New Reporter
22-06-23, 17:22
Demand, supply and the question of value
Michelle Low
Jun 20, 2023
IN THE Singapore market, where entry cost is a high barrier, is investing in property now a poor proposition?
Housing prices are at a high and only just starting to flatten. Transaction costs have grown significant for investors both local and foreign with higher stamp duties in place. Supply of land for housing appears to be ample despite the country’s limited land size - the state periodically reclaims and rezones huge tracts of land to be repurposed for housing. The possibility of government intervention is also always on the agenda, to keep a lid on prices and rein in buying.
As Leslie Yee writes in The Level Ground, any investor may hope for demand to constantly outstrip supply in order to achieve high returns. Still, even with plenty of supply in the pipeline, there is value in Singapore property. Read his column to see why.
Some key indicators will surface in the next few weeks. The government is due to soon unveil its slate of state land sites for tender in the Government Land Sales (GLS) programme for the second half of 2023. Supply for both office space and private homes was bumped up in the H1 programme. What will the H2 list bring?
Next week, we’ll see the tender result (on Jun 27) for the first piece of land to be sold in the new Marina South precinct. The Marina Gardens Lane parcel could yield about 790 apartments as well as commercial space, in a locality that could potentially house up to 10,000 dwelling units.
Bids of up to S$1 billion were expected when the Marina South site sale was first announced in December, for what’s seen as one of the best picks on the year’s land sales list. Sentiment has cooled since then, though. And several new launches in the downtown area are waiting in the wings.
Tenders for two other state land sites will close on the same day next week - a plot for an executive condominium project in Tengah, and a mixed use parcel in Tampines. The results will give some insight into developers’ views.
What does the picture look like on the demand side? Developers sold 1,038 new private homes out of 1,595 units launched in May. New sales in May were 17 per cent higher than in April, but about 24 per cent lower year on year. While the month’s tally was the highest sold in a year, the 65 per cent overall take-up rate was the lowest in over two years, and buyers are increasingly price-sensitive, analysts noted.
Foreign buying showed a sharp fall after the introduction of much higher stamp duties for foreign purchasers at the end of April. The immediate knee-jerk reaction was to be expected.
Some foreign investors are now looking elsewhere. A weaker ringgit and easier approvals are drawing China investors into the Malaysian market. Both commercial and residential segments across the Causeway are seeing a boost in interest, consultants tell Tan Ai Leng.
Shares in two Singapore-listed property counters jumped in the last week. Amara Holdings and Ho Bee Land both saw trading volume and prices surge. Amara subsequently disclosed that it was in talks over a transaction that may or may not lead to an offer for the company. Ho Bee, meanwhile, had no explanation for its trading spike.
Two Chinatown properties are up for collective sale. People’s Park Centre restarted its en bloc process after its second bid at a sale came to a dead end. People’s Park Centre had attempted to sell at S$1.8 billion in 2022. It is now looking at a lower reserve price of between S$1.5 billion and S$1.7 billion. Nearby, owners at People’s Park Complex hope to jump on the bandwagon and are in the process of obtaining consent. Both mixed-use buildings will be coming to a market that is now at a standstill.
In green terms, does it make sense to tear down an ageing building and redevelop to improve energy efficiency, or does the overall carbon footprint enlarge with the demolition? Bryan Kow talks to industry players and finds out that retrofitting is not always best for older buildings to meet new energy standards.
Things may be looking up for office markets in the Asia-Pacific. Colliers sounded an optimistic note on the office sector, saying sentiment was expected to improve on peaking interest rates, in a Jun 15 report. Apac office occupancy levels are averaging 80 per cent, trumping Europe’s 65 per cent and North America’s 50 per cent.
A separate report by S&P Global Ratings found office-focused real estate investment trusts (Reits) in the region to be more resilient than their global peers. The same challenges apply - hybrid working looks like it’s here to stay, tenants are downsizing, vacancies are elevated, and financing costs continue to pressure asset values. But S&P found Apac office Reits and landlords performing better in stress tests in terms of having a financial buffer against scenarios of sharper declines of rents and asset value.
Outside Apac, Reits are shedding assets. Cromwell European Real Estate Investment Trust said it was divesting two assets in Italy - one in Bari valued at 73.3 million euros (S$106.5 million) as at Dec 31, 2022, and a “trophy asset” in Milan’s CBD, reportedly for close to 100 million euros.
In other markets, things are not looking good:
Where housing prices have crashed and billions in wealth have vanished
China’s property investment slump deepens; home demand weak
South Korea’s house price decline in May, softest in 10 months
Surging mortgage rates bring early summer slowdown for UK housing market: Rightmove
In that scheme of things, perhaps Singapore looks like a safe haven.
https://www.businesstimes.com.sg/property/demand-supply-and-question-value
Michelle Low
Jun 20, 2023
IN THE Singapore market, where entry cost is a high barrier, is investing in property now a poor proposition?
Housing prices are at a high and only just starting to flatten. Transaction costs have grown significant for investors both local and foreign with higher stamp duties in place. Supply of land for housing appears to be ample despite the country’s limited land size - the state periodically reclaims and rezones huge tracts of land to be repurposed for housing. The possibility of government intervention is also always on the agenda, to keep a lid on prices and rein in buying.
As Leslie Yee writes in The Level Ground, any investor may hope for demand to constantly outstrip supply in order to achieve high returns. Still, even with plenty of supply in the pipeline, there is value in Singapore property. Read his column to see why.
Some key indicators will surface in the next few weeks. The government is due to soon unveil its slate of state land sites for tender in the Government Land Sales (GLS) programme for the second half of 2023. Supply for both office space and private homes was bumped up in the H1 programme. What will the H2 list bring?
Next week, we’ll see the tender result (on Jun 27) for the first piece of land to be sold in the new Marina South precinct. The Marina Gardens Lane parcel could yield about 790 apartments as well as commercial space, in a locality that could potentially house up to 10,000 dwelling units.
Bids of up to S$1 billion were expected when the Marina South site sale was first announced in December, for what’s seen as one of the best picks on the year’s land sales list. Sentiment has cooled since then, though. And several new launches in the downtown area are waiting in the wings.
Tenders for two other state land sites will close on the same day next week - a plot for an executive condominium project in Tengah, and a mixed use parcel in Tampines. The results will give some insight into developers’ views.
What does the picture look like on the demand side? Developers sold 1,038 new private homes out of 1,595 units launched in May. New sales in May were 17 per cent higher than in April, but about 24 per cent lower year on year. While the month’s tally was the highest sold in a year, the 65 per cent overall take-up rate was the lowest in over two years, and buyers are increasingly price-sensitive, analysts noted.
Foreign buying showed a sharp fall after the introduction of much higher stamp duties for foreign purchasers at the end of April. The immediate knee-jerk reaction was to be expected.
Some foreign investors are now looking elsewhere. A weaker ringgit and easier approvals are drawing China investors into the Malaysian market. Both commercial and residential segments across the Causeway are seeing a boost in interest, consultants tell Tan Ai Leng.
Shares in two Singapore-listed property counters jumped in the last week. Amara Holdings and Ho Bee Land both saw trading volume and prices surge. Amara subsequently disclosed that it was in talks over a transaction that may or may not lead to an offer for the company. Ho Bee, meanwhile, had no explanation for its trading spike.
Two Chinatown properties are up for collective sale. People’s Park Centre restarted its en bloc process after its second bid at a sale came to a dead end. People’s Park Centre had attempted to sell at S$1.8 billion in 2022. It is now looking at a lower reserve price of between S$1.5 billion and S$1.7 billion. Nearby, owners at People’s Park Complex hope to jump on the bandwagon and are in the process of obtaining consent. Both mixed-use buildings will be coming to a market that is now at a standstill.
In green terms, does it make sense to tear down an ageing building and redevelop to improve energy efficiency, or does the overall carbon footprint enlarge with the demolition? Bryan Kow talks to industry players and finds out that retrofitting is not always best for older buildings to meet new energy standards.
Things may be looking up for office markets in the Asia-Pacific. Colliers sounded an optimistic note on the office sector, saying sentiment was expected to improve on peaking interest rates, in a Jun 15 report. Apac office occupancy levels are averaging 80 per cent, trumping Europe’s 65 per cent and North America’s 50 per cent.
A separate report by S&P Global Ratings found office-focused real estate investment trusts (Reits) in the region to be more resilient than their global peers. The same challenges apply - hybrid working looks like it’s here to stay, tenants are downsizing, vacancies are elevated, and financing costs continue to pressure asset values. But S&P found Apac office Reits and landlords performing better in stress tests in terms of having a financial buffer against scenarios of sharper declines of rents and asset value.
Outside Apac, Reits are shedding assets. Cromwell European Real Estate Investment Trust said it was divesting two assets in Italy - one in Bari valued at 73.3 million euros (S$106.5 million) as at Dec 31, 2022, and a “trophy asset” in Milan’s CBD, reportedly for close to 100 million euros.
In other markets, things are not looking good:
Where housing prices have crashed and billions in wealth have vanished
China’s property investment slump deepens; home demand weak
South Korea’s house price decline in May, softest in 10 months
Surging mortgage rates bring early summer slowdown for UK housing market: Rightmove
In that scheme of things, perhaps Singapore looks like a safe haven.
https://www.businesstimes.com.sg/property/demand-supply-and-question-value