RESIDENTIAL MARKET
Home prices unlikely to fall in next 12 months
While residential prices can be expected to moderate in the fourth quarter (Q4), they are unlikely to dip in the next 12 months.
Prices of resale housing board (HDB) flats could inch up by 0.5 per cent in Q4 and private non-landed home prices are likely to see a marginal 0-0.5 per cent increase.
This is in comparison with the expectation that HDB resale prices would increase by 2-2.5 per cent and private non-landed homes would increase 0.8 per cent quarter-on-quarter, before the latest cooling measures were announced..
That being said, prices are unlikely to fall, given the low interest rate environment and the fact that the market is flush with liquidity.
The underlying support for the residential market is still the low interest rate environment, which will ensure market activity over the next 12 months.
Despite this, the latest set of measures, which include a 35-year cap implemented on loan tenures alongside tighter loan-to-value (LTV) ratios, may result in moderated sales takeup.
Some buyers may be priced out of the market because of the cap on loan tenures which results in higher monthly instalments.
The bigger impact will come from buyers who postpone their purchasing decisions in the expectation that the market will correct itself.
Another potential impact of the measures is that HDB upgraders who previously may have held on to their flats for investment purposes would now have to let go of their HDB flats
Source: Business Times – 11 October 2012
COMMERCIAL MARKET
Business park property holding well: analysts
The business park sector continued to hold steady in the third quarter of the year, and should remain resilient in the next three to six months, analysts have said.
Average rents for business and science parks worked out to S$3.70 per square foot (psf) per month in Q3, the same rate as in the previous quarter.
Vacancy rates meanwhile fell to 6.9 per cent from 7.5 per cent from Q2.
Rents held firm for a couple of reasons: one was a strong pre-commitment by companies to upcoming land supplies; the other was multi-national companies (MNCs) based in the Central Business District relocating amid a gloomy economic outlook.
Leasing activity completed in Q3 2012 included British Telecom and International SOS taking up around 65,000 sq ft of space in UE Bizhub East, CBRE's report showed.
Three new sites with 1.04 million sq ft in net lettable area (NLA) will be completed in the fourth quarter. CBRE said that the last time more than one million sq ft in supply of business park space was available was when Mapletree Business City was completed in April 2010. It had 1.72 million sq ft of NLA.
But companies have already committed to about 71 per cent of the upcoming space.
Knowing that there is a sustainable level of demand should put developers at ease.
The biggest risk to the current assessment remains the uncertain economic outlook, the analysts believe.
Source: Business Times – 11 October 2012
Dim property outlook for office and retail sectors
The property market might be displaying resilience amid a global economic slowdown, but experts say both the office and retail segments face weakness ahead.
Office space did better than expected in the three months to September. Vacancy rates fell and more space was leased than was vacated for a fourth straight quarter.
However, office rents are still falling and are set to come under further pressure. This is particularly so for older office buildings - such as One George Street, PWC Building and DBS Tower One - as space becomes available when existing tenants move to newer buildings.
Stronger-than-expected occupier demand surprised analysts, but was not enough to halt rents from sliding further in the third quarter. The fall, however, happened at a slower pace.
Grade A office rents fell by 2.5 per cent to $9.80 per sq ft (psf) a month from the figure in the previous three months. They are down 10.9 per cent so far this year, CBRE said. Rental falls are expected to be minimal in the next quarter, with Grade A rents to reach support levels next year.
Grade B rents dipped a milder 0.6 per cent in the quarter, and 2.3 per cent in the first nine months of the year, to $7.17 psf a month.
The outlook for the Grade B market is expected to be less favourable in the next six months due to the impact of impending secondary or vacant stock and upcoming decentralised stock.
Demand for space from financial institutions has stalled. This is the greatest drag on the market now and overshadows decent take-up from other industries. Professional business services and legal sectors continue to be the main drivers of Central Business District (CBD) demand, but of late we have observed greater tenant diversification to include a toy manufacturer, Lego, and a nutrition company, Mead Johnson."
Next year, Asia Square Tower 2, with 782,280 sq ft of space, will be the only Grade A supply to come onstream in the CBD. The other major supply will come from two projects in outlying areas - The Metropolis in Buona Vista with 1.18 million sq ft, and the fully pre-leased Jem in Jurong with 315,390 sq ft.
Strong appetite for decentralised projects remains, given the offer of lower occupation costs and improved proximity to established amenities and transport infrastructure.
On the retail front, rents held firm in the third quarter. Retail demand was mixed, with the withdrawal of Carrefour from Singapore juxtaposed against more new brand entrants and food and beverage outlets entering the market.
However, landlords were still able to hold up their asking rents this quarter, with flexibility extended to new market entrants and desired tenants. The landlords will monitor and review tenants' gross sales performance before making any rental revisions.
Prime Orchard Road rents held steady at $31.60 psf a month, while prime suburban rents were $29.75 psf a month.
Source: The Straits Times – 11 October 2012
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