ERA Daily Research - 26 April

Singapore private home prices rise in Q1 on strong demand

The Business Times, 24 Apr 2021, Sat

By Fiona Lam

Prices of private residential properties across Singapore increased quarter on quarter by 3.3 per cent in Q1 2021, steeper than the 2.1 per cent growth in Q4 2020, according to final figures released by the Urban Redevelopment Authority on Friday.

This is stronger than the flash estimates put out on April 1, with estimates then reflecting a 2.9 per cent gain in Q1 from the previous quarter. Analysts had said then that a stronger price surge could be captured when full figures for March are in.

The uptrend has lasted four consecutive quarters, and the latest figure marks the biggest quarterly rise since Q2 2018, said OrangeTee & Tie senior vice-president of research and analytics, Christine Sun. "A combination of strong domestic demand for private home ownership and the resurgence of foreign investment demand has pushed home prices higher last quarter," Ms Sun added.

Huttons Asia research director Lee Sze Teck described the demand for properties as "extremely strong" in the first three months of this year.

Partly fuelling the overall price increase was a 6.7 per cent jump for landed properties in the January-March period this year, which more than reversed the 1.6 per cent drop in October-December last year.

This was supported by the growing demand for more spacious homes, as well as rising condominium prices, which made landed housing appear to be "value for money", said ERA Realty head of research and consultancy Nicholas Mak.

Non-landed private homes became 2.5 per cent pricier in the first quarter of 2021, a tad slower than the 3 per cent rise in quarter prior.

The rest of central region (RCR), or city fringe, saw the largest increase in non-landed properties' prices.

They climbed 6.1 per cent, speeding up from the 4.4 per cent growth in Q4 2020. The RCR segment's growth was likely driven by strong sales for Normanton Park and The Reef at King's Dock, said PropertyGuru Singapore country manager Tan Tee Khoon.

Non-landed homes in the outside central region (OCR) or suburbs booked a 1.1 per cent price increase, slightly slower than the 1.8 per cent growth in the previous quarter.

In the core central region (CCR), the price increase eased to 0.5 per cent for non-landed private housing in the first quarter, from a 3.2 per cent rise previously.

Resale volumes of private residential properties ticked up by 6.4 per cent in the latest quarter to 4,519 transactions, compared with 4,249 units in the previous three months.

Huttons' Mr Lee said: "The resale market, which included the landed segment, probably drove much of the 3.3 per cent price gain."

Resales accounted for more than half of the private housing transactions during the quarter, as buyers who were unable to secure their choice units in new launches turned to the secondary market, he added.

Ms Sun from OrangeTee noted that foreign buyers seemed to be coming back to Singapore's property market. In the first quarter, 281 non-landed private homes were bought by non-permanent residents, higher than the 199 units in Q4 2020.

According to ERA's Mr Mak, the concern about rising home prices and the risk of additional cooling measures motivated some buyers to rush to acquire residential properties.

Rents of private homes picked up pace, gaining 2.2 per cent quarter on quarter, compared with the 0.1 per cent increase earlier.

"Fewer homes were available for lease in recent months, and the reduced stock helped prop up rents," said Ms Sun. Demand may also have gone up as more Singaporeans, permanent residents, students and long-term pass holders returned to the city-state from abroad, she added.

The increase in private housing rents was driven by non-landed properties, where rents grew 2.4 per cent, versus the 0.1 per cent fall in the fourth quarter of last year. Landed homes' rents edged up by 0.6 per cent in the first quarter, compared with the 0.7 per cent increase previously.

Developers sold 3,493 private residential units - excluding executive condominiums (ECs), a private-public housing hybrid - in Q1 2021. That is about a third more than the 2,603 moved in the final quarter last year.

In terms of launches, developers put 3,716 uncompleted private homes, excluding ECs, up for sale this January-March. That is nearly a fifth more than the 3,147 units launched in October-December last year.

JLL senior director, research and consultancy, Ong Teck Hui, said the latest new sales and launch volumes were the highest first-quarter figures in seven years. This "reflects a buoyant market that sets an optimistic tone for the coming quarters", and the price uptrend has led "many" buyers to make their purchases before prices escalate further, he added.

Supply in the pipeline continued to shrink. As end-March 2021, it totalled 48,139 uncompleted private residential units, excluding ECs, down 2.4 per cent from the supply of 49,307 units by the end of 2020.

Overall private residential properties' prices could increase by up to 5 per cent this year, Mr Lee predicted. ERA's Mr Mak foresees the private residential property price index increasing by 7-10 per cent this year.

Ms Sun noted that the supply of new mass-market homes will remain limited this year, while more luxury and city-fringe projects are slated to be launched. "The increased sales of such homes with higher price tags may uplift the overall residential price index in the next few quarters."


HDB Q1 resale prices up for 4th straight quarter; volume eases

The Business Times, 24 Apr 2021, Sat

THE Housing Board resale market remained steadily robust in the first quarter of this year amid Covid-19 vaccine optimism, with prices of resale flats rising for the fourth consecutive quarter even as fewer flats changed hands.

The resale price index for the first three months of the year was logged at 142.2, an increase of 3 per cent over that in the fourth quarter of 2020, figures released by HDB on Friday showed.

Prices rose 8.1 per cent year on year.

Last quarter's HDB resale prices were just 4.8 per cent lower than their peak in the second quarter of 2013, said Christine Sun, OrangeTee & Tie's senior vice-president of research and analytics.

She noted that the roll-out of Covid-19 vaccines around the world and anticipated global economic recovery stoked a frenzy of property-buying activity worldwide, which in turn lifted market sentiment for the HDB resale market.

The supply and demand imbalance of flats has also caused prices of HDB resale flats to climb in many locations, said Ms Sun.

Prices for resale flats rose in 22 of the 26 HDB towns, with those in the central area clocking the highest median resale price at S$910,000 for a four-room flat.

These include popular projects such as The Pinnacle @ Duxton in Cantonment Road, where a handful of five-room flats on high floors have sold for more than S$1 million in recent years.

Woodlands clocked the lowest median resale price at S$380,000 for a four-room flat, while Sembawang followed closely at S$399,000.

Demand for HDB resale flats started gaining traction in the second half of last year, after Singapore came out of a two-month-long circuit breaker period to curb the spread of the Covid-19, with resale prices steadily inching up in recent months.

However, overall resale volume dipped slightly last quarter on the back of higher resale prices and rising cash over valuation (COV).

The number of transactions fell 0.8 per cent from 7,642 units in Q4 of 2020 to 7,581 units in Q1 of this year.

Compared with Q1 of last year when 5,893 units changed hands, resale volume rose 28.6 per cent.

Ms Sun said: "Last quarter, many flats were sold with COV. Multiple offers and price bidding wars for choice flats were common as buyers were willing to shell out extra for premium flats, as they believe that supply of these flats are limited especially for newer resale flats in mature estates."

Demand for rental HDB flats also rose last quarter despite rising rents, as many foreigners chose to stay put and renew their leases because of border restrictions.

The number of approved applications to rent out HDB flats rose by 26 per cent, from 8,472 cases in Q4 of last year to 10,676 cases in Q1 of this year.

As for Build-To-Order (BTO) flats, HDB will offer about 3,800 such flats in Bukit Merah, Geylang, Tengah and Woodlands next month.

In August, it will launch another 4,900 BTO flats in Hougang, Jurong East, Kallang/Whampoa, Queenstown and Tampines.

HDB said it will calibrate the supply if required, given the economic uncertainty due to Covid-19.

Ms Sun said the completion period for BTO projects in the two upcoming exercises is likely to remain long, as there is a backlog of projects facing construction delays caused by the pandemic.

Current waiting time for a new BTO flat ranges from three years to five years, based on the timeline released in the previous two BTO exercises.

"The situation could be exacerbated as further construction delays may be expected as a result of new quarantine orders arising from the recent resurgence of Covid-19 cases in certain dormitories," said Ms Sun.


Singapore office rents up 3.3% in Q1 2021

The Business Times, 24 Apr 2021, Sat

By Nisha Ramchandani

RENTALS of office space in Singapore's central region turned a corner in the first quarter of 2021, as rents rose 3.3 per cent quarter on quarter, versus a 3.5 per cent contraction in the fourth quarter of last year.

As vaccination efforts progress and the economy get back on track, some analysts project that the office rental market will bottom out this year before starting to recover in 2022.

JLL's head of research and consultancy (Singapore), Tay Huey Ying, reckons the jump in the Q1 2021 office rental index was likely due to offices with a lower rent-point.

She said: "The search for replacement premises by tenants displaced by the recent spate of redevelopment plans of ageing offices had likely strengthened demand and put upward pressure on the rents for Category 2 offices."

According to JLL, the average monthly gross effective rents for Grade A CBD office space tracked by the real estate consultancy worked out to S$9.78 per square foot (psf) as at end Q1 2021, easing slightly from S$9.81 psf three months prior.

Meanwhile, data released by the Urban Redevelopment Authority (URA) also showed that prices of office space in the Central Region contracted 2.7 per cent in Q1 2021, narrowing from the 3.1 per cent decrease seen in Q4 2020.

This was led by the Fringe Area, which saw prices go up 5.8 per cent quarter on quarter, while prices in the Central Area fell 4 per cent, CBRE said.

At the end of Q1, there was a total supply of about 761,000 square metres (sq m) gross floor area of island-wide office space in the pipeline, compared with 770,000 sq m in the previous quarter.

Net absorption was negative as the amount of occupied office space fell by 19,000 sq m of net lettable area in Q1 2021, vis-a-vis an increase of 2,000 sq m in the previous quarter. The stock of office space decreased by 9,000 sq m in the first quarter, narrowing from a decrease of 13,000 sq m in the prior quarter.

Leonard Tay, head of research for Knight Frank Singapore, highlighted that the negative net absorption came about largely due to falling net absorption in the Downtown Core (-29,000 sq m), Orchard (-3,000 sq m) and outside the Central Region (-4,000 sq m).

In the Downtown Core in particular, some industries are starting to scale down their footprint, while remote working might also have prompted other office occupiers to hunt for space elsewhere at cheaper rents, Mr Tay added.

The island-wide vacancy rate of office space edged up to 11.9 per cent at the end of Q1 2021, from 11.8 per cent at the end of the previous quarter.

Cushman & Wakefield's head of research (Singapore), Wong Xian Yang, projects that vacancy rates in the Downtown Core could continue to trend higher as hybrid working grows entrenched, "putting pressure on rents over the short term".

This comes as some banks such as DBS, Citigroup and Mizuho are cutting back on space in the Central Business District (CBD).

Mr Wong said: "We estimate that at least 500,000 sq ft (46,451 sq m) of office space in the Central Area may be released by banks as secondary or shadow space over the next two years."

Still, he expects that office rents should bottom out in the second half of 2021 as economic activities gradually resume and the vaccination programme helps to contain the pandemic.

Similarly, Knight Frank's Mr Tay expects office rents will bottom out this year and recover in 2022.

Although 1.5 million sq ft (139,355 sq m) of new office supply is due to come onstream in the remaining nine months of 2021 and the banks are scaling back on space, this should be mitigated by demand from the tech behemoths and from private wealth management in the CBD, Mr Tay said.

Barring unforeseen circumstances, JLL's Ms Tay expects that Grade A CBD office rents could stabilise in H2 2021 and possibly see a recovery by year-end or early next year.

She said: "Given the better-than-expected Q1 rent performance, we have upgraded our Grade A CBD office rent forecast for 2021, predicting a milder full-year correction of 3 per cent or less."

Looking ahead, Singapore's recovering economy, coupled with a pick up in employment and a tight supply pipeline, should help support demand for offices, CBRE highlighted.

"Singapore remains an attractive base as a HQ (headquarter) for global firms," the real estate consultancy said.

"However, it will not be a uniform recovery. The Grade A market is expected to be the main beneficiary as large corporates leverage on the pull-back in rents to move to higher quality and better located offices."


Q1 retail rent slides in central region; fall expected to moderate further

The Business Times, 24 Apr 2021, Sat

By Nisha Ramchandani

RENTALS of retail space in Singapore's central region slid by 4.4 per cent quarter on quarter in the first quarter of this year, albeit moderating from the decline of 5.2 per cent in the prior quarter.

Analysts expect the decline in retail rents to moderate further this year as vaccinations pave the way for the easing of safe distancing measures and the eventual lifting of border curbs.

CBRE Research highlighted that the rental index for the central region has slumped 18.4 per cent since the start of 2020, when the pandemic first took hold.

But the real estate consultancy also pointed out that performance has varied, with the suburban segment proving resilient as some prime spaces still racked up rental growth.

Angelia Phua, consulting director (research and consultancy) at JLL said the rollout of vaccinations in Singapore, together with the Phase 3 re-opening, helped the challenged retail market. She added: "This supported occupier demand and moderated the retail rental decline in Q1 2021."

The data released by the Urban Redevelopment Authority (URA) also showed that prices of retail space in the central region dropped by 3.2 per cent, accelerating from a 2.1 per cent decrease in the previous quarter.

Analysts noted that retail in the fringe area performed better than the central area, which saw prices and rents falling 5.8 per cent and 4.8 per cent quarter on quarter respectively owing to the ongoing border closures and prevalence of working from home. On the other hand, retail prices in the fringe went up 1.6 per cent, while rents eased 1.3 per cent.

Island-wide, there was a total supply of 428,000 square metres (sq m) gross floor area of retail space from projects in the pipeline, compared with 426,000 sq m in the prior quarter.

The amount of occupied retail space went up by 28,000 sq m of net lettable area in Q1 2021, compared with an increase of 24,000 sq m in the previous quarter. The stock of retail space increased by 10,000 sq m in Q1 2021, reversing from a decrease of 26,000 sq m in the prior quarter.

As a result, the island-wide vacancy rate of retail space eased to 8.5 per cent at the end of the first quarter, from 8.8 per cent previously.

Cushman & Wakefield's head of research (Singapore) Wong Xian Yang noted that vacancy rates in Orchard held steady at 11.6 per cent, in a nod to its positioning as Singapore's iconic shopping belt.

"In fact, retailers are still taking up space in Orchard despite the dearth of tourists," he said, pointing to fashion retailer Love, Bonito which opened a 520 sq m flagship outlet at ION Orchard.

On the other hand, "vacancy rates in the downtown core continued to rise to a record high since Q3 2017 to 11.7 per cent, reflecting the impact of flexible working that has led to lower footfall in the CBD," Mr Wong added.

He expects the vacancy rates in the downtown core and central area to improve as more employees go back to work.

Leonard Tay, head of research at Knight Frank Singapore, said: "Moving forward, with work-from-home no longer the default and workplace capacity increased to 75 per cent, footfall in the CBD should rise and boost retail sales."

He added: "As such, rental declines are easing, pointing to a potential bottoming out sometime in the coming months, led by malls in the city fringe and suburban areas."

Ms Phua also expects the decline in retail rents to moderate this year, given that mass vaccinations, the further easing of safe-distancing measures and the eventual lifting of travel restrictions should give retail sales a lift.

"Opportunistic retailers with a medium- to long-term perspective" could also seize this opportunity to expand, which could "support and stabilise rents in H2 2021", she said.

Still, even as the recovering economy bolsters retail sales, the sector will still have to contend with other headwinds, such as competition from e-commerce and labour woes, which will slow the recovery, CBRE warned.


Longer waiting time for homes, increased costs due to tighter Covid-19 curbs on migrant workers: Contractors Association

The Straits Times, 23 Apr 2021, Fri

By Michelle Ng

Home buyers in Singapore will face a longer wait time for their property and higher costs as a result of the border restrictions on travellers from India, the Singapore Contractors Association Limited (Scal) said on Friday (April 23). 

It added that the construction sector is already facing delays which have seen projects knocked back by between nine and 12 months due to a labour crunch brought about by the Covid-19 pandemic.

On Thursday, the Government announced that long-term pass holders and short-term visitors with recent travel history to India will not be allowed entry or transit through Singapore, with the new rule taking effect from Saturday (April 24).

Read more at:

One-North Eden 85% sold on launch weekend

Edgeprop, 25 Apr 2021, Sun  

By Cecilia Chow

Developer TID, a joint venture between Hong Leong Holdings and Mitsui Fudosan, announced that 140 out of a total of 165 units (about 85%) at One-North Eden were sold during its launch weekend on April 24-25. Prices of units sold ranged from $1,800 psf to $2,250 psf.

More than 80% of the buyers were said to be Singaporeans, with the remaining 20% being a mix of Permanent Residents and foreigners from the UK, China, France, Malaysia, India and the US.

“The good response is an indication of the pent-up demand in one-north due to limited private residential options in this high-growth area,” says Yoichi Kaga, managing director of TID. “Many homebuyers are drawn to One-North Eden’s strategic location and enjoy the convenience of living near their workplace, while families are attracted to the prime local and international schools located within 1km of the project.”

During the preview stage, more than 1,200 expressions of interest were received, meaning the 165-unit project was 7.3 times subscribed. Unit sizes at One-North Eden range from 517 sq ft for a one-bedroom-plus-study to 1,410 sq ft for the largest four-bedroom premium unit. “Compared to the earlier launches, One-North Eden really stood out in terms of interest from the investors in particular,” says Ismail Gafoor, CEO of PropNex.

In fact, interest was so strong that all the one-bedroom-plus-study and two-bedroom apartments were fully taken up by 10am on Saturday, April 24, the first day of sales. And the three-bedroom compact units were also 100% taken up by afternoon. The three-bedroom premium units were close to 80% sold, while the four-bedroom compact units were half sold and the four-bedroom premium units were one-third taken up. “Interest has been across the board,” says Gafoor.

The prices achieved at One-North Eden have set a new price benchmark for the one-north neighbourhood, says Nicholas Mak, head of research at ERA Realty. “Developers interested in bidding for the two adjacent government land sale (GLS) sites at Slim Barracks Rise will now have to recalibrate their bid prices,” he adds.


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