Issue 60

Copyright 2011-2012 www.Propwise.sg. All Rights Reserved.

CONTENTS
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What Transaction Volumes Tell Us About Investing in the Property Market

FROM THE

EDITOR

Welcome to the 60th edition of the Singapore Property Weekly. Hope you like it!

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Singapore Property News This Week

Resale Property Transactions (June 27 July 3)

Mr. Propwise

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SINGAPORE PROPERTY WEEKLY Issue 60

What Transaction Volumes Tell Us About Investing in the Property Market

Transaction volumes can tell us a lot about the current activity and sentiment in the Singapore property market. In general, volume tends to pick up during bull markets and die down during bear markets. How volumes are affected during bull and bear markets which looks at the Total Residential Sales Volume (in terms of number of units) on a quarterly basis. Transaction volume in the Singapore residential property market had a pronounced peak during 2007Q2 at just under 13,000 units, one quarter before the end of the Early Bull Market Phase in PropertyMarketInsights.coms Property Market Cycle Model. Due to the Global Financial Crisis, volumes collapsed after 2007Q2 and hit a bottom in 2008Q4 at under 2,000 units, one quarter after the start of the Early Bear Market Phase. Since then, residential property sales volume recovered quickly and remained at a high level from 2009 onwards, much higher than the average levels we saw from 2000 to 2006. As at 2012Q1, total residential sales volume
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We can see this quite clearly in Figure 1.1.2a,

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SINGAPORE PROPERTY WEEKLY Issue 60 was 6,377 units, comprising 4,154 developer sales and 2,223 secondary market sales. Do note that all the volume data are obtained from the URA and based on caveats lodged by purchasers at the Singapore Land Registry. The numbers only provide an indication of the level of activity as not all purchasers lodge caveats for their transactions. Primary versus Transactions Secondary Market Figure 1.1.2b shows the Quarter-on-Quarter change in Residential Sales Volume split by whether they are Developer Sales (which we call Primary Sales as new units are sold firsthand to buyers) and Resale Market Sales (which we call Secondary Sales as they are sold secondhand from a buyer to another buyer). We can see that Residential Sales Volumes are in general very volatile, and also that Developer Sales are in general more volatile than Secondary Sales. This is potentially because real estate developers have a greater ability versus individuals to time the market for their property launches. They also typically exhibit pro-cyclical behaviour, which is to say that when the market for new units is hot they will all crowd in and try to launch as many units as possible.

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SINGAPORE PROPERTY WEEKLY Issue 60 As of 2012Q1, versus the previous quarter, total residential sales had risen by just 0.2%, with developer sales increasing 36.9% and secondary sales falling by 33.3%. the type of sale. The green bars show the Secondary Sales. The red bars show the sale of uncompleted units by developers. The blue bars show the sale of completed units by developers. From the graph we can observe a few phenomena. First, from 2000 to 2005 developers were still digesting a lot of their inventory (completed units) and this probably kept both the market and their new launches fairly depressed. The digestion of this inventory likely helped the property bull market to really take off from 2006 onwards. Second, Secondary Sales have been shrinking as a percentage of total sales volume versus Developer Sales over this period (i.e. the green bars are shrinking while the red bars have been growing).

Figure 1.1.2c shows the quarterly Composition of Residential Sales Volume by

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SINGAPORE PROPERTY WEEKLY Issue 60 As of 2012Q1, the proportion of developer sales to total sales was 65.1% while secondary sales made up 34.9%.

Figure 1.1.2d shows this shift clearly. The 12year average for Developer Sales as a percentage of Total Sales is around 30%, but in 2012Q1 it hit an all time high of 65.1%.

Correspondingly, Secondary Market Sales as a percentage of Total Sales have plunged from their 12-year average of around 70% to an all-time low of 34.9% in 2012Q1 (Figure 1.1.2e).

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SINGAPORE PROPERTY WEEKLY Issue 60 remaining at a relatively high level. The total, developer and secondary market sales were down 19.0%, 23.0% and 12.4% respectively on a month-on-month basis. How these trends affect investors Lower volumes suggest that the property market is cooling off, but we will need to see at least a few months worth of data to establish a trend. The dominance of developer sales and drying up of the resale market presents a double challenge to investors. Lets take a look at the situation since 1Q2012. In May 2012, the estimated total residential transaction volume was 3,475 units, comprising 2,057 developer and 1,418 secondary market sales (Figure 1.1.2f). Developer sales were 59.2% of total sales, Firstly, currently new property launches tend to be unattractively priced versus their surrounding resale projects (a phenomenon we will explore in greater detail in a later article), thus reducing the prospect for future

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SINGAPORE PROPERTY WEEKLY Issue 60 capital appreciation and increasing the risk of capital loss. Secondly, a shrinking resale market means that investors will find it more difficult to sell off their purchased property, i.e. have less liquidity. This could also negatively affect the transacted pricing. And given that we are currently in the Late Bull Market Phase of the Property Market Cycle Model, investors should be doubly cautious when looking to make a property purchase. By Mr. Propwise for PropertyMarketInsights.com, a Singapore property market research site that helps buyers and sellers make profitable investment decisions subscribers get updates on where we are in the Property Market Cycle Model to help you time your investments.
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SINGAPORE PROPERTY WEEKLY Issue 60

Singapore Property This Week

Residential
Freehold Asia Gardens back on the en bloc market, with a lower price Freehold Asia Gardens at Everton Road is back on the market, asking for a lower $273.2 - 300.3 million or $1,354 to $1,488 psf ppr, compared with the earlier $302.6 - 307.7 million. The 84-unit development zoned for residential use has an allowable GFA of 201,765 sq ft based on its 2.8 plot ratio. There is no development charge payable for the site, which is located near the Outram Park MRT interchange. The tender closes at 3pm on July 31. Cooling measures helped in stabilising the property market and making it sustainable According to National Development Minister Khaw Boon Wan, the ABSD, among other cooling measures, has helped the property market stabilise and made it more sustainable. He said that the ABSD and the increase in supply for both private and public housing has helped to reduce the proportion of foreign purchase of private properties from 20% in 2011 to 7% in H1 2012, stabilise prices of private housing to a 0.3% increase in H1 2012 compared to a 6% increase in the whole of 2011 and reduce short-term property speculation.

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SINGAPORE PROPERTY WEEKLY Issue 60 Buyers from the middle and low-end of the housing market has also benefitted from the moderation to a0.4% increase in Q2 compared to the 1.1% in Q1 2012. The increase in supply of BTO flats also meant that most first-timers who apply will be successful. New policies for PR owning HDB flats To deter PRs from buying flats for investment or rental yields, the approval to sublet HDB flats is reduced to one year, compared to the earlier three years. Unlike the earlier policy, which allows owners to renew the approval at expiry without limit, extension will be granted only if there are extenuating reasons and the total period of subletting during the flat owner's entire duration of ownership cannot exceed five years. According to HDB, PRs can sublet their flats on a temporary basis and should sell the flats if they no longer need
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the flats for their own occupation instead of subletting them. Since the number of flats owned by PRs (5,000) accounts for only 5% of the HDB sublet market, the overall impact of the new policy will be small even if there may be a small increase in HDB rental rates in the short term. New homes between $500,000 to $1 million the most popular 46.3% of all new home deals or 3,361 transacted by Singaporeans in H1 2012 were in the $500,000 to $1 million price range, compared to 26.0% in H1 2010 and 40.1% in H1 2011. The demand for such homes is strong, especially from HDB upgraders gaining from the higher COVs recently. Demand for new units under $500,000 and new units in the $1 million to $2 million range also increased, with the former seeing a three-time increase from 2011 to 384 at the of
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SINGAPORE PROPERTY WEEKLY Issue 60 H1 2012 and the latter increasing from 1,760 units in H1 2011 to 1,910 or 26.3% in H1 2012. Meanwhile, new home deals in the $2 million to $3 million, $3 million to $5 million and beyond $5 million range fell by 21.2%, 21.3 % and 50.0% from H1 2011 to 215, 59 and 12 units In H1 2012, respectively. This trend towards new home purchases in the under $1 million range is likely to continue as there is a large upcoming supply of suburban developments and developments with small units. 99-year leasehold 486-unit Parc Olympia launched at an average price $820 psf The 99-year leasehold 486-unit Parc Olympia at Flora Drive in Pasir Ris has been launched at an average price of $820 psf, with the cheapest unit at an affordable $440,000. The mass market residential development consists of eight residential blocks comprising
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one-bedroom units (495 sq ft to 646 sq ft), two-bedroom units (646 sq ft to 1,292 sq ft), three-bedroom units (969 sq ft to 2,164 sq ft) and four-bedroom units (1,324 sq ft to 2,702 sq ft) sitting on a 322,368 sq ft site with facilities such as a 600 metre synthetic jogging track, a 50 metre lap pool, an airconditioned badminton court and a putting green for golfers. The project also offers a feeder bus service to and from nearby MRT stations and the Singapore Changi Airport. It is located next to The Japanese School and a drive away from Tampines Mall, Tampines One and Downtown East. It will be launched in total of four phases, with the first offering 118 units. 99-year leasehold Potong expected to be very popular Pasir site

The 88,267 sq ft plot located at Tai Thong Crescent and five minutes away from Potong
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SINGAPORE PROPERTY WEEKLY Issue 60 Pasir MRT Station was released after a successful application to release the site from the reserve list. It is expected to draw 7-15 bids with the top bid of $580-750 psf ppr since it is zoned for residential use with commercial space on the first storey and well located, being near near schools such as St Andrew's Junior and Secondary and Cedar Girls' Secondary School, and near the MRT station. However, some believe that it may have some disadvantages when compared to nearby sites since it is near a major road junction and a fly-over and has a partial twostorey height limit. The maximum GFA of 308,945 sq ft can potentially yield around 267 homes. The expected selling price of the apartments and first-storey commercial space are $1,250-1,450 psf and $4,000-4,500 psf, respectively. Most expect more cooling measures 47% of some 300 hundred respondents to a Credit Suisse survey believe that home prices will rise next year since they believe that there is genuine demand, with 30% predicting a 10% rise, while another 35% expect prices to fall. 60% believes that there will be more cooling measures, with 40% expecting it to happen within a year. 60% also stated that they may consider buying a residential property within three years, though only 31% of these intend to buy them for investment; others are buying for occupation, upgrading, or buying for family. However, only 21% said that they will consider buying a home within the year, suggesting cautiousness in the market. 60% of the respondents also said that they will not purchase shoebox apartments.

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SINGAPORE PROPERTY WEEKLY Issue 60 Commercial Upward revision of Singapores office market needed Grade A rents have fallen more than Grade B rents, 4.9% from Q1 to $10.10 psf in Q2 compared to 0.6% to $7.21 psf for the latter, hence narrowing the gap between the two. This is Rents for Grade A office space could fall even further to $9.30/9.40 psf by the end of 2012, a 15% fall from 2011. This may change as Grade B rents may fall more as supply from vacating tenants (1.2 million sq ft) and shadow space are expected to increase in the next one-and-a half years while rents for Grade A fall at a slower rate. Grade As rental decline is due to the large amount of new space from recently completed projects whereas Grade B rentals relative lack of change is due to the higher occupancy level it enjoys. However, since Grade A rental rates have fallen much from its recent peak, there is room for growth, unlike Grade B rental rates which have likely reach the peak,
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Demand in the office market has been stronger than expected, with the positive net office absorption of 473,200 sq ft in Q2 bringing H1 2012s total to 1.06 million sq ft. This means that the earlier prediction of having no change in net office demand has to be revised to one of having a positive net demand. Meanwhile, vacancy rates in all submarkets and building grades have fallen from Q1 to Q2 2012 (with the overall vacancy rate falling from 7.3% in Q1 to 6.4% in Q2, and Grade A vacancy rate falling from 12.9% in Q1 to 12.2% in Q2), though the vacancy rates in the CBD are expected to rise as more space are released back into the market as leases expires and tenants move out.

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SINGAPORE PROPERTY WEEKLY Issue 60 hence widening the rental gap again. A total of 1.37 million sq ft of office space will be completed by 2012, with another 2.8 million sq ft in 2013 and 1.7 million sq ft in 2014. Secondhand spaces filling up Almost 90% or 114,000 sq ft of the 129,000 sq ft left behind by Citi when its lease at Centennial Tower expired has been taken up, with existing tenants of the building such as Sumitomo Mitsui Banking Corporation (SMBC) and McKinsey taking a total of 36,000 sq ft, and other new tenants such as Maxwell Chambers and PetroChina taking up the rest. Citi will also vacate 143,000 sq ft of space at Millenia Tower when its lease expires, but two tenants taking up two floors of this space has been confirmed. Rents in both Centennial Tower and Millenia Tower are in the $9-11.50 psf a month range. Meanwhile, other companies such as Allianz and JP Morgan that are facing lease expiry are said to be deciding either to renew their leases or move out to other spaces. Creative ways to tackle office supply glut As supply of office space increase, developers found a new way to deal with the competition by redeveloping existing office buildings for other uses and downsizing units to make them more affordable. A total of 1.4 million sq ft of net lettable area in the CBD are to be redeveloped into residential and commercial type projects. However, despite this, the amount of space slated for redevelopment is unlikely to make much of a impact, especially with low pre-lease figures and higher vacancy rates.

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SINGAPORE PROPERTY WEEKLY Issue 60

Non-Landed Residential Resale Property Transactions for the Week of Jun 27 Jul 3
Postal District 1 1 1 1 3 5 5 5 5 5 5 5 5 5 5 5 8 9 9 9 9 9 9 9 Project Name THE SAIL @ MARINA BAY ONE SHENTON EMERALD GARDEN THE CLIFT THE METROPOLITAN CONDOMINIUM THE INFINITI BOTANNIA MONTEREY PARK CONDOMINIUM BLUE HORIZON THE INFINITI ONE-NORTH RESIDENCES THE INFINITI ONE-NORTH RESIDENCES ONE-NORTH RESIDENCES REGENT PARK VISTA PARK CITY SQUARE RESIDENCES ORCHARD VIEW THE TRILLIUM THE COSMOPOLITAN THE COSMOPOLITAN TIARA ASPEN HEIGHTS LUCKY PLAZA Area (sqft) 2,174 1,098 1,033 527 1,076 1,496 1,238 1,259 1,152 1,087 592 926 592 592 904 1,001 1,238 2,530 2,390 1,324 1,141 1,561 1,324 829 Transacted Price ($) 5,761,100 2,305,800 1,650,000 1,180,480 1,610,000 1,500,000 1,390,000 1,280,000 1,233,000 1,050,000 990,000 970,000 940,000 935,000 920,000 860,000 1,850,000 7,125,000 6,120,000 2,760,000 2,380,000 2,350,000 1,980,000 1,735,000 Price Tenure ($ psf) 99 2,650 99 2,100 1,597 999 99 2,238 99 1,496 FH 1,003 1,123 956 1,016 999 99 1,071 FH 966 99 1,672 FH 1,048 99 1,588 99 1,579 99 1,018 99 859 FH 1,495 FH 2,817 FH 2,561 FH 2,085 FH 2,086 FH 1,506 1,495 999 FH 2,093 Postal District 9 9 9 9 10 10 10 10 10 10 10 10 10 11 11 11 11 11 11 12 12 14 14 15 Project Name WATERMARK ROBERTSON QUAY THE SUITES AT CENTRAL ROBERTSON EDGE MACKENZIE 88 FOUR SEASONS PARK GARDENVILLE THE HORIZON RIDGEWOOD OLINA LODGE VALLEY PARK EWE BOON REGENT D' DALVEY THE LEVELZ SOLEIL @ SINARAN THE SHELFORD THE LINCOLN MODERN NEWTON 18 THE ANSLEY THE PARK VALE DE ROYALE THE ELYSIA LE REVE WING FONG COURT GRAND DUCHESS AT ST PATRICK'S Area (sqft) 893 624 689 807 2,260 1,765 1,722 1,744 1,539 1,216 1,141 926 786 1,722 1,389 1,378 980 1,302 1,012 1,055 1,249 786 1,066 2,573 Transacted Price ($) 1,608,000 1,500,000 1,300,000 1,180,000 5,510,000 3,360,000 2,550,000 1,980,000 1,880,000 1,800,000 1,598,888 1,510,000 1,230,000 3,185,700 2,180,000 1,950,000 1,700,000 1,680,000 1,285,000 1,300,000 1,100,000 968,000 805,000 2,900,000 Price Tenure ($ psf) FH 1,800 FH 2,403 1,887 999 FH 1,462 FH 2,438 FH 1,903 FH 1,481 1,135 999 FH 1,221 1,480 999 FH 1,401 FH 1,631 FH 1,565 99 1,850 FH 1,570 FH 1,415 FH 1,736 FH 1,290 1,270 999 FH 1,232 999 881 FH 1,232 FH 755 FH 1,127

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SINGAPORE PROPERTY WEEKLY Issue 60

Postal District 15 15 15 15 16 16 17 17 17 18 19 19 19 19 19 19 19 19 19 20 20 20 20 21 21 22 22 Project Name AMBER PARK THE ATRIA AT MEYER SANCTUARY GREEN WATER PLACE THE CLEARWATER LIMAU PARK DAHLIA PARK CONDOMINIUM CARISSA PARK CONDOMINIUM LOYANG VALLEY THE TROPICA THE CHUAN KENSINGTON PARK CONDOMINIUM KENSINGTON PARK CONDOMINIUM THE SPRINGBLOOM NOUVELLE PARK THE QUARTZ THE SUNSHINE RIO VISTA THE QUARTZ THE WINDSOR BRADDELL VIEW BISHAN PARK CONDOMINIUM FAR HORIZON GARDENS THE HILLSIDE SUMMERHILL THE CENTRIS PARC OASIS Area (sqft) 1,744 1,615 1,572 1,453 1,356 1,270 1,270 1,238 1,582 1,238 1,464 1,658 1,668 1,442 1,227 1,152 1,227 1,249 1,033 2,454 1,453 1,324 1,152 1,528 1,550 1,238 1,399 Transacted Price ($) 2,435,000 2,230,000 1,850,000 1,535,000 1,235,000 1,200,000 1,020,000 1,013,000 915,000 1,048,000 1,980,000 1,710,000 1,608,000 1,360,000 1,228,000 1,155,000 1,120,000 1,030,000 1,000,000 2,400,000 1,070,000 1,055,000 800,000 1,670,000 1,530,000 1,380,000 1,140,000 Price Tenure ($ psf) FH 1,396 FH 1,381 99 1,177 99 1,056 99 911 FH 945 FH 803 FH 818 99 578 99 847 1,353 999 1,032 999 999 964 99 943 FH 1,001 99 1,003 FH 913 99 825 99 968 FH 978 99 736 99 797 99 695 FH 1,093 FH 987 99 1,115 99 815

Postal District 23 23 23 25 25 26

Project Name CASHEW HEIGHTS CONDOMINIUM HAZEL PARK CONDOMINIUM NORTHVALE CASABLANCA ROSEWOOD BULLION PARK

Area (sqft) 1,658 1,367 1,281 936 1,012 1,238

Transacted Price Tenure Price ($) ($ psf) 1,560,000 941 999 1,280,000 936 999 888,000 99 693 760,000 99 812 758,000 99 749 1,260,000 1,018 FH

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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