Cooling measures affecting local developers and local buyers, MAS will continue to ensure stability for local property market, Holland Village to maintain unique charm, Upcoming New Developments: South Beach and Urban Oasis
Cooling measures affecting local developers and local buyers
The year of 2014 has seen Singapore developers venturing overseas to seek higher yields and returns. Research firm Real Capital Analytics (RCA) reported a three-fold increase of investment (US$2.32 billion) into overseas markets by companies such as City Developments and Keppel Land, in the nine months through September, compared to the same period a year before. Based on the figures, Singapore emerged as the top Asian country in terms of overseas real estate investment. On the buying side, local property buyers for non-landed private housing have been dwindling since 2013. According to Nomura, Singaporeans accounted for 80 per cent of purchases in 2012 but figures have fallen since 2013 where only 76 per cent of the buyers were Singaporeans. The percentage of Singapore buyers has fallen again in the first three quarters of this year to 73 per cent. Despite the substantial Additional Buyer Stamp Duty (ABSD) levy for foreigners, Nomura noted that purchases by Malaysians and Mainland Chinese are rising. With the government not showing signs of reversing the cooling measures, Ms Sigrid Zialcita, Managing Director of Cushman & Wakefield predicts that the trend of developers investing in overseas properties will continue.
The government is also responding to the subdued property market with its recent announcement on the first half 2015 Government Land Sales (GLS) Programme. The Urban Redevelopment Authority (URA) announced on 4 December that the confirmed list for the H1 2015 GLS Programme will include land for 3,020 private residential units (including 490 EC units). This is almost 30 per cent lower compared to the 3,915 private residential units (including 1,520 EC units) offered in the confirmed list for the H2 2014 GLS Programme. The reserve list for H1 2015 will yield about 5,750 private residential units and 265,000 sq m of commercial space compared to 6,305 private residential units and 193,280 sq m of commercial space in the H2 2014 reserve list.
MAS will continue to ensure stability for local property market
The Monetary Authority of Singapore (MAS) released its annual Financial Stability Review on 27 November 2014 which stated that MAS would ensure stability of the housing market even if it requires additional steps. According to the central bank, the overall transactions declined from a peak of 3,200 units in 2012, to 1,900 units in 2013 and down to 1,200 units in the first ten months of 2014.
Mr Colin Tan, Director of Suntec Real Estate, noted to TODAY, “Sales are slow, but we still see projects with good value selling well, which means there is still liquidity and many people are also spending on overseas properties. So debt is still being built up and there is the risk that when interest rates rise, people may face difficulty servicing their loans.” He added, “Prices are still elevated, one reason being property prices have outgrown income levels. And anything can happen when there is so much uncertainty surrounding when interest rates will rise, so we should watch the situation closely.”
Housing loan growth is deteriorating as confidence in the property market remains sluggish. MAS stated that “Private property prices in Singapore have moderated but remain at an elevated level. New housing loans have declined in tandem with the fall in transactions. The property measures have also contributed to restoring financial prudence, but the prospect of higher interest rates remains a risk for some highly leveraged households.” Maybank Kim Eng states that “2015 may not be much better as demand will stem mainly from drawdowns for newly completed homes sold in 2012-13.” According to a HSR report on 25 November, property prices are expected to reach appropriate levels in Q3 2015 for resale HDB and in Q3 2016 for resale condominiums. The report indicated a possibility of a relaxation in cooling measures once prices reach a reasonable equilibrium.
Holland Village to maintain unique charm
The commercial & residential site at Holland Road is the first sale site to be launched as part of the Holland Village Extension plan unveiled in the Master Plan 2014. A Concept and Price Revenue Tender will be adopted for this site that requires developers to present concept plans and bids for the Holland Road site. This is unlike the usual system of awarding the site to the highest bid. Developers’ proposals will be reviewed based on a list of criteria including architecture, business approach and developer’s credentials. This is to ensure that the site’s future development enhances the unique charm and distinctive urban village character of the Holland Village Identity Node. URA announced on 4 December that the site has been transferred from the Confirmed List to the Reserve List for H1 2015 to give developers more time to study the site and tender evaluation criteria before triggering it for sale.
Upcoming New Developments: South Beach and Urban Oasis
The South Beach project, a mixed development jointly developed by City Developments and Malaysia’s IOI Group, will open over the next 12 months. The two towers (34-storey North Toewer and 45-storey South Tower) along Beach Road will house The South Beach, a luxury hotel and have 500,000 square feet of premium office space.
In addition, Sims Drive will have its first prime private estate in the area. GuocoLand announced on 2 December 2014 that it is constructing Urban Oasis, a 99-year leasehold private development consisting of 1,024 units, at the junction of Sims Drive and Aljunied Road.