Week in Review – 18 November 2016

Local Property News
Surge in sales of Executive Condominiums 
Falling prices, coupled with a higher eligibility income ceiling, have led to an increased number of transactions for Executive Condominiums (ECs). The gross household monthly income ceiling for purchasing an EC was raised this year, from S$12,000 in 2015 to S$16,000. According to property analysts, the median price of ECs fell 6 per cent between Q1 2015 and Q3 2016 to S$773 psf. 1,398 EC units were sold in Q3 2016, almost reaching a four-year high according to the Urban Redevelopment Authority (URA). 3,265 units were sold in the year-to-September, exceeding the 2,550 units sold in the whole of 2015. Mr Eugene Lim, Key Executive Officer at ERA Realty, said that increased interest can be attributed to ECs being priced significantly lower than private properties. Mr Lim expects EC prices to remain at current levels, with buyers cautious amid economic uncertainty. 

New private home sales hit 15-month high in October
Photo credit: Forest Woods
1,252 new private homes were sold in October, almost double the 509 units sold in September. According to the Urban Redevelopment Authority (URA), the October sales are the highest recorded in a month since July 2015. Mr Eugene Lim, Key Executive Officer at ERA Realty Network, said the surge in transaction volume was largely influenced by newly launched Forest Woods and The Alps Residences, which were attractive to buyers due to their pricing and location. 1,467 private homes were launched in October 2016, compared to the 479 units in the previous month. Analysts expect the strong sales of private homes to continue into November with the launch of Queen’s Peak and Parc Rivera. According to Cushman and Wakefield, 6,908 new private homes have been sold to date in 2016, and total transactions are expected to reach approximately 8,000 by the end of the year. 

Industrial rents grew one per cent in Q3 2016
According to Colliers International, average monthly rents for industrial spaces in Singapore increased one per cent in Q3 2016 to S$4.20 psf, bucking the trend of declining rents. Colliers noted that the increase was largely influenced by new developments, completed in Q3 2016, being able to command higher rents. Although rents for industrial premises outside science and business parks continued to slide in Q3 2016, due to lacklustre demand, the decline was smaller compared to the previous quarter. Q3 2016 rents in independent high-specs buildings fell 0.3 per cent to S$3.23 psf and 1.4 per cent to S$2.87 psf for ground and upper-level spaces respectively, compared to Q2 2016. Rents in prime conventional industrial spaces fell 0.4 per cent to S$2.32 psf and 1.1 per cent to S$1.78 for ground and upper-level spaces respectively in Q3 2016 compared to the previous quarter.

Singapore to have its first high-rise multi-tenanted logistics facility 
JTC Logistics Hub @ Gul is set to become the first high-rise multi-tenanted logistics facility in Singapore for housing container depots, warehouses and heavy vehicle parks. The 5.8ha integrated logistics hub, expected to improve efficiency and lower costs in the logistics sector, can hold up to 30 2,100 to 2,800 sqm warehouse units, as well as a maximum of four container depot units not exceeding 6,500 TEUs (Twenty Foot Equivalent Unit) per floor. JTC and the Container Depot Association have signed a memorandum of understanding to develop a traffic management and a warehouse booking system for the logistics hub to improve traffic and system flows. The integrated logistics hub is expected to be completed by 2019.
Global Property News

Empty-home tax to be imposed on Vancouver landlords in 2017
A new one per cent Empty Homes Tax will be levied on landlords of unoccupied and under-occupied homes in Vancouver, effective from 1 January 2017. The new tax, applicable on the assessed property value, addresses the acute shortage of rental homes in the city by pressuring absentee homeowners to lease their property. The aim is to increase the number of residential units for lease to approximately 3.5 per cent from 0.6 per cent currently.  Landlords that are caught falsely declaring occupancy status will be fined C$10,000 a day, assuming the property is valued at C$1 million. Gregor Robertson, Vancouver’s Mayor, estimates that over 10,800 homes in Vancouver are empty, and a further 10,000 units are under-occupied. 

More incentives for renting Manhattan apartments
Landlords in Manhattan are feeling pressure to provide incentives for tenants to avoid their apartments sitting unleased. According to a report by real estate appraiser Miller Samuel Inc and real estate brokerage Douglas Elliman, 24 per cent of new rental agreements in October 2016 included sweeteners such as a waiver of a month’s rent or absorption of brokerage fees. The report also found that the number of available apartments spiked 23 per cent in October 2016 to 7,132, compared to October 2015. According to Miller Samuel Inc and Douglas Elliman, the median rent for Manhattan apartments rose 0.3 per cent to US$3,400 in October 2016. However, medium rents fell one per cent when factoring in the value of the incentives offered by landlords. 

London residential and commercial property values fall
According to property investment and development business Derwent London, property values in London have been sliding since Brexit, with demand for both residential and commercial properties hampered by market uncertainty and higher taxes. Home prices in the city fell for the fifth consecutive month in August, the worst streak of monthly price declines since 2009. Reduced lending from banks for site takeovers and construction, and almost 11,000 homes under construction yet to secure buyers, have also contributed to declining property values. According to LonRes, transactions of homes in London’s best districts slid 39 per cent year-on-year in Q3 2016. Societe Generale estimates that home prices may slide as much as 30 per cent if Brexit is officially triggered. In July, office values fell to the lowest levels in seven years. DealX, a real estate researcher, expects over 1,900 companies to reconsider their existing office leases and Mike Prew, Analyst at Jefferies Group LLC, estimates that approximately 100,000 jobs could be relocated out of London when Britain officially begins its exit process from the EU, further weakening demand for offices.