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Thread: BT SUPPLEMENT Property 2021 (Sept issue)

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    Default BT SUPPLEMENT Property 2021 (Sept issue)

    What's behind the resilience of Singapore real estate?

    Sep 16, 2021

    Fiona Lam

    https://www.businesstimes.com.sg/hub...re-real-estate

    THE housing market has again taken centre stage in what many have described as a property boom, with homebuyers and investors steadily picking up residential properties of all types.

    Across the board, price increases appear to be on the cards, be it for landed homes including Good Class Bungalows (GCBs), condominiums, executive condominiums (ECs), apartments in integrated developments, or Housing Board (HDB) resale flats.

    The possibility of fresh cooling measures does not seem to have dampened spirits significantly. In fact, analysts have observed the "fear of missing out" taking root among some buyers.

    Buzz is also growing in the collective-sale scene, albeit still a far cry from the frenzy of the last cycle that ended in mid-2018.

    In this edition of The Business Times' property supplement, we delve into the segments that have been driving the resilience of the Singapore property market in the midst of a global pandemic.

    For instance, recent private residential project launches have been breaking price records. Could these new-launch projects pressure prices upwards for other condominiums in the vicinity?

    Similarly, HDB flat owners are enjoying a seller's market, with resale prices climbing and more buyers paying cash-over-valuation amounts. August's prices are just 0.1 per cent off the peak in April 2013, according to SRX data. Is the double-digit year-on-year price growth seen in the second quarter of 2021 a cause for concern?

    There are also hints that the GCB market may be poised for a surge in transaction prices, following a "sudden reawakening". The supplement examines anecdotal and empirical evidence as to whether this potentially nascent trend has legs.

    Investors weighing whether they should purchase new or resale residential properties may refer to the analysis of non-landed homes' financial performance in a special report, which also lists out the pros and cons of the two options.

    In addition, the residential components of integrated developments have long captured the attention of purchasers. Find out why some of these apartments are able to command price premiums over comparable condominiums nearby.

    It's not all rosy, however. Much has been said about the K-shaped trajectory for economic recovery, and a similar picture can be painted for Singapore's real estate market. Fates are diverging for the different sub- and micro-segments, even as the residential upcycle continues to hog the spotlight.

    As a whole, the landed housing segment continues to shine. More buyers, cooped up at home during the pandemic, are looking for bigger houses. Still, some districts saw bigger price gains for landed homes than in other locations.

    The supplement thus compares the top and worst performers by transaction volumes, and also identifies where the next hotspots for landed housing might emerge.

    In the rental market for private homes, tenant profiles are changing. Will the fresh demand support a recovery in rents?

    Rents of Grade A and B offices in the central business district have been growing further apart, in yet another example of uneven recovery paths. Read about how this comes amid a thriving flexible-workspace sector, which has presented a double-edged sword: in part bolstering leasing demand for prime Grade A offices, while also drawing potential tenants away from traditional spaces in Grade B buildings.

    Also in the office sector, more occupiers have been eyeing locations farther away from the city centre to woo talent, while others rejig their real estate footprint to enable employees to work in less-dense spaces. Does this mean tenants might take up more office space to achieve de-densification? And which decentralised office submarkets will see stronger growth prospects?

    As for industrial real estate, the robust growth momentum has persisted. New warehouse supply is slated to come online, with notable projects in Singapore's western region including Logos EHub, which accommodates a wide spectrum of e-commerce uses. Find out more about what industrial occupiers are seeking and the latest demand drivers, in this supplement.

    Over on the retail front, a long-awaited code of conduct has been rolled out to level the playing field for tenants and landlords, as the sector continues to trudge through its recuperation from the pandemic's pummelling.

    The new code aims for fair and balanced lease negotiations. Desmond Sim, Edmund Tie CEO and a member of the Fair Tenancy Industry Committee, notes: "By eliminating unfair practices, it allows both the landlord and tenant to focus on bringing sustainable values to the retail sector."

    In the meantime, the trade mix at Singapore's malls has continued to evolve. This supplement lays out the retail categories that are in vogue, as well as those losing flavour. As more shoppers venture online, what might our malls look like in the future?

    And in the property investment sales market, total deal values in the year to date have already almost matched 2020's total, buttressed by the residential, office and industrial sectors. If the potential key transactions in the pipeline materialise, Singapore's property investment sales may soon rebound to pre-pandemic levels.

    JLL Singapore's head of research and consultancy Tay Huey Ying describes the Republic as well-positioned to tap on the liquidity-flush global capital market, given its reputation as a safe investment haven backed by sound property market fundamentals.

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    Default Re: Property 2021 (Sept issue)

    Good Class Bungalows - major value uplift in the works?

    Given the unique nature of this type of housing, the trend of 'outlier' transactions may expand in scale as Singapore continues to attract talent and businesses in the new economy.

    Sep 16, 2021

    Alan Cheong
    GALVEN TAN

    https://www.businesstimes.com.sg/hub...t-in-the-works

    THE Good Class Bungalow (GCB) market has heated up with record-breaking prices since early April. But even though average prices have been rising, they are not climbing at an astounding rate.

    In our view, there are hints of a new trend emerging - one that occurs only once every generation.

    Over the last 10.5 years, the average price of GCB transactions each year has been rising almost in tandem with the average per-square-foot (psf) price based on land area.

    Meanwhile, the number of GCB transactions has yet to rebound to 2010 levels. The deal volume has been languishing at fewer than half those numbers for the most of the past decade.

    It was only in 2020 that we saw a positive trendline potentially emerging. With 2021's full-year numbers, the upward momentum may possibly continue, or at least match last year's levels.

    For the first half of 2021, there were 37 transactions captured in the URA Realis database. If we simply doubled this to extrapolate to a full-year number of 74, that would be the same as 2020's total.

    The sudden reawakening of the GCB market (as well as the entire private residential market) in a pandemic and the accompanying economic slowdown point to a nascent trend that is developing.

    In the last five years and three quarters, although the compound annual growth rate (CAGR) for GCB psf prices based on land area was 7.1 per cent (versus URA's private residential property price index's 3.2 per cent), the rate of increase was not uniform across the spectrum of transactions.



    The CAGR was 4.9 per cent for the minimum price and 10.5 per cent for the maximum price, from 2016 to H1 2021. The dispersion of prices has also increased over this period.

    Besides, the distribution of transacted prices does not appear normal nor uniform. In H1 2021, the right-tailed "outliers", both in terms of overall quantum and psf price, are far from the general cluster of observed prices.

    We believe these "outlier" deals may in fact be indicative of an upcoming step-up in values in this segment of the private residential market, based on anecdotal evidence about the buyers' motivations.

    Empirically, we can also get a whiff of this incipient trend. The number of GCB transactions started to reawaken only in 2020, after a 10-year slumber, while the average deal price shifted gears in 2019 due to the record S$230 million price tag in a sale by Wing Tai's chairman.

    Recent transactions that made headlines have also increasingly involved buyers who made their fortunes in the new economy (technology and Internet-related industries).

    Essentially, the "outlier" GCB transactions in the right tail of the price spectrum may not be mere flashes in the pan.

    As the new economy grows in size to rival or even supersede traditional industries, an additional layer of economic structure is created, and with this, comes new wealth.

    New wealth creation is quite unlike old wealth. New-economy companies boast astronomical valuations that are several times those of old-economy firms.

    Also, successful new-economy entrepreneurs tend to be much younger and therefore more likely to embrace the "you only live once" (YOLO) mentality.

    All these may be translated into the GCB market, where fresh records are expected to be set more frequently for transaction prices, be it in absolute quantum terms or on a psf basis.



    FUTURE TRENDS

    GCBs remain the most coveted type of housing for the highest echelon of society. They are exclusive to Singapore citizens, and every bungalow is unique in terms of site attributes, location or other characteristics.

    Given this nature, the trend of "outlier" transactions may expand in scale as Singapore continues to attract talent and businesses in the new economy.

    Based on feedback on the ground, there is continued interest from new citizens for the best addresses, with the Singapore Botanic Gardens as the pivotal landmark.

    Another group of buyers would be the next-generation scions of the economically active "old rich". To them, purchasing a GCB is seen as a method of wealth preservation.



    As GCB values continue to push new benchmarks, there could be a downstream effect on the detached housing market, where the price quantum tends to be lower due to the smaller size of the properties.

    Come 2025, the number of millionaires in Singapore could increase 61.9 per cent from 2020 levels, Credit Suisse's Global Wealth Report 2021 estimated.

    Using that as a proxy for the number of ultra high-net-worth individuals in Singapore who can afford GCBs, the demand for this residential real estate segment is expected to surge in tandem, amid limited supply.

    GCB prices look set to soar to a higher cruising altitude, and as things stand, we could be in the early stages of the engines powering up.

    Alan Cheong is executive director of research and consultancy, and Galven Tan is deputy managing director of investment sales and capital markets at Savills Singapore.

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    Default Re: Property 2021 (Sept issue)

    The enduring charm of landed homes

    The perennial interest in these coveted assets and their limited future supply ensure they will maintain a lasting appeal among those who can afford them.

    Sep 16, 2021

    HAN HUAN MEI
    CHEONG CHOON GHEE

    https://www.businesstimes.com.sg/hub...f-landed-homes

    THERE were 73,263 completed landed homes - including detached, semi-detached and terrace houses - in Singapore as at the second quarter of 2021, making up 19.3 per cent of the private housing stock and just 5.1 per cent of total housing stock. The limited availability and enduring charm of landed homes has made them a coveted asset among residential property types.

    Similar to the broader housing market, the landed segment was affected by cooling measures introduced in July 2018. Sales were also hampered by sellers' high price expectations, which potential buyers could not match. The landed segment further weakened in 2019 as Singapore's economy was hit by the US-China trade war.

    With their larger living spaces, landed homes became more appealing to buyers last year as people spent more time at home for work, study and family recreation, due to the pandemic. This contributed to the 38 per cent surge in sales volume to 1,805 in 2020, from 1,304 in 2019.

    The strong sales momentum continued this year, with 1,779 landed homes changing hands in the first seven months. In particular, the number of detached and semi-detached houses sold in January-July 2021 has already exceeded 2020's total. At this rate, we can expect more than 2,000 landed homes to be transacted by year-end, the highest since 2012, signalling a renaissance for the segment.

    Based on prices per square foot (psf) of land area, the three types of landed properties have charted a general uptrend from 2018 to July 2021. Semi-detached houses clocked the biggest gain of 10.5 per cent in that period to reach S$1,281 psf. Prices grew 9.7 per cent to S$1,448 psf for terrace houses, and 9.6 per cent to S$1,427 psf for detached houses.



    Geographically, the landed segment's performance differs by district. Transaction data from 2018 to July 2021 showed the highest sales volumes in Districts 19, 15, 28, 16, 10 and 20. The 4,158 homes sold in these six districts made up 61 per cent of the total 6,797 transactions island-wide. Unsurprisingly, these are also the districts with the highest concentration of landed housing.

    Supported by robust sales, the prices of landed homes in the top six districts showed a healthy compound annual growth rate (CAGR) from 2018 to July 2021. District 20 led the pack with a 3.1 per cent CAGR.

    District 16's prices grew by a smaller 1 per cent, likely because this location is farthest away from the city, relative to the other districts.

    Another reason for the popularity of the top six districts is that they are established housing estates with popular primary schools, malls, and entertainment and lifestyle options. Except for Districts 15 and 28, the other four are served by several MRT lines, enhancing their connectivity.

    As these districts are either within or surrounded by HDB estates, there is a constant pool of families upgrading to landed homes in the same neighbourhood. Some demand also came from those who sold their units in the 2017-2018 collective sales.

    Districts 8, 12, 9, 4, 25 and 18 each had fewer than 100 transactions of landed homes from 2018 to July 2021. This stemmed from the low stock of just 2,623 landed homes in total in these six districts.

    In District 8, the negative CAGR of 16.1 per cent in prices was an anomaly, as only two terrace houses were sold in 2018 with a high median of S$2,176 psf, and another two were sold in January-July 2021 at a low median of S$1,158 psf.

    District 12's strong CAGR of 4.5 per cent could be attributed to the limited availability of landed homes for sale. The 2.2 per cent CAGR in District 4 was supported mainly by the sale of high-end villas in Sentosa Cove.

    Districts 25 and 18 were less appealing to buyers due to the distance from the city centre, although their median prices, being below S$1,000 psf, suggests room for future growth.

    Conservation houses at Emerald Hill and Cairnhill made up nearly half of the 40 transactions in District 9. Buyers forked out a premium for these rare and prized assets, supporting the strong CAGR of 8.9 per cent.



    POTENTIAL LANDED HOTSPOTS

    The Thomson-East Coast Line (TEL) Stage 2 opened on Aug 28, comprising the Springleaf, Lentor, Mayflower, Bright Hill, Upper Thomson and Caldecott stations. TEL will also be connected to two other MRT lines. This improves the connectivity of landed estates at Sembawang, Upper Thomson, Lentor, Ang Mo Kio and Thomson, which will draw buyers.

    TEL's next three stages will open between 2022 and 2025, spanning 23 stations from Mount Pleasant to Sungei Bedok, passing through Downtown and Districts 9, 10, 15 and 16. Potential buyers will be keen on the landed homes in these locations.

    Meanwhile, developers have been eyeing collective-sale sites. This year, there have been a few en-bloc sales of smaller residential developments, such as Lew Mansion, Surrey Point, Ji Liang Gardens and Woo Mon Chew Court. These deals affected fewer than 50 households in total.

    If larger sites in Districts 10, 15, 19 and 20 are sold en bloc, they will release a significant number of households seeking landed homes in the same neighbourhoods. Those districts could then become hotspots for landed housing sales.

    New projects may also drive landed home prices higher, amid the current property upcycle. On the cards are Belgravia Ace, with 104 semi-detached and three terrace houses, as well as Pollen Collection, with four semi-detached and 128 terrace houses. Both projects are located in District 28 and could be launched before end-2021.

    These properties are likely to be priced higher than recent sales at Luxus Hills, where new terrace houses fetched S$3.2 million to S$3.5 million while semi-detached houses were sold at about S$4.2 million.

    Also, the project on the site of Mediacorp's former Broadcast Centre - within the Caldecott Good Class Bungalow Area - will set the price level of new bungalows in that district.

    Given the perennial interest in landed homes and as Singapore learns to live with an endemic Covid-19, bigger households and multi-generational families will look to upgrade from apartments to landed homes, while the more affluent will look for larger houses.

    As the future supply of landed homes stays limited, such properties will maintain a lasting appeal among those who can afford them.

    Han Huan Mei is research director, and Cheong Choon Ghee is senior associate vice-president at List Sotheby's International Realty.

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    Default Re: Property 2021 (Sept issue)

    Private residential hotspots: A housing renaissance emerges

    HDB upgraders and new wealth from pandemic-driven growth industries such as biotechnology and information technology are driving the revival.

    Sep 16, 2021

    Leonard Tay
    KHOO ZI TING

    https://www.businesstimes.com.sg/hub...ssance-emerges

    DURING Pasir Ris 8's launch weekend in July, six rounds of price increases were said to have taken place within a single day. About 85 per cent of the units in the project, located in Singapore's eastern region, were snapped up at the launch. The upward price revisions came as sales exceeded expectations.

    The romance of Pasir Ris 8 with homebuyers can hardly be considered an isolated case, as other projects launched earlier in the year had established the trend of launch-led demand leading to buoyancy in prices in certain locations.

    It appears that whenever a highly-anticipated new project captures the public's and buyers' attention, fresh benchmarks are set for the area.

    Do these new price levels in selected new-launch projects have the gravitas to cause a re-rating of condominium prices in their respective localities?

    To examine this, we looked at the emerging hotspots that resulted from such new condominium projects and their respective planning areas. We analysed primary sales, specifically in Queenstown, River Valley, Downtown Core, Bukit Merah and Pasir Ris, where this year's popular projects have come to the market.

    The exceptional sales at Pasir Ris 8 were the talk of the town, with two of the two-bedroom units selling above the S$2,000 per square foot (psf) mark, at S$2,084 psf.

    Given the lack of significant launches in the Outside Central Region (OCR) for several months this year, and the fact that there was hardly any new project in Pasir Ris for some time, demand-fuelled prices at Pasir Ris 8 easily outpaced last year's average prices for new sales.

    RECURRING PHENOMENON

    The 417 units sold at Pasir Ris 8 as at July 31, according to URA Realis data, fetched an average of S$1,611 psf. This pulled up the average new-sale unit price in the Pasir Ris area in January to July this year to S$1,542 psf, about 14 per cent above last year's average.

    In Bukit Merah, the average price of S$2,306 psf at The Reef at King's Dock also broke 2020's levels. In addition to its distinctive facilities, the project benefits from being located within the upcoming Greater Southern Waterfront. Developments that ride on the narrative of larger, grander national development plans may see price uplifts, potentially forming the basis for a price re-rating in the planning area.

    The same phenomenon occurred in the Downtown Core, where the government's urban planning efforts to rejuvenate the city centre contributed to improving property values. Midtown Modern had distanced itself from the pack since its launch, achieving an average of S$2,767 psf.

    This contributed to a 9.7 per cent year-on-year increase in the average new-sale prices in January to July this year to S$2,724 psf for the whole of the planning area. Prices at One Bernam, which launched in May, were also at the upper end of 2020's new-sale average.



    Despite the buzz created by success stories such as Pasir Ris 8, the upward price pull of popular launches does not necessarily lead the average prices within their respective planning areas.

    Although Irwell Hill Residences' launch in April drove fast and furious sales at the River Valley planning area, the project came within the ambit of last year's average new-sale prices. As the River Valley planning area comprises many prime residences and exclusive luxury enclaves, other projects were selling at higher prices in both 2020 and 2021.

    In Queenstown, the bulk of this year's new sales were attributed to the Normanton Park mega project. While Queenstown's S$1,914 psf average last year was higher than Normanton Park's S$1,778 psf for its 1,039 units sold, both figures were surpassed by One-North Eden, which moved 155 units at S$1,992 psf on average.

    However, that was not sufficient to pull up average prices in 2021 thus far to exceed 2020's levels, as the posh Holland area is also part of the Queenstown planning area. One Holland Village Residences launched in 2019 at S$2,686 psf on average, essentially creating its own elevated "price zone" within Queenstown.

    Thus, Queenstown's recent launches have yet to outpace the area's average prices in the way that their counterparts in Downtown Core, Bukit Merah and Pasir Ris have done.

    In the planning areas surveyed, rising prices stemmed from an interplay of factors such as overall market demand and supply, individual project attributes, interest rates and population affluence.

    The characteristics and announcements of growth stories in the planning areas also played a part. In addition, steady demand for homes has depleted the total unsold stock of uncompleted units to 19,384 as at the second quarter of 2021, similar to levels in 2017 during the collective sale bonanza.

    PERSISTING DEMAND

    Going by some recent government land sales, developers also foresee that this demand will persist. Those that submitted high land bids are anticipating that new benchmark prices can be set at future launches.

    If this trend continues and market conditions remain sanguine, unit prices in the respective planning areas may re-rate or adjust as developers re-evaluate their pricing, given their projected higher costs against sustainable demand.

    Even so, this cannot be expected for all condominium projects. Pasir Ris 8's positioning as an integrated development linked to a mall, polyclinic and MRT station is unique; the same performance might not be replicated in other projects that are not integrated developments.

    This year, prices have taken the lead from new launches, especially in areas with less activity a year ago. But this does not necessarily mean that new launches will always have the wherewithal to run ahead of its planning area's prices and cause a price re-rating in the locale. Ultimately, the pricing of new launches falls within developers' purview.

    Developers will have to navigate the delicate balance between price, product and timing to strike while the iron is hot, and simultaneously maintain a sustainable profit margin and create buy-in from potential owners.

    Average new-sale and resale prices in certain planning areas from the first quarter of 2020 to July 2021 show that any increments had remained fairly stable each quarter, despite new launches grabbing headlines.



    Nonetheless, there are positive signs that the private residential market is in a period of renaissance post-pandemic, girded by genuine buyers comprising HDB upgraders and new wealth from pandemic-driven growth industries such as biotechnology and information technology.

    More households have been able to upgrade, thanks to the overall increases in disposable income and earning power in the past decade.

    Today's market conditions amid the pandemic could have also prompted more individuals and families to make major life decisions such as home purchases more quickly. In normal circumstances, would-be homebuyers might have been happy to watch and wait.

    Leonard Tay is head of research and Khoo Zi Ting is research analyst at Knight Frank Singapore.

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    Default Re: Property 2021 (Sept issue)

    New or resale homes? Unravelling the property investment conundrum

    The decision to purchase a new or resale home is predicated more on age, affordability, space and choices. The decision matrix boils down largely to one's personal preferences, needs and budget.

    Sep 16, 2021

    LAM CHERN WOON
    ALPHONSO LIM

    https://www.businesstimes.com.sg/hub...rty-investment

    IN Singapore's current property upswing, median prices of private homes in the secondary market have risen across all regions.

    For the first half of 2021, median resale prices for non-landed transactions in the Outside Central Region (OCR) and the Rest of Central Region (RCR) increased 15.6 per cent and 13.8 per cent respectively, from 2017. In the Core Central Region (CCR), prices grew by a modest 3.8 per cent.

    The stronger recovery in the city fringe and suburban regions is closely tied to the fact that the last collective-sale boom was concentrated in the suburban market.

    The perennial question every property investor asks is: should I invest in a new or resale home?

    In this article, we revisit the pros and cons of each property type. Given the active rental market for apartments and condominiums, we also examine the financial performance of new and resale non-landed homes, among other factors such as locality, holding period and property tenure.

    PROS AND CONS: AGE

    A key differentiating feature between new and resale homes is age. New projects often offer modern facilities and curated environments that leverage smart and green technology. Of late, developers have been incorporating digitalised and automated interfaces in place of mechanical ones, such as touch-free lift buttons, home-assistant mobile apps and voice-activated home functions.

    Upon completion, new units offer a ready condition for a buyer to move in or rent out, while resale units tend to require some refurbishment. On the other hand, resale units' renovation duration is likely to be shorter than new units' construction period.

    For some leasehold resale developments, investors are more likely to experience the effect of lease decay at some point, especially if the unit on hand was completed decades ago. Nonetheless, should owners of an ageing leasehold project band together in a collective sale, the lease decay effect could be offset adequately.

    PROS AND CONS: PRICE

    On a per square foot (psf) basis, new-sale units are generally priced at a premium over resale units.

    In H1 2021, new units' median price was S$1,841 psf, 40 per cent above the S$1,312 psf for resale units. This suggests that for a given budget, a resale unit offers 40 per cent more living space than a new one. However, new units tend to come with more efficient floor plates and space utilisation, which can make up for their smaller sizes.

    By locality, the price gap between new and resale units was the most pronounced in the OCR at 45 per cent, suggesting that the trade-off between space and price will be most keenly felt by buyers considering units there. New units fetched premiums of 41 per cent in the CCR and 32 per cent in the RCR, over their resale counterparts.

    One draw of purchasing a new unit from developers is the availability of flexible-payment schemes, which are attractive to buyers who need more time to put their finances in order.

    PROS AND CONS: CHOICES

    To date, there are around 2,300 apartment and condominium projects completed in Singapore, offering an abundance of choices varying in location, character and tenure.

    The range of new projects is more limited, as land parcels are only available through government land sales (GLS) or the en-bloc market. New units on GLS land parcels also tend to be on 99-year leases.

    However, buyers considering a new project will have more unit choices at the point of launch, as compared to an older project.

    When a new project is completed, investors could face stiff competition in marketing their units for rent. This applies too if there is a sizeable pool of investors looking to offload their purchases upon project completion and the expiry of the seller's stamp duty holding period. Consequently, rents and exit pricing might fall short of initial expectations.

    CAPITAL GAINS

    In our analyses of the return characteristics of properties sold in 2019, 2020 and H1 2021, we classified the transactions into units bought from the developer versus those bought in the resale market. The figures should be interpreted against the fact that the market has reached an all-time high in the last 2.5 years.

    While resale units appear to be slightly more profitable from a capital gains perspective, this belies the differences across market segments. New projects priced competitively could reap better gains than if one had invested in a resale home.

    RCR and OCR units enjoyed stronger capital gains than those in the CCR. This may be due to the aforementioned stronger recovery in the fringe and suburban regions.

    While a longer holding period seemed to correlate with a higher annualised capital gain, units with a modest holding period of five to 10 years underperformed those with a shorter holding period of less than five years. The disparity was due to the market cycle where units purchased around the last peak in 2013 would have rendered buyers in a less-favourable position, compared to those who purchased around the start of the current upswing.

    The effect of tenure on capital appreciation was mixed. For developer units, a better performance was returned by those of a leasehold tenure, perhaps due to the premium paid for new freehold units. On the other hand, leasehold resale units fared worse than their freehold counterparts as the lease decay effect was more prominent for aged properties.



    RENTAL YIELDS

    In general, rental yields generated by developer and resale units were fairly equal. It appears the rental yields were not contingent on the property's age. Similarly, there was no clear trend between rental yields and the investment holding period.

    However, an investor can generate earlier cash flows with a resale unit than with a new unit, given the absence of a construction phase.

    Locality wise, OCR units fetched the highest rental yields, followed by those in the RCR and finally the OCR. Yields tend to be compressed for highly sought-after properties in prime areas.

    With minimal exceptions, leasehold units returned better rental yields than their freehold counterparts. In general, the premium paid for freehold units translates to a lower yield, as tenants are agnostic to the property tenure.

    TOTAL RETURNS

    Given the property market's stellar performance through the decades, investors could be forgiven for focusing more on capital gain potential.

    However, total returns arise from both capital gains and rental yields. On average, resale units provided somewhat higher total returns than developer units.

    RCR and OCR units enjoyed higher total returns than those in the CCR, again due to the stronger recovery in the fringe and suburban markets.

    While total returns improved with the holding period, the effect was diluted by the consistency of rental yield vis-à-vis holding period.

    The effect of tenure was mixed. As rental yields were higher for leasehold properties, the total-return analysis suggested that among new units, leasehold ones tend to outperform their freehold counterparts. However, among resale homes, freehold units maintained a slight edge over leasehold units.

    In conclusion, various attributes such as locality, holding period, and tenure have noticeable effects on the financial returns of homes sold in the current cycle.

    On the other hand, the distinction between investing in a new or resale home seemed less stark financially.

    At the end of the day, the decision to purchase a new or resale home is predicated more on age, affordability, space and choices. The decision matrix boils down largely to one's personal preferences, needs and budget.

    Lam Chern Woon is Edmund Tie's head of research and consulting, and Alphonso Lim is assistant manager, research and consulting.

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    Default Re: Property 2021 (Sept issue)

    Rental market for private homes maintains buoyancy

    The Covid-19 vaccination programmes and gradual resumption of air travel globally may lend further support to Singapore's private residential leasing market.

    Sep 16, 2021

    CHRISTINE SUN
    TIMOTHY ENG

    https://www.businesstimes.com.sg/hub...tains-buoyancy

    SINGAPORE'S private residential leasing market remains on track for recovery as the global economic outlook improves and vaccination roll-outs gather pace worldwide.

    More foreigners and Singaporeans are expected to return to the city-state from abroad as Singapore syncs its border reopening with the population's higher inoculation coverage.

    Leasing demand for private housing has bounced back to pre-pandemic levels. According to data from the Urban Redevelopment Authority (URA), 47,515 leasing transactions for landed and non-landed private homes - excluding executive condominiums (ECs) - were recorded in the first half of this year, surpassing the 41,714 units in H1 2020 and 46,232 in H1 2019. The rental volume in H1 2021 was almost on par with the 47,728 transactions in the second half of 2019.

    Occupancy rates for private residential properties, excluding ECs, also remained high throughout the Covid-19 pandemic, hovering above 90 per cent from Q1 2020 to Q2 2021, URA statistics showed.

    WHAT'S PROPPING UP DEMAND

    The pandemic closed borders and triggered travel restrictions around the world. The first six months of 2020 saw the start of a domino effect of an economic slowdown and rising foreign unemployment, with some foreigners retrenched amid the weakened economic climate. Consequently, rental demand for private homes and the growth of rental rates were temporarily stalled.

    In H2 2020, demand rebounded sharply with rental volumes rising more than 20 per cent to 50,823 units, from 41,714 in H1 2020. Many Singaporeans came back from abroad as the lure of a dream expatriate life faded with the pandemic fallout.

    A steady stream of permanent residents, students and long-term pass holders returned, helping to prop up demand in the city fringe and suburban areas. Many of these tenants were looking for accommodation near workplaces or international schools. Leasing demand in the vicinity of industrial parks and commercial buildings was firm.

    Some Singaporean students that were previously based overseas continued their studies here via remote learning and online courses, after their schools urged international students to return to their home countries. As the number of virus cases climbed, some parents also felt more at ease having their children back home, where advanced healthcare and educational systems would be easily accessible.

    Many foreign expats residing in Singapore renewed their leases. Some were expecting to live here for a while as their regional work assignments were placed on hold given the extensive global lockdowns. Others were reluctant to scout for alternate housing during the pandemic.

    Tenants opted for shorter leases in general because they intended to move if cheaper accommodation became available; this resulted in more transactions recorded over time.



    FRESH DEMAND

    While the virus outbreak brought about unprecedented economic challenges, it also triggered a change in housing needs that sparked the emergence of new tenant groups.

    Investors may leverage the fresh opportunities that came with the new rental demand for private homes.

    Domestic demand has helped fill the gap left by the decline in leasing transactions from foreigners. As offices were shut during the pandemic and work-from-home arrangements became a norm, many Singaporeans - especially professionals - have started rethinking their living arrangements. Now acutely aware of the need for bigger living spaces, many have set up dedicated workspaces at home and segregated areas for personal solitude.

    A growing number of young adults were also renting apartments temporarily to enjoy more space, independence and privacy. Some lived on their own or with a few friends, thus raising demand for small apartments in the city fringe and prime locations.

    There were many former or current HDB homeowners renting apartments as well, especially those who sold their flats at the end of the five-year minimum occupation period. To capitalise on the price appreciation of HDB resale flats, many owners offloaded their flats quickly, even before they had secured another home. Others rented temporarily due to construction delays at their next homes.

    Meanwhile, the rental market is increasingly attracting families with school-going children. Singaporean parents tend to go to great lengths to enrol their children in popular primary schools; some even rent homes in the vicinity.

    There has been a greater emphasis on distance-based priority - given to those who live closer to the preferred school - as balloting has been observed in almost all phases of the Primary One registration exercise these two years.

    The intensive balloting and the need to stay near popular schools have inevitably driven rental demand higher, especially from families that cannot afford to buy new homes in the relevant areas.

    RENTS RISE AS STOCK DECLINES

    Construction delays have hampered the supply of new homes, with the pace of completions slowing down significantly. Limited stock and low supply in the pipeline drove rental prices higher in many locations. According to quarterly data from URA, overall rents of all private residential properties rose 2.9 per cent in the second quarter of 2021, steeper than the 2.2 per cent increase in the first quarter of 2021.

    Further, the available housing stock for rental has been declining, as many landlords have sold their condominium units with resale prices recovering, in part to unlock their assets' investment values. Affected tenants have had to vacate and look for new accommodation.

    Homes sold with tenancy were similarly affected as the new landlords may not renew leases upon expiry.

    Consequently, rental demand and rents rose in many locations.



    POTENTIAL DEMAND BOOST

    The Covid-19 vaccination programmes and gradual resumption of air travel globally may lend further support to Singapore's private residential leasing market. The Republic will progressively restore cross-border travel as domestic vaccination rates continue to rise.

    Further, employment prospects in Singapore are brightening as more firms plan to expand headcounts.

    An increase in inbound travellers and foreign employment here will likely boost rental demand for private homes. We estimate between 85,000 and 95,000 rental transactions may be inked this year.

    As new project completions are likely to remain limited, rents may grow 5 to 8 per cent for 2021.

    Christine Sun is senior vice-president and Timothy Eng is research analyst at OrangeTee & Tie Research and Analytics.

  7. #7
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    Default Re: Property 2021 (Sept issue)

    Homes within integrated developments retain their popularity

    Despite some threats, such residential properties will continue to appeal to both owner-occupiers and investors in the years ahead.

    Sep 16, 2021

    Nicholas Mak

    https://www.businesstimes.com.sg/hub...eir-popularity

    HOMEBUYERS and investors have shown keen interest in integrated developments amid the current property bull market. Most recently, about 86 per cent of the 487 units at Pasir Ris 8, which is next to the Pasir Ris MRT station, was sold in the first week of the project's launch in July.

    What exactly is an integrated or mixed-use development? It is most commonly used to describe a development with residential and commercial components, linked to an MRT station. Sometimes, it may also be connected to a bus interchange. The residential component is usually built on top of the mall.

    The concept bears similarities to that of an integrated transport hub (ITH), although the latter does not necessarily include a residential component. The authorities define an ITH as a fully air-conditioned bus interchange that is seamlessly linked to an MRT station and adjoining commercial developments.

    The Covid-19 pandemic led to the rapid adoption of the work-from-home practices among white-collar workers. There were also several rounds of restrictions, such as the circuit breaker last year and the two heightened-alert phases this year.

    Individuals who live near a shopping centre are able to meet their dining and retail needs easily, especially when such pandemic-related restrictions are in place.

    Furthermore, residential properties near MRT stations have always been popular with buyers due to the ease of connectivity.

    Demand for homes within integrated developments therefore increased over the past year, as they enable residents to access both retail premises and an MRT station.

    That being said, one may argue that individuals working from home most of the time will no longer need public transport to commute to the office daily. The draw of an MRT station in their home-purchase decisions may thus diminish in such cases.

    CHANGING PREFERENCES

    Looking at the red-hot demand for the recently launched Pasir Ris 8, it is easy to forget that the apartment units in integrated developments have not always been this popular.

    When some of the earlier integrated developments were introduced more than 15 years ago, some homebuyers in fact preferred condominiums without the attached malls.

    Those buyers favoured more or larger recreational facilities - such as tennis courts, jogging tracks, swimming pools and function rooms - which were usually found in larger condominium developments. Some also felt that condominiums provide more privacy as they are not situated on top of busy malls.

    Nonetheless, homebuyers' preferences do change over time, especially given the impact of the pandemic.

    PRICE PREMIUM

    The prices of apartments in integrated developments are usually higher than those of nearby comparable condominiums with the same land tenure and similar age. In our study, the condominiums that were compared to the apartments in integrated developments, are not linked to any mall or MRT station.

    Some integrated developments can command price premiums ranging from 4 to 30 per cent, against comparable condominiums nearby. However, there are also a few with only a small or no price premium.

    Wider premiums were observed in cases where there had been a dearth of new private residential launches for a number of years in that area before the integrated development's apartments came to the market. This is because the lack of fresh supply of private housing would lead to pent-up demand in the locality, on which the developer of the integrated development could then capitalise.

    In addition, the apartments in an integrated development would enjoy a bigger price premium if they are launched in the midst of a bullish market that is fuelled by buoyant demand and ample liquidity.

    An example would be The Orchard Residences, situated atop the Ion Orchard mall, with 56 storeys housing 175 luxury apartments. As one of the earlier integrated developments, launched in 2007, it was also the only integrated development and the tallest building along Orchard Road.

    The Orchard Residences thus commanded one of the highest price premiums among integrated developments. In the 12-month period after the project's launch, its median transacted price of S$3,064 psf was 25 per cent above the median price of nearby comparable 99-year leasehold condominiums transacted in the primary market.

    The median price of the 99-year leasehold Orchard Residences was even higher than the overall median transacted prices of new freehold condominiums in the Cairnhill area.



    THREATS TO INTEGRATED DEVELOPMENTS

    Still, the bigger threat to apartments in integrated developments are not other condominiums, but technological innovations embraced by consumers, such as in online shopping and ride-hailing services.

    E-commerce has already proven to be a serious contender in the retail space. As online shopping becomes more prevalent and orders get delivered more quickly, that will erode the attraction of living above a mall.

    Similarly, with the improving public transport network and the emergence of more vehicular options such as buses, LRT, taxi and ride-hailing services, the advantage that residential properties next to MRT stations have over those located farther away will likely shrink.

    In addition, retail malls near MRT stations typically see high footfall. This can be both a boon and a bane during a pandemic, as crowded places will have a higher risk of a Covid-19 cluster forming. If a mall is affected, that could cause some inconvenience to the residents living in the apartments above it.

    In conclusion, homes that are part of integrated developments have maintained their popularity. As the cost of car ownership remains on an uptrend and the MRT network cements itself as a fundamental part of Singapore's transportation system, such residential properties will continue to appeal to both owner-occupiers and investors in the years ahead.

    The writer is head of research and consultancy at ERA Realty Network.

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    Default Re: Property 2021 (Sept issue)

    Dwindling options for EC buyers in H2 2021, 2022

    Demand for this housing segment has been robust; moving forward, just one EC launch may take place every six months.

    Sep 16, 2021

    LEE SZE TECK

    https://www.businesstimes.com.sg/hub...n-h2-2021-2022

    EXECUTIVE condominiums (ECs) are a hybrid private-public housing segment created for Singaporeans since 1996. They are generally found in the Outside Central Region (OCR).

    About 30 per cent of completed EC units are in District 19 (Serangoon Garden, Hougang, Punggol).

    This is followed by District 23 (Hillview, Dairy Farm, Bukit Panjang, Choa Chu Kang) with 16.5 per cent, and District 18 (Tampines, Pasir Ris) at 15.6 per cent.

    The smallest number of such residential properties is in District 20 (Bishan, Ang Mo Kio), followed by District 28 (Seletar, Yio Chu Kang) and District 22 (Boon Lay, Jurong, Tuas).

    Across Singapore, there are 66 completed EC projects as at the second quarter this year. Of these, 23 are fully privatised, having passed the 10-year mark, and can be sold freely in the open market.

    Units at another 26 completed projects can now be resold to Singaporeans and permanent residents as they have fulfilled the five-year minimum occupation period (MOP).

    Since the property market's recovery in the third quarter of 2017, developers have launched seven EC projects, or about two per year, with a total of 4,136 units. That works out to an average of 1,034 units put on the market each year.

    The seven projects are Hundred Palms Residences, Rivercove Residences, Piermont Grand, Parc Canberra, Ola, Parc Central Residences and Provence Residence.

    SUPPLY BELOW HISTORICAL AVERAGE

    At first glance, it may appear that many EC units have been launched in the last four years. However, from the first quarter of 2010 to Q2 2017, there were 22,495 units launched for sale, or an annual average of 2,999 units.

    That is nearly triple the current annual EC supply of 1,034 units.

    In the pipeline are three more EC projects amounting to an estimated 1,850 units. Located at Yishun Close, Tengah Garden Walk and Tampines Street 62, these three projects can be launched for sale after they pass their 15-month waiting periods in, respectively, February 2022, September 2022 and November 2022.

    Parc Greenwich, along Fernvale Lane, was launched on Sept 11, 2021. It was the first EC launch in District 28 in eight years and the only EC launch in the second half of 2021.



    RISING AFFLUENCE, HDB UPGRADERS DRIVING DEMAND

    Demand for ECs has been robust, with projects typically selling at least 30 per cent of their units at the launch. The sale volume could have been higher if not for the fact that the number of units set aside for second timers in the first month of launch is capped at 30 per cent. There is always a spike in sales after the first month.

    As at Aug 23, 2021, developers had sold more than 90 per cent of the total 4,136 units launched since Q3 2017, leaving an estimated 300 uncompleted EC units unsold. The number of unsold EC units has been trending downwards since Q1 2020.



    Reasons for the robust demand for ECs in recent years include the availability of deferred payment schemes, a favourable transition policy, rising affluence among Singaporeans, a larger pool of HDB upgraders, a buoyant HDB resale market, limited choices in the immediate estate, and price gains for resale EC units.

    Over the past decade, the number of households earning S$9,000 to S$13,999 per month is estimated to have increased by 50 per cent or 80,000. Rising affluence has partly fuelled the desire to upgrade to an EC environment and lifestyle.

    There have also been more flats meeting their five-year MOP recently. About 102,000 three-room and larger flats would reach their MOP in 2021. Many flat owners thus put their newly MOP-ed flats up for sale and joined the growing pool of upgraders.

    Meanwhile, the HDB resale market bottomed out in Q2 2019. If the current trend continues, transaction volumes of HDB resale flats may reach 27,000 to 29,000 units this year, the highest since 2010. HDB resale prices may rise up to 8 per cent in 2021, the strongest growth since 2011, giving owners even more reasons to upgrade.

    Besides, the seven EC project launches since Q3 2017 were in estates with hardly any private residential launches. For HDB upgraders who wish to stay in their current estates, and with private residential options almost non-existent, ECs are the apparent choice.

    In the resale market, EC units have recorded steady price gains of 52.3 per cent from 2010 to H1 2021, demonstrating their value as an asset that appreciates over time. Esparina Residences, launched in Q4 2010 at an average price of S$749 per square foot (psf), was transacting at S$1,160 psf in H1 2021, up 54.9 per cent.

    In fact, all EC projects have seen price appreciations, and unit owners were able to reap gains in as short as five years.



    BRIGHT OUTLOOK

    The outlook for the EC market is positive for H2 2021 and 2022. Part of the reason is that there will be a huge pool of HDB upgraders due to the sheer volume of flats that have passed the five-year MOP. Flat owners may be keen to tap on the buoyant HDB resale market and upgrade.

    Besides, recent land bids for mass-market condominium projects have been similar to the selling prices of current EC projects in the market. With prices of mass-market condominium units potentially reaching S$2,000 psf in 2022, the value proposition of new EC projects would only get stronger.

    The land supply for EC projects under the H2 government land sales programme is below the historical average. Moving forward, just one EC launch may take place every six months, limiting options for buyers.

    The writer is senior director (research) at Huttons Asia.

  9. #9
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    Default Re: Property 2021 (Sept issue)

    Is the double-digit growth of HDB resale flat prices sustainable?

    It's not, in the long run; a sustainable growth rate for resale prices of public housing should be at most 2 to 3 per cent above inflation, in line with the economy and income growth.

    Sep 16, 2021

    ISMAIL GAFOOR

    https://www.businesstimes.com.sg/hub...le-flat-prices

    THE HDB resale market defied odds and embarked on a remarkable recovery in spite of the pandemic and economic downturn. Based on the second quarter of 2021 statistics from the Housing and Development Board, resale flat prices rose nearly 11 per cent from the year-ago period.

    The double-digit year-on-year growth has not been witnessed since the 2010-2011 period, when prices increased annually by 10 to 13 per cent. Resale flat prices are now about 2 per cent below the peak in Q2 2013.

    We believe the momentum was driven largely by the housing market's demand-supply dynamics and boosted by the economic recovery starting from end-2020. Overall housing demand was supported by ample liquidity and low interest rates.

    On top of these, demand for HDB resale flats in particular has been buoyed by first-time homebuyers facing long waiting times for Build-To-Order (BTO) projects, exacerbated by construction delays. Demand from these buyers was further fuelled by generous resale grants of up to S$160,000.

    There were also a number of buyers purchasing resale flats due to other pandemic-fuelled motivations. More HDB occupiers have been upsizing to homes with bigger floor areas, to facilitate work-from-home arrangements. While these larger HDB flats have higher price quantums, they are more affordable than upgrading to a private apartment of the same size.

    Some buyers downsized their homes due to financial hardships as a result of the economic downturn. However, this group of "downgraders" has been thinning out, given the improving economy.

    Current supply conditions also played a significant part in driving resale flats' price growth. Higher demand coupled with the limited pool of flats available for sale led to demand outstripping supply, as seen from the increasing number of cash-over-valuation (COV) transactions this year.

    On top of that, the bulk of the supply were flats which attained their five-year minimum occupation period (MOP) this year. These younger flats come with longer remaining leases and are typically in newer condition, thus fetching higher prices and contributing to the rising resale price trend. A bumper crop of flats will reach their MOP soon, estimated to be over 25,500 units in 2021 and 31,300 units in 2022.

    PRICE TRENDS IN THE LAST DECADE

    Based on resale transactions over the last 10 years, prices of HDB flats in both mature and non-mature estates have increased by at least 15 per cent since 2011.

    However, much of this growth was due to the strong price recovery that began in the second half of 2020. Prior to that, HDB resale prices were in the doldrums, with the lull period starting in 2013.

    Resale transaction data as at Aug 27, 2021 showed resale flat prices averaging S$528 per square foot (psf) in mature estates, up 15.4 per cent from 2011's levels. In non-mature estates, the average price was S$439 psf, up 15.6 per cent from a decade ago.

    This year, a handful of non-mature estates have achieved resale flat prices similar to those in mature estates. For instance, Punggol's average hit S$488 psf, close to the S$484 psf in Serangoon, a mature estate.

    The narrowing gap in price premiums between mature and non-mature estates can be attributed to the latter's improved connectivity and better-quality infrastructure.

    Another reason is the decaying leases of older flats in mature towns, which contributed to downward pressure on their resale prices.

    Ranking the 26 HDB towns by their 10-year price growth rates, we found that flats in the Central Area took the top spot, with resale prices climbing 32.4 per cent since 2011. Among the non-mature estates, Choa Chu Kang posted the fastest growth in resale prices, rising 18.9 per cent.

    In terms of price appreciation from 2020 to 2021 year-to-date, the same two estates experienced the biggest increases. Resale flats in the Central Area became 12.4 per cent more expensive, while those in Choa Chu Kang saw prices surging by 18.4 per cent from last year.



    MILLION-DOLLAR TRANSACTIONS

    Besides the escalating resale prices, other key trends have gained traction in the HDB resale market over the past year, with one of them being the rise in million-dollar deals.

    There have been 147 million-dollar HDB resale transactions this year, as at Aug 27, exceeding previous years' records. In 2020, there were 82 such deals, which likewise surpassed the 64 in 2019.

    Several of these transactions involved rarer flat types. For instance, a handful of Design, Build and Sell Scheme (DBSS) flats in Bishan were sold at record-setting prices, with the highest reportedly reaching S$1.295 million. Most of these million-dollar properties also tend to be bigger HDB flat types in mature estates - attributes that are highly valued by buyers.

    Although the growing occurrence of such deals may signal rising flat prices and their price appreciation potential, buyers should not be alarmed, as these represent less than one per cent of total transactions.

    CASH-OVER-VALUATION

    More buyers have paid COV over the past year. COV occurs when a resale flat is sold above its actual HDB valuation, and the difference must be paid for in cash. COV transactions tend to occur in a seller's market, when demand exceeds supply.

    One in three resale flat buyers paid COV this year, a bigger proportion than last year's one in five, the Ministry of National Development (MND) said in early July 2021. Still, the current proportion of buyers who paid COV remains lower than during the 2010-2013 peak period, MND noted.

    Prospective buyers looking to purchase a resale flat are advised to exercise prudence and avoid overbidding for a flat beyond their budget.

    IS THIS SUSTAINABLE?

    While a thriving property market points to healthy macroeconomic fundamentals and housing demand, a double-digit growth rate in prices is not sustainable in the long run.

    This is because the intended purpose of HDB flats is to provide homes for the masses, rather than serve as an investment product. HDB flats ought to remain the most affordable form of housing, to cater to the younger generation and the middle-lower income groups.

    Based on a simulation of a double-digit growth for resale prices over the next decade, price tags of four-room and five-room flats are likely to run above S$1 million by 2030. This will mean most of these flats will exceed many homebuyers' budgets.



    In our view, a sustainable growth rate for resale prices of public housing should be at most 2 to 3 per cent above inflation, in line with the economy and income growth.

    If the current uptrend persists, it will neither be sustainable in the long term nor beneficial to society.

    The writer is CEO of PropNex Realty.

  10. #10
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    Default Re: Property 2021 (Sept issue)

    Singapore property investment sales could return to pre-Covid levels

    Should all the likely deals materialise, and coupled with the expected robust demand for shophouses, GCBs and high-end apartments, there is potential for sales this year to inch closer to the pre-pandemic annual average of S$31b in 2010-2019.

    Sep 16, 2021

    Tay Huey Ying

    https://www.businesstimes.com.sg/hub...n-to-pre-covid

    SINGAPORE'S real estate market has attracted some S$17.4 billion in investments in the year to date (YTD), as at Aug 23, just 1.6 per cent shy of the S$17.6 billion accumulated in the whole of 2020. These included all public-sector deals, as well as private-sector deals each worth S$5 million and above.

    The top performer was the residential sector, which again captured the bulk of the capital. It amassed about S$10.8 billion worth of sales in 2021 YTD, already exceeding 2020's full-year figure of S$8.7 billion.

    Residential investment sales were led by landed homes, where deals totalled more than S$5 billion. That included S$1.9 billion involving Good Class Bungalows (GCBs) - the highest since 2010.

    There were 61 GCB transactions recorded in 2021 YTD, with the largest being the S$129 million sale of a Nassim Road bungalow in March to Jin Xiao Qun, wife of Nanofilm Technologies founder Shi Xu.

    Within the broader residential sector, the top deal in the year thus far involved the 99-year leasehold Lentor Central government land sales (GLS) site, zoned for residential with commercial at first storey use, to GuocoLand for S$784 million.

    In all, developers acquired 18 residential development land parcels totalling S$2.7 billion in 2021 YTD, including S$93 million from four collective-sale deals. That compares with last year's 19 residential land parcels amounting to S$2.8 billion, including S$127 million from four collective-sale deals.

    OFFICE AND INDUSTRIAL: INSTITUTIONAL FAVOURITES

    Institutional investors, such as funds and real estate investment trusts, have poured an estimated S$3.4 billion into Singapore's property investment sales market in the year thus far. That's about one-fifth of the overall investment sales of S$17.4 billion.

    Office and industrial assets were institutional investors' hot favourites, with the latter sector enjoying a slight lead. Fuelled by the global chase for industrial assets and underpinned by the sector's resilience amid the pandemic, institutional investors injected about S$1.4 billion into this asset class in 2021 YTD.

    Meanwhile, office assets attracted about S$1.3 billion from institutional investors in the same period.

    In the other sectors, retail and mixed-use asset classes brought in some S$0.4 billion each.

    The top three acquisitions by institutional investors in 2021 YTD included Allianz Real Estate's S$634 million purchase of a half stake in Grade A office asset OUE Bayfront, conserved building OUE Tower, and OUE Link, a link bridge with retail units, in the central business district.

    The other two major deals were Ascendas Reit's acquisition of the remaining 75 per cent interest in business park Galaxis for around S$540 million, and Lendlease Global Commercial Reit's purchase of an effective 17 per cent stake in office and retail development Jem for S$353 million based on the agreed property value of about S$2.08 billion.



    DEALS TO WATCH

    Singapore's reputation as a safe investment haven backed by sound property market fundamentals positions it well to tap on the liquidity-flush global capital market.

    Institutional investors are expected to continue pushing ahead with their strategic portfolio reallocations, increasing their exposure to logistics and industrial assets for improved diversification and resilience.

    Meanwhile, office assets will remain high on the radar for institutional investors, with the turnaround in Singapore office rents potentially intensifying competition for asset acquisitions.

    Potential office deals to watch in the coming months would include PIL Building, One George Street, Twenty Anson, and 112 Robinson Road.

    The S$2.7 billion collective-sale tender of International Plaza - a mixed-use development comprising strata shops, offices and apartments - in Tanjong Pagar is also an interesting one to watch. If concluded, it could become Singapore's largest en-bloc deal in history, surpassing Farrer Court's S$1.3 billion transaction in 2007.

    As for residential development land, developers' appetite should remain firm on the back of their fast-depleting unsold inventory and buoyant demand from homebuyers.

    However, uncertainties and challenges arising from the pandemic, such as the construction labour crunch and higher building costs, could see developers being selective in their land acquisitions.

    They can be expected to gravitate to GLS sites or smaller residential sites in the private sector to lower development risks.

    In the rest of the year, we expect to see the conclusion of sales for several GLS sites that are designated for developments with significant residential components.

    Last month, the concept-and-price revenue tender for the Jalan Anak Bukit commercial and residential site was awarded to Far East Organization and Sino Group, which submitted a S$1.03 billion bid.

    The Marina View white site's tender is scheduled to close on Sept 21. It will be sold for at least S$1.51 billion - the price at which the plot was triggered from the reserve list. The site can yield about 905 private residential units, 21,528 square feet in gross floor area of commercial space, and 540 hotel rooms.

    Meanwhile, the tender for Parcels A and B at one-north's Slim Barracks Rise is set to close on Sept 28. They are for residential developments with commercial use on their respective first storeys.

    Jalan Tembusu and Lentor Hills Road (Parcel A) are scheduled for launch this month, and the tender awards could be announced just before the end of 2021. These two sites are designated for residential use, but the latter comes with the requirement to incorporate a childcare centre.

    Should all the above deals materialise, and coupled with the expected robust demand from family offices and high-net-worth individuals for shophouses, GCBs and high-end apartments, there is potential for Singapore's property investment sales this year to inch closer to the pre-pandemic annual average of S$31 billion in 2010-2019.

    The writer is JLL Singapore's head of research and consultancy.

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