Local Property News
Will property market bottom out soon?
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Hopes of a market rebound may be reignited as the bottom of the cycle seems to be in close reach. While private home prices have fallen by 0.4% for the 13th consecutive quarter, the rate of decline of private home prices have been reduced from the 1.5% in 2016's Q3.
In 2016, private home prices fell only 3%, the slowest since 2013. Since the third quarter of 2013, home prices have fallen 11.2%, with a 4% fall in 2014 followed by a 3.75% fall in 2013. The projected fall in home value this year is 2% to 3%. While home seekers and investors may be drawn back into the market with the lowered property prices, analysts are not expecting them to splurge.
In Q4 of 2016, non-landed private home prices fell 0.7 per cent, led by city fringe properties with a 2 per cent drop. Prices of units in the core central region remained unchanged while suburban home prices fell 0.3 per cent. Units in the core central region have suffered a 1.9 per cent fall in Q3, thus the fact that sales volume have increased while prices remained unchanged could be a good sign for the year ahead.Landed property prices posted a surprising rise of 0.9 per cent after a 2.7 per cent fall in Q3 while in the resale HDB flat market, prices fell 0.1 per cent.
Long-term potential of Commercial property in Singapore
Commercial properties in Singapore still hold a special place in the hearts of investors, if the activity in the market last year was anything to go by.
There were some massive bulk purchases of prime sites from foreign entities in 2016 and developers were actively buying up land sites. Investors are obviously seeing huge potentials of the commercial property market here. The 43-storey Asia Square Tower 1 for example was sold at $3.38 billion to Qatar Investment Authority's sovereign fund in June 2016. This record sale by investment firm BlackRock was the largest single-asset and office transaction in the Asia-Pacific region. On a smaller but not any less worthy scale, is the sale of the Straits Trading Building to Indonesia's Mayapada Group for $560 million. At $3,250 psf, it set a record for psf prices in the district.
Investors from all over the world are spotting the potential for long-term positive growth in this region and in extending their reach in Singapore. Large assets here are of particular interest and 2017 may see more such transactions taking place.
Not only are they investing in completed commercial properties, but also in land with developmental potential, such as a white site in Central Boulevard which was purchased by Malaysian plantation and real estate tycoon, Lee Shin Cheng. This Marina Bay mixed-use site was released under the Government Land Sales (GLS) programme. Though the office rental market has not been in its best form last year, there is hope that it will bounce back up by 2021.
How to make your rental unit shine
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Though the Monetary Authority of Singapore (MAS) has reminded property investors in their Financial Stability Review released late last year of the increase in vacancy rates and declining rental market, there are still ways to ensure the best yields from the properties you have invested in.
Finding yourself a reliant property agent is of course the first step, and experienced agents can often advise you on how to make your property more appealing to tenants, what to look out for when selecting a suitable tenant and what the current market sentiments or pricings are like. But putting in the behind-the-scenes work will also get you the results and the little things do make a difference.
As more tenants are taking their search online, making an online presence, and a good one, will at least help to bring in the views. The reach of social media and online platforms where expatriates often visit could be extensive. On occasions, you may even consider online advertising. And providing a 360-view of your unit will also provide tenants who search online with a more comprehensive idea of what you are offering. This helps save time for both landlords and tenants.
Before taking any photographs, some home-staging will go a long way. The rise of Airbnb (though not yet legalised in Singapore) means tenants now have more options or are used to more elaborate visuals of the units they potentially select. Taking care of tiny details such as cleanliness, lighting, placement of plants or quality of furniture and utensils all play a part in making the tenant feel comfortable and could be just what gives them the final push to sign on the dotted line.
Continued decline of private resale condo prices expected
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2017 has arrived and the question on every property owner, seeker and investor's mind may be how the year will fare for them. Will interest rates rise and how will that affect their financial sustainability? Will vacancy rate fall and will there be an increase in resale units hence affecting price competitiveness?
The last couple of months of 2016 has shown a continued decrease in resale condo prices. In November, overall resale condominium prices have fallen 0.7 per cent, following a 0.2 per cent in October from September. While central region private non-landed residential properties have regained some favour with foreign buyers, prices have dipped despite a rise in sales volume. Property analysts are expecting a market stagnation at best for 2017 as a quick rebound seems unlikely due to the continued slow economic growth and global political uncertainty.
The increase in sales volume is however a sign of hope for the property sector, as the rate of price decline may cease after a period of increased activity. Most sellers who are listing their units under the current market conditions are more likely than not serious sellers as most investors will try to hold on to their units and tide over the market lull. Thus buyers are increasingly aware of this change in tide and are negotiating for lower prices.
The segment most affected could be the small suburban condominium apartments as the number of resale units are on the rise and also facing competition from HDB flats. While official figures are yet to be computed, analysts are expecting private property prices to have fallen by approximately 3.5 per cent last year.
To refinance or not to refinance?
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With the new year in the horizon, the question on the minds of many home owners and buyers may be whether interest rates are likely to rise as the historic lows have been consistent for quite a while now. In fact, the United States Federal Reserve has announced a rate hike in the earlier part of the month though only marginally at 0.5 to 0.75 per cent.
In 2017 however, there may be 3 more rate hikes, which will in turn increase bank loans and mortgages rates all over the globe. Singapore included. The Sibor and SOR (swap offer rates) have both risen since the rate hike announcement, with the former rising to 0.96555.
Those taking a new home loan might have to commit to higher loan rates. For those who are already servicing existing home loans and wish to alleviate the cost of servicing their loans, this could be their last chance to refinance. There are possibilities for them to convert to a different package within their existing bank or take up a refinanced package with another bank.
Financial analysts typically advise home owners to weigh the pros and cons of sticking to their existing home loan versus switching loan packages or banks carefully. The option which offers a lower interest rate and also allows for savings or provides additional means for investment would be the more favourable one. There are however interest reset dates to be aware of as penalties may be incurred should the loans be redeemed outside of these specific dates. Loan interest rates are usually reset quarterly, on March 1, June 1, September 1 and December 1. The general advice is to check with the bank at which the current loan is being serviced for any lock-in conditions or fees payable when switching loan packages or banks.
Global Property News
New properties to help boost Indonesia's property market
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The global commodity slump has affected markets all over the world. In Indonesia, the property market has seen a 26 per cent drop in value in 2015 and a whooping 49 per cent in the first 3 quarters of 2016.
But momentum has picked up within the last quarter as a number of foreign developers are drawn to the market and recognising the potential it holds. The Indonesian government has relaxed mortgage rules and implemented tax cuts in attempts to boost market activity. Taxes on home sales have been halved and the minimum down payment on homes have been cut once again in 2016. Bank Indonesia has also reduced the benchmark interest rates.
As urbanisation in Indonesia is amplified yearly, with approximately 200,000 people moving from rural areas to the major urban cities such as Jakarta, developers are seeing the real and immediate effects of providing ready housing for a rapidly growing market of property and home seekers. Recent entries by foreign developers include China Communication Constructions Group (CCCG), Mitsubishi Corporation, Tokyu Land, Hong Kong Land and Sime Darby. The total investment monies come up to an estimated US$2.8 billion, the highest amount recorded since 2007.
City centre properties in Jakarta are increasingly popular as traffic conditions make it difficult for the growing workforce to travel from outlying districts. CCCG for example have their hand in the development of 4 residential projects in Jakarta alone, targeting mainly young couples and families. Mitsubishi Corporation is also jointly developing 1,000 housing and retail units in Bumi Serpong Damai. Though there may be some doubt about how the domestic market will be able to manoeuvre around the sudden increase in available properties, analysts are hopeful that property sales this year will post at least a 15 per cent growth.
For more District Guides, you can head over to iProperty.com Singapore.
Will property market bottom out soon?
Hopes of a market rebound may be reignited as the bottom of the cycle seems to be in close reach. While private home prices have fallen by 0.4% for the 13th consecutive quarter, the rate of decline of private home prices have been reduced from the 1.5% in 2016's Q3.
In 2016, private home prices fell only 3%, the slowest since 2013. Since the third quarter of 2013, home prices have fallen 11.2%, with a 4% fall in 2014 followed by a 3.75% fall in 2013. The projected fall in home value this year is 2% to 3%. While home seekers and investors may be drawn back into the market with the lowered property prices, analysts are not expecting them to splurge.
In Q4 of 2016, non-landed private home prices fell 0.7 per cent, led by city fringe properties with a 2 per cent drop. Prices of units in the core central region remained unchanged while suburban home prices fell 0.3 per cent. Units in the core central region have suffered a 1.9 per cent fall in Q3, thus the fact that sales volume have increased while prices remained unchanged could be a good sign for the year ahead.Landed property prices posted a surprising rise of 0.9 per cent after a 2.7 per cent fall in Q3 while in the resale HDB flat market, prices fell 0.1 per cent.
Long-term potential of Commercial property in Singapore
Commercial properties in Singapore still hold a special place in the hearts of investors, if the activity in the market last year was anything to go by.
There were some massive bulk purchases of prime sites from foreign entities in 2016 and developers were actively buying up land sites. Investors are obviously seeing huge potentials of the commercial property market here. The 43-storey Asia Square Tower 1 for example was sold at $3.38 billion to Qatar Investment Authority's sovereign fund in June 2016. This record sale by investment firm BlackRock was the largest single-asset and office transaction in the Asia-Pacific region. On a smaller but not any less worthy scale, is the sale of the Straits Trading Building to Indonesia's Mayapada Group for $560 million. At $3,250 psf, it set a record for psf prices in the district.
Investors from all over the world are spotting the potential for long-term positive growth in this region and in extending their reach in Singapore. Large assets here are of particular interest and 2017 may see more such transactions taking place.
Not only are they investing in completed commercial properties, but also in land with developmental potential, such as a white site in Central Boulevard which was purchased by Malaysian plantation and real estate tycoon, Lee Shin Cheng. This Marina Bay mixed-use site was released under the Government Land Sales (GLS) programme. Though the office rental market has not been in its best form last year, there is hope that it will bounce back up by 2021.
How to make your rental unit shine
Though the Monetary Authority of Singapore (MAS) has reminded property investors in their Financial Stability Review released late last year of the increase in vacancy rates and declining rental market, there are still ways to ensure the best yields from the properties you have invested in.
Finding yourself a reliant property agent is of course the first step, and experienced agents can often advise you on how to make your property more appealing to tenants, what to look out for when selecting a suitable tenant and what the current market sentiments or pricings are like. But putting in the behind-the-scenes work will also get you the results and the little things do make a difference.
As more tenants are taking their search online, making an online presence, and a good one, will at least help to bring in the views. The reach of social media and online platforms where expatriates often visit could be extensive. On occasions, you may even consider online advertising. And providing a 360-view of your unit will also provide tenants who search online with a more comprehensive idea of what you are offering. This helps save time for both landlords and tenants.
Before taking any photographs, some home-staging will go a long way. The rise of Airbnb (though not yet legalised in Singapore) means tenants now have more options or are used to more elaborate visuals of the units they potentially select. Taking care of tiny details such as cleanliness, lighting, placement of plants or quality of furniture and utensils all play a part in making the tenant feel comfortable and could be just what gives them the final push to sign on the dotted line.
Continued decline of private resale condo prices expected
2017 has arrived and the question on every property owner, seeker and investor's mind may be how the year will fare for them. Will interest rates rise and how will that affect their financial sustainability? Will vacancy rate fall and will there be an increase in resale units hence affecting price competitiveness?
The last couple of months of 2016 has shown a continued decrease in resale condo prices. In November, overall resale condominium prices have fallen 0.7 per cent, following a 0.2 per cent in October from September. While central region private non-landed residential properties have regained some favour with foreign buyers, prices have dipped despite a rise in sales volume. Property analysts are expecting a market stagnation at best for 2017 as a quick rebound seems unlikely due to the continued slow economic growth and global political uncertainty.
The increase in sales volume is however a sign of hope for the property sector, as the rate of price decline may cease after a period of increased activity. Most sellers who are listing their units under the current market conditions are more likely than not serious sellers as most investors will try to hold on to their units and tide over the market lull. Thus buyers are increasingly aware of this change in tide and are negotiating for lower prices.
The segment most affected could be the small suburban condominium apartments as the number of resale units are on the rise and also facing competition from HDB flats. While official figures are yet to be computed, analysts are expecting private property prices to have fallen by approximately 3.5 per cent last year.
To refinance or not to refinance?
With the new year in the horizon, the question on the minds of many home owners and buyers may be whether interest rates are likely to rise as the historic lows have been consistent for quite a while now. In fact, the United States Federal Reserve has announced a rate hike in the earlier part of the month though only marginally at 0.5 to 0.75 per cent.
In 2017 however, there may be 3 more rate hikes, which will in turn increase bank loans and mortgages rates all over the globe. Singapore included. The Sibor and SOR (swap offer rates) have both risen since the rate hike announcement, with the former rising to 0.96555.
Those taking a new home loan might have to commit to higher loan rates. For those who are already servicing existing home loans and wish to alleviate the cost of servicing their loans, this could be their last chance to refinance. There are possibilities for them to convert to a different package within their existing bank or take up a refinanced package with another bank.
Financial analysts typically advise home owners to weigh the pros and cons of sticking to their existing home loan versus switching loan packages or banks carefully. The option which offers a lower interest rate and also allows for savings or provides additional means for investment would be the more favourable one. There are however interest reset dates to be aware of as penalties may be incurred should the loans be redeemed outside of these specific dates. Loan interest rates are usually reset quarterly, on March 1, June 1, September 1 and December 1. The general advice is to check with the bank at which the current loan is being serviced for any lock-in conditions or fees payable when switching loan packages or banks.
Global Property News
New properties to help boost Indonesia's property market
The global commodity slump has affected markets all over the world. In Indonesia, the property market has seen a 26 per cent drop in value in 2015 and a whooping 49 per cent in the first 3 quarters of 2016.
But momentum has picked up within the last quarter as a number of foreign developers are drawn to the market and recognising the potential it holds. The Indonesian government has relaxed mortgage rules and implemented tax cuts in attempts to boost market activity. Taxes on home sales have been halved and the minimum down payment on homes have been cut once again in 2016. Bank Indonesia has also reduced the benchmark interest rates.
As urbanisation in Indonesia is amplified yearly, with approximately 200,000 people moving from rural areas to the major urban cities such as Jakarta, developers are seeing the real and immediate effects of providing ready housing for a rapidly growing market of property and home seekers. Recent entries by foreign developers include China Communication Constructions Group (CCCG), Mitsubishi Corporation, Tokyu Land, Hong Kong Land and Sime Darby. The total investment monies come up to an estimated US$2.8 billion, the highest amount recorded since 2007.
City centre properties in Jakarta are increasingly popular as traffic conditions make it difficult for the growing workforce to travel from outlying districts. CCCG for example have their hand in the development of 4 residential projects in Jakarta alone, targeting mainly young couples and families. Mitsubishi Corporation is also jointly developing 1,000 housing and retail units in Bumi Serpong Damai. Though there may be some doubt about how the domestic market will be able to manoeuvre around the sudden increase in available properties, analysts are hopeful that property sales this year will post at least a 15 per cent growth.
For more District Guides, you can head over to iProperty.com Singapore.