Week in Review – 27 May 2016

Local Property News
Price, prime location, and amenities crucial in attracting condo buyers
Despite a slow property market, ERA Realty analysts noted that major project launches this year attracted buyers due to their affordability, prime locations, and nearby amenities. ERA highlighted residential projects such as Wandervale in Choa Chu Kang, The Wisteria in Yishun, and Cairnhill Nine in Orchard as fulfilling these criteria. All three projects saw approximately 50 per cent of their available units sold during their respective launch weekends. 
ERA noted that affordable smaller units made up most of the transactions at The Wisteria and Cairnhill Nine. All one-bedroom units at The Wisteria were sold out during its launch weekend and 70 per cent of Cairnhill Nine transactions were one-bedroom units. Meanwhile, 87 per cent of four-bedders launched at Wandervale, an Executive Condominium (EC), were sold. These projects are popular due to their proximity to MRT stations and amenities such as shopping malls and schools. The prices were also competitive. For Cairnhill Nine, buyers can own a property in Singapore’s prime location at $1.35 million for a one-bedder. 
A recent project which saw a similarly successful launch was Gem Residences in Toa Payoh, with almost 1,500 potential buyers registering interest in the 578-unit project. Analysts interviewed by Today suggested that the prime location of Gem Residences was a factor in the strong response seen during the launch. Ku Swee Yong, Chief Executive of Century 21 Singapore, told Today that Gem Residences will attract “a significant number of upgraders” as Toa Payoh remains a popular estate and the project is the only private condominium launched in the estate in seven or eight years.

Qingjian Realty purchases Shunfu Ville for $638 million
The second en bloc effort for Shunfu Ville has been a success, with Chinese developer Qingjian Realty purchasing the estate at S$638 million. The last en bloc of such a scale in Singapore was Farrer Court in 2007. While the transaction was below the reserve price of S$688 million, 80 per cent of home owners in the 358-unit property took up the offer. The owners will each be given an average of $1.78 million from the sale, or about S$747 per square foot per plot ratio. The property was put up for sale last September but did not find a buyer then. 

Orchard Road losing its sheen
Mall vacancies along Orchard Road reached a five-year high at 8.8 per cent in the first quarter according to data released by the Urban Redevelopment Authority, surpassing the national mall vacancy average of 7.7 per cent. Savills Singapore research head Alan Cheong said shop owners and big brands alike are exiting prime shopping areas in favour of suburban malls. This shift away from town can be attributed to consumers increasingly finding Orchard Road prices too premium, preferring to do their shopping online or at more convenient locations near their homes. The competition Orchard Road faces from suburban malls will only stiffen, with the entry of about 2.2 million square feet of suburban retail spaces by 2020. Ms Christine Li, director of research at Cushman & Wakefield in Singapore, cautioned that vacancy rates in Orchard Road will likely continue rising, perhaps even reaching ten per cent in Q4 2016. 

Stiff competition for flats in mature estates
In its second launch this year, the Housing and Development Board (HDB) launched 8,940 flats this week, including 3,770 Build-To-Order (BTO) flats and 5,170 Sale of Balance units. Excluding grants, the prices for BTO projects in Bukit Panjang, Sembawang, Ang Mo Kio, and Bedok range from S$73,000 for a two-room Flexi flat in Bukit Panjang to S$541,000 for a 3-Generation flat in Ang Mo Kio. Meanwhile, prices for the sale of balance units in 11 non-mature estates and 14 mature estates fall between S$81,000 for a two-room Flexi flat in a non-mature area and S$530,000 for an executive unit in a mature town. Including this launch, the HDB has released 21,050 units for sale in 2016. A third BTO launch in August with sites located at Hougang, Sembawang, Tampines, and Yishun will add 4,810 units to the market.
Minister Lawrence Wong cautioned in his blog that there is strong competition for families aiming to purchase BTO units in mature towns as the past two BTO launches in mature estates were extremely popular with lower rates of successful balloting. He encouraged newlyweds to apply for BTO units in non-mature towns, citing higher savings and future developments by the Government. Residents in non-mature areas can look forward to more employment opportunities and nearby amenities in the future, in line with the Government’s aim to disperse the city’s commercial resources.
The balance flats in 11 non-mature towns and 14 mature towns are priced from S$81,000 (excluding grants) for a two-room Flexi unit in a non-mature estate to S$530,000 (excluding grants) for an executive flat in a mature estate.
Commercial-residential space boosts investor potential in Bukit Batok
URA has announced that Chinese developer Qingjian Realty won the tender for a 99-year leasehold mixed commercial and residential site at Bukit Batok West Avenue 6, with a highest bid of $301.2 million out of 11 bidders. The 158,194 square feet site has the potential to yield more than 400 residences, with 64,583 square feet set aside for commercial purposes. Qingjian Realty has plans to construct approximately 500 condominium units at the site. 
While the property market has been slow in recent months, developers were drawn to the site due to its mixed-use versatility and it being the first site for mixed-development to be sold in the H1 2016 Government Land Sales (GLS) programme. In an interview with Today, Mr Nicholas Mak, Executive Director and Head of Research and Consultancy at SLP International Property Consultants, also attributed the demand to surrounding HDB projects that will provide a potential stream of customers for the retail component of the site. Other drawing factors include nearby amenities such as healthcare services, food centres, schools, and community clubs, as well as its proximity to the Pan-Island Expressway (PIE) and Bukit Batok MRT station.
Global Property News

US home sales continue rising amid recovering economy
A Commerce Department report showed that US new home sales in April rose to a seasonally adjusted annual rate of 619,000 units, a 16.6 per cent increase from March. Economists previously expected new home sales in April to increase to 523,000 units. Median prices of new homes rose to US$321,100, a 9.7 per cent year-on-year hike, while average prices of homes jumped 13.5 per cent year-on-year to US$379,800. All these suggest the US economy is on its way to recovery. However, Lawrence Yun, Chief Economist of National Association of Realtors, cautioned that the supply of homes is still tight and that home prices have seen a year-on-year increase for the 50th consecutive month. The housing demand and supply balance is considered robust when there is a six-month supply in stock. However, inventory of unsold homes in the US will be cleared in 4.7 months should April’s sales rate continue.

IT could be Philippines’ key to the world
According to JLL India, the Philippines is set to follow the footsteps of India by capitalising on its IT and high-tech sectors. This could lead to an influx of foreign capital flow and global property investments for the Philippines, similar to India’s real estate market, which has seen the inflow of US$26 billion in private equity funds since 2005. By investing in talent development and building infrastructure to support and attract IT firms and investments, the Philippines can boost its economy. Ramesh Nair, Chief Operations Officer and International Director of JLL India, says that the country needs to provide land at subsidised prices for leading IT firms to construct infrastructure, so as to attract the big players of the IT industry. Once a leading organisation enters Philippines, more IT players will follow suit, paving the way for opportunities for foreign investors.

NSW may join Victoria in imposing higher taxes on foreign investors 
New South Wales (NSW) Treasurer Gladys Berejiklian has proposed imposing a land tax of 1.5 per cent for foreign real estate investors. This comes a month after Victoria announced a raise in stamp duty surcharge from three per cent to seven per cent for foreign investors and an increase of land surcharge for non-dwelling foreigners from 0.5 per cent to 1.5 per cent, effective 1 July 2016. The proposal has drawn flak from real estate experts interviewed by The Daily Telegraph. Jane Fitzgerald, NSW Executive Director of Property Council of Australia, commented that the taxes will only drive potential international investors interested in building residential housing away, worsening the housing affordability crisis in the country. In the 2014 to 2015 financial year, foreign investment in Australian residential property surged 75 per cent to a new high of AU$60.8 billion according to the Foreign Investment Review Board. China was the greatest contributor to the pool of foreign investors with an investment of AU$24.3 billion – accounting for more than a quarter of global investments into Australia. The State Budget on 21st June will announce the decision on NSW foreigner taxes.