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Buyers face critical decision with two-room Flexi flats
To provide more housing options for elderly Singaporeans, the Ministry of National Development (MND) and Housing and Development Board (HDB) on Wednesday (19 August) introduced the two-room Flexi Scheme – a unified scheme which replaces the existing two-room and studio apartment schemes.
The scheme was first mooted by National Development Minister Khaw Boon Wan back in March 2015 at the Committee of Supply debate, and subsequently incorporated feedback and suggestions from the public.
Under the scheme, elderly citizens aged 55 and above can now choose to buy a two-room Flexi flat on shorter leases of between 15 and 45 years, in five-year increments, as long as it covers them and their spouses until they are at least 95 years old.
Property agency PropNex Realty said its biggest advantage is that it allows seniors another option at the entry level, to commit to purchasing a two-room flat and unlocking more cash from the sale of their existing flat. However, it also noted that interested applicants will face a critical decision on whether or not to take up the scheme, as it does not allow homeowners to sell the flat on the open market.
In terms of pricing, a recent blog post by Mr Khaw revealed that flats with shorter leases will be cheaper than flats with longer leases. But when PropNex compared the prices of the varying leases, it found that the lower the lease, the higher the price per lease year – mainly due to construction costs, which are constant regardless of the length of lease, it said.
The two-room Flexi Scheme will be launched with the September 2015 Build-to-Order (BTO) exercise. At least 40 percent (subject to a minimum of 100 units) of such flats in a BTO project will be made available to the elderly.
Developers to delay new launches in election lead-up
New property launches in Singapore are expected to come to a standstill in the lead-up to the much-anticipated General Election next month.
According to media reports, developers are expected to delay new launches, in the hope that the newly-elected government will relax the cooling measures, analysts noted.
“With the General Election expected to be held before the year ends, developers will also be trying to delay launches, hoping that the authorities will loosen some measures that have gripped the property market,” stated a Savills report.
However, property players are likely to face disappointment, as the government recently signalled that the curbs will not be relaxed any time soon.
For instance, National Development Minister Khaw Boon Wan said the market has yet to reach a more sustainable equilibrium, while Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam shared that the government is taking a wait-and-see approach on a potential easing of the measures.
“Ministers have (extinguished) hopes (of) relaxing property cooling measures in the near term, with the General Election expected in September. While we expect further price falls in mass market housing, we believe we are closer to the end of the tunnel than a year ago. We remain constructive on developers,” added a report from Barclays.
Bungalow site expected to fetch over $52m
A freehold residential redevelopment site at 3 East Coast Avenue has been put up for sale by tender, revealed marketing agent Knight Frank Singapore.
Located within an established landed housing estate in the East Coast area, the 45,249 sq ft site is zoned residential and within a three-storey mixed landed area. It currently houses a two-storey bungalow that was built approximately 40 years ago, and sits on a regular-shaped plot of two contiguous lots.
According to Knight Frank, the seller is expecting offers in excess of $52 million ($1,149psf) on the land. “It is extremely rare for such a large plot of freehold land zoned three-storey mixed landed to be sold. At $52 million, this will be the largest landed property transaction in D15 since 2010, when Fort Terrace was sold for $86 million through an en-bloc sale,” said Ian Loh, Executive Director & Head, Investment and Capital Markets.
100,000 first-time buyers of new flats since 2008
National Development Minister Khaw Boon Wan revealed on Tuesday that around 100,000 first-timer applicants, including singles and families, have purchased new HDB flats since 2008.
In a report by Channel NewsAsia, Mr Khaw — in reply to a parliamentary query from Pasir Ris-Punggol GRC MP Gan Thiam Poh — noted in a written response that about 50,400 successful applicants have already collected the keys to their flats, while another 6,700 will receive their keys later this year.
“We expect another 31,100 (31 percent) to collect their keys in 2016 or 2017, and the balance 11,800 (12 percent) after 2017,” he added.
Mr Gan also asked about the number of applicants who had successfully received grants to purchase a flat on the resale market. In reply, Mr Khaw said 38,400 first-time applicants have already received grants to buy a resale flat since 2008.
Unsold units will take many years to clear: report
With more residential projects set for completion in the coming quarters, property developers will need more time to clear their inventory of unsold units in previously launched developments, according to a Savills report.
“Adopting the CCR’s average monthly sales for the period of January to May 2015, and assuming there will be no further Government Land Sales (GLS), it will take about 12 years to clear the inventory of unsold units in projects under development now,” said Savills.
It highlighted that the situation is even more serious for projects located away from the central region, since the GLS programme is generally focused on the OCR and RCR.
“The time (needed) to clear the stock of present and future unsold units will be more than 12 years. Therefore, even if island-wide take-up rates double, it will take well over five years to sell the inventory,” the report stated.
While demand is expected to pick up in the near future, this does not mean the property market has returned to normal.
“The broad brush measures have merely made smaller units more affordable to local buyers, whereas larger units and those with a high price quantum — mainly projects in the CCR —are not selling fast enough to clear off the unsold inventory.
“Lowering prices further would not be a panacea to increase demand, because much of the unsold stock are larger units that, because of the larger price quantum and various cooling measures, are beyond the reach of many locals and permanent residents,” added Savills.
Ringgit drops to record low against Sing dollar
The Malaysian ringgit has dropped to a record low against the Singapore dollar, and is now trading at 3.0049 ringgit per S$1. This happened shortly after the markets opened on Monday, according to Bloomberg data.
Compared to last Friday’s close of 2.9760, this decline represents a 0.9 percent fall. The ringgit also plunged to a new 17-year low against the US dollar as ongoing concerns about China’s economy dented global risk appetite, with European and Wall Street stocks suffering their largest one-day drop in nearly four years last week.
The ringgit also fell 0.9 percent against the greenback — now at 4.2200 per $1 —its weakest showing since 31 August 1998. The ringgit was pegged at 3.8000 to the US dollar in September 1998, and maintained that level until 2005.
GuocoLand names new CEO
Property developer GuocoLand has appointed Choong Yee How, 59, as its new CEO and President, with effect from 1 September, revealed the company in a recent SGX filing.
Presently the President and CEO at Hong Leong Finance Group (HLFG) since 2015, Choong previously held the same position at Citibank Savings Inc in the Philippines.
“In the 10 years with HLFG, Mr Choong has gained in-depth insight into its policies, embedded business values and culture, strategies, visions, credit appetite and enterprise risk management. This bodes well for his new leadership role in GLL,” it added.
Choong will replace the current President Chia Boon Kuah, who will officially vacate his post on 31 August. The resignation of the 58-year-old property veteran was unexpected due to his short stint with the group, starting in February 2014, reported AsiaOne.
In April, another two company executives resigned, P. Y. Wong and Vito Koh, 52, who stepped down as Managing Director of GuocoLand China.
More Malaysians, Chinese buying Singapore homes
The number of mainland Chinese and Malaysian buyers of private homes in Singapore shot up in the second quarter of this year from Q1, a DTZ Research report revealed.
Home purchases by Malaysians increased the most at 53 percent quarter-on-quarter to 248 units. On the other hand, Chinese buyers bought 234 units. Overall, buyers from both countries accounted for almost 50 percent of the 1,017 purchases by non-Singaporeans in Q2.
“This increased activity coincided with heightened economic uncertainty in China and political concerns in Malaysia,” said the real estate consultancy. At the same time, DTZ regional head Lee Nai Jia noted that while the number of Malaysian buyers had been expected to drop with the fall of the ringgit, the opposite occurred.
“I think all the political issues in Malaysia have hindered some of the structural reforms that were supposed to take place. This has become a concern among Malaysian buyers, moving them towards Singapore…they want to make sure that their money and wealth are intact and don’t depreciate further,” he added.
As for Chinese buyers, Lee believes the stock market plunge in China probably spooked investors, raising doubts about the country’s financial security and stability, and causing them to see Singapore as a safe haven.
Looking ahead, DTZ expects the devaluation of the yuan to drive more high-net-worth individuals to acquire property in the city-state, while those whose wealth has been affected by China’s stock market rut will likely stay away. Meanwhile, Malaysian purchases will continue, said Lee, adding that Malaysians “continue to form one of the main non-Singaporean buyers, especially in the prime district.”
Industrial occupancy rate slipped 2% in 2014: MTI
As more industrial sites became available in the past few years, occupancy level in the sector declined by two percentage points in 2014 from 93 percent in 2013, government data revealed.
In a report by Channel NewsAsia, Trade and Industry Minister Lim Hng Kiang said the occupancy rate at JTC’s and HDB’s industrial facilities also fell by three percentage points to 94 percent during the two-year period.
This was his reply to a recent parliamentary question fielded by MP Lee Bee Wah, who asked about the take-up rate at JTC and HDB industrial parks in the last three years, and whether demand exceeds the supply for such spaces.
In addition, Mr Lim revealed the industrial property pipeline for 2016 and 2017. For each year, an average of around 1.8 million sq m of space is projected to enter the market.
“This is higher than the average annual supply and demand of around 1.5 million sq m and 1 million sq m in the past three years. Of the upcoming industrial space, new JTC developments will contribute about 340,000 sq m.”
Upcoming JTC projects include JTC nanoSpace @ Tampines and JTC Chemicals Hub @ Tuas View, he added.
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