ERA Daily Research - 16 July

Singapore's 'nouveau riche' drum up luxury home demand in first half of 2021

The Business Times, 15 July 2021, Thu 7:00pm

By Lisa Kriwangko

DEMAND for luxury and prime-area private housing picked up in the first half of this year, reflecting the gains from the nouveau riche in the finance, technology and pharmaceutical sectors, analysts said.

Based on current numbers, some analysts expect overall sales volume for 2021 to cross the 10,000-mark.

The Urban Redevelopment Authority (URA)’s monthly developer sales data released on Thursday indicated that 1,529 new private homes were sold in the Core Central Region (CCR) in the first half of this year.

This is the highest half-year sales for CCR homes recorded since 2010, when 2,506 units were transacted, noted Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie. 

She added that H1 2021 sales were also higher than the full-year sales of 2014 to 2020.

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 “The exponential growth in luxury-home sales may be triggered by the flood of super-wealthy investors and foreign buyers flush with cash, snapping up luxury apartments, villas, penthouses and multi-million exclusive properties here,” she said.

Leonard Tay, head of research, Knight Frank Singapore, said sales at existing projects continued in steady rhythm on the back of positive economic recovery and Singapore being a safe venue for private wealth.

"(This is) especially among the nouveau riche from the finance, technology and pharmaceutical sectors," said Mr Tay.

In May, Shun Tak Holdings' luxury condo Park Nova sold five units for a total of over S$100 million; its biggest five-bedroom penthouse reportedly fetched S$34.438 million, or S$5,838 per square foot (psf).

That same month, a four-bedroom unit at the conglomerate’s Les Maisons Nassim was snapped up for S$39 million, or S$5,930 psf.

Riding the wave, luxury apartment complex Hyll on Holland sold 87 units at a median price of S$2,387 psf last month, securing its position as the best-selling project in June.

However, analysts noted that the rise in sales came after some discounts were offered. Before that, from January to May this year, just two units were sold in March at a median price of S$2,458 psf.

Mr Tay noted that of the yet-to-be-completed Hyll on Holland, discounts of up to 13.2 per cent were reportedly meted out on the weekend of June 26 and June 27.

This led to a boost of around 41 units being sold in that weekend alone, according to caveats recorded, Mr Tay pointed out. 

"Caveat data also demonstrated that the entire total of 87 units in the project that were transacted in the month were recorded from June 24, a surge compared to the less than 10 units sold in the preceding months."

Nicholas Mak, head of research and consultancy at ERA, said the increase in CCR sales could be driven by new launches in the area.

He said: “The number of private homes sold in the primary market decreased by 15 per cent quarter on quarter in Q2 2021. However, developers managed to sell more homes in the CCR market. This could be because five out of seven new launches in Q2 2021 were located in the CCR.”

Besides Hyll on Holland, another 119 luxury homes were sold in other projects in the CCR last month, said Ms Sun. This includes Leedon Green (31 units), Fourth Avenue Residences (12 units) and Irwell Hill Residences (11 units).

Overall, developers in Singapore sold 872 new private homes in June, easing 2.6 per cent from May's 895, according to data from the URA. Analysts billed the sales figures as fairly healthy and resilient, given the absence of new launches.

Including executive condominiums (ECs), sales reached 962, down 22 per cent from the 1,234 sold in May. Thursday's figures were similar to analysts' flash estimates published by The Business Times on Wednesday.

This marks the third consecutive month-on-month fall, after figures in May tumbled nearly 30 per cent.

June's transactions, excluding ECs, were led by the Outside of Central Region (OCR) and Rest of Central Region (RCR), which accounted for 38.6 per cent and 37.7 per cent of new private home sales, respectively. The CCR made up 23.6 per cent of the sales.

A total of 6,530 private homes were sold in the first six months of this year, which is the strongest first half since 2013, noted Mark Yip, chief executive officer of Huttons Asia.

He said: “This puts the new-sales market on course to set a record of 10,000 to 12,000 units in 2021. We estimate prices to rise by as much as 8 per cent  for the whole year.”

“The Watergardens at Canberra and Pasir Ris 8 are the first two mass-market launches in 2021, and are widely expected to do very well on the back of the buoyant HDB resale market and attractive price points. Klimt Cairnhill, an ultra-luxury project in prime District 9, offers the well-heeled an opportunity to own a large floor plate unit, a rarity among new launches,” added Mr Yip.

ERA’s Nicholas Mak also estimated sales figures to reach about 11,000 to 12,000; Knight Frank’s Leonard Tay agreed that this year’s sales “looks certain” to breach the 10,000 mark.

However, Mr Tay noted that some risks might upset the current momentum, which has been underpinned by genuine buyers. “Perhaps not so much from possible cooling measures, but worries of more prohibitive restrictions to be implemented, should there be sudden Covid-19 eruptions in the community. Still, with the national vaccination programme forging ahead, measures are expected to relax in the later half of 2021,” he added.


Singapore new private home sales dip 2.6% in June amid viewing restrictions

The Straits Times, 15 July 2021, Thu 6:40pm

By Grace Leong

Sales of new private homes eased last month amid Covid-19 heightened alert measures, though demand is still holding up well, said market observers.

Developers sold 872 units in June, down 2.6 per cent from 895 units in May, according to figures from the Urban Redevelopment Authority (URA) released on Thursday (July 15). 

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UOL's The Watergardens at Canberra launches this month on hopes of 'pent-up demand'

The Business Times, 15 July 2021, Thu 6:18pm

By Nisha Ramchandani

UOL Group is banking on pent up demand for its upcoming project along Canberra Drive, the 448-unit The Watergardens at Canberra, with prices to start from S$1,380 per square foot (psf).

A two bedroom-unit will start from below S$920,000, while a three-bedroom unit will be priced at below S$1.3 million and a four-bedroom unit from below S$1.8 million, the developer said on Thursday. The 99-year leasehold project will launch for preview on July 17 while balloting for units will take place on July 31.

UOL chief investment and asset officer Jesline Goh said: “We expect robust demand given that The Watergardens at Canberra is the first private development to launch in Sembawang after the opening of Canberra MRT station in November 2019.”

Pointing to its location near the future North Coast Innovation Corridor - which stretches from Woodlands to Punggol - she added that The Watergardens at Canberra is in a region with “strong growth potential”.

The low-rise project comprises 16 five-storey buildings, offers a mix of two to four-bedroom units, ranging in size from 646 square feet (sq ft) to 1,528 sq ft. It is a joint venture between UOL, Singapore Land Group and Kheng Leong Company.

The suburban location is likely to draw owner occupiers, and some buyers may opt for bigger sized units owing to the attractive price per square foot vis-à-vis other locales, UOL group chief executive Liam Wee Sin highlighted. “There is a bit of changing priorities and lifestyle choices that has come with Covid,” he added.

While there will be competition from another project at a smaller, adjacent site, Mr Liam expects there will be sufficient overall demand from the catchment area.

UOL was awarded the site under a state tender which closed in March last year for S$270.2 million, or about S$650 per square foot per plot ratio (psf ppr). In the same tender, an adjacent 99-year leasehold parcel which could yield up to some 220 units, was bought for nearly S$129.20 million or about S$644 psf ppr by Oasis Development, controlled by boutique developer JBE Holdings Group.

Nicholas Mak, head of research and consultancy at ERA, pointed out that there is pent-up demand among HDB upgraders for affordable private housing. He said: “Some potential demand for the condominium projects in the Canberra area could originate from the residents in the Sembawang housing estate. However, a larger number of buyers would be from the HDB estates in the north region, such as Woodlands and Yishun.”

A five minute walk from Canberra MRT station, The Watergardens at Canberra features a nature-inspired landscape and is close to the Sembawang Hot Spring Park and Sungei Khatib Bongsu. It is in the vicinity of Canberra Plaza and Sembawang Shopping Centre. It is accessible via Seletar Expressway and the future North-South corridor, which will cut travel time to the Central Business District to 20 to 25 minutes come 2026.

The Watergardens at Canberra is slated for completion in the second quarter of 2026.

This launch follows that of the group’s Clavon at Clementi Avenue 1, which debuted in December last year and has sold about 540 of its 640 units to date, according to data from the Urban Redevelopment Authority.

UOL, Singapore Land Group and Kheng Leong were also recently awarded a 99-year leasehold residential site at Ang Mo Kio Avenue 1 in a state tender after they put in the top bid of S$381.38 million or nearly S$1,118 psf ppr.

Shares in UOL shed seven Singapore cents or 0.95 per cent to close at S$7.33 on Thursday.


Two bungalows in Cluny Road in early stage of being sold for S$91m

The Business Times, 16 July 2021, Fri 5:50am

By Kalpana Rashiwala

THE buzz in the Good Class Bungalow market continues. The Business Times understands that recent deals include two adjacent old freehold bungalows on Cluny Road opposite the Singapore Botanic Gardens for which options to purchase have been granted by their respective owners at about S$3,000 per square foot on land area totalling about S$91 million.

One bungalow, on land area of nearly 15,430 sq ft, is owned by lawyer Laurence Wee.

Ronald Ooi of Kim Eng Securities fame is the owner of the other bungalow, on 15,075 sq ft of land.

Located in the Cluny Park Good Class Bungalow (GCB) Area, both houses are ripe for redevelopment.

Options for both the properties are said to have long exercise periods till early next year.

Word on the grapevine is that both bungalows are being bought by a family of Indonesian Chinese origin. One generally has to be a Singapore citizen to be allowed to buy a landed property in a GCB Area.

All eyes are now on whether the next-door property, which is owned by plastic surgeon Woffles Wu, will also be transacted. It has a land area of nearly 15,500 sq ft .

Meanwhile, BT understands that another GCB for which an option was granted recently is along Second Avenue, a stone's throw from the Sixth Avenue MRT station on the Downtown Line.

On the site is an old bungalow that is expected to be torn down for redevelopment. The price of S$30 million reflects S$2,045 psf on land area of 14,667 sq ft. This is a record psf price for GCB redevelopment land in the locale, BT understands.

Word in the market is that Realstar Premier is acting for the seller in the deal. The property is closer to the MRT station than the Third Avenue bungalow that gaming company Razer co-founder and chief executive Tan Min-Liang was recently granted an option to buy at S$52.8 million, as reported by BT last week.

The price works out to S$1,706 psf on the freehold land area of 30,954 sq ft.

The house could either be refurbished or redeveloped, say observers.

In Chatsworth Park, an old house on 22,462 sq ft of freehold land is changing hands for S$30 million. The price reflects S$1,336 psf, which is deemed lower than the current price levels .

That may be due to the deal being negotiated some time ago. The option was granted in November last year but exercised last month. Another factor contributing to the low psf price would be the long driveway, said a property agent.

List Sotheby's International Realty's (List SIR) analysis of URA Realis caveats data shows that year to date (with the latest transaction dated July 1), there have been 55 deals in GCB Areas totalling S$1.6 billion. This is higher than the total for the whole of last year - 46 deals amounting to S$1.1 billion.

However, the actual size of the GCB market is larger, as the lodging of caveats is not compulsory.

Steve Tay, senior associate vice-president at List SIR, said that he is confident that the full-year 2021 tally will cross the record S$2.2 billion of deals in GCB Areas done in 2010.

"GCB prices have appreciated significantly in the past decade. The appetite for bigger bungalows with land areas exceeding 30,000 sq ft has also grown among those buying for own occupation.

"Buyers are prepared to pay top-dollar for a GCB with a big plot size and with good attributes in prime locations close to the Botanic Gardens and Orchard Road."

The buying momentum for GCBs is being fuelled by locals and new citizens - including those who have sold their businesses or benefited from an initial public offering.

Besides entrepreneurs who have been riding the digital economy boom, wealthy families have also been acquiring bungalows in GCB Areas for the next generation.

Realstar Premier founder William Wong said: "We used to be concerned about running out of good GCB listings as some owners had withdrawn their properties from the market.

"But now, the listings are back in the market - at higher prices. In addition, we have new listings.

"So far, things have not come to a point where local Singaporeans have pulled back and stopped looking for a GCB. What we are finding is that if a particular owner keeps changing his asking price, buyers may start looking at another owner's property - because they would still like to own a GCB."

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.


Property agents close fewer deals as their ranks continue to multiply

The Business Times, 16 July 2021, Fri 8:49am

By Fiona Lam

THE total number of property agents in Singapore continued to rise last year, although on average they appeared to be closing fewer sales each.

This came as some agents looked to diversify their income streams, such as by shifting their focus towards rental properties, said the Institute of Real Estate and Urban Studies (IREUS) at the National University of Singapore.

IREUS deputy director Lee Nai Jia said many salespersons also took on additional jobs or gig-economy work, such as driving for ride-hailing platforms, while retaining their licences in the property agencies as a safeguard. This helped to mitigate the industry's attrition rate.

Robust property prices likely attracted individuals, including those retrenched during the Covid-19 pandemic, to join the agency business as well, he added.

The number of agents generally mirrors the ups and downs of the private residential market, albeit with a slight time lag, Dr Lee said, citing data from the Council for Estate Agencies (CEA) and the Urban Redevelopment Authority's Realis platform.

In 2020, there was an increase of 326 agents while the housing market sizzled despite the pandemic. The industry grew to 30,399 strong as at Jan 1, 2021, close to levels from the 2011-2013 property market upturn.

As at Jan 1, 2014, the industry had expanded to 31,783 real estate salespersons, from 31,169 on Jan 1, 2011.

After the total debt servicing ratio (TDSR) was introduced in June 2013, private home sales plunged. Caveats lodged for private housing, including executive condominiums, almost halved to 14,034 in 2014, from 27,181 in 2013. Meanwhile, 953 agents exited the industry in 2014, followed by 1,568 leaving in 2015 and 865 in 2016, CEA data showed.

The downtrend in the agency scene bottomed out in 2017 with 174 agents joining the industry, coinciding with the collective-sale fever then.

However, the correlation between the number of real estate agents and private home transactions stopped in the next two years. Fewer caveats were lodged in 2018 and 2019, falling 17.5 per cent and 16.7 per cent year on year respectively, after a round of cooling measures in July 2018. In contrast, the industry welcomed more salespersons - 575 in 2018 and another 927 in 2019.

This divergence could be attributed to some agents turning to rental markets for homes and commercial properties, to reduce their reliance on residential sales, Dr Lee noted.

While most salespersons would still prefer to handle sales of private homes, that became more challenging in the second half of 2018 and 2019 amid cooling measures and a widening price gap between buyers and sellers.

"There were also more residential project completions then. Hence, some salespersons pivoted to leasing to tide them over the dry periods, while waiting for private home sales to pick up again," he said.

The number of rental contracts for private residential properties rose progressively to 95,491 in 2019, from 83,918 in 2017. This uptrend corresponded with the completion of several condominium projects around that period. In 2020, rental contracts for private homes dipped in volume, but stayed elevated at 94,205.

Some agents from mainstream brokerages were also moving into the rental market for commercial space.

"However, they would have to contend with international property consultancies, which maintain a competitive edge for larger, single-owner developments due to their overseas networks," Dr Lee said.

The heightened level of activity in the rental markets seemed to boost overall productivity - based on transactions - of property agents.

Taking into account both rental and sale transactions for industrial, commercial and residential properties, each salesperson closed about 7.1 deals on average in 2020, more than the average of five deals in 2011.

That said, the actual number of deals brokered by a typical salesperson could well be lower than the computed average. Some rental contracts were inked without agents, as tenants renewed leases directly with landlords. For private and public housing, CEA data showed agents closed 62.2 per cent of rental transactions last year.

"Besides, a productive salesperson closes disproportionately more deals than the average salesperson, so we are likely looking at a highly skewed distribution," Dr Lee said. Still, the computed average can be useful as a comparative statistic.

"All things being equal, salespersons involved in rental activity in 2020 were more productive than in 2011."

On the other hand, agents' productivity appeared to tick down when it came to the number of sales of homes. Each salesperson on average brokered about 1.52 sales transactions of residential properties last year, fewer than the 1.66 deals in 2011 and the 1.9 deals in 2012.

More part-time and inexperienced practitioners could emerge when the agency scene gets more crowded, said Dr Lee. "And when the industry is highly competitive, salespersons are likely to focus more time on marketing efforts to attract clients and less on directly working with buyers and sellers," he said.

Dr Lee expects competition in Singapore's agency landscape to intensify, with fewer new launches and completions ahead implying a potential decline in new private home sales and rental transactions.


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