Week in Review – 2 October 2014

Property prices down again, New private home launches – Marina One Residences and Forte Suites, HDB – First EC launch in 2014, latest Build-to-Order Exercise, Staggered Downpayment Scheme, Oversupply concerns in Iskandar
Property prices down again
The latest flash estimates by the National University of Singapore’s Singapore Residential Price Index (SRPI) revealed that resale prices of private homes have hardly changed from July to August. The Q3 2014 flash estimate price index for private residential property by the Urban Redevelopment Authority (URA) however, showed a decline for the past four consecutive quarters. The URA private residential property index showed a decline of 0.6 per cent in Q3 2014, from Q2 2014. Properties in the Core Central Region (CCR) fell by 0.9 per cent, in addition to the 1.5 per cent decline in the previous three months. Prices of residential homes in the suburbs fell by 0.2 per cent, following the 0.9 per cent decline in the previous quarter; the Rest of the Central Region (RCR) experienced a 0.1 per cent fall compared to the 0.4 per cent decline in the previous quarter. According to the SRPI, prices in the central region were unchanged from July, at a SRPI value of 139.5, whereas the SRPI value in the non-central region increased marginally by 0.1 per cent to 164.2. 
A Housing and Development Board (HDB) flash estimate revealed resale flat prices have fallen by 1.6 per cent in Q3 2014. The Resale Price Index (RPI) has seen a decrease of 1.6 per cent over the past three months.
New private home launches – Marina One Residences and Forte Suites
Developers launched new private properties after a quiet month of August. Marina One Residences by M+S Pte Ltd, a 1,042-unit uxury project at Marina Bay, with one to four bedroom types and penthouses will launch this month. Forte Suites on Rangoon Road was also recently launched. The newly completed project consists of 106 units and is known to be a “hotel-style condominium” with a 24-hour concierge service, a 37m swimming pool and sky gardens. 
HDB – First EC launch in 2014, latest Build-to-Order Exercise, Staggered Downpayment Scheme 
Bellewoods, an executive condominium (EC) located in Woodlands, was launched late last month. This is the first EC project launched in 2014, following the implementation of a 15-month waiting period for developers. More than 200 online applications were received by Bellewoods. Prices of the 561-unit project are expected to be between S$750 and S$820 per square foot, and less than S$1 million per unit. Mr Nicholas Mak, Executive Director for Research and Consultancy at SLP International Property, told Channel NewsAsia (CNA), “The first three or four EC projects are likely to enjoy strong demand from the pent-up demand, but subsequent ones, especially those that are going to be launched next year, will face quite a lot of competition…” 
In a recent tender for a Sembawang EC site, only two bids were made – signalling low participation from developers. In an interview with Today, Mr Mak said, “I believe the main reason for the low participation rate from developers in this land tender is the (expected) steady supply of new EC project launches from 2015 onwards”. Analysts also commented to Today that while there is pent-up demand for ECs, the oncoming supply in 2015 will cause buyers to be selective. 
Build-To-Order (BTO) flats in Kallang-Whampoa saw the highest demand in the recent BTO exercise by the Housing and Development Board (HDB). Approximately 7.9 applications per unit were received for four-room flats and three applicants per unit received for three-room flats. 463 four-room flats and 124 three-room-flats were put on sale in the town area, out of more than 4,630 new flats were offered for sale in the exercise. 
Following the launch of the BTO exercise, HDB introduced the Staggered Downpayment Scheme. Under the scheme, buyers of two- and three-room flats in non-mature estates such as Bukit Batok, Hougang and Jurong West are required to pay only half of the downpayment. An analyst indicated to CNA that although the policy is helpful, second-time applicants are unlikely to downsize. However Ku Swee Yong, Chief Executive Officer of Century 21 Singapore explained that “In the next two or three BTO exercises, when the range of non-mature estates widens up for them to apply, and with the given time for the grassroots and HDB officers to explain this new scheme, I think the take-up rate will be much better.” HDB will also be releasing approximately 4,290 BTO flats in Sembawang, Sengkang, Tampines and Yishun in November, along with an additional 3,000 flats in a Sale of Balance Flats exercise.
Oversupply concerns in Iskandar
Mr FD Iskandar, President of Malaysia’s Real Estate and Housing Developers’ Association recently expressed concerns of supply exceeding demand for residential units in the Johor market, specifically in the Nusa Jaya and Danga Bay areas. “Over the past 12 to 18 months, we’ve seen developers from a certain country introducing a lot more units than Malaysian and Singaporean developers usually introduce,” said Mr Iskandar at KPMG’s Global Real Estate and Construction Conference held on 29 September 2014. He said, “My concern is in two to three years’ time, once those 30,000 units are completed, and if 50 to 60 per cent of the buyers are actually not from Iskandar or around the Iskandar region … then you will see those that are empty. Once they want to start to rent, so many units (will be) available, then it will put pressure on rental yield”. However, Mr Iskandar believes in the potential of landed homes in the region and noted that interest in industrial properties in Iskandar among Singapore investors has increased.