Are the days of the shoebox unit numbered?
In its latest release of quarterly real estate data, the Urban Redevelopment Authority (URA) – for the first time in a very long while – included its own analysis of private apartments sold by size and price categories.
The URA figures show that 27 per cent of the 6,526 units sold by developers in the first quarter, including 68 completed units, comprised small units of 50 sq m or below, up sharply from 15 per cent in the previous quarter.
Units costing up to S$750,000 made up 42 per cent of developers’ Q1 sales, up from 25 per cent in Q4 and the highest since the 52 per cent registered in Q1 2009, when property buying fervour recovered after the global financial crisis.
Earlier news reports have shown that the bulk of small apartment buyers have HDB addresses. The evidence becomes even more damning after the National University of Singapore released its flash estimates of its Singapore Residential Price Index (SRPI) for March early this week.
In the March data, all the sub-indices of the SRPI showed that both resale and new home sale prices increased, something that has not happened for some time. This consistency indicates that buying confidence has returned to the market and that’s usually the prelude for a price increase. And it looks very likely that small apartments or shoebox units will lead the charge.
It has been more than a year since shoebox apartments began making the headlines. There have been numerous arguments against them as well as industry analyses providing ample evidence that such units have been leading the price charge as well as the robust sales.
Yet despite warnings that the rental yield for such units may not be as rosy in the future as they are today or that the market is already oversupplied with such units, the market continues to snap them up, simply because they are affordable.
But I can understand these buyers. Even Marc Faber, the famed “Dr Doom”, when he was in town recently, said: “One is better off holding shares and properties than government bonds or cash” even as he predicted that global markets are ripe for a deep correction over the next six months. Presumably he feels, like most buyers today, that property tends to hold its value better than other assets in a correction.
Dr Faber foresees a 20 per cent correction in global markets. Will property prices be hit? For sure, the same factors that will lead to a sharp correction in global stock markets will also affect property – more in some markets and less in others. How will Singapore fare?
Source : Today – 4 May 2012
SINGAPORE
Hotel room rates on the rise
HOTELS are charging more for their rooms, buoyed by demand from a greater number of tourists checking in.
In February, for example, the six-day Singapore Airshow helped pull in more visitors who also clocked longer stays here.
The result? Hotels achieved an average room rate of $273.70 that month - the highest in four years.
'Hotel rates will continue to go up for the next few years. Rates of more than $270 will become the norm,' said Mr Robert Khoo, chief executive of the National Association of Travel Agents Singapore.
Industry observers noted that most of the new hotels coming up are smaller boutique types and that time is needed for the Government to release land for hotel building.
There is a room crunch now when big events, such as last month's Food & Hotel Asia trade show, are held.
But CTC’s Ms Seah said: 'If prices continue to rise, we might lose our competitiveness to countries in the region like Thailand and Malaysia where rates are very affordable.'
Still, other industry players said that price is but one of many factors that travellers evaluate before deciding where to check into a hotel here for a vacation.
It is equally crucial to dangle fresh carrots - such as the upcoming River Safari and Gardens by the Bay attractions - to keep drawing tourists.
Source: The Straits Times – 7 May 2012
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