the lowest yields of 3.2 per cent, followed by suburban homes with 3.99 per cent. City fringe homes were tops at 4.02 per cent.

Experts say demand and rents of high-end homes have taken a hit as corporations cut back on spending.

Prime rents have fallen 8 per cent since a year ago.

Source: The Straits Times – 7 July 2012

Balestier attracts buyers who find city centre pricey

Savvy home buyers, including expatriates on tight budgets and unable to afford the expensive city centre, are looking to nearby Balestier as a handy substitute.

Balestier homes can be 20 per cent cheaper than some nearby prime areas, yet are still fairly central, experts said. The area is also starting to shed its messy, occasionally seedy, image.

Various new condominiums like Nova 88 have sprung up in the past year, adding more than 400 new homes to the eclectic tenant mix of shophouse eateries, hardware shops and contractors.

A further 1,400 new homes will be ready by 2015.

Rental yields in the nearby Novena and Balestier areas are on par at 3.3 to 4 per cent.

Median monthly rents stood at $3.35 psf in April and May, up from $2.98 psf in December.

Freehold condo resale prices are 15 to 20 per cent lower than in Novena and 7 to 10 per cent lower than in Toa Payoh.

One factor attracting investors and expats is the plethora of shoebox units, especially at small to mid-sized condos like Okio.

Consultants said Balestier's old world charm, good food and attractions like Zhongshan Park, make it appealing to buyers and tourists, boosting its vibrancy.

However, experts said the lack of an MRT station and a tenant mix that includes budget hotels could put some people off.

Source: The Straits Times – 7 July 2012

Rush of property launches after recent lull

Property launches are back in full swing after a lull of a few months when several developers did not get approvals to go to the market. Others held back because of the June school holidays.

The rush of new stock promises a wealth of choice for home hunters - everything from mass-market condominiums to high-end projects.

One on display is Amerald Land's Gaia in Balestier. The 28-unit freehold project is being previewed and likely to be officially launched by the end of the month.

It is understood that some units have already been sold for an average of about $1,500 per sq ft (psf).

Sizes range from 915 sq ft three-bedders to 1,700 sq ft penthouses.

City Developments and Hong Realty are also likely to push out Haus @ Serangoon Garden soon.

Homes are tipped to cost between $2.5 million and $3 million.

In suburban Upper Changi, Koh Brothers is expected to launch its sports-themed condo Parc Olympia next week.

Sources said units could go for between $800 and $900 psf.

Punggol, where a number of projects have already been launched, is also likely to see Parc Centros being released within the month by Wee Hur Holdings.

Indicative prices for the 99-year project range from $550,000 for a 462 sq ft one-bedder to about $1.6 million for a 2,239 sq ft five-bedder. Average prices could be about $950 psf.

Prices are not available for the penthouses, which measure between 1,302 and 2,927 sq ft.

At the higher end, The Line @ Tanjong Rhu from Lakeview Investments is likely to be previewed soon with its 130 units priced from $2,000 psf.

Sizes range from more than 400 sq ft to over 3,000 sq ft.

United Industrial Corporation will roll out the 510-unit V on Shenton in the Central Business District by the end of the month, with prices tipped to start from $1 million, or over $2,100 psf.

At least one completed project is also ramping up marketing efforts to clear stock.

The 34-unit Ferrell Residences, which was launched in 2009, has taken out ads to sell its remaining units - five 1,841 sq ft homes and a 5,608 sq ft penthouse.

The five units cost between $4.2 million and $5 million while the penthouse is going for about $14.5 million.

Ferrell Residences, the maiden project for Premium Land, was completed late last month.

But developers might have to brace themselves for slow sales as within the first four weeks, agencies are witnessing less than 50 per cent sales. This is set to continue.

Source: The Straits Times – 7 July 2012