ERA Daily Research - 9 July

HDB resale prices rise for 12th straight month; 19 million-dollar flats sold in June

The Straits Times, 8 July 2021, Thu 11:51am

By Michelle Ng  

The Housing Board resale market bounced back quickly last month, with prices continuing to climb and more flats changing hands as tightened Covid-19 measures were eased.

HDB resale prices rose for the 12th straight month, advancing 0.9 per cent last month compared with May, according to flash data from real estate portal SRX on Thursday (July 8).

The HDB resale market has "returned to business as usual", said ERA Realty head of research and consultancy Nicholas Mak, who added that the latest figures show that people are getting used to the safe distancing measures and restrictions imposed by the Government as a result of the pandemic.

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HDB resale prices up again, 19 million-dollar flats sold in June

The Business Times, 9 July 2021, Fri 5:50am

THE Housing Board resale market bounced back quickly last month, with prices continuing to climb and more flats changing hands as tightened Covid-19 measures were eased.

HDB resale prices rose for the 12th straight month, advancing 0.9 per cent last month compared with May, according to flash data from real estate portal SRX on Thursday.

The HDB resale market has "returned to business as usual", said ERA Realty head of research and consultancy Nicholas Mak, who added that the latest figures show that people are getting used to the safe distancing measures and restrictions imposed by the government as a result of the pandemic.

Year on year, resale prices increased 13.2 per cent from June last year, and are just 1.7 per cent off their peak in April 2013.

The rise in prices for resale flats last month was broad-based, climbing for both mature and non-mature estates, as well as across all room types.

A total of 2,311 resale flats changed hands last month, rising 17.5 per cent from the month before.

Huttons Asia senior director of research Lee Sze Teck said the jump in transaction volume reflects the demand that was artificially constrained by viewing restrictions imposed during the phase two (heightened alert) period, when households could receive only two unique visitors each day.

After June 13, the measures were relaxed to five unique visitors each day.

Last month also saw 19 resale flats change hands for at least $1 million, a jump from 13 such transactions in May.

A 49-year-old terraced house in Whampoa was sold for $1.268 million, making the 210-square-metre dwelling the most expensive HDB resale unit on record.

The 19 million-dollar flats sold made up 0.8 per cent of last month's total resale transactions.

This brings the total number of such flats to 106 in the first half of this year, more than four times the 24 units sold in the same period last year.

PropNex head of research and content Wong Siew Ying pointed out that all of the 106 million-dollar transactions were located in mature estates.

The central area, specifically The Pinnacle @ Duxton, saw the most activity, with 30 such deals, followed by Queenstown and Bishan, with 16 each, she noted.

Analysts expect resale prices to continue rising so long as Build-To-Order (BTO) flats face construction delays.

Huttons' Mr Lee said HDB's willingness to consider waiving penalties for buyers who cancel their BTO applications to buy a resale flat to meet their urgent housing needs may likely prop up demand in the resale market in the months to come.

Besides increased demand and rising prices, another issue that buyers might be contending with is the cash-over-valuation (COV) component, said Mr Lee.

COV happens when a resale flat is sold above its actual HDB valuation, and the shortfall can only be paid for in cash by the buyer.

"More buyers have chosen to match the sellers' asking prices, which tend to be higher than the last transacted price, resulting in more instances of COV. If left unchecked, this will affect affordability and put flats out of reach for some buyers," he said.

However, Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, pointed out that the government had recently clarified that the majority of buyers did not have to pay any COV, with the median COV remaining at $0.

"This information can serve as a market indicator for both buyers and sellers. It may help to alleviate the anxieties of some buyers who may be worried about paying high COVs or 'overpaying' for certain flats," she said. 


106 HDB resale flats sold for over S$1m in first half of 2021, over 4-fold increase year-on-year

Today Online, 8 July 2021, Thu

By Navene Elangovan

The number of Housing and Development Board (HDB) resale flats changing hands for above S$1 million in the first half of this year jumped to 106, more than four times the total for the same period in 2020. Nineteen of these sales were in June alone.

Flash data from real estate portal SRX released on Thursday (July 8) showed that the highest price for a resale flat sold last month was S$1,268,000 for a three-room terrace unit along Jalan Bahagia near Whampoa estate.

Ms Wong Siew Ying, head of research and content at real estate agency PropNex, said that all 106 transactions took place in mature estates, especially in more central locations with a broader range of amenities.

The central area, primarily Pinnacle@Duxton in Tanjong Pagar, led with the highest number of million-dollar HDB resale transactions with 30 deals, followed by Queenstown and Bishan with 16 transactions each.

In non-mature estates, the highest price commanded by a resale flat last month was S$968,000, for an executive apartment on Bukit Batok Street 25.

In the first half of last year, a total of 24 resale HDB flats sold for more than S$1 million. For the full year of 2020, the total was a record 82 flats at that price level — eclipsing the previous record of 71 such sales in 2018.

The numbers point to a growing trend over the last five years of HDB resale flats being sold for at least S$1 million.

Aside from a slight dip in 2019 when there were 64 such transactions, the number of resale flats sold for at least S$1 million have steadily increased from 12 in 2015 to the 82 figure last year, Propnex data showed.


Ms Christine Sun, senior vice-president of research and analytics of property agency OrangeTe, said that the increased demand for flats selling above S$1 million could be driven by couples or singles in their 30s to 50s who work as top executives in private firms or the public sector.

“These people do not mind paying top dollar for well-located resale flats as they perceive connectivity and convenience to be crucial when it comes to choosing a home,” she said.

Other buyers could be those downgrading from private property or former homeowners who had sold their property in an en-bloc sale and have collected a substantial sum of money from the collective sale.

For many of these buyers, million-dollar HDB flats are considered affordable compared to private property, Ms Sun said.

Mr Nicholas Mak, head of research and consultancy at property agency ERA, said that the number of resale flats sold at at least S$1 million each pointed to the strength of the HDB resale market.

He noted that buyers of the most expensive HDB flats sold last month showed a preference for spacious homes that presented value for money.

Three of the most expensive HDB flats sold last month were transacted above S$1.23 million each, with the unit price of each of these three flats below S$1,000 per square foot as they were rather large in size.

 “The pandemic and current work-from-home culture could have pushed more households to look for larger homes,” he added.


Singapore's shophouse transaction value up 29.9% in H1 2021

The Business Times, 9 July 2021, Fri 5:50am

By Lisa Kriwangko

SINGAPORE'S total shophouse transaction value hit S$836.1 million in H1 2021, up 29.9 per cent from H2 2020, backed by the pick-up in activity from the fourth quarter of 2020.

This total was made up of the first and second quarter's transaction values of S$365.4 million and S$470.7 million respectively. In terms of volume, the half-year saw 118 sales, up from the 90 in H2 2020.

While freehold shophouses still accounted for the bulk of transactions - 78.8 per cent - leasehold sales volume more than doubled from the previous half year to 25 units.

Knight Frank said on Thursday: "Buyers who were drawn by hopes of capital appreciation showed interest in better-located leasehold shophouses, with over half of the leasehold transactions located at prime District 2."

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The report also noted a trend towards more "affordable alternatives". District 8 recorded the highest sales volume among the regions, with 18 out of the 26 sold at "entry prices" of below S$5 million.

However, the typically-favoured Districts 1 and 2 remained sought-after, recording 15 and 20 transactions respectively.

The average unit price of freehold shophouses during the half year dipped 0.4 per cent from that of H2 2020, to S$4,344 per square feet (psf) on land. This is 59.5 per cent higher from H1 2020, when Singapore was experiencing the onset of the pandemic.

Meanwhile, leasehold prices reached S$4,418 psf on land, up 4.9 per cent from the previous half-year and 23 per cent from the year ago. The rise came on the back of transactions in the Tanjong Pagar and Kreta Ayer Conservation Areas fetching higher prices.

The biggest transaction for the six months was 277/279 New Bridge Road, which sold for S$28 million or S$11,018 psf. On a psf basis, the most expensive transaction was 9 Stanley Street in the Telok Ayer Conservation Area, which sold for S$17.8 million or S$12,607 psf.

A fully tenanted three-storey conservation shophouse with an attic at 91 Tanjong Pagar Road obtained the highest gain during the half year: it was sold at S$10.5 million, more than five times the previous sale price some 15 years ago.

Knight Frank said that buyers exhibited a "continued appetite" for shophouse assets in the first half of 2021. The real-estate consultancy firm noted that the half year's transaction value was equivalent to 91.6 per cent of that in the full year of 2020.

"Barring any recurring waves of the Covid-19 infection and based on the current demand momentum, it is more than possible for the sales value in the full year of 2021 to exceed the last S$1.46 billion high posted in 2018, and for sales volume to cross the 200-unit mark," said Knight Frank.

"In addition, with many still keen to test the market on the offers they can draw, we might see shophouse sales in the second half of the year achieving new benchmark prices," it added.

That said, the company also noted that there is an "inevitable ceiling" to the escalating prices.


Grab CEO Anthony Tan's family buys GCB in Bin Tong Park for S$40m

The Business Times, 9 July 2021, Fri 5:50am

By Kalpana Rashiwala & Claudia Chong

GRAB co-founder and CEO Anthony Tan's family has bought a property in the Bin Tong Park Good Class Bungalow (GCB) Area for S$40 million. The purchase was made by his wife, Chloe Tong, BT understands.

The couple is expected to redevelop the property, which has a bungalow on site understood to have been built in the 1990s.

The property was sold by a doctor. The price works out to S$1,849 per square foot based on the freehold land area of 21,637 sq ft. The deal was entered into a few months ago and has been completed.

Mr Tan, 39, is a Malaysia-born Singapore citizen and a scion of the Tan Chong Motor family but struck out on his own to co-found Singapore-based ride-hailing and food delivery startup Grab.

He married Ms Tong, the daughter of The Edge Media Group owner Tong Kooi Ong, in 2015.

Some observers described the nearly S$1,850 psf that Ms Tong had paid for the Bin Tong Park property as a "fair price" when the deal was entered into a few months ago.

"If the property were to be sold today, the price would be higher, maybe S$2,000 psf," said a veteran bungalow market watcher.

News in March of the sale of an old Nassim Road house for S$4,005 psf - a record price for bungalow redevelopment land in a GCB Area - is seen as the catalyst that emboldened sellers to be firm about their asking prices. Well-heeled Singapore citizens house hunting in GCB Areas have been willing to match higher asking prices.

The price appreciation has rippled from the ultra-prime locations such as Nassim and Cluny which are closest to the Singapore Botanic Gardens to areas further away.

Based on URA Realis caveats data, there have been 53 deals in GCB Areas totalling nearly S$1.5 billion in the first-half of this year. This exceeds the tally for the whole of last year - 46 deals amounting to S$1.1 billion.

Bungalows in the 39 gazetted GCB Areas are the most prestigious form of landed housing in Singapore, with strict planning conditions stipulated by the Urban Redevelopment Authority (URA) to preserve their exclusivity and low-rise character.

One generally has to be a Singapore citizen to be allowed to acquire a landed property in a GCB Area.

Mr Tan started Grab, then known as MyTeksi, with his Harvard Business School classmate Tan Hooi Ling (no relation) in 2012. The company began as a taxi-hailing business in a cramped Kuala Lumpur office with Mr Tan's mother as its first external investor.

Vertex Ventures, a venture capital firm linked to Singapore state investor Temasek, funded the startup in 2013 and Grab later moved its headquarters to Singapore. It diversified its business into transport, food delivery and financial services.

The company's valuation climbed over the years as it snagged backing from SoftBank, Toyota, Tiger Global and other investors. Its last known private market valuation is understood to be more than US$16 billion.

A US$39.6 billion merger with US-listed SPAC (special purpose acquisition company) Altimeter Growth, announced in April this year, will likely push Mr Tan's net worth to US$829 million, according to the Bloomberg Billionaires Index.

Last month, Grab postponed the merger, which had been slated for completion this month, to the fourth quarter of this year.

The delay in the deal - poised to be the biggest merger with a SPAC to date - came as Grab works on a financial audit of the past three years to comply with standards required by the US Securities and Exchange Commission.

BT reported earlier that according to information in Grab's presentation, Mr Tan will control 60.4 per cent of Grab's voting power after the SPAC merger, thanks to a dual-class structure that will grant the co-founder disproportionate voting rights.

He would own a 2.2 per cent stake in the company post-merger, comprising 162.9 million Class B ordinary shares. Each Class B share is entitled to 45 votes, in contrast with the one vote accorded to each Class A share.

Grab recorded a net loss of US$2.7 billion in FY2020 ended December, on the back of US$1.2 billion in net revenue (gross billings less base and excess incentives). This marked an improvement from the US$4 billion loss in FY2019, with US$455 million recorded in net revenue.

The delivery segment was the main driver of revenue growth, likely boosted by the Covid-19 pandemic. Adjusted net revenue (gross billings less base incentives) rose from US$0.2 billion to US$0.8 billion in 2020.


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