Home sales hit a wall as stock jitters spook buyers

Fewer launches add to September slowdown but analysts expect pick-up amid new benchmark prices

(SINGAPORE) Developer sales of new homes slowed to a crawl in September, hit by stock market jitters caused by sub-prime woes in the US.

Just some 529 new units were sold by developers last month, a sharp drop from the 1,731 units sold in August.

Property analysts said that September’s take-up rate for new homes could be the lowest monthly figure seen over the past four years.

The low sales were also caused, in part, by fewer launches.

Developers launched just 570 units in September, down from 1,885 units in August as many held back projects while waiting for the market to recover.

However, despite the low volume, new benchmark prices for private homes were set in several areas across Singapore – including Sentosa Cove, Boon Lay and science hub one-north – market observers pointed out. This means that genuine demand for homes still exists, they said.

The Urban Redevelopment Authority (URA) released its monthly update on private residential properties yesterday, showing that developer sales of new projects fell sharply last month.

‘The primary sales market was relatively quiet in the month of September,’ said Tay Huey Ying, Colliers International’s director for research and consultancy.

Like other analysts, Ms Tay attributed the low volumes to the global financial market turmoil as well as the traditionally quiet lunar seventh month.

Developers were also holding back projects, both due to market sentiment and because preparations for their launches could not be finished in time, others said.

‘A few developers’ projects have been held back because of contractors being delayed when it comes to getting the showflats ready,’ said Savills Singapore director of marketing and business development Ku Swee Yong.

The largest project launched during the month was the 163-unit Hillcrest Villa, a cluster housing project.

The poor market sentiment also affected sales at Frasers Centrepoint’s Soleil @ Sinaran as more than 10 per cent of buyers did not exercise their options to purchase their chosen units.

URA’s figures for August showed that 394 out of a total of 417 units launched in the development had been sold, but the number sold fell to 352 in September’s data. Frasers Centrepoint confirmed that 42 options were not exercised before their deadlines, but added that 12 of the units involved have since been resold. The total number of units sold in the project climbed to 395 as the market picked up in October, the developer said.

Analysts also noted that two other trends seen in July and August – the decline of speculative activity and the increased demand for mass market homes – continued into September.

‘Subsales of residential properties accounted for only a small 6.8 per cent of all transactions in the month of September compared to 9.4 per cent in August and 15.1 per cent in July,’ said Ms Tay. Subsale transactions are generally thought to be an indication of the level of speculative activity in the property market.

And in line with a recovering mass market, new units priced in the range of $751-$1,000 per square foot (psf) remained the most sought-after in the third quarter, accounting for 36 per cent of all units sold, Colliers analysis shows.

This was followed by units in the next price range of $1,001-$1,500 psf, which made up 26 per cent of all units sold. By contrast, luxury homes priced above $3,000 psf accounted for only 8 per cent of all new units sold in the quarter.

Analysts expect the property market to recover in the last quarter due to genuine buyer demand.

‘Going forward, we expect the sales momentum in the residential market to continue at a healthy pace against a backdrop of a strong economy,’ said Li Hiaw Ho, executive director at CBRE Research.

 

Source: Business Times 16 Oct 07

S’pore seeking property investments from Mid-East

SINGAPORE is wooing investments from the Middle East, as companies and individuals from the oil-rich region expand their presence in the Republic.

Government bodies such as the Urban Redevelopment Authority (URA), Singapore Tourism Board and the Building and Construction Authority have joined a host of other groups to showcase what Singapore has to offer at Cityscape Dubai, a major international real estate event starting today.

It will be the first time a Singapore pavilion has been set up at a top international property event in the Middle East.

The URA will speak about Singapore’s strong economic growth in various sectors, including real estate, real estate investment trusts and other investment opportunities.

There are more than 250 Middle East companies operating in Singapore, as well as an increasing number of individuals and equity funds from the region investing in mega development projects in the Republic.

Foreign direct investment from the Middle East grew from $5.8 billion in 2004 to $6.6 billion in 2005, the most recent year for data, according to the Statistics Department.

Based on caveats lodged, individual Middle East investors bought 34 homes worth $76 million in Singapore from 2004 to Sept 28. About 47 per cent of these deals were closed this year.

Meanwhile, Al-Nibras Islamic Real Estate Fund bought 56 homes in the Reflections at Keppel Bay project earlier this year.

The URA attended the Dubai event last year and pitched investment opportunities to investors, including the Istithmar Group. This is owned by Dubai World consortium, whose assets include the famed Palm in Dubai.

Istithmar has now teamed up with Singapore developer City Developments and the North American-based El-Ad Group to develop an office, hotel, retail and residential project worth an estimated $2.7 billion in Beach Road.

The URA said several Middle East investors had also indicated interest in sale sites that the agency has launched.

At the Dubai event, the URA will showcase Marina Bay, Singapore’s future downtown, which has attracted about $15 billion worth of international investment so far.

Other Singapore groups involved in the Singapore pavilion include the Ong & Ong architecture firm and the Singapore Institute of Architects, while upcoming developments Somerset Central and the Marina Bay Financial Centre will also be showcased.

 

Source: The Straits Times 16 Oct 07

Record prices for some properties despite sliding sales – Sentiment steady last month despite fears over impact of US credit crisis

PROPERTY sales slumped last month, as buyers stayed on the sidelines but there was a silver lining with prices at some projects hitting record levels.

The cause of the sales dip was clear – concerns in the United States over its subprime mortgage industry triggered meltdowns in share markets across the globe.

Many spooked buyers put purchases on hold but the fact that prices of the deals that were done stayed buoyant reflects the firm undertone for private residential properties.

Urban Redevelopment Authority (URA) data showed that the number of new homes sold last month fell nearly 70 per cent to just 529 units, from 1,731 in August. July sales amounted to 1,378.

Developers typically sell about 7,500 new homes a year, though the recent boom has lifted figures. The URA data is based on sale options given by developers to buyers.

With more sales in the lower price ranges, median transacted prices, or the mid-point in prices, fell 27.7 per cent, from $1,328 per sq ft (psf) in August to $960 psf last month.

And with the lunar seventh month barely over, there were only a few new launches. One of them was Hillcrest Villa, a cluster of 99-year leasehold terrace homes near Dunearn Road.

Yet MCL Land still sold 162 out of the 163 units with a median price at $865 psf – said to be fairly high for a landed project in the area.

‘The high sales volume in August has caused a bit of indigestion in the market,’ said Knight Frank director (research and consultancy) Nicholas Mak.

‘September’s figures can thus be viewed as a healthy breather before the market resumes its momentum.’

Mr Mak said monthly sales would gradually improve to 800 to 1,000 units.

Sub-sales of residential property accounted for 6.8 per cent of all transactions last month, compared with 9.4 per cent in August, according to Colliers International.

Prices in some projects managed to hit records.

In the high-end segment, Ho Bee sold 36 units of its latest Sentosa Cove project Turquoise. The 91-unit project’s median price hit $2,587 psf while the highest was $2,772 psf, a record for the Cove.

In Scotts Road, Wheelock Properties sold 27 units of Scotts Square, of which 12 were above $4,000 psf.

A high for the month of $4,359 psf was recorded, with the median price at $3,985. It was the only project to sell above $4,000 psf last month.

There were also a few record highs for suburban projects. Two units at the 318-unit Gardenvista in Dunearn Road were sold at $1,223 psf and a record high of $1,449.

Sales at The Lakeshore in Boon Lay Way ranged from $695 psf to a record $1,080.

‘These buyers could be buying for their own use because the properties have just obtained their temporary occupation permit,’ said Savills Singapore director of marketing and business development Ku Swee Yong.

New projects such as The Beacon Edge in Tembeling Road also did relatively well. Six of the 32 units sold at a median price of $1,306 psf, with a high of $1,327.

Achieving record highs in a slow month could mean there are serious buyers out there, said Mr Ku. ‘Right now, there is strong demand in the mid-tier and mass markets.’

These are homes costing $800 psf to $1,600 psf, he said.

Mr Ku said the market was doing better this month but sub-prime hangovers may keep activity slightly muted.

 

Source: The Straits Times 16 Oct 07