Week in Review – 3 June 2016

Local Property News
Private home resale prices rise by 0.3% in April
Private home resale prices rose by 0.3 per cent in April, after a 1.1 per cent month-on-month drop in the previous month. This was according to flash estimates from the Singapore Residential Price Index compiled by the National University of Singapore’s Institute of Real Estate Studies. Excluding small units, property prices in the central region increased 0.4 per cent, while property prices outside of the central region increased 0.2 per cent. Small units sized 506 square feet and below registered a price increase of 0.2 per cent from March to April.

Expat workers increasing but rents falling
Rents have cooled approximately ten per cent since 2013 despite Ministry of Manpower data showing a year-on-year increase of about 22,000 expat workers (excluding foreign domestic workers) between 2014 and 2015. Some are seeing even larger declines in rents. Alexander Karolik Shlaen, CEO of Panache Management, said to CNBC that a unit he owns has dropped from about S$13,000 in 2008 to its current rent of under S$8,000. This has been attributed to a drop in salaries among incoming expats, who are primarily from the pharmaceutical and chemical sectors rather than the more well-paying financial industry (historically). Foreign banks have also been cutting down on costs and streamlining their workforces, leading to the exit of wealthier expats. Chandran V.R., Managing Director at luxury property agent CRE, also noted to CNBC that there are today fewer expat clients with generous benefit packages – packages that used to include housing. 
This decline in potential upscale tenants comes as the housing market is reaching a surplus with about 20,000 private homes due to be added to the market by the end of the year. Another 15,000 private units will be added in the each of the years 2017 and 2018. Chandran predicts that rents are set to nosedive even further as developers with unsold units will choose to rent them out, further taxing the housing glut.

Singapore property market close to bottoming out
According to LaSalle Investment Management, Singapore’s property market may be bottoming out sooner than Hong Kong’. Cooling measures have been implemented in both countries by the respective governments in recent years in a bid to manage rising house prices. Both cities are experiencing a correction in property prices as demand decreases due to the region’s economies slowing down. Chris Chow, the Managing Director of LaSalle, told Bloomberg that Singapore is ahead of Hong Kong in bottoming out. Property prices in Singapore have dropped nine per cent compared to the previous peak in September 2013. Property prices in the country hiked 92 per cent between 2003 and 2013 before curbs were imposed. In Hong Kong, prices rose 370 per cent from 2003 to a record last September before cooling measures were implemented – property prices have dipped 13 per cent since. Singapore is ranked behind Hong Kong as Asia’s second most expensive location to purchase a luxury home, according to The Wealth Report 2016 by Knight Frank. 

Demand for units in mature estates far exceeds supply
The number of applicants for new flats offered in Ang Mo Kio and Bedok in May’s Build-To-Order (BTO) exercise has far exceeded the supply of units. The recently concluded BTO exercise launched new BTO flats for the first time in three years in these mature towns. There were about nine applicants per unit for the four-room units at Ang Mo Kio Court; the five-room and three-generation units in the same development had about eight applicants per unit. Second-time home buyers were mostly behind the high demand, armed with the high equity of their current homes that make upgrading to these flats affordable. This was in contrast to the markedly diminished demand for units in non-mature estates of Bukit Panjang and Sembawang, despite prices being more affordable. 5,100 balance flats were also offered during the exercise, with flats located in Kallang-Whampoa, Tampines, The Pinnacle @ Duxton and Queenstown. Two five-room flats in Kallang-Whampoa were the most oversubscribed with 118 applicants.

Exclusive concierge services now available in mid-range condominiums
Developers of mid-range condominiums have begun to bundle exclusive and typically high-end concierge services such as housekeeping, laundry and grocery shopping with home sales. Recently launched Gem Residences in Toa Payoh has collaborated with lifestyle concierge operator Ten Group and Djenee, a digital concierge service, to bring personalised services to its residents. Concierge service will be available to residents round the clock. Since service requests will be grouped together based on demand, prices for such services are expected to be more affordable for residents. Gem Residences is also teaming up with Tetsuya Home Care to provide complimentary weekly medical check-ups. Residents are also free to utilise the bicycles and cars for rent at the condominium. The charges for concierge services are excluded from the condominium’s maintenance fees, which is typical of other similar service offerings in other developments. They will instead pay a service charge based on their usage of Djenee’s services. 
Tay Kah Poh, Executive Director and Head of Residential Services at Knight Frank Singapore, told Today that while these add-ons may sway buyers who were undecided, factors such as location, amenities and price still bore the most weight. He also cautioned the costs that homeowners will bear eventually as a result of the attached concierge services to the condominium. Vincent Ong, a managing partner of Evia Real Estate and co-developer of Gem Residences, has plans to bring similar models of a “club condo” to future developments. In the next two years, Cairnhill Nine opposite Paragon and North Park Residences in Yishun are set to follow this trend with their own offerings of concierge services.
Global Property News

Demand for Sydney homes resilient despite surplus
Eager buyers scored all 391 available units at a Darling Square project in Sydney by Lendlease Group within four hours of its launch, showing vital signs of a resilient demand for city homes despite rising housing surplus. The invigorated demand comes as 34,300 new apartments are expected to enter the property market within the next year; a total of 81,969 new flats within the next two years. Steep and unaffordable prices led to an influx of developed property, according to research firm CoreLogic Inc. According to Lendlease, the price of Sydney homes has gone up 3.4 per cent in May. Tim Lawless, Head of Research at CoreLogic, said in a statement that the looming election in July and the possibility of change in foreign investor taxation policy have not affected the revived increase in property prices. The recent launch was the concluding stage of the 1,500-unit development due for completion in 2019, with flats priced between AU$630,000 for a studio and AU$3.5 million for a three-room penthouse, according to Lendlease in an email statement to Bloomberg.

London luxury home buyers holding back on purchases
According to Knight Frank, the property market for residences in prime central London is slowing ahead of the referendum on Brexit, with subdued demand for homes even where prices have dropped more than ten per cent. The real estate agency’s Prime Central London Sales Index Report for May 2016 shows that annual values for property in the prime regions rose 0.1 per cent in May, the lowest growth since 2009. While sales volume in the earlier half of this year was almost flat compared to 2015, viewings of houses in London rose 31 per cent between January and April year-on-year, indicating housing demand might be suppressed by the possibility of a Brexit. Additionally, mortgage lending in Britain has slowed to £281 million in April, the lowest increase since August 2012. This comes as the new tax imposed on landlords takes effect.

Global investors to reap from booming economy of Myanmar through Golden Glory IPO
Golden Glory Group Pte., a Singapore-based Myanmar real estate developer, is holding an initial public offering (IPO) in Singapore to support the development of property in Myanmar . This will allow global investors to reap from Myanmar’s projected GDP growth of 8.6 per cent this year, the highest in Asia, according to the International Monetary Fund. New legislations and recently relaxed foreign sanctions are attracting global investors to the country. Additionally, the property market is seeing increasing demand, according to Golden Glory Chief Executive Officer Christopher Wu in an interview with Bloomberg. The anticipated IPO is targeting an initial share sale between US$80 million and US$100 million, with raised funds to go into acquiring land banks in Myanmar. According to the company’s website, Golden Glory Group is currently handling a mixed-use project in Yangon – Polo Club (Asia) Residence – that will include hundreds of high-end private units, a 5-star hotel, shops and offices.