Research & Forecast Report Singapore Residential 3Q 2014 Accelerating success. Private residential market languid for most parts of 3Q 2014 Sharp pullback in launches and sales volume Market activity in the private residential property market was languid at best for most parts of 3Q 2014, save for the pickup in new home launches towards the end of the quarter. Besides the continued enforcement of government curbs and stringent financing regulations, the Hungry Ghost Festival (the seventh lunar month), which stretched from 27 July to 24 August, also kept some homebuyers at bay, as the Chinese traditionally regard this period as an inauspicious time to commit to home purchases. Specifically, new home sales, which languished at a monthly average of less than 500 units in the months of July and August, improved only in September to 648 units. Cumulatively, buying momentum slowed and the number of new units sold fell 39.9% quarter-on-quarter (QoQ), bringing 3Q 2014 s sales tally to 1,582 units the lowest level since 419 units were sold during the onset of the global financial crisis in 4Q 2008. sharp pullback in launch volume to 1,377 units in 3Q 2014, half of the 2,843 units released in 2Q 2014. In particular, launch activity was visibly subdued in the Outside Central Region (OCR) where developers released a mere 527 new mass-market homes, 67.9% lower than the 1,640 new homes released in the preceding three months. Launch activity was visibly subdued in the Outside Central Region In 3Q 2014, UOL Group launched Seventy Saint Patrick s in the OCR. The 186-unit project proved to be popular with homebuyers who took up 110 of the 140 units launched. The proximity of the project to the Marine Terrace Mass Rapid Transit (MRT) station on the future Thomson East Coast Line (TEL) as well as its freehold tenure helped to draw homebuyers. Prices achieved ranged from $1,400 to 1,795 per sq ft in the quarter ending in September. Aside from Seventy Saint Patrick s, primary market buying activity in the suburban areas was generally limited to popular projects launched in the earlier quarters, such as The Panorama in Ang Mo Kio, Lakeville in the Jurong Lake District and Coco Palms in Pasir Ris, which sold 80 units, 74 units and 57 units, respectively, in 3Q 2014. Nonetheless, the absence of major project launches caused a steep dent in the sales volume of new homes in the OCR by 55.3% QoQ to 742 units in 3Q 2014. As a result, the mass market segment, which has been dominating primary market sales since 3Q 2010, accounted for only 38.3% of all units launched and 46.9% of all units sold in 3Q 2014. Developers who had already anticipated the lull chose to focus their marketing efforts on moving units in previously launched developments instead of releasing new projects. This led to a
Geographical Distribution of New Units Launched & Sold in 2Q 2014 projects. Homebuyers picked up 11 units at the 120-unit Bijou by Far East Organisation. Prices achieved for the project located along Jalan Mat Jambol in Pasir Panjang ranged between $1,878 and $2,253 per sq ft in the quarter ending in September. Along Mergui Road, developer Forte Development Pte Ltd managed to sell 17 units of the 106-unit Forte Suites at prices between $1,622 and $1,885 per sq ft in September, its launch month. Separately, a total of 159 units were sold at popular projects launched in the earlier quarters such as Commonwealth Towers, Riverbay, Sky Habitat, Guillemard Suites and Eight Riversuites. Source: URA/Colliers International Research Selective buying seen in the Rest of Central Region In the Rest of Central Region (RCR), market response was mixed. While pent up demand helped to support the sales of new projects located in neighbourhoods that have seen limited launch activity, response was muted at other projects. Over at City Gate, the launch of the residential component, which comprises 311 residential units sitting atop a threestorey retail podium, met with a healthy response. Developers Fragrance Group and World Class Land released 150 units from the 99-year leasehold project located along Beach Road and in close proximity to the upcoming Nicoll Highway MRT station; 105 units were sold at prices ranging from $1,647 to $2,130 per sq ft during the July to September quarter. Another mid-tier project that did well was the 99-year leasehold Highline Residence. The 500-unit project, developed by Keppel Land, is located in the largely popular Tiong Bahru enclave, which has not seen a new launch in seven years. The project, which offers one- to four-bedroom configurations, lies within walking distance of the Tiong Bahru MRT station. By the close of the quarter, 142 of the 160 units launched were sold at prices ranging from $1,599 to $2,245 per sq ft. At The Citron Residences, developer Goodland Group Limited moved 40 of the 49 units launched at the 54-unit project. Homebuyers paid prices between $1,400 and $1,835 per sq ft in 3Q 2014 for the freehold project located within walking distance of the Farrer Park MRT station. All in all, launch volume in the RCR fell 28.5% QoQ to 710 units while the number of mid-tier homes sold slid 24.3% QoQ to 664 units in 3Q 2014. These accounted for 51.5% of all units launched and 42.0% of all units sold in the quarter. The Core Central Region (CCR) was the only region to see some improvement in sales activity, after moving less than 150 units per quarter in the first half of 2014. Although launch volume fell 33.3% QoQ to 140 units, home buying momentum picked up in the three months from July to September with 176 highend homes sold, up 85.3% QoQ. Notably, 55 units were released from the 134-unit Robin Residences in 3Q 2014. Developer Sing Holdings Pte Ltd found buyers for 21 units in the freehold project located along Robin Road at prices ranging from $1,941 to $2,450 per sq ft by the end of September 2014. Sales performance also improved at some previously launched projects. For instance, The Vermont on Cairnhill, located along Cairnhill Rise, moved 37 units in 3Q 2014 after its developer reportedly cut prices by about 15%, while RV Residences along River Valley Road sold another 17 units during the quarter. Despite the mild improvement, market performance in the CCR continued to pale in comparison to the other market segments. Consequently, the market share of the high-end/ luxury segment continued to take the smallest piece of the pie, accounting for 10.2% and 11.1% of islandwide new home launch and sales volumes, respectively. Despite the mild improvement, market performance in the CCR continued to pale in comparison to the other market segments. Other RCR projects launched in the quarter include smaller projects such as Bijou and Forte Suites. Sales momentum was relatively slower at both of these fully-launched freehold 2 Research & Forecast Report 3Q 2014 Residential Colliers International
New Project Launches Sample List of Newly-Launched Residential Projects for 2Q 2014 DEVELOPMENT LOCATION TENURE TOTAL NUMBER OF UNITS IN DEVELOPMENT UNITS LAUNCHED IN 3Q 2014 UNITS SOLD IN 3Q 2014 TRANSACTED PRICE RANGE ($ PER SQ FT) NON-LANDED Bijou Jalan Mat Jambol Freehold 120 120 11 1,878-2,253 City Gate Beach Road 99 years 311 150 105 1,647-2,130 Forte Suites Mergui Road Freehold 106 106 17 1,622-1,885 Highline Residences Kim Tian Road 99 years 500 160 142 1,599-2,245 M5 Jalan Mutiara Freehold 33 33 1 1,910 One Duchess Duchess Road 999 years 13 13 2 2,131-2,413 Robin Residences Robin Road Freehold 134 55 21 1,941-2,450 Seventy Saint Patrick's St. Patricks Road Freehold 186 140 110 1,400-1,795 The Citron Residences Marne Road Freehold 54 49 40 1,400-1,835 Viio @ Balestier Balestier Road Freehold 48 48 1 1,556 THE SORRENTO One Surin Surin Avenue Freehold 27 27 2 751 Source: URA/Colliers International Research Private home prices continue to head south amid soft market sentiments Amid the prevailing soft market sentiments, prices of private homes in Singapore registered the fourth continuous quarter of decline according to the Urban Redevelopment Authority s (URA) preliminary estimates for 3Q 2014. Overall, the private residential property price index showed that home prices eroded by 0.6% QoQ slower than the 1.0% QoQ decline recorded in 2Q 2014. While prices of non-landed private residential properties retreated on a market-wide basis, the pace of decline was comparatively mild in all three market segments. Generally, the stalemate between sellers with strong holding power and buyers who have been refraining from making purchases in the near term led to a price impasse and this provided some level of support for prices in 3Q 2014. In the CCR, prices dipped 0.9%, compared to the 1.5% decline in 2Q 2014 while in the RCR, prices slipped 0.1% following the 0.4% fall in the preceding quarter. Prices in the OCR fell 0.2%, a moderation from 2Q 2014 s 0.9% decline. Residential Property Price Movement Quarter-on-Quarter Change in Price Indices of Private Residential Properties Source: URA PERIOD ALL RESIDENTIAL CORE CENTRAL REGION NON-LANDED RESIDENTIAL REST OF CENTRAL REGION OUTSIDE CENTRAL REGION 3Q 2013 0.4% -0.3% -0.9% 2.2% 4Q 2013-0.9% -2.1% 0.4% -1.0% 1Q 2014-1.3% -1.1% -3.3% -0.1% 2Q 2014-1.0% -1.5% -0.4% -0.9% 3Q 2014* -0.6% -0.9% -0.1% -0.2% *Flash Estimate Luxury/super-luxury segment still in the doldrums In contrast, with acute affordability concerns in the current home purchasing environment proving to be a formidable push factor, Colliers International s research showed that the average capital value of luxury and super-luxury apartments softened by a steeper 2.1% QoQ following 2Q 2014 s 1.1% fall to $2,584 per sq ft. In the rental market, leasing activities picked up following the seasonal summer break lull. While tenants continued to enjoy stronger negotiating powers in light of the many choices 3 Research & Forecast Report 3Q 2014 Residential Colliers International
available in the market, well-maintained and attractivelylocated homes were able to hold rents. Supported by healthy leasing demand, Colliers International s research showed that the average monthly gross rents of luxury/super-luxury apartments slid by a milder 0.5% QoQ to $5.17 per sq ft per month as of 3Q 2014, following the 1.4% QoQ fall in 2Q 2014. Average Capital Values and Monthly Gross Rents of Luxury (Including Super Luxury) Apartments islandwide private residential property price index, which slid by some 2.9% over the January to September period, is forecast to continue trending south in the final quarter of 2014, although the full-year fall is not expected to exceed 5%. With no immediate relief in sight for the pricier luxury/super-luxury apartment segment that has been languishing in the doldrums, prices could slide by about 10% for the year as a whole given that they have already eroded by 6.9% in the first nine months of the year. With regard to the leasing market, leasing activities traditionally slow down over the October to December year-end festive season. With a mounting supply of high-end apartments vying for a limited pool of tenants amid an increasingly competitive leasing environment, this may exert further downward pressure on rents in 4Q 2014. Consequently, average monthly gross rents of luxury/super-luxury apartments, which have fallen 3.9% over the January to September period, could decline by about 5% for the whole of 2014. Source: Colliers International Research the average monthly gross rents of luxury/superluxury apartments slid 0.5% QoQ to $5.17 per sq ft per month as of 3Q 2014 Mounting downside risks to temper demand for homes and weigh on prices Over the last three months of the year, with the private residential property market continuing to operate amid the strict financing and regulatory environment, mounting downside risks are likely to further temper demand for homes and weigh down prices. This is on the back of uncertainties in the global arena, which are expected to generate turbulence in the financial markets and hamper growth in the domestic economy. Additionally, longstanding threats of an impending interest rate increase and a looming supply of homes remain. With homebuyers maintaining a cautious stance, the take-up of new homes in 2014 could potentially fall to between 7,000 and 8,500, taking into consideration the sales tally of 5,991 units accumulated over the first nine months of the year. This is down from 2013 s 14,948 units. Despite the market-wide slowdown, homebuyers were observed to be attracted to well-located projects in areas with growth potential, particularly those with enticing price points. This will provide the impetus for developers to price their projects competitively to drive sales. Consequently, the 4 Research & Forecast Report 3Q 2014 Residential Colliers International
485 offices in 63 countries on 6 continents United States: 146 Canada: 44 Latin America: 25 Asia: 38 ANZ: 148 EMEA: 84 Contact: Chia Siew Chuin Director singapore.research@colliers.com Colliers International Singapore 1 Raffles Place #45-00 One Raffles Place Singapore 046818 TEL +65 6223 2323 FAX +65 6222 4901 RCB No. 198105965E US$2.1 billion in annual revenue 1.46 billion square feet under management 15,800 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services, with over 13,500 professionals operating out of more than 482 offices in 62 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world. colliers.com Copyright 2014 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.