Bigger average unit size expected to temper condo prices

The Business Times - Oct 18
The average size of new private flats outside the central area will have to be at least 85 sq m, a regulatory change that will cut the number of units allowed in a project - something that developers say would sound the death knell for en bloc deals and moderate condo and land prices in the affected areas.

The Urban Redevelopment Authority (URA) also further announced on 17 October that nine areas in Singapore - up from four presently - will be subject to an even more stringent minimum average requirement of 100 sq m, namely Marine Parade, Joo Chiat-Mountbatten, Balestier, Telok Kurau-Jalan Eunos, Stevens-Chancery, Pasir Panjang, Kovan-How Sun, Shelford and Loyang. 

Under the revised guidelines, the minimum average unit size for such developments - including executive condominiums and residential components of mixed-use developments - outside the central area will go up from 70 sq m to 85 sq m from 17 January 2019, which is also the effective date for the 100 sq m threshold in the nine designated areas. 

Tricia Song, Head of Research:
The revised guidelines are not in addition to the July 6 cooling measures, but could temper land bids as developers may no longer be able to support high en bloc asking prices with high psf selling prices driven by small units. Nonetheless, we believe developers can still curate a good mix of large and small units with the new average benchmark. To move land sales, we recommend private land sellers moderate their price expectations, in particular for the areas affected by the new guidelines. 

On the bright side, the guidelines are to ensure the liveability of residential estates, and also provide more certainty to boundaries and unit sizes. In the longer term, better liveability and a sustainable market equilibrium ought to support property values. Read our analysis here

CDL to launch Whistler Grand in the west at average S$1,380 psf

The Business Times - Oct 22
City Developments Limited (CDL)'s Whistler Grand condo will go at an average selling price of S$1,380 per square foot (psf), which the giant developer touts as the most affordable launch for the fourth quarter.

CDL will begin previews this weekend for the 716-unit development comprising two 36-storey towers at West Coast Vale.

Special prices at the official launch for Whistler Grand will start from S$608,000 for one-bedders, S$792,000 for two-bedroom, S$1.198 million for three-bedroom, S$1.568 million for four-bedroom and S$1.788 million for five-bedroom, with typical unit sizes ranging from 441 square feet (sq ft) for a one-bedroom to 1,442 sq ft for the five-bedroom. There are also two five-bedroom flexi penthouses, and dual-key options for the three-and four-bedroom units are available.

Tricia Song, Head of Research:

We expect launches to rush in before the year-end festive season, and especially after the encouraging takeup in September which shows developer sales picking up strongly by 51% MOM to 932 units. Whistler Grand’s target launch price is similar to the average price achieved at its neighboring project, Twin Vew which was launched in May 2018, of SGD1,382 psf. Twin Vew has sold 454 units or 87% since its launch, reflecting the high demand for homes in the West Coast area. 

With fewer units available in Twin Vew, average price had steepened to over SGD1,500 psf. Hence we expect Whistler Grand to fill the demand gap, at an average price of SGD1,380 psf, most units are affordable at below SGD1.2 million. We understand 408 or 57% of the Whistler Grand will have two or fewer bedrooms, ranging from 441 to 850 sqft.

Cooling measures 'dampened developers' sentiment'

The Business Times - Oct 23
Property-cooling measures announced in July have dampened sentiment towards the Singapore property market, says the latest quarterly Real Estate Sentiment Index (RESI), which assesses perceptions and expectations of real estate development and market conditions in Singapore from the developers' standpoint. The composite index, comprising a Current Sentiment Index and a Future Sentiment Index, fell sharply to 4.0 in the third quarter from 6.6 in the second quarter on the back of July's additional buyer's stamp duty (ABSD) measures. 

The office sector was the strongest performing out of the sectors surveyed, with its current and future net balances each rising 45 per cent.

Survey respondents cited rising inflation and interest rates, a slow-down or decline in the global economy and the tightening of financing or liquidity in debt markets as the top three potential risks that could hit market sentiment in the next six months. 

Tricia Song, Head of Research:
Land sales are expected to cool on the measures in July, and as developers focused on launching their projects and moving inventory. Looking at the encouraging take-up rates, we believe developers will be ready for more price adjusted land acquisitions in the coming quarters. Colliers expects greater investment demand to be channeled from the residential market to commercial and industrial assets,  especially office properties which continue to see a strong leasing market underpinned by limited new supply and stable economic growth.