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12 December 2012

12th December, Wednesday




Private home sales seen falling 25% next year

Source: Business Times

Sales in the private residential market could fall by more than 25 per cent next year, as a result of local buying fatigue from the many new launches over the past years and increasing home completions, according to a report.

This would mean that from the record breaking 20,000 units sold in the past 10 months of this year, transaction numbers are likely to hover between 16,000 and 18,000 next year.

Prices, however, are expected to continue their upward trend, in line with rising land costs and demand from overseas investors.

According to the report, the average unit price of luxury condos in Singapore posted a second quarterly rise of 2 per cent quarter on quarter (q-o-q) from $2,350 per sq ft (psf) to $2,395 psf in the fourth quarter of 2012. For the full year of 2012, luxury condo prices have risen 5 per cent from $2,286 psf in 4Q 2011, but are still 4 per cent lower than the peak price of $2,495 psf in 4Q 2007.

Given the rising trend, market analysts expect a price increase of about 10 to 15 per cent for mass-market non-landed properties, while luxury properties may rise by about 3-5 per cent.

"Sharply rising land costs, strong developer balance sheets and low interest rates should all conspire to make 2013 another halcyon year for the industry," said the report.

Additionally, the strong affinity towards executive condominium (EC) developments is likely to continue given the confident sentiments among EC buyers.

Close to 3,500 EC units were snapped up in the first 10 months of this year and this number is expected to reach 4,000 once three more EC developments - CityLife@Tampines, The Topiary and Forestville - are launched before the year end. This will surpass the 3,935 ECs sold in 2010 and 2011 combined.

The report also noted that demand for shoebox units declined in the fourth quarter of this year to a low of 7 per cent from its three-year peak of 21 per cent in the third quarter of 2011, a possible result of government curbs.

Although these new measures, which require developers to build homes with a prescribed average unit size of between 500 sq ft and 700 sq ft, will curb the growing number of shoebox units, it could in turn heighten the median prices of these small-format homes.

Prices of shoebox condos sized below 500 sq ft have already risen for three consecutive quarters to a high of $1,474 psf in 4Q this year. This translates to increases of 6 per cent q-o-q and 10 per cent y-o-y.


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Alexandra View site draws top bid of $332.7m

Source: Business Times

A closely watched tender for a residential site at Alexandra View drew a top bid of $332.7 million, or $970.18 per sq ft per plot ratio (psf ppr), Tuesday.

Singland Homes, which put up the top bid for the 99-year leasehold site, Alexandra View (Parcel B), beat five other bidders.

Assuming it is awarded the site, the developer plans to erect a 43-storey residential tower. The break-even cost will be about $1,500 psf, which translates to a selling price of about $1,700 psf, said Singland.

The majority of the units will feature two bedrooms or two-plus-one and will be in the range of 800-1,000 sq ft.

Lee Sze Teck, senior manager for training, research and consultancy at Dennis Wee Group, said: "The top bid of $970 psf ppr is one per cent higher than the Prince Charles Crescent bid of $960 psf ppr in September 2012. "This can be considered a good price considering the fact that the Alexandra View site is closer to the Redhill MRT station. The other attributes of the location include proximity to town."

Said an analyst: "When everything is up and running, the Alexandra area could be the new luxury prime district . . . This may be the first outside the traditional prime districts to hit past $2,000 psf, probably by the end of next year."

Another analyst said: "There is a 10.9 per cent gap between the top bid and the second bid. Following the high land prices set in the sale of the residential sites at Alexandra Road in December 2011 and Prince Charles Crescent this September, Singland probably believed that in order to win the tender, it must bid above the previous tender price of $960 psf ppr for the Prince Charles Crescent site. But the other five bidders are more cautious."

"The results of today's tender could also lead the government to offer one or two more development sites in the Redhill area in the upcoming GLS (Government Land Sales) programme," he added.


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Investment Sales


79 Anson Rd on verge of being sold for over $400m

Source: Business Times

At least one major office block transaction could be sealed before the year ends, Business Times understands. A deal is close to being stitched for 79 Anson Road, with both owners - German fund manager SEB and Central Provident Fund Board - selling their space.

Expectations are running high that the price will cross $1,400 per sq ft based on the freehold building's existing gross floor area (GFA) of 289,185 sq ft (sq ft). On a lumpsum basis, this would translate to $405 million or more. Assuming the price is in the $400-410 million range, this represents $2,000-2,050 psf based on the building's current net lettable area (NLA) of around 200,000 sq ft, say market watchers.

Industry watchers tipped United Engineers group as a possible buyer of the 23-storey tower. Others which had been in the running earlier are said to include Sun Venture.

The buyer of 79 Anson Road could potentially redevelop the site in the mid to long term, depending on market conditions closer to when the last of the building's existing leases run out in 2016, say analysts.

However, 79 Anson Road's new owner may also be keen on keeping the office block as a long-term investment property generating steady rental income. Located some 250 metres from Tanjong Pagar MRT Station, the building was completed 20 years ago. A major draw is its generous carpark provision, with 145 lots on levels 2-4.

SEB's space, on Levels 1 and 5-15, adds up to 117,423 sq ft in strata area. CPF Board owns 100,007 sq ft comprising eight office floors (levels 16-23) along with a ground-floor retail unit fronting Anson Road.


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