Q3 private residential property transactions rise 20%

Q3 private residential property transactions rise 20%

Dec 9, 2009 - PropertyGuru.com.sg

Singapore's private residential market experienced a strong surge in the third quarter, as the volume of transactions increased 20 percent over the second quarter.

According to property consultancy firm Savills, around 11,000 units were sold between July and September, mostly in the mid-tier and mass market sectors.

Projects like the Optima at Tanah Merah, Hundred Trees at West Coast, and The Gale at Flora Road benefited from this buying interest.

However, the high-end sector observed that the government’s implementation of the cooling-off measures and the limited number of launches eased off transaction volumes in the third quarter.

Behind the buoyant sales, prices of private properties increased 15.8 percent in Q3 - the sharpest quarterly rise in 28 years.

Even in the high-end sector, prices recorded two consecutive increases, despite being around 22 percent under the previous peak in the last quarter of 2007.

Savills said that it expects to have slow transaction volumes in the private residential sales market in the next few months, as purchasing activity tends to ease during the year-end holiday season and there will be fewer major launches.

However, island-wide prices of homes are expected to stay firm, with a modest increase from Q3 to Q4.

Meanwhile, office vacancy rates surged 12.5 percent in Q3. The figure was up by 2.5 percentage points from Q2, as 1.25 million sqft of new office space was completed.

According to Savills, net supply now exceeds net demand by around 1.2 million sqft. Companies stayed cost conscious in Q3 despite a more positive outlook for the economy.

Consequently, tenants relocating to seize the chance of transferring to new office buildings that give them a more competitive rental package largely led the leasing activity.

Looking forward, Savills said that the slow pick up of business confidence will prompt more companies to revisit or to expand their space planning needs that will result in an increase in the demand for leasing.



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Asian property funds to expand to $200 billion in coming years

Asian property funds to expand to $200 billion in coming years

Dec 9, 2009 - PropertyGuru.com.sg

Asia's property fund size will expand by over 50 percent to $200 billion in the next two to three years. This is fueled by demand from institutional investors from several countries including China, industry executives said.

Sovereign wealth funds, pension funds, and wealthy individuals would likely enhance their portfolios for property funds in the coming years after interests waned harshly during the sharp economic recession earlier this year, said the executives.

“The next 12 months will probably be a bit slow because we are still coming out of this difficult global situation, but then I think it will pick up more quickly after that,” said Nicholas Loup, Asia-Pacific chief executive of Grosvenor Limited, a UK-based private property group.

Fund managers from Asia have $130.9 billion worth of property assets under management, as shown in a survey conducted by the Asian Association for Investors in Non-listed Real Estate Vehicles, a non-profit organization that focuses on fund-related firms within the region.

This first-ever survey done by the association showed that the total global property funds have reached $409.6 billion. According to Loup, chairman of the association, Asia's fund size could easily generate $200 billion over the next few years, excluding risks outside the region, like debt issues faced by financial institutions in markets outside Asia.

“The big sovereign wealth funds in the region, the Chinese insurance companies, will start investing, (and) you'll see the Middle East looking more eastwards for their capital to be deployed,” said Morgan Stanley Asia Managing Director Willem de Geus.

Morgan Stanley, Australia's AMP Capital and Singapore's CapitaLand Financial are the top three property fund managers in Asia, composing nearly 40 percent of the total property funds in the region, the survey showed.

“We are doing some homework at the moment on domestic Chinese funds and domestic Indian funds. We haven't decided on anything yet,” said de Geus.

Property investment sales recover after slow start

Property investment sales recover after slow start

Dec 8, 2009 - PropertyGuru.com.sg

Investment sales of Singapore property recovered with a $9.4 billion year-to-date tally, after a slow start in the first quarter. CB Richard Ellis (CBRE) projects that the full-year figure will reach more than $10 billion after all transacted caveats in November and December have been lodged. However, the figure would only be around half of $17.9 billion in 2008.

Hitting investment sales deals of about $15 to $20 billion, property consultants anticipate 2010 to be a better year. Such transactions are the basis for the medium to long-term view of developers and investors to the property market.

Investment sales are defined by CBRE as transactions with a value of no less than $5 million, including landed residential property and apartments, private and government sales of buildings and land, both en bloc and strata. It likewise includes change of ownership of property through share sales.

“With 2010 expected to be a recovery year for the Singapore economy, investment sales could be in the region of $15 billion, similar to that of 2005. Economic fundamentals should start to catch up with the positive sentiments in the stock market and the residential market, with more stability in the financial and business sectors,” said Jeremy Lake, executive director for investment properties at CB Richard Ellis.

Chris Fossick, managing director of Jones Lang LaSalle (South East Asia and Singapore) said, “Investors are starting to focus on the recovery, and whilst still cautious about the short term, they are optimistic about the mid and long-term outlook of the Singapore real estate market.”

Most market watchers are expecting that the residential segment will lead the way for next year’s investment sales deals, with the Government scheduled to resume the sale of residential sites through its confirmed list from January. The collective sales market is also expected to be more active next year, after just one major deal this year (the $100.8m sale of Dragon Mansion).

According to Mr. Lake, investors' interest for retail malls in suburban areas continues to be strong.

“So the appetite for office space, which has been somewhat weak in the past 12 months or so, will pick up again. However, deal flow may be limited as many of the sellers who were keener to sell have probably already sold,” he said.

Shaun Poh, senior director for investment advisory services at DTZ, says there are reserved funds for office properties in 2010 but deal sizes will be limited to $200 to $300 million for each building. “Office investors are also more stringent, demanding initial property yields of at least 4-5 per cent, compared with 2-3 per cent during the 2007 boom. And they'll only look at buildings that are substantially leased, given supply overhang issues,” he added.

“The office market would likely see more investment activity next year as the rental slide eases or rents even begin to recover. And with credit loosening further, major institutions like real estate investment trusts could be priming themselves for further acquisitions, having addressed refinancing concerns,” said Karamjit Singh, Credo Real Estate managing director.

Sentosa Cove draws more transactions

Sentosa Cove draws more transactions

Dec 7, 2009 - PropertyGuru.com.sg

Homes in Sentosa Cove drew strong interest in the first 10 months of 2009 from high-net-worth investors. More properties costing over $10 million were transacted over this period compared to the last four years.

According to property consultancy firm Savills Singapore, its analysis of URA Realis data as of Dec 1 showed that September and October 2009 were noticeably active months. In fact, Sentosa Cove’s three largest residential transactions to date – at $20.18 million, $22 million and $30 million respectively – happened during this time. The biggest transaction involved a completed bungalow at Ocean Drive, which changed hands in October this year in the secondary market. The selling price of $30 million works out to $1,753 per sq ft, based on the 17,115 sq ft land area.

Two Chinese citizens, who are also permanent residents of Singapore, were the buyers of the bungalow, and the seller is a locally incorporated firm.

The second and third biggest deals were transacted in September, involving the subsales of two villas at Paradise Island for $22 million and $20.18 million.

In general, the analysis of Savills showed that the number of lodged caveats for homes in Sentosa Cove costing more than $10 million jumped to 24 in the first 10 months of the year – from just 17 between the last quarters of 2004 and 2008.

More than half or 14 of the 24 transactions were sealed in September and October. According to the firm, a more optimistic outlook for the global economy at the time, before the recent debt problems of Dubai World, enhanced investor’s confidence in making big-ticket purchases like super-luxury homes.

Savills said that the stable recovery of Singapore’s economy in the past few months and the renewed prominence of the Republic on the global financial map have boosted optimism among investors to invest monies here.

Steven Ming, Savills director of investment sales & prestige homes, offered another reason for the flow of transactions in October. He related the anecdotal evidence that some high-net-worth mainland Chinese were in Singapore to shop for properties during their National Day Golden Week holiday.

Overall, the total number of caveats lodged for private homes in Sentosa Cove increased to 133 in the first 10 months of 2009 from 72 in the whole of 2008. Nevertheless, the latest figure is just 26 percent of the peak in 2006, having a record of 516 transactions.

Savills also confirmed that the bulk of transactions in 2009 were in the resale and subsale markets. Deals in the primary market, which involved developer sales accounted for just 9 percent of caveats. This reflected the limited release of new projects in 2009.

Ong Choon Fah, DTZ executive director (consulting), believes that prices of homes at Sentosa Cove will continue to appreciate in 2010, although a lot will depend on the wider property market. “Prices in Sentosa Cove could be more volatile than in the prime districts on the mainland because Sentosa Cove buyers are relatively more investment driven than motivated by owner occupation, compared to the prime districts. When markets go up or down markedly, investors may be more inclined to sell than owner-occupiers, whether it is to cut loss or realize a gain,” she said.

Singapore property prices increasing

Singapore property prices increasing

Dec 7, 2009 - PropertyGuru.com.sg

The dramatic rebound of the real estate sector in Singapore, including the renewed interest of foreign buyers, has become a big concern to government officials. This resulted in new measures being created to stop property speculations. The government’s earlier measures to boost the housing market were successful, and its effort to slow it down is working as well.

After the prices of residential property in Singapore increased 15.75 percent in the third quarter this year, the government warned against property speculations, as well as the formation of property bubbles. From 953 housing units sold in the fourth quarter of last year, home sales surged to 10,120 units in the second quarter and 11,518 units in Q3 2009 this year.

After strengthening from 2005 to 2007, home prices in Singapore declined in 2008 due to the global recession. As global demand plummeted, Singapore’s economic condition shrank 9.5 percent in 2008 to the first quarter of 2009, and there was a 24.9 percent fall in home prices during the year to the second quarter of 2009.

In Q3 this year, Singapore’s economic cycle reversed and GDP increased by 0.8 percent year-on-year. Prospects of an economic stability, combined with low borrowing costs, triggered the massive increase in home prices.

With this, the government warned that it will manage the housing cycle.

In September, the government implemented measures to cool down the housing market, including policies, making it difficult for all households to defer mortgage payments.

“We do want to manage the property cycle as best we can, prevent boom and bust,” said Finance Minister Tharman Shanmugaratnam, admitting that it’s uneasy to foresee the property needs of the country. The government is reviewing the use of other measures to manage the home price cycle, such as modifying rules on credit, adjusting land supply and in extreme cases, amending the tax policies of the country.

The MAS also noted in its Financial Stability Review released in November: "As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted."

Singapore and Hong Kong investors expect portfolio value to rise

Singapore and Hong Kong investors expect portfolio value to rise

Dec 4, 2009 - PropertyGuru.com.sg

Based on a survey done by Barclays Wealth on high net worth individuals, Singapore and Hong Kong investors are very much interested in properties. In fact, HK investors have apportioned 25 percent of their portfolios to property.

Both groups are expecting to allocate a larger portion of their portfolios to property by around 3 percentage points for the next two years.

They cited that capital appreciation and potential yield are two primary advantages of investing in residential properties.

According to Barclays Wealth, it expects that the demand of investors for property will remain relatively strong due to the loosening of liquidity and economic recovery. However, it noted that diversification is vital to any investment portfolio.

“At the end of the day, 25 per cent concentration for a Singaporean respondent is a fairly high part of the portfolio to invest in one asset class – one which, depending on the specific instance, could be potentially illiquid. That's a higher number than what we would be recommending,” said Manpreet Gill, Asia strategist, Barclays Wealth.

“At this point in time, we think it makes sense to invest in risky assets, which will include property, but also other asset classes like equities. We think diversification is a very important part of what clients and investors should be looking at today. That's one of the important findings of our survey.”

Barclays also noted that property does not usually deliver high long-standing returns as an asset class.

In Singapore, Barclays anticipates rising price trends in the mid- to higher-end segments of the market, where prices of properties have taken a hit due to the global credit crunch.

Barclays conducted the survey in August and September. It polled more than 2,000 respondents from across the world, including India, Spain, the US and the UK.

Six whole floors purchased at Marina Bay Suites preview

Six whole floors purchased at Marina Bay Suites preview

Dec 3, 2009 - PropertyGuru.com.sg

About half a dozen floors at Marina Bay Suites were sold during last week’s preview. Its buyers are believed to be Singaporeans, Indonesians and other Asians.

The biggest transaction recorded in the preview was about $45 million, including at least two whole floors that were purchased by an Indonesian party.

Some market watchers believe it could cost buyers between $17million and $18 million to buy a whole floor at the 99-year leasehold condo based on last week’s selling price.

Each floor has four apartments, two three-room units and two four-room units. The total area per floor is about 8,000 square feet.

Thomas Tan, head of marketing (residential) for Raffles Quay Asset Management (RQAM), said 87 out of 90 units released for preview were purchased. The total amount made from the sales is approximately $400 million.

Two-thirds of the total units were purchased by Singapore residents, including PRs. The remaining units were bought by non-PR foreigners, including Malaysians, Indonesians, Americans, Australians and mainland Chinese.

“We do have multiple-unit buyers, but due to client confidentiality and privacy reasons, we are unable to reveal such information,” said Mr. Tan when asked about the buyers.

RQAM is the asset manager for Marina Bay Suites, which is being developed through a joint venture between Cheung Kong Holdings, Hongkong Land and Keppel Land.

Mr. Tan declined to share the details but reiterated that “the average price range was between $2,200 psf and $2,500 psf.” It was understood that the selling price of the 90 units were close to $2,300 per square foot (psf).

However, the range of the apartments that were sold could be about $1,800 psf to over $2,600 psf.

Mr. Tan said the apartments that were released at last week’s preview were located at the 7th to 40th plus floors of the 66-storey project.

Marina Bay Suites consists of 218 three- to four-room units and three penthouses. The construction of the project is set to begin in the first-half of next year.

“We have no immediate plans to release more units for the rest of this year but we'll continue to register interested buyers. We'll monitor the market and determine the price at the time of launch,” said Mr. Tan.