ERA Daily Research - 2 July

HDB resale prices rise 5.9% in first half of 2021, with new high expected in second half of year

Today Online, 1 July 2021, Thu

By Justin Ong

Prices of Housing and Development Board (HDB) resale flats rose by 5.9 per cent in the first half of this year, based on government estimates, with analysts expecting the market to reach a new high in the second half of the year. 

HDB’s early estimates released on Thursday (July 1) showed that resale prices in the public housing market climbed by 2.8 per cent in the second quarter of this year, compared with the first quarter. 

This is the fifth consecutive quarter of increase. 

In the first quarter of this year, prices went up by 3 per cent, compared with the fourth quarter of last year. 


Delays to Build-to-Order (BTO) housing projects owing to restrictions brought on by the Covid-19 pandemic and high demand for resale properties in attractive locations have led to the continued rise in prices, property analysts said. 

Ms Christine Sun, senior vice-president for research and analytics at real-estate firm OrangeTee & Tie, said that construction delays for new BTO flats have led many couples to seek housing in the secondary market. 

Buyers downsizing from private properties have also turned to the HDB resale market, she said. 

Ms Sun added that because of the high demand for and supply crunch in the resale market, “bargains were fading”. 

This has led buyers to snap up resale flats once they spot a home that interests them, especially if it is in a popular location. 

“With many eager buyers willing to match the valuation of properties, prices of resale flats are creeping up in many areas.” 

Still, Mr Nicholas Mak, research and consultancy head at real-estate agency ERA Realty, noted that HDB resale volumes fell by 14.1 per cent from April to June, when 6,513 flats changed hands. 

He said that some buyers could have held off their purchases owing to the effects of the Phase Two (heightened alert) imposed to arrest the spread of Covid-19 from May 16 to June 13. 

“Buyers and sellers who were not in a rush would rather delay their property purchase until when the Covid-19 situation improves and restrictions are lifted.” 


Analysts expect HDB resale prices to creep above the peak observed in the second quarter of 2013 later this year. 

Right now, HDB resale prices are 2.1 per cent below the peak in 2013, said Ms Sun. 

 “Given the current pace of price increase, resale prices are likely to reach a new high by the second half of this year,” she said. 

Agreeing, Mr Mak said that at this rate, the HDB resale market might set a new record in a quarter or two.

He predicts that HDB’s resale price index, which provides information on general price movements in the resale public housing market, could expand by 8 to 11 per cent year-on-year in 2021.


HDB resale prices climb for fifth straight quarter but at slower pace: Flash data

The Business Times, 2 July 2021, Fri 5:50 am

HOUSING Board resale prices climbed for the fifth consecutive quarter but eased from recent highs, flash estimates released on Thursday showed.

Resale prices rose 2.8 per cent in the three months to June this year from the previous quarter, compared with a 3 per cent rise in the first quarter.

Year on year, HDB resale prices were up by 10.8 per cent.

The slower price increase could be due to buyers' resistance to paying more in cash over valuation, said Huttons Asia director of research Lee Sze Teck.

Last quarter's HDB resale prices were just 2.1 per cent lower than their peak in the second quarter of 2013, said Christine Sun, real estate agency OrangeTee & Tie's senior vice-president of research and analytics.

At the current pace of price growth and increased demand, prices are likely to reach the 2013 peak in the second half of this year, she added.

For the first half of this year, resale prices increased by 5.9 per cent, this was within her full-year estimates of 5-9 per cent, said Ms Sun.

Median prices of resale flats rose in 20 out of 26 towns, added Ms Sun.

Median resale prices rose the most in the central area, up 37.2 per cent to S$738,000, followed by S$520,000 in Marine Parade (up 14.8 per cent) and S$488,000 in Clementi (up 13.5 per cent). The construction delays in new Build-To-Order (BTO) flats drove many families to turn to the secondary resale market, along with buyers who have downsized from private properties, said Ms Sun.

"Due to the robust housing demand and supply shortage, bargains were fading and buyers have to move quickly if they spot a home that interests them, especially at popular locations. With many eager buyers willing to match the valuation of properties, prices of resale flats are creeping up in many areas," she said.

An estimated 8 per cent fewer flats have changed hands in the second quarter of this year compared with the first quarter, said Huttons Asia chief executive Mark Yip.

All HDB towns, except for Bukit Merah, Choa Chu Kang and Marine Parade, saw a lower transacted volume, noted Mr Yip.

This was likely due to the tightened restrictions during Singapore's phase two (heightened alert) in May and June, he added, although there is still keen interest in resale flats.

A total of 106 HDB flats were sold for at least S$1 million in the first half of this year, compared with 82 such deals in 2020 and 64 in 2019.

Mr Yip expects the number of million-dollar flat transactions to exceed 200 this year.

"While it may make headlines for the transacted value, such transactions are less than 1 per cent of the whole year transaction volume," he said.

In August, HDB will launch about 4,900 BTO flats in Hougang, Jurong East, Kallang Whampoa, Queenstown and Tampines.

A further 3,100 to 3,600 BTO flats in Choa Chu Kang, Hougang, Jurong West, Kallang/Whampoa and Tengah will be offered in November.

HDB said it is monitoring the evolving Covid-19 situation and will make adjustments where necessary.


HDB resale prices climb for 5th straight quarter but at slower pace of 2.8%: Flash data

The Straits Times, 1 July 2021, Thu 6:21 pm

By Michelle Ng

Housing Board resale prices climbed for the fifth consecutive quarter but eased from recent highs, flash estimates released on Thursday (July 1) showed.

Resale prices rose 2.8 per cent in the three months to June this year from the previous quarter, compared with a 3 per cent rise in the first quarter.

Year on year, HDB resale prices were up by 10.8 per cent.

The slower price increase could be due to buyers' resistance to paying more in cash over valuation, said Huttons Asia director of research Lee Sze Teck.

Last quarter's HDB resale prices were just 2.1 per cent lower than their peak in the second quarter of 2013, said Ms Christine Sun, real estate agency OrangeTee & Tie's senior vice-president of research and analytics.

At the current pace of price growth and increased demand, prices are likely to reach the 2013 peak in the second half of this year, she added.

Read more at:

Analysts debate cooling measures, as Singapore Q2 flash private home prices up for fifth straight quarter

The Business Times, 1 July 2021, Thu 5:05pm

By Lisa Kriwangko

PROPERTY analysts continue to debate the odds of cooling measures and how targeted they would be, with Singapore's Q2 private home prices rising for the fifth straight quarter, flash estimates showed on Thursday.

It comes too as Singapore's central bank flagged this week that it is watching closely the risk of runaway housing prices, relative to income gains.

Conversations resurfaced after the Urban Redevelopment Authority (URA) released flash figures, which estimated that the overall residential price index in Q2 2021 rose by 0.9 per cent for the second quarter from Q1 2021. The quarter's gain comes after Q1 2021 saw a 3.3 per cent rise.

For the half year, prices increased by 4.3 per cent. Meanwhile, they rose 7.3 per cent compared to Q2 2020, when the "circuit-breaker" period began on April 7 last year, noted Mark Yip, chief executive officer of Huttons Asia.

Noting the Monetary Authority of Singapore (MAS) managing director Ravi Menon's speech on Wednesday, Mr Yip suggested that property curbs "remain a possibility". 

Bottom of Form

During the launch of the MAS's annual report, Mr Menon noted that the property market is not considered overheated at this juncture. But MAS remains "highly vigilant" to the risk of a sustained increase in housing prices relative to income trends, with a prolonged divergence seen as unsustainable

Mr Yip said: "Cooling measures are likely to be targeted at a certain group of buyers, such as multiple home owners with higher ABSD (additional buyer's stamp duty) or lower LTV (loan-to-value) or couples who decide to buy multiple homes to encourage prudence."

In a report, Citi analyst Brandon Lee said the "benign" 0.9 per cent rise in Q2 2021 private property prices was a surprise, given the strong residential sales momentum.

"Living a day at a time," said Mr Lee. "Given the slate of launches in Q3 2021, incremental re-opening activity post pickup in vaccination roll-out and strong HDB resale prices, we expect market to continue focusing on policy risk in the near term."

The tightened restrictions during Phase 2 (Heightened Alert), which took place from May 16 to June 13, contributed to the slower growth pace in Q2 2021, analysts said.

The 3.3 per cent rise in Q1 2021 was the sharpest quarterly increase since the second quarter of 2018, when private residential prices rose by 3.4 per cent.

Mr Yip said that the additional measures deterred some developers from launching new projects, pushing buyers to turn to the resale market, which is typically tagged with lower prices. Resale volume made up a bigger chunk of the transactions in Q2 2021 at 61.1 per cent, compared with 57 per cent in Q1 2021, he added.

Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said that the trend towards larger homes may have resulted in lower per square foot prices for some locations. 

"Space has become a valued asset as many homeowners saw their daily lives suddenly confined to their properties. Many owners were looking for homes with outdoor space and additional areas for solitude," she said.

She expects demand to remain resilient, backed by strong job creation in the first half of the year,  a "flood" of Housing Development Board (HDB) upgraders, as well as local and foreign investors looking for long-term rental income.

Leonard Tay, head of research, Knight Frank Singapore, said given the Q2 2021 flash estimates, overall private residential prices now looks to increase by more than 5 per cent year-on-year, but but will not likely surpass 10 per cent for all of 2021.

"The proceeds from the resale of HDB flats have enabled households to make that transition into the private residential market, especially if these are families comprising young professional couples who have benefited from general wage increases in the past decade as reflected in the Population Census 2020," he said.

Mr Tay noted that the proportion of resident households earning S$20,000 and over more than doubled from 6.6 per cent in 2010 to 13.9 per cent in 2020.

"Notwithstanding the pandemic-led recession in 2020, the present resilience of the private home market comes at a time when the current low interest rate environment is also a contributing factor as credit remains affordable."

In non-landed property, the three months saw a 0.9 per cent quarter-on-quarter (qoq) rise after climbing 2.5 per cent in Q1.

The quarter's largest driver of prices was in the suburbs or outside central region, which saw prices advance 1.8 per cent, steeper than the first quarter's 1.1 per cent increase.

This was likely due to the performance of executive condominiums - such as Provence Residence, Parc Central Residences and Ola - as well as Treasure at Tampines, which has consistently been in the top 10 best-selling projects list since its launch in 2019, said Tan Tee Khoon, country manager of PropertyGuru Singapore.

"There is still a strong demand for affordable entry-level condos, likely fuelled by the market of HDB upgraders whose flats recently fulfilled their Minimum Occupation Period in 2020 and 2021," he added.

In the city fringe or rest of central region, prices increased 0.3 per cent qoq, compared to 6.1 per cent in the previous quarter.

Meanwhile, prime areas or core central region saw prices advance 0.6 per cent in Q2, close to the 0.5 per cent growth seen in Q1.

The URA also said that prices of landed properties rose 0.8 per cent qoq in Q2, after they scaled 6.7 per cent in the previous quarter.

The flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment, and data on units sold by developers up to mid-June. The statistics will be updated on July 23, when the URA releases its full set of real estate numbers for the second quarter.

Still, when the full Q2 2021 results are announced, it is more likely that the marginal gain in the property index will be fairly similar to the flash estimates, said Knight Frank’s Mr Tay. This is due to the lack of new launches in June 2021, as a result of safe-distancing restrictions.

Separate flash estimates released on Thursday showed that HDB resale prices climbed for the fifth consecutive quarter but eased from recent highs.

Resale prices rose 2.8 per cent in the three months to June this year from the previous quarter, compared with a 3 per cent rise in the first quarter.

Year on year, HDB resale prices were up by 10.8 per cent.


Singapore private home prices rise 0.9% in Q2, slowing sharply from recent growth: Flash data

The Straits Times, 1 July 2021, Thu 5:19 pm

By Grace Leong

 Private home prices in Singapore rose for the fifth straight quarter but at a much slower pace, dampening speculation of another round of property curbs in the near future. 

The 0.9 per cent price gain in the three months to June from the previous quarter follows an increase of 3.3 per cent in the first quarter and 2.1 per cent in the fourth quarter of last year. Year on year, prices are up 7.3 per cent.

Read more at:

Developers may seek extension to delivery date of possession

The Business Times, 2 July 2021, Fri 5:50 am

By Nisha Ramchandani

WITH construction timelines under pressure, developers plagued by construction delays will now get some relief in the form of an extension should they be unable to meet the delivery date of possession in their sale and purchase (S&P) agreements.

According to a circular issued on Thursday to developers by the Urban Redevelopment Authority's (URA) Controller of Housing (COH), effective July 1, developers who need to can serve a notice on property buyers for an extension of up to 122 days, in line with the extension granted to construction projects. This is subject to certain qualifying conditions.

Developers can extend the delivery date of the new property without being liable to pay liquidated damages for late delivery up to the extended period.

Those who need an extension of more than 122 days will need to have an assessor determine the period of extension, which would be equivalent to the length of construction delay as a result of the pandemic.

The relief measures (Part 8C) were passed by Parliament in November 2020 under the third set of amendments to the Covid-19 (Temporary Measures) Act. Further amendments were made to the Act on April 5, 2021, to enable the implementation and delivery of relief.

Meanwhile, property buyers who rack up certain out-of-pocket costs due to a delay in the delivery of their unit, such as having to rent alternative premises, will be able to seek reimbursement from developers. Where damages apply, there will be a cap of up to 70 per cent of the liquidated damages originally payable.

"This approach allows for co-sharing of the delay costs between the developer and purchaser," the COH added.

Generally, for failing to meet the delivery date of possession in the S&P agreement, a developer would be liable to pay liquidated damages of 10 per cent per year on the sum paid by the buyer.

Similarly, those buying flats from the Housing and Development Board will also be able to claim up to 70 per cent of the liquidated damages, the circular showed.

The Real Estate Developers' Association of Singapore (Redas) had flagged the issue in the past, pointing out that developers could get hit by penalties if projects are delayed, adding to the other costs they were already grappling with.

In response to queries, Redas said: "Covid-19 has affected the construction industry severely and resulted in delay of completion for many projects. The government's decision to implement Part 8C of Covid-19 (Temporary Measures) Act to address such an unexpected delay in a reasonable and amicable manner is appreciated and supported."

With challenges such as the labour shortage, escalating costs and project delays expected to persist, Redas added that it will continue to work with the government to monitor the situation and address issues.

The operating environment for developers and contractors, already affected by last year's "circuit breaker", has seen further headwinds after Singapore closed its borders to South Asian nations to curb the spread of the virus, resulting in a labour crunch. The ongoing lockdown in Malaysia hasn't helped either, hampering the flow of construction materials to Singapore.

Given the disrupted timelines, the government this week announced another six-month extension to the project completion period (PCP) for qualifying residential, commercial and industrial development projects.

This is on top of two six-month extensions that were announced in May and October 2020 respectively.

Similarly, the commencement and completion timelines for residential projects in relation to the remission of Additional Buyer's Stamp Duty (ABSD) for developers has also been extended by another six months, for a total of 18 months.

However, there was no further extension to the remission condition timeline for sale, which means that eligible developers have to sell all their units in a five and a half year time span, instead of five years. One six-month extension was announced in May 2020.


Good Class Bungalow market is on a roll

The Business Times, 2 July 2021, Fri 5:50 am  

By Kalpana Rashiwala

THE Good Class Bungalow (GCB) market is on a roll.

List Sotheby's International Realty's analysis of URA Realis caveats data shows that year to date (with the latest transaction dated June 18), there have been 50 deals in GCB Areas totalling nearly S$1.4 billion. This is higher than the total for the whole of last year - 46 deals amounting to S$1.1 billion.

The action is expected to continue, with attractive new offerings on the market.

Among them is a bungalow in Cluny Hill with a freehold land area of 18,010 sq ft. Word in the market is that the pricing expectation is about S$3,200-3,400 per square foot (psf) on land area, which would translate to around S$57.6 million to S$61.2 million.

The property, near the Singapore Botanic Gardens Unesco World Heritage site, is said to be vacant and ripe for redevelopment. It is being marketed by CBRE through an expression of interest closing on Aug 2.

It could not be reached for comment.

BT understands that the property is owned by former Singapore Cabinet minister Yeo Ning Hong and his wife.

The property is next to the bungalow under construction that local technopreneur Tommy Ong is in the early stages of purchase. The price for that deal, reported by BT in May, is S$63.7 million - reflecting a record S$4,291 psf on 14,843 sq ft land area. Mr Ong sold his Singapore-based e-commerce marketing platform to Canada-listed WeCommerce in April for up to US$110 million.

BT understands that the bungalow behind the one Mr Ong is buying, was also put on the market recently. Its owners include Low Check Kian, lead independent director at Singtel. The asking price is S$63.8 million; this works out to S$3,560 psf on the freehold land area of 17,922 sq ft.

Over in Leedon Park, word on the grapevine is that a 15,668 sq ft vacant freehold site is in the early stage of being sold for S$28.5 million, or S$1,819 psf.

This price is about 16 per cent higher than the S$1,560 psf the plot had been marketed at about a year ago, say industry watchers.

Realstar Premier is understood to be brokering the deal. Its founder William Wong noted that GCB land prices have appreciated not only in the ultra-prime locations such as Nassim and Cluny which are closest to the Botanic Gardens but also for areas further away.

"In the case of Leedon Park, although land prices have risen from the S$1,600 psf range to S$1,800-plus psf on average in the span of a year, it would not be surprising to see prices in the area climb further to S$2,000 psf in about six months or so. This will be on the back of scarcity and expectation of continued strong demand.

"There is still a lot of activity going on in the GCB market. Even though owners have adjusted their prices upwards in the past few months, buyers are willing to pay a reasonable premium - up to a certain point," said Mr Wong.

The number of those looking to buy GCBs now is about two to three times the level a year ago, he added.

Observers say that the pool of those house hunting in GCB Areas includes both locals and new citizens. Some of them have sold their businesses or benefitted from an IPO. Wealthy families are also buying for the next generation.

Bruce Lye, co-founder of SRI, describes the mood in the GCB market as "euphoric". "In the past few months, we have seen buyers rushing to pick up properties from earlier listings - before owners started to up prices."

New listings are also at higher price levels.

"Some potential buyers may be unwilling to match the new benchmark price levels; so transactions may taper. But for now, GCB sales are still robust," said Mr Lye.

Meanwhile, a Singaporean family member of Indonesian tycoon Alexander Tedja is understood to be buying an old two-storey bungalow in the Dalvey Estate locale near the Botanic Gardens for S$50 million.

The price works out to about S$2,500 psf on the freehold land area of nearly 20,050 sq ft. The family is expected to redevelop the property.

According to the Forbes website, Mr Tedja's net worth is estimated at US$1.1 billion as at July 1, 2021.

Mr Tedja, 75, founded property developer Pakuwon Jati in 1982; the company has been listed on both the Jakarta and Surabaya stock exchanges since 1989, according to information on its website.

The company's portfolio includes retail, residential, commercial and hospitality developments.

Mr Tedja's daughter Irene is a Singapore citizen.

Bungalows in the 39 gazetted GCB Areas are the most prestigious form of landed housing in Singapore, with strict planning conditions 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.

Separately, a property with dual frontages on Holland Rise and East Sussex Lane is in the early stage of being sold for S$56.7 million, which works out to about S$1,325 psf on land area of 42,770 sq ft. On site is a low-rise apartment block, Zion Mansion, and a smaller building.

The property is within the Holland Rise GCB Area.

The buyer is a local Singaporean family. Observers say that two bungalows can be built on the site, one facing Holland Rise and the other, East Sussex Lane.

The property is owned by the Guok family linked to Soon Lee Holdings.


Commercial properties set for big change post-Covid

The Business Times, 2 July 2021, Fri 5:50 am  

By Lisa Kriwangko

SINGAPORE'S commercial property market has seen the ups and downs of changes brought on by Covid-19.

Offices in the central business district (CBD) - especially older buildings - need to evolve. Cloud kitchens are expected to serve a wider market. Business parks look resilient.

So what should we expect from the years ahead from different property segments? CBRE's Q2 2021 recovery playbook offers some ideas:

Government schemes

Both the Central Business District Incentive (CBDI) Scheme and Strategic Development Incentive (SDI) Scheme were introduced to incentivise the redevelopment of older buildings to more productive mixed-use developments, as part of the Urban Redevelopment Authority's (URA) 2019 Master Plan. Post-pandemic, these schemes have become even more pertinent as flexible working arrangements drove businesses to evaluate their office spaces.

Under the CBDI scheme, qualifying properties are allowed to intensify their gross floor area (GFA) by 25 to 30 per cent, depending on the proposed land use.

Meanwhile, the SDI is intended to redevelop precincts in strategic areas across Singapore, such as Orchard Road, the CBD and Marina Centre.

Under the scheme, developers can increase their GFA or attain flexibility on other development controls if they have innovative proposals that transform the precinct.

Since the circuit-breaker period, URA has received nine outline applications under the CBDI Scheme, of which six have been given in-principle approval.

Three outline applications under the SDI Scheme were also given in-principle approval.

The take-up of these schemes are also likely to result in the long-term reduction of office stock in the CBD, which plays a part in the government's decentralisation strategy to have more offices located outside the city centre, CBRE said.

Offices for redevelopment

According to CBRE, redevelopment of commercial sites will remain robust despite the current flexible working arrangements.

This is driven by the continued downward revisions to commercial charges, such as the replacement of the Development Charge with the Land Better Charge bill passed last May, which will improve the economics of redevelopment under these schemes.

The government has not been releasing sites for commercial development, thereby prompting developers to turn to the private market for redevelopment opportunities.

Singapore's reputation as a "safe haven" will also give global investors confidence in the local office sector.

Redevelopments of buildings and precincts will also increase their value, as well as that of their surrounding vicinities. Thus, analysts expect rents and prices to increase concurrently.

Cloud kitchens

The shift of food and beverage (F&B) sales online, prompted by the pandemic, will likely fuel the growth of cloud kitchens, the report noted.

Also known as ghost or dark kitchens, cloud kitchens are centralised kitchens where food is prepared primarily to cater to food delivery. In some cases, a small area is set aside for dining-in.

Older suburban malls will likely benefit from hosting such kitchens due to their proximity to residential areas. Shophouses could also make for suitable locations, especially those already approved for F&B use.

"It will become a new norm, as F&B players shift their focus towards takeaways and deliveries as an essential part of their operations," the report noted.

Business parks

Demand for business parks is expected to increase, driven by Singapore's growing biomedical sector.

The government is encouraging global pharmaceutical companies to set up their bases in Singapore, such as by investing heavily in providing the relevant infrastructure at Biopolis and Tuas Biomedical Park.

Unlike other forms of work, it is also difficult to move laboratory activities to work-from-home arrangements.

Over the years, Singapore has also seen a rise in prominence of factoryless goods producing firms (FGPFs). These firms perform pre-production activities but outsource their production, qualifying them as business parks tenants.

Given business parks' established tenant portfolio and tightly-held supply, those strategically located will remain attractive, the report noted.


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