Week in Review – 12 June 2014

Resale market for private, non-landed residential properties continues to weaken, More commercial land, fewer homes released in latest GLS, Johor Housing and Real Property Board Bill 2014 approved
Resale market for private, non-landed residential properties continues to weaken
According to the Singapore Real Estate Exchange (SRX), prices of private, non-landed residential properties slipped 0.3 per cent in May, following a 0.5 per cent drop in April. An estimated 421 units were sold in May, a 7.5 per cent drop from April, and a 42.6 per cent drop compared to the same month last year. 
In a Today report, analysts attributed the weakening resale market to the attractive pricing and discounts of new homes, in addition to the continued downward pressure from cooling measures. Citing the sale of 80 to 85 units at the Panorama in May after a 12 per cent discount, Mr Nicholas Mak, Executive Director of Research and Consultancy at SLP International Property Consultants, said, “Such marketing activities in the primary market may have drawn away some buying demand from the resale market, resulting in lower resale volume”. Mr Jeffrey Hong, Chief Executive at GPS Alliance, added that ”developers are now a bit more willing to price their projects at more attractive levels, or even lower their prices in some cases.” Both expect overall prices to fall by five to 10 per cent, and three to five per cent respectively, this year.
Properties in the Bukit Timah, Holland Road, and Tanglin district (District 10), as well as in the Upper Bukit Timah and Ulu Pandan district (District 21), on the other hand rose; transaction over x-values were at $80,000 and $29,000 respectively.
In the rental market, rents dropped by 0.8 per cent in May compared to April. Rental transactions rose by 3.7 per cent to an estimated 3,120 units in May. ERA Key Executive Officer Eugene Lim explained to Today that “there is demand for rental, but landlords are getting more realistic with the drops in rent. Thus, it is now a tenant’s market. The increasing number of projects obtaining temporary occupation permits may be translating to more rental transactions as tenants generally prefer newer to older properties.”
More commercial land, fewer homes released in latest GLS
The government has released nine confirmed list and 14 reserve list sites under the second half of the GLS Programme 2014. The Programme collectively adds up to 10,200 private homes (including 1,500 executive condominiums) and 325,000 square metres of gross floor area for commercial space. 
3,900 private homes will be provided in the confirmed list, lower compared to the 4,630 units and 6,000 units offered in H1 2014 and H2 2013. These units will be added to the current large pipeline supply of more than 90,000 private homes. In an interview with Channel NewsAsia, Mr Donald Han, Managing Director at Chesterton Singapore said, “I think the government is sending a very clear signal that they are aware of the current market being in an oversupply state and they have also noted that generally there has been a paring-down in developers bidding for sites.”
Analysts at Barclays Research are concerned that scaling down the private home supply may not be sufficient to prevent a major oversupply in 2015 to 2017. They project prices to fall by 20 per cent by 2015, considering an anticipated rise in interest rates, together with peak supply; vacancy rates, might hit a record 10 per cent by 2016.
While the number of private homes offered in the latest GLS Programme has decreased, the 352,000 square metres of commercial space released is almost 80 per cent more than what was released in the first half. According to Mr Han, this might signal the government’s intention to keep office rents affordable, citing the past office supply shortage in 2007 and 2008 that increased rents by 40 per cent to 50 per cent per annum. “I think it is just prudent for the government to come up with more sites since rents have started to move upwards,” said Mr Han.
Johor Housing and Real Property Board Bill 2014 approved
The Johor Housing and Real Property Board Bill has been approved by the Johor State Assembly. The board will be tasked with policy making, implementation, coordination and planning of housing and real estate development in Johor. Maulizan Bujang from BN-Tiram noted that from the government’s perspective, the purpose, goal, and function of the enactment was to strengthen real estate development in Johor, particularly for the benefit of the middle and lower income groups. Prior to the Bill’s approval, a total of 10 amendments to 10 clauses were made to limit the powers of the Sultan, in addition to stating that the Ruler has to act on the advice of the Menteri Besar. The board is expected to begin operating in the first half of 2015, said Menteri Besar Datuk Seri Mohamed Khaled Nordin.