Property
MARKET
DIRECTION
FREE Quarterly Magazine by Sam Gian The Independent Real Estate Sales Consultant in association with
www.update.sg
MICA permit 239/06/2008
Issued in April 2009 by
Time will TELL In this April 2009 issue – Market Update – How Low will it go? Primary Sale market surprised everyone Sub-sale market poised to rise HDB resale market going strong Analysis of Price Trend and Market Behaviours Policy Updates – New CPF rule, HDB Lease BuyBack Scheme etc.
Sam Gian’s FREE “Rookies’ Survival Course” – specially catered for New & Inexperienced agents in this Recession – will be held on 4th May 2009 from 9.00am to 1.00pm at HDB Hub Auditorium.[Details inside] Also look out for Sam’s Sub-Sales Course in late May 2009
Singapore Property Market Review
Table of contents
Two cents’ worth: A global city beset by global problems Editor Sam Gian www.update.sg
[page 3-6]
Market Update (1) X-file – Missing in Action of the RICH? [page 7]
(2) How low will it go – While the rich
This magazine is titled: “Time will Tell” because no one in this age and circumstance will be able to say for sure what is going to happen next. What we really need is an OPEN MIND – Anything Is Possible!
economises, prices go ‘limbo rocking’ [page 9]
(3) How bad will it be? – All is not well with
the world economy [page 11]
However, this is not to say that an informed opinion is out of place. Quite the contrary, this is what I am attempting at this issue; and hope that with all the data and statistics that I am able to lay my hands on, I will be able to piece together a coherent story and hope that the crazy real estate market will turn out to be not too different from my projection.
(4) A reality check or a wake-up call? – More
We are in a bizarre situation now with economic numbers and job statistics at an all-time low. But home buyers are out in full force snapping up new home units, as though on cue. Are they making the right decision? Well, only time will tell. But at this moment, all hard evidence is on their side. This means that we may be seeing the real support point, in terms of the basic unit price (i.e. psf) of mass market homes. What I mean is that home prices in the heartlands are not going to be any cheaper than now, give and take a few ten dollars psf.
(7) Secondary market sales overshadowed
However, a variable factor, that is, sub-sale of TOP condo units may alter the equation altogether. Moreover, the euphoria in the mass market is isolated and cannot be found in the high-end home segment which is still in the doldrums, not just in Singapore but elsewhere in the world as well. How long is this imbalance going to last? It is still very uncertain at this moment for this particular home segment. How soon will the buyers from the richer nations come back here and splurge on us again? Only time will tell.
TOP of high-end condos may depress prices [page 12]
(5) Landed homes went into hibernation mode [page 14]
(6) Where have the Investors gone? [page 19] [page 20]
Issues in the News (8) Small is Beautiful – Smallness is the Next Big Thing [page 22] Policy Update (9) The Price Stabilizer – Lease Buyback Scheme [page 24]
Tips on Selling (10) How to Advertise in a Recession by Jacob Tay [page 25]
FREE Quarterly Magazine issued by
I guess in the interim, we will have to make do with this ‘back to the basics’ market again.
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Sam Gian Independent real estate sales Consultant in association with A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]
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Two cents’ worth
A global city beset by global problems But real estate is the surest bet domestically Only time will tell the extent of damage this global financial crisis will cause to the Singapore economy as well as the real estate market. As of now, my guess is as good as yours. But at least my earlier statement on the ‘crisis of epic proportion’ seems prescient when compared with the GIC losses of $25 billion. [And it pleases me tremendously when my students attributed their recent successes in closing to the new sales pitch that I have designed for them, i.e. ‘Mr buyer sir, you are buying at recession price – when do you think the recession will be over?’] In this smaller rendition in April 2009, I will show the most current statistics and make an informed guess as to how the demand and supply (and prices) of real estate in Singapore, including public flats, will evolve in the next few months. New THRESHOLD of $600 psf for mass market condos First of all, I believe Singaporeans have already accepted the $600 per square foot (psf) threshold for mass market private condominiums. It will become the new psychological support point, which means, anything below the threshold will cause a ‘mad rush’ like the ones we saw in February/March 2009 period where the soft-launches of many new home projects attracted droves of potential buyers. Queue numbers had to be issued at the waiting areas of these show rooms, such as Caspian, Mi Casa and Domus.
On 11 April 2009, it was reported that a 72unit freehold luxury condominium, Illuminaire, in District 9 Devonshire Road near Somerset MRT station, achieved a 96% sell-out rate in a matter of two days with the average price of $1,700 psf. It was ‘yesterday once more’. Good MARKETING STRATEGIES still work – Recession or not The phenomena confirm an established truth in real estate sales and marketing, i.e. buyers react to good selling strategy. As long as the strategy is able to appeal to buyer’s emotion, the buyers will react. On the other hand, what the real estate salespersons need to do is to give the buyers a little ‘push’ – by giving them a good reason to justify the emotion. The NEW ORDER in mass market condo PRICING There are a number of reasons why the $600 psf threshold for mass market condos will be the new order of the day. Firstly, buyers in general hardly showed any genuine resistance to the final proposition of the absolute sale prices in recent months, judging from the various degrees of successes at developers’ soft-launches. Though the ‘per square foot’ price may appear high by the usual standard, the absolute sale prices were considered ‘palatable’. Buyers in general have snapped up new condos units at between $600,000 and $750,000 without any qualms, though the psf prices are way above the ‘$600 psf’ threshold. For example, the majority of the 101 units sold during the soft-launch of Mi Casa at Choa Chu Kang were transacted at $610 psf (the lowest
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Singapore Property Market Review
psf price being $578 psf and the highest $707 psf). The majority of the 264 units sold at Double Bay Residences at Simei St 4 were transacted at $650 psf (the lowest psf price being $409 and the highest $898). The Singapore property market has come a long way since the last market bull-run in 1994/95 period where ‘$600 psf’ was the ‘point of resistance’ for mass market condos. In fact, in 1996, the market crashed when the psf price for many mass market condos breached the $600 psf level. From the look of things in recent months, buyers in general have accepted the $600 psf price level as ‘affordable’ and ‘reasonable’ and this is very significant for older private residential properties as well. The psychological support point for the new home unit will provide a basis for older condo projects to find their suitable price point, perhaps between $400 psf and $500 psf – anything lower than that the sellers might as well sit tight and wait for ‘en bloc sale’ propositions when the ‘en bloc sale potential’ emerges from the project’s functional and design obsolescence. One must not forget that not only the human population in Singapore is greying; the property sector is also aging. This means that up to a point, more and more old private property projects will be ‘locked into’ en bloc sale negotiations and taken out of the supply equation for individual home buyers. And, regardless of the tenure, the ‘older and uglier’ the project is, the ‘more attractive’ it will become – when en bloc sale is concerned. SMALL is the NEXT BIG THING Secondly, the basis for the new support point is also in the new ‘acceptable’ size of the new apartment units that are recently introduced into the market.
Most of the units sold in recent two months were between 380 sq ft and 1,100 sq ft, with the vast majority in the 500 sq ft to 600 sq ft range, which is smaller than the size of a typical HDB 3-room flat. By Singaporean standard, anything that is smaller than a 3-room flat is considered SMALL. Of course in Hong Kong, the smallest unit is 140 sq ft; and only time will tell whether houses in Singapore will go down to that ‘small’. [Full article ‘Small is Beautiful’ at page 22]
HDB resale prices will PROP UP mass market condo prices Another reason why $600 psf will be the new threshold is because of the HDB resale market. Singapore is the only democratic country in the world that has a huge public housing programme – even China does not have a public housing programme that takes up 86% of all residential land. Due to the sheer size of Singapore’s public flat segment, and the tendency for the government to intervene directly in the property market, home prices in general (excluding the high-end segment) tend to swing back and forth within a manageable range. Resale flat prices near $600 psf in some places The recent HDB resale transactions in March 2009 have shown that buyers are paying prices high enough to prop up the $600 psf threshold for most mass market condo projects. Flat buyers are paying between $250 psf and $330 psf just to own a quarter-century old HDB resale 3-room flats in suburban areas such as Yishun, Woodlands and Hougang; In Kim Tian Road, which is a short drive from the Central Business District (CBD), buyers would have to pay much higher psf prices such as between $450 psf and $550 psf for a sixyear-old resale 5-room flats. At Strathmore Avenue near the Redhill MRT station, buyers have to shell out at least $530 psf in order to own a 5-year-old resale HDB 5room flat.
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In fact, the highest resale price achieved in Strathmore Avenue in March 2009 was $608 psf for a 5-year-old resale 5-room flat. For resale HDB flats further afield, such as in Sengkang, buyers still have to part with at least $310 psf (highest being $364 psf) for five to six years old resale flats (including 4-room, 5-room and executive flats) in March 2009.
many offices and factories everywhere in the world will continue to stay vacant, and likewise, demand for high-end homes will continue to be weak. There are a number of underlying factors affecting the demand/supply of the high-end home market, including the following: (1)
HDB resale Prices provide the STABILIZER Thirdly, the newly introduced Lease Buyback Scheme (LBS) will provide the stabilizer to the new price point. According to the latest news on 20 April 2009 200 flat owners have already applied to take advantage of the HDB Lease Buyback Scheme; and it appears that as long as the Singapore population continues to age, more, rather than fewer people, will opt for the scheme, which provides stability and security for flat owners who are above 62 years of age. In fact, according to the same news, the Singapore government is studying the feasibility of extending the LBS in the future to owners of larger flats including 4-room and 5-room flats. While such a scheme provides the safety net for the older folks and the lower income earners in bad times, in good times flat owners in general (who have not signed up for LBS) will have more financial options. Some 3-room flat owners will choose to sell their flats outright to an ever growing pool of buyers and enjoy the capital gain, rather than getting the annuity payments over a long period of time. This means that prices for mass market homes will never crash, even at the depth of the worst recession. [Full article on ‘The Price Stabilizer at page 24]
High-end market vulnerable to external factors It is a different ball game altogether for the high-end private home market, whose fate is interwoven with the global financial market. And as long as the current gloom in the global financial market is not lifted and real economic activities and productions are not resumed,
The United States factor, which is the most critical factor as the financial woes and the resulting credit crunch in the US are causing massive export slumps all over Asia, and crippling growth and developments in poorer countries in general;
(2) The reluctant banks, which are frustrating home sellers, home buyers and the middlemen alike by being cautious in lending (and not lending); and (3) The Singapore economy, which does not appear to be bottoming out yet. [Full article ‘How bad will it be - All is not right with the world economy’ at page 8]
Outflow of funds hurting high-end homes Unlike the situation in the mass market where buyers buy homes for own use, the high-end home market is where buyers buy for capital gain (the fastest gain could come from ‘flipping’ of options), or positive cash flows. As such, the economic factors weigh heavily on buying decisions. A couple of such economic factors include the following: (1)
The arrival of Direct Foreign Investments (FDI), and thus expatriate tenants looking for high-end comfort in homes;
(4) Conspicuous spending, which hinges on the performance of the worldwide stock market. [Full article ‘X-File – Missing in action of the RICH at page 7]
In other words, buyers of high-end private homes are more vulnerable to external market especially the global stock market, which remains highly volatile, to say the least.
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Unfortunately, at the moment, the flow of money is going the other way. There has some conspicuous flight of capital back to the United States and Europe. The Royal Bank of Scotland (RBS) trying to offload its Asian asset is just one case in point (reference: 19 March 2009 Business Times). With the two most critical factors missing from the high-end market, more supply in this segment can only depress prices further. [Full article on ‘How low will it go – While the rich economises, prices go ‘limbo rocking’ at page 9]
In fact, most of the soon-to-be-TOP projects are in the mid- and high-end market where the unit prices are above $2,000 psf. There could be more severe price corrections in the mid- to high-end segment in the next six months to a year. [Full article on ‘A reality check or a wake-up call – more TOP of high-end condos may depress prices at page 12]
When will the rich come back to invest in Singapore? Only time will tell. Landed home segment into hibernation mode Landed home segment is one that will be the last to feel the heat of the market sell-out, which in my opinion, has not even begun.
In fact, the upcoming corporate reporting season may turn out to be the most telling season in many decades. Analysts expect overall earnings of Corporate Singapore to fall by as much as 35% over last year – with almost all sectors experiencing sharp drop in earnings. Corporate earnings may bottom out only in the second quarter of the year. On the other hand, with the Singapore government artificially propping up the job
market with SPUR programme (where it foots the absentee pay while employees go for retraining), and the Job Credit Scheme (where it picks up 12% of the payroll), many middle- to high-income earners (dubbed the PMET which stands for Professional, Managers, Executive and Technicians) are still clinging to the lifelines, which many reckon will not last long. The sell-out in the landed home segment will happen much later – after the condo segment which is bracing itself for the great impact of 10,000 new condo units to be available on the secondary market from later this year onwards. The landed home segment may suffer a delayed-action only when the recession has bottomed-out and when the government discontinues the financial hand-out to the private sector companies. [Full article on ‘Landed home sales went into hibernation mode’ at page 14]
Landed home prices act as a BAROMETER of the larger economy In fact, the cruelty of the current economic recession is that it is dragging down honest business as well – not just the speculative ones. The chief cause of the problems with the current down-turn is not corporate mismanagement, but rather the complete lack of demand by the richer countries for our domestic exports. Moreover, through no faults of business consultancies, many companies diversify their assets and keep very little cash. And what was considered the soundest financial advice to businesses for the past 10 years, i.e. ‘keep the balance sheet light and leverage’, turns out to the worst advice any business enterprise could get. Many businesses are going down because of the huge debts that they have chalked up after placing their cash in stocks and borrowing against the stocks for more cash. As it turns out, nobody is spared in this global financial tsunami. The worst is definitely not over for the Singapore economy; and the worst certainly has not begun for the landed home market.
A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]
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Singapore Property Market Review
Market Update
X-File – Missing in Action of The RICH Those with $10 million to spare – please show up The economic bubble has burst; and the wealth effect has all but disappeared not just in the United States and Europe, but in Asia as well. The rich in India, Hong Kong and Singapore are reeling from the fallout of the global financial crisis which has left some of them fending for their last billion dollars.
Macau casino boss Stanley Ho, 87, is worth $1 billion and ranked the 19th richest person in the territory. The Singapore RICH LIST gets SHORTER In Singapore, only two persons made it to the billionaire list – Far East Organization's Mr Ng Teng Fong and UOB's Mr Wee Cho Yaw. Last year, there were five Singaporean billionaires.
According to Forbes magazine, there were 1,125 billionaires in the world at the same time last year. But there are only 793 of them in 2009.
Mr Ng and his family are now worth US$5.5 billion, down from US$7 billion a year ago. Likewise, Mr Wee and his family have seen their net worth shrink to US$1.9 billion, from US$2.9 billion.
Only ALIVE
The combined net worth of Asian billionaires plunged 55% to US$357 billion; and the number of billionaires in the region fell 38% to 130.
In Hong Kong, the 40 richest men have lost over half their combined wealth as the global economic meltdown intensifies. Hong Kong's richest man Li Ka-shing has lost almost half his wealth and is presently worth US$16.2 billion (S$24.4 billion). A survey on wealthy individuals conducted by the Forbes magazine revealed that about 45.81% of the combined wealth of Hong Kong's top 40 richest was wiped out in the meltdown and they are now left with $82 billion from $179 billion a year ago. The number of billionaires also shrank from over 40 to 19. The second richest family, who owns Sun Hung Kai Properties, saw 55% of their wealth evaporated and the family is now worth $10.8 billion. Tycoon Lee Shau-kee, 81 famed for his stock market killings took the full brunt of the stock market crashes and lost a whopping $14 billion. He is now worth $9 billion.
The Indians feel it too The richest person in Asia - and the 7th richest in the world - India's Mukesh Ambani, who heads 'Reliance Industries’ is poorer by US$23.5 billion. He is now worth US$19.5 billion. Last year's richest Asian Lakshmi Mittal, who lost US$25.7 billion is one place behind Mr Ambani with US$19.3 billion. Fewer big-ticket transactions in 2008/09 No small wonder there was only one luxury apartment transaction here that exceeded $10,000,000 so far this year. A search with the SISVREALINK system revealed that in 2009, there were no property transactions recorded for private homes in the price range of between $6 million and $10 million.
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This is a far cry from the 2007 market buoyancy where there were 38 transactions of luxury apartments that were well above $10 million. In all, there were 1,004 property transactions that year that crossed the $3 million mark.
This underscores the importance of foreign investors in the Singapore property market. If they do not come back, the luxury market in Singapore will continue to slide.
2008 wasn’t that bad
Likewise, the foreigners’ share of private home purchases in Singapore has gone down to 24% in 2008 from the high of 26% in 2007, according to a recent DTZ research paper.
Even though 2008 was considered a ‘recessionyear’, there were 143 property deals above the $3 million mark throughout the island. Out of these transactions of high-end private home, there were 79 transactions in District 10 that were above the $10 million mark, with majority of the sales occurring at Nassim Park Residences, where prices range from $10-$26 million.
FEWER foreigners buying homes here
Non-permanent residents (PR) foreigners accounted for 11% of total caveats lodged for private homes last year, down from a 13% share in 2007. Singapore PRs' share was 13%, supported by the higher arrival of PRs in recent years.
There were five transactions in District 9 ranging from $10 million to $14 million at Grange Infinite at Grange Road and a unit at The Hamilton Scotts at Scotts Road for $10,128,500 or $2,756 psf.
in Bishan.
A 5,834 sq ft unit on the 63th level of The Sail @ Marina Bay went for more than $15 million or 2,650 psf in August 2008.
The most popular projects among non-PR foreigners were The Lakeshore, Citylights, Icon and Costa Del Sol.
Year of the Zero and Cross – O X
Districts 9, 10, 15 and 16 were the most soughtafter addresses by foreigners (including PRs) last year.
Like the locals, PRs prefer the mass-market condos, including projects include Melville Park in Simei, Livia in Pasir Ris, The Lakeshore in Jurong Lake District and Clover by the Park
However, in 2009 there are so far SIX property transactions worth more than $3mil in District 9. Only one transaction in January 2009 at The Ritz-Carlton Residences was above the $10 million mark and over $3,709 psf. Table [1] – Transactions of high-end properties in Q1 2009
Project Name
Cairnhill Crest Yong An Park Yong An Park The Claymore The Tate Residences The Ritz-Carlton Res
Floor Area (sq ft) 1,970 3,434 4,639 3,348 3,208 2,831
Floor Rate ($ psf) 1,600 1,025 925 1,703 1,850 3,709
Sale price
3,152,000 3,520,000 4,290,000 5,700,000 5,932,950 10,500,000
Malaysians top foreign buyer chart Among the foreign buyers, the Malaysians take the top spot with 20% ownership among all foreign owners in Singapore, followed by the Indonesians who have a 19% share of the total private houses owned. Indians come in third with 12% share of the purchases, with PRC Chinese following hot on the heel with an 11% share of the market. UK citizens take 8% share of the purchase with Koreans having 4% share.
Source of data: SISVREALINK & URA
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Market Update
How Low will it go? While the rich economises, prices go ‘limbo rocking’ Transacted prices of luxury condos in the prime Orchard Road belt have fallen by a big margin from their peaks in the second half (H2) of 2007 to the first quarter (Q1) 2009. This article seeks to examine the extent of the price fall by analysing some past transactions of mid-market to high-end private homes across the island. Both sales volume and prices of luxury apartments, such as St Regis Residences and Ardmore II, have been heavily battered in Q1 2009.
The transactions of two similar 1,733 sq ft apartment units at Cairnhill Crest have been used to determine the difference in prices in the two time period, i.e. between Nov 2007 and March 2009. Table [2] – Price comparison between units in CAIRNHILL CREST between H2 2007 and Q1 2009
Unit Level 05 11
Floor Area (sq ft) 1,733 1,733
Floor Rate ($psf) 2,279 1,373
Contract Date
Sale Price ($)
Nov 07 Mar 09
3,950,000 2,380,000
Source of data – SISVRealink
Reportedly, sale price of St Regis Residences has fallen 38% from $3,411 psf in H2 2007 to $2,099 psf in Q1 2009. Likewise, at Ardmore II, the average transacted price has slipped 43%, from $3,073 psf in H2 2007 to $1,761 psf in Q1 2009. According to data from SISVRealink, the transaction volume of luxury apartments had also receded. In H2 2007, there were 15 sub-
Though the latest transaction involved a higher floor unit (as there were very few transactions in the price range), the sale price was still about 40% cheaper last month when compared with the transacted price more than a year ago, in November 2007. On average, condo prices in Sentosa Cove in Q1 2009 were about 30% below H2 2007. For example, a third-storey 1,701 sq ft unit at The Azure bought in February 2009 was 29.56% cheaper than another second-storey unit at the same condo project which was bought in July 2007. Table [3] – Price comparison between units in THE AZURE between H2 2007 and Q1 2009
Unit Level 02 03 sale deals in St Regis. However, in Q1 2009, only four sub-sale deals were done at St Regis. The situation in Ardmore II is similar in H2 2007 with 28 sub-sale deals in H2 2007, but only six deals in Q1 2009.
Floor Area (sq ft) 1,701 1,711
Floor Rate ($psf) 2,070 1,449
Contract Date
Sale Price ($)
Jul 07 Feb 09
3,521,070 2,480,000
Source of data – SISVRealink
Likewise, a 1,658 sq ft apartment unit at The Berth @ Sentosa Cove was transacted at $2 million in January 2009, while a similar unit was sold for $3,191,650 in late 2007. This is a 37.33% drop in the capital value.
Over the same period, Cairnhill Crest's average price declined 36% to $1,430 psf in Q1 2009; while resale transactions fell to only three in Q1 2009. A Free Quarterly Magazine published by Sam Gian [Independent Real Estate Sales Consultant]
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Table [4] – Price comparison between units in THE BERTH @ SENTOSA between H2 2007 and Q1 2009
Unit Level 05 04
Floor Area (sq ft) 1,658 1,658
Floor Rate ($psf) 1,925 1,206
Contract Date
Sale Price ($)
Unit Level
Dec 07 Jan 09
3,191,650 2,000,000
19 17
Source of data – SISVRealink
Units at other popular projects were also taken as samples to determine the difference in price. One of the favourite projects was The Sail @ Marina Bay which recently received TOP. Two similar units were taken for analysis and it was found that a 1,184 sq ft 58-storey unit went for $2,070,000 in January 2009, while a similar 36-floor unit was transacted at $3,182,592 in October 2007. That was a 35% drop in value. Table [5] – Price comparison between units in THE SAIL @ MARINA BAY between Oct 2007 and Jan 09
Unit Level 36 58
Floor Area (sq ft) 1,184 1,184
Floor Rate ($psf) 2,688 1,748
Table [8] – Price comparison between units in ONE AMBER between Jul 2007 and Mar 2009
Contract Date
Sale ($)
Price
Oct 07 Jan 09
3,182,592 2,070,000
Floor Area (sq ft) 1,335 1,335
Floor Rate ($psf) 1,180 840
Contract Date
Price ($)
Jul 07 Mar 09
1,575,300 1,121,400
The price drop of comparable units at One Amber was 28.8% in value. Table [9] – Price comparison between units in ONE SHENTON between Aug 2007 and Feb 2009
Unit Level 12 13
Floor Area (sq ft) 1,184 1,184
Floor Rate ($psf) 1,767 1,598
Contract Date
Price ($)
Aug 07 Feb 09
2,092,500 1,892,520
The price difference of comparable units at One Shenton was moderate. There was a drop of 9.6% in value. Table [10] – Price comparison between units in MARINA BAY RES. between Jul 07 and Mar 09
Unit Level 42 40
Floor Area (sq ft) 1,959 1,959
Floor Rate ($psf) 3,073 1,700
Contract Date
Price ($)
Jul 07 Mar 09
6,020,850 3,330,300
Source of data – SISVRealink
Source of data – SISVRealink
Units at other popular projects taken for the study include the following:
The price difference of comparable units at Marina Bay Residences is stunning. There was a drop of 44.6% in value.
Table [6] – Price comparison between units in THE METROPOLITAN between Jul 2007 and Mar 2009
Unit Level 23 23
Floor Area (sq ft) 1,033 1,033
Floor Rate ($psf) 950 828
Contract Date
Price ($)
Jul 07 Mar 09
981,350 856,000
The price difference of comparable units at The Metropolitan was obvious. There was a drop of 12.8% in value. Table [7] – Price comparison between units in THE ESTA between Jul 2007 and Jan 2009
Unit Level 03 16
Floor Area (sq ft) 1,130 1,130
Floor Rate ($psf) 938 850
Contract Date
Price ($)
Jul 07 Jan 09
1,060,000 960,500
There was a moderate drop of 9.4% in value in the two units that were used for analysis.
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Market Update
How bad will it be? All is not right with the world economy The Ministry of Trade and Industry (MTI) said on 13 April 2009 that the Singapore economy contracted by 19.7% compared to the previous quarter. This was far below analyst expectations for a 9.0% decline following the 16.9% fall in the previous quarter. The manufacturing sector tumbled 29% yearon-year, while the services producing industries fell 5.9%. The only sector that is still going strong is the construction sector which was up 25.6%. The MTI said in its statement that "falling external demand in late 2008 and early 2009 has severely affected domestic manufacturing output. And with most of Singapore's key trading partners still in recession, the manufacturing sector will continue to remain weak for the rest of the year." It added that there have been no clear signs of a likely turnaround in the US economy this year. Following MTI’s statement, the Monetary Authority of Singapore (MAS) lowered its GDP forecast for 2009 to between –6% and –9%, far worse that its earlier estimate of between – 2% and –5%. MTI added that the global economy is expected to remain weak in the coming quarters.
Taiwan. The two months’ figures effectively mean that the recession in Singapore has deepened. Singaporeans are not spending like before According to the Department of Statistics (DOS), retail sales in Singapore slide 12.2% year-on-year (y-o-y) for March 2009. The last time retail sales tumbled 12.3% y-o-y was in September 2001 during the technology bubble bust. However, the worst slump in retail sales was seen in May 1998 during the Asian financial crisis where sales crashed 26% y-o-y, and sales in January 1999 plunge 20.7% y-o-y. Sales of discretionary items, including watches and jewellery, furniture and household equipment, and telecommunication apparatus and computers, all fell between 12.4% and 28.2% from December 2008. When compared to the same month the year before, sales at the same categories of retailers were down between 14.5% and 31.7%. What can one make of the statistics? Very obvious, the recession is taking a deeper and harder bite into consumer’s pockets.
Export slump in Singapore continued According to figures released on 16 March 2009 by trade promotion agency International Enterprise (IE) Singapore, Singapore’s non-oil domestic exports (NODX) tumbled 23.7% from a year ago to $9.73 billion in February 2009. A month ago, Singapore's NODX plunged a record 34.8% from a year earlier, along with other Asian exporters such as South Korea and
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Market Update
A reality check or a wake-up call? More TOP of high-end condos may depress prices The first crack has appeared – and it is a huge one! A Business Times report on 21 April 2009 revealed that a China investor that bought 20 units at MCL Land’s The Fernhill condo has failed to pay about $30 million that was due more than two weeks ago when the project received Temporary Occupation Permit (TOP). Like many other foreign investors, this particular one has taken advantage of the now defunct Deferred Payment Scheme (DPS) when he booked 25 units in January 2007. Five of the units were later flipped later that year for 30% gain each. Will this episode be the harbinger of things to come? Only time will tell. Right now, let’s look at some numbers and extrapolate. An estimate of some 10,448 private homes under construction (comprising both landed and non-landed units) will be completed by the end of 2009. In this current economic climate, some private condo owners may not be able to secure the home financing that they require and may be forced to offload their units in an untimely manner. Unfortunately, most of the recent sub-sale deals at soon-to-be-TOP projects were done at prices lower than those at the height of the property bull-run in mid-2007. (See previous article for the statistics) As such, the upcoming supply of TOP-projects is not really very good news for property sellers in general. This year, the bigger projects that are expected to obtain TOP include The Centris in Jurong West and Casa Merah in Tanah Merah.
In the Amber Road area where many new developments were launched in the past few years, One Amber will obtain TOP by year end. It will join two recently completed big condos, The Esta and The Sea View, and ‘flood’ the Amber Road vicinity with more than 1,200 brand new condo units. In District 12 Balestier road area, the 180-unit Pavilion 11 in Minbu Road will obtain TOP in the second half of the year, along with the 53unit The Centrio in Irrawaddy Road and a nearby project, the 151-unit Montebleu which will be ready early next year. In District 9, the 46-unit Cuscaden Royale, the 175-unit The Orchard Residences, the 120-unit The Inspira, the 228-unit The Cosmopolitan, and the 545 Rivergate will add another 1,100 brand new units onto the prime area from now to early next year. (See table for more details) Nearer to the Central Business District (CBD), Southbank in North Bridge Road will obtain TOP next year. So will The Riverine by the Park nearby. Fewer POSITIVE sub-sale after Lehman Bros According to Savills Singapore, there were more negative sub-sales after the Lehman Brothers fallout in September 2008 and the global stock market meltdown in October 2008.
Sub-sale deals are secondary market deals in projects that have yet to receive their Certificates of Statutory Completion. This may be anywhere from three to 12 months after the project receives Temporary Occupation Permit (TOP).
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The number of negative sub-sales rose from 24 in the first-half (H1) of 2008 to 52 in secondhalf (H2) of the same year. The average loss per unit rose from about $138,000 or 7% in H1 2008 to $188,000 or 12% in H2 2008. The number of positive sub-sale deals fell 16.8% from 757 in H1 to 630 in H2. The subsellers are also making lesser and lesser money through the year, with average gain falling from $425,000 or 37% in H1 to $288,000 or 28% in H2. Most sub-sale losers bought units in 2007 Around 90% of the 76 investors who suffered a loss in the sub-sale market for the whole of last year had bought their units in 2007 during the market peak. Projects with the highest number of sub-sale transactions for 2008 were The Sail (78 units), Citylights (77 units), Varsity Park Condo (59 units), City Square Residences (57 units), The Sea- view (52 units), The Esta (49 units) and Park Infinia at Wee Nam (48 units). With more TOP expected in the later part of 2009 and beginning of 2010, more sub-sales deals are expected; and by the natural extension of the same argument, more sellers are expected to suffer losses this time round. Condo projects to get TOP in late 2009
Table [11] – Project with at least 100 units and about to receive TOP by end-2009
Project Name
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
D3 D4 D5 D5 D5 D8 D9 D9 D9 D9 D12 D12 D13 D14 D15 D15 D15 D15 D17 D23
The Metropolitan The Coast @ Sentosa ClementiWoods The Infiniti Botannia Mera Springs The Orchard Res The Inspira The Cosmopolitan RiverGate One St Michael's Montebleu Tierra Vue Atrium Residences Grand Duchess Imperial Heights One Amber The Esta Ferraria Park YewTee Residences
Total Units in Project 382 249 240 315 493 129 175 120 228 545 131 151 129 142 121 100 562 400 472 139
Source: information culled from Straits Time news reports and classified advertisements over February and March 2009
Note: smaller projects of less than 100 units are not featured in the list due to space constraint; and also because individually they have less impact on the market situation. However, collectively, they do contribute to a downward pressure on the resale prices.
Below is a list of 20 condo/apartment projects that will receive their Temporary Occupation Permit (TOP) either in late-2009 or very early 2010. More sub-sales are expected to take place in these projects.
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Singapore Property Market Review
Market Update
Landed home sale went into hibernation mode Sales of all house types fell by more than 65% The situation in the landed home segment is at best uneven, with terrace houses selling reasonably well, but not semi-detached and detached houses which appear to have gone into a hibernation mode with minimal sales. In fact, I have deliberately listed out all landed home transactions in this issue of the magazine just to prove a point, i.e. there were so few transactions that I could count each and every one of them.
Table [13] – Transaction figures of Detached houses in February 2009
Street Name
D19 D27 D10 D10 D10 D27
Farleigh Ave Jln Mata Ayer Queen Astrid Gn Namly Dr Jln Haji Alias Jln Kemuning
Land Land Area Rate (sq ft) (psf) 1-storey 4,219 396 1-storey 3,274 422 2-storey 15,918 716
Price ($,000)
2-storey 3,420 3-storey 8,782 3-storey 4,526
3.85 mil 4.2 mil 1.8 mil
Type
1,126 478 398
1.67 mil 1.38 mil 11.4 mil
Source of data – SISVRealink
And here is the finally tally:
Table [14] – Transaction figures of Detached houses in March 2009
Detached house transactions in Q1 2009 There were EIGHT transactions of detached houses in January 2009; SIX in February 2009; and SEVEN in March 2009. The total detached house transactions for the first quarter (Q1) of 2009 were 21. When compared with the 72 detached house transactions in Q1 2008, there was a 70.5% drop in sales volume. Table [12] – Transaction figures of Detached houses in January 2009
D8 D11 D15 D16 D17 D19 D28 D11
Street Name
Type
Truro Rd Olive Road Ettrick Terr Jln Haji Salam Toh Close Rosyth Rd Jln Rengas Barker Rd
1-storey 1-storey 1-storey 1-storey 2-storey 3-storey 3-storey 4-storey
Source of data – SISVRealink
Land Land Area Rate (sq ft) (psf) 3,389 870 15,055 452 4,400 500 5,000 678 6,669 300 4,820 446 3,673 403 4,805 1,020
Price ($,000) 2.95 mil 6.8 mil 2.2 mil 3.38 mil 2.0 mil 2.15 mil 1.48 mil 4.9 mil
D20 D11 D23 D19 D28 D4 D11
Street Name
Type
Marigold Dr Trevose Cres Almond St Jln Arif Ponggol 17th Ave Bt Teresa Rd Trevose Cres
1-storey 2-storey 2-storey 3-storey 3-storey
Land Area (sq ft) 3,637 6,412 5,921 7,891 -
Land Rate (psf) 825 780 419 485 -
4-storey 4-storey 9,408 478
Price ($,000) 3.0 mil 5.0 mil 2.48 mil 3.82 mil 2.0 mil 2.7 mil 4.5 mil
Source of data – SISVRealink
Price Comparison of detached house between 2008 and Q1 2009 1-storey detached houses The Q1 2009 psf prices of 1-storey detached houses have held their ground. The ‘median’ price actually went up, though overall transactions were thin. For the whole of 2008, the psf price range of 1storey detached houses throughout the country was from $318 to $982 psf. The median psf price of 1-storey detached house was $413 psf for the whole of 2008. The psf price range of 1-storey detached houses sold in Q1 2009 was from $396 to $870 psf. The median psf price of 1-storey detached houses in Q1 2009 was 500 psf.
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Singapore Property Market Review
2-storey detached houses
Semi-detached house transactions in Q1 2009
The Q1 2009 psf prices of 2-storey detached houses have dropped ‘just a little bit’.
There were 13 transactions of semi-detached houses in January 2009; 11 in February 2009; and 12 in March 2009.
For the whole of 2008, the psf price range of 2-storey detached houses throughout the country was from $399 to $1,298 psf. The median psf price of 2-storey detached house was $736 psf. The psf price range of 2-storey detached houses sold in Q1 2009 was from $300 to $1,126 psf. The median psf price of 2-sotrey detached houses in Q1 2009 was $716 psf.
The total semi-detached house transactions for Q1 2009 were 36. When compared with the 122 semi-detached house transactions in Q1 2008, there was a 70.5% drop in sales volume. Table [15] – Transaction figures of Semi-detached houses in the January 2009
Street Name
Type
Land Rate (psf) 517
Price ($,000)
1-storey
Land Area (sq ft) 2,900
Yarrow Garden Serangoon Gdn Way Bodmin Dr Jin Sindor Jln Antoi Chwee Chian Rd Sixth Ave Lengkok Dua Jln Anggerek Kew Ht Berwick Dr Pavilion Circle Jln Paras
1-storey
4,180
84
350,000
1-storey 1-storey 1-storey 2-storey
2,800 2,790 3,356 4,551
29 645 620 367
80,000 1.8 mil 2.08 mil 1.668 mil
2-storey 2-storey 3-storey 3-storey 3-storey 3-storey 4-storey
3,278 4,274 3,610 2,401 3,122 2,337 2,248
869 550 526 505 631 612 805
2.85 mil 2.35 mil 1.9 mil 1.213 mil 1.97 mil 1.43 mil 1.81 mil
3-storey detached houses D15
The Q1 2009 psf prices of 3-storey detached houses have dropped significantly from the average of over $700 psf to as low as $446 psf. For the whole of 2008, the psf price range of 3-storey detached houses throughout the country was from $207 to $1,217 psf. The median psf price of 2-storey detached house was $709 psf. The psf price range of 3-storey detached houses sold in Q1 2009 was from $398 to $485 psf. The median psf price of 2-sotrey detached houses in Q1 2009 was $446 psf.
D19 D19 D28 D28 D05 D10 D14 D13 D16 D19 D23 D14
1.50 mil
Source of data – SISVRealink Table [16] – Transaction figures of Semi-detached houses in the February 2009
Street Name
D16 D05 D15 D16 D26 D26 D05 D10 D10 D19 D23
Harvey Cres Faber Ave Goodman Rd Jln Pokok Serunai Springleaf Walk Springleaf Cres Jubilee Rd King’s Dr Holland Grove View Brighton Cres Burgundy Cres
Type
Land Area (sq ft) 1-storey 3,200 2-storey 5,717 2-storey 6.600 2-storey 2,254
Land Rate (psf) 688 434 61 701
Price ($,000)
2-storey 2-storey 3-storey 3-storey 3-storey
538 408 743 1,136 741
2.68 mil 1.5 mil 2.45 mil 2.9 mil 1.95 mil
463 573
1.8 mil 1.29 mil
4,986 3,672 3,298 2,553 2,633
3-storey 3,886 3-storey 2,260
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2.2 mil 2.48 mil 400k 1.58 mil
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Singapore Property Market Review
Table [17] – Transaction figures of Semi-detached houses in the March 2009
Street Name
D19 D13 D20 D28 D28 D10 D16 D20 D20 D21 D26 D16
Walmar Drive Mulberry Ave Jln Binchang Dedap Rd Upp Neram Rd King’s Rd Jln Pergam Mayflower Cres Casuarina Walk Jln Jambu Ayer Springleaf Ave Kew Walk
Type
1-storey 2-storey 2-storey 2-storey 2-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 4-SD
Land Area (sq ft) 5,712 3,570 4,616 3,707 4,167 2,281 2,368 2,199 2,409 2,937 3,542 2,426
Land Rate (psf) 315 412 849 405 437 1,078 633 614 490 943 531 453
Price ($,000) 1.8 mil 1.47 mil 3.92 mil 1.5 mil 1.82 mil 2.46 mil 1.5 mil 1.35 mil 1.18 mil 2.77 mil 1.88 mil 1.1 mil
Price Comparison of Semi-D house between 2008 and Q1 2009 1-storey Semi-D houses The Q1 2009 psf prices of 1-storey Semi-D houses have ‘more or less’ held their ground with a significantly lower ‘highest’ price. However, the median price of Q1 2009 did better than last year’s.
price of 2-storey semi-D house was $547 psf for the whole of 2008. The psf price range of 2-storey semi-D houses sold in Q1 2009 was from $340 to $881 psf. The median psf price of 2-storey detached houses in Q1 2009 was $561 psf. 3-storey Semi-D houses The Q1 2009 psf prices of 3-storey Semi-D houses have dropped in the ‘highest’ and ‘median’ categories but rose in the ‘lowest’ category. It may mean some desperate selling and on the other hand, more cautiousness when it comes to big-ticket semi-d houses. For the whole of 2008, the psf price range of 3-storey semi-D houses throughout the country was from $263 to $1,764 psf. The median psf price of 3-storey semi-D house was $636 psf for the whole of 2008. The psf price range of 3-storey semi-D houses sold in Q1 2009 was from $463 to $1,136 psf. The median psf price of 3-storey detached houses in Q1 2009 was $614 psf.
For the whole of 2008, the psf price range of 1storey semi-D houses throughout the country was from $299 to $1,434 psf. The median psf price of 1-storey semi-D house was $455 psf for the whole of 2008. The psf price range of 1-storey semi-D houses sold in Q1 2009 was from $315 to $688 psf. The median psf price of 1-storey detached houses in Q1 2009 was $620 psf. 2-storey Semi-D houses The Q1 2009 psf prices of 2-storey Semi-D houses maintained the median price but not the ‘highest’ price. It means that buyers are getting more cautious for more ‘expensive’ semi-detached houses. For the whole of 2008, the psf price range of 2-storey semi-D houses throughout the country was from $278 to $1,576 psf. The median psf
Terrace house transactions in Q1 2009 There were 42 transactions of semi-detached houses in January 2009; 33 in February 2009; and 43 in March 2009. The total transactions of Terrace houses in Q1 2009 were 118. When compared with the 336 terrace house transactions in Q1 2008, there was an almost 65% drop in sales volume.
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Table [18] – Transaction figures of Terrace houses in the January 2009
Street Name
D15 D15 D19 D19 D19 D19 D20 D20 D14 D15 D15 D18 D19 D22 D22 D26 D28 D28 D15 D15 D16 D16 D16 D16 D16 D17 D17 D17 D18 D19 D19 D19 D19 D19 D19 D19 D20 D22 D23 D26 D27 D28
Onan Rd Duku Place Bloxhome Dr Bridport Ave Bridport Ave Blandford Dr Jln Gelenggang
Jln Lanjut Lor 28 Geylang Jln Tua Kong Jln Keris Pasir Ris Ht How Sun Ave Yunnan Cres Yunnan Cres Iqbal Ave Lilac Dr Lilac Dr Everitte Elite Terrace Jln Kathi Eastwood Dr Minaret Walk Bedok Place Upp Changi Rd East Loyang Rise Jln Sinar Bulan Loyang View Pasir Ris Ht St Helier’s Ave Lowland Rd Chuan Dr Lange Rd Parry Terrace Lange Rd Simon Place Binchang Rise Yunnan Dr 1 Verde Cres Springside Green Miltonia Close Mimosa View
Type
Land Area (sq ft) 1-storey 1,888 1-storey 1,774 1-storey 3,646 1-storey 2,157 1-storey 2,157 1-storey 2,800 1-storey 2,564 1-storey 1,999 2-storey 1,407
Land Rate (psf) 861 521 192 554 139 536 402 465 853
Price ($,000)
2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey
561 736 340 679 396 422 514 520 494 768 658 582 423 743 831 0
1.28 mil 1.38 mil 1.95 mil 870,000 1.68 mil 1.54 mil 1.08 mil 1.08 mil 1.05 mil 920,000 1.168 mil 1.68 mil 1.1 mil 1.2 mil 1.468 mil 970,000
3-storey 1,615 464 3-storey 2,322 568
750,000 1.32 mil
3-storey 2,153 418 3-storey 2,573 311 3-storey 2,200 631
899,000 800,00 1.38 mil
3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey
214 527 0 655 0 0 539 493 494 570
356,700 1.28 mil 1.188 mil 1.1 mil 1.122 mil 1.425 mil 2.08 mil 1.8 mil 1.08 mil 1.45 mil
3-storey 0
0
1.19 mil
3-storey 2,190
617
1.351 mil
2,283 1,875 5,737 1,281 4,427 3,653 2,102 2,076 2,125 1,198 1,776 2,886 2,602 1,615 1,767 0
1,664 2,431 0 1,680 0 0 3,858 3,653 2,187 2,542
1,625 925,000 700,000 1,195 mil 300,000 1.5 mil 4.03 mil 930.000 1.2 mil
Table [19] – Transaction figures of Terrace houses in the February 2009
D15 D19 D13 D13 D14 D14 D15 D15 D16 D16 D19 D20 D20 D20 D16 D17 D18 D19 D22 D22 D22 D23 D23 D23 D23 D26 D28 D28 D15 D19 D19 D26
Street Name
Type
Crane Rd Highland Rd Jln Mulia Jln Setia Lor 3 Geylang Lor 3 Geylang Jln Keris
First St Limau Grove Harvey Ave Jln Limbok Fulton Rd Jln Isnin Jln Kuak Seagull Walk Loyang View Elias Terrace Tai Hwan Cres Corporation Walk
Westwood Ave Westwood Cres Verde View Verde View Hazel Park Terrace Verde View Springside Ave Saraca Terrace Mimosa View Lor Stangee Simon Place Simon Place Yio Chu Kang Dr
Land Rate (psf) 1,119 553 757 881 200 207 491 719 13 604 408 484 653 814 774 520 396 646 529 557 551 557 557 590
Price ($,000)
1-storey 1-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 2-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey
Land Area (sq ft) 1,617 1,265 885 885 725 725 3,317 1,642 1,854 2,118 2,347 1,850 1,821 885 1,615 1,615 3,734 1,704 1,616 1,634 1,615 1,615 1,615 2,034
3-storey 3-storey 3-storey 3-storey 4-storey 4-storey 4-storey 4-storey
2,067 2,210 9,857 2,190 3,520 0 0 0
484 566 206 617 517 0 0 0
1.0 mil 1.25 mil 2.03 mil 1.351 mil 1.82 mil 1.18 mil 1.1 mil 1.42 mil
0
928,000
Sembawang 4-storey 0 Walk Source of data – SISVRealink
D27
1.81 mil 700,000 670,000 780,000 145,000 150,000 1.63 mil 1.18 mil 25,000 1.28 mil 958,000 895,000 1.19 mil 720,000 1.25 mil 840,000 1.48 mil 1.1 mil 855,000 910,000 890,000 899,000 900,000 1.2 mil
Table [20] – Transaction figures of Terrace houses in the March 2009
D15 D19 D19 D28 D10 D12 D13 D14
Street Name
Type
Onan Rd Hemsley Ave Bodmin Dr Jln Keruing Ming Teck Park Jln Taman Jln Gemira Lor 3 Geylang
1-storey 1-storey 1-storey 1-storey 2-storey 2-storey 2-storey 2-storey
Land Area (sq ft) 1,928 2,983 2,800 2,160 1,753 1,595 883 725
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Land Rate (psf) 830 674 425 463 799 627 793 232
Price ($,000) 1.6 mil 2.01 mil 1.19 mil 1.0 mil 1.4 mil 1.0 mil 700 mil 168,000
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Singapore Property Market Review
D14 D15 D19 D19 D19 D20 D05 D10 D13 D14 D15 D15 D15 D16 D16 D16 D16 D17 D17 D17 D17 D18 D18 D19 D22 D22 D23 D23 D26 D26 D13 D27 D27 D27 D27
Lor 3 Geylang Jln Keris Jln Gotong Royong Tai Hwan Ht Jln Lepas Jln Khamis West Coast Rd Ming Teck Park Jln Setia Lor Mydin Wilton Gdn Jago Close Kurau Grove Taman Bedok Bayshore Rd Seagull Walk Jln Angin Laut Mariam Walk Mariam Walk Loyang Rise Jln Sinar Bulan Riverina Cres Pasir Ris Ave Tai Hwan Dr Westwood Cres Westwood Cres Verde Cres Verde Cres Springleaf Ave Springleaf Dr Lichi Ave Miltonia Close Miltonia Close Miltonia Close Miltonia Close
2-storey 725 2-storey 1,732 2-storey 1,297
182 664 748
132,000 1.15 mil 970,000
2-storey 2-storey 2-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 3-storey 4-storey 4-storey 4-storey 4-storey 4-storey
579 454 693 0 736 928 585 844 624 731 517 489 669 624 609 518 448 519 404 542 776 508 526 575 542 624 650 898 0 0 0 0
1.17 mil 950,000 950,000 1.215 mil 1.6 mil 820,000 1.388 mil 1.45 mil 1.265 mil 1.18 mil 1.17 mil 1.1 mil 1.08 mil 1.32 mil 991,000 1.45 mil 750,000 1.3 mil 1.07 mil 1.3 mil 1.32 mil 820,000 850,000 1.238 mil 1.168 mil 1.38 mil 1.2 mil 1.53 mil 1.1 mil 1.08 mil 950,000 1.04 mil
2,019 2,093 1,370 0 2,175 884 2,372 1,718 2,028 1,615 2,265 2,250 1,615 2,115 1,628 2,799 1,674 2,507 2,650 2,400 1,701 1,615 1,615 2,153 2,153 2,210 1,847 1,704 0 0 0 0
Source of data – SISVRealink
Price Comparison of Terrace house between 2008 and Q1 2009 1-storey Terrace houses The Q1 2009 psf prices of 1-storey Terrace held their ground when compared to last year’s psf prices of all 1-storey terrace houses transacted. For the whole of 2008, the psf price range of 1storey terrace houses throughout the country was from $339 to $1,119 psf. The median psf price of 1-storey terrace house was $544 psf for the whole of 2008.
The psf price range of 1-storey terrace houses sold in Q1 2009 was from $192 to $1,119 psf. The median psf price of 1-storey terrace houses in Q1 2009 was $493 psf. 2-storey Terrace houses The Q1 2009 psf prices of 2-storey Terrace was no match with the whole of last year’ due to one rare transaction in Emerald Hill road which went for more than $5.8 million. But, nonetheless, the median price of 2-storey semiD house in 2009 dropped slightly. For the whole of 2008, the psf price range of 2-storey terrace houses throughout the country was from $199 to $4,382 psf (for a conserved house in Emerald Hill Road). The median psf price of 2-storey terrace house was $651 psf for the whole of 2008. The psf price range of 2-storey terrace houses sold in Q1 2009 was from $340 to $881 psf. The median psf price of 2-storey terrace houses in Q1 2009 was $561 psf. 3-storey Terrace houses The Q1 2009 psf prices of 3-storey Terrace houses have dropped in all ‘lowest’, ‘highest’ and ‘median’ categories, with the drop in the ‘highest’ price being more pronounced. It probably means buyers are more cautious in this segment. For the whole of 2008, the psf price range of 3-storey terrace houses throughout the country was from $263 to $1,764 psf. The median psf price of 3-storey terrace house was $636 psf for the whole of 2008. The psf price range of 3-storey terrace houses sold in Q1 2009 was from $206 to $928 psf. The median psf price of 3-storey terrace houses in Q1 2009 was $557 psf.
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Market Update
Where have the INVESTORS gone? Property investment sales fall to 10-year low Investment sales refer to major investment transactions like office buildings and shopping centres, as well as sites bought for development including collective sale deals. They do not cover purchases of single property units by individuals. Such sales are considered a barometer of developers' and big investors' mid-to-long-term confidence in the market.
83,367 sq ft, which was sold in February for $6.2 million or $74 per square foot on land. This contributed to 3.4 % of total investment sales.
Property investment sales in Singapore have dropped to $184.6 million in the first quarter (Q1) of 2009. It is a 56.4% drop when compared with the previous quarter.
The table below shows the yearly property investment sales since 2000 and the severity of the current slowdown.
The new figure is the lowest since 1988 when investment sales were $49.28 million and $110.62 million in Q1 1998 and Q3 1998 respectively. Sales from the residential sector accounted for 51.5% of the quarter's total investment sales or $95.1 million in transacted value. The sales volume was 60.7% lower than the $241.79 million residential investment sales recorded in the last three months of 2008. This time round, the investment sales included three GCBs, at 28A Olive Road, 39 Cornwall Gardens and 8 Queen Astrid Gardens, which sold for a combined total of $18.2 million. They accounted for almost 20% of the total residential sales. There were no collective sales in Q1 2009. The commercial investment market accounted for $77.3 million or 41.9% of total investment sales in Q1 2009. The only major sale was for Le Mercier House at 65 Mohamed Sultan Road for $35.8 million or about $900 psf on 39,000 sq ft of gross floor area.
The investment market is expected to remain dormant for a long while before the entire global economy is nursed back to health.
Table [21] – Investment sales volume from 2000 onwards
Year
2000 2001 2002 2003 2004 2005 2006 2007 2008
Total Investment Transactions ($billion) 6.89 5.46 4.92 4.16 7.92 14.19 30.57 50.78 15.8
Source: Sam Gian’s own compilation since 2006 from Straits Times and Business Times
Moreover, the government has already suspended the government land sales (GLS) program and there will be no land sales through the confirmed list for at least this entire year. There was also no major office deal in the second half of 2008 and the supply gut in this particular segment is expected to be worse than earlier expected, given the magnitude of the current worldwide financial crisis.
There was only one sale in the industrial sector - 29 Loyang Crescent, with a site area of
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Singapore Property Market Review
Market Update
Secondary market sales overshadowed Slight improvement in Q1 sales can’t lift gloom The uplifting sales figures in the mass market new home segment have failed to lift the other housing segments, including the secondary condo/apartment segments, which has shown a shade of better performance but not significant enough to be called a revival. In other words, there is not much different calling the performance of the resale market ‘near death’ or ‘half-dead’. Either way, it means there is little ‘life’ in that segment. The secondary sales of condo/apartment in Q1 2009 were as follows: Table [22] – Secondary condo/apartment sales in Q1 2009
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10
39 17 56 14 74 0 8 82 96 78
D11 D12 D13 D14 D15 D16 D17 D18 D19 D20
47 26 7 45 173 68 20 33
D21 D22 D23 D24 D25 D26 D27 D28
50 217 98 0 17 21 15 13
102 33
Total = 1,449
Source of information: SISVRealink
Note: There were 151 transactions at a new project called Caspian @ Jurong Lake. If the new home sales were taken out, there would only be 66 transactions at District 22. Table [23] – Secondary condo/apartment sales in Q4 2008
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10
32 26 38 14 89 0 35 48 98 88
D11 D12 D13 D14 D15 D16 D17 D18 D19 D20
53 36 13 54 184 55 30 54
D21 D22 D23 D24 D25 D26 D27 D28
37 43 84 0 17 14 36 9
77 36
Source of information: SISVRealink
Total = 1300
On the surface, there was a slight improvement in the secondary market sales when the figures are compared on a quarterly basis. However, when compared to the same period in 2008, the performance of Q1 2009 was 46% lower than the 2,666 transactions recorded in Q1 2008. The sudden surge of new home market sales in February and March 2009 has managed to overshadow the poor performance in the secondary market. The fact is that buying sentiment at the secondary market has taken a severe hit after the Lehman Brothers saga and the subsequent worldwide stock market crash on 10 October 2008. HDB upgraders the only hope for private secondary market sales The only hope for the private secondary market is the consistent performance of the HDB resale market where valuation prices are still holding up strongly. Of late, there has been signs of ‘flight to quality’ where HDB flat owners are seen snapping up ‘reasonably priced’ mass market condominiums in heartland areas, such as Choa Chu Kang, Jurong West, Hougang/Buangkok area, and Balestier Road areas. For example, at Mi Casa in Choa Chu Kang, upgraders accounted for 80% of its 120 buyers so far. HDB dwellers also bought many units at The Caspian, beside Lakeside MRT station, Double Bay Residences in Simei and The Quartz in Buangkok. In response to this, developers have rolled out some more mass-market private condos such as Woodleigh Close by Frasers Centrepoint, and
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UOL's 646-unit condo at Simei Street 4 called Double Bay Residence. Some more private condo launches can be expected including Oasis @ Elias, The Gale on Flora Road in Upper Changi, Ascentia Sky on Alexandra Road, and a 571-unit condo by NTUC Choice Homes at Lor 2/3 Toa Payoh near Braddell MRT Station. All these new home units are expected to be priced between the $600-650 psf range on average. Developers slashed price to boost sales of leftover units For unsold condo units that are still available on the new home market, developers are slashing prices on the quiet to try to offload them. For example, the average price at Waterfront Waves in Bedok was reduced from $800 psf to $600 psf, while at Kovan Residences near Kovan MRT station prices were cut from $880 psf to $750 psf. Private home rents fall in Q1 2009 The official URA rental data is not yet available when this magazine goes for print. However, according to a private research done by DTZ, the average monthly rent for luxurious nonlanded homes in Singapore's prime districts 9, 10 and 11 slid 18.8% quarter on quarter (q-o-q) to $5.20 psf in Q1 2009, a level last seen in Q3 2006. Meanwhile, the average rental value of nonlanded homes in the prime districts fell 16.2% q-o-q to $3.65 psf per month in Q1 2009. Office rents set to fall in Q1 2009 Shadow space, or excess space that is being put up by existing tenants for sub-letting, is set to soar from this point on. This is because demand for office space in Singapore is easing for the whole year in 2009, in tandem with the economic recession.
Moreover, there will be a supply glut in the office space sector from later part of this year. Another 2.9 million sq ft of office space is estimated to come on stream later this year, on top of the bumper crop of net new completion amounting to 1.4 million sq ft seen in 2008. On top of that, there will be fresh supply of 2.5 million sq ft of new hi-spec industrial space due for completion in 2009. Furthermore, to cope with the current economic downturn, many companies have downsized their operations or relocated to cheaper premises prior to lease expiry. Where the shadow space will be Macquarie is reportedly prepared to sub-let some of the space it has signed up for at Marina Bay Financial Centre's (MBFC) Tower 2 under the project's first phase, which is slated to be ready in Q2 2010. DBS Group may also sub-let part of the 700,000 sq ft it has leased at MBFC's Tower 3, in the project's second phase. Citibank is said to be offering over 100,000 sq ft of shadow space at various locations, including Capital Square, Marsh & McLennan Centre and Millenia Tower. New malls offer rent rebates to get tenants Likewise, rents for retail space are taking the same trajectory. New malls are taking the triedand-tested route of ‘cutting rents to get tenants’. For example, Orchard Central which is above Somerset MRT station, has cut rents as much as 30% so as to push up tenancy by 75% when it opens for business in June 2009. Prior to that, Ion Orchard had offered rental rebates of up to 30% for stores even before it opens for business in July 2009. Other new malls which have offered rent cuts or rebates include Tampines 1 and Iluma, at Bugis.
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Singapore Property Market Review
Market Update
Small is Beautiful! Smallness is the Next Big Thing Small is beautiful!
Small units at Alexis sold out in two weeks
Smallness is back. Smallness is here to stay for as long as foreign investors are kept at bay.
Most of the 293-unit project, Alexis @ Alexandra, at the corner of Alexandra Road and Commonwealth Avenue were sold at prices between $850 and $1,100 per sq ft (psf) or between $450,000 and $650,000 in absolute sale price for the one-bedroom and two-bedroom units.
What coincides with smallness in size is the smallness in price which is very palatable to small-cap investors who covet good location such as Orchard Road. The recent successes in the new home market owe much to the small-size apartments as well as their smallness in price. This may put a downward pressure on prices of properties at the fringe of the core areas, though the unit psf price appears quite respectable. Just how small is small? Property experts attributed the success of Illuminaire, a 72-unit freehold luxury condominium in District 9 Devonshire Road near Somerset MRT station, to the small size of the units. The project consists entirely of one- and twobedroom apartments. One-bedroom units, which are 441 sq ft or 463 sq ft, all cost less than $800,000. And all the two-bedroom apartments, which are 635 sq ft or 721 sq ft, sold for under $1.25 million. The project achieved a 96% sell-out rate in a matter of two days in early April 2009. What was more spectacular was the average price of $1,700 per sq ft. Double Bay sold 264 units in 2 weeks Most of the units sold at the new 646-unit project Double Bay Residences at Simei Street 4 were smaller apartments. The majority of the 264 units sold were priced correctly at around $650 psf.
Most units there are between 366 sq ft and 527 sq ft. At least 80% of Alexis are one- to twobedroom units. And the smaller units which average about 400 sq ft were sold for around $450,000 in absolute price. The two-bedroom units which average about 600 sq ft were sold for around $650,000. The developers had adjusted the mix to include more affordable units because of the weak market, and to maximise profit as the site is only 50,838 sq ft. More condo projects with small units More developers are ready to emulate the success of the smallish developments. Sing Holdings withdrew the building plan of The Laurels at Cairnhill Road and reconfigure the original 150 larger units to comprise 290 smallish units. In mid-March, a freehold project, Kembangan Suites at Jalan Masjid was launched with starting prices from $300,000 for the onebedroom units, which range from 344 sq ft to 527 sq ft. On the first day of the preview, the developer sold out 60 units of mostly one- and twobedders, ranging from 344 sq ft to 581 sq ft in size.
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It proves that the success achieved by Alexis at Alexandra Road was definitely not a fluke. All of a sudden, new home units started to sell like hot cakes due to their affordability and the Singaporean’s aspiration of owning a piece of real estate in a good location. Other new home projects with smallish units started to catch on the craze. The 104-unit Domus in Irrawaddy Road was launched with starting prices from as low as below $500,000 for the 25 studios of 474 sq ft.
The 127-unit Mezzo on the site of the former Ruby Plaza along Balestier Road was released with 20 one-bedders of 560 sq ft with starting prices of about $540,000. Other new launches like Mount Sophia Suites in Sophia Road, Nova 88 in Bhamo Road and Zenith in Zion Road are offering studio apartments or one-bedders from 366 sq ft to 484 sq ft. UOL Group may also jump on the bandwagon and resize the units of its Green Meadows project in Upper Thomson.
Update on Collective Sales Horizon Towers deal falls through After almost two-and-a-half years, the minority owners of Horizon Towers have finally succeeded in blocking the $500 million collective sale of their homes at Horizon Towers. The minority owners had argued that the deal was done in bad faith as a higher $510 million offer from Hong Kong firm Vineyard Holdings was not taken seriously. The Court of Appeal agreed with the minority owners that the sales committee did not secure the best price obtainable for the property. Justice V K Rajah also ruled that a Sales Committee is expected to follow up all expressions of interest and offers, and carry out sufficient investigations and due diligence to determine their genuineness. A Sales Committee is also tasked with creating competition between interested purchasers and 'waiting for the most propitious timing for the sale in order to obtain the best price'. Likewise, Justice Rajah said that Strata Titles Board (STB) must play a pro-active role when it comes to disputed cases, rather than simply listening to the evidence and arguments of both sides and then ruling on their differences. 'Despite the reference to its 'mediation-arbitration' function, STB has a significant inquisitorial role to play,' he said. 'It is not confined to what is presented to it by the contending parties, but must seek out the facts whenever there is evidence that the SC (sales committee) has not disclosed everything about the transaction to STB.' In July 2008, the High Court ruled in favour of the majority owners and ordered the sale of the property to Singapore-listed Hotel Properties Ltd (HPL) and its partners Morgan Stanley Real Estate and Qatar Investment Authority.
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Singapore Property Market Review
Government Policy Update
The Price Stabilizer – Lease Buyback Scheme Why prices for heartland properties will not crash Background information on LBS From 1 March 2009, Singaporeans who are at least 62 years of age can sell back the tail end of the lease period of their HDB 3-room (or smaller) flats to the Housing Development Board (HDB) and continue to live in their own flat. The HDB will top up an additional $10,000 in the sale proceeds of the remaining lease and pay out $5,000 cash to the flat owners. The difference in the sale proceeds will be converted to an annuity and the flat owners will receive a monthly cash payment for the rest of their life. LBS is available to Singapore citizens owning 3room or smaller flats where the outstanding mortgage loan is $5,000 or lower. They must also meet the following criteria: Age of youngest lessee is 62 years or older; Household income of $3,000 or less; Have not previously owned a 4-room or larger flat or private property; Have only enjoyed one housing subsidy; Have owned the existing flat for 5 years or more. How it will act as price stabilizer The most important implication of the LBS is that the new scheme will shore up prices of larger flats as well as mass market condominiums. As it is, there is already a healthy price buffer between the various different typical flat types; for example, no matter how high the price of a resale 3-room HDB flat goes up, it will not exceed the median price of resale 4-room flats. The buffer will then prevent prices of 4-room flats from falling below the highest 3-room flats.
Likewise, such a price buffer will prevent resale prices of HDB flats in general from going beyond reasonable price points. Moreover, by sucking a few hundred 3-room flats out of the supply equation, the HDB resale prices will be boosted when demand increases. Let’s look at the following illustrations. Using the March 2009 HDB resale prices at Ang Mo Kio as a gauge, one will see that the stabilising of 3-room resale prices will shore up the value of other larger flats, including mass market condos. Mass market condos [$600k-$700k] 5-room flat highest price [$610k] 4-room flat highest price [$505k]
E-flat median price [$595k] 5-room flat median price [$480k]
4-room flat median price [$328k] 3-room flat highest price [$315k]
Simply put, it means that prices of 5-room resale flats will be supported by the highest price range of 4-room resale flats. (Quality resale 4-room flats, such as one on high floor and with sea view still command very good premium over low- or mid-floor 5-room flats.] Conversely, when the prices of 3-room resale flat appreciate due to constraints in supply, prices of larger flat types will likewise be increased, especially when more and more 3room flats are being sucked out of the supply chain because of the LBS.
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Tips on Internet Advertising
How to Advertise in a RECESSION Smart and Effective Online Marketing [SAM GIAN] Do you cut back on advertising because of recession? The answer is: “that will be the dumbest thing to do!” In fact, when the times are bad, you should advertise more intelligently; because if you don’t – you will be out of business when the recession is over.
You also need to know what to include and how to optimise your listings in order to reach as many prospective buyers as possible and then getting the most number of leads.
But how does one make do with a very small advertising budget?
Listings that catch the eyes of property buyers are those that provide more than enough information for the buyer. If you have scant information and less visuals, it is difficult for the viewer to imagine how the property looks like. Likewise, a listing packed with accurate, detailed and useful information as well as good quality photos and videos will help the prospective buyer visualise the property and will more likely contact the agent to find out more.
In this issue, I have again invited our online marketing guru, Mr Jacob Tay a.k.a Mr InfoTool, to share with us some tips on effective online marketing. SMART & EFFECTIVE ONLINE MARKETING for REAL ESTATE SALESPERSONS – by JACOB TAY In recent times, the Internet has rapidly grown to become the most effective and cost-efficient medium for marketing property. In matured markets like the US and Australia, it has overtaken traditional mediums like newspapers, with almost 100 per cent of agents using the Internet to advertise their properties. This phenomenon is currently taking Asia and Singapore by storm therefore, it is not just important but also absolutely crucial to learn and adopt this medium in order to stay relevant and prosper in today’s market place. There are several online products available in the market place. It is important to know how to select the right products, as well as utilise them to maximise returns. Take a look at all the different offerings available and compare the features and costs to find out what best suits you. Effective online marketing essentially means generating the highest number of quality leads in the most cost-efficient manner possible. How do you achieve this? Select the right property portal. The best ones will help you reach the largest and most targeted audience possible; and generate the most number of quality leads for you.
What are the things property BUYERS look for?
Below are the few key things to consider when putting up listings: TRAFFIC – high traffic comprising serious property buyers would generate more leads for agents, therefore it is important to choose a property portal that enjoys good quality high traffic. A user-friendly interface, quality content and listings, comprehensive information, useful data and links are some of the qualities of a good property portal which would attract high traffic. iProperty.com Singapore (www.iproperty.com.sg) is an example of a property portal that attracts not just high traffic. Its website visitors include serious local and expatriate property buyers, majority of which belong to high income groups. Moreover, the iProperty.com Group has a network of regional websites in six countries across Asia, which channels property buyers from all over Asia to the Singapore site. LISTINGS – property buyers seek good quality listings that provide a lot of information about the property and high numbers of listings to
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give them more options. A good quality listing should have the following: Accurate and detailed information on the property e.g. address, name of development, number of bedrooms and bathrooms, built-up size and etc. Descriptions of the property, inside and outside, as well as the surrounding neighbourhood with information such as facilities and amenities, schools, and conveniences nearby. Clear visuals such as photos of the interior and exterior of the property, and the surrounding area. A video would further help property buyers understand the location and its surroundings better. Agents using iProperty.com Singapore are allowed to upload up to 20 photos per listing. For agents who don’t have enough photos or would like to enhance their listings with more photos, we have also built a photo library with over 11,000 photos and panoramic views of condominiums, HDB and private estates. Agents can use these photos for free. Google map to show where the property is situated. This will also show access points to the property and what types of highways and major roads it is connected too. Getting CONNECTED with prospective BUYERS Once the property buyer has decided that he is interested enough to find out more, he would want to know how to get in touch with the agent. A good property portal would have all the necessary information at hand. At iProperty.com Singapore, the respective agent’s details and contact information is readily available on the same page as the listing. There are also multiple ways of contacting the agent, effectively building a strong link between the buyer and the agent.
SMS to the agent, from their computer to the agent’s mobile. Simultaneously, an email will be sent to the agent to inform them of the potential lead. The cost of the SMS is borne by iProperty.com Singapore. That way, agents will never miss out on potential leads again, even if they are engaged on the phone or are unable to check their emails often. ‘Property wanted’ feature: Property buyers are allowed to advertise too, by putting up wanted advertisements to let agents know what type of property they are looking for. If you have a property that matches the buyer’s criteria, give them a call. This opens up the avenue in which buyers and agents are connected.
iProperty.com – Singapore’s No. 1 Property Website Gets you Maximum Leads at Minimum Cost iProperty.com Singapore, Singapore’s No. 1 property website, offers you all the above and more. We offer a wide range of products and services to cater to all your needs, with frequently updated and improved features to enhance your property listings. Its traffic and leads have grown tremendously with the amount of website visitors increased by over 250% in the last 6 months and almost 500% over the past year!
You can reach Mr Jacob Tay or his other MLS consultants at Tel: 6255-4411 / email: sg.info@iproperty.com; or visit his office at #08-01 HDB HUB East Wing, Toa Payoh Lor 6
Besides the usual phone call that prospective buyers make to the agents, iProperty.com Singapore also provides a free SMS enquiry service where interested buyers may send an
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Advanced Selling TECHNIQUES
How to Transact Sub-Sale Deals (including ‘flipping’ in this Recession) Lesson plan – First Day 21 May 2009 (09.00am – 3.00pm) 1.
The basics of new home sale (Before you know how to ‘flip’ what you need to know about new home sales)
2. The critical success factors – The different Skill sets required in both types of sales (Different approaches in conducting new home sales, sub-sale and resale deals) 3. Check-list to your first $1 million dollar in Commission (Step-by-step guidance in closing new condo deals)
4. Show and Tell component (Sam Gian and co-trainers will point out your mistakes in the ‘show-and-tell’ segment)
Lesson plan – Second Day 22 May 2009 (09.00am – 12 noon) 5. Different types of sub-sales in this recession 6. Difference between ‘flipping’ and ‘assignments’ (Step-by-step guidance in closing both types of transactions) 7. The workflow of sub-sale deals (Detailed explanation) 8. The Paperwork in sub-sale deals (Detailed explanation)
Sam Gian is the only real estate sales consultant in Singapore who has written and published SEVEN books in selling skills and real estate brokerage know-how. He also provides the following research materials FREE OF CHARGE to real estate salespersons of all creeds and persuasions: FREE Monthly Property Market Updates via his website, FREE Quarterly Magazine titled ‘PROPERTY MARKET DIRECTION’, and FREE half-yearly seminar titled ‘Where is the market heading’. Sam’s teaching provides the Critical Winning-edge needed by salespersons to beat their competitors and outsmart today’s more sophisticated customers. Many salespersons who have attended Sam Gian’s programmes have tripled their income as they are now able to close effectively & quickly, and get paid a higher commission. This time around, Sam is tying up with Mr Benson Ong and Mr Douglas Lee, both government certified trainers and Toastmasters, to bring you the new selling skill course.
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Keep a date with Sam Gian’s upcoming FREE Seminar Singapore Property Market Review
Where is the Market Heading? 27 July 2009 9.30am to 1.00pm
Venue:
To Be Confirmed
Free tickets will be available for collection from 20 July onwards at iProperty office at #08-01 HDB HUB East Wing Seminars are Organised by
Sam’s Free Magazines / Free Monthly Reports / Free Seminars / Free workshops are being funded by the sales of his BOOKs. If you Support Professionalism, tell your friends about how Sam’s Books can help improve their selling skills and their sales income.
And Ask Them to BUY Sam Gian’s Books.
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