November 22, 2010 "The latest slew of property measures slowed market activity while price increases moderated across all segments signalling the start of a price consolidation phase." Image: The Sail @ Marina Bay Singapore s economy is on track to achieve the overall growth forecast of 13 to 15 per cent for the whole of 2010. Primary sales surged 82 per cent month on month in July; despite the traditionally inauspicious Hungry Ghost Festival falling in August, demand remained fi rm. The number of collective sales also improved signifi cantly with more than S$800 million of sales recorded year to date. On the 30 August 2010, the government announced its third slew of property measures to curb speculative activities and maintain a more stable property market. Two projects sold well although the island-wide primary sales volume dipped 28 per cent month on month in September after the announcement of the new measures. Price increases across all sectors moderated after the announcement of the new measures. The number of expected completions for 2011 was revised upwards as several projects were completed ahead of time. Demand for homes is expected to stabilise in the coming months as overall private home prices continue to trend sideways. Savills Research www.savills.com MICA(P) No. 218 / 02 / 2009 Company Reg No. 198703410D
Market Overview Based on the third quarter advance estimates from The Ministry of Trade and Industry (MTI), Singapore s economy is on track to achieve the overall growth forecast of 13 to 15 per cent for 2010. The manufacturing and construction sectors continued to bolster the nation s growth, albeit at a slower pace in the third quarter compared to the exceptional growth in the fi rst two quarters. In the first two months of the reviewed quarter, sentiment in the property sector remained buoyant as buyers continued to fl ock to the market and developers placed aggressive bids for land tenders. Primary sales rebounded strongly by 82 per cent month on month from 847 units in June to 1,544 units in July. Demand remained fi rm in the second month of the quarter with 1,248 new sales despite the fact that the traditionally inauspicious Hungry Ghost Festival fell in August this year. Total Number of Transactions and Purchases by Foreigners, 2000 Q3/2010 45,000 40,000 35,000 Q4 Q3 Q2 Q1 (LHS) % of Foreigner Purchases (RHS) No. of Transactions 5,656 30,000 10,306 7,102 20% 25,000 7,932 15% 20,000 8,557 12,613 3,248 15,000 14,702 5,022 10,238 10% 4,165 5,751 1,890 2,697 10,000 2,464 3,589 3,619 2,406 3,461 5,173 4,556 5,800 9,420 4,146 3,876 2,952 5% 5,000 3,191 2,871 6,809 2,973 4,097 4,030 8,529 9,125 2,701 3,218 2,171 1,418 2,493 2,619 4,322 3,437 3,428 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: URA, Savills Research & Consultancy Some major new launches achieved impressive sales in the fi rst two months of the reviewed quarter. The Scala, a mass market project situated beside the Lorong Chuan MRT station, sold 90 per cent of its 468 units within the fi rst week of launch. The average unit price was S$1,173 per sqft, setting a new benchmark for the area. Another project that attracted buyers was the 157-unit 368 Thomson developed by City Developments Limited. The mid-tier project, located at district 11, was fully sold within a month at an average price of S$1,350 per sqft. Other projects that were as well received include Viva Vista (144 units) at Pasir Panjang Hill, The Greenwich (319 units) at Seletar and Terrene at Bukit Timah (172 units) at Toh Tuck Drive. 30% 25% The number of collective sales also improved significantly with more than S$800 million of sales recorded this year to date. More than 10 deals were sealed in the reviewed quarter compared with only one in the whole of 2009. The largest collective sale to date was Meng Garden at Lloyd for S$137 million (S$1,380 per sqft per plot ratio), while most of the other deals were small, each less than S$100 million. Major New Launches, Q3/2010 Project Name NV Residences Vacanza@ East Developer Location Category Total Units Hong Realty Pte Hoi Hup Sunway Property Pasir Ris Grove Lengkong Tujoh / Jalan Senang The Scala Circle Line Serangoon Avenue 3 The Greenwich Terrene at Bukit Timah Far East Square Premier Land Development 368 Thomson City Developments Viva Vista Hume Homes Yio Chu Kang / Seletar OCR 642 OCR 473 OCR 468 OCR 319 Toh Tuck Drive RCR 172 Thomson South Buona Vista / Pasir Panjang Hill Loft@Nathan Oxley JV River Valley Haig 162 Tomlinson Heights Dorsett Residences Centra Suites Mequity Two Pte Yarra Investments Tang Suites Pte Pinnacle Realty CCR 157 RCR 144 CCR 121 Haig RCR 99 Tomlinson New Bridge Lorong 25A Geylang Jupiter 18 RH Changi Lorong 102 Changi Centra Studios Pinnacle Realty Source: URA, Savills Research & Consultancy Lorong 25 Geyland CCR 70 RCR 68 RCR 62 RCR 53 RCR 51 Over 200 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. I 02
On 30 August 2010, the government announced its third slew of property measures to cool the overheated property market. These were aimed at curbing speculative activities and maintaining a more stable and sustainable property market through greater fi nancial prudence; especially the public housing sector where resale prices have surged repeatedly. The new measures are summarised as follows: New Property Measures with effect from 30 August 2010 Private Residential Market 1) Reduction of the housing loanto-value from 80 per cent to 70 per cent for buyers with one outstanding housing loan or more and increase of the minimum cash deposit from 5 per cent to 10 per cent. 2) Concurrent ownership of both HDB flats and private residential properties (including land and overseas) within the five-year Minimum Occupation Period (MOP) is no longer permitted. 3) Increase of seller s stamp duty (SSD) from one year to three years. 4) Introduction of mandatory disposal of properties in Singapore within two years if landed homeowners give up their Singapore permanent residency or citizenship. 5) Application for PR through investment in residential properties is no longer permitted. Public Housing Market 1) Households earning between S$8,000 and S$10,000 can no longer buy new Design, Build and Sell Scheme (DBSS) flats with a S$30,000 CPF Housing Grant. 2) Increase in the supply of new fl ats, DBSS and executive condominiums (ECs) from 16,000 units in 2010 to 22,000 units in 2011. Completion time for build-to-order (BTO) fl ats to be reduced. 3) Buyers of non-subsidised fl ats will no longer be allowed to own a private property for fi ve years and the MOP of non-subsidised fl ats for resale and subletting will be increased from three to fi ve years. 4)Introduction of a seven day cooling-off period for any owners who intend to sell their HDB fl ats. Possible Impact 1) HDB upgraders may take a longer time to upgrade to a private property, which in turn would reduce demand for mass market homes. Limited effect on high-end properties as only some buyers of these properties take loans of more than 70 per cent. 2) PRs and affected buyers may switch to buy small-format, older private resale or mass market homes as an alternative to HDB resale fl ats. 3) Number of speculators will fall, but unlikely to affect long-term investors. 4) Limited impact as the number of such owners is likely to be small. 5) Limited impact as it affects few people. Possible Impact Source: URA, HDB, Savills Research & Consultancy HDB resale price hike could be reined in and the public housing supply crunch could see respite in the coming months. Reduced demand from buyers who are not in urgent need of housing. The unexpected timing and swiftness of the cooling measures caught the market off guard. Demand was originally expected to surge after the Hungry Ghost Festival and many launches from land parcels bought from the Government Land Sales (GLS) programme in the past year were reportedly lined up to be released in the coming months. As the cooling measures kicked in, some developers were said to have delayed their project launches while buyers adopted a wait-and-see approach. Nevertheless, two projects went ahead with their sales launches and surprisingly received good responses. Dorsett Residences, a 99-year project located above the Outram MRT Station, was sold out in one day at an average price of S$1,800 per sqft, due mainly to its excellent location and small-format units at affordable prices. The other project that did well was the 642-unit NV Residences in Pasir Ris where over 90 per cent of 380 launched units were sold during the preview week. The market, on the whole, entered a stale-mate phase as buyers held off purchases in anticipation of price falls while fi nancially strong sellers maintained their asking prices. Many show fl ats were notably quieter as were land tenders, which saw dismal numbers of bids as developers became more wary. Unsurprisingly, private home sales in September dipped 28 per cent month on month and 20 per cent year on year to 911 units as a result of the new measures. However, we do not expect the stand-off situation to last as well-located projects and smaller-sized homes with more affordable price tags will continue to draw interest. The mass market segment is expected to remain relatively resilient as speculative activities are ebbing and interest rates are likely to stay low. More PRs may also enter the mass market segment as some no longer qualify to buy HDB resale fl ats. Prices According to the URA, the island-wide price index of private residential property surged further by 2.9 per cent quarter on quarter in Q3/2010 after a 5.3 per cent increase in the previous quarter. The slow down in price increase refl ects a consolidation in the property market brought on by the slew of cooling-off measures. By region, prices of non-landed private residential property increased 1.6 per cent in the Core Central Region (CCR), 2.3 per cent in Rest of Central Region (RCR) and 2.2 per cent in Outside Central Region (OCR) in Q3/2010. Generally, the increase across all segments has moderated after the measures. Over 200 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. I 03
According to Savills data, the average price of nonlanded high-end private homes increased marginally by 0.8 per cent quarter-on-quarter to S$2,179 per sqft in Q3/2010, the smallest rise since 2006. The average super luxury residential price dipped marginally by 0.5 per cent quarter-on-quarter to S$3,039 per sqft in Q3/2010, signalling the beginning of price stabilisation. Average Prices of High-End and Super Luxury Non- Landed Residential, 2000 Q3/2010 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Q1 00 01 02 High-end Residential 03 04 Source: Savills Research & Consultancy 05 06 Super Luxury 07 08 09 Q3 10 Future Supply There were a total of 72,987 private residential units in the pipeline as at Q3/2010. Of these, 39,937 units are under construction, while 33,050 are in the planning stage. Compared with the Q2/2010 forecast, the completions in 2011 have been marginally revised from 6,451 units to 6,766 units as some projects will be completing ahead of time. The forecasts beyond 2014 have been revised upwards from 11,796 units to 14,859 units. This quarter also saw an addition of 680 executive condominiums under construction with another 3,419 units in the planning stage. The surge in the pipeline supply could be attributed to the ramp up of the 2010 GLS programme. Outlook With the curtailing of HDB upgraders participation in the private residential market and speculators taking a back seat after the cooling-off measures, the sales volume is expected to stabilise in the coming months. However, as a number of major projects are set to be launched in Q4/2010, new sales (including executive condominiums) in the last quarter could remain fi rm, ranging between 1,500 and 2,500 units, mirroring or even surpassing the demand seen in Q4/2009. This year could well end with a total sales volume of between 13,500 and 14,500 units. For further information, please contact: singapore Christopher J Marriott CEO, South East Asia +65 6415 3659 cjmarriott@savills.com.sg residential sales, singapore Phylicia Ang +65 6836 6888 pang@savills.com.sg international marketing, singapore Julian Sedgwick Senior Associate Director +65 6836 6888 jsedgwick@savills.com.sg residential leasing, singapore Patrick Lai Director +65 6415 3629 plai@savills.com.sg prestige homes, singapore Steven Ming +65 6415 3624 sming@savills.com.sg research & consultancy, singapore Jessie Yeo +65 6415 7580 jyeo@savills.com.sg research & consultancy, asia pacific Simon Smith Senior Director +852 2842 4573 ssmith@savills.com.hk address Savills (Singapore) Pte Limited 2 Shenton Way #17-01 SGX Centre 1 Singapore 068804 T: +65 6536 5022 F: +65 6538 5540 corporate website www.savills.com This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part of, an offer or contract; interested parties should not rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of the agent or the agent's principal has any authority to make any representations or warranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills. Savills (Hong Kong) Limited. 2010.
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