Singapore private home sales, units launched down month-on-month in December

The Business Times - Jan 15
Amid no new launches and the year-end lull, 602 private homes were taken up in December, about half the 1,201 units sold in November.

But December's tally was about 40 per cent higher than the 431 units booked in the same month a year ago.

The figures were released by the Urban Redevelopment Authority (URA) on Tuesday, based on its survey of licensed housing developers. The above figures exclude executive condominium (ECs) units, which are a public-private housing hybrid.

Tricia Song, Head of Research:
Despite the sharp drop-off in new private home sales in December against November, the number of units sold last month – 602 (excluding Exec Condos) - was actually quite encouraging considering the absence of any new project launches and the year-end festive period where market activities tend to slow substantially. In fact, it was the highest sales done in the month of December since 1,410 units were sold in December 2012. 

Developers’ sales last month fell by 49.9% from November to 602 (excl. ECs), but were up by 39.7% against the 431 units transacted in December 2017. After accounting for units that were returned in the quarter, we estimated the total new home sales for the full 2018 to come in at 8,706 units, down by 17.6% from the 10,566 units in 2017 – broadly in line with Colliers’ forecast. Including ECs, developers sold a total of 605 new units in December.

Home buyers continued to pick up units from projects that were launched in November – notably Parc Esta and Whistler Grand – as well as those from earlier launches. Read our analysis.

Club Street Hotel site draws top bid of S$2,148.50 psf ppr

The Business Times - Jan 15
State tenders for three sites closed on Tuesday, Jan 15, 2019. 

Based on provisional results released, a  premium hotel site along Club Street in the Central Business District drew eight bids. The highest bid, from Midtown Development (which is part of the Worldwide Hotels Group that also includes Hotel 81), was S$562.2 million, which works out to S$2,148.50 per square foot per plot ratio (psf ppr).

A private housing site along Kampong Java Road scored seven bids. The highest bid, from Chip Eng Seng Corporation's unit CELH Development, came in at S$418.38 million or S$1,192.26 psf ppr. 

An executive condominium housing site along Tampines Avenue 10 fetched seven bids.

Tricia Song, Head of Research:

Broadly, the outcome of this batch of public land tenders reflects the impact of the new cooling measures that were introduced in July 2018, as developers shift their focus to the hotel and executive condo (ECs) segments amid brighter outlook for the tourism industry and continued appeal of the ECs among middle class households in Singapore. Meanwhile, the relatively tight bidding – especially among the top and second highest bids with a difference of 0.27% – for the District 9 Kampong Java Road site shows that developers are more cautious about the residential market. 

What stood out in this latest batch of land tenders is the fairly aggressive bid for the Club Street plot - the first hotel site to feature in the GLS Confirmed List since the Bukit Chermin Road plot in H2 2008 land sales programme. Read our analysis

Singapore home sales face crucial litmus test

The Business Times - Jan 11

It's only the second week of 2019 and Singapore's residential home sales market is already facing a S$1.1 billion litmus test.

Horizon Towers, an older-style building near the Orchard Road shopping district, has gone on the market for that price, gunning for redevelopment a third time after two failed attempts. The sellers' collective sale has retained its reserve price but other groups of homeowners also seeking so-called en bloc deals are cutting their asking bids in the hope developers will bite.

For individuals who have held apartments for several years and ridden the property boom, the profits can be handsome.

Tricia Song, Head of Research:
The cooling measures and the increase in minimum unit size requirements have brought about more caution among developers, especially as they have accumulated ample landbank over the past one year. En bloc sellers would have to be more realistic about asking prices if they want their properties to sell. We expect developers would be focused on the monetisation of the inventory in the next six months, and could be ready to be more active in buying land in the later part of 2019.   

Workspace provider IWG leases space at Perennial's Capitol Singapore

The Business Times - Jan 11
Mainboard-listed Perennial Real Estate Holdings has leased over 20,600 square feet of space at Capitol Singapore to global workspace provider IWG.

IWG will launch its premium co-working space concept with private offices and club amenities branded as No18 at level two of Capitol Piazza. No18 at Capitol Singapore, which comprises three conservation buildings, will be its first venue in Asia when it starts operations in the third quarter 2019.

About 70 per cent of No18’s space will be for private offices and 30 per cent for its club and amenities. An event space within the premises will host events with a focus on health and wellness, and cater to luxury brands and product launches.

Tricia Song, Head of Research:
This deal validates our forecast of more retail-to-flexible workspace conversions. This followed deals such as Spaces (a subsidiary of IWG) taking up 35,000 sq ft (3,300 sq m) at One Raffles Place Shopping Mall in March 2018, and JustCo leasing 57,000 sq ft (5,300 sq m) of retail space at Marina Square in late 2017. 
This is likely an adaptation to the tough retail leasing climate in Singapore. Based on latest data from the Urban Redevelopment Authority (URA), Singapore’s retail vacancy currently stands at 7.6% as of Q3 2018, with approximately 5.0 million sq ft of vacant retail floor area island-wide. Meanwhile, Central Region retail rents have chalked up a long-running decline of 18.1% over the past 14 quarters, as of Q3 2018. 
These factors may have prompted landlords to explore leasing to flexible workspace operators, in a bid to achieve more stabilised occupancy for their retail properties. This is in spite of the trade-off being lower gross rental income, as office rents are typically lower than retail rents.

Duncan White, Head of Office Services:
As IWG launch their No18 brand in Singapore, their decision to locate in Capitol Singapore is well-suited to their brand positioning and targeted occupier approach. This additional take up of space also boosts IWG’s offerings, making it one of the largest Flexible Workspace Operators in terms of square footage under lease in Singapore. With a tightening office market in terms of available space - particularly in Premium and Grade A developments - we have anticipated Flexible Workspace Operators to seek more differentiated and dynamic locations and environments. 

We can expect to see additional growth in the Flexible Workspace sector this year, with more diversified building offerings including re-positioned Grade B buildings as well as retail locations to accommodate for the growth. MNCs are expected to continue the adoption of Flex and Core ™ strategies to allow for uncertain headcount growth.