Redas explains why some cooling measures need to be revised

The Business Times - Feb 20
The Real Estate Developers' Association of Singapore (Redas) has given reasons why some of the property cooling measures should be revised, and at the same time called for more dialogue between the Government and property stakeholders.

Finance Minister Heng Swee Keat said afterwards that the real estate sector faces "bitter medicine" from time to time.

Speaking at the association's spring festival lunch at Shangri-La Hotel, Redas's new president Chia Ngiang Hong said there could be some flexibility in the timeframe needed to complete the sales of projects when it comes to the remissible additional buyers' stamp duty (ABSD) for developers.

Tang Wei Leng, Managing Director:
The cooling measures introduced in July 2018 have led to a decline in transaction volumes while home prices have been relatively more resilient. Post-July 2018, home buyers and developers alike have been more cautious as the new measures - such as additional taxes - weigh heavily on their buying decisions.

The various rounds of property cooling measures are aimed at ensuring that the market remains sustainable, and the government has indicated that it will monitor the market closely and will intervene, if necessary. While it is unlikely that the government will unwind the measures completely in the near-term, we agree with REDAS that some of them could be tweaked. For example, having more flexibility in the timeframe needed to complete the sales of projects - as suggested by REDAS - could go a long way in supporting healthy market development, as it gives developers more time to plan, design, and launch their projects as opposed to inundating the market with a large number of new launches all at once. Having more time to sell the projects will also help to ensure a more sustainable pipeline of launches that are well-spaced out, thereby creating greater stability in the property market.


8M Real Estate buying shophouses worth S$144m

The Business Times - Feb 20
8M Real Estate is buying about S$144 million in shophouses in four transactions involving 10 shophouses in Tanjong Pagar Road, Amoy Street, Gemmill Lane and Lorong Mambong.

The biggest of the four deals, at S$80 million, is for a row of six shophouses - Nos 33, 35, 37, 39, 41 and 43 Tanjong Pagar Road - which have four floors and a mezzanine level.

The ground-floor space of two of the shophouses is leased to a bridal boutique; that for another two shophouses leased to Five Oars Coffee Roasters, and that for the last two shophouses to The Proof Collective, which uses the space as its offices and also operates a cocktail bar at the back.

Tricia Song, Head of Research:
Colliers expects demand for shophouses - which are hybrids of the residential, commercial and hospitality sectors - to remain consistent in the next three years, especially from boutique investors due to the low capital quantum required. 

Based on Colliers International's research, shophouse transactions with a value of SGD5 million and above grew 7% QOQ and 23% YOY to SGD212 million in Q4 2018. As a result, total shophouse transactions in 2018 hit an all-time high of SGD1.2 billion, following a rising trend which started in 2015 and indicating strong demand for this class of asset in the aftermath of the cooling measures in the residential sector. Click here for our Investment Sales report.


Singapore property not set for 'big bump', CapitaLand says

The Business Times - Feb 20
Singapore home prices are unlikely to stage a rapid rebound after the government imposed further property curbs in mid-2018, the finance chief of the city-state's largest developer said.

"If we see a 5 per cent increase in home prices I think that will be a pretty good year for the Singapore residential market," CapitaLand chief financial officer Andrew Lim said in an interview with Bloomberg Television on Wednesday. "The severity and extent of the measures in July caught us by surprise."

Home prices posted their first decline in six quarters in the last three months of 2018.

Tricia Song, Head of Research:
Prices of private residential properties dipped by 0.1% from Q3 to Q4 2018 - unchanged from initial estimates released earlier this month. This brought the overall increase in private home prices to 7.9% for the whole of 2018, as compared with the 1.1% growth in 2017.

Overall private residential prices are now 3.2% below the peak in 2013.

The price growth last year was largely fueled by pent-up demand for homes, attractive new launches, and a more positive economic outlook for Singapore. However, we do not expect private home prices to continue to rise rapidly in view of the new property curbs implemented last July. 

We estimate that overall private home prices could potentially climb by 3% in 2019, in line with the economic growth – barring any unforeseen events. The rise in home values in 2019 would likely be led by the Core Central Region (CCR), which will potentially see several new project launches.