Week in Review – 4 June 2015

Drop in April’s private homes resale price
Private homes resale prices tumbled 0.1 per cent month-on-month in April, with small units seeing a 0.4 per cent price increase. This according to figures in the Singapore Residential Price Index (SPRI), released by the National University of Singapore’s Institute of Real Estate Studies. Other figures showed a 0.1 per cent fall in prices of central residential properties excluding small units; prices remained the same as the previous month for non-central residential properties excluding small units.  
Vacant homes attributed to increasing launches and declining prices
The residential vacancy rate in Singapore will likely soar in 2016, up to 9.8 per cent, when almost 21,000 new private residential units will be released. Barclays projects that new home completions will increase to 20,900 by the end of next year, more than the 19,900 units to be completed this year. More public housing is also slated to be completed in the coming quarters, putting further pressure on occupancy rates. Private home rents are now five per cent below the peak in Q2 2013. Barclays noted that prices tend to dip substantially when the vacancy rate surpasses eight per cent. 
On the executive condominiums (EC) front, a startling 2,446 units are unoccupied, according to the Urban Redevelopment Authority’s (URA) first-quarter report. This consists of EC units that have yet to be sold and those bought but left vacant. Almost 50 per cent of EC buyers are HDB homeowners seeking a home upgrade. Declining HDB resale prices have hindered the sale of their HDB flats. This has ultimately prolonged the period their newly bought ECs sit vacant. Under HDB rules, upgraders have six months to sell their existing flats upon key collection of their EC units. In the first three months of this year, 29 extension requests to HDB have been made. The total was 56 last year. Apart from HDB homeowners, vacant EC units are also likely to belong to investors who have no intention to move in. 
2,000 applications for 156 five-room units in Clementi for recent BTO exercise
The number of applicants for five-room units in a Clementi Build-To-Order (BTO) project, Clementi Crest, reached 2,000 as of 5pm on 2 June. On average, that is about 13 applicants for each five-room unit. Four-room flats in Clementi Crest were equally popular, drawing nearly 1,900 applications for 229 units. The flats at Clementi have emerged a frontrunner in the recent Housing and Development Board’s (HDB) round of flat sales. This is despite its premium price tag, almost S$200,000 more than the other five-room units on sale under the current BTO exercise. A five-room HDB flat at Clementi Crest is priced at S$576,000 to S$725,000. 
The demand for Clementi has been associated with its lack of new flats and prime location, as it is also near to an MRT station and the town centre. Its neighbouring estate, Jurong East, also promises a new regional centre and HSR (High-Speed Rail), which has created a ripple effect to estates nearby. The Sembawang project was the next most popular, with about four applications for each four-room unit, followed by Tampines with three applications for each four-room unit, and lastly Punggol Northshore with two applications for each four-room unit. 
Jurong West EC sells 120 units on first day 
A quarter of the 480 units were sold in the newest executive condominium (EC) project on the first day of booking. 120 units at Westwood Residences, located at Jurong West, were snapped up by buyers by 7pm on 30 May. Prior to the booking date 500 booking applications were made. Prices for the EC project range from S$620,000 for a two-bedroom unit to S$1.1 million for a five-bedroom unit. Developers confirmed that this averages about S$783 per square foot, slightly less than the given price of S$800 per square foot. Westwood Residences is also the first EC to be altered by resale levy rules. EC buyers who have formerly bought HDB flats or ECs are also affected by the new changes. 
Savills report: slow supply growth expected to pick up 
Singapore’s rental market picked up 3.1 per cent quarter-on-quarter (QoQ) and 13.5 per cent year-on-year (YoY) in Q1 2015; 15,229 leasing transactions were recorded. Homes in the core central region (CCR) and the rest of the central region (RCR) enjoyed an increase of 4.6 per cent and 5.6 per cent respectively, while those in the outside central region (OCR) faced a 0.9 per cent decline. Demand for the OCR is still strong as YoY growth was 19.1 per cent. This comes despite the saturated employment market and sluggish economic growth. 
In terms of rent, the URA rental index recorded a 1.8 per cent decline in non-landed private residential properties. The decline is reflected in all regions, with the CCR leading with a 1.9 per cent QoQ decrease, closely followed by the OCR (1.8 per cent) and the RCR (1.6 per cent). Likewise, Savills observed that rents for high-end non-landed residential properties have dropped by 1.5 per cent QoQ. Additionally, Savills noted that individual landlords, unlike institutional or corporate landlords, are ready to adjust their rental expectations to guarantee a tenant. 
With larger projects receiving Temporary Occupation Permit (TOP), the leasing market in the CCR is seeing more competition. High profile projects include OUE Twin Peaks, RV Residences and Stellar RV, which contribute an additional 830 units to the existing stock. With a further shortening of rental budgets, expatriates are now turning to seek rentals in non-CCR areas. Vacancy rates of private homes prove a huge opportunity cost with a stagnant number of about 22,346 residential units.
First freehold property up for collective sale
Fairhaven, located at Sophia Road in District 9, is up for collective sale by public tender. Over 80 per cent of the owners provided consent to the sale of the 15-unit residential development. The owners are looking at offers above S$45 million for the freehold development that comes with an approximate land area of 16,660 square feet. Taking the ten per cent bonus balcony into account, this would translate to about S$1,169 per square foot per plot ratio. Jones Lang Lasalle’s (JLL) National Director of Capital Markets, Ms Yong Choon Fah, suggested for potential buyers to consider constructing smaller apartments. This is to capitalise on the site’s central area location, where residential units are not restricted by new minimum size guidelines imposed by the Urban Redevelopment Authority (URA). Fairhaven is the first development site to be put up for sale in the vicinity since URA released a Mount Sophia site in 2013 that drew a fair number of bids. Ms Yong expects the site to attract owner-occupiers, investors and families with school-going children. 
Fairhaven’s proximity to educational clusters and the Dhoby Ghaut interchange station are further selling points. Public tender for Fairhaven closes on 1 July 2015 at 3pm.