**** NEWS & VIEWS ***** Monday, 18 November, 2014 RESIDENTIAL MARKET Marina One saves developers sales from hitting years trough in October Developers may have sold more units in October than in September, but take away just one project and the picture is decidedly less rosy. In all, developers sold 765 private homes in October, 18 per cent higher than the 648 units sold in September, according to data released by Urban Redevelopment Authority on Monday. But this was mostly boosted by brisk sales at a single large-scale launch, Marina One Residences, which sold 334 of its total 400 launched units. If Marina One Residences was taken out of the equation, the sales volume in October would be the lowest for the whole of 2014. Other than Marina One Residences, the sales in the other top sellers were all less than 50 units each in October. Therefore, there is still a long way to go for the local real estate market before a firm and steady recovery is in sight. Year-on-year, sales have fallen 31 per cent from the 1,104 units sold in October last year. These figures exclude executive condos (ECs). If ECs are included, developers sold 855 units in October, above Septembers 707 units. Marina One Residences is part of a mega mixed-use project by Temasek Holdings and Khazanah Nasional, located just behind the Marina Bay Financial Centre. Its units were sold at a median price of S$2,228 per square foot in October. Consultants credited its appeal to its attractive pricing, prime inner city location and proximity to MRT stations. It was also the only new residential project launch in October. Mr Mak noted, too, that out of the 334 units sold, more than 300 units were bought through private sales, rather than a public launch. Besides the Marina development, buying activity was supported by Coco Palms in Pasir Ris, Lakeville at Lakeside, and The Skywoods along Dairy Farm Heights. Buying demand was not totally absent in the market, but it had to be drawn out by attractive pricing. The higher sales volume in October was also a result of the higher launch volume, again skewed by Marina One Residences. New launches rose 26 per cent to 649 units. Again, taking away Marina One Residences, the launch volume would have tanked. The lack of new launches in October, despite this period being considered a window of opportunity to secure some sales (before the year-end festivities begin), shows that developers are not confident that there is sufficient demand to achieve a decent take-up. Due to the challenging market conditions, developers seem to prefer to let the year slip by and tackle the challenges afresh in 2015. It is unlikely that the market will see any significant resurgence in launches and sales for the rest of 2014, and it looks set to close as the most dismal year since 2008 when the market was hit by the global financial crisis. Eugene Lim, key executive officer of ERA Realty Network, too, expects that developers may hold back launches and focus on clearing units from their existing projects in the last two months of the year. He expects primary market sales of 400-700 units for November and December each. Year-to-date, 6,705 new units have been sold, compared to nearly 15,000 sold for the whole of 2013. The last two months of 2014 could round this figure up to 7,500, say the more bearish analysts, or 9,000, say the optimists. Already, Lake Life EC has sold 534 out of 546 units this month. TRE Residences in Geylang has sold about 50 of its 250 units. Sophia Hills at Mount Sophia has not released its sales figures but according to a source, its showflat was quiet over its launch weekend. Adapted from: The Business Times, 18 Nov 2014 20% of 250 units sold at TRE Residences launch TRE RESIDENCES in Geylang East sold a fifth of its 250 units at its launch over the weekend. The units were sold at an average S$1,416 per square foot (psf) including a 5-per cent early bird discount. Its developer, marketing agent, and other consultants agreed that this was an encouraging result, very much in line with expectations given the current lukewarm market. A spokesman told BT that most of the units sold were one- and two-bedroom units, and the buyers were a mix of house hunters and investors. In such times where the total debt servicing ratio framework plays a big part in many home purchasing decisions, the developer expect the sales momentum to pick up after a while as most potential buyers need some time to obtain their loan approvals. The 250-unit condominium project is jointly developed by Sustained Land, MCC Land and Greatview Development. Their prices were originally at an average S$1,560 psf. A market watcher said the sales result was positive, given that there wasnt a major advertisement campaign like for Lake Life (an executive condo) where developers go on TV and radio. In contrast, TRE Residences had a relatively quiet campaign. The condo is located near Aljunied MRT station, several stops away from the city. The developers paid S$776 psf per plot ratio for the land, which translates into a breakeven price of about S$1,300 psf. Another analyst said buyers today are extremely selective and price sensitive. They dont have an urgency that they used to have in a positive market. Many will only fully come in when they are very certain that there is not likely to be any further price correction. In a way, some developers have fuelled this buyers mentality, he added, referring to aggressive price discounts at Wheelocks Panorama, as well as CapitaLands Sky Habitat and DLeedon. Some of the buyers are fearful that if they rush to buy at the launch, they may end up paying a higher price when the developer gives a subsequent discount. Some market watchers think that the developer of TRE Residences may continue to offer the condo at lower prices, but repackage it as something else other than early bird discounts. The lower launch prices meant that investors could lower their asking rental prices to attract expats amid the weak leasing market. The original S$1,560 price was probably a bit steep, given that Central Grove (another 99-year leasehold condo nearby) is reselling at about S$1,000 psf. The post-discount S$1,410 is more within buyers expectations. Adapted from: The Business Times, 17 Nov 2014 Scotts Square units leased out at $5,200 a month The luxury segment of the residential market is so dire that upmarket developer Wheelock Properties is leasing out units at Scotts Square, near the heart of Orchard Road. Wheelock disclosed in its results statement yesterday that 33 units were leased at an average monthly rent above $5,200 during the third quarter. It did not disclose the rent on a per sq ft basis. An Internet check shows that $5,200 is the asking rent for a one-bedder of 626 sq ft. Wheelock said its focus is on leasing, given the weakening buying demand in the luxury property sector. As at Sept 30, 79 per cent or 268 units of the 338 units at Scotts Square had been sold, representing 85 per cent of the net saleable area at an average price of $4,004 psf. Three units at Ardmore Three, a 36-storey freehold development comprising 84 three-bedroom apartments of 1,800 sq ft each, were sold in a private preview at an average price of $3,158 psf. The Temporary Occupation Permit for the project in Ardmore Park is expected towards the end of the year. In preparation for its launch, Wheelock is fitting out three showflats on site. The Panorama, a 698-unit leasehold development in Ang Mo Kio, sold 282 units at an average price of $1,274 psf as of Sept 30. Adapted from: The Straits Times, 15 Nov 2014 More luxury homes go under the hammer as defaults spike Slipping property prices, a stricter regulatory environment and poor financial planning are forcing delinquent owners to turn off the lights in their homes permanently, piling on banks’ non-performing loans and leaving a trail of repossessed properties under the auctioneer’s gavel. The number of residential properties being put up for auction by banks, or mortgagee sales, have soared this year as more high-end homeowners unable to meet their monthly payments find themselves unable to dispose of their properties in a lacklustre market. In the first 10 months of this year, 98 residential properties were put up for auction sale by banks. This is about five times the 17 homes they put up for auction in the whole of last year. Notably, non-landed homes in several prominent residential enclaves featured strongly in mortgagee listings this year, said Colliers. These include units at Reflections at Keppel Bay, Turquoise at Sentosa Cove and Stevens Court on Stevens Road. The jump in forced house sales comes amid a spike in local banks’ non-performing loans (NPL), due primarily to defaults by mostly high-end property owners. United Overseas Bank said last month its housing NPLs rose to S$502 million in its fiscal third quarter, up from S$295 million in the year-ago period, mainly because of “borrowers investing in a particular high-end residential project in Singapore”. It did not name the development concerned. Likewise, at the Oversea-Chinese Banking Corporation Limited, housing NPLs climbed to S$272 million in the third quarter from S$227 million a year ago, although the consolidation of OCBC Wing Hang’s portfolio also contributed to the rise. Analysts say while the market has indeed become unfavourable for high-end homeowners following the introduction of stricter regulations that has since led to sliding property prices, some of the problems faced by these owners were borne from their poor financial planning, which left them in a bind after the Total Debt Servicing Ratio kicked in last June. For those that have maxed out their loan quantum and values have dropped, they will have difficulty refinancing, especially if their credit worthiness is not attractive. There’s a possibility that banks may ask some of them to pump in more money to top up their value. When someone is not able to do so, that may go into the NPLs. Amid the stricter regulatory and financing environment, borrowers in default are finding it difficult to sell their properties on their own, as buyers generally remain cautious. The high-end residential segment has been hit the hardest by several rounds of cooling measures and tighter loan curbs, denting demand and leaving homes with heftier price tags increasingly out of reach of buyers. As a result, third-quarter prices for non-landed private homes located in the city centre, or Core Central Region (CCR), have fallen by 5.7 per cent from its recent peak in the first three months of last year, statistics by the Urban Redevelopment Authority showed. This prompted City Developments Ltd executive chairman Kwek Leng Beng, who is known for his outspoken comments, to warn this week that the high-end segment might face forced “fire sales” if prices decline further. Some analysts say that is actually quite a danger because it may filter through to the other segments. When you have CCR prices moving downwards faster than price trends in other segments, people will start to expect the fringe areas to reflect that. It is a challenging market right now. And with the Government having no intention to remove or tweak property curbs in the near future, prices are bound for greater falls. However, as prices slip, opportunities are opening up for buyers to snap up homes at bargain prices. In the January-October period, 15 residential properties worth a combined S$36.59 million successfully went under the hammer, up from five homes worth S$31.45 million in the whole of last year. Of those, 11 properties worth S$21.59 million were auctioned through mortgagee sales this year, compared with only two worth S$4.95 million for the entire of 2013. In recent months, although demand or transactions have gone down, we have seen an increase in enquiries. As prices adjust and reach a level acceptable to investors, demand will return. So while the coming months may still be challenging, we could see prices reaching the level of acceptance soon. Adapted from: TODAY, 15 Nov 2014 News & Views is for educational use only. 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Posted on: Wed, 19 Nov 2014 04:24:53 +0000
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