2011 was a record
year for mass market home sales. Urban Redevelopment Authority (URA) numbers
indicate that 10,374 units or 65 per cent of the total number of new private
homes sold were in the Outside Central Region (OCR). The figures exclude
executive condominiums (ECs).
In comparison, home sales in the OCR numbered 7,357 units (45 per cent
share) in 2010 and 6,060 units (41 per cent) in 2009. It is our view that this
segment of the residential market, particularly projects with good location and
product attributes, will continue to be fairly resilient in the coming months.
URA defines Core Central Region (CCR) as districts 9, 10, 11, Downtown
Core and Sentosa while the Rest of Central Region (RCR) comprises the Central
Region excluding districts 9, 10 and 11, Downtown Core and Sentosa.
OCR comprises the rest of the island outside the Central Region. Most
of the HDB new towns and private mass-market housing are located in the OCR.
The strong take-up of new mass-market homes in 2010-2011 could be
attributed to both population growth and supply, under a climate of healthy
economic fundamentals and low interest rates.
According to the Department of Statistics, Singapore’s total population
grew from five million in 2009 to 5.08 million and 5.18 million in 2010 and
2011 respectively.
The proportion of households living in private apartments/ condominiums
grew from 10.4 per cent in 2009 to 11.2 per cent in 2010. The proportion in
2011, although not available, ought to be higher. Moreover, Singapore’s open
economy continued to attract foreigners to our shores.
URA’s figures show that the number of foreigners and permanent
residents who bought new private homes increased from 2,911 in 2009 to 3,887 in
2010 and to 4,337 in 2011.
On the supply side, developers launched a total of 17,710 new homes in
2011, 6.8 per cent more than the 16,575 units launched in 2010. Of this number,
11,248 units (64 per cent) were located in OCR, 4,419 units (25 per cent) in
RCR and 2,043 units (11 per cent) in the CCR.
In 2010, developers launched 7,866 units (47 per cent) in OCR, 4,731
units (29 per cent) in the RCR and 3,978 units (24 per cent) in the CCR.
Developers were able to put on the market the large volume of homes in
these past two years as they built up sizeable land banks through the
Government Land Sales (GLS) Programme and private collective sales when the
market recovered in H2 2009.
Between H2 2009 and 2011, developers bought a total of 43 GLS sites in
the OCR (excluding executive condominiums). These sites can potentially yield
over 18,300 new homes.
From the pool of private sites, developers bought at least 52 sites in
the OCR which can be developed into 2,600 homes or more. To date, developers
have launched about 60 per cent of the total supply on GLS and private sites.
Based on caveats lodged for mass-market homes sold in 2009 to 2011, the
median price of new non-landed homes rose by 35 per cent from $688 psf in 2009
to $927 psf in 2010. And in 2011, the rate increased 4 per cent to $966 psf.
2009 saw the highest proportion of buyers, or 76 per cent, forking out
less than $1 million for their new homes. The proportion was 56 per cent in
2010 and 62 per cent in 2011.
Interestingly, since 2009, the median size of OCR homes has been
shrinking from 115 sq m to 97 sq m in 2010 and 85 sq m in 2011. Clearly,
developers have been careful to manage the rise in prices by building smaller
units.
Innovative approaches used by developers in recent years have proven to
be popular with homebuyers.
Firstly, the provision of a higher percentage of studios, one- and
two-bedrooms have found a ready pool of buyers – singles, young professionals,
retirees who are downgraders and/or empty-nesters and investors looking for
rental income. Then there is the introduction of Soho-style units to facilitate
a live-work-play lifestyle.
Thirdly, large-scale residential-and-mall developments which are linked
to an MRT station are able to attract homebuyers even in a more cautious
market. The success of Bedok Residences and Watertown testify to the popularity
of this lifestyle concept.
A fourth innovative strategy by developers has been the provision of
strata houses within condominium projects. Prices of these houses range from
$2.5 million to $4 million each and these properties have proved especially
popular among foreigners, who may buy strata landed homes that are within
approved condominium developments without seeking government approval.
In 2012, we expect to see more innovations in the mass-market projects
to continue to attract a steady stream of buyers. Developers face more challenging
market conditions in the new year.
Under the new additional buyer’s stamp duty (ABSD) tax regime,
developers participating in the H1 2012 GLS Programme will have to assess the
risks involved.
Developers buying any residential sites from Dec 8, 2011, will have to
pay a 10 per cent ABSD.
However, upfront remission of this can be granted to licensed housing
developers provided they undertake to complete developing projects on such
sites and selling all the units in these projects within five years from the
date of contract or agreement to purchase the site, among other conditions.
For sites with strong attributes for example near an MRT station,
developers may not need to factor in ABSD as they will be more confident of
selling the entire project within five years.
However, they will be cautious in their bids so that they can manage
costs. Since land costs are fixed once committed, developers will be as
creative as possible to manage construction and marketing costs to sell units.
Homebuyers will remain price sensitive, especially to projects with
poorer location and product attributes. Moreover, some of the demand could be
satisfied by executive condominiums.
Han Huan Mei
The Business Times
Business & Investment Opportunities
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