Barclays: Biggest losses recorded for luxury property owners
Loss-making deals located in the Orchard Road and Sentosa districts have cost the ultra-wealthy millions this year due to the luxury property market downturn. A Barclays report highlighted a 56 per cent drop in value for a St Regis Residences penthouse unit sold for S$12.77m, S$15.8m below its purchase price of S$28m in 2007. Other losses in the Orchard vicinity include another penthouse at St Regis Residences, a three-bedroom unit at The Orchard Residences and a four-bedroom unit at The Grange, with losses of S$4.78m, S$2.253m and S$2.05m respectively.
On Sentosa, four-bedroom units located at Turquoise at Sentosa Cove and The Coast at Sentosa Cove made losses of 37 per cent, or S$2.715m, and 28 per cent, or S$1.215m respectively. The oldest Sentosa Cove condo, The Berth by the Cove, has suffered a 36 per cent loss from its peak in 2011According to Barclays, the condo, built in 2006, recently traded for S$1,230 psf. This is a far cry from its S$1,919 psf price in October 2011, prior to the Additional Buyer’s Stamp Duty (ABSD). Projects such as The Oceanfront have plummeted by 25 per cent; the latest transaction was recorded at S$1,954 psf compared to S$2,605 psf in September 2011.
URA bolsters transparency
Private residential developers are now required to state the transacted price, nett price and benefits given to buyers of each transaction stemming from the Urban Redevelopment Authority’s (URA) new rule. Since Friday, 5 June 2015, information such as discounts and rebates has been made accessible to the public on URA’s website. Such information was previously undisclosed and it was impossible to confirm what buyers were offered. Mr Steven Tan, Managing Director of OrangeTee, told Channel NewsAsia that the new rule would help buyers “have a better gauge of the overall pricing.”
All developers are also obligated to disclose sales data to authorities. This includes sales volumes and prices of individual transacted units. This information will be updated on a weekly basis on URA’s website.
While both guidelines will provide the public with a clearer picture, homebuyers are advised to be careful when interpreting the data to avoid generalising the property market. Ms Chia Siew Chuin, Director of Research and Advisory at Colliers International, told Channel NewsAsia, “What buyers need to take care of is that they need to harvest all this information for project-specific details, rather than as a general indication of what the property market at large is like. Property trends take time to form. So on a weekly basis, buyers may not be able to know exactly where … the market at large … is heading.”
The next set of new developer rules will be issued on 20 July 2015. The new guidelines will require developers to certify that their showflats accurately exhibit the actual units put on sale before public viewing.
The new rules bolster transaction transparency and may drive homebuyer bargains. Mr Donald Han, Managing Director at real estate broker Chesterton Singapore, said to Today that homebuyers will be able to use the additional information to negotiate a better price. Ms Alice Tan, Head of Consultancy and Research at property brokerage Knight Frank, added that developers will begin marketing home prices more attractively as a result of the new rules, “In light of the weak market, developers need to get the price right at the start, in order to garner immediate interest from buyers.” She also expects developers to provide discounts of between three and eight per cent.
7,825 private residential units to be added to pipeline with 2H2015 GLS Programme
The Ministry of National Development (MND) has announced the second half of 2015 (2H2015) Government Land Sales (GLS) Programme, comprising four Confirmed List sites and 13 Reserve List sites. These sites can yield up to 7,825 private residential units, including 1,340 Executive Condominium (EC) units, and 277,580 square metre (sqm) gross floor area (GFA) of commercial space.
The Confirmed List comprises four private residential sites (including one EC site) that can yield about 2,130 private residential units (including 520 EC units) located in the outside central region (OCR) and the rest of the central region (RCR). The Reserve List comprises eight private residential sites (including one EC site), two commercial and residential sites, two commercial sites and one White site. A White site is a land parcel for which developers have flexibility in deciding the mix of uses and allocated floor space for respective uses restricted by the development’s total gross floor area (GFA). These sites can yield about 5,695 private residential units as well as 275,580 sqm GFA of commercial space, mostly for office use.
According to MND, the supply of private housing and commercial space from the GLS Programme, together with supply from projects in the pipeline, will be adequate to meet the demand for private housing and commercial space over the next few years.