Local Property News
Global investors pumped S$5.68 billion into Singapore property in H1 2016
Foreign investors accounted for S$5.68 billion or 59.5 per cent of total property investment sales for transactions above S$10 million in Singapore in H1 2016, according to data from CBRE. The strong performance of Singapore’s property investment market was mainly contributed to by prime office acquisitions such as the S$3.4 billion sale of Asia Square Tower 1 and the S$560 million sale of Straits Trading Building. These transactions made up 35 per cent and 10 per cent of total sales respectively. According to Desmond Sim, Head of Research at CBRE Singapore and Southeast Asia, the investor demand was strong in the first half of the year due to newcomers in the market such as Qatar Investment Authority and Hong Kong-based Shun Tak Holdings. However, he added that such high volumes of sales may be unsustainable in the near future. As there were lesser sites released under the Government Land Sales programme, residential sales including the S$638 million sale of Shunfu Ville en bloc and the S$145 million sale of 9 Cuscaden Road made up for a smaller percentage of total sales.
Sim Lian to launch Treasure Chest condo
Treasure Chest, a 504-unit executive condominium (EC) at Anchorvale Crescent, will be launched for online applications between July 1 and July 10. The 99-year leasehold development by Sim Lian Group is built on an 187,800 square feet plot and consists of eight 15-floor buildings yielding a total of 84 three-bedroom homes, 364 premium three-bedroom units, as well as 56 four-bedroom residences. The sizes of the units range between 958 to 1,345 square feet, with an average price of S$735 psf (per square feet) and S$755 psf. The upcoming development features a poolside party room, spa, and heated dipping pool facilities. Treasure Chest is located near Cheng Lim LRT station and the Sengkang MRT station, which is adjacent to the Compass One mall. It is also close to prestigious schools such as Nan Chiau Primary School, Nan Chiau High School, and CHIJ St. Joseph’s Convent. Balloting and booking of Treasure Chest EC starts on 16 July.
Prices of completed condos fall 0.8% in May
Flash estimates from the National University of Singapore (NUS) Singapore Residential Price Index (SRPI) show that prices of completed condominiums fell 0.8 per cent in May. In their respective categories, the shoebox units of less than 506 square feet performed the worst – suffering a price drop of 1.1 per cent in May from a 0.1 per cent drop the month before. Homes in the central district saw prices fall 0.5 per cent in May, reversing the 0.4 per cent increase in April, while homes outside of the central district also slid by one per cent after recording a 0.1 per cent rise the previous month.
Rents to remain low as condo supply increases
20,516 units will be added to the property market by the end of the year bringing the total number of private condominiums to approximately 23,435 units. Jones Lang LaSalle (JLL) cautions investors capitalising on rental income that 2016 will be another year of low rents with rising vacancy rates and dull tenant demand, with a glut of condominium units in the market and tightened governmental restrictions on foreign labour. Launches over the next two years are expected to yield approximately 23,000 units in total, a significant slowdown compared to projects completed from 2014 to 2016. JLL suggested that the lowered supply may ease the market excess accumulated over the past three years, supporting a recovery in the rental market. This is provided rental demand increases to offset the supply.
MIT lists 12 industrial sites for H2 2016 Industrial GLS programme
The Ministry of Trade and Industry (MIT) launched its Industrial Government Land Sales programme with 12 listings for the second half of 2016: seven sites on the Confirmed List and five on the Reserve List. Reserved List plots will be available for public bidding only when a minimum bid placed meets the expectations of the government, or when there is sufficient interest by multiple parties who have submitted a minimum price offer that is around the Government’s Reserve Price for the land plot. Four plots in Tuas South Link, two sites in Tampines Industrial Drive, and one site at Woodlands Industrial Park make up the seven Confirmed List plots, with a total site area of 3.99 ha. Three other plots in Tuas South Link, a plot at Tuas Bay Close, and one in Woodlands Height make up the five Reserved List plots with tenures of 20 or 30 years, and a total area of 7.71 ha. A total of 10 industrial sites were released for bidding in the first half of 2016, with six Confirmed List sites and four Reserved List sites making up the total area of 12.24 ha.
JTC Corporation will be handling the sales of all sites released in the second half of the year, and has also just put up a 20-year tenure industrial site of 0.59 ha for sale under the Industrial Government Land Sales programme. The site at Tuas South Link 2 is the last of the six Confirmed List sites in the H1 2016 Industrial GLS programme. The tender will close on Aug 23.
HDB releases Sengkang EC site for public tender
The Housing and Development Board (HDB) launched an Executive Condominium land parcel along Anchorvale Lane for public tender this week. The 99-year lease site from the Confirmed List under the H1 2016 Government Land Sales programme has a site area of about 2.1 ha and can yield up to about 635 units with a permissible gross floor area of 63,043.8 square metres (sq m). The site will be accessible via Tongkang LRT station and is beside Punggol Reservoir. According to HDB, bidding for the EC plot will close at noon on Aug 23.
GuocoLand places highest bid of S$595.1m for Martin Place residential plot
The Urban Redevelopment Authority (URA) closed the public tender for the Martin Place residential site this week. The plot along Martin Place and River Valley Close attracted 13 bids, with the highest being S$595.1 million, placed by First Bedok Lane, a GuocoLand unit. At almost 1.6 ha, the highest bid came up to about S$1,239 per square foot per plot ratio (psf ppr). It has a 99-year lease period and is expected to yield up to 450 units with a permissible gross floor area of 44,622 sq m. Intrepid Investments submitted the second-highest bid of S$588 million, or about S$1,224 psf ppr.
Global Property News
Overseas roadshows boost sales for Thai developers
Amid dismal demand from locals and lower domestic wages, property developers are now using foreign roadshows to improve sales for their residential project launches. The weak domestic demand can be attributed to stringent loan and mortgage restrictions on middle and lower income buyers. Some banks have rejection rates of as high as 50 per cent.
Across the borders, however, interest in property remains strong even though the Thai baht has appreciated by 2.41 per cent to 35.20 baht per USD at present from the 36.07 baht per USD at the end of 2015. Global investors from Singapore, Hong Kong, China, and Europe see potential in the country, choosing to have their regional headquarters in Thailand. Besides commercial property, residential property in Bangkok is also in demand due to it being priced lower than homes in foreign investors’ own countries. Uthai Uthaisangsuk, the Senior Executive Vice President of Sansiri, told The Nation that one of Bangkok’s priciest condo would run up to a maximum of THB400,000 per square metre (psm), while an average Hong Kong condominium goes for THB600,000 psm.
Furthermore, the Thai government has also pledged to develop the nation’s infrastructure and ensure better transportation systems and facilities connecting the country, especially in Siam City, with the extension of Skytrain and other modes and rails of public transport. The projection of an interconnected city will certainly draw more foreign interest in properties located near such facilities. Sansiri managed to clinch sales worth about THB 1 billion during its overseas roadshows in Hong Kong and Singapore promoting the Line Asoke-Ratchada.
Brexit drives Asian investor interest in UK property
British commercial property saw a 28 per cent decline in investments from Asian investors in Q1 of 2016 compared to the same time period in 2015, according to Real Capital Analytics. However, since Brexit, the sterling has been reduced to a 31-year low and Asian investors are ready to cash in on property investments. While uncertainty plagues Britain and the EU, foreign investors are eager to take advantage of the favourable exchange rate.
Residential property in London is among the priciest globally, and the value of property in the capital has been increasing over the past six years, reaching an average home price of £470,025 in April, a 14.5 per cent annual increase, according to the UK’s Land Registry. With a “leave” vote in the earlier referendum, KPMG has projected that home prices in Britain could fall by five per cent, with a greater impact on London’s property prices. JLL told Agence France-Presse (AFP) that valuation is expected to reduce by 10 per cent within the next two years. BlackRock Inc. said to Bloomberg that it also expects lower rent demand and shorter lease requests in the capital. Jeffries Mike PRew, analyst at Jeffries LLC, also wrote to Bloomberg, adding that passport restrictions post-Brexit may mean international businesses moving 100,000 jobs out of Britain.
Nicholas Brooke, the Chairman of Hong Kong real estate consultancy Professional Property Services, told AFP that the lowered exchange rate would attract those who do not transact using the pound. The firm has already received enquiries on possible British investments from clients from Hong Kong and China. However, real estate experts expect a waiting period from interested buyers as investors remain cautious regarding the impact of Brexit on the overall economy and growth of Britain. Henry Chin, the Head of Research for Asia-Pacific at CBRE, said other cities like Singapore, Hong Kong, and Australia could see increased investor interest as investors flock to more stable assets in developed markets.
Indonesia’s expat repatriation sees vacant homes and offices
Global companies streamlining their workforces in Indonesia are seeing expatriates being repatriated in large numbers amid an economic slump and tighter governmental regulation on foreign workers. In 2015, 171,944 temporary residence permits and renewals were issued to foreigners, down from 194,162 two years prior. In contrast, 72,399 such permits were issued in the first half of 2016, and the numbers are expected to continue dropping in H2 2016.
The heavy repatriation of expats has caused rents on prime Jakarta housing and international school enrolment to nosedive. With a reduction in enrolments, teaching staff are laid off and schools are down-sized. As expats tend to hire workers for miscellaneous duties such as house-keeping and chauffeuring, their exit has led to the dismissal of Indonesian workers as well – further driving unemployment. The expat void is also leaving many homes and offices empty, with residential and commercial vacancy rates almost reaching a ten-year high. One particular home in the prime district of Kemang, Jakarta, has seen its rent plummet by about 30 per cent to about US$3,000 per month – with no tenants for six months.
Second consecutive fall of new home sales recorded in Australia
The sales volume of new homes in Australia slipped by 4.4 per cent in May when seasonally adjusted – its second consecutive month since a 4.7 per cent decline in April, according to a Housing Industry Association (HIA) survey. This indicates that the housing market might be slowing down. The 6.7 per cent decline of detached home sales was the main reason for the dismal sales volume. Conversely, sales of apartments rose 4.9 per cent. Harley Dale, Chief Economist of HIA, cautioned against paranoia, arguing that the trend is merely following historical cycles and the drop in sales will not have significant impact.
Developers snapping up Myanmar land in response to rising local demand
Myanmar is moving towards rapid economic growth and recovery after recently emerging from political instability since its declaration as a democratic state in 2011. As a result, international sanctions on the country have since been relaxed. Yoma Strategic Holdings, a Singapore-listed property developer, has stepped up its development projects in Myanmar in response to soaring domestic demand for residential and commercial property.
Lotus Hill, a prime residential project, was recently launched by Yoma in Yangon, the country’s largest city. The project will see 70 high-end homes of three stories each being constructed on a 3.6 ha land parcel along the Yangon River. The units will have a floor area ranging between 190 square metres and 370 square metres. Yoma hopes to capitalise on the influx of expatriates and upper/middle class locals in the area, with homes expected to sell at prices between US$600,000 to US$800,000. The prime development will also be surrounded by facilities run by Yoma such as a golf course, hospital, and a school.
Yoma has also been involved in prime residential development Star City on a 50 ha site in Thanlyin in Eastern Yangon, as well as the upcoming Landmark Development project near Yangon Central Railway Station. The Landmark Development project will see the entry of a Peninsula hotel, as well as two office towers on a plot of about 4 ha. Since democratisation five years ago, the rise in demand for central residences and offices has led to developers aggressively releasing properties. According to Colliers International Group, competition within the market is heating up as new properties are introduced into the domestic real estate market. While the supply of luxury condominium units has increased since the country democratised in 2011, supply of such units fell in 2015 for the first time since 2011. For commercial property, more office towers are expected to be added, with supply climbing throughout 2016 despite office rents in decline since H2 2015.