Week in Review – 22 May 2014

Lower prices push sales of private homes, Cooling measures dampen posh districts, Luxury homes facing tough period, Dual-key units growing in popularity, Investors should be more careful with their overseas investments, Unlicensed agent charged by CEA
Lower prices push sales of private homes
Property developers are lowering prices of private homes, attracting price-sensitive buyers into the market, resulting in April recording the highest sales of private homes this year. According to the URA, this delivered a month-on-month increase of 55%, but was a 46% year-on-year decrease compared to the same month last year.
In an interview with Bloomberg, Nicholas Mak, executive director at SLP International Property Consultants, explained that the improvement in sales is “a good sign because it shows they [the developers] are cutting their inventory of unsold units.” One example is Sky Habitat in Bishan, which sold 130 units in April, 11-16% cheaper than the launch price of S$1,583 two years ago, bringing total sales to 312 units out of 509. 
As for new launches, The Sorrento, a freehold project priced almost similar to a 99-year-leasehold project, has also experienced strong sales volume, nearly selling out in one month. Last week, City Developments Limited (CDL) reported optimistic expectations for the launch of their Coco Palms. At the launch, CDL offered an early bird price, averaging about S$980 per square foot (psf), compared to the original price of S$1,100 to S$1,200 psf. By 3.00pm on launch day 490 units out of 600 (82%) were taken-up. In a report by CNA, Desmond Sim, head of research at CBRE explained that “there is an underlying demand out there waiting to buy, but they (buyers) are just waiting for developers to make such moves or (give) some sweeteners in order to come into the market and start buying.”
Cooling measures dampen posh districts
Data from the Singapore Real Estate Exchange (SRX) reveals that in District 9 (Orchard, Cairnhill, and River Valley), the property market has slowed compared to its equally luxurious neighbour District 10. The SRX report shows properties in District 10 are largely purchased by locals for owner-occupation, whereas properties in District 9 are more for investment. Since the Total Debt Servicing Ratio (TDSR) took effect, median resale prices in District 10 have increased by 0.4%, while District 9 decreased by 3.2%. Despite the price increase, transactions in District 10 have almost doubled in the same period. According to Sam Baker, co-founder of SRX, the data suggests cooling measures have effectively held back the investment market, while tolerating a measured growth in the owner-occupier market.
Luxury homes facing tough period
A recent report by Barclays Research indicates a poor performance in the luxury home market last month. An estimated 14 luxury units were returned in April, including four from the popular [email protected] launch in February, compared to 38 in March. The highest median price in March was recorded at S$2,592 psf at Liv On Wilkie, bringing total sales to 49 units (81%). According to a report by CIMB, while sales of projects in the mid-tier market such as Coco Palms appear positive for CDL, the company also continues to experience a significant number of unsold units in its luxury segment. 
Dual-key units growing in popularity
In the Singapore Residential Research Feature this month, Knight Frank reports on the growing popularity of dual-key units in recent years. A dual-key unit is an “apartment unit which comprises two sub-units, but sharing a common main entrance,” intended to accommodate multi-generational households. According to Alice Tan, director and head of consultancy and research at Knight Frank, developers are capitalising on increased preferences for such a living concept by including more dual-key units in large-scale private residential projects. Eight launches (53%) in 2013 included dual-key units, compared to three in 2011. Also, the proportions of dual-key units in these launches have increased from 3.4% to 7.5% in the same period.
Investors should be more careful with their overseas investments
The Monetary Authority of Singapore (MAS) has reported that the value of overseas property investments handled by local real estate agencies increased by 43% from S$1.4 billion in 2012 to S$2 billion in 2013. Similarly, Knight Frank reported that Singaporeans account for 23% of sales of new central London property built in 2013, second only to British buyers at 27%. Singapore’s central bank expressed its concerns of Singaporeans being exposed to various risks associated with foreign investments. Besides foreign exchange risks, the unfamiliarity with market conditions overseas, such as the “prospects for oversupply of properties, or of deterioration in economic conditions” may also result in vulnerabilities for investors.
Unlicensed agent charged by CEA
Singapore has just seen its first prosecution case of unlicensed real estate agency work for selling foreign properties. According to the Council for Estate Agencies (CEA), 50-year-old Tan Yong Po was allegedly facilitating sales for US property developer Sterling Camden LLC, collecting commissions for each successful transaction. She belonged to the AZEA property club, which organises free property seminars to the public. Without a valid license from CEA, she allegedly introduced investment opportunities by Sterling Camden to members of the club. Following this, CEA advised consumers to verify if their agents are licensed and registered by checking its public register available on its website.
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