NOVEMBER PROPERTY MARKET UPDATE !

Introduction

November 2009 will be remembered for central bank interventions in the real estate market throughout the world.

The US Federal Reserve has added one more provision onto the objectives of a central bank – which traditionally deals only with monetary policy including economic growth, inflation, and stability of currency – to include monitoring of property price movements.

Monetary Authority of Singapore (MAS) quickly followed the big brother’s foot step. The de-facto central bank has said that further action may be needed to cool the property market if the recent measure* to dampen property speculation prove insufficient.

* The Singapore Government had cancelled the use of interest absorption scheme (IAS) and interest-only loans (IOL) for property purchasers in September 2009. Except for some new home projects that have already received the green light, all purchases of new home units are subject to the normal progress payment scheme of old which requires the purchasers to pay according to the construction progress.

Will private property investors bear the brunt of yet another round of ‘anti-speculation’ curb measures? Are property prices really unsustainable? Can the two Integrated Resorts save us from the miseries? These are questions that need to be asked and answered before more potential buyers head back to the property showrooms again.


(A) OVERVIEW OF THE LARGER ECONOMY


[A.1] HOME PRICES IN ALL MARKETS MAY HAVE REACHED BUBBLE LEVEL

The recent half-a-year property rally in Singapore mirrored those in other countries, including the US and other major Asian cities such as Shanghai, Hong Kong, and South Korea. Policymakers in these countries are contemplating tightening lending standard to tame the spiking home prices.

IN THE UNITED STATES

In the US, home prices in certain areas, e.g. Minneapolis and San Francisco, have risen by double digits over the past four months. When considered on an annualised basis, the home prices appear to be in 'bubble territory'.

US home prices in August 2009 rose for the fourth straight month. The Standard & Poor's/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2% in August from July 2009.

According to the same index, prices in the top 10 US metropolitan areas gained 1.3% in August 2009 after a 1.7% rise the previous month.

IN HONG KONG

In Hong Kong, home prices have climbed 26% so far this year. For example, a one-bedroom, 816 sq ft apartment in Kowloon district was sold for HK$24.5 million (S$4.3 million) in September 2009.

The rampant price hike had spurred the HK authorities to tighten down-payment requirements for luxury homes. The authorities have also reduced loan-to-value ratio of private homes costing more than HK$20 million from 70% to 60%.

The Hong Kong Mortgage Corp, a government-backed home-loan insurer now only insures owner-occupied homes.

IN SOUTH KOREA

South Korea's financial regulator said on Oct 8 2009 that it planned to tighten regulations on lending to households; and the authorities have cut loan-to-value ratios in mortgages to 50% from 60% in some Seoul areas.

IN SINGAPORE

The sharp rise in private home prices in the third quarter (Q3) of 2009 [see page 6 – 12 – Overall Performance of Private Home Segment] could have precipitated the increase of residential sites in the government land sale (GLS) programme for 2010. [Page 13 – 15 on Government Land Sale Programme]

While there has been no announcement of any similar tampering of the property market like the other countries, property speculators are still on tenterhooks waiting for the ‘unexpected’ to happen. The unusual involvement of the central bank in monitoring price swing of private homes – an add-on to the traditional role of a central bank – may have ruffled some feathers among the speculators.

IN PRC

Official statistics showed that from January to October 2009, real estate investments in China had gone up by 18.9%, compared with a mere 1% rise in the first two months of the year.

Large Chinese banks have been told by the central bank to increase write-offs against bad loans and maintain their capital adequacy.

The Chinese central bank has also recently called for immediate halt of the country’s real estate stimulus policies which include low down-payments, low mortgage rates and tax cuts or risk a housing bubble. Some Chinese officials share the concern that home prices in some areas may not be affordable to ordinary citizens.


[A.2] HAVE PRICES GONE TOO HIGH?

Is there genuine cause for concern over the price-run in the private home segment? Well, judging from the recent sub-sale activities so far, many speculators seem to have adopted the ‘safety-first’ approach this time round.

[A2.1] Sub-sale activities subdued compared with last bull run

In terms of sub-sale, the barometer for market speculation, 2009 has been a much quieter year so far with only 2,780 sub-sale deals from January 2009 to September 2009. In the same period in 2007, a total of 4,193 home units had been sub-sold by the end of Q3 2007.
The tables below show the comparison of sub-sale volume between the 2009 rally with the earlier property rallies in 1996 and 2007.

Table [1] – Comparison of 2009 sub-sale volume with the peak of the rally in 1996 and 2007
Period Sub-sale Sub-total of sub-sale at peak of Rally Total Sub-sales Total Sales Transaction
Q1 1996 1,238 2,888 2,888 31,921*
Q2 1996 1,650
Q1 2007 766 3,427 4,863 40,654
Q2 2007 1,892
Q3 2007 1,535
Q4 2007 670
Q1 2008 435 N.A 1,830 13,642
Q2 2008 562
Q3 2008 566
Q4 2008 267
Q1 2009 414 2,366 2,972 25,793
Q2 2009 1,309
Q3 2009 1,057
Source of data: URA website

*1996 figures include New Home Units sold by developers and sold in the secondary market which accounted for 19,699 units and caveated sales of 12,222 completed units. Both sets of figures have been culled from URA website.

All three periods, i.e. 1996, 2007 and 2009, were marked distinctly by extremely high sales volume in the new private home segment. However, the following compares the difference between the three rallies:

At the peak of 1996 bull-run, sub-sale deals transacted at the height of the rally amounted to 2,888 deals.
The height of the 2007 bull-run witnessed 3,427 sub-sale deals.
In 2009, the peak of the rally produced 2,366 sub-sale deals. This makes 2009’s rally a relatively quieter one.


IN PERCENTAGE TERM

In fact, the percentage of sub-sale deals in relation to overall sales had maintained at double digit level since Q2 2007, until Q3 2009.(See Table 1.1 below)

Table [1.1] – Percentage of sub-sale deals to overall sales volume
Period Percentage of sub-sale deals to overall sales volume
Q1 2007 7.5%
Q2 2007 12.8%
Q3 2007 15.0%
Q4 2007 12.4%
Q1 2008 12.8%
Q2 2008 12.9%
Q3 2008 13.3%
Q4 2008 16.3%
Q1 2009 10.0%
Q2 2009 12.9%
Q3 2009 9.0%
Source of data: URA website

As such, Q3 2009 was considered one of the quieter quarters in recent history with sub-sale deals accounting for only 9% of all home sales, compared to 12.9% in Q2 and 10% in Q1 2009.

MORE END-USERS BUYING

One of the reasons why sub-sale activities were much subdued in 2009 could be due to the fact that the vast majority of the original purchases of mass market homes were done by home owners who are HDB flat dwellers.

Savills Singapore’s analysis published on 23 November 2009 in Business Times showed that HDB dwellers accounted for 39% of the 1,300 private sub-sale deals in Q2 2009 and 36.6% in Q3 and 33.7% in October 2009 alone.

Comparatively in 2007, HDB residents' shares of sub-sale deals were much lower at 20.8% and 23.1 % share of sub-sale deals done amidst the property bull-run in Q2 and Q3 2007. It has been an established fact that the 2007 bull-run was characterised by high number of foreigners buying luxury homes.

PROJECTION OF SUB-SALES FOR 2010

The overall sub-sale level is likely to stay firm for the next 2 to 3 quarters if the following factors remain:

market value of HDB resale flats remain firm;

rents for HDB flats remain at current high level.

Other supporting factors include the gradual recovery of the global economy and the advent of foreign employees at the two upcoming Integrated Resorts (IRs) which are due for opening in 2010.

CHALLENGES AHEAD

However, there are valid concerns for speculators as the market awaits further moves by the central bank to further depress soaring property prices.

Coupled with the falling private home rents, speculators may fear the cost-cushion being pulled off from their feet as holding costs, as well as the risks of rental void are now correspondingly higher.


[A2.2] The Difference between the two bull-runs

Though both 2007 and 2009 were spurred by spectacular rallies in the new home segment, the combined value of the new home units sold in 2009 is estimated at $11.2 billion - which is a far cry from the $23 billion worth of new homes sold in the 2007 bull-run.

A recent market analysis published by CBRE showed that the median quantum per unit sold by developers in 2009 was $930,000, compared with $1.18 million for 2007. The median per-square-foot price of new home sold so far this year was $863, compared with $928 for 2007.

The highest price for new home unit transacted in 2009 was $13.89 million for a third-floor apartment at Seven Palms Sentosa Cove; while the top price in 2007 went to a 19th-floor unit at The Marq On Paterson Hill which sold for $31.40 million.

HOUSES BECOME SMALLER

The median size of units sold by developers also went down from 1,292 sq ft in 2007 to 1,206 sq ft this year. Because unit sizes have fallen, the total quantum of the home price is lower and the market value of transactions in 2009 actually remains at about the same level as last year which only sold slightly more than 4,000 new home units in a year.

POORER TAKING FOR IRAS

This can also be seen from the modest amount of stamp duty collected by the Inland Revenue Authority of Singapore (IRAS) so far this year.

According to the Department of Statistics (DOS), the IRAS took in $1.37 billion in stamp duty from January to September 2009, though almost 25,800 private homes were sold in the same period.

The Government received $3.8 billion in stamp duty in the whole of 2007; and $1.84 billion in 2008. (Note: 98% of stamp duty comes from real estate transactions)


FEWER FOREIGNERS

Likewise, the number of foreign buyers has also shrunk in the aftermath of the financial tsunami. So far, only 651 foreigner buyers were accounted for new home purchases in the first three quarters of the year. At the same period in 2007, a total of 1,736 foreign buyers were accounted for new home sales.

The drastic drop in private home rents may also have deterred many foreign buyers as more quality condo units are slated for completion eventually in the first six months of next year.


(B) OVERALL PERFORMANCE OF PRIVATE HOME SEGMENT

According to the recent URA report, private home prices increased by 15.8% in Q3 2009, compared with the 4.7% price fall in Q2 2009.

In Q3 2009, apartment prices went up by 16.2%, while condo prices shot up by 15.8%.


[B.1] NON-LANDED PRIVATE HOME PRICES BROKE 20 YEAR RECORD

In the Core Central Region (CCR) which comprises the prime districts such as Districts 9, 10, 11 and Sentosa Cove, non-landed home prices climbed by 15.2% in Q3 2009; while the same in the Rest of Central Region (RCR) and Outside Central Region (OCR) increased by 18.5% and 16.1% respectively

Landed home also became dearer by 14.9% in Q3 2009, compared with the 4.7% fall in prices in Q2 2009.

Prices of detached, semi-detached and terrace houses increased by 15.6%, 13.4% and 15.1% respectively in Q3 2009.

The comprehensive increase in home prices has not been seen for more than 20 years in Singapore, despite the fact that Singapore is now in one of the worst economic recessions since Independence.


[B.2] RALLY IN LANDED HOME SEGMENT RECEDED IN OCT/NOV PERIOD

Thanks to the sudden upsurge of home-buying activities, landed homes enjoyed a brief revival reminiscent of the vintage 2007 bull-run. For example, between June and August 2009, more than 450 landed homes were transacted. The transaction volume, especially detached houses, was quite close to April 2007 (see Table 2.1 below).

However, the sales volume seems to have receded after the IAS and IOL were scrapped in September 2009.


Table [2] – Overall sales volume of Landed homes between January and November 2009
2009 Detached Semi-D Terrace Total
Jan 13 35 49 97
Feb 8 22 57 87
Mar 20 50 138 208
Apr 40 87 134 261
May 55 97 171 323
Jun 106 158 246 510
Jul 71 116 350 537
Aug 70 109 271 450
Sept 94 100 191 385
Oct 55 100 179 334
Nov *12 *32 *66 *110
Dec - - -
Source of data: SISVRealink
*November sales figures are incomplete due to lag in caveat time.

In good years, such as 2007, the monthly sale volume of landed homes would stay above 200-unit level; and sometimes breaching the high-700-unit level, such as in May 2007. (See Table 2.1 below)

Table [2.1] – Overall sales volume of Landed homes in 2007
2007 Detached Semi-D Terrace Total
Jan 83 106 188 377
Feb 55 110 194 359
Mar 59 130 213 402
Apr 105 168 317 590
May 128 211 439 778
Jun 106 213 374 693
Jul 123 184 382 689
Aug 70 116 258 444
Sept 38 57 160 255
Oct 48 88 230 366
Nov 52 83 177 312
Dec 31 56 104 191
Source of data: SISVRealink

In normal times, such as 2008, the monthly sale volume of landed homes would stay below the 200-unit level. As such, 2009 can be considered a jolly good year with monthly sales figures going beyond the 200-unit level in most months.

Table [2.2] – Overall sales volume of Landed homes in 2008
2008 Detached Semi-D Terrace Total
Jan 34 47 116 197
Feb 20 38 101 159
Mar 18 37 119 174
Apr 21 39 107 167
May 31 56 108 195
Jun 17 39 114 170
Jul 21 41 115 177
Aug 9 33 91 119
Sept 15 40 88 143
Oct 12 28 60 100
Nov 12 17 55 84
Dec 8 17 47 72
Source of data: SISVRealink

In the final analysis, much of what will happen to the landed home segment would depend on the impact of the withdrawal of the Job Credit Scheme in July 2010. The massive stimulus cash-handout programme to employers has been credited as the main force behind the recent property rally. However, with employers facing the bleak prospect of a fragile economic recovery, more landed homes may be made available on the resale market; and that may be music to prospective landed home seekers but a bad news to those who are selling.


[B.3] PRIVATE HOME RENTS ON A LOSING STREAK

According to URA’s Q3 2009 rent figures, the 15.8% surge in private home prices was not matched by any increase in rental income for landlords.

In fact, private home rents have been in decline for the fifth consecutive quarter, losing a further 2.2% in Q3 2009. Private home rents had dropped a massive 5.2% in the previous quarter.

Rentals of non-landed private homes in CCR, RCR and OCR fell by 2.1%, 2.3% and 2.3% respectively in Q3 2009.

In all, private home rents have fallen over 15% since Q1 2009. This could mean that the current rally in the private home segment is not being supported by economic fundamentals and the soaring prices may be considered speculative. In other words, if there are no significant improvements in the larger economy, the down-side to private home prices will remain huge.


[B.4] NEW HOME SALES WENT BELOW 1,000 UNITS IN OCTOBER 2009

After 8 consecutive months of strong showing, the mass market home segment has begun to show signs of weariness, losing 55.17% over the previous month’s sales volume. The statistics below show the sluggish performance of the new home segment in October 2009.


Table [3] – Comparison of new home units sold in the past 10 months of 2009
2009 Total Number of Units in Project Cumulative Units Launched to-date Cumulative Units Sold to-date Cumulative Units Launched but Unsold Units Launched in the Month Units Sold in the Month
January 48,128 32,197 27,870 4,327 204 107
February 48,371 33,244 29,168 4,076 1,069 1,323
March 48,902 34,048 30,314 3,734 832 1,220
April 48,821 34,645 31,025 3,620 1,083 1,207
May 49,223 35,802 32,656 3,146 1,161 1,668
June 50,490 37,371 34,389 2,982 1,637 1,825
July 50,884 39,893 36,898 2,995 2,878 2,767
Aug 53,047 41,269 38,256 3,013 1,641 1,699
Sept 52,803 41,989 38,832 3,157 1,413 1,143
Oct 54,068 42,505 39,557 2,948 566 811
Total New Home Units Sold so far 13,770
Source of Data: URA website

Table [3.1] below shows that despite the two-fold increase in new home units sold in the Core Central Region (CCR) in October 2009, the overall percentage of transactions in prime districts still fell below the 25% mark, accounting for only 22.8% of all new home sales; while the mass market homes still dominated the proceedings with 42.9%.

Table [3.1] – Sale volume of the three regions i.e. CCR, OCR & RCR over the past 10 months
2009 JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT TOTAL %
CCR 13 102 133 322 617 526 514 449 152 311 3,139 22.80%
RCR 49 381 300 362 609 867 751 722 431 249 4,721 34.30%
OCR 45 840 787 523 442 432 1,502 528 560 251 5,910 42.9%
TOTAL 107 1,323 1,220 1,207 1,668 1,825 2,767 1,699 1,143 811 13,770 UNITS
Source of Data: URA website

[B.4.1] Sale of New home units in Core Central Region (CCR) jumped two-fold

Below are two tables showing the sales performance of new home units in the Core Central Region (CCR) in October 2009.

Table [3.2] – New home units sold in CCR in October 2009
Project Name Units launched so far but UNSOLD Units Sold in the Month Lowest Price ($psf) Highest Price ($psf) Median Price ($ psf)
1 Cyan 9 81 1,712 1,983 1,821
2 Trilight 22 58 1,639 1,836 1,684
3 Lincoln Suites 3 53 1,530 2,365 1,845
4 Vivace 0 28 1,445 2,111 1,906
5 Sophia Residence 35 10 1,141 1,605 1,452
6 Madison Residences 3 9 1,639 1,754 1,677
7 Estrivillas 31 8 494 862 616
8 Shelford Suites 11 8 1,158 1,457 1,431
9 Nassim Park Residences 2 5 2,774 3,480 3,89
10 VIVA 3 5 1,548 1,801 1,755
11 Alba 12 4 2,310 2,531 2,488
12 Icon 9 3 1,430 2,022 1,921
13 Luma 13 3 1,696 1,768 1,725
14 The Trizon 77 3 1,352 1,523 1,396
15 Villas @ Gilstead 6 3 658 906 763
16 8 Rodyk 13 2 1,416 1,503 1,460
17 D'Ixoras 19 2 1,150 1,175 1,163
18 Latitude 20 2 1,640 1,758 1,699
19 Lush on Holland Hill 8 2 1,465 1,465 1,465
20 Martin No 38 0 2 2,048 2,722 2,385
21 The Orange Grove 3 2 2,101 2,300 2,201
22 Volari 1 2 1,856 2,077 1,967
23 Boulevard Vue 1 1 4,150 4,150 4,150
24 Dukes Residence 4 1 1,531 1,531 1,531
25 Jia 13 1 1,366 1,366 1,366
26 Marina Collection 26 1 1,872 1,872 1,872
27 One Devonshire 1 1 1,912 1,912 1,912
28 Parc Mackenzie 13 1 1,146 1,146 1,146
29 Seven Palms Sentosa Cove 0 1 3,429 3,429 3,429
30 Signature At Lewis 10 1 1,307 1,307 1,307
31 Skyline 360° at St Thomas Walk 0 1 2,125 2,125 2,125
32 The Greenwood (Phase 5) 32 1 952 952 952
33 The Lincoln Residences 33 1 1,708 1,708 1,708
34 The Promont 2 1 2,096 2,096 2,096
35 The Wharf Residence 8 1 1,496 1,496 1,496
36 Ventura Heights 4 1 675 675 675
37 Vida 33 1 2,498 2,498 2,498
38 Watten Residences 0 1 780 780 780
311 (152 in September 2009)
Source of Data: URA website


With the increase in sales volume, the median price of new home units in CCR had also risen to $1,684 psf from $1,666 psf in September 2009.

The highest transacted price also rose to $4,150 psf from $3,353 psf in September 2009.



[B.4.2] Sale of New home units in Rest of Central Region (RCR) receded in October

New home sales in the Rest of Central Region (RCR) further receded from 431 units in September 2009 to only 249 units in October 2009.

Table [3.3] – New home units sold in RCR in October 2009
Project Name Cumulative Units Launched but Unsold Units Sold in the Month Lowest Price ($psf) Highest Price ($psf) Median Price ($psf)
1 Suites @ Guillemard 0 66 896 1,514 1,234
2 City Loft 0 40 880 1,280 1,181
3 Silversea 92 21 1,189 1,647 1,381
4 Clover By The Park 132 17 673 895 784
5 The Interlace 115 14 728 1,110 1,046
6 Trevista 73 13 905 1,083 1,013
7 Reflections at Keppel Bay 13 11 1,528 2,097 1,685
8 Bliss Loft 18 10 951 1,052 1,018
9 Concourse Skyline 40 8 1,553 2,063 1,781
10 Ascentia Sky 19 5 1,240 1,477 1,282
11 The Peak @ Balmeg 18 5 982 1,098 1,007
12 Vista Residences 3 5 1,158 1,257 1,174
13 Prestige Heights 8 4 1,250 1,400 1,322
14 The Serennia 14 4 681 1,006 836
15 Dakota Residences 8 3 943 982 977
16 Floridian 53 3 1,327 1,380 1,360
17 Ritz Regency 20 3 940 994 979
18 The Seafront On Meyer 34 3 1,253 1,281 1,261
19 Ventura View 1 3 772 823 809
20 Amber Residences 15 1 1,060 1,060 1,060
21 D'Fresco 4 1 825 825 825
22 Esterina 0 1 685 685 685
23 Evergreen View 1 1 596 596 596
24 Goodman Crest 1 1 776 776 776
25 Oasis Garden 1 1 870 870 870
26 Parc Aston 9 1 870 870 870
27 Parc Seabreeze 26 1 1,210 1,210 1,210
28 Stillz Residence 15 1 941 941 941
26 The Arte 5 1 943 943 943
30 The Verve 4 1 734 734 734
249 (431 in September 2009)
Source of Data: URA website


The median price of new home units in RCR had slide to $979 psf from $995 psf in September 2009.

The highest transacted price also fell from $2,482 psf to $2,097 psf in September 2009.



[B.4.3] Sale of New home units in Outside of Central Region (OCR) halved in October

Sales of new home units in OCR took a tumble in October losing more than 50% of the volume in the previous months.

The withdrawal of the Interest Absorption Scheme (IAS) and Interest-Only Loans (IOL) appeared to have impacted HDB upgraders harder than it did wealthier buyers of high-end homes – who in October 2009 came out in force to buy more new home units and along the way sent the highest psf price to cross the $4,000 psf mark in October 2009.


Table [3.4] – New home units sold in OCR in October 2009

Project Name Units launched so far but UNSOLD Units Sold in the Month Lowest Price ($psf) Highest Price ($psf) Median Price ($ psf)
1 Hundred Trees 24 52 799 1,029 799
2 Mi Casa 109 43 635 780 685
3 Livia 28 18 572 683 641
4 Prestige Loft 3 16 1,013 1,159 1,109
5 Elliot at the East Coast 14 14 731 1,074 810
6 Wembly Residences 19 14 675 997 801
7 Oasis @ Elias 17 13 599 730 648
8 Meadows @ Peirce 53 10 737 1,126 920
9 Double Bay Residences 17 8 686 746 717
10 Pavilion Park (Phase 2) 2 7 766 941 891
11 Waterfront Key 94 6 748 888 761
12 Waterfront Waves 21 6 696 931 727
13 Cubik 0 5 1,219 1,332 1,264
14 Rosewood Suites 4 5 493 586 572
15 Centro Residences 86 4 1,134 1,229 1,217
16 Envio 20 4 955 975 965
17 Breeze By The East 0 2 707 712 710
18 Chateau La Salle 0 2 621 632 627
19 D'Pavilion 28 2 876 921 899
20 Hillvista 70 2 1,079 1,085 1,082
21 St Patrick's Residences 7 2 905 1,031 968
22 The Gale 29 2 778 793 786
23 Verdana Villas 46 2 630 649 640
24 Coastal Breeze Residences 15 1 533 533 533
25 D'Almira 0 1 695 695 695
26 Dunsfold Residences 4 1 468 468 468
27 Fontaine Parry 7 1 910 910 910
28 Kovan Residences 31 1 887 887 887
29 Landed housing 6 1 814 814 814
30 Serangoon Garden View 4 1 657 657 657
31 Suncottages 1 1 800 800 800
32 The Amery 24 1 922 922 922
33 The Lattiz 9 1 812 812 812
34 The Lenox 15 1 1,163 1,163 1,163
35 The Parc Condominium 35 1 950 950 950
251 (560 in July 2009)
Source of Data: URA website


Though the sales volume in OCR had suffered, the median price of new home units in OCR had actually risen to $899 psf from the low of $741 psf in September 2009.

However, the highest transacted price fell from $1,550 psf in September 2009 to $1,332 psf in October 2009.



(C) PERFORMANCE OF NON-RESIDENTIAL SEGMENT

At the height of the bull-run in 2007, Grade A office space went at $18.80 psf/pm.

However, with the key occupiers of Grade A office space still nursing the bruises afflicted on them by the global economic crisis, the average Grade A office rent has slipped to $8.80 per square feet per month (psf/pm) in Q3 2009.

In general, office prices and rents had fell by 2.1% and 4.1% respectively in Q3 2009. Likewise, shop prices and rents also dropped by 1.2% and 0.9% respectively in Q3 2009.

With the substantial supply pipeline of about 7.7 million sq ft of offices slated for completion from Q4 this year to end-2012, office rents look set to head south for a few more quarters.


[C.1] LATEST PSF/PM PRIME OFFICE RENTS

The following shows the latest office rents in the central business district in the first 6 weeks of Q4 2009:

In the Shenton way area, prime office rents fell 0.8% to $5.99 per sq ft (psf) per month (pm) from $6.04 psf/pm in Q3 2009.

In the City Hall area, prime office rents dipped 0.4% to $6.77 psf/pm from $6.80 psf/pm in Q3 2009.

At the Orchard Road area, prime office rents are down a cent psf from $6.90 psf/pm in Q3 2009 to $6.89 psf/pm.

At Raffles Place area, Grade A rents fell 3.5% to $7.85 psf/pm, from $8.13 psf/pm in Q3 2009. Prime rents there also dropped 2.6% to $7.60 psf/pm, from $7.80 psf/pm in Q3 2009.


In the prime office arena in the CBD, there is no escaping the fact that the 2.2 million sq ft of new prime office space in 2010 must be absorbed first before any hope of a recovery in prime rents can be realised.


(D) GOVERNMENT LAND SALE (GLS) PROGRAMME

The Government announced in November 2009 that at least eight residential sites - and as many as 26 - will be offered to developers in 2010 under the government land sale (GLS) programme. In all, the 26 sites can yield a total of 10,500 private homes in the next two to three years.

All the 26 new residential sites to be released for tender are in the outside central region (OCR) and rest of central region (RCR) where common folks live.

[D.1] DEVELOPERS SNAPPING UP LAND PARCELS

A local developer, Treasure Well Investments, has placed the top bid of about $251.3 million or $533.34 per square foot per plot ratio (psf ppr) for a 99-year leasehold condo plot at Upper Thomson Road. The next highest bid was $438.83 psf ppr by Far East Organization.

The tender attracted just six bids in total - about half the 12 to 15 bids received for each of the other four GLS sites in the reserve list in the past few months.

The Upper Thomson Road site boasts a good location opposite the Singapore Island Country Club's Island Golf Course and Lower Peirce Reservoir. Freehold units at Meadows@Peirce nearby are being sold at about $900 psf

[D.1.1] Developers seeking to enrich own land-bank

Recently, the government land sale tenders had attracted a lot of interests from housing developers.


13 bidders were attracted to the tender of Chestnut Avenue in August 2009. The eventual successful bid price was $143.7 m or $280 psf ppr.

13 bidders vied for Dakota Crescent in September 2009 and UOL clinched the site with $329 m or $508 psf ppr.

In September 2009, Far East Organisation edged out 11 other bidders to win the site at Seletar/Yio Chu Kang Roads with the successful bid price of $119.1 m or $376 psf ppr.

In October, 15 developers competed for a site at Serangoon Ave 3 which is right above the Lorong Chuan MRT station. Eventually, a unit from Hong Leong Holding clinched the deal at $221.2 m or $529 psf ppr.


Rightly or wrongly, the keen competitions are clear signs that housing developers are optimistic of the near future and are afraid to lose out in their bids. However, the real test of the market hinges on how potential buyers and prospective tenants react to the generous supply of the thousands of ‘ready-built’ quality condominium units in 2010 and beyond.

[D.1.2] Landed housing sites on reserve list set for sale

An unidentified developer has triggered for public tender a government landed housing site with a minimum bid price of $15 million or $99 psf ppr for the 99-year leasehold parcel on Westwood Avenue, Jurong West. This site has an area of 14,098.9 sq m and is surrounded by other landed estates such as Westwood Park and The Floravale condominium.

About 60 terrace houses with a minimum plot size of 150 sq m can be built on the site and the eventual sale price of completed units should be around $1.1m to $1.2m.

A search with URA website reveals that terrace houses at the adjacent Westwood Park changed hands at $454-510 psf, or $850,000 to $1.13 million.

Due to low bid prices, the govt had rejected two earlier bids of $11.8 million and $10.33 million for the same site at Westwood Avenue.

(E) NEWS ON COLLECTIVE SALES

The first successful en bloc sale for 2009 was sealed sometime in late November 2009. Dragon Mansion at 18 Spottiswoode Park Road has been sold in a collective sale arrangement for $100.8 million or $863 per sq ft per plot ratio (inclusive of development charge).

On the other hand, the residents of Laguna Park have thrown in the towel in late November 2009 and withdrew from the collective sale market after yet another failed attempt to secure a good enough offer.


(F) CONCLUSION

It is still early day to gauge the impact of the withdrawal of the interest absorption scheme (IAS) and interest-only housing loans (IOL). There is also no point second-guessing the central bank’s intention in watching the price swing of private homes. Whatever follows next may well be a reaction to a global event beyond any player’s calculation or fancy.

However, at home the private home prices may have fallen due to ‘fatigue’ suffered by buyers after the 6-month rally. Traditionally, the house-hunting season has been overtaken by Christmas shopping; and the buyers deserve a good holiday breather.

For whatever reasons it is worth, the Minister for National Development, Mr Mah Bow Tan has come out saying that he is pleased with the weakening in private home prices. He explained that the government’s aims are to curb erratic price hikes arising from excessive speculation, inaccurate information or market manipulation, but ultimately prices have to be determined by market forces, based on genuine demand from home buyers and investors.

October updates.

Introduction

Two years after scrapping the Deferred Payment Scheme which effectively truncated the spectacular bull-run in 2007, the government has wielded the big axe again – this time by scrapping the Interest Absorption Scheme (IAS) and the Interest Only Loan (IOL). This move may well have the same effect on the property market like two years ago.

Following Minister Mah Bow Tan’s announcement to withdraw IAS and IOL, the Monetary Authority of Singapore (MAS) has also announced the probable increase in capital requirements for local banks. The de-facto central bank also made clear its stand on medium-term price stability for the property market.

In fact, the MAS’ recent policy stance will have a much deeper impact on the demand for private homes because one can now expect to see more stringent credit controls by lenders in general.

(A) OVERVIEW OF THE LARGER ECONOMY

[A.1] SINGAPORE NOW HOME TO FIVE MILLION PEOPLE

Singapore will be home to more than five million people by 2010. We now have 4.99 million residents as a result of a 3.1% increase in the population, primarily through the very ‘pro-active’ immigration-friendly policy. This is despite more economic migrants having ‘gone home’ since jobs have become tough to come by recently. The growth in population was the slowest since 2007.

There is now a sizeable numbers of permanent residents (PRs) and guest workers on permits, relative to the citizen component. The Singapore population profile is a one-third foreigner content of 1.8 million. It breaks down to 1.25 million transients and 533,000 PRs.

[A.2] JOBLESS RATE FELL FOR THE WRONG REASONS – MANY GRADUATES PURSUE FURTHER STUDIES

According to a Straits Times report on 16 September 2009, eight in 10 local residents were chronically unemployed as of June this year. This means that they had been unsuccessful to land themselves a job after 25 weeks of searching. The majority of them are university graduates in their 30s and 40s, and the lowly-educated in their 40s.

In all, Singapore lost 13,900 jobs in the first half. This is 26% lower than the estimate of 18,800 by the Ministry of Manpower (MOM).

A September report by MOM showed unemployment at 3.3% in the second quarter (Q2) of 2009. At the same time, the resident unemployment rate fell from 4.8% to 4.6%. But the reason for the decline was that many stopped seeking jobs to pursue courses, which means they are no longer counted as unemployed.

Manpower Minister Gan Kim Yong was quoted as saying that the employment outlook remains uncertain; and the labour market is likely to remain weak for the rest of the year.

(B) OVERALL PERFORMANCE OF PRIVATE RESIDENTIAL PROPERTY SEGMENT

New home sale volume in September 2009 was well supported by the remnant projects which had earlier received the authority’s blessing to use the now-defunct Interest Absorption Scheme (IAS). With a respectable 1,143 new units transacted in the aftermath of the scrapping of the IAS and Interest Only Loans, the grand total of new home units sold thus far this year is standing tall at 12,959 units. The whole year sale volume for new home units might even surpass the historic peak achieved in 2007.

Transacted prices are also very respectable with the freehold Hundred Trees in the old Hong Leong Garden site commanding a median price of $941 psf, with more expensive units going beyond $1,200 psf.

[B.1] NEW HOME SALE EASED IN SEPTEMBER 2009 COMPARED MONTH-ON-MONTH

However, when compared month-on-month the new home sale volume has eased in August 2009 and further in September. Sales volume in the new home segment appears to be on a slippery slope. But the buying mood can still be considered generally optimistic with good units still flying off the shelves within days of the project’s launch.

[B.1.1] OCR was the star performer this year.

The total transactions at the respective regions over the past 9 months, with the Outside Central Region (OCR) chalking up the most impressive sales volume so far this year.

In fact, while CCR and RCR had lost 66.15% and 40.30% respectively in sales volume in September 2009; the sales volume in OCR gained 6.0% in September 2009 with strong sale performance coming from the aforesaid freehold Hundred Tree project in the west coast area.

In all, 43.67% of all the new home units sold so far this year took place in the outlaying areas, with only 21.82% and 34.5% sold at the Core Central Region (CCR) and the Rest of Central Region (RCR).

[B.2] LUXURY MARKET SHOWED SOME SIGN OF LIFE BUT IT MAY BE TOO EARLY TO POP CHAMPAGNE

The luxury market segment saw some ‘pink’ signs in August 2009 with 11 new home units in the District 9 and 10 areas changing hand at higher than the psychological benchmark of $2,500 psf, including the following:

THREE units at The Orchard Residences were sold at $2,780 psf, $3,499 psf and $4,099 psf respectively.
THREE units at Nassim Park Residences were sold at $2,782 psf, $2,829 psf and $3,403 psf respectively.
THREE units at Orchard View were sold at $3,057 psf, $3,155 psf and $3,181 psf respectively.
ONE unit was sold at The Hamilton Scotts at a median price of $3,313 psf.
ONE unit at Scotts Square was sold for the highest median price of $4,304 psf in August 2009. This was a rare phenomenon this year.

Likewise in September 2009, NINE brand new luxury units broke the psychological barrier of $2,500 psf with some super-rich individuals shelling out more than $3,000 psf to acquire SIX out of 10 units launched at Seven Palms at Sentosa Cove. Here are the statistics:

SIX units at Seven Palms Sentosa cove were sold at a median price of $3,273 psf. The cheapest unit went for $3,091 psf and the highest psf price was $3,353 psf.
TWO units at Nassim Park Residences were sold at a median price of $3,062 psf; with the lowest psf price at $2,856 psf and the highest psf price at $3,268.
One unit at District 9 Alba condo by Far East Organisation was sold at $2,500 psf.

While the higher-than-$3,000 psf prices were not unprecedented, it had been a long while since the high-end market was abuzz with such optimism.

In fact, according to a Straits Times report on 16 September, two transactions at above the $4,000 psf level were recorded for August 2009 - Scotts Square ($4,304 psf) and The Orchard Residences ($4,099 psf). The last time the market saw transactions at above the $4,000 psf mark was in May 2008 when four units at Scotts Square were sold at prices ranging from $3,779 to $4,612 psf.

[B.3] TRANSACTIONS OF HIGH-END HOMES IMPROVED OVER THE PAST TWO MONTHS

[B.3.1] More high-end homes in District 9 exceeding the psychological $2,500 psf mark

In August 2009, out of the total 287 transactions in District 9, only FIVE transactions [Table 2.1] or a mere 1.74% of the total exceeded the psychological benchmark of $2,500 psf. In the meantime, 52 or 18.12% out of the total transactions exceeded the $3,000,000 mark.

In September 2009, there were so far 117 transactions in District 9; however already FOUR transactions [Table 2.2] or 3.42% (1.7% in August 2009) of the total had surpassed the psychological benchmark of $2,500 psf. And 32 or 27.35% (18.12% in August 2009) of the total transactions exceeded the $3,000,000 mark. The September sales data will be further updated by URA later this month and the total number of transactions will be different.

[B.3.2] More high-end homes in District 10 exceeding the psychological $2,500 psf mark

In District 10, a total of 263 high-end homes were transacted with TEN transactions [Table 2.3] or 3.8% of the total exceeding the psychological benchmark of $2,500 psf. Out of the total transaction, 95 or 36.12% of them exceeded the $3,000,000 mark.

In September 2009, there were so far a total of 148 transactions in District 10, but already SEVEN transactions or 4.73% (3.8% in August 2009) of the total had exceeded the psychological benchmark of $2,500 psf. Out of the total transactions, 46 or 31.08% (36.12% in August 2009) of them exceeded the $3,000,000 mark.

However, the budding high-end property market may well be snubbed by the recent global stock market correction and the policy stance of the Monetary Authority of Singapore (MAS) to ensure medium-term property price stability. Furthermore, with the MAS’ call to increase capital requirements of local banks, the liquidity that fuelled the recent rally may be severely curtailed from now on.


[B.3] NEW HOME SALE PERFORMANCE IN DIFFERENT REGIONS

[B.3.1] Sale of NEW home units in Core Central Region (CCR) dropped in September

FACTS – 29 projects in CCR reported at least one transaction in September 2009, compared with a month ago where 42 projects there did so. The highest median price achieved in September 2009 was $3,356 psf by Seven Palms at Sentosa Cove, which was 22.02% lower than the highest median price of $4,304 psf achieved by a unit at Scott Square in August 2009.

In terms of transaction volume in CCR, there was a 66.14% drop in September 2009 compared with a month ago.

Below are comparisons of sale prices between September 2009 and the previous months in some selected new condo/apartment projects in CCR.

In the drop zone

In SEPTEMBER 2009, 5 units at Belle Vue Residences at Oxley Walk were sold at a median price of $1,627 psf, compared with 17 units sold at a median price of $1,831 psf in August 2009. In July 2009, the median price was $1,869 psf. A year ago in August 2008, the median price was $2,044 psf. It was a drop of 11.14% in September 2009 compared with a month ago.

In SEPTEMBER 2009, 5 units at Latitude at River Valley area were sold at a median price of $1,751 psf, compared with 27 units sold at a median price of $1,786 psf in August 2009. It was a 1.96% drop in the median price.

In SEPTEMBER 2009, 17 units at Sophia Residences were sold at a median price of $1,459 psf, compared with 43 units sold at a median price of $1,504 psf in August 2009. It was a 2.99% drop in the median price.


On the way up

In SEPTEMBER 2009, 10 units at Madison Residences at Dunearn Road area were sold at a median price of $1,661 psf, compared with 37 units sold at a median price of $1,686 psf in August 2009. It was a 1.5% rise in the median price.

In SEPTEMBER 2009, 14 units at Viva condo at Suffolk Walk at District 11 were sold at a median price of $1,623 psf, compared with 203 units sold at a median price of $1,537 psf in August 2009. It was a 5.59% rise in the median price.

FINDING – Despite the withdrawal of IAS and IOL, there has been no drastic fluctuation of prices in CCR. The biggest drop in median price was registered at Belle Vue Residence where the median price dropped 11.14% compared with a month ago. However, median prices of the majority of the projects moved within a very narrow range of between 1% and 6% in both directions.

[B.3.2] Sale of NEW home units in Rest of Central Region (RCR) eased in August/September

New home sales in the Rest of Central Region (RCR) slide in two consecutive months in August and September 2009 from 722 units to 431 units compared with 751 units sold in July 2009.

FACTS – The number of new home projects that reported at least one transaction stagnated at 32 projects in September 2009 while the sales volume dropped 59.7% in the same period.

Below are comparisons of sale prices between September 2009 and the previous months in some selected new condo/apartment projects in RCR.

In the drop zone

In SEPTEMBER 2009, 3 units at Dakota Residences at Dakota area were sold at a median price of $950 psf, compared with 11 units sold at a median price of $956 psf in August 2009. It was a 0.6% drop in the median price.

In SEPTEMBER 2009, 59 units at Trevista at Toa Payoh were sold at a median price of $938 psf, compared with 413 units sold at a median price of $943 psf in August 2009. It was a 0.53% drop in the median price.


On the way up

In SEPTEMBER 2009, 5 units at Concourse Skyline at Beach Road were sold at a median price of $1,753 psf, compared with 10 units sold at a median price of $1,528 psf in August 2009. It was a 14.72% rise in the median price.

In SEPTEMBER 2009, 9 units at Ascentia Sky at Alexandra Road were sold at a median price of $1,254 psf, compared with 36 units sold at a median price of $1,221 psf in August 2009. It was a 2.7% rise in the median price.

In SEPTEMBER 2009, 17 units at Clover by the Park at Bishan were sold at a median price of $788 psf, compared with 21 units sold at a median price of $774 psf in August 2009. It was a 1.8% rise in the median price.

Source of Data: URA website

FINDING – The narrow movement in sale price in RCR mirrored that of CCR – with the exception of Concourse Skyline where the median price of the FIVE transactions in September 2009 were 14.72% dearer than the median price of the 10 units sold there a month ago. Except that, the drop in the primary sale volume in RCR also coincided with the general softness in prices.

[B.3.3] Sale of NEW home units in Outside Central Region (OCR) edged up in September 2009

The sales volume at OCR edged up in September 2009 after dipping in August 2009. A total of 560 units were sold from OCR with Hundred Trees being the star of the month.

Price wise, the improvement in sale volume did not lead to increase in sale prices. Except Centro Residences at Ang Mo Kio which hit a median price of $1,184 psf, most others are transacting in competitive prices with the freehold Hundred Trees hitting the highest psf price of $1,219 and a median price of $6 shy of the psychological $1,000 psf mark.

Below are comparisons of sale prices between the June 2009 and July 2009 in some selected projects in OCR.

In the drop zone

In SEPTEMBER 2009, 15 units at Oasis@Elias at Elias Road were sold at a median price of $639 psf, compared with 30 units sold at a median price of $636 psf in August 2009. It was a 0.47% drop in the median price.

In SEPTEMBER 2009, 15 units at Livia at Pasir Ris area were sold at a median price of $646 psf, compared with 24 units sold at a median price of $651 psf in August 2009. It was a 0.76% drop in the median price.

In SEPTEMBER 2009, 7 units at Waterfront Waves at Bedok Reservoir area were sold at a median price of $690 psf, compared with 21 units sold at a median price of $691 psf in August 2009. It was a 0.14% drop in the median price.

In SEPTEMBER 2009, 14 units at Meadows @ Peirce at Upper Thomson area were sold at a median price of $868 psf, compared with 52 units sold at a median price of $894 psf in August 2009. It was a 2.9% drop in the median price.


On the way up

In SEPTEMBER 2009, 15 units at Double Bay Residences at Simei were sold at a median price of $708 psf, compared with 32 units sold at a median price of $704 psf in August 2009. It was a 0.56% rise in the median price.

In SEPTEMBER 2009, 8 units at Waterfront Key at Bedok Reservoir area were sold at a median price of $772 psf, compared with 22 units sold at a median price of $765 psf in August 2009. It was a 0.92% rise in the median price.

Source of Data: URA website

FINDING – The price movements in OCR were negligible if any. This is probably due to the fact that the withdrawal of IAS and IOL has yet to filter down to the heartland areas as most of the projects being marketing right now are still enjoying the benefits of the financial schemes.

However, it remains to be seen how the newer projects that do not have the convenience will fare in the months to come.

[B.4] MORE LOSSES IN SUB-SALE DEALS

According to an August 2009 Straits Times report, losses in sub-sale deals have quadrupled in the first eight months of this year. More than 340 sub-sales of condos and apartments ended in the red within that period.

For example, out of the 71 sub-sale deals done at Casa Merah in Tanah Merah, 16 deals or 22.53% resulted in losses averaging $30,601.

Most sellers made gains at Rivergate, which was completed in the first quarter of the year, but 10 suffered hefty losses of around $371,355, with one of them losing $985,000.

At popular projects like The Sail @ Marina Bay, eight out of 19 sub-sale deals this year were done at an average loss of $949,343. According to a separate ST report, the six sub-sale deals done at Alexis in Alexandra Road this year had average gains of $62,833.

Those who lost money in the sub-sale market in January to August this year chalked up an average loss per unit of $267,616.

According to the same August ST report, the vast majority of those who sold their properties in the sub-sale market from January to August this year held their units for at least two years. Over half (52%) bought their properties in 2007. Another 36% had bought in 2006, while nearly 7% of 2009 sub-sale deals involved properties purchased this year.

The general mood in the sub-sale market may turn cautious now that the Interest Absorption Scheme (IAS) and Interest Only Loan (IOL) have been withdrawn. This may severely impact the bottom-line of many sub-sellers in the months to come when more quality condos receive their Temporary Occupation Permit (TOP).

September Update!

Introduction

While troubled banks in the United States are still being shut down, banks in Singapore are busy writing ‘Letters of Offer’ to home buyers and there may now be a shortage of mobile bankers on duty at newly launched condominium showrooms across the island. Exactly what is causing the buying frenzy is not immediately known as official statistics still point to a fragile, if improving, global economy. Cabinet Ministers in Singapore are hinting at tougher times ahead for wage earners, but few Singaporeans are able to read between the lines.

Of late, property experts have maintained that there was no speculative froth in the market at this moment; but it is foolhardy for anyone to point to the positive GDP growth in the last quarter as evidence of an economic upswing as the figure is largely the resultant effect from the current property rally and must not be used to justify the buying decision.

In short, the recent buying spree in the property market has caused an improvement in the GDP growth; and at the same time, the GDP growth has also caused more property buying to occur. If this cannot be called a ‘property bubble’, then what is?


(A) OVERVIEW OF THE LARGER ECONOMY


[A.1] FIVE US BANKS SHUT DOWN IN ONE GO

Regulators in the United States (US) had shut down Colonial BancGroup, a lender in real estate development, in the biggest US bank failure this year, and also closed four banks in Arizona, Nevada and Pennsylvania.

The failure of Colonial is expected to cost the deposit insurance fund an estimated US$2.8 billion.

Altogether, 77 US banks have been shut down this year, compared with 25 in 2008 and three in 2007.

FDIC officials warned that while home mortgages may have seen the worst year, commercial real estate loans are now facing tremendous challenges. There could be more defaults on such loans if the recession deepens.

So far, bank failures in the US have sapped out deposit insurance fund which stands at US$13 billion as of the first quarter of 2009. This means that another round of banking crisis is not a remote possibility, but a likelihood.

[A.2] DR TONY TAN SAID THE WORST OF CRISIS WAS OVER

The Government of Singapore Investment Corporation (GIC) deputy chairman and executive director Tony Tan said recently that the worst of the crisis seems to be over for Asia which is expected to continue to improve economically through 2010.

Dr Tan had earlier correctly predicted the ‘worst scenario’ though he was lambasted by many private sector economists after his ‘worst in 60 years’ prediction.

However, Dr Tan warned that the greatest risk to the outlook for Asia is a global economic and financial environment that does not stabilise and recover by 2010. Despite signs of stabilisation, downside risks remain high.
Besides the threat of ‘protectionism’, another risk is the US consumer spending less and saving more. This could result in sustained deflation, and America relapsing into recession.

[A.3] UNIONS WARNED OF PERMANENT LOSS OF SOME JOBS

Labour chief Lim Swee Say warned that retrenchments are likely to climb in the months to come as the ongoing global economic slump has prompted many manufacturers to downsize their operations here or move out of Singapore completely. And Mr Lim is worried that once these jobs are lost to Singapore, they will be gone forever.

Mr Lim said several unionised companies had told the NTUC that they would retrench over 1,500 workers later this year. This is because the companies do not see a pick-up in global demand and many do not want to hold on to spare capacity.

A decline in the jobs situation could lead to what Mr Lim described as a 'double-dip' - a W-shaped economic recovery.

Although preliminary second-quarter figures show this has since eased to 4,800, Mr Lim said this did not mean Singapore and the global economy were back on a path to growth. The outlook for the second half of the year remains uncertain, and layoffs were on the horizon.

[A.4] HOME LOANS MARKET ACTIVE AGAIN

What a difference three months make. Just then, amid gloom over the economic outlook and falling home price valuations, banks reportedly tightened lending criteria.

But now, a cocktail of low interest rate, the availability of money and the pent-up demand had fuelled the recent property rally. The slowing of Housing & Development Board construction over the years also helped to push some of the demand towards private condominiums which are always favoured by younger families. And the banks could also be instrumental in fuelling the rally as they are reportedly lending up to 90% of the home value recently.

According to Bloomberg data, the three-month Sibor has been hovering at about 0.68% for a few months, not far from the 10-year low of 0.56% in 2003. And most market observers do not expect interbank rates to go up in the near future as economic uncertainties still looms over the horizon.

[A.4.1] Bank Lending surged again in June 2009

According to an estimate by the Monetary Authority of Singapore (MAS) issued in mid-August 2009, the total amount of Singapore-dollar loans held by banks in Singapore went up by 0.5% to $272.2 billion at end-June, hot on the heel of an expansion in overall bank lending of 0.3% a month ago. The continuous rises give the market some self-belief that the Singapore economy could already be in the recovery mode.

Consumer housing and bridging loans were the main sources of growth, which rose 1.5% in June to $82.9 billion, after a 0.8% increase in May 2009.

Total consumer loans rose 1.5% in June 2009 to $118.7 billion at the end of the month, compared to $116.9 billion at end-May.

Business borrowing continues to fall for the eighth consecutive month in June, to $153.5 billion or 0.2%. The worst of the lots were borrowing from the manufacturing sector, shrinking 2.6% over the month to $11.2 billion. This simply means that orders in this particular sector continue to stay low.


(B) OVERALL PERFORMANCE OF PRIVATE RESIDENTIAL PROPERTY SEGMENT


As the global economy seems on track for a recovery, home buyers who have been restrained by the sudden meltdown of the financial market pounced on the property market with impunity, and along the way pushed the market to another historical high – barely a month after it hit the first historical height of 1,825 new homes sold in a month.

NEW HOME MARKET PERFORMING BEYOND ECONOMIC FUNDAMENTAL

By the end of July 2009, a total of 10,117 new home units have been sold in Singapore belying an on-going economic recession.

The phenomenal performance of the new home segment starting from May 2009.

[B.1.1] Almost half the total transactions of new homes were outside central region

Total transactions at the respective regions over the past seven months, with the Outside Central Region (OCR) chalking up the most impressive sale performance so far this year.

By percentage term, 45.18% of all the new home units were sold in OCR, with only 22.01% of them sold at the Core Central Region (CCR). The remaining 32.81% of the new home units changed hands in the Rest of Central Region (RCR).

Traditionally, foreign investors do not buy into heartland areas as home units there are mostly for ‘own use’ by locals. Likewise, capital appreciation in outlaying areas, if it occurs, will not be as fast and as huge as in the prime areas where more ‘big hitters’ are playing.

41 projects in CCR reported at least one transaction in July 2009, compared with a month ago where only 30 projects there did so. The highest median price achieved in July was $3,273 psf, way below the $3,813 psf recorded in June 2009. Though fewer projects were accounted for in CCR in June 2009, there were more transactions there as compared to July 2009.

Below are comparisons of sale prices between the June 2009 and July 2009 in some selected new condo/apartment projects in CCR.


• In JULY 2009, 18 units at Belle Vue Residences at Oxley Walk were sold at a median price of $1,869 psf, compared to 31 transactions in June 2009 at a median price of $1,786 psf. While the JULY’s median price of $1,869 psf was 8.56% lower than the $2,044 psf median price achieved in August 2008, it was 4.6% higher than June 2009’s median price.

• In JULY 2009, 15 units at Martin Place Residences at Kim Yam Road were sold at a median price of $1,741 psf, compared with 61 units sold in June 2009 at a median price of $1,536 psf. The July median price was 6.24% lower than its original median price when the project was launched but it was 13.34% higher than the June median price of $1,536 psf.

• In JULY 2009, a unit at Miro at Keng Lee Road was sold in for $1,770 psf, compared with 30 transactions in June 2009 at $1,436 psf. That was a 2.36% rise in median price.



FINDING – Despite the phenomenal rise in transaction volume in July 2009, sale prices in CCR continue to slide when compared with a year ago. However, when compared month-on-month with the June 2009’s median price, prices in July 2009 rose impressively. For example:


(a) The $2,792 psf median price achieved at The Hamilton Scotts in July 2009 was a 10.57% rise over the median price of $2,525 psf of June 2009.

(b) The July median price of $1,771 psf at RiverGate was a 14.2% increase over the median price of $1,551 psf in June 2009.


CONCLUSION – The recent buying frenzy has helped recover some lost grounds in home prices in CCR. There is conclusive evidence to show that the high-end new home segment has stabilised for now. However, whether prices will continue to climb remain a fluid proposition as the larger economy remains uncertain.

45 projects in RCR reported at least one transaction in July 2009, compared with a month ago where 43 projects did so. The highest median price achieved in July was $1,649 psf for five units at Reflections at Keppel Bay, compared with $1,501 psf achieved in June 2009 for one unit at Jardin along Upper Bt Timah Road. However, the sale volume dipped slightly in July 2009 compared with a month ago.

Below are comparisons of sale prices between June 2009 and July 2009 in some selected new condo/apartment projects in RCR.




• In JULY 2009, 48 units at Dakota Residences at Dakota Crescent were sold at a median price of $894 psf. The median price suffered an 8.6% drop when compared with last year’s $978 psf median price of June 2008. However, when compared month-on-month with the $870 psf median price in June 2009, there was a 2.7% rise in the price.

• In JULY 2009, 54 units at Clover by the Park at were sold at a median price of $745 psf. While it was a shade lower than the $753 psf median price in July 2008, it is a 2.2% rise in median price over June 2009.

• In JULY 2009, 16 units at Concourse Skyline at Beach Road were sold at a median price of $1,438 psf. It was a 9.67% drop in median price when compared month-on-month with the 68 units sold in September 2008 but an 8.2% rise in median price when compared with the 21 units sold in June 2009 at a median price of $1,329 psf.

• In JULY 2009, 18 units at Beacon Heights at the junction of St Michael’s Road and Mar Thoma Road were sold at a median price of $786 psf. It was a 14.28% drop in median price when compared with the 34 units sold in August 2008 but a 1.15% rise in median price when compared month-on-month with the 32 units sold in June 2009 at a median price of $777 psf.

• In JULY 2009, three units at 8@Woodleigh were sold at a median price of $956 psf, compared with 330 units sold in June 2009 at a median price of $804 psf. The latest median price was 18.9% higher than last month’s median price.

• In JULY 2009, 94 units at Parc Seabreeze were sold at a median price of $1,320 psf, compared with the 51 units sold there in June 2009 at a median price of $1,228. The latest median price was 7.49% higher than last month’s median price.

• In JULY 2009, 20 units at The Ariel were sold in July 2009 at a median price of $839 psf, compared with the 5 units sold there in June 2009 at a median price of $872. The latest median price was a 3.93% drop in median price.


Source of Data: URA website

FINDING – The price trend in RCR is similar to that of CCR with July 2009 median prices generally higher than those of June 2009 but much lower than last year’s. The same conclusion can be drawn for developers’ pricing strategy in RCR, i.e. they appear to be in a hurry to offload as many as they can.

[B.1.4] Sale of primary home units in Outside Central Region (OCR) hit over-drive

The sales volume at OCR soared more than three times to hit 1,502 units compared with 432 new home units sold in June 2009.

A total of 903 units were sold from four new projects launched in the Outside Central Region (OCR), accounting for the lion’s share of the total 1,502 units sold in OCR in July 2009. These projects included The Gale which sold 294 units with ease, Meadows @ Peirce which sold 286 units at a very bullish median price of $919 psf, Waterfront Key which sold 191 units, and Optima @ Tanah Merah which sold 132 units at $822 psf.

Together with the other 40 on-going projects, OCR hit back with a vengeance by closing an unprecedented 1,502 new home units in July 2009.

Price wise, the phenomenally high transaction volume did not shore up sale prices by much. Instead, units at the freehold project The Gale at Flora Road in Upper Changi/Loyang Area were transacted at a competitive median price of $696 psf. Though units at other projects were all selling at higher prices, the increase was restricted to around 5% to 6% over the June 2009 sale prices.

Below are comparisons of sale prices between the June 2009 and July 2009 in some selected projects in OCR.


• In JULY 2009, 107 units at Double Bay Residences were sold at a median price of $686 psf, compared with 39 units sold in June 2009 at a median price of $659 psf. The July median price was a 4.09% improvement over the previous month.

• In JULY 2009, 27 units at Waterfront Waves were sold at a median price of $687 psf, compared with 41 units sold in June 2009 at a median price of $651 psf. There was a 5.53% rise in median price in July 2009.

• In JULY 2009, 82 units at Livia were sold at a median price of $638 psf, compared with 35 units sold in June 2009 at a median price of $620 psf. There was a 2.9% increase in median price in July 2009

• In JULY 2009, three units at St Patricks’ Residences were sold at a median price of $894 psf, compared with 10 units sold in June 2009 at a median price of $835 psf. There was a 7.06% increase in median price in July 2009.

• In JULY 2009, 20 units at Coastal Breeze Residences were sold at a median price of $653 psf, compared with six units sold in June 2009 at a median price of $640 psf. There was a 2.03% increase in median price in July 2009.

• In JULY 2009, 33 units at Riz Haven were sold at a median price of $731 psf, compared with Six units sold in June 2009 at a median price of $694 psf. There was a 5.33% increase in median price in July 2009.

Source of Data: URA website

[B.2] PRICIER UNITS MAKING UP BIGGER SHARE OF HOME SALES

The proportion of private homes sold at over $1.5 million has risen by 6% in June and July 2009. According to a DTZ analysis, 18% of caveats lodged from January to June this year were for apartments in this price range.

From January to April, private homes costing more than $1.5 million accounted for a smaller 12% of the 4,401 caveats lodged.

According to URA data, 72% of the 1,637 units launched by developers in June 2009 were from the core central region and rest of central region. This was a marked increase in quantity of quality home units launched when compared with April 2009.

74.4% of the total 2,227 new home units sold in CCR occurred in May, June and July. 67% of the total of 3,319 new home units sold in RCR was likewise done in May, June and July 2009.

Some of the examples include Allgreen Properties’ freehold One Devonshire near Killiney Road where a caveat showed a unit costing $2.02 million or $1,690 psf was sold.

Sim Lian also launched Rochelle at Newton in May. Several caveats were lodged for units above $1.5 million, with one going for $1.83 million or $983 psf.

A unit at The Oceanfront@ Sentosa Cove changed hands at $11.5 million or $1,922 psf.

Seven units at Ardmore Park were also sold at $6 million or more each, with the highest at $7.25 million or $2,513 psf.


(C) PERFORMANCE OF NON-RESIDENTIAL PROPERTY SEGMENT


While the private residential segment was basking in glory, the commercial and industrial property segments are both in sorrowful state with rent quantum and occupancy rate sinking into new depth.

[C.1] STEEPEST FALL IN OFFICE OCCUPANCY COST IN SINGAPORE

Singapore has become more competitive in terms of business costs under a dubious circumstance, i.e. the plunging office rents. The weakening demand for office space and rising supply have conspired to cause the negative net take-up of office space for three consecutive quarters since Q4 2008.

According to Colliers International, monthly gross rents for Grade A offices in Singapore's central business district (CBD) posted the sharpest fall in Q2 2009, compared with other major cities in the region. Rents in CBD are now at about $6.73 psf per month in Q2.

Though other analysts are making similar but different projections, the outcome does nothing to cheer any commercial landlords.

Cushman & Wakefield's mid-Q3 analyses show a slower decline in prime office rents. For instance, Raffles Place Grade A office rents fell 18% from $10.61 in Q1 to $8.70 in Q2. But since then, they have dipped just 2.9% to $8.45.

Jones’ Lang Laselle has put the average monthly rental value for prime Grade A Raffles Place (small space) at $9.50 psf in Q2 2009, about half the peak figure of $18.40 psf in Q3 last year.

Prime office rents in the Shenton area dropped 5.8% from Q2 to $6.32 - a smaller decline compared with the 17.9% drop from $8.17 in Q1 to $6.71 in Q2.

The prime office vacancy rate at mid-Q3 is 6.1%, up 0.4 of a percentage point from Q2.

[C.1.1] Office rents unlike to go up in near term

Due to some companies’ plan to downsize in the months ahead, the downward pressure on rents in the next few quarters and positive take-up of space might not emerge until next year.

At the moment, leasing activity has been dominated by companies relocating for better propositions, such as more competitive rents or more efficient floor plates.

According to URA figures, the pipeline supply for the office sector stood at about 13.3 million sq ft gross floor area as at end-Q2 2009, of which about 12 million sq ft is slated for completion by 2012.

[C.2] PREPARED INDUSTRIAL LAND ALLOCATION FELL IN Q2 2009

The net allocation of JTC prepared industrial land performed poorly in Q2 as the economic recession starts to rear its ugly head in the industrial segment. Almost a quarter of terminations were due to companies shutting down operations – with nearly half of total terminations coming from the electronics segment.

JTC's Q2 facilities report shows net allocation at negative 32.2 hectares, compared with a net allocation of plus 14 ha in Q1 and 34 ha in Q2 2008.

Gross allocation in Q2 this year slid to 5.4 ha. And termination jumped to 37.6 ha, from 16.7 ha in Q1.


(D) PERFORMANCE OF COLLECTIVE SALE


As private home prices have risen by 16% to 26% in July 2009 from the lowest point in March 2009 and sales volume has surged 200% year-on-year, the current rally is similar in outlook as the recent 2007 bull-run, though the current state of the economy is anything but uncertain. However, hopeful en bloc site sellers cannot help but to try their luck at this juncture. But whether the speculative prod at collective sales will yield any results, nobody is the wiser.

[D.1] INTEREST IN RESIDENTIAL LAND REKINDLED

The number of en bloc sales has fallen from 116 collective sales completed in 2007 to eight such deals in 2008. As for 2009, the looming uncertainties have made any talk of an emerging en bloc sales drive highly premature.

However, this year's only collective sale tender so far, for Dragon Mansion at 18 Spottiswoode Park Road, has closed with more than one interested bidder. However, the marketing agent stopped short at revealing the offers.

Dragon Mansion is a small-size site with only 41,874 sq ft to boast. It has a plot ratio of 2.8 and could potentially yield an estimated 120 units of 1,000 sq ft apartments in a new development. The main selling point of this site is its freehold status.

[D.2] GUILLEMARD ROAD APARTMENT ON EN BLOC SALE MARKET

The newfound optimism in the market has prompted Cassia View at 320 Guillemard Road to be put up for sale by expression of interest. The freehold development sits on a 35,511 sq ft site and comprises 72 two- to three-bedroom apartments and penthouse units, with a total strata area of 89,362 sq ft.

The marketing agent said it has received nearly 10 preliminary inquiries about the site and expects to have at least three serious bids by the time the offer closes in early September.

[D.3] ELEVEN APARTMENTS ON BALMORAL ROAD ON EN BLOC SALE MARKET

A development of 11 freehold apartments on No 3 Balmoral Road is on the en bloc sale market for $65 million. The apartments are owned by an investment company which has leased out all the units.

The land area is 23,821 sq ft and it has a permissible plot ratio (ratio of maximum gross floor area to land area) of 1.6 and a height restriction of 12 storeys. The site can be redeveloped into 30 residential units.

The $65 million price works out to $1,705 per square foot per plot ratio (psf ppr) based on the 1.6 plot ratio.

[D.4] TEACHERS HOUSING ESTATE ON EN BLOC SALE MARKET

An 86,402 sq ft plot at No 162 Tagore Avenue, within the Teachers Housing Estate, has been put up for collective sale with an indicative price of $15 million. It will be sold on a 99-year leasehold tenure by the Singapore Teachers' Union, which holds the freehold interest in the property.

The Tagore Avenue site, although currently zoned as 'civil & community institution', has the approval for a three-storey mixed landed development, allowing a potential development of either 33 landed homes or 40 cluster houses.


(E) FOREIGNERS’ INTERESTS IN SINGAPORE REAL ESTATE


There are two sides to the same story of the abundant opportunities available in the current weakness in high-end home prices. On the one hand, foreign buyers are reportedly coming back to Singapore to take advantage of the competitive prices; but on the other hand, some foreign owners are disposing of their high-end properties in Singapore at huge losses. How the situation will pan out later is anybody’s guess. Will there be more foreigners trying to get rid of the ‘hot potatoes’ on hand or will there be more buying in the months to come?

Lest one forgets, the current global economic downturn inflicts the rich in the developed countries more than it does the heartlanders in Singapore. The script has not been completed yet as far as the story of economic recovery is concerned.

[E.1] HONGKONGER OWNER SOLD HILLTOPS CONDOS AT HUGE LOSSES

18 apartments at Hilltops condo at Cairnhill Circle were disposed of in late August 2009 in the sub-sale market for a total of $48.2 million or an average price of about $2,560 per square foot (psf), which is a far cry from the average price of around $3,900 psf for the first 28 units.

A check with SISVREALINK data showed that NINE units were sold by the project's developer, SC Global subsidiary Taraville, between October and December 2007 at prices ranging from $3,501 psf to $4,812 psf or at absolute prices of between $4,371,500 and $43,146,832.

By such extrapolation, the loss suffered by the seller was estimated to be more than 35%.

[E.2] PROPERTY FUND SNAPS UP 21 CONDO UNITS FOR $65M

Bulk sales of apartments, or marriage deals between developers, involving huge ‘bulk discounts’ seem to be a common phenomenon during recession. An overseas property fund is understood to have made a ‘bulk purchase’ of the remaining 21 units at Sui Generis condo at Balmoral Crescent for $65 million.

The price works out to about $1,260 per square foot (psf) on average, which is thought to be about half the average price of about $2,460 psf achieved for the earlier 19 units in the 40-unit development that were sold in 2007 and 2008 at prices ranging from $1,991 psf to $2,717 psf.

[E.3] INVESTMENT SALES STILL IN THE DOLDRUMS

The investment sales deals struck in the first six months of this year is only about $2.2 billion, compared with $17.9 billion for the whole of last year and the record $53.7 billion in 2007.

However, experts reckon that things will get slightly better in the second half of this year as demand for Government's reserve list has warmed up and sales of some big-ticket items can be expected to come to fruition.

Besides, Lion Properties Group has recently disposed of the 50-room Hotel Nostalgia in the Tiong Bahru area for about $22 million. Hotel Nostalgia, a freehold property, is expected to receive Temporary Occupation Permit soon.

An expression of interest closed last week for a portfolio of four malls owned by Asian Retail Mall Ltd (ARML) 1 fund, which comprises White Sands in Pasir Ris, Century Square in Tampines, Hougang Mall, Tiong Bahru Plaza and the next door Central Plaza office block. The seller is asking for $1.5 billion for the above properties.


(F) GOVERNMENT LAND SALE (GLS) PROGRAMME



[F.1] GOVERNMENT RESIDENTIAL SITE AT SERANGOON AVE 3 UNLOCKED FOR TENDER

A 99-year leasehold residential site at Serangoon Avenue 3 in front of Nanyang Junior College has been triggered off for release from the reserve list.

A developer has put in a minimum price bid of $83.7 million for the plot for the Urban Redevelopment Authority (URA) to unlock the reserve site and put it up for public tender.

The proposed bid price of $83.7 million works out to about $200 per square foot of potential gross floor area. URA will release the site for tender in about two weeks.

[F.2] GOVERNMENT RESIDENTIAL SITE AT SELETAR HILL AREA TRIGGERED FOR SALE

A URA’s 2.1ha commercial and residential site at the corner of Yio Chu Kang and Seletar roads has been triggered off for sale after a developer committed to bid at least $40.5 million for it.

The site is the third URA site triggered for sale in as many weeks after developers tendered bids on land in Dakota Crescent and Chestnut Avenue.

With a gross plot ratio of 1.4, the Yio Chu Kang site which is near the future Seletar Aerospace Park, can generate a maximum permissible gross floor area of about 29,400 sq m. URA estimates the site can accommodate 225 housing units. Shops and food and beverage outlets can be built on 4,500 sq m of commercial space within the proposed development.



[F.3] KAKI BUKIT INDUSTRIAL SITE ATTRACTS 18 BIDS

A 1.07 ha industrial site along Kaki Bukit Road 2 put up for sale by the government attracted 18 bids by the close of tender.

URA said that the highest bid received for the 30-year leasehold site was $12.1 million, more than double the minimum bid price of $5 million.

The highest bid works out to be around $105 per square foot per plot ratio (psf ppr), with the second highest at $90 psf ppr.


(G) OVERALL PERFORMANCE OF HDB RESALE MARKET


Like its private counterpart, HDB resale flats are doing very well in recent months. The strong improvements in sales volume starting from February 2009.

With the advent of more permanent residents (PRs) and the media drumming up the ‘economic recovery’ story, buyers are coming out in full force to compete for ‘good’ units at popular locations, driving resale prices at the same time.

August update

MONTHLY PROPERTY MARKET DIRECTION UPDATE

Introduction

Is there a real estate bubble; or is there not? This is also what we are asking ourselves now. This report will show readers that despite being in one of Singapore’s deepest recession, new home sales broke the national record of having the highest number of new units (i.e. 1,825 units in all) sold at all time. However, when prices are scrutinised another picture emerges. It appears that housing developers are in the hurry to offload their inventories by keeping prices at very affordable level. At this moment, the situation still intrigues most property analysts as to who will be the real winner at the end of the day.


(A) OVERVIEW OF THE LARGER ECONOMY

[A.1] MINISTER MAH CAUTIONED AGAINST EXCESSIVE SPECULATION

Where the taxman added more confusion and unnecessary trepidation by the untimely announcement of the Gain Tax, Minister Mah Bow Tan scored with his usually crisp comment that the Government will take 'whatever action necessary' to prevent excessive speculation in the property market.

However, as of now, Mr Mah does not believe “there is excessive speculation at the moment, but there is some element of speculation involved”. He pointed out that “some of the practices and habits that you saw in the last property boom are beginning to come back, so I think we'll have to be careful.”

He also warned about a property bubble forming.

Recently, the mass market segment has gone crazy with frequent sightings of long queues curling in front of new show rooms days before they were opened. For example, Optima, next to the Tanah Merah MRT and the 329-unit Centro Residences opposite Ang Mo Kio MRT station.

[A.2] SLIGHT IMPROVEMENT IN FOREIGN PURCHASERS’ SHARE AND SUB-SALE VOLUME

According to URA data, the number of sub-sale deals for private homes reached 1,041 in the second quarter (Q2) of 2009, and the median sub-sale price has likewise gone up to $959 psf or 18.1% over Q1 2009.

HDB upgraders' share of total caveats, which had been increasing for six consecutive quarters since Q4 2007, slipped in Q2 this year as purchases by those with private addresses rose at a faster pace. (see statistics of new home sales at Outside Central Region (OCR)B.1.3.

Q2 2009 also saw higher number of mid and mid-upper projects being launched and these are products that are typically beyond the reach of HDB dwellers. Coupled with the fact that there were fewer launches of mass-market projects in Q2 2009, the share of HDB dwellers of total purchases was therefore smaller this time round.

The number of caveats for private homes lodged by foreigners, including PRs, showed the same upward trend, reaching 1,418 in Q2 compared with 496 with Q1 2009. This is not surprising as the market has reached fever pitch.

[A.3] RETRENCHMENT CONTINUES IN SINGAPORE WHILE FEWER NEW JOBS WERE CREATED IN Q2 2009

According to a preliminary report from the Ministry of Manpower (MOM) published on 31 July 2009, a total of 5,500 workers lost their jobs in the second quarter (Q2) of 2009; and this is less than half the 12,760 redundancies in Q1 2009.

2,600 workers lost their jobs in the manufacturing sector in Q2 2009, compared with 9,250 in Q1 2009. 2,400 workers were laid off in the service sector in Q2 2009, compared with 3,170 in Q1 2009. The rest of the 500 workers who lost their jobs were from the construction industry.

Total employment was also reduced by 12,400 in Q2 2009, double the losses in Q1 2009.

[A.4] US JOBLESS RATE TO STAY HIGH – A REAL BAD NEWS

The US Federal Reserve expects the unemployment situation to worsen this year, probably topping 10%. The central bank previously predicted that job losses will be around 9.6%. The nation's unemployment rate climbed to a 26-year high in June 2009, hitting 9.5%.

The Fed also gives a range of all the forecasts including some officials’ expectation that the jobless rate would hit 10.5% this year, and 10.6% in 2010.

The post-World War II high was 10.8% at the end of 1982, when the country had suffered through a severe recession. The jobless rate averaged 5.8% last year.


(B) OVERALL PERFORMANCE OF PRIVATE RESIDENTIAL PROPERTY SEGMENT



[B.1] SOMETHING BIZARRE IS HAPPENING IN THE NEW HOME MARKET

Officially, Singapore is still in one of the worst recessions it ever had. But the country is in one of the best property bull runs as 1,825 new home units were sold in June 2009, knocking down the highest sales record of 1,723 new home units sold at the height of the 2007 bull-run before the market came to an abrupt halt.

And since February 2009, property analysts have been saying the rally would not last. Nothing can be more bizarre than this. The rally just defies logic.

By now, property developers have already sold more than 7,300 units in all. In theory if the situation remains more or less stable, the full year take-up may well exceed the record sale of 14,811 new home units.

But before any educated guesses are made, two things need to be ascertained: (1) the sale prices achieved so far this year; and (2) the market trend of home rents.

So far, it has been ascertained that prices of new home units did not improve much (please refer to last two reports in June and the findings in the July ‘Property Market Direction’ magazine). In subsequent chapter, we will look at the fall home rents and determine how long more before the ignorant buyers will wise up. First of all, let’s look at the details of the new home transactions.

[B.1.1] Good sales number at Core Central Region (CCR) but developers appear to be in a hurry

In June 2009, high-end homes in CCR sold 526 units from 34 projects, compared with 617 units from 32 projects in May 2009. This shows that developers are launching more projects but had sold fewer units in CCR. Likewise, median prices across the board appeared to be rather subdued.

Below are comparisons of sale prices between the whole of 2008 and June 2009 in some selected new condo/apartment projects in CCR. The June transacted prices are also compared with April prices to make sense of the actual market situation.


• 22 units at Zenith at Zion Road were sold in January 2008 at a median price of $1,682 psf, compared with two recent transactions in June 2009 at a median price of $1,300 psf (in April 2009 the median price was $1,199 psf).

• 13 units at Mulberry Tree at Moulmein Road were sold in September 2008 at a median price of $1,337 psf, compared with two May 2009 transactions at a median price of $1,198 psf (in April 2009 four transactions were done at between $1,194 psf and $1,217 psf).

• Three units at Visioncrest were sold in July 2008 at a median price of $2,123 psf, compared with two transactions in June 2009 at a median price of $1,730 psf (in April 2009 the median price was $1,651 psf).

• Six units at Belle Vue Residences at Oxley Walk were sold in August 2008 at a median price of $2,044 psf, compared to 31 transactions in June 2009 at a median price of $1,786 psf (in April 2009 the median price was $1,503 psf).

• Two units at Martin Place Residences at Kim Yam Road were sold in April 2008 at a median price of $1,857 psf, compared with 61 units sold in June 2009 at a median price of $1,536 psf. (in May 2009, a total of 186 units were sold at a median price of $1,423 psf)

• A unit at Miro at Keng Lee Road was sold in October 2008 at a median price of $1,616 psf, compared with 30 transactions in June 2009 at $1,436 psf. There was a fall of 11.13% in median price.

• A unit at Orchard Scotts at Anthony Road were sold in October 2008 at $2,407 psf, compared with a June 2009 transaction at $1,750 psf. There was a fall of 27.29% in median price.


Finding: Despite the spike in transaction volume, sale prices in CCR continue to slide when compared with a year ago. However, in general the improved sentiments recently did edge up sale prices a notch. Let’s look at two typical examples.

(1) 61 units at Martin Place Residences units were sold in June 2009 at a median price of $1,536 which was 17.28% cheaper than the median price of $1,857 psf transacted in April 2008. However, when compared with the 186 units sold in May 2009, the June 2009 median price was about 8% stronger than the $1,423 psf in May 2009.

(2) 31 units at Belle Vue Residences were sold in June 2009 at a median price of $1,786 psf which was 12.6% cheaper than the $2,044 psf median price achieved a year ago. However, the June median price was a 18.8% improvement over the $1,503 psf median price achieved in April 2009.

Conclusion: Housing developers in general appear to be in a hurry to offload units before the flood of completed new home units hit the market in the final quarter of this year.

[B.1.2] Record sales volume at Rest of Central Region (CCR) but prices are falling

In June 2009, a total of 876 units were transacted from 46 projects, compared with 609 new home units sold at 38 projects. This was a 43.8% surge in sales performance over the previous month.

Below are comparisons of sale prices between the whole of 2008 and June 2009 in some selected new condo/apartment projects in RCR.


• 144 units at Dakota Residences at Dakota Crescent were sold in June 2008 at a median price of $978 psf, compared with 27 units sold in June 2009 at a median price of $870 psf. (10 units were sold in May 2009 at a median price of $883 psf)

• 100 units at Clover by the Park at were sold in July 2008 at a median price of $753 psf, compared with 33 sold in June 2009 at a median price of $729 psf. (16 units were sold in April 2009 at a median price of $730 psf.)

• 68 units at Concourse Skyline at Beach Road were sold in September 2008 at a median price of $1,592 psf, compared with 21 units sold in June 2009 at a median price of $1,329 psf. (20 units were sold in May 2009 at a median price of $1,314 psf)

• 47 units at The Peak @ Balmeg at Balmeg Hill were sold in September 2008 at a median price of $1,011 psf, compared with 13 transactions in June 2009 for a median price of $1,019 psf. (two transactions in April 2009 of between $935 psf and $950 psf).

• 34 units at Beacon Heights at the junction of St Michael’s Road and Mar Thoma Road were sold in August 2008 at a median price of $917 psf, compared with 32 units sold in June 2009 at a median price of $777 psf. (four units were sold at a median price of $771 psf in April 2009).

• Four units at Woodsville 28 were sold in August 2008 at a median price of $919 psf, compared with 12 units sold in June 2009 at a median price of $770 psf. (34 units were sold in April 2009 at a median price of $751 psf).


Source of Data: URA website

Finding: The price trend in RCR is similar to CCR with June 2009 median price higher than April 2009 but much lower than last year’s. The same conclusion can be drawn for developers’ pricing strategy in RCR, i.e. they appear to be in a hurry to offload as many as they can.

Median price in June 2009 improved slightly over the previous month due to the support provided by the buying frenzy. However, when compared to the same time last year, median price in RCR still has much lost ground to claw back.

[B.1.3] Sale of primary home units in Outside Central Region (OCR) slides

In all, a total of 432 new home units from 39 projects were sold in June 2009, compared with 442 new home units in 40 projects sold in OCR a month ago. However, when compared to the sales performance of 787 new home units sold from 40 projects in March 2009, the June 2009 figure was a drop of 44.5% in volume. It appears that the buying momentum caused by the droves of HDB upgraders is on the wane.

Below are comparisons of sale prices between the whole of 2008 and June 2009 in some selected projects in OCR.


• 22 units at Breeze By The East at Upp East Coast Road were sold in April 2008 at a median price of $948 psf (with the highest psf price at $1,080 psf), compared with 16 units sold in June 2009 at a median price of $838 psf. (Three units were sold at a median price of $740 psf in April 2009).

• Seven units at The Amery at Lorong K Telok Kurau were sold in July 2008 at a median price of $877 psf, compared with four units sold in June 2009 at a median price of $863 psf. (Three units were sold in April 2009 at prices between $727 psf and $863 psf).

• Seven units at Naturalis at Lorong M Telok Kurau/Still Road were sold in September 2008 at a median price of $909 psf, compared with four units sold in June 2009 at a median price of $830 psf. (Three units were sold in April 2009 at prices between $827 psf and $881 psf).

• Four units at Park Natura at Bt Batok East Ave 6 were sold in February 2008 at a median price of $1,034 psf, compared with two units sold in June 2009 at a median price of $950 psf. (Three units were sold in April 2009 at a median price of $949 psf).

Source of Data: URA website


[B.2] CONDO RENTS CONTINUE TO FALL – ALBEIT SLOWER THAN BEFORE

The number of condo projects that meet the URA criterion of at least 10 tenancy agreements signed in a quarter increased by 40 projects (or 20.7%) from 193 projects in Q1 2009 to 233 in Q2 2009. This may mean higher instances of ‘break lease’ cases – which mean that the tenants may have exercised the ‘diplomatic clause’ and terminated the tenancy agreements earlier, resulting in higher number of tenancy agreements being replaced within the respective projects – hence more entries into the data.

Another telltale sign is the comprehensive rent fall amidst higher number of rental transactions. When the increase in tenancy agreements was caused by higher demand, the rents amount would have gone up instead of coming down. As such, the higher number of tenancy agreements amidst falling rents could have been caused by tenants going through some ‘financial adjustments’ during this difficult time.

Some of the rent drops were severe, for example:

 At District 9, Cairnhill Crest the median rent dropped from $6.43 psf per month to $4.10 psf pm, which worked out to be 35.23% drop in rent.

 In other popular locations such as District 3 Queens at Stirling Road, the median rent dropped $1 psf per month from $4.52 psf pm to $3.52 psf pm or 22.12% slide.

 The median rent at Water Place at District 15 also dropped $1.73 psf pm or 37.7% from $4.59 psf pm to $2.86 psf pm.

The year-on-year comparison of private home rents of 100 quality condos between Q2 2008 and Q2 2009 across different districts. Both sets of statistics for Q4 2008 and Q1 2009 were culled from the URA’s rental price index where information on rents collected at condo/apartment projects with at least 10 tenancies is captured.

 [B.2.1] Median month rent below $2.00 psf

From the statistics available, it appears that in Q2 2009 there were a total of 46 projects (or 20% overall) having their median rent going below $2.00 psf per month. In Q1 2009, only 35 projects (or 18% overall) were renting at below $2.00 psf pm in median rent. These projects are either very old former HUDC flats or are located at outlaying areas including districts 17, 18, 19, and 23.

In Q2 2009, a total of 109 projects (or 47% overall) enjoyed median rent of below $3.00 psf per month. In Q1 2009, 126 projects (or 65% overall) were renting below $3.00 psf pm.

The other 78 projects (or 33% overall) shown in the URA statistics enjoyed rents of above $3.00 psf per month in Q2 2009. The majority of the projects are located near the central business districts including Districts 1,2,3,4,5,7,8,9,10,11, and 15. Only two units at two relatively newer projects in the outlaying districts, i.e. Gardenvista and Lakeshore managed to rent out for $3.32 psf pm and $3.48 psf pm respectively.

In Q1 2009, 39 projects (or 20% overall) featured in the URA record enjoyed rents of above $3.00 psf per month. However, despite the 2-fold increase in the number of projects enjoying above $3.00 psf rent per month, more high-end projects rather than fewer are suffering from sliding rents.

At the very top end of the home rent spectrum, only six projects had units renting out at $6.00 psf pm or higher. The rental prices of high-end condo units in District 9, 10 and 11 also succumbed to the general downward slide. In Q2 2009, only one unit at The Pier at Robertson managed to rent out at above $6.00 psf pm threshold. The unit was rented out at $6.08 psf pm.