The property market in Singapore for Q2 of 2009 appears to be the property boom during 2007. The sale volumes are huge. So let's see some of the numbers and readings.
May 2009- the number of units sold increased 37% mom (+368% yoy) to 1,668.
- the number of units launched increased 7% mom (+244% yoy) to 1,161.
- median price levels for mass market and mid-tier projects in May suggest a 2-3% increase in price levels compared with that in the previous month.
The mid-tier segment has registered strong sales of 609 units, up 67% mom, accounting for nearly 37% of all the units sold. The mass market segment, on the other hand, took a breather after a strong showing in the first quarter, with monthly sales declining 16% mom to 442 units.
June 2009- a record 1,825 units were sold in Jun 09 (+9.1% QoQ, +127.8% YoY).
- uncompleted homes (the number of units launched) increased 41% mom to 1,637 units.
- an average 5.2% MoM price hike (May 09 saw 3 - 5% hike).
- a fifth consecutive month of > 1,000 sold units.
Mass and mid projects continue to dominate, making up 71.2% of total sales. 58.7% of transactions came under S$1,000 psf. Median prices for mass and mid projects were up 6.3 – 7.0% MoM (to S$729 psf and S$911 psf respectively). Prime projects jumped 13.0% MoM to S$1,661 psf, underpinned by several luxury projects (saw units sold at above S$3,000psf with the highest one being the S$3,813psf for the unit at Nassim Park Residences), i.e. Orchard Residences (7), St Regis Residences (3) and single units in Hamilton Scotts, Nassim Park Residences and Ritz-Carlton Residences.
Major sales for the last two months are:
- 330 units at 8@Woodleigh project at a median price of 804psf
- 186 units at Martin Place Residences at median prices of S$1,423 psf
- 146 units at the One Devonshire project at a median price of S$1,771psf
- 140 units at The Wharf at median prices of S$1,186 psf
- 98 units at The Arte at a median price of S$933 psf
- 89 units at The Mezzo at a median price of S$903 psf
Q2 and H1 of 2009- the total number of units sold in 2Q09 to 4,714 units (+77% qoq, +195% yoy).
- 7,374 units sold for 1H09.
The second quarter alone has exceeded the 4,370 units sold for the whole of last year and it is the best quarterly showing in two years since the sale of 4,820 units observed at the height of the property boom in 2Q07.
Reasons for robust sales activity:
- confluence of pent-up demand,
- HDB upgrader market,
- low interest rates (driving interest towards property investment and away from bank deposits),
- positive sentiments,
- improving macroeconomic landscape.
Looking forward.....
A monthly sales volume of more than 300 units represents a good support level for further price upside potential from current levels, which remain 20 – 30% off their 4Q07 peak. This comfortable pricing should also ensure a healthy take-up for upcoming prime launches. As foreigners have yet to enter in droves, we believe domestic and regional speculative-investors should stand to profit as the current upcycle gears up.
The Ministry of Trade and Industry (MTI) reported a better-than-expected 2Q09 GDP growth advance estimate of - 3.7% yoy, which is a significant improvement from the 9.6% contraction in 1Q09. MTI has raised its 2009 full-year GDP growth forecast to between - 6% and -4% from the previous -9% to -6%. The job market has also held relatively stable and recent surveys suggest an improvement in the second half outlook.
However, on the other side, the average price of freehold non-landed resale private homes in prime districts 9, 10 and 11 increased 11.3% to $1,247 per sq foot in the second quarter from Q1. This followed a 3.7% quarter-on-quarter (q-o-q) price fall in Q1. The average resale prices have fell only 10-35% between Q4 2007 and Q1 2009, compared with the fall of 35-45% from the Q2 1996 peak to the Q4 1998 Asian financial crisis trough.
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The Urban Redevelopment Authority’s (URA) quarterly statistics indicate that the fall in the private residential prices has decelerated sharply from 14.1% qoq in 1Q09 to 4.7% qoq (flash estimate: 5.9%) in 2Q09. At 133.3, the price index is 26.5% below the peak levels reached during 2Q96.
Volari by CDL is freehold and was brought about with the famous enbloc of Garden Hotel in Balmoral. Sitting on a large 102,000sqft plot of land, it consist of only 85 units of 2, 3, 4 bedrooms and penthouses in a 12 storey iconic facade with irresistible Goodwood Hill lush greenery view. The architect of the development is well renowned Carlos Ott.
Key sell points:
Project Name: Air Stream
Positive outlook for retail segment; office segment remains weak. In the office market, rents fell by a slower 7.7% QoQ in 2Q09 but vacancy rate increased to 10.8% due to increasing supply and decreasing demand for office space. There was also no significant change in the oncoming supply of office space in the pipeline. In the retail segment, outlook is more positive as rents fell by a smaller 2% QoQ in 2Q09 and occupied shop space increased sharply by 247,570 sq ft in 2Q09 (vs 10,764 sq ft in 1Q09). Although vacancy rate increased from 6.6% to 7.5%, this was due the lag time taken for tenants to retrofit and move into newly completed malls like ION Orchard and Orchard Central.
The 99-year leasehold development has 297 units that feature one-bedroom studio apartments, 2- to 4-bedroom units plus 18 penthouses which come with open balconies and terraces. More details as follows:
Invest in Melbourne, Australia's most liveable city. Broad based economy, growing population, strong rental market, world class education system, comfortable climate and high standard of living. Central Equity Land is now building a wide range of landed properties with gardens in three fantastic sought after Melbourne locations.
According to the Business times, City Developments is understood to have sold between 50-60 units at the 85-unit FH Volari @ Balmoral condo at Balmoral road (as shown above) at an ASP of S$2,000 psf since its launch on Friday.
A historic PPI since 1990 is shown above. It can be seen that PPI always peak when there is a continuous positive QoQ change, likese the other way round.
Based on the past information, some analysts guess that this round will be a V-shape recovery based on the fact that Demand is greater than Supply. But will this be the case? We shall see.
The Gale, a 329 unit development in Changi, by Hong Leong. It was reported in the press that more than half of the units were sold at average pricing of S$700psf. Prices for this project is comparable to Livia by City Development.
Reasons for robust sales activity:
In the mid-market segment, Vista Residences, a district 12 project by Far East Organisation, had also seen strong take-up for the initial units launched. Our check with property agents suggest that local buyers are still driving the demand for private properties but there is a rising proportion of buyers who are buying properties for investments rather than for own stay. At Vista Residences, we understand that prices start from ~S$1,050 psf onwards and 90% of the initial release of the units up to the 12th storey had been taken up during the private preview, with more floors subsequently released for sale.
Singapore does not have a capital gains tax, unlike many countries. Its income tax rules are merely aimed at taxing persons who make an income out of their property transactions. This income tax policy is common among tax authorities internationally, and our local practices are not unique.
Sales volumes to remain firm; luxury demand recovering but still weak. CBRE expects >10,000 units of new home sales for 2009 (vs the 4,264 units sold in 2008) with firm buying interest for mass to mid-tier projects supported by upgrader and pent-up demand. Nonetheless, appetite for luxury projects priced >S$2,000psf remains weak with relatively low foreign investor participation. Wing Tai has seen interest pick up in its high-end project Belle Vue with around 70 units sold (40% of total) at avg price of S$1,800psf (>80% local buyers). The Ardmore sites will likely be launched no sooner than 2010.
