Week in Review – 8 May 2014

New home loan applications drop, Positive outlook for new private homes, Island-wide retail rents rising especially in prime areas and Jurong

New home loan applications drop
Cooling measures and loan restrictions are taking their toll, as banks reveal declines in new mortgage applications. Housing and bridging loans increased at only 7.9% in March, compared to a compound annual growth rate of 15% over the last 5 years. DBS chief executive Piyush Gupta revealed that new loan applications in the first quarter fell 45% compared to the same period last year. New loan originations have also decreased, by 40% compared to two years ago, according to OCBC chief executive Samuel Tsien. 
Positive outlook for new private homes
In spite of declining bank loans, recent private home launches are experiencing good turnouts. Commonwealth Towers, developed by Hong Leong Group, opened its doors to buyers on Labour Day. 400 units out of a total of 845 were released, and 210 units were snapped up.  In an interview with Today, Ku Swee Yong, CEO of Century 21 Singapore said the launch demonstrates that many investors qualified “under the TDSR and ABSD rules” and were keen to invest in the property, with its location and interior furnishings. Another condominium developed by Hong Leong Group, the 944-unit Coco Palms, started its preview on Saturday, recording 600 visitors at the show flat as of 4pm. The 199-unit Waterfront @ Faber project at Clementi, by World Class Land, also opened for preview on Labour Day and recorded about 400 visitors. According to analysts, developers are planning to launch more projects in the coming months, in the window between the festive period in the first quarter and the year-end holiday season.
The private housing market looks set to continue its positive outlook as the URA revealed plans for a 38-hectare private housing estate in Ang Mo Kio, to be developed in tandem with the opening of the Lentor MRT station around 2020. According to some property analysts, this estate could be a popular choice with buyers as new landed housing in locations near the city and in mature estates are rare. The planned estate is currently a forest bordered by Tagore Road, Lentor Drive and Yio Chu Kang Road and will see high-rise, medium-rise and landed housing options, alongside parks and a variety of amenities.
Island-wide retail rents rising especially in prime areas and Jurong
Knight Frank has reported 0.8% q-o-q increases in island-wide prime retail rents for the first three months this year. Rents for prime retail spaces for malls in Marina, City Hall, and Bugis registered the most significant q-o-q increase of 3.2%, narrowing the rental gap with retail rents in Orchard Road (Central and Fringe) from 16.8% to 10.2% since 4Q 2012. The opening of Capitol Singapore and the National Art Gallery in the Marina, City Hall and Bugis cluster, likely in end-2014 and in 2015 respectively, promises more retail space. They are also expected to enhance the arts enclave area, boosting its appeal and attracting visitors, which could generate higher retail demand and interest post-development.  
Another upcoming precinct that looks set to experience rental growth is the Jurong cluster. Recent speculation for Jurong East to be one of the possible locations for the terminal of the proposed high-speed rail link between Singapore and Malaysia, is signalling the potential for significant growth in footfall in the area. According to Knight Frank, average prime retail rents in Jurong East and West precincts are currently one of the highest across the suburban clusters in Singapore, at about $32.50 per sq ft compared to the average prime retail rents of $32.30 per sq ft for other suburban malls.