Goldilocks and the property bears

NOT too hot, not too cold. It could be said that Singapore’s housing market has entered a kind of Goldilocks phase, as property prices stabilise and home sales move at a slow and steady pace, post cooling measures. Is the lukewarm porridge palatable? 

For house hunters, very much so. As Leslie Yee points out, neither a weak nor a strong housing market is good for those looking to sell their homes and buy new ones. Falling prices throw up bargains, to be sure, but sellers may not get a good price for their properties. On the other hand, rising prices feed gains for homeowners, but can make it hard for those who have sold to buy their next home within their budget. 

Under the prevailing market conditions, sellers whose price expectations are reasonable will easily find takers. And those in the market to buy can browse and shop in relatively calm conditions, without fretting that they will be outbid by others or feeling pushed to sign on a purchase in a frenzied showflat crowd.

A boring Dragon Year for the housing market could be ideal for locals looking to rightsize, Leslie writes in The Level Ground. 

One would hazard that developers would much prefer their porridge to be warmed up - not congealing, unfinished, in their bowls. 

New home sales at the year’s first few project launches have gone much slower than they used to. Take-up at a project’s first weekend of sales has dropped steadily from the heady 80 per cent rush seen from the end of 2022. 

Lentoria is the fourth condo in the Lentor Hills estate to be offered for sale in the space of about 18 months. Lentor Modern, the first to come to market in September 2022, sold 84 per cent of its 605 units at launch. The second project, Lentor Hills Residences, moved half its 598 units in July 2023. The third, Hillock Green, sold 132 units, or 28 per cent, of its 474 units in November 2023. The latest to be marketed, TID’s Lentoria, sold 50 units or about 19 per cent of the project’s 267 units, when it opened for sales over the Mar 2-3 weekend. The next to be launched is Lentor Mansion.

Pricing of units sold across the four projects launched so far have averaged around S$2,100 per square foot, a benchmark set by GuocoLand’s Lentor Modern.  

How quickly a developer moves new units at a project launch is watched closely by the trade, not just as an indicator of overall market demand, but also because sales lose momentum quickly after the hype of the first weekend. 

Slower sales at the start mean it could take a longer time to sell out the project. The developer then faces a hefty stamp duty payment - up to 35 per cent of the cost of the land - if it is not able to sell all the units within five years of the land purchase (extensions were handed out for some projects caught in Covid delays).

New projects in prime locations face slower demand as higher stamp duty rates keep foreign buyers and investors at bay. Suburban condos, meanwhile, continue to see steady demand from locals. 

Developers have accordingly priced risk into their bids for land, and the divergent performance and sentiment in the market were mirrored in the latest land betterment charge (LBC) rates, writes Kalpana Rashiwala.  

LBC rates, which developers pay to enhance the use of sites or to build bigger projects on them, fell the most for land near the prime Orchard Road belt. Rates went up the most for the West Coast/Clementi and Toa Payoh areas, where recent state land tenders saw strong bids. 

The relatively lower rates payable on land in non-suburban locales are not likely to unblock the collective sales market. Deals have stalled as developers remain leery of big-ticket land buys.

But owners at three large condos have conceded a little, in the hope that their lower asks will bring developers back to the table.

Thomson View Condominium is back on the market, after owners agreed to cut their reserve price for the sale by about 3 per cent to S$918 million, from the S$950 million they were asking in 2022. Island View Condo owners also re-opened the tender for their en bloc sale at S$575 million, with plans to lower the reserve price by 7.5 per cent to S$532 million. Owners at Pine Grove, too, plan to cut their reserve price by 8.7 per cent to S$1.78 billion.   

Deals and financials

Hwa Hong Corporation sold OneTen Paya Lebar, an eight-storey high-tech industrial building, for S$140 million to an entity linked to Big Data Exchange (BDx), which operates the data centre facility in the freehold building.

City Developments Ltd (CDL) is close to a deal to buy the Hilton Paris Opera hotel from asset management giant Blackstone for 244 million euros (S$356 million). Blackstone had reportedly acquired the Paris property in 2013 for 250 million euros. 

News of the deal comes soon after the CDL announced that net profit fell 75 per cent to S$317.3 million for 2023. Higher debt costs eroded earnings in the absence of divestment gains. CDL geared up on acquisitions in the past year, picking up land and assets tallying S$2.4 billion. 

CapitaLand Investments saw earnings shrink as valuations deflated. Net profit fell 79 per cent to S$181 million in 2023, after the group recorded S$600 million in revaluation and impairment losses, compared with revaluation gains of S$30 million in FY2022. It fell into the red in its second half, posting a S$170 million loss compared with H2 FY2022’s net profit of S$428 million.

The collapse in home buying momentum took a toll on Singapore’s two biggest real estate agencies. PropNex’s net profit fell 27 per cent for H2 2023 to S$25.8 million, with full-year net profit down 23.3 per cent to S$47.8 million. Apac Realty, which owns the ERA agency business, saw its H2 net profit fall 31.4 per cent to S$6.8 million, taking the full-year net down 55.7 per cent to S$11.8 million. 

Online listings portal PropertyGuru cut 79 jobs and shut unprofitable units. The company, which operates in Singapore, Malaysia and Vietnam, posted net income of S$1.1 million for its Q4 in its second sequential quarter of positive earnings. For the full year, net loss shrank 88.2 per cent to S$15.3 million. 

How do you like your porridge? Let me know at mich@sph.com.sg