Week in Review – 21 August 2015

Khaw: Still some distance to go before cooling measures are lifted
Minister of National Development Khaw Boon Wan, has asserted in an interview with TODAY that cooling measures are here to stay until the residential market’s housing demand and supply reaches equilibrium. Property prices have fallen for seven quarters straight—the longest in 13 years. 
Khaw also told TODAY that international interest rates are a major factor to consider, given that central banks throughout the world are gradually increasing them. While this process is expected to take an extended period of time, the general concern of the government is to prevent a housing bubble that could have adverse effects on the economy.
July’s private home sales reaches two-year peak
Developers recorded 1,594 private home sales in July, compared to 375 in June. According to the Urban Redevelopment Authority (URA), this was the highest since June 2013. Fernvale Development’s High Park Residences saw a near sell-out, with 1,169 out of 1,186 units offered sold, with SLP International Property Consultants’ executive director Nicholas Mak citing affordable prices ($989 psf) as the main reason. Another notable project included The Botanique at Bartley on Upper Paya Lebar Road, with 63 units sold at a median of S$1,282 psf. Sales volumes of executive condominiums (EC) peaked as well, with 495 units sold last month, compared to 110 units in June. 
Two new launches contributed to the increase – The Brownstone on Canberra Drive, with 187 units sold at a median of S$818 psf, and The Vales, with 79 units sold at a median of S$788 psf.  Dr Chua Yang Liang, Head of Research for Singapore and South-east Asia of JLL, told TODAY that while July’s sales figures were high, total sales volume for 2015 are likely to stay between 6,500 to 7,500 units.
Bargain hunters eye Sentosa Cove and prime district properties
Prices of high-end condos in prime districts and Sentosa Cove have been hardest hit by cooling measures introduced by the Monetary Authority of Singapore (MAS). One seller at the 91-unit luxury condo Turquoise located in Sentosa Cove, sold a three-bedroom unit on the fifth floor for $2.9 million—a drastic 52 per cent reduction from the original purchase price. 
In the prime district, Knight Frank’s auction saw a 1,894 square feet, four-bedroom loft unit at Jardin sell for $2.9 million, a loss of approximately $400,000. In light of falling prices, buyers have indicated strong interest in properties in districts 9, 10, and 11, hoping to purchase units in older condos located near Ardmore Park, Grange Road and the Claymore area.
HDB’s two-room flexi scheme gives buyers greater range of housing options
The Housing and Development Board (HDB) has announced a new 2-room Flexi scheme—a hybrid of the existing Studio Apartment (SA) and 2-room schemes—to offer homebuyers greater lease-term options. These schemes will be available from next month and applicable to the Punggol and Bidadari Build-to-Order (BTO) exercise.
Over 70 BTO projects, to be completed in the next five years, will incorporate 2-room Flexi flats, with 40 per cent set aside for the elderly. Current SA homeowners are given flexibility in the extension of leases, by five, ten, or 15 years, compared to only ten years previously. Those who opted for the Lease Buyback Scheme (LBS) prior to April can extend their lease by another five years at current market value, beginning April 2016.
SA homebuyers awaiting their flats will bear no cost of the forfeiture fee if they decide to switch to a short-lease Flexi flat. However, this must be done before 19 August 2016. Second-timers above 55 years old who are buying a new two- or three-room flat will see a waiver of interest accrued on their resale levy if their first subsidised flat was sold before March 2006. This option will be made available in September 2015’s BTO exercise. The short-lease option will also be extended to them whether they have enjoyed housing subsidies before, or own a private residential property. Singles earning more than $5,000, divorcees, households who have enjoyed two housing subsidies and private property owners will have to pay a prorated amount. They will however, be unable to put properties on short-lease terms on the resale market.
Penang: Developers announce RM16.3 billion worth of properties 
Major developers in Penang have announced a combined RM16.3 billion worth of integrated properties. These companies and their respective values are: IJM Land (RM4bil), Eco World Development Group (RM10bil), Sunway (RM2.3bil), Mah Sing Group (RM2.09bil), Tambun Indah Land (RM4.1bil), and Ivory Properties Group (RM2bil). Developers believe that the lifestyle amenities will allow these projects to have a greater appeal to buyers. Also, the retail portion of these amenities can be leased out, providing income to developers. 
Eco World Development Group will be offering its first residential phase at its RM10bil Eco Marina project in Batu Kawan in nine to 12 months. Although situated on the mainland, Eco Marina’s prices will be comparable to properties on the island. Eco Marina features an internationally-acclaimed hotel, along with international schools, and food and beverage outlets. The highlight of the development is a sea-fronting golf course overlooking the island.
Johor Bahru: Iskandar optimistic despite uncertainties in high-rise residential market
A Knight Frank’s report has revealed RM166.10 billion invested in the Iskandar region as of March 2015. The Real Estate Highlights 1H2015 reported that foreign investment accounted for 38 per cent of the total investment value, with the top five countries being Singapore, the United States, Spain, Japan, and China; RM78.53 billion (47 per cent) of the investment has been realised. The cooling measures introduced by Bank Negara Malaysia to curb property speculation have resulted in a relatively sluggish market, with transaction volumes falling. 
Developers are delaying the launch of new high-rise residential projects as potential buyers adopt a ‘wait-and-see approach’. Also, the impact of the newly-introduced Goods and Services Tax (GST) has yet to become apparent. While interest is expected to shift to the commercial and industry sector, luxury homes are expected to be well-received by Johoreans.
Indonesia: Relaxation of foreign property rule unconfirmed
Indonesia has been contemplating the restrictions on foreigners, with the Minister of Land and Spatial Planning, Ferry Mursyidan Baldan, asserting that the relaxation of these rules will not apply to state-subsidised dwellings. In light of such positive news, Knight Frank Indonesia’s Hasan Pamudji has advised caution, as there is still uncertainty in the implementation date. While removing the price ceiling may bring benefits to the domestic economy, 
Indonesia has to consider factors of transparency and certainty in regulating property ownership. These are: the ease of obtaining staying permits; land right statuses (freehold, leasehold, etc); lease terms; and additional property taxes for foreigners.