RESIDENTIAL MARKET

S'pore luxury property market still resilient

SINGAPORE luxury property remains resilient despite the government's cooling measures, as the wealthy look to the city as a 'safe haven' and a lifestyle destination.

A survey of 4,000 individuals worth an average of US$100 million each cites Singapore as the fifth most favoured second home location across all respondents. In pole position was the United States, followed by the United Kingdom, France and Spain.

In terms of quality of life, Singapore took second place, after London.

The study reflects the growing shift in emphasis towards the East, where the number of 'centa-millionaires' - defined as those with a net worth of at least US$100 million in investible assets - is growing rapidly.

For instance, the current ranking of the most important global cities finds Singapore in fifth spot, after London, New York and Hong Kong. Shanghai and Beijing were ranked eighth and ninth, respectively.

In 10 years, based on the expectations of survey respondents, Singapore continues to take the fifth spot. But Beijing and Shanghai moved up to third and fourth places, respectively.

In terms of the rise in the number of centa-millionaires, the fastest growth by far between 2011 and 2016 is projected to occur in Africa, South and Central Asia, the Middle East and South-east Asia.

Property remains a favoured asset among high net worth individuals. It has the biggest share of 31 per cent of portfolios on average, and equities and bonds have 31 per cent each in 2011. In the Asia-Pacific, however, property's share of portfolios is higher at 31 per cent, with equities taking 24 per cent and bonds 16 per cent.

The study finds that 57 per cent of the ultra high net worth individuals expect to increase their residential property portfolio. The growing wealth market has led to the emergence of 'super prime' markets, characterised by transactions of at least US$20 million each. Of these transactions, foreign buyers typically account for a quarter. In Asia-Pacific, Singapore and Hong Kong are super-prime markets, but Shanghai may well emerge as one too.

The report notes that Asian markets such as Singapore and China have implemented property cooling measures which have hit prices somewhat last year.

In Singapore, however, the demand for prime residential property among foreign buyers remains intact.

The trend among foreign buyers implies that notwithstanding the Additional Buyers Stamp Duty (ABSD), ultimately the rich will buy Singapore property. This is due to a number of factors such as Singapore's stable political and economic environment; its safe haven status for capital and it offers an attractive lifestyle.

In terms of investment themes, Citi Private Bank head of investment (Asia Pacific) Debashish Duttagupta said clients should 'intensify their quest for yield'. 'It's our view that rates will stay low and risk free yields will stay low. This has deep implications for real estate markets.' With this backdrop, he adds, financial investments will also continue to outperform.

He suggests that clients could construct real estate investments including commercial property that behave like a fixed rate bond in terms of its yield.

Dividend stocks are also an attractive option. 'It does not mean that in a market rally dividend stocks underperform. Our studies show that when equity markets rally strongly, dividend yield stocks outperform growth and value stocks.'

Source: Business Times – 31 March 2012

More cooling measures 'likely'

THE likelihood of the government implementing a sixth round of cooling measures is now much higher than two months back.

That being said, measures, if implemented, are likely to happen only in the second quarter of this year,.

A few months doesn't really constitute a trend so naturally, the government will look - it may take one to two quarters to observe if this is a sustainable trend or if (the spike in sale volumes) is short-term.

Based on Urban Redevelopment Authority (URA) figures for the month of February, a total of 2,413 private homes - excluding executive condominiums (ECs) - were sold, representing a 29 per cent month-on-month jump, and more than double the number sold in the same period last year.

Including ECs, a total of 3,138 units were sold in February, up 51 per cent from January's 2,077 units.

The robust buying sentiment has revived conjecture that the government might roll out additional cooling measures. This follows a series of cooling measures which culminated in the implementation of an additional buyer's stamp duty in December last year.

When the sixth round comes in, it could be a refinement of the existing five rounds of cooling measures, or it could be something drastically new.

The market is actually in mixed flux. The resale market is quite dead while new sales are doing very well. Is this a sign of a very stable and sustainable market? This is a question many people are interested in.

Source: Business Times – 31 March 2012

Homes shrink as prices rise

SINGAPORE home buyers are squeezing into ever smaller homes in order to be able to afford that prized apartment.

Figures show the median size of new homes sold in the three months to today is now a very cosy 667 sq ft - a touch smaller than a squash court.

The latest figure is a hefty 24 per cent smaller than the same figure a quarter earlier. This trend is made even more stark compared with the median home size of 1,141 sq ft in the second quarter of 2010.

The median size of new suburban homes is slightly larger than the 667 sq ft, standing at 721 sq ft this quarter, but it is also well down from the 915 sq ft in the three months before.

Experts say the main draw of small units is their affordable overall price, which is also attractive to investors. The new data seems to back up their claim.

The median price of all new non-landed private homes is about $790,000 in the first quarter, down sharply from $960,000 in the quarter before, in tandem with shrinking sizes.

In general, however, median unit prices have risen to $1,179 per sq ft (psf) from $1,084 psf in the same period.

The smaller quantum makes compact apartments very affordable, providing a safe haven for investors keen to park their savings.

The projects with small units that were fully sold in the first quarter include 275-unit Guillemard Edge at a median price of $1,215 psf, 198-unit Casa Cambio at $1,390 psf and Millage, which moved 70 units at $1,350 psf.

Three-bedroom apartments have shrunk from about 1,200 sq ft five to six years ago to about 1,000 sq ft now to fit the budgets of home buyers.

This is still larger than in cities like Hong Kong, where the average apartment size is about 600 sq ft, according to a CNN report last year.

We are headed in the direction of smaller apartments, but it is unlikely to be as small as Hong Kong. Three-bedroom units are likely to remain larger than 900 sq ft.

Some experts emphasize that smaller homes are largely a function of sky-high prices - they surged 17.6 per cent last year - rather than lifestyle changes.

When prices come down, apartment sizes are likely to increase again. This is partly because HDB flats with three bedrooms are typically at least 1,000 sq ft, and so most Singaporeans are not used to living in tiny units yet, they add.

But shoebox apartments of 500 sq ft and less are also likely to have brought the median home size down, as they have been gaining in popularity in recent years. They usually go for under $1 million and attract mostly investors.

Sales of such units have shot up from 300 in 2008 to 1,900 in 2010, or from 6 per cent to 12 per cent of developers' sales over the same period.

Home hunter Pang Zhijian, who works in the financial industry, is not keen on units of less than 1,000 sq ft as the apartment will be meant for his own stay. 'I plan to live there for a while. It is not an investment home, so it needs to be bigger so that it can accommodate my family even five years from now.'

New home sales in the first quarter are expected to come in at 5,200 units - close to the previous quarterly peak of 5,578 units in the third quarter of 2009 - driven by easy credit.

Home sales averaged about 4,000 units each quarter for the past few years.

Top sellers for the quarter were Watertown in Punggol with 924 units sold, Parc Rosewood with 577 units sold and The Hillier in Upper Bukit Timah with 457 units snapped up.

Source: The Straits Times – 31 March 2012