Week in Review – 28 October 2016

Local Property News

JTC to offer improved facilities and extended lease term for businesses transferred from HDB

Businesses, affected by the transfer of industrial land and properties from Housing Development Board (HDB) to JTC Corp, can look forward to JTC developing facilities catered to various industrial needs and requirements. JTC is also considering extending the maximum lease term from three years to five years or longer. Minister for National Development Koh Poh Koon said the extension of the maximum lease will benefit businesses that are involved in high capital investments. Dr Koh also reassured that tenants need not worry about increased rents since JTC and HDB have aligned rental policies over the years. Approximately 10,700 units and 540 land leases owned by HDB will be transferred to JTC Corp (JTC) in Q1 2018.


Strong sales volumes of non-landed private property expected in October and November

According to Rachel Tan and Derek Tan, DBS Vickers Analysts, new non-landed private property launches have proven to remain popular with the public. Both analysts observed a substantial crowd at the preview launch of MCC project Queens Peak in Queenstown and EL Development project Parc Rivera at Clementi. Assuming that high interest in preview launches translates to sales, DBS expects sales volumes of non-landed private residential property to be healthy in October and November. Queens Peak, connected to Queenstown MRT station via a linkbridge, is selling at S$1,500 psf to S$1600 psf, 11 per cent lower compared to neighbouring condominium Commonwealth Towers. Parc Riviera is priced at S$1,250, 25 per cent higher than condominium units at The Infiniti and Faber Hills.


Oversupply of office rental spaces expected to continue into 2018

According to Colliers International, the supply of Premium and Grade A office spaces in the Central Business District (CBD) will increase 5.6 per cent in 2016, followed by a further 12.1 per cent growth in 2017. Approximately 1.9 million sqf of office spaces will be available to tenants in 2016, with majority located in the CBD, and this will increase to 2.9 million sqf in 2017. By 2018, there will be 2.7 million sqf of office spaces available for rent, mostly located outside of the CBD. Capital values of Premium and Grade A office spaces are expected to fall into H2 2017. The oversupply of office spaces has led to the fifth straight quarter-on-quarter decline in office rentals in Q3 2016. Capital values of Premium and Grade A offices have slid 2.1 per cent since Q1 2016, and the full year decline is expected to range from seven per cent to 12 per cent.


Jurong Point Shopping Centre up for sale at more than S$2 billion

Jurong Point Shopping Centre, with 658,000 sqf of commercial net lettable area, has been put up for sale at more than S$2 billion in an equal joint venture between Guthrie GTS and Lee Kim Tah Holdings. The two companies are looking to divest approximately 702,000 sqf of total net lettable area. This includes 44,000 sqf currently used by NTUC First Campus Co-Operative’s My First Skool and voluntary welfare organisations under the government’s Community/Sports Facilities Scheme (CSFS). Some experts believe that the price tag of more than S$3,000 psf is too hefty for the 21-year-old mall, especially in the current weak economic and retail climate. Conversely, Mr Alan Cheong, research head at Savills Singapore, believes that the asking price is fair due to the rarity of a prime mall being put on sale.

Global Property News

US residential property sees strong transaction figures in September

With more first-time home buyers entering the market, resale transactions of homes in the US hiked 3.2 per cent in September, after two consecutive months of sliding, to an annual rate of 5.47 million units. 34 per cent of residential property transactions made in September were by first-time buyers, the highest proportion of first-time buyers since July 2012. With limited housing supply, the increase in demand for housing will likely push prices higher, while restricting the number of future transactions. The median price of existing homes increased to US$234,200 in September, a 5.6 per cent year-on-year increase. The number of transactions for new homes also hiked 3.1 per cent to an annualised rate of 593,000, with median sales price rising 1.9 per cent year-on-year to US$313,500 in September 2016.


Record number of new high-rise units sold in Greater Toronto Area in August

17,949 new high-rise homes were sold in the Greater Toronto Area (GTA) up until the end of August 2016, a record for this time period. According to Altus Group, which provides statistics to the Building Industry and Land Development Association (BILD), a record 1,880 high-rise units were sold in August which is usually a slow sales month. The average price of new high-rise residences in GTA in August was a record high of $480,914, a seven per cent year-on-year increase. Supply of high-rise residences decreased in August, with just 14,600 units in builder inventories available for purchase. The decrease was due to homes being in the pre-construction stage as very few new projects were launched in August, traditionally a quiet month.


Australian property market boom past its peak; calls for regulatory changes to address issue of affordability

According to Morgan Stanley, the Australian housing boom has passed its peak, and an impending glut in supply of residential apartments is expected to cause housing prices to slide in the future. Morgan Stanley asserted that Australia’s housing market, especially in Sydney and Melbourne, will have an excess of 100,000 residential units by 2018. In the meanwhile, Australian Treasurer Scott Morrison wants planning regulations, that have contributed to high housing prices to be removed or simplified. He believes these regulations obstruct the injection of supply of residential units into the housing market, causing homes to be increasingly unaffordable in the largest states of the country. Housing prices in Sydney have almost doubled since the end of 2008. According to CoreLogic, year-to-September 2016 residential property prices in Sydney have risen 14 per cent compared to the nine per cent price hike for other major Australian cities.


Frasers purchases land in Australia for A$466 million mixed use development 

Frasers Property Australia, part of Frasers Centrepoint Limited, has purchased a 115-hectare land parcel in Wyndham Vale, suburban Melbourne for an undisclosed sum. An A$440 million mixed-used community will be developed on the land, including approximately 1,200 residential lots spanning 69.4 hectares and over 20,000 sqm of retail facilities to meet the needs of the locals. 8.3 hectares of land will be allocated for education and community use, with an additional 8.3 hectares allocated to retail and 14.8 hectares reserved for mixed-use commercial or employment purposes. Depending on planning approvals, public sale of land lots at Wyndham is expected to start from early 2018.

Heathrow Airport’s third runway expected to cause prices of surrounding homes to slide

The construction of a third runway at London’s Heathrow Airport could lead to prices of homes in the vicinity sliding by 20 per cent or more. According to Russell Quirk, Chief Executive Officer and founder of eMoov, a leading online property agency, the resulting noise and air pollution from the third runway will deter buyers from considering properties in close proximity. Home buyers are expected to be put off by the sound of jets rumbling round the clock, as well as the smell of jet fuel. As a result, home prices in the area can be expected to fall drastically without seeing a pickup in demand.