PROPERTY INSIGHTS

A battle royale for the homebuyer dollar

Michelle Low

Published Tue, Nov 5, 2024 · 12:30 PM

Executive condo projects have so far sold well, as an option that is more affordable than private property, writes BT deputy news editor Michelle Low. BT SCREENSHOT

This week in Property

Singapore developers make one big push at the year-end
Why the government should sell more EC sites
Dalvey Road bungalow linked to Three Arrows’ Zhu Su sold for S$51 million
The remaking of Hongkong Land

Big push

And so it begins. An epic rush to market six projects totalling more than 3,500 units in the space of a month. This after three dismal quarters when developers struggled to move new projects and monthly sales fell to record lows. To put things in context, in the first six months of 2024, developers launched a total of 2,485 new units and another 1,325 units in the third quarter.

Those shopping for a property will be pleased – thousands turned up at showflats over the Deepavali weekend, and bank officers will no doubt also be waiting to serve up fresh mortgage packages. With rates easing since last year, Ry-Anne Lim reports that some banks have shaved rates down to the 2.5 per cent mark (terms and conditions apply, of course).

How will it all play out for developers? Already, two projects have brought forward their official launch dates when they start booking sales, to get ahead of the rest. The robust sales chalked up by September launches has given developers confidence to move now, agents said, to catch a rising wave ahead of the year-end holiday season. Much of the new supply hitting the market now is coming from projects that were held back for months – some by delays in government approvals.

Outside the mass market, money is slowly and surely circulating its way to the top. A Dalvey Road bungalow owned by Evelyn Tao, the wife of Three Arrows Capital founder Zhu Su, has been sold for $51 million. Kalpana Rashiwala has the details.

Zhu owns two landed properties in Singapore, where his crypto hedge fund is being wound up. While he is prohibited from selling them due to the liquidator’s court order, there is no prohibition on Tao’s Dalvey Road house.

Meanwhile, another GCB property changed hands recently. A Fifth Avenue house was sold for S$47 million to a member of the Sunray Woodcraft family, who had sold a bungalow in Rebecca Road for S$38 million.

The price of progress?

Executive condo projects have so far sold well, as an option that is more affordable than private property. They’re also starting to look good next to public housing with the HDB’s new restrictions on better located flats in the Plus and Prime categories. Buyers enjoy much greater flexibility with a new EC home versus a BTO Plus or Prime flat, and resale data shows many making substantial gains down the road.

The latest land sale for an EC plot in Tampines set a new record for the cost of EC land, pointing to higher selling prices in the near future. At that land price, the new EC launched might be priced at S$1,600 psf or more, a benchmark that will stretch affordability for the first-time homebuyer. A new EC unit of around 980 square feet – roughly the size of an HDB four-room flat – could cost about S$1.57 million or nearly 8.2 times the annualised income of S$16,000 per month.

To temper prices in the face of bullish demand, the government should put out more EC sites for sale and perhaps even sell sites for ECs in prime areas and in the city centre, Leslie Yee writes in The Level Ground.

In markets like Singapore, the high cost of land and construction, compounded by several seasons of cooling measures and other transactional costs, can make residential development a difficult business. Elsewhere, depressed economies also squash real estate markets. In any case, development earnings are lumpy due to the revenue recognition process.

Hence, Hongkong Land’s big decision to exit the pure residential business and pivot to fund management, new CEO Michael Smith tells Jessie Lim. Reits will likely follow, as the Jardine-owned player recycles capital into new integrated commercial property opportunities and ties up with third-party capital to grow investment assets. The strategic review comes after the group fell into the red; Hongkong Land shares jumped on the news.

Hongkong Land could notch a near-term win in unlocking value, with a Singapore-listed Reit comprising its office-centric property portfolio here, says Leslie Yee. The group’s Singapore office portfolio was valued at US$3.6 billion as at end-June, and comprises prime buildings at Marina Bay Financial Centre, One Raffles Quay and One Raffles Link.

Leslie thinks Hongkong Land can also explore working with tycoon Ong Beng Seng’s Hotel Properties Limited in its Orchard Road redevelopment project, or work with partners to develop the 6.5 hectare Jurong Lake District (JLD). Singapore opportunities could shine in Hongkong Land’s remaking, Leslie writes.

In other markets

Korea and Japan deals drove commercial real estate investment volumes in the Asia-Pacific in the third quarter. Deal volume rose to the highest quarterly levels since 2022, helped by lower cost of debt. Deals done in the Asia-Pacific were up 82 per cent year-on-year to US$38.8 billion, with Korea the most active market in the quarter, Jessie Lim reports. Singapore investors are most active among cross-border deals.

Investors are also starting to buy China, where volumes were up 32 per cent year-on-year to reach US$6.2 billion in Q3. Local insurers continued to pick up assets offloaded by overseas investors and domestic developers, while overseas capital targeted retail assets, JLL said.

City Developments Ltd (CDL), together with its partner in China, Lianfa Group, acquired a mixed-use development site in Shanghai’s Xintiandi area. The joint venture was awarded the plot for 8.9 billion yuan (S$1.7 billion), of which CDL has a 51.6 per cent stake.

Mainland Chinese buyers are back in Hong Kong. The territory saw fresh records of home-buying from mainland Chinese in the first three quarters, following concerted government efforts to attract foreign professionals and remove buying curbs. Hong Kong lifted all additional stamp duties for foreign and second home buyers in February. It recently also relaxed the down payment required to 30 per cent for all properties, and allowed purchases of luxury homes worth more than HK$50 million to be included in its investment immigration scheme. According to realtor Centaline, most mainland Chinese purchases are in the secondary market, and the average spending was HK$11 million, the price for small-to-medium sized homes.

Sydney-based wealth and pensions manager AMP said that office valuations in Australia are likely near the bottom after shedding more than a quarter of their value. AMP is now looking to the domestic office market for opportunities.

Will strong take-up at new private home projects continue? Let me know your thoughts at mich@sph.com.sg