SINGAPORE’S HOUSING MARKET IN 2020: WHAT WILL THE LEAP YEAR BRING?
This year saw 52 new projects and the highest number of new units launched in seven years. With 37 new projects and half the number of units in 2020, will sales momentum stay positive? Property consultants weigh in.
New private home sales for the first 11 months of 2019 totalled 9,547 units (excluding executive condos or ECs). “The figure has already surpassed the 8,795 units for the whole of 2018,” says Ismail Gafoor, CEO of PropNex Realty. He estimates new home sales for the full year to be about 10,000 units.
“The healthy new home sales performance in 2019 is partly due to prices remaining resilient in spite of the cooling measures that were imposed in July 2018,” says Ong Teck Hui, JLL senior director of research & consultancy.
The URA private home price index increased by 1.5% in 2Q2019 and 1.3% in 3Q2019 which probably lent more confidence to buyers and sellers, contributing to the relatively healthy sales in the primary market, adds Ong.
Next year, PropNex’s Ismail reckons about 37 new projects will be launched. He forecasts sales momentum to “stay positive” with new home sales in the range of 9,000 to 10,000 units.
The 52 new projects launched in 2019 translated to about 17,000 residential units, says Tricia Song, Colliers International’s head of research for Singapore.
“The number of new units launched this year is the highest since 2012, which saw 21,478 units entering the market,” says Nicholas Mak, ERA Realty’s head of research and consultancy. “It was also the first time that figure crossed 20,000. New home sales was also at a record high of 22,197 units in 2012.”
This year was significant as four of the new projects were “mega-developments” of more than 1,000 units each, namely Treasure at Tampines (2,203 units), Florence Residences (1,410 units), Parc Clematis (1,468 units) and Avenue South Residence (1,074 units). In 2020, there will be
no launches of such mega projects. The biggest will be the EC at Tampines Avenue 10, with 695 units, notes Colliers.
Treasure at Tampines scored this year in terms of absolute number of units taken up – 856 units which is 39% of its total 2,203 units, the single largest private condominium in Singapore to date, notes Song. In terms of percentage take-up rate, the highest this year was the 262-unit Sky Everton. About 68% of the units were sold at an average price of $2,548 psf, as at Dec 20, based on URA Reali data.
Integrated mixed-use developments also saw robust buying demand, for instance Sengkang Grand Residences, where 216 units or 32% of a total 680 units were snapped up on its first weekend of launch at an average price of $1,700 psf in November. At One Holland Village Residences, another mixed-use development, about 37% of its 296 units have been sold since its launch at the end of November, with prices in the range of $2,600 to $3,200 psf, notes Colliers’ Song.
Another project that stood out this year was the 1,074-unit Avenue South Residence on Silat Avenue, just off Kampong Bahru Road. Launched in September, 437 units have been sold at an average of $1,951 psf as at Dec 20, translating to a take-up rate of 41%.
Both Sky Everton and Avenue South Residence benefitted from their proximity to the upcoming Greater Southern Waterfront, for which future plans for new developments and redevelopments were unveiled in August.
Other projects where sales benefitted from the government’s infrastructure projects include the 1,052-unit Affinity at Serangoon and the 1,410-unit Florence Residences. The first phase of 12 MRT stations on the Cross Island Line was announced in January 2019. Since the announcement, Affinity at Serangoon has sold 360 units in the 12 months to date. This is on top of the 290 units sold in 2018, following its launch on the eve of the property cooling measures. Meanwhile, The Florence Residences at Hougang Avenue 2 has sold 553 units or 39% of its total number of units since the project was launched in May this year.
As for the 774-unit One Pearl Bank (former Pearl Bank Apartments), its city-fringe location and proximity to Outram Park MRT Station and the future SGH medical campus have attracted investors and home buyers. About 251 units (32%) of the units have been sold since its launch in July, with average price of $2,386 psf, according to caveats lodged as at Dec 20.
“Developers are very practical today,” says PropNex’s Ismail. “Before the property cooling measures, most of them would want to achieve 40% sales within the first weekend; now, they aim to clear 40% of the units within the first 12 months.”
Prime properties to make up 40% of new launches in 2020
Of the 52 projects launched in 2019, about 20 (or 38%) were located in prime Districts 9, 10 and 11; with another eight projects (15%) in prime District 15, the East Coast neighbourhoods of Amber Road and Meyer Road. Next year, 15 of the 37 projects (about 41%) are in prime Districts 9, 10 and 11, and only two are in District 15 (see chart).
On the other hand, there will be three EC projects launched next year, namely the 548unit Ola, at Anchorvale Crescent; the 385-unit Parc Canberra; and the upcoming EC at Tampines Avenue 10. In contrast, only one EC was launched in 2019, namely the 820-unit Piermont Grand at Sumang Walk in Punggol.
The number of new private, non-landed residential units in the pipeline for launch is estimated to be around 8,900 units, which is just over half of 2019’s, notes Colliers’ Song.
With new home sales at about 10,000 units this year, and an expected 9,000 to 10,000 units next year, PropNex’s Ismail reckons that some of the beneficiaries in 2020 will be “the earlier projects that were launched in late 2017, 2018 and 2019 and still have unsold units”.
While property developers are concerned about the build-up in unsold inventory which totalled 31,948 as at end-3Q2019, Ismail expects that they will be taken up within the next three to four years, assuming no new supply enters the market, and the annual absorption rate is steady at 9,000 to 10,000 units.
Projects on the radar of home buyers in 2020
“Most home buyers today are drawn to larger projects because they want full condo facilities,” observes PropNex’s Ismail.
One of the most anticipated new launches next year is Leedon Green (the former Tulip Garden purchased en bloc by a joint venture between MCL Land and Yanlord Land) given that it has a freehold tenure, has a prime District 10 address and sits on a sizeable land parcel of 316,711 sq ft.
Another upcoming project that will be on the radar of home buyers is the 999-year leasehold KI Residences, a redevelopment of Brookvale Park by Hoi Hup Realty and Sunway Developments, with an estimated 660 units.
For sites purchased via the government land sales (GLS) programme, those that are on the radar of home buyers include the 378-unit Kopar at Newton, located at Kampong Java in prime District 11 by Chip Eng Seng Corp’s property development arm CEL Development; the 375unit The M on Middle Road by Wing Tai Holdings; and the GLS site on Tan Quee Lan Street by GuocoLand Singapore, which is likely to yield 560 units, and will be linked underground to the Guoco Midtown integrated development across the road.
Luxury market driven by foreign buyers
An interesting trend this year was the increase in the number of foreign buyers in the Core Central Region (CCR) despite the hike in additional buyer’s stamp duty (ABSD) to 20%. International buyers accounted for 6% to 7% of the overall home purchases in 2019 – which is similar to the levels in 2015 to 2017. Their representation in the CCR jumped to 17% to 19% in 2Q2019 and 3Q2019, compared to 13% to 14% in the 2015 to 2017 period, says Colliers’ Song.
In the luxury space, Boulevard 88 (former Boulevard Hotel) is at the top with 87 units sold (56.5%) out of a total of 154 units. Average price psf is also the highest at $3,797 psf, based on caveats lodged as at Dec 20.
Many of the units were picked up by Chinese buyers, says Alan Cheong, senior director of research & consultancy at Savills Singapore. Other luxury condos that benefitted include 3 Orchard By-The-Park where both penthouses were purchased by Chinese buyers at record highs of $31.5 million ($4,805 psf) and $32 million ($4,638 psf) respectively, compared to the average of $3,622 psf for the typical units.
The Marq on Paterson Hill saw a 6,300 sq ft unit on the 10th floor sold for $29.5 million ($4,677 psf). It was the highest in both absolute and psf terms achieved in the freehold, 66unit project since 2012. Other beneficiaries in the luxury segment included the 156-unit Nouvel 18, where 90% of the units sold went to foreign buyers, primarily Chinese. Based on the 18 recorded caveats, average price achieved at Nouvel 18 was $3,459 psf.
“Many of these Chinese buyers want big units in new developments,” says Savills’ Cheong. “And they want units that have not been lived in before.” Besides the rich Chinese, Cheong sees an influx of family offices of foreign highnet-worth individuals who were previously located in Hong Kong. “Some of them were rattled by the protests in Hong Kong, and have decided to relocate their family offices to Singapore. It’s not just the mainland Chinese but other foreigners, including Americans based in Hong Kong,” he adds.
Colliers’ Song expects prices for the full year of 2019 to increase by about 2.5%, and is projecting a 3% increase for 2020, “in line with GDP growth”.
Despite the higher barriers to entry in the form of higher ABSD since July 2018 and slower GDP growth in 2019, the Singapore private residential market “demonstrated great resilience and strong market liquidity”, says Christine Li, Cushman & Wakefield’s head of research for Singapore and Southeast Asia.
Ismail of PropNex agrees, adding: “The biggest advantage for Singapore is that it continues to be seen as a prime real estate investment destination for international investors, primarily those from China, India, Indonesia and Malaysia.” E