PROPERTY INSIGHTS

The latest condo launches are off to a brisk start – will it last?

Michelle Low

Published Tue, Oct 22, 2024 · 12:30 PM

In an environment where prices in both the private and public markets appear out of reach for many, extraordinary transactions can create much instability, writes BT deputy news editor Michelle Low. BT SCREENSHOT

This week in Property

Strong showing at the first two new launches of Q4
Government agencies need to step up communications on outlier deals
HDB shophouses are drawing investors eyeing yields
How Frasers Centrepoint Trust primed its portfolio

Strong sales at two new launches

In the first residential launches of the fourth quarter, two projects got off to a brisk start. Take-up rate was much better than other projects sold earlier in the year. UOL sold 50 per cent of its freehold 226-unit Meyer Blue in the East Coast, while CDL sold 84 per cent of the 348 units at its Woodlands project Norwood Grand. What was remarkable about the most recent launches was how well they sold at the prices they were pitched at.

Meyer Blue units started at S$2 million and were priced on average at S$3,260 per square foot (psf). Units sold at Norwood Grand were transacted at close to S$2,000 psf, marking a new high for private condos in the Woodlands area where the median price of resale units has been about S$1,000 psf over the last one year. The latest launches follow two other projects marketed earlier that also chalked up noteworthy sales – Hong Leong’s Kassia condo which sold 52 per cent of 276 units at launch, and Bukit Sembawang’s 8@BT which moved 53 per cent of 158 units.

Are we seeing a genuine uplift in buying sentiment – and liquidity – after months of sluggish sales? There’s a long line of projects waiting to be marketed soon, of which some are major 700-1,000 unit condos. Mortgage rates have already moved below 3 per cent this year, down up the 3.5-4 per cent packages offered last year; perhaps better loan terms will spark buying.

We have yet to see if developers will show more confidence at state land sales, where bids have been very muted and some assessed to be “too low” for the government to accept. Watch for our report on an executive condo plot tender closing on Thursday. The government has also opened tenders for two more residential sites in Lentor Gardens and River Valley Green, and offered up two reserve list sites in Marina Gardens Lane and Woodlands (an EC site). Outside its government land sales (GLS) programme, the authorities put two other projects up for tender last week: the sale of Tanjong Katong Complex with a 30-year tenure, and a Sentosa hotel development site on a 50-year lease. It’s also preparing the first new housing sites to be developed in Turf City, where a major new estate is on the cards for the prime Bukit Timah location.

In piping more supply into the residential market, the big picture goal is to take the steam off housing prices (as well as rents). In an environment where prices in both the private and public markets appear out of reach for many, extraordinary transactions can create much instability.

Outlier deals skew market perceptions and get people talking. There are many reasons why someone will fork out much more than the market rate to close on a deal. The danger is that some agents use extraordinary transactions as marketing points in hard-selling tactics.

Both HDB and URA share plenty of housing market data. Given the persuasive power of outlier transactions, which the government has noticed and talked about, official agencies should be more proactive in highlighting and commenting on them, Leslie Yee says in The Level Ground.

Shopping for shophouses

Singapore’s shophouses, a niche asset class that is highly valued, continue to draw interest. Three Bugis area shophouses are being sold for S$72 million, Kalpana Rashiwala reports. The buyer of the North Bridge Road properties is understood to be an affiliate of Clifton Partners, a Singapore-based real estate investment management company specialising in conservation shophouses.

More deals are being done in HDB shophouses too. These properties, located in high-traffic locations in mature public housing estates, are now drawing bigger players eyeing yield and affordability, writes Ry-Anne Lim. Rents are improving with the changing profile of businesses taking up HDB shop space, and investors are looking at yields of 4-6 per cent, compared to 2-3 per cent for freehold conservation shophouses. Find out who’s buying HDB shophouses and why .

On the corporate front

As competition intensifies among Singapore’s malls, Frasers Centrepoint Trust (FCT) has stayed laser focused on suburban retail centres that are located next to, above or very near an MRT station. It spent billions making acquisitions in the last six years. It sold off smaller malls in its holdings that were not competitive, to concentrate on big malls, leveraging on sheer size to gain a wider catchment area. FCT CEO Richard Ng talks to Kalpana Rashiwala about how the Reit has not only grown, it has improved the quality of its portfolio and boosted the resilience of its best-in-class properties. Read her Topline interview here.

For a property group with a sterling portfolio of hospitality and commercial assets and well-executed residential projects, UOL stock appears to be very much undervalued. As at Oct 16, UOL traded at a 59 per cent discount to its net asset value (NAV) per share of S$13.19 at end-June. With lower interest rates, the group should seize the opportunity to optimise its balance sheet, drive higher return on equity (ROE) and grow in fund management, writes Leslie Yee in his Hock Lock Siew column. UOL needs to urgently addresses the share price discount to book value, especially as the NAV is conservative and the balance sheet is healthy. The group can actively embrace capital-efficient ways of holding its assets, through Reits or private funds.

Adrian Cheng’s exit as New World Development’s CEO rocked Hong Kong corporate circles last month. It also holds valuable lessons for Singapore’s family-linked listed groups. Markets and investors judge a company by its performance, and judgement can be harsh. Despite his pedigree and his family being synonymous with New World, Cheng paid for the group’s weak financial and share price performance under his watch. Singapore business families should take note. First, a family member’s position as CEO is not guaranteed. Second, boards of family-owned listed companies must be fully aware of their fiduciary duties, and be thorough and objective in evaluating and appointing family members versus outsiders to top positions. Third, a scion of a wealthy family needs to carefully weigh whether to step forward to lead the business. Carrying a famous surname can both be a boon and a bane. Read Leslie Yee’s Sense and Cents column here.

Are we seeing the start of a recovery in private home sales? Let me know at mich@sph.com.sg