Private residential market just barely pulls through 2Q 2014

Transcription

1 Research & Forecast Report Singapore Residential 2Q 2014 Accelerating success. Private residential market just barely pulls through 2Q 2014 With on-going affordability concerns amid the more regulated buying environment, developers concentrated on launching the more affordably-priced mass market homes in the Outside Central Region (OCR). Geographical Distribution of New Units Launched & Sold in 2Q 2014 Launch and sales volume double QoQ at the expense of lower home prices The private residential market pulled through 2Q 2014 with a revival in developer launches and sales activity, albeit at the expense of lower home prices. Despite softer market sentiments that have prevailed following the imposition of the Total Debt Servicing Ratio (TDSR) in June 2013, developers stepped up their launches ahead of the lunar seventh month (largely regarded by the Chinese as an inauspicious period to commit to home purchases) which falls in August this year. In 2Q 2014, 2,990 units (excluding executive condominiums) were released, up 52.2% quarter-on quarter (QoQ) from 1Q Their efforts paid off, as new project launches over the April to June quarter were generally well-received. Buyers were drawn to projects, particularly those with positive attributes, such as attractive pricing and good location. Buying volume improved 54.7% QoQ to 2,658 units - the highest quarterly sales volume achieved since the TDSR was imposed. Buyers were drawn to projects, particularly those with positive attributes, such as attractive pricing and good location. Source: URA/Colliers International Research In particular, City Developments Limited, Hong Leong Holdings and Hong Realty jointly launched the 99-year leasehold, 944-unit Coco Palms in the OCR. Located in the East, it is the largest project to debut in 2Q Buyers were attracted to the development s proximity to the Pasir Ris Mass Rapid Transit (MRT) station as well as its reasonable pricing - the developers reportedly trimmed the initial intended selling price for Coco Palms from between $1,100 and $1,200 per sq ft to an average of $980 per sq ft. Of the 700 units launched, 635 were picked up at prices ranging from $682 to $1,251 per sq ft by the end of June Three mass market projects located in the Western region also met with healthy response at their respective launches. They are

2 the 131-unit The Sorrento, the 210-unit Faber and the 696-unit Lakeville. Located along West Coast Road, The Sorrento, a freehold project, was fully launched. Developer Allgreen Properties Ltd found buyers for 128 units at prices between $1,115 and $1,513 per sq ft during the quarter. Faber, a 99-year leasehold project sited along Faber Walk, was unveiled by World Class Land in May. A total of 147 units were released from the 210-unit project, of which 89 units were sold at prices ranging from $853 to $1,351 per sq ft in 2Q MCL Land Pte Ltd launched the 99-year leasehold Lakeville situated in the Jurong Lake District at the beginning of the second quarter. The remaking of the Jurong Lake District into a regional centre attracted homebuyers to this project, which is in close proximity to the Lakeside MRT station. The project, located along Boon Lay Way, moved 216 of the 230 units launched in 2Q Prices achieved range from $1,143 to $1,505 per sq ft. All in, launch and sales volumes in the OCR increased 9.5% QoQ and 59.1% QoQ to 1,619 and 1,631 units in 2Q 2014, respectively. The 1,619 homes released in the OCR accounted for 54.1% of all new homes launched in 2Q 2014 while the 1,631 mass-market homes sold accounted for 61.4% of the quarter s total developer sales. Pent-up demand boosts buying interest in the Rest of Central Region Buying interest also returned to the Rest of Central Region (RCR). Activity stirred in the region that has not seen any significant launches since the release of the 281-unit The Hillford in January Buying volume increased 57.2% QoQ to 899 units, on the back of a more than two-fold surge in launch volume to 993 units. These accounted for 33.2% of all units launched and 33.8% of all units sold in the quarter. Healthy buying demand in the region was mainly supported by the launch of the 845-unit Commonwealth Towers and the 212-unit Kallang Riverside. These projects were able to benefit from pent-up demand, as there has been little launch activity in their neighbourhood. Commonwealth Towers is a 99-year leasehold project jointly developed by City Developments Limited, Hong Leong Holdings and Hong Realty. Some 400 units were released from the project located on Commonwealth Avenue. Homeowners drawn to the convenience of living at the doorstep of Queenstown MRT station, bought 296 units at prices ranging between $1,373 and $1,956 per sq ft during the April to June quarter. Over at the debut of the freehold Kallang Riverside, located along the fringe of the Kallang River and within walking distance of the Lavender MRT station, developer Singapore- Johore Express Pte Ltd, which released all residential units in the project, sold 97 units to buyers attracted to the convenience of city-edge living at prices between $1,921 and $2,546 per sq ft in 2Q For projects already on the market, developers were able to overcome the slowdown in buying momentum after they adjusted prices downwards. Homebuyers who stalled buying decisions in view of high prices were quick to snap up units from projects such as Sky Habitat and Eight Riversuites, located along Bishan Street 14 and Whampoa East, respectively. About 146 units at the 99-year leasehold Sky Habitat were sold at prices between $1,267 and $1,696 per sq ft in 2Q 2014, after its developer, Capitaland, reduced prices from a median price of $1,583 per sq ft achieved at its launch in April Similarly, 38 units from the 99-year leasehold Eight Riversuites were sold at prices between $1,061 and $1,501 per sq ft. In comparison, although the Core Central Region (CCR) saw some improvement in launch activity, buying sentiments remained lukewarm. Prospective buyers continued to tread with caution. Sales volume rose 5.8% QoQ to 128 units in the three months from April to June 2014 despite developers releasing 378 units, nine times the number of units launched in the preceding quarter. although the Core Central Region saw some improvement in launch activity, buying sentiments remained lukewarm. A cloud of stillness continued to hang over the high-end segment. With the spotlight on the other more affordable mass and mid-tier market segments, homebuyers were comparatively less receptive to the new launches in the CCR. Developer Oxley Holdings Limited only sold 18 of the 120 units released at The Oxley Residences. Homes in the freehold project located along Oxley Rise were sold at prices ranging between $2,312 and $2,513 per sq ft in 2Q Similarly, sales performance was also dreary in previously launched projects. Goodwood Residence, located along Bukit Timah Road, and RV Residences sited in the River Valley area sold 20 and 19 units, respectively, while other projects sold less than 10 units each. Consequently, the market share of the high-end/luxury market segment was the smallest of all new homes launched and sold at 12.6% and 4.8%, respectively. 2 Research & Forecast Report 2Q 2014 Residential Colliers International

3 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 2Q 2014 UNITS SOLD IN 2Q 2014 TRANSACTED PRICE RANGE ($ PER SQ FT) NON-LANDED Amber Skye Amber Road Freehold ,650-1,981 Coco Palms Pasir Ris Grove 99 years ,251 Commonwealth Towers Commonwealth Avenue 99 years ,373-1,956 Kallang Riverside Kampong Bugis Freehold ,921-2,546 Lakeville Jurong Lake Link 99 years ,143-1,505 Loft 33 Lorong 32 Geylang Freehold ,051-1,307 Singa Hills Jalan Singa Freehold ,101-1,319 Sunnyvale Residences Lorong K Telok Kurau Freehold ,481-1,487 The Crest Prince Charles Crescent 99 years ,524-1,764 The Oxley-Residences Oxley Rise Freehold ,312-2,513 The Sorrento West Coast Road Freehold ,115-1,513 Trilive Tampines Road Freehold ,435-1,674 Waterfront@Faber Faber Walk 99 years ,351 Source: URA/Colliers International Research Competitive pricing strategy puts a drag on private home prices The competitive pricing strategy to stir buyers into action proved to be a drag on private residential home prices in 2Q Preliminary estimates released by the Urban Redevelopment Authority (URA) indicate that the prices of homes continued to fall for a second consecutive quarter since 4Q Overall, the all-residential property price index slid 1.1% QoQ during the April to June quarter, following the 1.3% QoQ decline in 1Q Price falls were recorded in all three market segments, pointing to the widespread effectiveness of the multiple doses of cooling measures, particularly the strict financing curbs of the TDSR. By locality, prices of non-landed private residential properties softened 1.5% QoQ in the CCR, 0.6% QoQ in the RCR and 1.1% QoQ in the OCR in the 2Q 2014, after recording declines of 1.1%, 3.3% and 0.1% respectively, in the preceding quarter. 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 2Q % -0.2% 0.2% 3.8% 3Q % -0.3% -0.9% 2.2% 4Q % -2.1% 0.4% -1.0% 1Q % -1.1% -3.3% -0.1% 2Q 2014* -1.1% -1.5% -0.6% -1.1% *Flash Estimate Luxury/super-luxury segment weighed down by anaemic demand Within the CCR, the luxury/super-luxury segment continued to be weighed down by anaemic demand amid the more restrictive and anti-speculative home buying environment. The higher price tags of the luxury/super-luxury homes inevitably served as a deterrent as potential buyers encountered difficulty in obtaining loans for higher value properties due to the enforcement of the TDSR. Coupled with the prolonged drought in foreign interest, Colliers International s research showed 3 Research & Forecast Report 2Q 2014 Residential Colliers International

4 that the average capital value of luxury and super-luxury apartments softened for the fourth consecutive quarter. Prices slid 1.1% QoQ in 2Q 2014 to average $2,639 per sq ft by the end of June In particular, the lacklustre secondary sales market in the high-end sector continued to take its toll on the leasing market. Some sellers who faced difficulty disposing their properties turned landlords, adding to the mounting supply of existing and uncompleted homes. Apart from the seasonal summer break lull, slow activity in the leasing market in the three months from April to June was also due to tenants taking their time to commit in view of the ample homes available in the market. According to Colliers International s research, the average monthly gross rents of luxury/super-luxury apartments slid by yet another 1.4% QoQ to $5.20 per sq ft per month as of 2Q 2014, following the 1.9% QoQ fall in 1Q Average Capital Values and Monthly Gross Rents of Luxury (Including Super Luxury) Apartments Developers, though likely to continue to push out their projects, are expected to be more selective with their launches and re-launches. Prospective buyers and investors are expected to adopt a tentative stance in anticipation of further price declines on the back of various downside risks. Primary home sales which stood at 4,402 units at half-time, could come in at between 7,000 and 10,000 units for the whole of In view of the continued enforcement of various government policies and loan curbs as well as purchasers price-sensitivity, developers are expected to price their projects competitively to maintain sales momentum. Given that private home prices recorded a moderate 2.3% decline over the first six months of 2014, the price fall for the whole of 2014 will likely come in at the lower end of the initial -5% to -8% forecast. Plagued by tepid demand, the lacklustre high-end/luxury segments could witness larger average price declines ranging from 10% to 15% for the year as a whole. This is following a 5.0% slide in 1H Over the same forecast period, the looming pipeline supply remains a concern. The increasingly competitive market could prompt landlords, particularly those of older developments, to lower their rent expectations in order to secure tenants. As such, the average monthly gross rents of luxury/super-luxury apartments are forecast to register further declines of up to 5% in the coming months after falling 3.3% in 1H Source: Colliers International Research the average monthly gross rents of luxury/superluxury apartments slid by 1.4% QoQ to $5.20 per sq ft per month as of 2Q 2014 The air of caution is expected to linger Over the next six months, the air of caution is expected to linger, as long as the punitive cooling measures and stringent loan curbs remain in place. This is on the back of persistent external headwinds, including the nagging risk of a hard landing in China and escalating crises in Iraq and Ukraine, the overall tentative growth in the global economy and the impending interest rate increase which could set in as early as 2015 along with the United States Federal Reserve s tapering programme. 4 Research & Forecast Report 2Q 2014 Residential Colliers International

5 485 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 TEL FAX RCB No E 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.