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Slower property market to be expected after a stellar 2012

AFTER last year’s stellar run-up in the property sector, a slower 2013 can be expected, a new report predicts.

Despite another round of tightening from the Government last October, home prices and volumes here continue to be strong, noted Credit Suisse analysts Yvonne Voon and Chok Sing Ping in the report released yesterday.

But with prices steadily rising in the mass market and Housing Board segments, the risk of new measures still persists, they added.

However, prices are likely to remain flattish this year, supported by low vacancy rates for rental properties and strong affordability, the report said.

Vacancy rates remain below the long-term historical average of 6.9 per cent while low unemployment should help keep the finances of households healthy.

“(However), we expect a further 5 to 10 per cent downside risk for the prime segment due to vacancy risks, given the oncoming supply and unsold units versus weak rental demand.

“Meanwhile, we expect mass market prices to be slightly more resilient, supported by a relatively affordable price tag, which seems to be the sweet spot for upgraders and investment demand,” the report added.

Sales volumes are also likely to slow this year as the number of units in the confirmed list of the Government Land Sales (GLS) programme for the first half of this year has dipped compared with the GLS in 2011.

Developers are also likely to be less aggressive this year, Ms Voon and Ms Chok said. This is because developers such as CapitaLand and Keppel Land have won bids in the past six months.

“(Therefore) we believe that there will be less urgency for them to bid for GLS sites, although we maintain our stance that attractive sites such as Alexandra View, Mount Sophia and Prince Charles Crescent are still likely to see strong bids.”

They noted share prices of Singapore real estate investment trusts (S-Reits) have also been boosted due to increased investor demand for yields.

Total returns for such Reits are expected to be in the “mid-teens” this year, the report added.

“The weighted-average yield for S-Reits is around 5.5 per cent, which implies that a further yield compression of 50 basis points should easily translate into share price appreciation of about 10 per cent,” it said.

The added kicker of the appreciation of the Singdollar should offer investors a total return in the teens.

(Source: The Straits Times)

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Posted by on January 5, 2013 in General


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14,000 new private homes in pipeline for first half next year

The Government will sell land that can be developed to more than 14,000 new private homes, including about 3,100 Executive Condominiums (EC), in the first half of next year. The sale keeps the Government’s strong and steady supply pipeline as it seeks to keep housing prices stable after they hit a record high in the third quarter this year.

The Confirmed List for 1H2013 of the Government Land Sales (GLS) programme will comprise 12 private residential sites, including five land parcels set aside for ECs, and a mixed commercial-cum- residential site, yielding a total of more than 14,000 new private homes, the Ministry of National Development (MND) said yesterday.

These sites can yield about 6,900 homes and more than 355,000 sq ft of gross floor area for commercial use. Most of the residential sites in this programme, including the five EC sites, are located in Outside Central Region or the Rest of Central Region, where more affordable private housing is expected to be built.

The Government has also put 19 sites on the Reserve List in the 1H2013 GLS programme, the MND said. These include 11 private residential sites, one commercial-cum-residential site, two commercial sites, four hotel sites and one white site that gives developers more development options. These sites can yield about 7,100 private homes, more than 3 million sq ft of commercial space and about 1,740 hotel rooms.

Under the Reserve List, a tender will only be launched when a developer submits an application committing to bid at a minimum price acceptable to the Government.

Ms Chia Siew Chuin, Director of Research and Advisory at Colliers International noted that the total pipeline supply of 14,000 new private homes under the 1H 2013 GLS programme almost matches the total supply of 14,185 units made available under the 2H2012 GLS and the 14,140 units under the 1H2012 GLS.

“Evidently, the Government is not going to ease off on land supply for private residential development until private housing prices movements are stable,” she said.

She added that some of the sites have attractive attributes that will lure developers, singling out a 409,000 sq ft site at Coronation Road / Victoria Park Road for landed housing.

Coronation road landed site

“Surrounded by mostly low-rise housing and good schools, and given the premier address, this site will be very sought after by developers. It has been more than a year since a landed residential site was made available on the Confirmed List,” she said.

Other sites at Mount Sophia, Kim Tian Road and Faber Road are also expected to draw much interest.

On the Reserve List, the sites with strong potential to be triggered could include those located near MRT stations, such as the ones at Toa Payoh Lorong 6/Toa Payoh Lorong 4, Prince Charles Crescent and Geylang East Ave 1, she added.

Mr Lee Sze Teck, Senior Manager of Training, Research and Consultancy at DWG, noted that the Government continued with the strong supply of EC sites to satisfy demand for the hybrid housing type and partly to moderate any increase in private home prices.

“Most of the EC sites are in the north and north-east. Both these regions already have a steady supply of EC sites this year. In the north-east, a number of HDB flats, particularly in Punggol have reached or are going to reach the five-year minimum occupation period,” he said.

“At the same time, the Government is stepping up development plans for Punggol. Rather than re-channel upgraders’ demand to other estates, the Government is providing another alternative to the upgraders,” he added.

Of the 3,111 EC units, 30 per cent or 933 units will be allocated to second-timers. Together with the large supply of Build-To-Order HDB flats and ECs launched for sale from 2010, this means that the resale market will see an influx of supply starting next year, Mr Lee noted.

“There could be an imbalance in the resale market if there is no growth in demand,” he said.

(Source: Business Times)

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Posted by on December 18, 2012 in Government Land Sales


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