Residential Market News Extract - 13 August 2012

Tampines holds its own with attractive amenities

Tampines has stayed on the radar of home buyers despite stiff competition from a bumper supply of launches in other suburban estates.

The area - designated a secondary commercial zone after the central business district - has continued to attract buying interest largely due to its wide array of amenities and easy accessibility.

The presence of international schools such as the United World College of South East Asia and its proximity to the Changi Business Park and Seletar Aerospace Park have also caught the eye of investors looking for healthy rental yields.

Experts say home prices in Tampines have outpaced the national average due to pent-up demand from Housing Board upgraders and the relatively lower supply in the pipeline.

Developments in the area have enjoyed price gains of between 23 per cent and 53 per cent over the past two years.

Tampines rental yields are between 4 per cent and 4.5 per cent, at the higher end of the typical 2 per cent to 4.5 per cent range found across the country.

Analysts noted that Tampines is well-served by three major shopping malls and transport links, including the East-West MRT line and the Downtown line, due to be completed by 2017.

Tampines Finance Park, which houses the backroom functions of some banks and insurance companies, is another economic driver.

About 75 per cent of Tampines residents live in HDB four-room and five-room flats - a potential pool of buyers for new launches.

There have not been many new projects in the area so demand is likely building up.

Source: The Straits Times – 11 August 2012

 

New homes put pressure on high-end rentals

Landlords of newly completed upmarket homes are being warned that they may have to be prepared to accept lower rents.

More than 4,000 private homes are set to be completed in the second half of the year - with many of them in the city centre and city fringe regions - possibly putting further pressure on rents of posh apartments that have already been softening.

Many of these high-end projects were rolled out in a slew of launches between 2007 and 2009 after the collective sale fever of the mid-2000s.

That was a vastly different landscape from the bumper supply of suburban launches from government land sale sites in the past two years.

Rents of non-landed city centre homes dipped 0.1 per cent in the second quarter - the only private non-landed rental segment to slide - according to data from the Urban Redevelopment Authority (URA).

The average monthly rent, tracked by analysts, dipped to $5.03 per sq ft per month in the second quarter, sliding 3 per cent compared with the three months before. On a year-on-year basis, prime rents fell by 8 per cent.

Experts say that the upcoming completions of upscale units will weigh further on the market.

But as long as Singapore remains a cost-competitive choice for corporates, newly completed projects should keep finding tenants, though landlords might have to manage rental expectations.

Vacancy rates for city centre homes have been trending up - to 8.2 per cent in the second quarter, from 7.8 per cent in the first.

This is in contrast to islandwide vacancy rates falling from 6 per cent to 5.9 per cent in the same period.

Leasing volume of high-end homes to ease in the third quarter as rental budgets continue to shrink. This may see many mid-level expats moving to the suburban areas.

However, the supply of high- end apartments is gradually tapering off as more suburban homes are completed in the next few years instead, experts note.

Almost 200 of the 4,285 homes expected to be completed this year are still looking for buyers. This adds to the 1,233 units in completed projects still unsold as at the second quarter, URA's data showed.

Source: The Straits Times – 11 August 2012

 

HDB resale policy has weeded out speculators

As recently as five years ago, private-property owners were snapping up resale Housing Board flats at market rates, making up 10 per cent of yearly resale transactions.

But tightened policies have cut the number of such transactions to just 3 per cent in the first six months of this year, going by fresh data from the Housing Board.

This means those going after resale units are now genuine downgraders who have either cashed out amid a property boom, or want to move to live closer their children, analysts said.

The turnaround was sparked by a change on Aug30, 2010. Before that, private property owners could buy a non-subsidised resale flat at any time, even while hanging on to their private property.

The policy that kicked in on that date required private property owners to sell off their property within six months of buying a resale Housing Board flat. This was to reinforce the principle that Housing Board flats are meant for long-term owner occupation, not for rental income or to make a quick buck.

The change effectively cut back on speculation in public housing among those well-off enough to own a private property and buy a Housing Board flat as investment.

ERA Realty key executive officer Eugene Lim said: "A substantial number of people bought flats in the past for investment and never lived in them."

The attraction for them was that Housing Board flats offer up to twice the yearly rental yield, at 6 to 8 per cent.

As of current, only genuine downgraders are entering the resale market, as they are saddled with a minimum-occupancy period of five years before they can sell the flat. It will be a constraint on their investments thereafter.

Source: The Straits Times – 10 August 2012

 

Property market sentiment improves in Q2

Property market sentiment improved slightly in the second quarter, but the mood was still dampened by the uncertainty over the euro zone debt crisis.

The Redas-NUS real estate composite sentiment index for April to June inched up to 4.7, from 4.6 in the first quarter.

It had declined for four straight quarters last year to plumb a nadir of 3.3 in the fourth quarter of last year.

A score below five indicates deteriorating market conditions while a score above five reflects improving market conditions.

The hotel sector continues to garner forward momentum with a net balance of 33 per cent of industry players surveyed saying they were optimistic about its current state, Redas and the National University of Singapore (NUS) said in a joint statement yesterday.

In contrast, the office sector is struggling owing to uncertainty over the global economic outlook, with a net balance of 31 per cent of respondents saying they were pessimistic about how it was currently faring.

A net balance figure is the difference between the proportion of respondents who were optimistic and the proportion who were pessimistic.

Fewer private residential units are expected to come onto the market in the coming months. Of the developers surveyed, 46 per cent expected more units to be launched soon, a sharp decline from 77 per cent in the first quarter of the year.

More of them than before also think prices will hold at current levels over the next half year.

"The uncertainty arising from the European sovereign debt crisis instils some degree of risk aversion in developers and buyers," said NUS real estate associate professor Sing Tien Foo.

"Some developers are adopting the 'wait and see' approach by moderating down new launches to the market."

The composite index, developed by the Real Estate Developers' Association of Singapore (Redas) and NUS' Department of Real Estate, combines two indices - the current sentiment index and the future sentiment index.

The current sentiment index, in which real estate industry players rate market conditions now compared with six months ago, stood at 4.9 for the second quarter, up from 4.8 in the first.

The future sentiment index, which indicates industry players' market outlook over the next six months, also moved up marginally from 4.4 in the first quarter to 4.5 in the second quarter.

Source: The Straits Times – 10 August 2012