New Reporter
18-01-24, 11:00
Should we expect an uneventful Budget for Singapore property?
Leslie Yee
Jan 17, 2024
MANY people here celebrate everyone’s birthday on “renri” which is the seventh day of the Chinese New Year.
For the upcoming Year of the Dragon, the seventh day of the new year falls on Feb 16.
Unfortunately, many folk at The Business Times will not be partaking much in celebrating everyone’s birthday as they will be busy covering Deputy Prime Minister and Minister for Finance Lawrence Wong’s delivery of Singapore’s Budget 2024 Statement in Parliament that day.
Recent Budgets have contained ill news for the property sector. In Budget 2022, property tax rates on homes were raised in two stages, with higher value homes bearing the brunt of the tax rise.
In Budget 2023, the Buyer’s Stamp Duty rate was raised for both residential and non-residential properties of higher value.
Possibly, property players will hope that Budget 2024 is a non-event for the sector.
In the name of fairness, I argue in The Level Ground that there is scope to tweak property tax rates. Possibly, elderly residential landlords and owners of vacant homes who pay non-owner-occupier rates should enjoy lower tax rates.
Also, property tax rates could potentially be differentiated based on the number of investment homes that an individual owns.
Another suggestion is the remission of the Additional Buyer’s Stamp Duty (ABSD) for singles who are moving from their sole owned-home to another home, subject to various conditions.
New homes sales in Singapore
Many Singaporeans go on holidays overseas in December. With no new projects launched in December 2023, data from the Urban Redevelopment Authority showed developers sold 135 private homes that month, excluding executive condominiums (ECs). December’s sales were 83 per cent lower than the 784 units sold in November 2023.
According to property consultants, 6,452 new private homes, excluding ECs, were sold in 2023, down 9 per cent from the 7,099 sales in 2022 and about half the tally sold by developers in 2021. Total new private home sales in 2023 was the weakest since 2008.
Will the number of new private home sales pick up in 2024?
Testing buyer appetite for new homes launches are City Developments Ltd and Far East Organization who will soon launch their Lumina Grand EC and Hillhaven condo projects respectively.
Nowadays, one needs fairly deep pockets to buy new ECs, which are a hybrid between private and public housing.
Prices for units on offer at Lumina Grand in Bukit Batok start from around S$1.34 million, or about S$1,429 per square foot (psf) for three-bedroom units, S$1.63 million (S$1,413 psf) for four-bedroom units and S$2.1 million (S$1,402 psf) for five-roomers. Unit sizes range from 936 square feet (sq ft) to 1,711 sq ft.
Strata offices
Besides new housing launches, property buyers may want to consider strata office space. After all, buyers of non-residential properties - whether locals or foreigners - do not pay ABSD.
Riding on the strong demand for strata offices, PGIM Real Estate plans to embark on sales of strata units at 108 Robinson Road in the Central Business District this quarter.
The 12-storey freehold office building underwent an extensive revamp that was completed in June 2023.
Pricing for 108 Robinson Road may take its cue from the strata office floors at the freehold Solitaire on Cecil which were generally transacting at over S$4,000 psf last year.
Big ticket deals are brewing in Singapore’s property market. My colleague Kalpana Rashiwala reports that Allgreen Properties, part of the Kuok Group, is in exclusive due diligence to buy The Seletar Mall. Pricing for the mall, which is located next to Fernvale LRT station in the Sengkang West area, could be about S$520 million.
Rumours surrounding Frasers
Meanwhile, could something be stirring at Singapore-listed Frasers Property Ltd (FPL)? The company issued a statement on Jan 12 refuting talk of a potential sale of the company or its assets.
FPL was responding to recent news reports speculating that the company’s majority owners could sell the company or some of its assets, as part of a strategic review.
FPL’s public float is small and its share price is at a deep discount to net asset value. My colleague Ben Paul believes weak underlying profitability and reduced dividend in recent years contribute to FPL’s low share price.
He wonders whether a deal - if at all there is one - will benefit FPL’s minority investors. Perhaps FPL’s minority shareholders will get more colour on what the company’s controlling shareholders are considering to unlock value at FPL’s upcoming annual general meeting that is scheduled on Jan 24.
On Jan 15, FPL unveiled several changes in its leadership team in efforts to draw deeper upon group synergies and strengthen the business.
Another real estate group, Ho Bee Land, is expecting its net losses for the full year ended Dec 31, 2023 to widen from its current net-loss position for the six months ended Jun 30, 2023.
Ho Bee attributes the projected increase in net losses mainly to fair-value loss based on indicative valuations of its portfolio of investment properties in London, UK.
Hong Kong / China
Outside of Singapore, Hong Kong developers confront a tough 2024. These groups face a squeeze from rising funding costs and sluggish home sales and office rentals, making creditors and investors cautious about developers’ financial health.
With home prices approaching a seven-year low and sales at their lowest in nearly three decades, many Hong Kong homeowners are choosing to rent out second or third properties rather than sell, hoping that the downturn will end when borrowing costs fall and China’s economy improves.
Also, China’s property downturn may continue for two more years before gaining stability. New home sales nationwide could shrink by another 50 million square metres (sq m) both this year and next year, with 2025’s annual total plateauing at around 850 million sq m, Sheng Songcheng, a former director of the People’s Bank of China’s statistics and analysis department, said at a forum in Shanghai, China.
However, global fund giant Loomis Sayles is turning more upbeat on China’s battered real estate sector, saying recent restructuring is bearing fruit and improved sentiment may result in a faster-than-expected bounce back. A fund manager at the company argues that investors who wait too long may miss out on the rebound.
Globally, property markets are highly sensitive to interest rate movements. Watch for when and how fast interest rates adjust downwards, if at all, and the impact of such changes on property markets across the globe.
https://www.businesstimes.com.sg/property/should-we-expect-uneventful-budget-singapore-property
Leslie Yee
Jan 17, 2024
MANY people here celebrate everyone’s birthday on “renri” which is the seventh day of the Chinese New Year.
For the upcoming Year of the Dragon, the seventh day of the new year falls on Feb 16.
Unfortunately, many folk at The Business Times will not be partaking much in celebrating everyone’s birthday as they will be busy covering Deputy Prime Minister and Minister for Finance Lawrence Wong’s delivery of Singapore’s Budget 2024 Statement in Parliament that day.
Recent Budgets have contained ill news for the property sector. In Budget 2022, property tax rates on homes were raised in two stages, with higher value homes bearing the brunt of the tax rise.
In Budget 2023, the Buyer’s Stamp Duty rate was raised for both residential and non-residential properties of higher value.
Possibly, property players will hope that Budget 2024 is a non-event for the sector.
In the name of fairness, I argue in The Level Ground that there is scope to tweak property tax rates. Possibly, elderly residential landlords and owners of vacant homes who pay non-owner-occupier rates should enjoy lower tax rates.
Also, property tax rates could potentially be differentiated based on the number of investment homes that an individual owns.
Another suggestion is the remission of the Additional Buyer’s Stamp Duty (ABSD) for singles who are moving from their sole owned-home to another home, subject to various conditions.
New homes sales in Singapore
Many Singaporeans go on holidays overseas in December. With no new projects launched in December 2023, data from the Urban Redevelopment Authority showed developers sold 135 private homes that month, excluding executive condominiums (ECs). December’s sales were 83 per cent lower than the 784 units sold in November 2023.
According to property consultants, 6,452 new private homes, excluding ECs, were sold in 2023, down 9 per cent from the 7,099 sales in 2022 and about half the tally sold by developers in 2021. Total new private home sales in 2023 was the weakest since 2008.
Will the number of new private home sales pick up in 2024?
Testing buyer appetite for new homes launches are City Developments Ltd and Far East Organization who will soon launch their Lumina Grand EC and Hillhaven condo projects respectively.
Nowadays, one needs fairly deep pockets to buy new ECs, which are a hybrid between private and public housing.
Prices for units on offer at Lumina Grand in Bukit Batok start from around S$1.34 million, or about S$1,429 per square foot (psf) for three-bedroom units, S$1.63 million (S$1,413 psf) for four-bedroom units and S$2.1 million (S$1,402 psf) for five-roomers. Unit sizes range from 936 square feet (sq ft) to 1,711 sq ft.
Strata offices
Besides new housing launches, property buyers may want to consider strata office space. After all, buyers of non-residential properties - whether locals or foreigners - do not pay ABSD.
Riding on the strong demand for strata offices, PGIM Real Estate plans to embark on sales of strata units at 108 Robinson Road in the Central Business District this quarter.
The 12-storey freehold office building underwent an extensive revamp that was completed in June 2023.
Pricing for 108 Robinson Road may take its cue from the strata office floors at the freehold Solitaire on Cecil which were generally transacting at over S$4,000 psf last year.
Big ticket deals are brewing in Singapore’s property market. My colleague Kalpana Rashiwala reports that Allgreen Properties, part of the Kuok Group, is in exclusive due diligence to buy The Seletar Mall. Pricing for the mall, which is located next to Fernvale LRT station in the Sengkang West area, could be about S$520 million.
Rumours surrounding Frasers
Meanwhile, could something be stirring at Singapore-listed Frasers Property Ltd (FPL)? The company issued a statement on Jan 12 refuting talk of a potential sale of the company or its assets.
FPL was responding to recent news reports speculating that the company’s majority owners could sell the company or some of its assets, as part of a strategic review.
FPL’s public float is small and its share price is at a deep discount to net asset value. My colleague Ben Paul believes weak underlying profitability and reduced dividend in recent years contribute to FPL’s low share price.
He wonders whether a deal - if at all there is one - will benefit FPL’s minority investors. Perhaps FPL’s minority shareholders will get more colour on what the company’s controlling shareholders are considering to unlock value at FPL’s upcoming annual general meeting that is scheduled on Jan 24.
On Jan 15, FPL unveiled several changes in its leadership team in efforts to draw deeper upon group synergies and strengthen the business.
Another real estate group, Ho Bee Land, is expecting its net losses for the full year ended Dec 31, 2023 to widen from its current net-loss position for the six months ended Jun 30, 2023.
Ho Bee attributes the projected increase in net losses mainly to fair-value loss based on indicative valuations of its portfolio of investment properties in London, UK.
Hong Kong / China
Outside of Singapore, Hong Kong developers confront a tough 2024. These groups face a squeeze from rising funding costs and sluggish home sales and office rentals, making creditors and investors cautious about developers’ financial health.
With home prices approaching a seven-year low and sales at their lowest in nearly three decades, many Hong Kong homeowners are choosing to rent out second or third properties rather than sell, hoping that the downturn will end when borrowing costs fall and China’s economy improves.
Also, China’s property downturn may continue for two more years before gaining stability. New home sales nationwide could shrink by another 50 million square metres (sq m) both this year and next year, with 2025’s annual total plateauing at around 850 million sq m, Sheng Songcheng, a former director of the People’s Bank of China’s statistics and analysis department, said at a forum in Shanghai, China.
However, global fund giant Loomis Sayles is turning more upbeat on China’s battered real estate sector, saying recent restructuring is bearing fruit and improved sentiment may result in a faster-than-expected bounce back. A fund manager at the company argues that investors who wait too long may miss out on the rebound.
Globally, property markets are highly sensitive to interest rate movements. Watch for when and how fast interest rates adjust downwards, if at all, and the impact of such changes on property markets across the globe.
https://www.businesstimes.com.sg/property/should-we-expect-uneventful-budget-singapore-property