Category: Research

Confidence in the luxury apartments market in H1 2018 led to a 30% jump in sales volume and 12% rise in prices form H1 2017. New Futura, the Nassim and Gramercy Park stood out as best-sellers during the period.

In the bungalow market, 22 Good Class Bungalows were sold along with six bungalows in Sentosa Cove in H1 2018. Although these volumes were slightly lower than in H1 2017, prices have edged up slightly.

As the residential market is still at its early stages of recovery, we believe that current prices are at attractive levels, lending a passage for end-users and investors to acquire a luxury home.

Districts 9, 10 and 11 have always been regarded as the traditional prime districts in Singapore, due to the central location and the historical significance. Over the years, as the economy progresses and older buildings in the city begin to lapse into obsolescence, the salient need to rejuvenate and modernize these areas becomes apparent. The government began to roll out various initiatives to strike a balance between injecting a new lease of life into the ageing areas while expanding the Central Business District. These initiatives encompass new transportation linkages that complements the existing networks, as well as new developments that gentrify the greying areas. With the government playing a pivotal role in pushing out these changes, it has been observed that the new growth areas have greatly benefited from the urban renewal schemes.

This paper focuses on analysing Singapore’s new and emerging prime areas and the impact of these changes on residential property prices.

The recent active land market has aroused much attention among industry players, policy makers as well as the man on the street. Questions concerning potential oversupply, the ability of the market to absorb the units and whether prices would rise so fast as to edge out home buyers have resurfaced. Will the en bloc fever overheat the market? This paper lays out the likely time-line for the launch of the new projects from Q2 2018 to Q4 2019 and analyses the historical patterns of supply and demand to throw some light on how the market is likely to behave.

The steep spike of 3.9% in the Q1 2018 URA price index could be attributed to a simple supply-demand imbalance: new launches being unable to catch up with the improving sentiments and improving demand. As a result, prices of new launches and unsold units in ongoing projects were pushed up. Prices should smoothen out when the avalanche of launches hit the market in the coming months.

As market sentiments remained positive through 2018, some 10,000-12,000 new home are expected to be sold while prices are seen to gain 7%-10%.

2017 was a window of opportunity for astute investors to enter the luxury market. After three years of “famine”, luxury home sales picked up and clocked a 48% increase from 2016’s volume to 433 units. The surge in sales could be attributed to pent up demand, positive market sentiment since the beginning of 2017 and more realistic price levels after three years of decline.

Luxury homes is currently a good value proposition because prices are still at attractive levels and the stock of luxury homes remains limited. New launches in 2018 include New Futura, 3 Orchard-By-The-Park and South Beach.

Can the sales momentum of luxury homes be sustained in 2018?

The private residential market ended 2017 on a stronger note with the price index at 1.1% above 2016 levels and 42% gain in sales volume. 10,566 new homes were sold, 43% higher than the 7,972 units sold in the whole of 2016. Resale volume totalled 14,043 units, 78% higher than the 7,901 units sold in 2016.

Taking into account the pent up demand and the return of foreign investors, new sales volume in 2018 could reach 12,000-13,000 units. In addition, fresh demand will be generated by some of the 13,000 households affected by en bloc sales. If interest in the luxury segment is sustainable, it could set the pace for prices to rise by 4% to 6% through the year.

Is this the time to buy or wait?

Skyscrapers came about from as far back as the 1880s in Chicago and New York, starting off as commercial buildings and evolving into residential as well as mixed-use properties. Such developments provide a variety of real estate development choices for developers, offering greater flexibility in terms of tenant mix, massing and design flow. From the late 80s to the mid 90s, Singapore’s urban skyline was famously marked by One Raffles Place Tower 1, Republic Plaza and United Overseas Bank Tower 1. The most recent addition is Tanjong Pagar Centre, a mixed-use property which includes Wallich Residence and is now crowned the tallest building in Singapore at 290m.

What are “tall”, “supertall” and “megatall” buildings? Why is there a race to build the tallest building in the world? Which country has the most supertall buildings? How does height affect lifestyle offering, status symbol and property prices? What are some of the challenges faced by builders of skyscrapers?

The Q3 2017 URA private residential price index finally showed a positive q-o-q change of 0.7% after 15 consecutive quarters of decline. Developers reportedly sold 2,663 new homes in Q3 2017. The secondary market also registered 4,030 sales, 5% more than the 3,828 homes sold in the previous quarter. Notable sales included a 10,300-sq ft penthouse on the 35th/36th levels of Sculptura Ardmore which was sold at $60.00 mil/ $5,825 psf, and a 7,287-sq ft penthouse on the 23rd level of Gramercy Park, sold for $21.86 mil/ $3,000 psf.

Are we out of the woods yet?

Sentiments in the residential market remained fairly positive in Q2 2017. The URA residential price index for Q2 2017 continued to descend for the 15th consecutive quarter but registered the smallest q-o-q decline of 0.1%. While this is the longest downcycle for the residential property market, its magnitude of correction is the smallest at 11.6%.

A total of 3,077 new homes were sold in Q2 2017, higher than the 2,962 units sold in Q1 2017. Likewise, the improving sales volume was also seen in the secondary market with 3,828 units sold in Q2 2017, 71% higher than the 2,240 units sold in Q1 2017. Within the prime sector, the developments which sold the most units in H1 2017 were Leedon Residence, Gramercy Park and Ardmore Three. There was a 27% y-o-y increase in the number of permanent residents and foreigners who bought homes in Core Central Region. Buyers from China and Malaysia were the top two groups of investors.

Is the residential market about to see light soon?