Week in Review – 14 May 2015

High Speed Rail link at Jurong East likely to attract more firms

Notable companies are likely to relocate to Jurong Gateway including pharmaceuticals, consumer products, IT companies and research and development, following last week’s announcement that the High Speed Rail link between Singapore and Malaysia will be located in Jurong East.

Ms Christine Li, Research Director at Cushman and Wakefield, speaking to TODAY, said that companies are attracted by benefits such as integrating with their manufacturing operations located in Tuas, as well as easy access to various Malaysian regions such as Johor, Iskandar and Kuala Lumpur.

The terminus will be located approximately 600 metres away from Jurong East MRT interchange and will occupy 20 per cent of the site. According to authorities, the remaining area will include offices, retail space and possibly housing.

According to property agents spoken to by Channel NewsAsia, Jurong property prices have already increased by one per cent a week after the announcement of the rail location and are expected to increase further, by up to five per cent. Ms Susan Mariam, Associate Director of property agency OrangeTee, explained to Channel NewsAsia that property owners in Jurong should hold on to their property and potential buyers looking to purchase in the area should do so within a year or two.

Elevated prices and the resale levy affect EC demand

Executive Condominiums (ECs) have reported low sell-through rates due to high prices, oversupply in the market, as well as the new resale levy. The latest report by DBS Vickers reported a sell through rate of only 26 per cent for four out of five EC projects launched between December 2014 and January this year.

Jurong West’s new Westwood Residences is the first EC to be affected by the new resale levy. It recently released an indicative pricing of S$800 per square foot – six per cent lower than the nearby Lake Life EC.

According to the Housing and Development Board (HDB) website, the new regulations stipulate that those who have previously bought a HDB flat or have taken a CPF Housing Grant will have to pay a levy when they buy another flat from the HDB.

The 480-unit project is located near Nanyang Technological University and Cleantech Park and hopes to attract potential buyers with its cyclist-friendly features. This includes 500 bicycle parking lots as well as a conjoined bicycle maintenance area.

Local developers face rivalry from home sellers in a sluggish market

Home resales have increased to represent 45.5 per cent of all transactions in the private home market sector in Q4 2014 and rose further to 47.1 per cent in Q1 2015. Falling rentals and an expected rise in mortgage payments have propelled home owners to place their houses on the market, driving developers to cut prices for new launches amid this competitive market.

Costs of private residential properties continued for a sixth straight quarter decline, with more unsold units released into the market, placing pressure on prices. Over a third of 68,201 uncompleted private residential units have remained unsold.

Fewer residential properties were sold above S$1.5m in 2014

The Ministry of Development (MND) reported that 4,153 residential properties sold for S$1.5 million or more in 2014, a fall of 42.4 per cent from the previous year. In 2013, 7,128 units were sold. These comprised private property transactions and excluded HDB properties and Executive Condominium (ECs) categories.

Average prices rose however, from S$2.76 million in 2013 to S$2.83 million in 2014. Median prices also increased slightly from S$2.10 million in 2013 to S$2.13 million last year.

New home sales soar in March, rise expected to continue in April

613 private units, excluding Executive Condominiums (ECs), were sold in March, a significant 57.2 per cent increase from 390 units sold in February; 1,379 houses were sold between January and March 2015.

Serangoon’s Kingsford Waterbay and Sims Urban Oasis achieved the highest results, with both projects earning 43 per cent of sales. Kingsford Waterbay cleared 155 units in March at a median price of S$1,111 per square feet (psf), while Sims Urban Oasis has sold over 205 units since its launch in February.

Jones Lang LaSalle (JLL)’s National Director of Research and Consultancy, Mr Ong Teck Hui, explained in The Edge that sales figures for Q1 2015 “reflect stability” as the number of units sold (1,379) barely differs from the 1,376 units sold in Q4 last year.

Looking forward, he also anticipates April registering positive sales due to popular projects such as Yishun’s North Park Residences and Botanique at Bartley. According to developer Frasers Centrepoint, 100 units alone were sold at North Park Residences’ weekend launch on April 11 and 12. The project has sold 70 per cent of its 600 units to date, mainly due to its link with the upcoming integrated development Northpoint City. The hub will include the existing Northpoint Shopping Centre, a community club, a public library as well as access to Yishun MRT station and the bus interchange.

UOL Group’s 99-year leasehold Botanique at Bartley sold 50 units over the April 11 and 12 weekend, boosting sales figures to over 200 units for the project; units averaged S$1,290 psf.