The Business Times, 24 July 2024, Wednesday
Property investment sales rise in Q2, driven by state land tenders and residential deals
The Business Times, 24 July 2024, Wednesday
大宗房地产交易额今年料达230亿元高于去年
Lianhe Zaobao, 24 July 2024, Wednesday
Please scroll down to read the full articles.
Prime residential properties account for majority of loss-making resale deals in Q2
The Business Times, 24 July 2024, Wednesday
SINGAPORE’S prime residential properties chalked up the biggest losses – losing between S$780,000 and S$2.1 million in value – and accounted for the majority of loss-making deals in the second quarter of 2024.
Still, the majority of resale transactions in the Core Central Region (CCR) – at 80 per cent – remained profitable in Q2, data crunched for The Business Times by a property agency showed.
The biggest money-making deal by quantum in Q2 was for a 2,885 square foot (sq ft) unit in Ardmore Park in the prime District 10.
The 22nd-floor unit in the freehold luxury development was sold for S$11.9 million or S$4,108 per square foot (psf) in May. The seller netted S$2.7 million in profit, or 29 per cent over the initial purchase price of S$9.2 million (S$3,189 psf) in January 2020.
Based on a holding period of 4.4 years, the seller made an annualised profit of 5.9 per cent.
The data also showed that the five biggest profit-makers in terms of absolute gain in Q2 were all sales for freehold properties, which tend to command a premium, said a market observer.
In percentage terms, executive condominium (EC) transactions proved to be most profitable in Q2, continuing a trend that emerged in Q1 2023.
Most units were held for an average of around a decade before being sold for an “attractively high profit” of 101 to 103 per cent, said the analyst.
Topping the list was a 495 sq ft unit in Sol Acres EC in Choa Chu Kang (District 23). It was sold for S$762,888 or S$1,541 psf in May, more than double the original price of S$376,000 (S$759 psf) in May 2017. Given the holding period of slightly over seven years, the annualised profit worked out to 10.5 per cent.
Excluding ECs, four of the five top percentage gainers were for units in the suburban Outside Central Region (OCR), and one in the Rest of Central Region (RCR) or city fringe.
The most profitable deal by percentage was for a 2,390 sq ft unit in Veranda condominium in Telok Kurau (District 15) in the OCR. It transacted at S$2.9 million or S$1,205 psf in June, grossing the seller S$1.4 million in profit or 89 per cent over the initial purchase price of S$1.5 million (S$638 psf) in April 2016. This translated to an annualised profit of 8.1 per cent, based on a holding period of 8.2 years.
“Given their lower price point, resale ECs and suburban homes continue to appeal to buyers with a limited budget and a desire for larger living space,” said the analyst.
Meanwhile, the biggest losers in the quarter, by both percentage gain and quantum, were all prime properties bought during “varying periods of the market cycle”.
The deal that spilled the most red ink in Q2, in terms of quantum, was a 2,691 sq ft unit in Marina Bay Suites in District 1. It was sold for S$5.7 million or S$2,100 psf in May, down 27 per cent from the original price of S$7.7 million (S$2,861 psf) in June 2015. The seller made a S$2.1 million loss; the annualised loss was 3.4 per cent, based on a holding period of nearly nine years.
By percentage, the biggest loss-making transaction was a 657 sq ft unit in The Scotts Tower in District 9, which transacted at S$1.3 million or S$1,980 psf. The seller suffered a S$1.4 million loss – more than half the initial purchase price of S$2.7 million (S$4,092 psf) in January 2013. Given the holding period of 11.3 years, this worked out to an annualised loss of 6.2 per cent.
The analyst noted that private homebuyers continue to gravitate towards “more affordable products” – for instance, homes in the OCR, where prices are relatively lower, or smaller homes, which cost less.
Government data also indicated that the median size of a resale non-landed home across the island fell to 1,023 sq ft in the first half of 2024, from 1,249 sq ft in 2014.
This is especially because private residential prices have risen amid “constrained affordability due to cooling measures and loan curbs”, said the analyst.
For its study, the property agency examined caveats for non-landed private homes that were transacted in Q1 2024, and which had prior purchase history between January 2012 and June 2024. The analysis excludes transaction costs and taxes, such as Buyer’s Stamp Duty and Seller’s Stamp Duty.
Caveat data of landed and non-landed private homes also showed that prime CCR properties accounted for 63 per cent of loss-making deals in Q2 of this year. The RCR accounted for 20 per cent of such deals, and the OCR, 17 per cent.
This came as the proportion of loss-making resale transactions of private homes in both sectors inched down to 2.6 per cent, from 2.7 per cent in the previous quarter.
The analyst expects the overall levels of loss-making deals will likely remain low, as overall private residential prices continue trending higher, although at a more moderate pace.
“With still-low levels of unsold inventory and strong household balance sheets, prices remain supported by firm sellers’ holding power and higher replacement costs,” he said.
Source: https://www.businesstimes.com.sg/property/prime-residential-properties-account-majority-loss-making-resale-deals-q2
Property investment sales rise in Q2, driven by state land tenders and residential deals
The Business Times, 24 July 2024, Wednesday
REAL estate investment activity in Singapore rose by 52.6 per cent quarter on quarter (qoq) to S$6.48 billion in the second quarter of 2024, largely driven by the higher proceeds from the sale of state land under the government land sales (GLS) programme and residential deals.
The award of four GLS housing sites and one industrial site during the quarter contributed S$3.16 billion.
Meanwhile, private-sector investment sales saw an increase of 14 per cent qoq to S$3.32 billion in Q2, said an agency’s market report released on Tuesday (Jul 23).
The number of deals rose from 65 in Q1 to 85 deals in Q2. A total of 52 luxury homes (each priced at S$10 million and above), including 40 landed houses and 12 high-end apartments, were transacted in Q2, up from 40 deals in the previous quarter, and on a par with the 53 deals achieved in the same period last year.
“This may suggest that buying sentiment has returned to the level before the negative impact caused by the increase of the Additional Buyer’s Stamp Duty, and the aftermath of the anti-money laundering investigations last year,” said the report.
Commercial investment sales grew by 16.7 per cent qoq to reach S$1.52 billion in Q2.
There were four office deals inked during the quarter, with the largest transaction for Mapletree Pan Asia Commercial Trust’s S$775 million divestment of Mapletree Anson. This translates to a price of S$2,352 per square foot (psf) based on a net lettable area of 329,487 square feet, and represents a gain of S$10 million over the property’s valuation in March this year.
The other three office sales involved the sales of 20 Harbour Drive for S$160 million, Income at Prinsep at S$147 million and Wilmar Place for S$26.5 million.
In contrast, investment sales activity for the retail segment slowed to one deal during the quarter, which was Paragon Reit’s divestment of The Rail Mall for S$78.5 million or S$1,574 psf on a net lettable area basis.
In the mixed-use property sector, Delfi Orchard, which sold for S$439 million, was the largest collective sale during Q2.
The decreasing transaction volume may not reflect any moderation in buying interest, said Savills, but rather is due to the limited stock of properties available for sale.
Overall, the bulk of the investment activity came from the residential segment with sales value at S$4.06 billion in Q2, up 115.8 per cent qoq. This constituted the highest proportion of investment sales – at 62.6 per cent – for the quarter.
A market observer said: “More properties have been launched for sale in the last six months, with some sellers deciding to adopt proactive sale strategies rather than sitting passively and waiting for buyers to come along. While the appetite from buyers has improved, there is still a price gap in many cases and only some of the properties will be sold”.
With the market expecting at least one interest rate cut by the US Federal Reserve for 2024, Savills expects the commercial investment market to see a “return of momentum”.
Another market observer said: “Although this may just be a symbolic 25-basis-point reduction, the mood is now one which believes rates have peaked.”
Savills said that while the all-in borrowing costs are still well above commercial cap rates, the prospect that interest rates are now not likely to rise further gives hope to landlords and investors who now have one less uncertainty to consider.
The consultancy firm maintains its forecast of S$22 billion to S$23 billion in total investment sales for 2024, up from S$19.7 billion recorded in 2023.
Source: https://www.businesstimes.com.sg/property/property-investment-sales-rise-q2-driven-state-land-tenders-and-residential-deals-savills
大宗房地产交易额今年料达230亿元高于去年
Lianhe Zaobao, 24 July 2024, Wednesday
新加坡的大宗房地产交易额在第二季环比大增52.6％至64亿8000万元后，业者多认为，降息在即更有利提振市场情绪，今年全年的交易总额预计将高于去年，介于220亿元到230亿元之间，高于去年的197亿元。
房地产咨公司研究星期二（7月23日）发布的最新报告指出，大宗房地产交易额在第二季增加，主要受政府售地计划（GLS）推动，共计四幅住宅用地和一幅工业用地在第二季售出，总额为31亿6000万元，比第一季增加一倍多。
私人领域的大宗房地产交易额，在第二季环比增长14％至33亿2000万元，交易量环比增长30.8％至85笔。这主要受住宅房地产推动，在第二季售出的千万元或以上豪华住宅有52个，高于第一季的40个。
整体来看，大宗住宅房地产交易额在第二季环比增长115.8％至40亿6000万元，占所有大宗房地产交易额的62.6％。
商业大宗房地产交易额在第二季环比增加16.7％，至15亿2000万元，占所有大宗房地产交易额的23.5％；混合用途大宗房地产交易额为6亿2890万元，占总交易额9.7％；工业房地产交易额则环比大跌32.1％至2亿7200万元。
报告指出，由于美国联邦储备局延迟降息促使融资成本继续高企，新加坡房地产投资信托和上市发展商继续剥离它们在商业和工业房地产领域的非核心资产，以降低债务杠杆率，并把资金投入有新增长的资产。
房地产咨公司研究师说：“目前市场预计2024年至少有一次降息，尽管可能只是象征性降25个基点。但市场现在普遍认为利率已见顶，因此，任何降息都有助于提振市场情绪。”
房地产咨公司也在另一份报告中指出，随着利率即将下调，卖家和买家的价格预期差距缩小，今年预计会有更多交易成交。
此外，资产脱售的步伐将在下半年加快，因为更多房地产投资信托和机构基金将寻求通过回收、再开发和优化其投资组合，获取更高收益的资产。
Source: https://www.zaobao.com.sg/finance/singapore/story20240723-4332365
*ERA News & Views is for ERA’s internal circulation and educational use only. Commercial copying, hiring, lending is strictly prohibited