SINGAPORE Q Residential market looking optimistic H O U S I N G R E P O R T

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1 H O U S I N G R E P O R T R E SEARCH SINGAPORE Residential market looking optimistic Transaction volumes in the primary and secondary residential markets continue to improve in. What is driving the demand? Edmund Tie & Company Research

2 PP: Planning Permission GLS: Government Land Sales E d m u n d T ie & C o m p a n y R e s e a r c h 2

3 OVERVIEW Total sales boosted by the Secondary Market The private residential property market expanded in, with total sales increasing by 28% q-o-q to 6,54 units in (Figure 1). The improvement in secondary sales was one of the key reasons for higher sales in Q2. Residential property purchases by Singaporeans formed the bulk of transactions, comprising 78.2% and 63.3% of primary and secondary purchases respectively. Likewise, the HDB resale market recorded a 32.1% q-o-q increase in sales to 61 units in. The improvement in HDB resale volume was positively correlated to the completion of private projects in 216. Most HDB upgraders are trying to dispose their properties so that they do not incur the Additional Buyers Stamp Duties (ABSD). F I G U R E 1 Residential Property Sales Volume 15, 12, 9, 6, 3, Q2 28 Q2 29 Q2 21 Q2 211 Sold in secondary market HDB resale market volume Separately, residential property prices continued to decline at a moderate pace, with URA s residential property price index easing by.7% q-o-q in Q2 (Figure 2). The potential interest rate hikes and uncertain environment has kept prices in check. F I G U R E 2 HDB and URA Private Residential Price Indices (Price Index) Q2 28 Q2 29 Q2 21 Q2 211 HDB Price Index Q2 212 Q2 212 Source: URA, HDB, Edmund Tie & Company Research Sold directly by developers * (Q1 29=1) URA Price Index The supply of unsold homes remained close to the historical low of 28. With the Government maintaining its measured approach to the Government Land Sales (GLS) programme, there is less pressure coming from the supply. On a separate note, developers have turned to the private market, with six collective sale projects transacted so far in 217. While this has led to a 12% q-o-q increase in potential supply to 2,998 units in (Figure 3), the displaced households will form the demand for existing unsold homes in 218. F I G U R E 3 Potential units to be launched 45, 3, 15, Overall Outlook Despite the uncertain external environment, the higher sales are expected to continue its momentum till 218, barring any economic shocks. The market is expected to be driven by positive sentiments and pent up demand from buyers who have been waiting on the side lines. The upcoming projects (Table 1) to be launched is expected to benefit from the upturn in sentiments with higher take-up rates. T A B L E 1 Selected Upcoming Projects Developer Location District Project Name Qingjian Realty Tuan Sing Sing Development MCL Land UOL China Construction Q3 213 Q4 213 Q1 214 Q3 214 Q4 214 Q1 215 Q3 215 Q4 215 Q1 216 Q3 216 Q4 216 Q1 217 Bukit Batok West Avenue 6 Jalan Kandis Fernvale Road Margaret Drive Amber Road West Coast Vale Total Units 23 Le Quest Kandis 13 Residence 28 NA 65 3 NA NA 14 5 NA 52 E d m u n d T ie & C o m p a n y R e s e a r c h 3

4 DEMAND ANALYSIS: Primary Market Buying activity in the Primary Market continues its run Sales in the primary residential property market maintained its momentum in, rising 7.8% q-o-q to 2,988 units. Two-bedroom units (7 sq ft to 1,1 sq ft) were the most popular among buyers of non-landed properties, accounting for about 46% of non-landed primary market transactions (Figure 4). Fewer buyers were purchasing one-bedroom units as the proportion of non-landed residential properties sold that were smaller than 7 sq ft fell from 44% in Q1 217 to 3% in. F I G U R E 4 Breakdown of Non-Landed Homes by floor area (primary market) 1% 8% 6% 4% 2% % Q2 28 Q2 29 Q2 21 Q2 211 Q2 212 The sweet spot for residential property prices remained below $1.5m, although the proportion of homes (Figure 5) transacted at $1.5m and below declined by 8 percentage-points q-o-q to 75%. There were more properties transacted in other price bands in, with those between the $1.5m to $2m price band recording a higher increase of 4 percentage-points q-o-q. F I G U R E 5 Breakdown of Non-Landed Homes by Quantum (primary market) 1% Less than 5 sq ft 5 sq ft to 7 sq ft 7 sq ft to 1,1 sq ft 1,1 sq ft to 1,55 sq ft 1,55 sq ft to 2,1 sq ft Greater than 2,1 sq ft 8% 6% 4% 2% % Q2 28 Q2 29 Q2 21 Q2 211 Q2 212 Less than $1.5m $1.5m to $2m $2m to $2.5m $2.5m to $3m $3m to $4m $4m to $5m Greater than $5m Top Selling Projects The top selling projects in were either located within established estates or were priced competitively (Table 2). Projects located in established estates and close to upcoming MRT stations and amenities saw higher takeup rates. A case in point was Seaside Residences. The development is located right next to Siglap MRT Station (under construction) and is only a 5-minute walk away from East Coast Park. The project sold 377 out of the 56 units (67% of units launched) on its opening weekend, eventually selling 452 units in. T A B L E 2 Top Selling Projects in the Primary Market () Project District Units sold (7 sq ft or smaller ) Total Units Sold in (Stock) Average ($ per sq ft) Seaside Residences (841) $1,733 Commonwealth (845) $1,765 Towers Parc Riviera (752) $1,23 Artra 3 15 (4) $1,662 The Santorini (597) $1,24 Artra, located in the established Bukit Merah district, launched 153 units and sold 115 units on its opening weekend (75% of units launched). It eventually sold 15 units in. Another project in the vicinity, Commonwealth Towers, sold 182 units in. The awarding of the residential site at Stirling Road further reinforced the demand for residential properties in the area. Separately, The Santorini and Parc Rivera sold well as the pricing of their units were attractive. The Santorini obtaining its TOP also contributed to higher sales. Outlook We have revised our forecast for primary market sales in 217 slightly upwards to about 9,5 units from our forecast of about 8,5 units in Q1, barring any economic shock. The take-up rates of several upcoming projects are likely to remain high, as market sentiments continue to improve. E d m u n d T ie & C o m p a n y R e s e a r c h 4

5 DEMAND ANALYSIS: Secondary Market Landed home sales surged in Q2 217 The landed residential property market saw a resurgence as sales increased in (Figure 6). Sales of landed homes in the secondary market increased 75% q-o-q in to 473, with terrace houses accounting for 55.8% of landed property transactions. Notwithstanding this increase, the URA landed price index continued to trend downwards, easing by.3% q-o-q. Q3 213 Q4 213 Q1 214 Q3 214 Q4 214 Q1 215 Q3 215 Q4 215 Q1 216 Q3 216 Q4 216 Q1 217 Among the districts, District 19 (Serangoon Gardens, Hougang and Punggol) continued to record the most landed residential property transactions (12 units) in. This translated to about.9% of its landed property stock being transacted, one of the highest among all districts. District 15 (65 units) and District 1 (33 units) had the second and third most transactions respectively. F I G U R E 6 Landed Homes by Type against Price Index Sales Q3 213 Q4 213 Q1 214 Q3 214 Q4 214 Q1 215 Q3 215 Q4 215 Q1 216 Q3 216 Q4 216 Q1 217 With the proliferation of private non-landed properties, more Singaporeans aspire to own a landed home due to its exclusivity. Despite this aspiration, affordability remains a constraint, which is indicated by the higher number of sales for terrace properties among the landed homes transacted in the secondary market in Q2. The sweet spot for terrace homes was within the $2m and $3m price band (Figure 7), which recorded a higher jump. F I G U R E 7 Sales of Terrace Houses by Quantum (secondary market) Terrace House Detached House Price Index Q1 29 = Semi-Detached House Price Index URA Sales of high-end non-landed residential properties picked up The number of transactions for non-landed homes in the secondary market went up by 49% q-o-q to 3,27 units in. The improvement in sales was likely supported by the pent-up demand from buyers who had been left on the sidelines since the introduction of ABSD. This is evidenced by the larger increase of residential properties with higher quantum. For instance, the number of non-landed homes transacted within the $4m to $5m range increased the most in Q2, by about 82% q-o-q to 69 units. Likewise, the number of non-landed properties priced from $3m to $4m rose by 78% to 141 units (Figure 8). F I G U R E 8 Non-Landed Home Sales by Quantum (secondary market) 3, 2,5 2, 1,5 1, 5 Q3 213 Q4 213 Q1 214 Q3 214 Q4 214 Q1 215 Q3 215 Q4 215 Q1 216 Q3 216 Q4 216 Q1 217 Less than $1m $1m to $1.5m $1.5m to $2m $2m to $3m $3m to $4m $4m to $5m Greater than $5m Except for Fulcrum that is in District 15, the rest of the top five selling projects in the secondary market in were within District 1. All these projects have been delicensed within the last two years and were being sold by developers (Table 3). Some of the projects also introduced the Deferred Payment Scheme to boost sales. T A B L E 3 Top Selling Projects in the Secondary Market () Project (tenure) District Total Units Sold Price Range ($ per sq ft) Pollen & Bleu (LH) ,725-2,369 One Balmoral (FH) 1 4 1,874-2,468 Leedon Residence (FH) ,578-2,49 Gramercy Park (FH) ,5-3,228 Fulcrum (FH) ,336-2,334 Moving forward, we anticipate that the secondary market will continue to be active as buyers sentiments improve, which were reinforced by the higher land bids. The successful collective sales will also create sufficient demand to support the current pipeline of projects next year. Less than $2m $2m to $3m $3m to $4m $4m to $5m Greater than $5m E d m u n d T ie & C o m p a n y R e s e a r c h 5

6 DEMAND ANALYSIS: Foreign Buyers Non-Singaporean Purchases The foreign demand for residential properties grew in Q2, as properties in Singapore are relatively affordable among gateway cities despite the strong Singapore dollar. This is reflected by an increase in purchases by Singapore Permanent Residents (SPRs) and Non-Permanent Residents (NPRs) in Q Non-landed private residential purchases by NPRs rose 44% q-o-q to 473 units in. Likewise, the SPRs purchase of non-landed residential expanded by 17% q-o-q to 982 units. The projects popular with SPRs are either located in the RCR or in districts that are close to suburban growth clusters, such as Jurong and Tampines. Housing affordability is a key factor in their decision-making process, as seen from their choice of competitively priced projects that they purchase from. These properties include The Santorini ($77 per sq ft to $1,13 per sq ft) and Parc Riviera ($975 per sq ft to $1,369 per sq ft). In contrast, NPRs are attracted to projects in districts that are either close to the city or those that offer a sea view and amenities. Given that NPRs mainly purchase residential properties for investment, they are more likely to purchase in places that offer them higher yields. T A B L E 4 Preferences of NPR and SPR buyers () Popular projects for SPR (number of units sold to SPR) Popular projects for NPR (number of units sold to NPR) Sims Urban Oasis (3) Seaside Residences (25) Commonwealth Towers (28) Commonwealth Towers (23) The Santorini (23) Principal Garden (18) Parc Riviera (22) Sophia Hills (17) Artra (16) Gramercy Park (17) Foreign buyers by nationality There were more Mainland Chinese buyers in, as the number of home purchases by them rose by 11% q-o-q to 376 units (Figure 9). In contrast, the number of Indian nationals buying residential properties in Singapore declined by 5.6% q-o-q to 118 units in the same period. The number of Indonesian home purchases eased slightly to 73 units in Q2 from 78 units in Q1. However, Indonesians were purchasing more residential properties between $1.5m to $3m in Q2 as compared Q1, where the bulk of transactions were below $1.5m. F I G U R E 9 Sales by Nationality () 2, 1,5 1, 5 Q3 213 Q4 213 Q1 214 Q3 214 Q4 214 Q1 215 Q3 215 Q4 215 Q1 216 Q3 216 Q4 216 Q1 217 Mainland China Malaysia India Indonesia Others Mainland Chinese buyers can be divided into two segments: the relatively affordable mass market private properties; and the luxury segment. Separately, Malaysian buyers had similar preferences as Singaporeans, given their familiarity of Singapore s residential market. The Indian and Indonesian nationals were more locationcentric in terms of their preferences. Indian nationals were more active in the eastern part of Singapore (Table 5), as most of their purchases came from District 18 (Tampines, Pasir Ris), District 15 (Katong, Joo Chiat, Amber Road), and District 16 (Bedok, Upper East Coast, Eastwood, Kew Drive). On the other hand, Indonesians tend to buy within the prime districts 9 and 1. T A B L E 5 Popular Districts from Top 4 Purchasing Nationalities () Mainland China Malaysia India Indonesia District 1 (42 units) District 14 (29 units) District 18 (28 units) District 19 District 3 District 15 (35 units) (26 units) (17 units) District 15 District 15 District 16 (33 units) (21 units) (13 units) District 3 District 1 District 19 (32 units) (2 units) (1 units) Districts 9 District 19 District 3 (29 units) (2 units) (8 units) District 1 (18 units) District 9 (12 units) District 19 (8 units) District 18 (6 units) District 15 (5 units) E d m u n d T ie & C o m p a n y R e s e a r c h 6

7 DEMAND ANALYSIS: Singaporean Buyers Demand from Singaporeans continue to grow The total number of private residential property transactions by Singaporeans increased 28% q-o-q to 4,96 units, accounting for 69% of the total residential property purchases made in. However, after discounting the purchases made by corporate entities, this proportion went up to 77%, which is at a similar level to that of Q1. However, Singaporeans purchased more expensive properties in as compared to Q1. For instance, the number of Singapore property purchases priced above $5m rose by 82% q-o-q to 122 units in Q2. In contrast, the proportion of properties purchased by Singaporeans priced lower than $1.5m fell by 8 percentage-points q-o-q to 62%. There were fewer Singaporean property purchases transacted for less than $1m in Q2, declining by 15% q-o-q to 1,19 units (Figure 1). F I G U R E 1 Home Sales by Quantum in (Singaporeans) 2, 1,5 1, 5 Less than $1m $1m to $1.5m $1.5m to $2m Seaside Residences was the most popular project in the primary market in, followed by Commonwealth Towers (Table 6). In the secondary market, the top three projects were those that were delicensed and sold directly by developers. T A B L E 6 Preferences of Singaporean buyers () Popular new projects for Singaporeans (number of units sold) $2m to $3m $3m to $4m Q1 217 $4m to Greater $5m than $5m Popular developments for Singaporeans in secondary market (number of units sold) Seaside Residences (416) Pollen & Bleu (24) Commonwealth Towers One Balmoral (29) (189) Artra (129) Fulcrum (27) Parc Riviera (126) The Meyerise (18) Kingsford Waterbay (115) Riversails (16) Buyers with HDB addresses Non-landed residential property acquisitions by buyers with HDB addresses fell marginally by 2% q-o-q to 1,82 units in. The fall was attributed to the decrease in the demand for non-landed homes that were sold for $1m or less (Figure 11). F I G U R E 11 Non-landed Home Sales by Quantum in (buyers with HDB addresses) 1, Less than $1m $1m to $1.5m Buyers with HDB addresses were inclined to purchase units within new non-landed developments that were more affordable on a quantum basis due to financial constraints (Table 7). At least 75% of units in each project were purchased at a quantum below $1.5m, and this number increased to 93% when considering units that were below $2m. Buyers with HDB addresses were more willing to purchase higher quantum units if the projects were seen to offer greater value and were close to transport nodes. However, no purchases at $2.5m and above were made in new projects by buyers with HDB addresses. In contrast, they were willing to pay more for properties at better locations in the secondary market. For example, about 46% of the 69 purchases in District 1 were for units priced at $2m and above, although this number dropped to 26% for purchases for more than $2.5m. T A B L E 7 Preferences of buyers with HDB addresses () Popular new projects for buyers with HDB addresses* (number of units sold) $1.5m $2m to $3m to to $2m $3m $4m Q1 217 $4m to Greater $5m than $5m Popular districts for buyers with HDB addresses in secondary market* (number of units sold) Seaside Residences (69) District 19 (146) Commonwealth Towers (52) District 15 (14) Parc Riviera (5) District 23 (84) Sims Urban Oasis (47) District 14 (72) The Santorini (41) District 16 (7) * This excludes the buyers with HDB addresses who are yet to be updated into the system and are currently labeled as NA. We use it as a proxy for Singaporeans living in HDB flats Moving forward, most buyers with HDB addresses are likely to remain restrained, but are likely to enter the market if there are suitable products available. E d m u n d T ie & C o m p a n y R e s e a r c h 7

CONTACTS Edmund Tie Executive Chairman +65 6393 2386 edmund.tie@etcsea.com Ong Choon Fah Chief Executive Officer Key Executive Officer +65 6393 2318 choonfah.ong@etcsea.

8 CONTACTS Edmund Tie Executive Chairman Ong Choon Fah Chief Executive Officer Key Executive Officer P R O F E S S I O N A L S E R V I C E S Valuation Advisory Valuation Advisory Property Tax Advisory & Statutory Valuation Poh Kwee Eng kweeeng.poh@etcsea.com Hazel Ng hazel.ng@etcsea.com Ng Poh Chue pohchue.ng@etcsea.com Nicholas Cheng nicholas.cheng@etcsea.com Carolyn Teo carolyn.teo@etcsea.com Alden Cheong alden.cheong@etcsea.com Tay Pei Li Associate peili.tay@etcsea.com Research Consulting Property Management Hospitality Ong Choon Fah Chief Executive Officer choonfah.ong@etcsea.com Ong Choon Fah Chief Executive Officer choonfah.ong@etcsea.com Philip Leow philip.leow@etcsea.com Heng Hua Thong huathong.heng@etcsea.com Lee Nai Jia Senior naijia.lee@etcsea.com Constance Leung constance.leung@etcsea.com Kwok Sai Kuai Senior saikuai.kwok@etcsea.com Tay Hock Soon Senior tayhs@treetops.com.sg Paul Wong paul.wong@etcsea.com A G E N C Y S E R V I C E S Investment Advisory Auction Commercial & Retail China Desk Edmund Tie Executive Chairman edmund.tie@etcsea.com Nicholas Cheng nicholas.cheng@etcsea.com Chua Wei Lin Senior weilin.chua@etcsea.com Heng Hua Thong huathong.heng@etcsea.com Swee Shou Fern Senior shoufern.swee@etcsea.com Tan Chun Ming chunming.tan@etcsea.com Residential Margaret Thean margaret.thean@etcsea.com Gary Tan Senior gary.tan@etcsea.com Karen Ong Senior karen.ong@etcsea.com Joy Tan joy.tan@etcsea.com Associate Agency Margaret Thean margaret.thean@etcsea.com Edmund Toh Key Executive Officer edmund.toh@etcsea.com Albert Chan Executive Vice President albert.chan@etcsea.com Stephen Teo Associate stephen.teo@etcsea.com Authors: Lee Nai Jia Senior, Research Yam Kah Heng kahheng.yam@etcsea.com Joshua Loh Senior Research Analyst Edmund Tie & Company (SEA) Pte Ltd 5 Shenton Way, #13-5 UIC Building, Singapore 6888 phone: fax: mail.sg@etcsea.com Disclaimer: This report should not be relied upon as a basis for entering transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, Edmund Tie and Company can take no responsibility for any damage or loss suffered because of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to Edmund Tie and Company. Edmund Tie & Company 217 E d m u n d T ie & C o m p a n y R e s e a r c h 8

SINGAPORE Q H O U S I N G R E P O R T

SINGAPORE Q H O U S I N G R E P O R T H O U S I N G R E P O R T R ESEARCH SINGAPORE Q3 217 Residential market maintains momentum Private residential property sales volume was largely maintained in the primary and secondary residential markets