Property News & Market Trends

Singapore property news in a nutshell.

$160m for Trendale Tower enbloc?
Trendale Tower; a freehold development with a plot of 21,709sft at Cairnhill Road.  With a current plot ratio of 2.8, no DC(Development Charge) will be levied should the suitor build within 60,000sft. Bidders are expected to cough out at least $160m for this prime land.

Savills Singapore are confident that a new home can easily command $3,400psf. Based on their calculations, the new owner would rake in as much as $245m. After $160m and estimated construction cost of $30m, a decent profit of $50m is possible. That's about 26% gross margin. Not as lucrative but reasonable. Question is - can the developer market at $3,400psf when Orchard Residences is just $4000psf at its best? Marina Bay Residences sub-sales are seeking only $2200-$2600psf for some.

Ambitious, I must say, but nevertheless, some developers just have the magic touch. We'll see about that.

Fairways Condo clinches $244.3 million from Bukit Sembawang View.
Including the development charge and state land alienation cost, Bt Sembawang had foot out about $785psf/plot ratio. Owners will reap between $1.35 million and $4.3 million each. Those that bought in 2007 paid about $780-$1070psf. Even so, they would have made a good bet, netting $300k - $1.9m. Excellent for less than 4 months invested return! Congrats!

Gilstead View closed at $96 million, a 5% increase in a month!
This works out to be $1,036-1,056psf/plot ratio( inclusive of $7-9m DC). A likely breakeven price of $1500psf makes Gilstead as expensive as an East Coast prime property. Elmira Heights, a nearby project, went for $990 psf/pr just last month. That's a 5% increase in bidding price in a month. It's a joke when the market experts dish out a 4.6% quarterly increase in prices. With such prices, how much do you reckon the developers would want to make? 20%? Guess not. 30%? Close. 35-40% That's about right. Many developers have recorded obscene profit margins of 40% and above. That's the reason why I advocate buying property stocks in January.

Pasir Panjang Village up for sale - $30m, anyone?
 These 14 freehold shophouses which sits on a 22,000-sq-ft site is zoned for both commercial and residential use. Gross plot ratio is 3.0 and CBRE is suggesting to convert it into a boutique hotel, given its proximity to Sentosa. Estimated return? 3%. Guess not. Many can find better investment elsewhere. Better to build, sell while it's hot and make a decent gross profit of 20-25% fast.

Montebleu sold out, hitting $1000psf
An overseas institutional investor acquires 37 out of the 151 units of Montebleu by Soilbuild Group Holding. The 34-storey Freehold development achieved average prices of nearly $1,000psf, with some units reaching a high of $1,250. HSR International sold 37units to the overseas institutional investor at an average price of $1,050 psf. Montebleu will be one of Novena’s tallest landmarks. Soilbuild also fully sold the high-end One Tree Hill Residence on Grange Road at the beginning of this year.

Industrial sector has been lagging far behind. Is it time for a boom?
Subject: 18 Howard Road.
Tenure: Freehold, 42,800sft industrial land, off MacPherson Road.
Potential: near future Tai Seng MRT.
Asking price: $18 million($164 psf/plot ratio)
Breakeven:  Above $300psf.
Selling point: “The industrial sector is currently laggard and has great potential for future growth, compared to the office, retail and industrial sectors where prices are close to the previous peak of 1996/1997. Optimism in the industrial sector is also fuelled by expectations that the economy is set to grow by five per cent for the next five years,” said Mr Hoon, C B Richard Ellis.

First the commercial rent jumps more than 50% in less than 6 months, now the residential prices increases at 2-3% per week!
How can our luxury homes rental surpass HongKong in just a short span of 4 months when Singapore's economy and GDP still lacks behind? A Savills relocation expert was commenting that many corporations are finding rental rates for luxury homes in Singapore more expensive than those in Hong Kong. "For everything that Singapore has to offer, if we can’t find places for people to live, then they will have to go elsewhere, it’s fairly fundamental.” - Simon Hill, Regional Director, Savills Corporate Real Estate.

Is it any surprise that the pace at which the property prices escalate in Singapore is faster than those in HK? The sudden influx, the severe shortage, the vast sellout of enbloc projects, coupled with hungry landlords sets the pace for this abnormal price hike. Today, the landlords are enjoying a weekly increase in asking prices. Can you blame them? They would have snapped back and lamented they had suffered over the last 10 years. True but can Singapore sustain such huge spike? Is it a healthy sign? Does it profit the whole economy? Or will it drive inflation up?

Is this a good time to invest in real estate?
As of March, there are 41,000 investors with two or more mortgages, up 58 per cent from a year ago. However, the number of delinquent accounts has actually fallen; from 2.8% last March to 2.23% this February.

This year's grow will be sustainable, regardless of how crazy prices have gone up. Unless the government steps in, "kiasu" buyers will want to play it safe and buy first. Sellers, on the other hand, will want to outdo their "neighbour" by selling at a higher price and not be seen as a "sucker". This property cycle will just repeat itself till the number of "kiasu" buyers dwindled and the more logical ones step in. Once the resistance hold, sellers who are impatient will sell out, and the other cycle will follow.

The important question to property investment is - cash flow. Know thy cash flow and you'll know how to multiply. Know not, and you'll crumble at the slightest rumble.

Compiled and reviewed by Danny 'Bingo'

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