The private residential sector in Singapore will be interesting to watch in 2015, according to some analysts.
Although transaction volume has been declining and prices have been softening, wealthy individual buyers and investors will be keeping an eye out for good-value opportunities, especially in the luxury segment.
“With asking prices expected to become more realistic in 2015, narrowing the gap between buyers and sellers, residential volume (especially in the luxury segment) could improve. There could be slightly more momentum in the year ahead compared to what has certainly been a lackluster 2014,” Colliers International’s Managing Director Terence Tang said.
He added, “There should also be some interesting development sites coming onto the market in Singapore in 2015, and capital-market activities should then increase. It is likely there will be more international investors, particularly private-equity groups from North Asia and European pension funds.”
Buyers can also find opportunities in relaunches next year as many projects which are already launched still have plenty of unsold units, said OrangeTee Research & Consultancy. “Developers for such projects, especially for those who face hefty Qualifying Certificate fees, may then be more willing to offer attractive incentives to move sales. As such, buyers should keep a close eye for good bargains at project relaunches, which would not be otherwise possible in a normal market.”
DTZ said the first half of 2015 is also a good time to look at prime properties in good locations, as their prices will appreciate more than the rest in the longer term.
“However, the buyer will need to take a mid- to longer-term perspective and be able to lock away the investment and ride through the cycle. Unlike stocks, properties are heterogeneous and every property is different, especially landed properties in land scarce Singapore where the population is expected to continue to grow. This is all the more so, if one is buying for owner-occupation.” Ong Choon Fah, CEO of DTZ Research said.
As for sales volume of new homes in 2015, CBRE predicts it is expected to hit around 7,500 to 8,000 units, since the TDSR will continue to affect buyers’ access to funding. Desmond Sim, Head of CBRE Research in South East Asia said, “As for price movements, CBRE Research is of the view that developers are prepared to hold prices as long as economic fundamentals remain healthy and buyers are able to service their loans.”
Mortgagee sale properties to increase
In auctions next year, the number of properties put up for mortgagee sale is expected to increase, as sellers continue to face increasing difficulties in disposing their properties in the resale market.
Colliers International’s Director of Auction and Sales Annie Chan said, “Unless the government curbs on the property market are relaxed, it is expected that the number of properties put up for mortgagee sale will continue to trend upwards to hit 200 in 2015.
Residential properties will still make up most of the mortgagee listings next year, at about 70 to 80 per cent of the total mortgagee sale.
“This is on the back of some 78,402 private residential properties expected to be completed by 2018; of which, a significant 26.6 per cent, or 20,824 units will be completed next year. Owners who are holding multiple properties may experience further cash crunch, in view of the impending increase in interest rates and the challenge of renting out their units as more supply comes on to the market,” she added.
The challenging market conditions will also lead to an increasing number of high-value properties in prime districts 1, 4, 9 and 10 being put up for mortgagee sale.
“On the back of the continued effects of the government regulations, the expected low number of high-value sales and buyers’ opportunistic stance, the total sale value for the Singapore auction market in 2015 is likely to come in at approximately $70 to 80 million,” Chan said.