Week in Review – 9 December 2016

Local Property News
Total private home sales in 2016 expected to match 2014 and 2015
Photo credit: Parc Riviera
Research firm CBRE expects total sales of new private homes in 2016 to range between 7,000 and 7,500 units, similar to the number of transactions recorded in 2014 and 2015. Approximately 5,500 new private homes have been sold this year till end-September. In Q3 alone, near to 1,900 new private residential units were sold. This includes approximately 500 transactions from the 710-units Lake Grand Project. In Q4 2016, CBRE expects another 1,800 to 2,000 home transactions, driven by the launches of projects such as Alps Residences, Forest Woods, Parc Riviera, and Queen’s Peak. 

Residential site at West Coast Vale launched for public tender under the GLS Programme 
The Urban Redevelopment Authority (URA), announced the launch of a 99 -year leasehold site at West Coast Vale under the Government Land Sales (GLS) Programme for H2 2016. The 16,378 sqm site, which has been allocated for residential purposes, has a maximum gross floor area of 45,860 sqm, and can yield up to a maximum of 520 housing units. The land parcel is connected by the Ayer Rajah Expressway and the West Coast Highway. Amenities such as Westgate, JEM and Big Box malls, as well as Jurong Lake District park are located in close proximity. The tender exercise for this land parcel will close at 12 noon, 9 February 2017.
MCL Land submits highest bid of S$238.39 million for Margaret Drive private residential site
Photo credit: URA
According to data by the URA, MCL Land submitted the highest bid, of S$238.39 million, for the Margaret Drive private residential site. The 99-year leasehold, 4,809.8 sqm site with a maximum allowable gross floor area of 22,195 sqm was released for tender under the Reserve List of Government Land Sales (GLS) programme. An estimated 275 homes can be developed from the site. Mr Nicholas Mak, Executive Director, Research & Consultancy Department at SLP International Property Consultants, expect units to be priced above S$1,700 psf at its launch around late-2017 to early-2018. 

Gramercy Park wins Best Residential Development at MIPIM Asia property awards
Photo credit: Gramercy Park
Gramercy Park, a City Developments Limited (CDL) project, was awarded the Best Residential Development at the MIPIM Asia Awards 2016, organised by Reed MIDEM, a subsidiary of Reed Exhibitions. The 174-unit freehold luxurious condominium on a 170,000 sqf Grange Road site is expected to officially launch in H1 2017. The project has already sold 84 per cent of 50 units offered since its soft launch in May 2016. 
Global Property News

Foreign demand made up small fraction in rise of Australian property prices
According to an Australian Treasury report, foreign purchase of real estate in Sydney and Melbourne influenced prices to rise between A$80 to A$120 per quarter from July 2010 to March 2015. However, the Australian Treasury recently released the Treasury Working Paper 2016, which reported overall prices increasing approximately A$12,800 per quarter during the same period. In the 12 months to June 2015, Australia’s population was growing, and the central bank eased lending. Concurrently, Australian authorities approved A$24 billion worth of Chinese real investment. These factors combined to influence home prices in the largest Australian cities to grow more than 50 per cent compared to 2008. The property price hike triggered some Australian states to impose additional taxes on residential properties purchased by foreigners. However, the Treasury report suggests concerns of foreign buyers driving up property prices may have been overplayed. Shayne Elliot, Chief Executive Officer of ANZ Banking Group, said that the strong growth in the number of Australian households was the primary driver of rising demand for residential property. 

US home prices set to rise at a slower pace in 2017 
According to CoreLogic’s House Price Index, in the 12 months to October 2017, US home prices are expected to grow 4.6 per cent, 2.1 per cent lower than the 6.7 per cent growth recorded from the 12 months to October 2016. Home prices in Washington recorded the highest growth, of 10.5 per cent, followed by Oregon (9.9 per cent) and Idaho (8.5 per cent). Anand Nallathambi, President and Chief Executive Officer of CoreLogic, attributed the growth of home prices to a combination of strong housing demand, low housing supply, and record low interest rates. Dr Frank Nothaft, Chief Economist for CoreLogic, noted that the nationwide 6.7 per cent hike in home prices was mainly influenced by larger states such as Texas, Florida and California, which experienced high price growths. 

Developers expect greater competition for luxury residences in Manhattan, offer discounts 
With many new high-end projects entering the market, developers of existing Manhattan condominiums are increasingly offering discounts to entice buyers amid stronger competition. According to a September estimate by brokerage Corcoran Sunshine Marketing Group, over 3,500 new apartments are expected to enter the market in 2016, with half of them recognised to be luxury apartments priced above US$2,400 psf. According to appraiser Miller Samuel Inc., in 2016 those who bought apartments at 432 Park Ave, Manhattan’s tallest condominium, received average discounts of 10 per cent. A recent 88th floor penthouse was transacted at US$60.9 million, 20 per cent lower than its initial US$76.5 million price tag. Jonathan Miller, President of Miller Samuel, said that it is “smart” of developers to offer price cuts as it signifies their awareness of upcoming projects.  
Impact of Brexit on UK home prices not as strong as expected 
According to Nationwide Building Society, November home prices in the UK rose 0.1 per cent from October 2016, bucking a downward month-on-month trend. Year-on-year, prices rose 4.4 per cent compared to 2015. According to the Bank of England, approved mortgages also hit a seven-month high in October 2016. Robert Gardner, Chief Economist at Nationwide Building Society, said that a healthy labour market and record-low loan interest rates have helped soften the impact of economic uncertainty on the property market following Brexit. However, the limited supply of homes is expected to aid in a price recovery. Although the Organisation for Economic Cooperation and Development noted that the impact of Brexit on home prices was not as strong as expected, it estimates year-on-year growth of home prices to slow from two per cent in 2016 to 1.2 per cent in 2017. 

Chinese investors turn to Seattle after introduction of foreign tax on Vancouver properties 
Property brokers have revealed that home buying interest from the Chinese have shifted to Seattle and Toronto after the British Columbian government introduced a 15 per cent tax on foreign home purchases. The tax implemented in August 2016 was aimed at reducing prices in Vancouver’s heated property market, which has seen landed home prices increase 100 per cent since 2006. According to brokerage Windermere Real Estate, 12 per cent of Seattle homes purchased in 2016 were above US$1 million; in 2006 the figure was below 6 per cent. Dean Jones, Chief Executive Officer of Realogics Sotheby’s International Realty, said approximately half of suburban Seattle home purchases in November 2016 were by the Chinese; a 30 per cent rise since November 2015. 
Gordon Houlden, Director of the China Institute at the University of Alberta, explained that huge sums of Chinese money entering foreign countries are mainly influenced by investor’s uncertainty on the Chinese economy.