reporter2
27-02-18, 19:45
If time is a luxury . . . it could be now
Residential market is slowly rousing from its slumber; the luxury residential market poised for steady recovery
Sat, Feb 24, 2018
Desmond Sim
IN 2017, according to Q4 URA statistics, the residential market saw just north of 25,000 transactions lodged. These include new sales, resales and sub-sales. Some 74 per cent of these transactions were transacted below the quantum of S$2 million.
In fact, while the primary market saw a four-year high in terms of sales volume at 10,566 units, 85 per cent of the new private homes sold in 2017 were below S$2 million. Generally, the residential market was driven predominantly by quantum.
Unsurprisingly, the Rest of Central and the Outside Central regions accounted for homes at this sweet spot of below S$2 million. However, there was a positive story forming in the Core Central region as well: for luxury apartments worth S$5 million and above in the Core Central region, a total of 372 caveats were lodged in 2017, the highest since 2011.
The higher volume in the last six months of 2017 came on the back of the launch of Martin Modern, and buyers picking up units from previous launches such as Gramercy Park and Ardmore Three.
As data from the past two quarters suggest, the residential market is slowly rousing from its slumber. In the luxury segment, are we expecting a quick turnaround, or a slow pickup?
Overall, favourable macro indicators are injecting positive vibes back into the market. GDP growth has surprised on the upside, expanding by 3.6 per cent for 2017, as compared with 2.4 per cent in 2016. The annual average unemployment rate was still low at 2.2 per cent in 2017.
According to Oxford economics, there remains a healthy compound annual growth rate of 3.8 per cent for residents above the income bracket of S$150,000, signalling that purchasing power is growing.
The price index for non-landed homes in the CCR has already risen slightly by 1.7 per cent over the past two quarters. This is on the back of seventeen consecutive quarters of correction of 12.2 per cent from Q1 2013 till Q2 2017. As such, value buys in the segment is a plausible opportunity.
On this cusp of recovery, the Singapore residential market offers a better value proposition for price appreciation as compared with other key international residential markets, which are peaking or have peaked.
Foreign buyers have been a steady source of demand for the luxury market and are expected to continue to be a steady demand driver. Including PRs, foreign buying has accounted for 28.3 per cent of all the buying activity in the CCR in 2017. It should be highlighted that the ABSD of 15 per cent for foreign buyers remains unchanged.
In the recent Budget announcement, Finance Minister Heng Swee Keat has introduced a top marginal buyer stamp duty rate that was raised from 3 per cent to 4 per cent, applying to the portion of residential property value in excess of S$1 million.
This will prove to be a headwind for the luxury market as the raised buyer stamp duty is more impactful on larger transaction deals. While some may argue that the correction in prices may have soften the impact mathematically, there remains some barrier psychologically.
Nonetheless, with key cities like Hong Kong and Australia implementing cooling measures for foreigners, it has levelled the playing field and put Singapore back onto investors' radar as a viable opportunity
Eventually, in addition to being constantly ranked highly as a livable city, an investment into Singapore presents a sense of stability. Stability in terms of governance as well as in its currency. The latter entails capital preservation, and perhaps capital appreciation in a land scarce city state.
CBRE Research believes that overall luxury prices should recover in 2018, alongside rising land prices and the strong holding power of developers. Further, underpinned by a strengthening economy, and improving sentiment, the luxury residential market is poised for steady recovery.
The writer is head, CBRE Research, Singapore and South East Asia.
Residential market is slowly rousing from its slumber; the luxury residential market poised for steady recovery
Sat, Feb 24, 2018
Desmond Sim
IN 2017, according to Q4 URA statistics, the residential market saw just north of 25,000 transactions lodged. These include new sales, resales and sub-sales. Some 74 per cent of these transactions were transacted below the quantum of S$2 million.
In fact, while the primary market saw a four-year high in terms of sales volume at 10,566 units, 85 per cent of the new private homes sold in 2017 were below S$2 million. Generally, the residential market was driven predominantly by quantum.
Unsurprisingly, the Rest of Central and the Outside Central regions accounted for homes at this sweet spot of below S$2 million. However, there was a positive story forming in the Core Central region as well: for luxury apartments worth S$5 million and above in the Core Central region, a total of 372 caveats were lodged in 2017, the highest since 2011.
The higher volume in the last six months of 2017 came on the back of the launch of Martin Modern, and buyers picking up units from previous launches such as Gramercy Park and Ardmore Three.
As data from the past two quarters suggest, the residential market is slowly rousing from its slumber. In the luxury segment, are we expecting a quick turnaround, or a slow pickup?
Overall, favourable macro indicators are injecting positive vibes back into the market. GDP growth has surprised on the upside, expanding by 3.6 per cent for 2017, as compared with 2.4 per cent in 2016. The annual average unemployment rate was still low at 2.2 per cent in 2017.
According to Oxford economics, there remains a healthy compound annual growth rate of 3.8 per cent for residents above the income bracket of S$150,000, signalling that purchasing power is growing.
The price index for non-landed homes in the CCR has already risen slightly by 1.7 per cent over the past two quarters. This is on the back of seventeen consecutive quarters of correction of 12.2 per cent from Q1 2013 till Q2 2017. As such, value buys in the segment is a plausible opportunity.
On this cusp of recovery, the Singapore residential market offers a better value proposition for price appreciation as compared with other key international residential markets, which are peaking or have peaked.
Foreign buyers have been a steady source of demand for the luxury market and are expected to continue to be a steady demand driver. Including PRs, foreign buying has accounted for 28.3 per cent of all the buying activity in the CCR in 2017. It should be highlighted that the ABSD of 15 per cent for foreign buyers remains unchanged.
In the recent Budget announcement, Finance Minister Heng Swee Keat has introduced a top marginal buyer stamp duty rate that was raised from 3 per cent to 4 per cent, applying to the portion of residential property value in excess of S$1 million.
This will prove to be a headwind for the luxury market as the raised buyer stamp duty is more impactful on larger transaction deals. While some may argue that the correction in prices may have soften the impact mathematically, there remains some barrier psychologically.
Nonetheless, with key cities like Hong Kong and Australia implementing cooling measures for foreigners, it has levelled the playing field and put Singapore back onto investors' radar as a viable opportunity
Eventually, in addition to being constantly ranked highly as a livable city, an investment into Singapore presents a sense of stability. Stability in terms of governance as well as in its currency. The latter entails capital preservation, and perhaps capital appreciation in a land scarce city state.
CBRE Research believes that overall luxury prices should recover in 2018, alongside rising land prices and the strong holding power of developers. Further, underpinned by a strengthening economy, and improving sentiment, the luxury residential market is poised for steady recovery.
The writer is head, CBRE Research, Singapore and South East Asia.