The Business Times - July 17
New home sales in June dropped almost half from May - but the numbers will jump back up this month with the last-minute buying frenzy the night before a new round of cooling measures kicked in on July 6.
Given the skewed performance in July - over 1,000 units in Riverfront Residences, Park Colonial and Stirling Residences were snapped up on the night of July 5 - market watchers expect the impact of these measures on buying demand to be more clearly felt only in the months ahead.
Such uncertainty has given developers cause for pause, with many reviewing their project launch dates.
Latest figures from the Urban Redevelopment Authority showed that developers sold 654 housing units in June, 41.7 per cent lower than a month ago and 20.2 per cent below a year ago.
Tricia Song, Head of Research
Sales in July will likely jump from the June numbers, bolstered by the flurry of last minute deals done – estimated at 1,000 units from three project launches – The Stirling Residences, Park Colonial and Riverfront Residences - on the evening of 5 July to beat the ABSD deadline. Subsequently, 50-65 units for each of the above three projects were sold in the 6-8 July weekend, the buyers of which are probably first-timers and upgraders who were not affected by the ABSD hikes. The Straits Times reported on 17 July that agents observed the crowds visiting show-flats were much smaller over the 14-15 July weekend. Business Times reported that so far, there have not been huge discounts from developers yet, though "price discounts" of 3-7% from earlier price lists have been touted for certain projects.
We expect new home sales to decline significantly in the next few months as the market takes stock of the potential implications. Developers and buyers are also likely to shun the month of August due to the Ghost Month which starts on 11 August.
For the whole of 2018, Colliers projects that new private home sales (excluding ECs) could come in at 8,500-9,000 units – 15-20% lower than the 10,566 units shifted in 2017.
Meanwhile, Colliers expect home prices to likely hold steady from this point, after rising by 7.4% in the first six months of this year. For already launched projects, they are unlikely to show a downward trend in actual transacted prices. For those yet to be launched, developers are likely to trim their average selling prices from their original intended aggressive pricing to current achieved levels, instead of a continuously increasing trajectory. Read our analysis here
The Business Times - 12 July
Property owners sitting on smallish plots of land are still hopeful of pulling off en bloc deals despite recent cooling measures, which are seen to hit large residential sites hardest.
The stream of en bloc hopefuls comes amid new additional buyer's stamp duty (ABSD) measures on that were effective from July 6.
Developers are now subject to a new, non-remissible 5 per cent ABSD when they buy residential development sites.
On top of that, the remissible ABSD for residential developers which used to be 15 per cent has been jacked up to 25 per cent.
This means that if a developer fails to complete the residential project as well as sell all its units within five years of acquiring the site, it will have to cough up the 25 per cent ABSD with interest.
Tang Wei Leng, Managing Director:
Developers will now have to re-appraise the market, evaluating the supply and demand conditions in the wake of the new measures before deciding on further land acquisition activity via collective sale.
The hike in ABSD rate to 25% (from 15%) plus an extra 5% that is non-remittable for entities buying property has altered the operating environment and developers would have to consider how to best mitigate any additional risk - either through re-evaluating land price or via more careful site assessment and selection.
Given the increase in land acquisition cost mainly due to the new 5% non-remittable levy on the land purchase price or market value, we believe developers may prefer a medium to larger site which could potentially allow for more units to be built and sold. This will enable the developer to spread out the additional cost over a larger number of units, providing an opportunity to recover the increased capital outlay.
While a larger site may pose heightened risk in that the developer may not complete selling all the units within five years, we feel that a site that is too small may not provide sufficient development bandwidth or profit margins for the developers to recover the 5% ABSD that is non-remittable.
That said, well-located sites that are competitively priced – taking into consideration new market realities - should still garner some interest. Ultimately, whether a developer acquires a small or large site is also dependent on other factors including its development pipeline, growth strategy and financial capabilities.
The Business Times - 16 July
The tourism sector will likely retain its growth momentum in the second half of the year, underpinned by burgeoning travel demand and tourist flows from markets such as China and India.
However, downside risks remain, say industry watchers, including the spectre of a full-blown trade war, which could dampen sentiment.
Overall visitor arrivals for the January to April period are up nearly 7 per cent year-on-year to 6.18 million, preliminary estimates from the Singapore Tourism Board (STB) show.
Visitor numbers from China - Singapore's biggest source market - continue to power ahead with an 11 per cent jump to 1.22 million, while arrivals from India surged 19 per cent to 417,400.
Govinda Singh, Executive Director, Valuation & Advisory Services:
This is in line with our expectations and would expect a further boost following the US DPRK rendezvous in June. STB’s recent partnership with Alipay should further facilitate the burgeoning Chinese market. Given this, and restricted new supply of hotel room stock, we should therefore see a sustainable return to growth in RevPAR for hotels in Singapore. However, as STB noted, downside risks continue to prevail.