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16 April 2013

16th April 2013, Tuesday




New private home sales hit record high

Source: The Straits Times

New private home sales surged to an all-time high last month, boosted by discounts dangled by developers and first-timers entering the market.

A total of 2,793 units were sold last month, nearly four times February's number, as a string of new launches debuted strongly.

This is the highest monthly new sales volume since the Urban Redevelopment Authority (URA) began publishing monthly data in 2007. It narrowly beats the previous record of 2,772 in July 2009.

But analysts said the momentum may not continue into this month as the effects of a seventh round of cooling measures, which took effect in January, continue to filter through the market.

DWG senior manager Lee Sze Teck said the strong sales last month suggested strong demand from first-time buyers given that the cooling measures had curbed some investment demand.

Including executive condominiums, a hybrid of public and private housing, the number of private homes sold last month was 3,072. This is the second-highest on record, close behind the 3,142 units sold in February last year.

The 3,489 units launched for sale last month was also a record. A whopping 17 new residential projects launched last month. Almost three-quarters of March's new sales were from new launches that month. Nearly 65 per cent were in suburban areas.

Buyers purchased units at projects near MRT stations such as D'Nest, Bartley Ridge, Urban Vista and Sennett Residence, the URA data showed. The top-seller was 912-unit D'Nest in Pasir Ris, with 699 units sold at a median price of $963 per sq ft out of 800 units launched.

Overall, 5,533 units were sold from January to March, which was about 20 per cent higher than in the fourth quarter of last year. There were 5,564 units launched.

The strong March numbers made up for February's muted sales volume of 712 new sales owing to the Chinese New Year lull.

"By keeping new supply off the market in February, developers have benefited from a strong demand rebound in March as well as the resultant positive impact on the market," said an analyst. "Notwithstanding the latest measures, underlying demand remains healthy."

Still, analysts said this month was unlikely to see a similar surge in new sales. Most pent-up demand would have been "satisfied by the bumper crop of new launches in March", said another analyst.


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Bids for 3 EC sites to close on same day

Source: Business Times

In a move to moderate tender bids and future property prices, the tender for three sites will close on the same day for the first time.

Included in this exercise is an executive condominium (EC) site at Punggol Central, one of the four sites released as part of the Government Land Sales Programme for the first half of 2013. The other two EC sites whose tender closes on 30 July are in Punggol Drive and Yuan Ching Road.

The Punggol Central plot, which is about 146,010 sq ft, has a maximum building height of 64 metres above mean sea level (AMSL). Maximum gross floor area (GFA) for the site is about 438,030 sq ft. It will be launched for sale on 29 April and is expected to yield about 395 homes.

The Punggol Drive and Yuan Ching Road plots will be launched in June.

In a statement released Monday, the Housing and Development Board (HDB) said the move to close the tenders on the same day was initiated in response to feedback from the public and real estate industry that this could help moderate tender bids and future property prices.

DWG's senior manager of training, research and consultancy, Lee Sze Teck, said that while the number of participating bidders might moderate, bid prices might not necessarily be lower. Instead, the government should launch and close tenders for sites in the same area on the same day, suggested Mr Lee.

"For example, the sites at Anchorvale Crescent and Fernvale Close, both of which are in Sengkang, can have the same closing date," said Mr Lee.

"If one of the bids is too high, the price at which the project can be launched will be curtailed by the other site which was sold at a lower price. In this way, developers will be cautious about bidding. "But the downside of this is that developers with greater financial muscle could make a clean sweep of the sites and achieve certain pricing power in the area."

Another analyst warned that lower land prices does not necessarily lead to lower housing prices.

"The developer that managed to acquire the land at a relatively low price will still launch the new development at the market rate at the time of the launch. Therefore if the government's objective is to ensure lower EC prices ... the government would have to supplement this new initiative with other measures," he said.

One analyst was of the view that this could moderate tender bids as "there could be fewer bidders for each site as developers will have to weigh the different options and put in a bid for their most preferred choice."

The second EC site, which is located at Anchorvale Crescent, is about 247,570 sq ft which translates to 742,709 sq ft GFA. The site has a maximum building height of 64 metres AMSL, and is expected to yield about 690 units. Closing date for the tender is 30 May.

DWG's Mr Lee said he expects the two sites to see an estimated bid price of $300-$350 per sq ft per plot ratio (psf ppr).

Separately, the 162,808 sq ft residential site at Faber Walk is expected to yield about 210 units. It has maximum GFA of 227,936 sq ft, and has a maximum building height of five storeys. Closing date for the tender is 18 June.

An analyst said of the four sites, this is the most attractive due to its exclusivity. "Even though it's a low-rise apartment, residents can still enjoy unblocked views of its surroundings," she noted. She expects the top bid to be about $480 psf ppr.

The final residential site at Fernvale Close sits on a plot of about 160,710 sq ft, which translates to a maximum GFA of about 482,131 sq ft. It has maximum building height of 80m AMSL, and is expected to yield about 495 homes. Closing date for the tender is 13 June.

Another analyst picked the site at Fernvale Close as the most attractive one as it offers a wide frontage of the Punggol River. A realistic valuation for this site is about $450-$470 psf ppr. But in the current market sentiment, it is not surprising for the top bid to range from $500-$520 psf ppr."

DWG's Mr Lee said he expects top bids for the two residential sites to be in the range of $450-$500 psf ppr.

The EC site at Anchorvale Crescent and two residential plots at Fernvale Close and Faber Walk were launched for sale Monday.


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Investment Sales


Real estate investment plunges 33% in Q1

Source: The Straits Times

Investment activity in the real estate sector slowed down considerably in the first quarter but it is still raking up some robust numbers.

The sector recorded transactions of $5.4 billion in the three months to 31 March - a 33 per cent plunge from the $8 billion recorded in the last quarter of last year.

But it was still 15.6 per cent up on the same period a year earlier, according to a report.

Investment in office properties declined the most in the first quarter, coming in at $772.9 million, down 72 per cent over the previous three months.

This was partly because office sales were particularly robust at the end of last year, with blocks such as the NOL Building, Mapletree Anson, 79 Anson and a 30 per cent stake in Marina Bay Financial Centre Tower 3 changing hands.

Some of the bigger deals in the first quarter included the sale of The Pines Club in Stevens Road for $318 million and the freehold AIA building in Changi Road for $68 million. Both will be redeveloped.

Yet activity by property firms still accounted for 71.1 per cent, or $3.8 billion - in the first quarter, largely driven by their participation in Government Land Sales tenders.

The rest are mostly made up of deals involving real estate investment trusts (Reits) and private property funds.

Industrial Reits were the only investment trusts active in the first quarter, with two acquisitions - The Galen, a six-storey multi-tenanted building by Ascendas Reit, and Cache Logistics Trust's purchase of Precise Two, a warehouse.


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