2019's first home launches sell over 30% of units

The Business Times - Jan 21
Three condominium projects that were the first launches this year saw over one-third of their released units sold.

An analyst said that the results reflected a "very, very cautious" market while another said this showed that there is still demand post-cooling measures.

Roxy-Pacific Holdings' freehold developments RV Altitude and Fyve Derbyshire were launched last Friday and Saturday respectively.

Of the 63 units released in RV Altitude, 20 were sold at average prices of S$2,729 per square foot (psf) to S$3,100 psf, net of discount. 

The 71-unit Fyve Derbyshire had 13 units sold, out of the 36 units released on Saturday. According to Roxy-Pacific's chief executive officer Teo Hong Lim, the apartments sold at average prices of S$2,200 to S$2,700 psf are a "good mix" of two- and three- bedroom units.

Tricia Song, Head of Research:
We believe the takeup rates (14-18% of total available units) for the three District 9,10 and 11 projects are reasonable given the weaker sentiment since the cooling measures as well as the benchmark pricings -- RV Altitude at SGD2,729 – 3,100 psf, Fyve Derbyshire at SGD2,200-2,700 psf and Fourth Avenue Residences at SGD2,375 psf are among the highest in their localities.  

We think developers could likely sell 9,500-10,000 new homes amid the substantial pipeline of new projects that could be launched for sale. This is a 9% increase from 2018’s estimated new home sales number, as we take into account a potentially larger and varied launch pipeline and gradual market acceptance of the new measures in 2019. In the near-term, we believe demand side factors such as household income growth, job security, household formations should continue to support the private residential market. 

Over half of institutional investors to raise Asia-Pacific property allocations: poll

The Business Times - Jan 16
Over half of institutional investors globally, or some 57 per cent, intend to increase their allocations to Asia-Pacific real estate over the next two years, a survey showed.

According to the latest Investment Intentions Survey of institutional investors and funds of funds managers published by ANREV, INREV and PREA, European investors are the most bullish on the Asia-Pacific, with 69 per cent of those polled looking to increase allocations to real estate in that time frame, followed by 50 per cent of US investors.

However, 48 per cent of Asia-Pacific investors polled intend to make no changes to their Asia-Pacific allocations, with most instead preferring to increase allocations to the US and Europe. 

Sydney, Melbourne and Tokyo are still the key investment destinations for global investors.

Tricia Song, Head of Research:
Our recent Asia Property Outlook 2019 report forecasts that interest rate hikes to slow, implying lower funding costs for developers and investors, and thus favourable for property investments. Overall demand remains firm, and opportunities abound. In particular, we favour office assets in Singapore, Tokyo and Bangalore, logistics assets in China (notably in Tier 2 cities) and business and industrial park assets in Singapore, Shanghai and Beijing. Click here to read the report.

Cook, work, play in malls. But whither the retail property recovery?

The Business Times - Jan 16
Retail rents this year could stay flat or marginally increase for malls along the Orchard Road belt and in prime suburban areas, although a continued influx of supply and broader economic issues could continue to be overhanging concerns.

This comes after the sector continued to slide from long-standing issues like competition from online shopping, labour shortages and leakage of shopper dollars overseas, prompting retail landlords to take action with creative tenancy rejigs.

Retail rents in Singapore's central region as of the third quarter in 2018 were 18.1 per cent below their most recent peak in the fourth quarter of 2014.

Tricia Song, Head of Research:
Broadly, we expect the overall retail property market to stabilise over 2018 and 2019 as rental declines have edged down each year over the past two years. For the whole of 2017, rentals of retail space in the Central Region fell by 4.7%, a substantial drawdown from the decrease of 8.3% recorded in 2016. 

Ground floor retail rents in prime shopping centres along Orchard Road should lead the recovery, Colliers estimates these could rise 1% p.a. on average in 2018 and 2019. For the Regional Centres, select shopping malls should outperform, particularly those in suburban locations with significant catchment areas. Occupancy should dip in 2019 as over 1 million sq ft of retail space comes through during 2019.  

Much has been said about revitalising Orchard Road. We hope to see more integration of the Orchard Road malls, linking one another via overhead bridges, underpasses or sheltered walkways to offer shoppers a seamless, weather-proof experience. Due to the fragmented ownership of the malls as well as the higher rent base, there has been a lack of large scale synchronised events as well as activity-based tenants which could have brought more complete and seamless shopping experience.  

Retail landlords should continue to try to rejig their tenant-mix and gravitate towards more activity-based tenant which may reduce rental income in the near-term but that can generate larger benefits in the longer term by increasing foot traffic, capture valuable time spent by shoppers in the mall, as well as draw new shopper segments, and in turn generate spillover effects for other tenants.