News Update 20 April 2012

RESIDENTIAL MARKET


Home sales to foreigners dive 78 per cent

HOME purchases by foreigners plummeted 78 per cent in the first quarter as the effects of the 10 per cent additional buyer's stamp duty hit hard.

Most foreigners have retreated hastily from the market, buying just 293 homes in the first three months of the year.

This is 78 per cent down from the 1,358 homes bought by foreigners in the fourth quarter.

Permanent residents (PRs) are not included as foreigners in these figures.

Among PRs, home purchases dipped just 7.5 per cent to 790 units, while Singaporean purchases fell 12 per cent.

Experts say the implementation of ABSD has caused foreigners to pull out of the market in a knee-jerk reaction as they reevaluate their options. They say some foreigners might still see long-term potential in Singapore's property market and are attracted by rebates offered by some developers to cushion the impact of the tax, but others are simply watching and waiting. Uncertainty in global markets might have also taken its toll on foreign purchases.

Source: The Straits Times – 20 April 2012

Shoebox flats rake in higher rental yields

 

TINY 'shoebox' homes here are raking in much higher rental yields for investors than other apartment types but experts warn the good times might not last.

Data from the Singapore Real Estate Exchange (SRX) found that gross yields for shoebox apartments were 5.4 per cent in the first three months of the year.

This is well above the 2.5 to 3.5 per cent yields that residential properties typically return to investors.

The SRX shoebox yield was based on the average rent of $6.51 per sq ft (psf) per month for the 197 leasing deals inked in the period. The average unit price of the 123 shoebox homes sold then was $1,450 psf.

Experts say investors have flocked to the shoebox segment in droves, attracted by the affordable prices - typically less than $1 million. In fact, about one in seven buyers picked up new homes 500 sq ft and smaller last year.

This is more than double the rental yield of 2.4 per cent in the luxury segment. It also dwarfs the 3.6 per cent yield in the mid-end segment and 4.1 per cent yield for mass market homes.

But these high yields are not expected to last as an increasing supply of completed shoebox homes enters the market.

The number of these small homes is expected to double from about 4,100 units later this year to 8,200 units by the end of 2015.

While a dip in prices of shoebox flats could cause yields to rise temporarily, yields are likely to trend towards the norm of 2.5 to 3.5 per cent in the long run as supply picks up.

Source: The Straits Times – 20 April 2012

70% of residential units in Katong Regency booked

Property giant UOL Group has put out its first mixed-use development for sale in 2012.

Some 70 per cent of residential units in Katong Regency were booked on its launch. Of these, the sale of about 130 units have been confirmed.

Kam Tin Seah, Senior General Manager (Investment & Strategic Development) at UOL, said: “It is a very well associated kind of Tanjong Katong address. So you would expect the core demand to still come from this immediate neighbourhood.”

Located at the junction of Tanjong Katong Road, the site used to house the former Lion City Hotel and Hollywood Theatre. It is a mixed development which consist of 244 residential units and commercial space.

Prices for the residential units range between S$950,000 for a 550 square feet one bedroom unit, and S$2.52 million for a three bedroom pent house unit of 1,970 square feet. That works out to about S$1,475 to S$1,727 per square foot.

Analysts said the pricing is at the steep end, compared to units at nearby developments, which are about five to 10 per cent cheaper.

Still, buyers response are expected to be healthy. Analysts said this is because the government is planning to rejuvenate the area.

The apartments will sit above the upcoming ONE KM mall. To be managed by UOL, the retail development will have a total net lettable area of 210,000 square feet with some 150 retail tenants. Some of the buyers have said that they like the retail mall as there is a lack of malls in the Katong area.

Source : Channel NewsAsia – 19 Apr 2012