Week in Review – 21 October 2016

Local Property News
Singapore respondents expect property prices to drop, but confident in long-term prospects 
According to iProperty’s Asia Property Market Sentiment Report H2 2016, while 97 per cent of respondents in Singapore expect property prices to continue falling, 98 per cent have confidence in Singapore’s property market in the long term. 58 per cent of respondents feel that current property prices are unaffordable despite falling residential property prices. While 83 per cent of respondents expect housing loan interest rates to rise, 76 per cent indicated that the higher interest rates will not deter them from purchasing property. Singapore respondents also expressed a preference to relax current cooling measures. Additionally, 59 per cent felt that the Additional Buyers Stamp Duty (ABSD) should be removed for locals, with 38 per cent indicating that both the Total Debt Servicing Ratio (TDSR) and the ABSD should be removed for locals. 
Increase in private home sales in September 2016
Developers sold 509 new private homes in September 2016, despite no new project launches in the month; an 8.8 per cent month-on-month increase. Mr Nicholas Mak, SLP International Property Consultants’ Head of Research and Consultancy, said the increased sales could be a result of buyers starting to accept the additional costs caused by property cooling regulations. Chief Executive Officer of PropNex, Mr Ismail Gafoor, believes that 2016 will see a 20 per cent increase in private home sales compared to the 10,199 units sold last year. According to Mr Desmond Sim, Head of CBRE Research in Singapore and South-east Asia, the increase in sales during 2016’s year-end period could be a result of speculation that interest loans rates are set to increase. However, CIMB research shows that with 14,578 new units expected to enter the market next year, prices are still set to fall. 

Record number of landed housing transacted in Q3 2016 
436 landed residential units were transacted in Q3 2016; a 17.5 per cent increase compared to Q2 2016 and the highest number of transactions since Q2 2013. Falling prices of landed property and owners having a more realistic expectation of sale price has helped increase the number of landed property transactions. According to the Urban Redevelopment Authority (URA), prices of landed property fell at an accelerated rate from 1.5 per cent in Q2 2016 to 2.2 per cent in Q3 2016. The prices of landed homes fell steeper compared to non-landed homes, increasing their attractiveness to buyers. Director of Research at Edmund Tie & Company, Dr Lee Nai Jia, said that buyers see landed residential property as a strong investment option due to its limited supply in Singapore. 
S$3.2b mixed development set to rejuvenate Paya Lebar
Paya Lebar Quarter, a S$3.2 billion mixed-development project, will consist of three Grade A office towers, three residential towers comprising of 429 units, and a retail mall. The 39,000 sqm, 99-year leasehold project, by Australia-listed Lendlease, will be built beside Paya Lebar MRT. The project is part of Singapore government’s efforts to diversify office locations beyond the Central Business District (CBD). Ms Christine Li, Director of Research at Cushman and Wakefield, said the project is set to transform the entire precinct at Paya Lebar area into a regional centre. Lendlease announced that the commercial and retail components of Paya Lebar Quarter will be completed in H2 2018, and the residential component in H1 2019.  

HDB to transfer industrial land and leases to JTC by Q1 2018
10,700 industrial units and 540 industrial land leases currently managed by the Housing & Development Board (HDB) will be transferred to JTC Corporation (JTC) by Q1 2018. HDB and JTC believe the consolidation of industrial land and properties under JTC will better support land needs of small-and-medium enterprises as their businesses grow. With JTC managing the industrial units and industrial land leases, tenants can enjoy a “one-stop access” to the entire range of industrial facilities offered by the public sector. The consolidation allows JTC to have economies of scale in management and operations of industrial properties, with the HDB being able to focus on public housing. 
Global Property News
Singaporeans show growing interest in overseas property investments
According to iProperty Group’s Asia Property Market Sentiment Report, 93% of respondents in Singapore are interested in purchasing overseas properties with Australia, Malaysia and the UK emerging as the most popular investment destinations. Respondents cite the current favourable exchange rate, Australia’s close proximity to Singapore, as well as the tertiary education opportunities it provides as the top reasons for Australia’s popularity as an overseas property investment. Within Malaysia, Singaporeans are attracted to Nusajaya due to the construction of the Rapid Transit System (RTS) and the High Speed Rail (HSR), as well as affordable property prices in the region. Singaporeans also showed a renewed interest in UK properties due to the falling pound and weakened property prices as a result of Brexit. However, budgets for overseas property investments have shrunk when compared to H1 2016. None of the respondents indicated a budget above S$1 million in H2 2016, compared to 16 per cent of the respondents who did so in H1 2016.

Real estate investment in China sees record growth; investors concerned about property bubble
According to Reuters’ calculations based on data issued by the National Bureau of Statistics of China, September growth in real estate investment in China was the strongest since May, rising 7.8 per cent year-on-year and 6.2 per cent month-on-month. This growth has fuelled investors’ concern about a real estate bubble in the country, causing them to turn against Chinese real estate companies. Chinese regulators have introduced various measures to mitigate a real estate bubble in more than 20 cities. These measures include higher mortgage down payments and an immediate ban on second-home purchases.
Increased supply of rental property in Manhattan; landlords forced to lower rents
Landlords in Manhattan are being forced to lower rental prices and offer more incentives due to an increased supply of apartments from newly completed constructions. According to appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate, there were 7,392 rental listings as of end of September 2016; an increase of 35 per cent from last year, offered at a median rent of US$3,396, 1.2 per cent less than in September 2015. Due to the increased rental options in September 2016, landlords offered an average of 2.8 per cent discount in rents and 15 per cent of all new leases included sweeteners such as one month’s rent for free. 

Seven-fold drop in sale of ultra-luxury homes in Central London
Central London’s ‘super prime’ homes priced above £10m have seen year-on-year sales slide seven fold. According to the Land Registry, there were five transactions of super prime homes in Central London in Q2 2016, compared to 35 transactions during Q2 2015. Analysis by London Central Portfolio (LCP), a residential funds and asset management company, shows that the average price of the top five priciest homes also dipped from £22m to £16.3million; a 25 per cent decrease. There were no prime Central London sales above £10million in Q2 2016, compared with 30 per cent of sales last year. According to LCP, the UK government should be concerned by the slowdown in the ultra-luxury property market and reconsider the housing taxation policies. Naomi Heaton, Chief Executive Officer of LCP, said that the rapidly falling pound might salvage the situation by attracting foreign investors back to invest in such properties. 

Investors return to post-Brexit UK commercial property market
IPD real estate index, compiled by MSCI, showed that UK commercial property values fell 0.21 per cent in September 2016, compared to 0.65 per cent and 2.8 per cent fall in August and July respectively. Britain’s S$1.53 trillion commercial property market was deeply affected by the Brexit decision, with the market uncertainty causing investors to withdraw their commercial property funds. However, commercial property auctions conducted after Brexit reflect improved sentiments from both domestic and overseas investors. Britain’s biggest auctioneers Allsop and Acuitus collected S$196.2 million and S$120.5 million in their respective auctions in October 2016. George Walker, auctioneer at Allsop, said that foreign buyers from Hong Kong, China, and South Africa have been attracted by the weakened pound. Richard Auterac, auctioneer at Acuitus, noted that majority of buyers continue to be locals due to increased borrowing support by banks for UK investors.