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13 December 2012

13th December, Thursday




High-end rents seen easing further

Source: Business Times

High-end rental rates look set to continue their downward trend, with market watchers predicting a price correction of between five and 10 per cent next year stemming from tightened budgets and an increasing supply of completed luxury homes.

This would bring rents of luxury homes to below $5 per sq ft (psf) per month.

Rents of top-tier condos tracked by a consultancy showed a drop for a sixth consecutive quarter, bringing rents down 7.4 per cent to $4.88 psf per month in 4Q, from $5.27 psf per month in the year-earlier period.

As the number of vacant units increase in tandem with the surge in project completions, investors who have bought private homes for rental investment could encounter significant risks in the months ahead, warned the consultancy.

The vacancy rate in the Central region was 7.9 per cent in the third quarter of 2012, above the five-year average of 7.5 per cent. Vacancy rates in the eastern and western regions of Singapore were 4.5 per cent and 4 per cent in 3Q, higher than the 3.5 per cent and 3.6 per cent five-year averages, respectively.

But it's not all gloom and doom for the rental market in the coming year.

Demand for mass-market units is rising and is expected to remain buoyant throughout 2013, in line with the tighter rental budgets of the new entrants.

Data released by URA showed that island-wide median rents for condos and apartments (excluding executive condominiums) hit a record $3.75 psf per month in October, up 7 per cent over the previous year.

The total value of all leasing transactions for the first 10 months of this year hit $208 million, surpassing the yearly totals for the period from 2000 to 2010, and the figure is expected to surpass the $218 million record set in 2011 once contributions from November and December are included.


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Cash premiums soar for Marine Parade resale flats

Source: The Straits Times

Data from the Singapore Real Estate Exchange (SRX) show that the median COV in Marine Parade rose 47 per cent to $55,000 in the past year, the biggest jump islandwide.

Second place went to Bukit Merah, where median COV climbed 31 per cent to $42,000.

Agents said that Marine Parade has always been a top draw, thanks to nearby schools such as Tao Nan School, CHIJ Katong Convent and Ngee Ann Primary, and the scarcity of units for sale. It is a small estate of only 23,300 residents.

But in the past year, the high prices of private property in the area, which pushed buyers to the HDB resale market, and the news that the Eastern MRT line will run through Marine Parade, have stoked the COV fire, they said.

Among the top five Housing Board towns where COVs climbed the most, the stand-out to market-watchers was Punggol, in fourth place: Median COV there rose 27 per cent to $43,000.

These catapulting COVs have contributed to nationwide cash premiums reaching a median of $34,000 in the fourth quarter so far, just $2,000 shy of a five-year historic high, said SRX last week.

But, as its data revealed, COVs are not rising across the board: 11 towns out of 26 overall have seen drops in the past year.

Median COV in Bukit Panjang fell 12 per cent to $29,000, while in Jurong West, it dropped 9 per cent to $30,000.

Bukit Panjang is handicapped by its lack of connectivity through a poorly regarded LRT network. Jurong West flats should command more in cash premiums as they are popular with foreigners as they are near factories in Tuas, but about half of the blocks there have reached their quota of permanent residents allowed, tamping down demand from this group of buyers.

As for whether COVs will reverse their upward trend nationwide or in the most popular towns, an analyst said: "It's a vicious circle. People ask for a high COV because they know that to buy their next flat, they have to pay a high COV as well."


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Strata office demand 'likely to continue'

Source: The Straits Times

Demand for strata office space is expected to remain healthy next year, Citibank said at a press briefing Wednesday.

This is one of the property segments likely to continue enjoying growth next year, it added.

The scarcity of supply is one key reason supporting the segment.

Barring any major crisis, property prices are not expected to correct over the next few years as low interest rates and ample liquidity keep the market going despite the huge supply in the pipeline.

One possible strong residential performer is the high-end sector, which could see a resurgence next year as the price gap between suburban and high-end homes narrows. The segment could have been quiet owing to a lack of exciting launches.


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Investment Sales


Investment sales of property reach $28.7b this year

Source: Business Times

Investment sales of property - which refer to transactions of $10 million and above - have fallen to about $6.9 billion so far this quarter (up to 11 December), from the $9.3 billion in 3Q, estimates a consultancy.

The slowdown came amid a halving in deals originating from the private sector to $3.7 billion so far in 4Q from $7.2 billion the previous quarter.

"The weak global economy and a still-wide bid-ask gap remained key reasons for the tepid investment activities in the private sector. As well, the year-end holiday season has stretched negotiations and decision-making," the consultancy said.

Big-ticket deals originating from the public sector - predominantly Government Land Sales (GLS) - climbed to $3.2 billion in the Oct 1-Dec 11 period from $2.2 billion in 3Q.

Including outstanding state tenders, caveats for other transactions which have yet to be lodged and the expected sale of 79 Anson Road, 4Q's final tally could hit $7.6 billion.

Year-to-date (up to Dec 11), $28.7 billion of investment sales deals have been transacted, though 2012 could end at around $29.5 billion, it estimated. That would be slightly shy of the $30.1 billion last year and $32 billion in 2010.

Of the $28.7 billion transacted year-to-date, the residential sector continued to make up the lion's share - of about 45 per cent amounting to $13.1 billion. Including today's tender closing of a Sembawang EC plot and caveats for other residential transactions that will be lodged by 31 December, the full-year figure could be close to 2011's $13.5 billion.

Commercial (office and retail) property deals have reached $7.5 billion year-to-date, down from $8.2 billion in 2011. Private-sector office transactions declined from $6.2 billion in 2011 to $4.9 billion so far this year. DBS' purchase of a 30 per cent stake in Marina Bay Financial Centre Tower 3 at $1.035 billion has been the biggest office deal this year.

Retail property deals in the private sector doubled from $1.1 billion in 2011 to $2.3 billion year-to-date, buoyed by the sale of several shopping centres, including a half stake in nex in Serangoon for $825 million and the $519 million sale of Compass Point.

Investment sales of hospitality assets in private and public (GLS) segments combined jumped from $1.6 billion in 2011 to $3.8 billion so far this year, thanks to the flotation of Far East Hospitality Trust. This involved the sale of seven hotels and four serviced residences worth $2.1 billion to the trust by its sponsors.

Industrial property deals slipped from $4 billion in 2011 to $3.4 billion year-to-date, amid a decline in the public sector's contribution. The fall is from a high base in 2011 which saw the second phase of JTC's divestment, along with shorter-tenure GLS sites.


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