CBRE data shows over 40% of homes will be launched in core central region

DEVELOPERS are expected to push out a slew of high-end and luxury projects in 2010 as buying momentum starts returning to these segments of the property market.

Data from CB Richard Ellis (CBRE) shows that of the 7,975 landed and non-landed homes that are likely to be launched in 2010, more than 40 per cent of them are in Singapore’s core central region (CCR), which includes the prime Districts 9 and 10, the financial district and Sentosa Cove.

A total of 3,469 homes will be in the CCR. Another 3,071 units are in the outside central region, which is a proxy for suburban mass-market locations. The remaining 1,435 homes are in the mid-tier rest of central region.

In contrast, most private home launches in 2009 were in the mass market.

‘The first half of 2010 will see a wider spread of project launches from mass market, to city fringe and to prime locations,’ said Joseph Tan, CBRE’s executive director of residential.

‘A lot of developers did not launch or re-launch their high-end and luxury projects last year as prices were down,’ said Cushman & Wakefield Singapore managing director Donald Han.

‘They were holding onto their projects because they could afford to. Now, with prices beginning to climb, we can expect more launches in these segments.’

According to Goldman Sachs, luxury homes prices here are still some 19 per cent below their 2007 peak, while prime and mass market home prices are 8 per cent and 4 per cent lower than their previous peaks respectively.

However, it is unclear if the take-up for luxury homes will be as strong as that seen during the 2007 boom. Back then, sales were fuelled by international buyers. But now, most developers and analysts agreed that foreign demand has not returned as strongly as hoped to the high-end and luxury market.

But sellers are still hopeful that the openings of the integrated resorts will once again kick-start more interest from international investors into Singapore.

The fact that luxury prices are still far from their peaks means that investing in Singapore will once again prove to be attractive to international buyers, Mr Han added.

Said UOB Kay Hian analyst Vikrant Pandey: ‘The growing acceptance of Singapore as a choice destination to live and work will fuel prices further because property prices in Singapore are still significantly lower than those of key gateway cites of Monaco, London, New York, Hong Kong, Tokyo and Moscow.’

There is also a lot of speculation on the ground about how developers will replenish their landbanks once they start selling luxury and high-end homes once again. In 2006 and 2007, a scramble for prime residential sites led to a booming collective sales market.

‘All developers we spoke to are looking to participate in the government land sales for 2010, as land banks have been run down in the strong buying momentum in 2009,’ said Macquarie analysts Elaine Cheong and Soong Tuck Yin in a Jan 6 note.

‘A few have lost out in 2009 tenders due to intense competition. We see overpaying for land as a key risk for developers in 2010.’

Some analysts believe that collective sales, which witnessed a slump in 2008 and 2009, with only one transaction compared to 116 in 2007, could stage a comeback in 2010 if the strong buying sentiment in the property market continues well into the year.

‘We expect en bloc sales to make a comeback on the back of: rapidly falling inventory levels among developers; the H1 2010 government land sales programme (which) mainly targets the mass-market segment; a recent surge in high-end transactions; moderation in price expectations by collective sale home owners; and the transformation of Singapore into a top global city with the opening of the integrated resorts,’ said UOB Kay Hian’s Mr Pandey.

But Goldman Sachs said that the en bloc fever is not likely to return anytime soon.

‘Developers’ demand concerns still trump the need to replenish land banks, suggesting a new wave of en-bloc sales is not yet in sight,’ said analysts Paul Lian and Rishab Bengani yesterday.

‘As a group, developers made $2.5 billion in land purchases in 2009, flat over 2008, and some 75 per cent below 2006 peak levels, despite record take-up in 2009.’

Source : Business Times – 14 Jan 2010

More businesses may consider expanding in Singapore, thanks to the supply of office space entering the market.

With office rentals in Hong Kong expected to rise sharply, analysts said that is another reason why companies may find it more cost effective to hire in Singapore.

The office property sector within Asia is expected to see considerable growth in supply over the next three years, according to recent data from property consultant Savills.

In terms of some key cities, Singapore is expected to see a 47 per cent increase in Grade “A” office supply, and Shanghai a 64 per cent jump. But Hong Kong is expected to see as much smaller increase of just six per cent.

Simon Smith, Regional head of Research, Savills, said: “Hong Kong at the moment is almost unique in the region in not having an oversupply situation in the office markets – this is both good and bad. I mean that rents have already found a bottom.

“But it equally means that over the next quarter or two, our markets are going to look quite tight. So that’s going to translate into quite dramatic rates of growth in rents towards the end of this year for many corporates who are looking at weighting their businesses across Asia.

“They may choose to expand in areas other than HK where costs are rising dramatically. So Singapore, where you see quite a lot of office development over the last year or so, could be a net beneficiary.”

Rentals in Hong Kong are expected to move up in the region of 20 per cent for 2010, especially towards the end of the year, while in Singapore, prices are expected to remain relatively stable with the office market expected to see a bulk in supply between 2010 and 2012.

While most market watchers agree that government stimulus packages in the last year helped to push liquidity into the market and stimulate property demand, in the coming year, the slow withdrawal of the stimulus packages is not expected to have any impact on the property market.

Experts added that with governments in the region keeping a closer eye on potential bubble developments and the impact of stimulus package unwinding, they expect residential prices to be quite well supported even if growth moderates.

Source : Channel NewsAsia – 14 Jan 2010

The luxury housing sector is expected to lead the way for the Singapore property market this year, according to real estate broker Savills.

Savills is forecasting that prices in the luxury segment will rise 15 per cent in the year ahead.

However, prices in the mass market and mid-end properties could see values move up by about five per cent.

Last year, despite the deep economic recession, private property transactions nearly surpassed the highs of 2007.

Going into 2010, Savills believes the rising trend will continue but at a more moderate pace.

Savills said the underlying demand would come from the completion of the two integrated resorts as well as attractive office rentals which are expected to bring in more overseas investments.

Michael Ng, managing director, Savills Singapore, said: “We do see strong demand because of the population growth. Again a lot more foreign workers are expected to come in over the next 12 months, so I don’t think there will be a correction downward in that sense. But certainly not the same kind of growth as seen last year, more moderated, but healthier.”

“I think the prices in terms of luxury is still some 20 to 25 per cent off the peak. In terms of the high net worth individuals, I think a lot of confidence is coming back to the market. There is a lot of liquidity around that’s pushing them back into real estate.”

Source : Channel NewsAsia – 14 Jan 2010

5-10% rise seen in high-end residential prices; slight drop expected in the number of GCB transactions

PRICES of luxury and high-end homes in Singapore started inching up in 2009, but analysts and developers here are confident that there is room for further growth.

Developers here are unanimous in agreeing that mid to high-end residential prices will climb in 2010. And among property consultants, the expectation of price growth ranges from 5 to 10 per cent for the most part, although some are predicting increases of as high as 30 per cent.

Data from Savills Singapore shows that the prices of high-end homes on the mainland in Districts 1, 9, 10 and 11 (which include Shenton Way, Orchard, Holland, Newton and Bukit Timah) have been climbing since Q2 2009.

The average unit price of high-end homes fell from $1,621 per square foot (psf) in Q2 2008 to $1,174 in Q1 2009, the property firm said. But prices have since rebounded and the average unit price of high-end homes was $1,543 psf in Q4 2009.

And they still have some way to go.

‘We are very positive on the luxury sector,’ said Savills Singapore managing director Michael Ng. ‘The segment is still a laggard (in terms of prices) compared to the mass and mid-range markets.’

Echoed OCBC Investment Research analyst Foo Sze Ming: ‘We reiterate our positive view on the high-end property segment as it is likely to benefit most from the opening of the two integrated resorts this year.’

However, estimates for how much prices in this segment are expected to climb vary greatly, with predictions ranging from 5 per cent to 30 per cent.

Over the last year, prices of mass and mid-range private homes have caught up with and even surpassed that seen during the previous peak. But for the high-end/luxury segment, prices are still some 25-30 per cent off their peaks, Savills’ Mr Ng said.

‘We are confident that (high-end/ luxury) prices will move as much as 30 per cent over the next 12-24 months,’ he added. ‘We have already seen this happen in the mass market, over just the last nine months.’

Other estimates are more modest. Goldman Sachs yesterday raised its forecasts for high-end property prices, and now expects high-end prices to rise 10-15 per cent. The bank’s research shows that by segments, luxury home prices are 19 per cent below their 2007 peak, while prime and mass-market home prices are respectively 8 per cent and 4 per cent lower than their previous peaks.

‘We expect the high-end to lead for the better part of 2010; there is still positive carry in rental yields, as rents hold steady even as consensus braces for a 10 per cent decline,’ said analysts Paul Lian and Rishab Bengani. And as the volume of total home sales falls, the high-end and luxury markets are expected to make up a larger piece of the pie.

On a yearly basis, 2009 saw the second highest number of new private home sold. Developers sold around 14,500 new homes last year – second only to the record take-up of 14,811 units in 2007.

But in spite of the high volume of new sales last year, caveats lodged show that the total value of the homes sold is only around 60 per cent of that in 2007. The lower quantum was attributed to the dominance of mass-market and mid-tier homes that were sold in 2009, compared to 2007 when high-end homes stole the limelight.

This is expected to change in 2010. Analysts reckon that the take-up in 2010 will moderate to 8,000-10,000 units. But the activity is expected to move into the high-end and luxury segments. Mr Ng estimates that the volume of high-end and luxury home sales could climb by 50 per cent.

The year began well last week, with property giant CapitaLand reporting that it has sold 60 apartments in the 165-unit Urban Suites condominium in the Cairnhill area, at prices ranging from $2,400 to $2,700 psf.

In line with the rising interest in luxury homes, sales of good class bungalows (GCBs) also picked up in 2009.

According to CB Richard Ellis, the average price on a psf basis reached a high of $826 last year, up from $820 in 2008 and $681 in 2007.

And transaction volumes have also started picking up.

Data from Savills Singapore shows that 74 GCBs worth a total of $1.3 billion changed hands in 2009. This was a up from 43 GCBs and $745.7 million in 2008.

Most of the transactions last year took place in the second half of the year – 35 GCBs were sold in Q3 and another 15 were sold in Q4 2009.

‘A lot of people jumped into the GCB bandwagon from April last year,’ said Savills Singapore’s director of investment sales and prestige homes Steven Ming. ‘People sidelined themselves from the GCB market in 2008 in anticipation of a further slowdown in the economy. So there was a backlog of demand.’

Sales were also boosted by a low interest rate environment.

For 2010, Mr Ming expects a slight drop in the number of GCB transactions, and estimates that 60-80 bungalows will be sold: ‘We are expecting volumes to slow in 2010 because those investors who wanted to buy in the last two years would have bought last year.’

As for prices, no big surges are expected either, with Mr Ming predicting at most a 5-10 per cent climb for the GCB market in 2010.

Source : Business Times – 14 Jan 2010

CBRE data shows over 40% of homes will be launched in core central region

DEVELOPERS are expected to push out a slew of high-end and luxury projects in 2010 as buying momentum starts returning to these segments of the property market.

Data from CB Richard Ellis (CBRE) shows that of the 7,975 landed and non-landed homes that are likely to be launched in 2010, more than 40 per cent of them are in Singapore’s core central region (CCR), which includes the prime Districts 9 and 10, the financial district and Sentosa Cove.

A total of 3,469 homes will be in the CCR. Another 3,071 units are in the outside central region, which is a proxy for suburban mass-market locations. The remaining 1,435 homes are in the mid-tier rest of central region.

In contrast, most private home launches in 2009 were in the mass market.

‘The first half of 2010 will see a wider spread of project launches from mass market, to city fringe and to prime locations,’ said Joseph Tan, CBRE’s executive director of residential.

‘A lot of developers did not launch or re-launch their high-end and luxury projects last year as prices were down,’ said Cushman & Wakefield Singapore managing director Donald Han.

‘They were holding onto their projects because they could afford to. Now, with prices beginning to climb, we can expect more launches in these segments.’

According to Goldman Sachs, luxury homes prices here are still some 19 per cent below their 2007 peak, while prime and mass market home prices are 8 per cent and 4 per cent lower than their previous peaks respectively.

However, it is unclear if the take-up for luxury homes will be as strong as that seen during the 2007 boom. Back then, sales were fuelled by international buyers. But now, most developers and analysts agreed that foreign demand has not returned as strongly as hoped to the high-end and luxury market.

But sellers are still hopeful that the openings of the integrated resorts will once again kick-start more interest from international investors into Singapore.

The fact that luxury prices are still far from their peaks means that investing in Singapore will once again prove to be attractive to international buyers, Mr Han added.

Said UOB Kay Hian analyst Vikrant Pandey: ‘The growing acceptance of Singapore as a choice destination to live and work will fuel prices further because property prices in Singapore are still significantly lower than those of key gateway cites of Monaco, London, New York, Hong Kong, Tokyo and Moscow.’

There is also a lot of speculation on the ground about how developers will replenish their landbanks once they start selling luxury and high-end homes once again. In 2006 and 2007, a scramble for prime residential sites led to a booming collective sales market.

‘All developers we spoke to are looking to participate in the government land sales for 2010, as land banks have been run down in the strong buying momentum in 2009,’ said Macquarie analysts Elaine Cheong and Soong Tuck Yin in a Jan 6 note.

‘A few have lost out in 2009 tenders due to intense competition. We see overpaying for land as a key risk for developers in 2010.’

Some analysts believe that collective sales, which witnessed a slump in 2008 and 2009, with only one transaction compared to 116 in 2007, could stage a comeback in 2010 if the strong buying sentiment in the property market continues well into the year.

‘We expect en bloc sales to make a comeback on the back of: rapidly falling inventory levels among developers; the H1 2010 government land sales programme (which) mainly targets the mass-market segment; a recent surge in high-end transactions; moderation in price expectations by collective sale home owners; and the transformation of Singapore into a top global city with the opening of the integrated resorts,’ said UOB Kay Hian’s Mr Pandey.

But Goldman Sachs said that the en bloc fever is not likely to return anytime soon.

‘Developers’ demand concerns still trump the need to replenish land banks, suggesting a new wave of en-bloc sales is not yet in sight,’ said analysts Paul Lian and Rishab Bengani yesterday.

‘As a group, developers made $2.5 billion in land purchases in 2009, flat over 2008, and some 75 per cent below 2006 peak levels, despite record take-up in 2009.’

Source : Business Times – 14 Jan 2010