Week in Review – 25 November 2016

Local Property News
More than 10,000 HDB flats launched in November sales exercise; four-room units in Kallang oversubscribed
The largest Housing Development Board (HDB) sales exercise for 2016 was launched in November, with 10,118 units available for purchase. The flats comprise of 5,110 Build-To-Order (BTO) units from nine projects in Punggol, Bedok, Bidadari (Toa Payoh) and Kallang Whampoa, and 5,008 units of Sale of Balance Flats (SBF). Prices of flats sold in this sales exercise range from S$80,000, for a two-room Flexi flat in Punggol, to S$503,000, for a five room flat in Bedok, excluding grants. There are approximately 7.9 applications received for every unit available for second-timers while the subscription rate for first-timers is 2.3. As of 23 November, 4.3 applications had been submitted for every four-room BTO unit in Kallang, with indicative prices of four-room BTO units in Kallang/Whampoa is between S$497,000 and S$584,000.

Private home sales surge in October 2016
Photo credits: The Alps Residences 
According to DBS Research, year-on-year sales volume of private homes increased 128 per cent in October 2016. Launches of Forest Woods and The Alps Residences in October have driven this increase, selling 364 units and 334 units respectively, accounting for more than half of the total sales volume. DBS Research also showed that year-on-year sales of Executive Condominiums (ECs) rose five per cent in October 2016, while overall home sales increased 87 per cent during the same time period. 

Singapore ranked as the top Asian city by expatriates
According to the InterNations Expat Insider 2016 report, Singapore ranked as the top Asian city for expatriates with nine in 10 expatriate respondents saying that they enjoyed living in the city. Globally Singapore ranks fifth, behind Houston, Madrid, and Duesseldorf. Singapore ranked eighth in the Quality of Life Index, the highest ranked Asian city, and ranked tenth in the Ease of Settling In Index, with Kuala Lumpur being the only other Asian city to rank higher at eighth place.  
73 per cent of expatriates surveyed found it easy to familiarise themselves with the local culture in Singapore. 80 per cent of the respondents felt the city was ‘very good’ in the Safety & Security category compared to the global average of 38 per cent saying the same about their home cities. 
UOL plan to launch Clementi Canopy in 2017, and Raintree Garden development in 2018
Photo credits: The Clementi Canopy
UOL Group aims to launch its 505-unit Clementi Canopy in Q1 2017, and a 750-unit condominium at the Raintree Gardens site in 2018. UOL Group recently acquired the Raintree Gardens site through a joint en bloc tender, with JV partner UIC Ltd. Current UOL projects are also enjoying robust sales, with Principal Garden, Botanique at Bartley, and Riverbank@Fernvale achieving 43 per cent, 96 per cent, and 78 per cent of commitment respectively. 
Strong pre-commitment rates for new offices in Q3 2016 
Pre-commitment rates of new office projects in 3Q 2016 surpassed expectations, according to the Office Snapshot Q3 2016 report by Cushman & Wakefield. The high pre-commitment rate was influenced by strong new rental contract signings by industries including banking and financial services, technology and professional services. Pre-commitment rates for Guoco Tower and Marina One in Q3 2016 was at 75 per cent and 35 per cent respectively. Cushman & Wakefield expects the decline in office rental prices to slow-down in 2017 due to new projects experiencing strong take up and significantly decreased supply pipeline of offices after Q1 2017.
Global Property News

Chinese developers contribute to oversupply of homes in JB
Project developments by Chinese developers have pushed down home prices in Johor Bahru (JB). Chinese developers are investing in JB as they recognise the possibility of JB being the next Shenzhen, the economic zone in China’s Guangdong province. Garden Holdings, a Chinese developer, is building Forest City on four man-made islands in Southern Malaysia on an area three times the size of Singapore. The US$100 billion development can house 700,000 people, and consists of office towers, parks, hotels, shopping malls as well as an international school. Forest City is the largest of approximately 60 projects in Iskandar Malaysia, which will inject more than 500,000 new homes into the market cumulatively. According to Ms Alice Tan, Head of Consultancy and Research at Knight Frank, Chinese developers see the appeal of lower prices in JB as well as its close proximity to Singapore. However, it is still uncertain if Chinese developments in JB can be sold within the next five years, amid weak housing demand and more supply than demand. 
Stronger labour market and low mortgage rates drive US October resale home sales to 9.5-year high 
Resale of residential property in the US reached its highest numbers in more than 9.5 years in October. Confidence in the improving labour market and the low mortgage rates influenced increased property sales. According to Chris Rupkey, Chief Economist at MUFG Union Bank in New York, homebuyers displayed confidence in the economy and purchased property even when presidential election campaigns highlighted existing economic weaknesses. The National Association of Realtors (NAR) said existing home sales increased two per cent to an annual rate of 5.6 million units in October; the most since February 2007. According to the NAR, the higher sales were influenced by “unrealised pent-up demand”. Year-on-year median house price increased six per cent to US$232,200 in October. However, existing home supply slipped 4.3 per cent year-on-year in the month; the 17th straight month of year-on-year decline. Overall prices are likely to continue rising.

Chinese investors more inclined to invest in US real estate after Trump’s presidential election win
53 per cent of respondents have a higher inclination to purchase US property after Donald Trump’s presidential election victory, according to a survey of 500 mainland Chinese citizens conducted by East-West Property Advisors. Merely 16 per cent of the respondents are less likely to purchase real estate in the US following the election result. The survey suggests that respondents trust Mr Trump as a businessman, and as someone who is likely to improve the US economy and property market. 

Prospects of property in Liverpool set to improve as the city undergoes regeneration
According to property investment company One Touch Property, interest in Liverpool property is growing in part due to increased focus on regeneration and home building. Liverpool has recently regenerated residential buildings, and more projects of such nature are in the pipeline. Arran Kerkvliet, Investment Director at One Touch Property, noted that Liverpool has historically been a cheaper alternative compared to Manchester. However, with regeneration projects being completed, and more such projects in progress, prospects for Liverpool are set to improve. Kerkvliet added that Liverpool ranks among the top UK cities to consider if the objective of an investor is to secure a property with good rental yields and capital gain.
Lenders reduce financing for British homebuilders as market uncertainty forces greater caution
Lenders in the UK have reduced financing for homebuilders since the Brexit vote. Peter Macallan, Head of Structured Development Finance at Knight Frank, said that lenders are exercising more caution and are taking longer to assess deals. Lending for housebuilders has also been reduced by five to 10 per cent of the project cost. As a result, developers have to inject more cash equity into deals, providing lenders with greater assurance in an uncertain, post-Brexit market. Knight Frank’s Residential Development Finance Report 2016/17, which surveyed 50 major operators in the homebuilding industry, reported that more than 25 per cent of respondents expect loan-to-value on development projects to drop. Builders might have to give bigger discounts to attract landlords and foreign buyers, who are limiting their purchases due to the market uncertainty as well as the higher taxes levied for buy-to-let and second home investors.
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