Five new ECs break 9-month dry spell

Five executive condominiums (EC) are coming onto the market, after a nine-month drought in EC launches, but consultants and developers alike are unsure of how they will perform.

Some expect the new launches to benefit from pent-up demand, while others believe sales will not be that brisk as increasingly selective buyers take their time with their new array of choices.

It boils down to the price eventually, most say. ECs will meet with buyers’ resistance if prices exceed S$1 million in quantum or about S$800 psf. Most ECs are selling at about S$780-820 psf presently.

The 70 per cent slump in EC sales after a 30 per cent mortgage servicing ratio (MSR) kicked in last year shows that new launches could face challenges if they are still priced at or close to levels before the MSR was imposed. From Jan-Aug last year, ECs sold at a median of S$750 psf.

Vincent Ong, co-managing partner of Evia Real Estate, the developer of Lake Life, one the five ECs, agreed that the MSR will make some buyers more hesitant, depending on their debt profile. The saving grace is that ECs remain 20-30 per cent cheaper than equivalent private properties, and this will sustain interest levels in this market class, he said.

The three ECs which have confirmed their launches from now until November are: Qingjian Realty’s Bellewoods (in Woodlands) and Bellewaters (in Sengkang), and the Evia Real Estate-led consortium’s Lake Life (in Jurong West).

The other two yet to have set their launch dates are Keong Hong’s The Amore and Kheng Leong’s The Terrace, both in Punggol.

Three of the five projects are located in the Punggol-Sengkang region and may have to vie with one another for buyers with competitive pricing. This is on top of the existing unsold 75 units at Ecopolitan and 107 more at Waterwoods in the vicinity.

In Woodlands, Bellewoods is also up against the 120 units unsold at Forestville.

Lake Life may attract the most interest, although its record high land price of S$418 psf per plot ratio (versus the usual S$300-plus) will be factored into their pricing. This is because it has been 17 years since the last EC, Summerdale, was launched in Jurong West in 1997.

Add to that the fact that the Jurong Lake District is going through a major makeover, including spruce-ups of its parks and gardens, a new Science Centre, and the prospect of the high-speed rail station to Malaysia to be built there.

The project has gathered more than 500 pre-registrations over the past two weeks. But prices are indeed on the higher end. Current market indicative price for Lake Life is $880 to $890 psf.

Some projects are controlling apartment sizes to keep prices within buyers’ comfortable range. Donald Ng, head of sales and marketing at Qingjian Realty, for instance, is proud that Bellewaters’ Type C1 three-bedders are among the smallest in all the existing ECs.

Qingjian has managed to make efficient use of space with “no wastage, no super long corners or odd corners. With a reduction in size, it can help to keep the total quantum affordable within MSR limits,” he said.

Bigger units such as four-bedders or large three-bedders could be difficult to sell as buyers may struggle to secure the needed loan.

Most of the time at new launches, it is the smaller units that get snapped up because their loans are easier to finance. Bigger units might be booked but after that returned because buyers might have difficulty placing the deposit or getting the loan quantum from banks.

Bellewoods will come with two-bedroom units, a rarity in the leftover inventory from earlier ECs. The ones left in the market are low-floor or bigger units or those with not so favourable specs.

A developer of one of the five upcoming ECs, when asked what kind of interest his project might attract, said: “Your guess is as good as mine. It is an uncertainty all developers grapple with, so it boils down to the advertising and marketing. Of course we will do as much marketing as we can to make it attractive.”

Source: Business Times – 20 September 2014

Developer has faith in St Patrick’s project

Despite the gloom in the residential property market, developer UOL Group is confident of moving units at its latest East Coast development, 70 St Patrick’s.

Mr Liam Wee Sin, president (property), told The Straits Times yesterday that there is still “underlying demand if you have a good product”.

“The market has become more subdued and buyers are very selective… But if a development has the scarcity factor – in that it has attributes not easily found in most residential projects – as well as a strong product proposition, it will be sought after.”

Mr Liam said 70 St Patrick’s location in District 15, next to the upcoming Marine Terrace MRT station on the Thomson-East Coast Line, will be a draw.

“The residential blocks are all arranged… such that each faces a different aspect of the surrounding amenities, and this gives buyers more options,” he added.

The 186 units at the low-rise freehold project go on sale today at an average price of $1,600 to $1,700 per sq ft (psf). Prices start at $1.2 million for a 700 sq ft two-bedder and go up to $2.5 million for a 1,647 sq ft penthouse.

Industry sources said a number of buyers have already expressed interest in the development.

The project is next to the 102-unit St Patrick’s Residences, which launched last year. Units at the freehold project were sold at an average price of $1,226 psf over the past six months, according to Squarefoot Research.

UOL is also keeping busy with OneKM, the retail mall below Katong Regency, which is expected to have its soft launch next month, said Mr Liam.

The mall has 158 retail units spanning a net lettable area of 203,601 sq ft. Its anchor tenants include Cold Storage.

Mr Liam said the company is working towards growing its recurring income via a diversified portfolio in the light of the softening residential market.

In August, UOL embarked on its first overseas venture by acquiring a site in Bishopsgate, in the City of London, via a £97 million (S$200 million) purchase. It expects to operate a hotel on the mixed-use site under its Pan Pacific hotel flagship brand.

Pointing out the site’s location in London’s financial district, Mr Liam said its proximity to the Liverpool Street Station and the future Crossrail, which will link the whole of Greater London, will be a “game-changer”.

“In all our ventures, we always apply the same investment principle. There must be a scarcity factor and high connectivity and that would help translate into positive demand,” he said.

Source: The Straits Times – 20 September 2014

Serangoon Garden bungalow up for auction

A freehold bungalow at 14 Brighton Crescent in the Serangoon Garden area will go under the hammer at a auction later this month.

The property is understood to have been put up for sale by the estate of the late Raffles Girls’ School principal Noel Evelyn Norris, who died earlier this year.

The indicative price for the rectangular site is S$7.7 million or around S$890 per square foot (psf) on the land area of 8,666 square feet.

On site is a single-storey detached house. Under Master Plan 2014, the site is zoned for “two-storey mixed landed” use.

The site can be subdivided to accommodate either two bungalows of about 4,333 sq ft each or three terrace houses of some 2,000-3,000 sq ft each.

Both configurations would appeal to owner occupiers seeking a huge space for multi-generation households and/or immediate relatives to live next to one another and yet enjoy privacy.

Moreover, the freehold tenure of the property would boost its appeal to developers.

The auction will be held on Sept 24 at The Amara Hotel in Tanjong Pagar.

Another property that will go under the hammer at the same auction will be a two-bedder of 1,109 sq ft on the 12th floor of One Shenton. It is being offered for sale by its owner, with an indicative price of S$2.03 million or S$1,830 psf. One Shenton is on a site with about 90 years’ balance lease. The project received Temporary Occupation Permit (TOP) about two years ago.

Buyers were found for four properties – three residential properties and an industrial unit – at its auction last month. The 1,614-sq-ft factory unit, on the fourth level of The Spire in Bukit Batok Crescent, fetched S$650,000, or S$403 psf. The unit was put up for sale at the auction by its owner, as was a two-bedroom apartment with private enclosed space at the first level of UE Square in the River Valley area. It sold at nearly S$1.57 million, or S$1,400 psf. The property has 929-year leasehold tenure from Jan 1, 1953.

The other two properties that transacted at that auction were put up for sale by mortgagees (or lenders).

A two-level apartment at Orchard Scotts on Anthony Road was sold for S$3.3 million. This translates to S$1,565 psf based on its strata area of 2,109 sq ft. Located on the ninth floor, the unit has three bedrooms plus a study room. The project is on a site with a balance lease term of 86 years.

The other mortgagee sale property that found a new owner Aug 27 auction was a freehold, three-storey corner terrace house at Eng Kong Drive in the Toh Tuck area. It changed hands at S$3 million. The property is on 2,827 sq ft of land area and has five bedrooms and a maid’s room.

Mortgagee sales have gained momentum since the second quarter of this year.

Agents expect the number of properties put up for auction by mortgagees or lenders to rise because of difficulty that financially stretched borrowers face in securing buyers for their properties since the implementation of the total debt servicing ratio (TDSR) framework in June last year. As a result, financial institutions have had to repossess more properties and put them up for auction.

Source: Business Times – 11 September 2014

Resale prices of condos up a tad in August

Resale prices of non-landed private homes rose a slight 0.4 per cent in August, compared to July, but analysts say this cannot be construed as a turnaround in price performance. They pin it instead on some pent-up revival in buyers’ interest, among other factors.

This was according to flash data released by the Singapore Real Estate Exchange (SRX) on Monday.

August’s price gain was surprisingly led by properties in the city area and city fringe, which reported increases of 4.8 per cent and 1.5 per cent, respectively. In contrast, resale prices in the suburbs fell 1.1 per cent.

This may go against the conventional thinking that high-end homes would be the most affected by cooling measures and loan curbs, but this was simply because their prices have already fallen drastically in previous months and there was no way to go but up.

Buyers are finding high-end properties more affordable than before, but they are still very much concerned about weak leasing interest for high-end homes as companies tighten expatriates’ housing allowances.

This price increase in August is unlikely to be repeated in the following months . . . This is a pent-up investors’ interest that is expected to be short-lived. There is still ample unsold developer stock and lacklustre leasing demand.

Another explanation is that the figures were tilted by the greater number of transactions in the prime District 11 (Novena, Newton, Thomson) and the fact that their median “transaction over X-value” (TOX) were very positive, meaning that buyers paid higher than the properties’ estimated market value.

This masked the fewer transactions in Districts 9 (Orchard Road, River Valley) and 10 (Bukit Timah, Holland, Balmoral) where units changed hands below market value.

The minor recovery in the overall SRX price index and those of the core central region (city area) and rest of central region (city fringe) in August does not signal that the private residential price trend has reached the bottom. As some buyers wait on the sideline for prices to soften before they re-enter the market, it would result in a self-fulfilling prophecy of prices falling further.

Proof that the market remained quiet in August (also the hungry ghost month, during which it is considered inauspicious to buy property) lay in the flat resale volume. An estimated 418 non-landed private homes were resold in August, versus 417 in July.

On the leasing front, rental volume rose 3.6 per cent, with about 3,539 units rented in August. But rental prices continued to fall for the seventh straight month, slipping 0.6 per cent in August, led by the city area and suburbs which fell 2 per cent and 1.1 per cent, respectively. In contrast, rental prices in the city fringe rose a marginal 0.4 per cent.

ERA Realty key executive officer Eugene Lim said this shows that there is still demand for rented property but landlords have to price their rentals more realistically in what is now a tenant’s market.

“With more projects being completed, there is an increase in the competition for tenants. Landlords have to be realistic about rents to secure tenants quickly; and very often, it would mean lowering the rent to attract or keep good quality tenants.”

The weak rental market feeds into the cycle, further deterring buyers from purchasing private property for investment, he added.

Analysts continue to expect an overall drop of 4-8 per cent in the next 12 months, led by city-area condominiums.

Source: Business Times – 9 September 2014

Marina Bay taking on residential tone

The appeal of living near the Central Business District (CBD) will get a major test next weekend with the launch of the 1,042-unit Marina One Residences.

The area, best known as a fast-growing office centre, is shaping up as a significant residential precinct as well.

And while rents in the vicinity have fallen over the past year, investors may find the area a good buy now that cooling measures have restrained overly high prices, consultants say.

Marina One Residences – with one-, two-, three- and four-bedders – is part of the larger Marina One development, also including Marina One offices and The Heart, a retail podium set around a 65,000 sq ft park.

Developer M+S said it is looking to price Marina One at an average of $2,600 per sq ft (psf).

“We believe that there will always be discerning buyers who will seize a good investment opportunity as long as a development offers quality attributes – even through the peaks and troughs of the market,” said M+S chief operating officer Kemmy Tan.

Marina One Residences is one of the rare CBD residential developments with a freehold title.

Given current market conditions, its initial selling price may crowd out a considerable group of potential buyers… (But) in the longer term, Marina One will likely see more active deals due to its advantageous location and good designs, which are highly valued by busy owners and tenants.

Nearby project V on Shenton, launched in August 2012, sold 354 of 510 units as at the end of July.

In the past year, average resale prices in the area ranged from $1,945 psf at three-year-old One Shenton to $2,694 psf at one-year-old Marina Bay Suites.

On average, resale prices fell by about 8 per cent in the past year. A major reason for the fall is weakening leasing demand by expatriates. (They) have more or less decentralised to the city fringes to save on accommodation costs, as most companies have been strict in their housing allowances.

However, investors, especially those owning small units in the area, can expect keen leasing interest from mid- to senior-level expats who may still want a conveniently located property.

With cooling measures such as the total debt servicing ratio (TDSR) framework, buyers may now find properties here at attractive prices, which could “allow them to have a share of future price appreciation or recovery.

Prior to the TDSR, however, most locality upsides and rejuvenation plans were quickly priced in by owners and developers.

In the past year, average rents in the area ranged from $4.40 psf a month at Marina Bay Suites to $8.10 psf a month at three-year-old The Clift.

While rents have fallen by an average of 6 per cent over the past year, this is in line with weakening leasing conditions islandwide, especially rents of high-end residential properties.

But the investment outlook is promising beyond the short term.

Better infrastructure is expected in the next few years, such as the Thomson-East Coast Line which will be linked to Marina Bay MRT station.

The precinct’s unique setting and high accessibility will appeal to people working in the CBD who have tight daily schedules. Barring any major deterioration in the global economy, the rental market should also see good support in tandem with the maturation of adjacent office properties.

Source: The Straits Times – 6 September 2014

Return To Seller

Buyers of executive condominiums (ECs) are backing out of their purchases more than buyers of private properties, new data analysis shows.

Only a handful of ECs are on the market, compared with scores of private condos.

But units from just eight EC projects made up about 30 per cent of the 277 units returned to developers in the first seven months of the year.

The figures are based on an analysis of monthly data from property portal Square Foot Research.

ECs are a hybrid of public and private housing, sold with Housing Board restrictions.

At Skypark Residences, an EC in Sembawang, for instance, 22 units were returned – the highest number among the projects.

Forestville in Woodlands was next with 18. In Punggol, 14 units were given up at Ecopolitan while Waterwoods had 12 units returned. The Sea Horizon EC project in Pasir Ris had 10 units returned.

Consultants suggested that one reason could be that prices of ECs have risen to record levels, and that a lower mortgage servicing ratio (MSR) introduced last year limited the monthly housing payments at 30 per cent of the buyer’s gross monthly income.

The substantial (number of) units returned could be due to impulse buying, and buyers finding that they cannot secure a sufficient loan under the new MSR cap, or that the prices worked out to be in excess of their affordability.

Weak market sentiment could also mean buyers expect property prices to correct further, and some might have decided to give up their units for other opportunities.

Another possibility is that some buyers did not meet the eligibility criteria set by HDB. For instance, EC buyers cannot have a combined gross monthly income of more than $12,000, and must have lived in their HDB flat for at least five years, if they are not first-time buyers.

But some returns could simply be because of cancelled marriage plans, since buyers must form a family unit to buy an EC unit.

The penalty for returning a unit to developers who bought EC land after Dec 9 is 5 per cent of the property’s price, after the sales agreement has been exercised. For all other EC projects, the penalty is 20 per cent of the unit’s price tag. If the sales agreement has not been exercised, the penalty is typically about 1.25 per cent of the purchase price.

However, the number of EC units returned to developers is not alarming against the 3,337 EC units launched last year. No EC project was launched in the first seven months of the year.

The demand for ECs is still high, as they are much more affordable than private homes. As the number of sales transactions increases, the likelihood of units being returned also increases.

Source: The Straits Times – 6 September 2014

Sim Lian tops bids for EC site, beating market expectations

The latest state tender for an executive condominium (EC) site in Choa Chu Kang Drive shows that developers would still make a beeline for attractive sites.

Located about 550 metres from Choa Chu Kang MRT Station and Bus Interchange and Lot One Shoppers’ Mall, the 1.9-hectare plot drew eight bids, with the highest at S$361.08 psf ppr from Sim Lian Land – slightly above market expectations.

Some market watcher had expected the site to draw 5-6 bids with the winning bid at S$320-350 psf ppr. However, he added: “I see a mix of both caution and optimism. The optimism is in the top bid being higher than expected; the caution is the top bid being pretty close to the S$357 psf ppr average price for the two adjacent Choa Chu Kang Grove EC plots sold in February – despite the latest site being more attractive.”

The pair of Choa Chu Kang Grove sites are about 1.1 km from Choa Chu Kang MRT Station.

At the latest tender in Choa Chu Kang Drive, Sim Lian’s bid was just 2.2 per cent above the next highest, $353.21 psf ppr, from a consortium comprising Hoi Hup Realty, Sunway Developments and Oriental Worldwide Investments.

The number of bids and close winning margin indicate the healthy interest in the EC market, despite current market conditions.

City Developments Limited (CDL) unit Verwood Holdings teamed up with TID Residential to bid nearly S$343 psf ppr, the third highest. Back in March 2011, CDL had paid S$321 psf ppr for the next-door plot, on which it is developing The Rainforest EC project.

Also bidding at Thursday’s tender were Nanshan Group Singapore (S$337 psf ppr) and Qingjian Realty (S$331.08 psf ppr). A partnership of Evia Real Estate (6), Ho Lee Group, CNH Investment, OKP Land and Lian Soon Holdings offered S$311.46 psf ppr while MCL Land priced the site at S$305.17 psf ppr . This was significantly lower than the S$357 psf ppr average price that it had paid earlier this year for the pair of Choa Chu Kang Grove plots, in a much inferior location. MCL plans to amalgate the plots and build a project of over 1,300 units.

The lowest bid at Thursday’s tender – from Koh Brothers unit KBD Ventures – was S$280.21 psf ppr.

The strong turnout of eight bidders along with the higher-than-expected top bid of S$361 psf ppr constrasts with the lacklustre performance seen two months ago for an EC site in Sembawang Avenue, about 550 metres from Sembawang MRT Station.

That site drew just four bids and its winning bid of S$320 psf ppr was the lowest price for an EC site since November 2012.

ECs are a public-private housing hybrid with initial buyer eligibility and resale conditions that are fully lifted 10 years after the completion of the project.

Demand for ECs has softened following the December 2013 introduction of a mortgage service ratio (MSR) cap for EC purchases from developers.

Nevertheless, pent-up demand for this housing type is expected for the five EC project launches slated by year-end.

This is because no new EC projects have been launched in nearly a year, following regulations announced in January 2013 stipulating that developers would be allowed to sell units in EC projects only 15 months from the date of award of the site, or after completion of foundation works, whichever is earlier. Given that mass-market condo prices have started to soften, most analysts would expect prices of EC units to follow suit.

Market watchers reckon that based on the top bid for the Choa Chu Kang Drive site, the breakeven cost could be around S$700-720 psf. This still leaves the bidder with some cushion for a potential price softening from current levels. In the first half of this year, developers’ sales of EC units averaged around S$790 psf going by caveats data.

When contacted, a Sim Lian spokesman said that the group expects to launch a project on the site in early 2016, given current rules. “We’re looking at a project of 500-plus units. This is an attractive location, near the MRT station, a fairly big suburban mall and other amenities.”

Developers who pay high prices for EC sites may raise the proportion of smaller-sized units – for instance, by building more two-bedders instead of three-bedroom units, in order to keep the price quantum within reach of buyers’ MSR cap.

Source: Business Times – 5 September 2014