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06 November 2012

6th November, Tuesday




New private homes to be costlier than resale homes, reversing trends

Source: Channelnewsasia

New private homes typically cost 20 percent more than resale homes, but analysts say this price gap has since narrowed.

Entering into the fourth quarter, new private developments now command just a four per cent premium over resale private units, according to data compiled by the Singapore Real Estate Exchange (SRX) which collates transactions by major property agencies accounting for 80 per cent of the private sales market.

According to experts, resale units are usually near well-established amenities because they are in well-established estates. They are also bigger, in better locations and possibly have ready rental income from existing tenants.

Developers have been pricing new private homes "competitively" with marginal increases. As a result, prices of resale units started catching up earlier this year.

By the third quarter, the median prices of resale homes reached $1,163.45 psf, one percent higher than new homes.

This premium is expected to increase as developers price in the higher cost of land in their new launches.

Going into the fourth quarter, some analysts say prices of new private homes have recorded a premium of 4 per cent. This works out to a median price of $1,261.24 per sq ft for new private homes, compared to a median price of resale homes at $1,204.50 psf.

Lee Sze Teck, Senior Research Manager at DWG, said: "The price gap is likely to widen. We think that the new home prices, perhaps the situation could be reversed. Now you can see a gap between new home prices and resale prices."

An analyst said: "Based on the recent land bids, we have witnessed areas like Jurong and Tanah Merah - prices psf ppr by developer bidding exceeding $700. Which means that it will translate to sale prices next year, it will translate to $1,400 psf - minimum. Though today's median's prices are only about $1,200 for new launches. It is expected to move upwards."

Going into 2013, industry observers expect new private home prices to be some 5 to 20 per cent higher than resale units, as developers pass on higher costs.

Still, higher prices of new homes are expected to boost the value of existing private developments in the same area. And while resale homes come with shorter land leases, the waiting time to move in is also shorter.


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Investment Sales


Balestier freehold site up for sale

Source: Business Times

A freehold mixed-use redevelopment site along Balestier Road is up for sale by tender, with a guide price of between $68 million and $75 million.

The 21,219 sq ft site has a gross plot ratio of three, which gives it a potential gross floor area (GFA) of about 63,657 sq ft.

Based on the guide price and factoring in an estimated development charge, the cost of the plot works out to between $1,088 and $1,198 per sq ft per plot ratio (psf ppr) for redevelopment up to a GPR of three.

Under the 2008 Master Plan, it is designated for commercial and residential use. URA guidelines state that the commercial space can take up no more than 40 per cent of the maximum allowable floor area for the development.

The marketing agent added that there was the potential to join the site with an adjoining state land lot of about 750 sq ft, subject to approval from the relevant authorities. This could potentially enlarge the site area to about 22,000 sq ft and increase the potential GFA to some 66,000 sq ft.

The tender for 520 Balestier Road will close on 13 December at 3pm.

A freehold residential redevelopment site at 241 Pasir Panjang Road was put up for tender on Monday.

Its owners are expecting offers of between $12 million and $13 million, which works out to a land rate of about $928 to $1,005 psf on the 12,933 sq ft land with a GPR of 1.4.

The tender for the site will close on 5 December at 3 pm.


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19 retail units at Crown Centre for sale

Source: Business Times

Nineteen freehold strata retail units on the ground floor of Crown Centre in Bukit Timah have been put up for sale. The price tag is about $32 million, or $4,131 per sq ft of the units' total strata area of 7,746 sq ft.

Business Times understands that based on the current average rent being achieved for the units - which are fully tenanted - the price tag reflects a net yield of just 1.8 per cent. However, there is significant rental upside for investors looking to spruce up the asset and reposition its tenant mix.

Of the 19 units, 18 are held by a family investment company while the remaining unit is owned by an individual.

Crown Centre is a three-storey mixed use development with triple frontage - along Queen's, Bukit Timah and King's roads. Crown Centre has 21 retail units on its second level and six apartments on the third level. The building has 33 basement carpark lots.

Crown Centre, which was completed in the mid-1980s, is on a site with land area of 18,081 sq ft. Under Master Plan 2008, the site is zoned for commercial and residential use, with a plot ratio (ratio of maximum permissible GFA to land area) of three.

Its expression of interest exercise closes on 28 November.


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International Markets


London luxury home prices rise on overseas demand

Source: Business Times

Luxury home prices in central London rose at the fastest rate in four months in October as overseas investors sought less risky assets, a consultancy said. The average value of a house or apartment in the UK capital's most expensive neighbourhoods climbed 0.8 per cent from September, according to an index published by the London-based broker Monday.

The annual increase was 10.1 per cent with demand for apartments outstripping that for houses.

Luxury home values are now 16 per cent higher than their previous peak in March 2008 and have risen 52 per cent since a post-credit crisis low in March 2009. Better job opportunities in the city fuelled demand and foreign investors bought luxury homes to protect their wealth from volatile markets elsewhere in the world.


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