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Singapore: A good long term investment?

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Singapore: A good long term investment?

marina-bay-sunset-singapore-1000x563.jpg

 

What do you people think of properties in Singapore?

Pros:

The Singapore economy is well run,

The IMF expects it to grow quite a lot, compared to other advanced economies (Europe, North America), around 5-6% or so.

Although the prices have risen quite a lot, the price of condos (which foreigners can buy) is only about 10% higher than in 2008: http://www.singaporepropertycycle.com.sg/market-trends/singapore-property-price-index-by-housing-type/

You can make an 80% mortgage, at a fixed interest rate of 1.5% (in Singapore $). That's basically free money, though I have to check if 20-30 years is possible (checking now).

Constantly appreciating S$, at about 5% a year compared to the US$ (but a slight slump during the last months).

Long term increase in price of properties (over 20-30 years: about 4% a year)

Near HK, can go there in the morning and come back in the evening, cost about HK$1,500 for the flight, to sign contracts or check the flat.

Cons:

Low rent revenue (about 3%, similar to HK)

Now a tax of 20% of the purchase value, but overall I think in line with most other countries?

20% tax on revenue from rent

Conclusion:

Overall, a safe investment, and with the appreciation of the S$, increase in property values, and revenue from rent, you are talking of about 10% a year.

I am thinking of a long-term investment. I would buy a property with a 20-year mortgage (80% of the value), use the rent to pay off the mortgage, and then live my retirement on the rent.

I can envision an appreciation of the HK$ within the next 20 years, but I live to diversify a bit, and a property in Singapore is safer than in many other places, and as long as Singapore will continue to be managed by PAP you can't get wrong, can you?

What do you think?

===============

(in edit):

LINKS:

SG property News : https://www.srx.com.sg/singapore-property-news

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(as posted on AX):

Your assumptions are:

+ 5-6% growth
+ S$ constantly appreciating, at 5% p.a.
+ Fixed interest rate of 1.5%

Do you really think these can exist together?

How might these items effect the competitiveness of the Singapore economy?

I see Thailand (Chiang Mai) and the Philippines (Makati) as safer bets,
than the over-valued Singapore economy.

And the NOK might be a better bet now as a currency.

==

How you finance any investment is a separate question

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Index

Singapore-Property-Price-Index_zps70039c

>source: http://www.singaporepropertycycle.com.sg/property-cycles/singapore-property-cycle-summary-of-past-cycles/

From post #17:

Singapore Housing Index
'14
Q3 : 149.7
Q4 : 148.6
'15 : 147.0
Q2 : 145.5
Q3 : 144.2
Q4 : 142.3
'16 : 141.6
Q2 : 140.6
Q3 : 140.0
Q4 : 137.9
'17 : 137.2
Q2 : 136.7 : that's 11.5% below a 154.5 peak *estimated 2013, 1st Half
----
> http://www.tradingeconomics.com/singapore/housing-index

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Has Singapore's property bubble already burst?

Leslie Shaffer | Writer for CNBC.com
Tuesday, 28 Oct 2014 | 7:15 PM ETCNBC.com
 
102126033-98300161.530x298.jpg?v=1414475
Roslan Rahman | AFP | Getty Images

Despite dire predictions of sharp drops, Singapore's property prices don't seem to have budged much, but statistics may mask a market already in deep decline.

The official price index data appear largely benign, down just 0.7 percent in the third quarter, for a cumulative decline of less than 4 percent from the peak in 2012.

Read More Slump in Singapore prime property worst globally

 

But that's the wrong price data to look at, said Alex Shlaen, a property investor and CEO of Panache Management, a luxury brand manager.

The price index rolls in prices across various classes of properties, including the mass-market segment, more geared toward end-users, with luxury properties, where investors appear to be turning up their nose at higher prices.

While many analysts cite property price gains from 2009 when the index hit its financial crisis nadir, Shlaen believes the high-end never really recovered after hitting a pre-financial crisis peak in 2008.

"2009 was a cardiac arrest. If you compare the high-end property prices of 2007 with now, the market is substantially down," he said, estimating luxury property prices are off 30-50 percent from their peak.

Read More  Is Singapore driving away property investors?

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ABSD could shrink developers' profits by 50%

Real estate developers in Singapore are cutting unit prices by 15 percent in order to sell unsold homes and avoid steep government fines. According to a media report, CLSA revealed property firms could offer larger discounts as they struggle to move unsold units amidst a looming deadline for failure to do so means paying the applicable stamp duties and extension fees.


Read the article on propertyguru.com.sg >

 

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The Property cycle in Singapore has been less than 18 years (like 15-16 years)

Singapore-Prop-Price-2_zpspqwc3qjc.jpg

The Top is in, apparently.

This is from today's HK Standard, pg.18

Slipping in Singapore - in the Overseas Property column by Tony Liaw

+ Urban Redevelopment Authority data shows prices dropped 4% last year, after +1.1% in 2013

+ Secondary market flats were down: Luxury flats averaged S$2,650 (HK$14,908) psf: - 6.2%

+ New condos were down 17% (!) to S$2,450 psf

+ Rents also fell, being down 3%, after a 0.9% gain in 2013

CapeRoyaleSing_zpso4cyigxi.jpg

Cape Royale - A construction worker walks by the largely vacant Cape Royale condominium in Sentosa Cove

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CAPE ROYALE: Sentosa Cove

 

(Here's the argument used to promote buying at Cape Royale, back in Nov. 2013!):

 

Value proposition

A WINDOW of opportunity has opened for buyers in the Sentosa Cove condo market as prices in the upscale waterfront housing district are now attractive relative to both the high-end and mass markets on the mainland, Colliers International said in a White Paper issued yesterday.

 

The median price of 99-year Sentosa Cove condo units has dropped 44.2 per cent over two consecutive quarters, from $2,950 per square foot (psf) in Q1 2013 to $1,646 psf in Q3 - a pricing level that is about 1.5 per cent lower than their 99-year-leasehold counterparts in Districts 9, 10 and 11 as well as the financial district on the mainland.

"Considering that prices of condominiums in Sentosa Cove once climbed as high as 133.1 per cent above their mainland counterparts in Q1 2008, this about-turn today represents a possible window of opportunity for value investment and to snare a dream home," said Colliers.

 

Also, the $1,646 psf median price in Q3 is just 25.6 per cent more than the $1,311 psf median price of 99-year mass-market condos in Outside Central Region in the same period.

 

"This is in stark contrast to the 77.6 per cent difference registered when condo projects were first sold in Sentosa in Q4 2004, and the gaping 315.9 per cent difference in Q1 2008 when the property market was abuzz with strong interest from foreign home buyers. The current 25.6 per cent price gap is the narrowest observed since condos were launched in Sentosa," said Colliers.

. . .

In absolute price quantum too, there are attractive deals to be found on Sentosa Cove. Seven condo units with floor areas of between 1,012 square feet and 1,216 square feet were transacted at $1.71 million to $1.90 million in the first nine months of this year. Of these, six units were in The Berth by the Cove, which was completed about seven years ago, while another was a unit in the three-year-old The Oceanfront@Sentosa Cove.

"The entry-level price band of $1.7-2 million is comparable and in some instances, even more favourable than the prices of some popular new mass-market homes on the mainland. For example, two units of similar sizes in the yet-to-be-completed 99-year Centro Residences in Ang Mo Kio sold at a median price of $2.1 million in the first nine months of 2013."

"Given that new mass-market condos are increasingly pushing towards the $1.7-$2 million price band, potential home buyers with a budget of $1.7 million and above should not overlook the opportunities in Sentosa Cove, where the condo segment appears to offer intrinsic value in terms of capital appreciation in the long run," said Colliers.

The property consulting group said Sentosa Cove condos can be considered for rental returns as well. Condos offering unrivalled proximity to the sea will remain rare given the controlled supply.

"And with the unique island-resort lifestyle offering that is likely to continue to appeal to the affluent, there is potential for the net rental yields of 2.8 per cent as of September this year to return or even exceed the historical high of 5.4 per cent achieved in Q4 2008 in the long run, when the major economies emerge from their doldrums," according to the White Paper.

==

> http://www.stproperty.sg/articles-property/singapore-property-news/sentosa-condo-prices-attractive-colliers/a/142204

 

Update: http://www.stproperty.sg/condominium-directory/cape-royale-condo/26705

 

Haha. Some "Value proposition" !

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Assumptions must be made very carefully...

On 1/19/2015 at 9:42 AM, Newby said:

Pros: Constantly appreciating S$, at about 5% a year compared to the US$ (but a slight slump during the last months).

SGD / Singapore Dollar ... update : 10-d : Last : USD = S$1.38

SGD-3yrs_zpsvmxp1hr5.gif

Since Aug. the SGD has gone from...

=== :USdollar: Sing.$

Aug : S$1.24 : 0.806

Mar : S$1.38 : 0.725

That's a drop of -10% !

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Co-working in Singapore – a new driver?

In Singapore, co-working space has recently become the talk of the town.
 
This is because of the reported Collective Works and CapitaLand joint venture that provides first-of-its-kind “premium co-working space”
in Capital Tower – a Grade A office building in Singapore’s CBD. Currently, co-working space in Singapore is typically located outside the CBD. This joint venture is a break from tradition, sparking speculation and debate that co-working space could become the next demand driver, especially in the light of the large upcoming office supply of 5.4 million sq ft across the island over the next three years.
 
The very first co-working space was set up in 2009. To date, there are more than 30 co-working offices with a real estate footprint estimated at 250,000 sq ft island-wide, of which about 20% are located in the CBD. The growth of co-working space has been
increasing steadily and we could expect more entrants into the CBD given the upcoming launches in Capital Tower and OUE Downtown.
 
The typical tenant profile in a co-working space is entrepreneurs in the form of start-ups and freelancers. Large corporations typically do not use co-working space. Taking this into account, we think that although the growth of co-working space in Singapore is still in its infancy stage, it is unlikely to become a main demand driver in the short term.
 
Firstly, demand for work space by start-ups in Singapore is relatively small. Based on a study by the National University of Singapore
Enterprise, approximately 330,000 people (comprising 9.2% of the 3.6 million-strong workforce) were employed by the start-up sector in 2014. Besides, this figure is likely to grow at a gradual rate – according to the Global Entrepreneurship Monitor (2014 Global Report), a leading study into global entrepreneurship trends, 9 out of 100 people intended to start a business within the next three years in Singapore, compared to 20 for Asia Pacific as a whole. These figures suggest that the demand for co-working space could be
fairly limited, at least in the short term.
 
Furthermore, the typical floor space leased by small-to-medium size co-working space operators ranges from 2,000 to 5,000 sq ft as their tenants usually have a smaller team size and may not require daily use of the office space. Thus, it could be challenging for these

operators to lease large floor areas from landlords unless there is substantial demand

In a nutshell, there is potential for a vibrant co-working space culture in Singapore and with the right nourishment, it could grow beyond its infancy phase in the future. This growth is likely to be gradual given the relatively smaller floor plate required for co- working space.
About Co-working
In addition to allowing more flexibility in terms of size and duration of space commitments – which is similar to the more traditional
business centres – the key benefit of the new co-working brands is their value-added. Co-working space focuses on creating social,
interactive, and open working environments. Their standard features usually include social apps for members to easily interact with each other, a large common space to mingle, and social activities such as outings. Such added-values differentiate co-
working space from the more traditional business centres.
 
The potential for co-working space to generate value through more interaction between people and to save costs by sharing resources
have inspired corporate tenants to start thinking about how to incorporate co-working elements into their workplace strategies.
 
ABOUT THE AUTHOR
Jenny Goh is a research analyst based in Singapore. She provides market analysis and forecasts for the office sector and also contributes to quarterly publications. Jenny is also involved in the production of thought leadership pieces and consultancy projects.
==

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Sometimes these Drops take a Long Time to get going

The Singapore property market peaked in 2013-14, when taxes were imposed - but the bigger drops are coming in 2016

Singapore-Property-Price-Index_zps70039c

 

Singapore home prices dropped by the most in more than seven years as developers offered discounts amid signals from the government that it won’t roll back property curbs initiated in 2009.
An index tracking private residential prices fell 1.5 percent in the three months ended Sept. 30 from the previous quarter, the biggest decline since June 2009. Prices fell for the 12th straight quarter, the longest streak of quarterly losses since prices were first published in 1975, according to preliminary data from the Urban Redevelopment Authority Monday.
http://www.bloomberg.com/news/articles/2016-10-03/singapore-home-prices-have-biggest-drop-in-more-than-seven-years
 

-1x-1.png
Singapore is down from 154.5 (Estimated for Q3.2013) to 137.9 (Q2.2016) - that's - 10.7%
/ 2 /
Singapore Is Crushing Hong Kong in the Race to Cut Home Prices

On the surface, the property markets in Singapore and Hong Kong have much in common. The two Asian financial hubs have both moved to rein in runaway home prices in recent years as they sought to make housing more affordable.
Yet, consider how home values in the cities have diverged. Singapore has been successful in damping buyer demand with curbs (prices slumped by the most in seven years last month), while restrictions have had little impact on Hong Kong’s gravity-defying market, which is rebounding after a short-lived dip.
. . .
Another possible explanation for the Hong Kong’s market resilience this year is a resurgence of interest from mainland Chinese buyers. Seeking alternatives amid surging home prices in cities such as Shanghai and Shenzhen, they accounted for 9 percent of total Hong Kong transactions in the three months ended June 30, compared with 5.8 percent in the same period last year. By contrast, the share of Chinese buyers in Singapore has been on the wane, with mainland investors representing 6.9 percent in the second quarter, down from 7.1 percent last year.

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Singapore Dollar may be approaching a Turnaround

USD in SGD Dollars ... update

SGD_zpsweakozrk.gif

I sold US$100,000 worth of SGD two months ago (at a small loss to buy a high-yielding property), and may now buy them back

In edit: (1/19/2017):

I did not buy SGD, I bought options on Gold and Gold stocks instead;

SGD - updated ... 3-years / Last: SGD 1.4284 at 1/19

SGD_zpsz7ktovsh.gif

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Singapore’s three-year housing slump could see relief from an unexpected quarter in 2017: Hong Kong.

800x-1.png

So says Cushman & Wakefield Inc., which expects the slide in the city-state’s home prices to end this year as foreign investors turned off by Hong Kong’s move to increase the stamp duty for overseas buyers look to Singapore instead. Desmond Sim, head of research for Singapore and Southeast Asia at CBRE Ltd., said Singapore house prices are approaching their trough, with a forecast price move of flat to minus 2 percent.

“The fallout from the stamp duty could be beneficial for Singapore,” said Sigrid Zialcita, managing director for Asia Pacific research at Cushman & Wakefield. “Singapore is always seen as a place where you can preserve capital and we are expecting interest from foreign nationals to come back.”

==
More https://www.bloomberg.com/news/articles/2017-01-18/hong-kong-s-home-curbs-may-help-end-singapore-s-three-year-slump

The downphase of the 18 year cycle, generally lasts 3-5 years.
So maybe it is getting close to a low - possibly within 2017 or 2018

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This is from late 2015, and I have heard reports that SG prices are now 30% off the highs

 

Singapore-Property-Price-Index.jpg

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Sentosa Luxury : A Nightmare for investors

PPHO.2026604.V550.jpg

Excerpt

... housing markets elsewhere are suffering from some serious wobbles. Take Singapore, for example, where recently a 4,069 sq ft at Seascape in Sentosa Cove was sold at a $6.6 million loss. The loss works out to 52% or 10% annualised over a holding period of 6.6 years. The unlucky seller: a Russian oligarch. According to The Edge Property, the previous owner, a Russian national bought the unit from the developer at $12.8 million or $3,146 psf in June 2010. The unit was put up for mortgagee sale at an auction conducted by JLL in January 2017 at an opening price of $6.8 million but did not find a buyer. It was subsequently sold at $6.2 million or $1,524 psf by private treaty. According to JLL head of auctions Mok Sze Sze, the buyer is an investor

It's not the first dramatic repricing of Singapore real estate. So far, four other private non-landed homes have been sold at losses above $5 million, based on the matching of URA caveat data as at Feb 17.

Previously, a 4,133 sq ft unit at Seascape was sold at a $5.2 million loss. The unit was bought at $11 million or $2,661 psf in December 2011 and sold at $5.8 million or $1,403 psf. The loss works out to 47% or 17% annualised over a three-year holding period. The seller was also liable for a 4% or $232,000 Seller’s Stamp Duty.

Before that, a 3,757 sq ft unit at St Regis Residences Singapore in prime District 10 was sold at a $5.02 million loss. The unit was bought at $13 million or $3,461 psf in July 2007 and sold at $7.98 million or $2,124 psf. The loss works out to 39% or 24% annualised over a 1.8 year holding period.

/ 2 / Dec, 2016:

Boomtime property buyers now big losers

026f5b3e.jpg?itok=aQ8i6iwq Seascape, waterfront homes on Sentosa Island.PHOTO: HO BEE GROUP

More than 800 condo units were resold at a loss this year as economy slows

property_losses.png

An ultra-luxury apartment with a sea view at Sentosa Cove has made the largest loss in the property market so far this year.

Originally bought for $11 million in 2011, the condominium unit at Seascape was sold for $6.35 million in October at a loss of $4.65 million.

A high-end property at The Ritz Carlton Residences in Cairnhill Road made the second-largest loss-making deal of $3.7 million in March.

Another Sentosa Cove unit at Turquoise came in third, in a transaction that made a loss of more than $3.3 million in June.

. . . The top-10 loss-making properties are in two affluent neighbourhoods, Sentosa Cove and the Central area.

All of them were bought during the property boom years in 2007, 2011 and 2013. Seven were bought in 2007.

> http://www.tnp.sg/news/singapore/boomtime-property-buyers-now-big-losers

 

/ 3 /

If solitude and silence are part of high living, then some Sentosa Cove residents are getting more than they bargained for.

When The Sunday Times visited the Cove on Thursday night, many units of the private estates there were dark.

At The Residences at W, a 228-unit development completed about five years ago, an online search shows 209 units are up for rent.

... offers another reason why so many units are unoccupied.

"Many Sentosa Cove residences would be left empty for most of the year as they are holiday homes for the owners, so Sentosa would likely have a higher vacancy rate than the rest of the CCR," he says.

Based on his observations, International Property Advisor chief executive Ku Swee Yong estimates about 30 per cent of units in the Cove are vacant.

Says Mr Ku: "Assuming a 70 per cent occupancy, that would mean around 650 units of the 2,200 homes and apartments there are empty."

> http://www.straitstimes.com/singapore/housing/quiet-nights-and-dark-homes-at-sentosa-cove

When the cycle turns, it can get nasty - especially for over-priced "trophy" type properties with high management fees that might be hard to rent out

MAP : Sentosa Cove

It is a luxury enclave, off on its own -- not a job anywhere in sight

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Singapore Housing Index
'14 > http://www.tradingeconomics.com/singapore/housing-index
Q3 : 149.7
Q4 : 148.6
'15 : 147.0
Q2 : 145.5
Q3 : 144.2
Q4 : 142.3
'16 : 141.6
Q2 : 140.6
Q3 : 140.0
Q4 : 137.9
'17 : 137.2
Q2 : 136.7 : that's 11.5% below a 154.5 peak *estimated 2013, 1st Half

SRX Property Index : a premature low? maybe not

- a second index shows a bounce after almost 4 years drifting lower
SG-property_zpsh9dyx3qi.png

 

> update : https://www.srx.com.sg/price-index

The SRX index got down to the mid-point in the channel, and is now bouncing.

The 18 year cycle is generally 14 years up, followed by 3-5 years down, so it is not impossible to see a bottom in 2017, after 4 years of decline.

But I reckon this cycle may take longer than 4 years, as the last one did. Especially since the up phase was terminated at 11-12 years by the government imposing taxes.

18 years from the last low (2003-4) might mean a low as late as 2020-22.

Meantime,

RENTS in Singapore are drifting lower: https://www.srx.com.sg/research/35542/non-landed-private-rents-decrease-by-10-hdb-rents-decrease-by-05-in-march-2017

The Rent index dropped from 113.1 (3/2016) to 108.7 (3/2017-flash est.) - that's 3.9% lower in 13 mos.

If we are seeing a major low now, then I would expect CapitaLand's stock continue to rally from here - Let's see if that happens.

BTW CC now sports a yield of 2.66%, and that's better than the net yield on most SG properties

SG:C31
CapitaLand Ltd. (SIN) : All-data : 5-yrs : 2-yrs : 6 mos / 10d -- Last: S$ 3.76 - yield: 2.66% - PE: 14.2

SG-Capita_zpsvqryqvcw.gif

CapitaLand is a SG stock to watch (as a property bellwether)

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Nassim bulk sale helps CapitaLand post 77% jump in Q1 gain to S$386m

4 days ago - The Business Times

CAPITALAND Ltd achieved a 77.2 per cent jump in net profit to S$386.8 million for the first quarter ended March 31, aided by divestment gains.

190117093346-Nassim-deal-700x467.jpg

The Nassim : Luxury, but IN the city, near jobs, embassies, and schools

" prestigious address nestled between Orchard Road and the Botanic gardens ( Nassim Road )- The Embassy Row ."

Giving a fillip to the quarterly results was a S$160.9 million gain from the sale of 45 units at The Nassim, a luxury condominium project near Orchard Road, to one of Singapore's richest men and veteran banker Wee Cho Yaw in January.

Group revenue for the quarter grew a marginal 0.4 per cent from a year ago to S$897.5 million as the higher handovers from development projects in China and rental contribution from newly acquired properties were offset by lower revenue from development projects in Singapore.

CapitaLand also enjoyed a surge in portfolio gains to S$17.7 million from S$2.9 million a year ago, mainly from the divestment of a township project Central Park City in Wuxi.

Group president and CEO Lim Ming Yan said the group will complete and commence this year six more shopping malls in China, India, Malaysia and Singapore, as well as the retail components of three Raffles City developments and Capital Square in China. Five of these 10 shopping malls and retail components will open in the second quarter.

 

The Nassim deal a win-win: Analysts

"On Monday, it was announced that Mr Wee, chairman emeritus of United Overseas Bank, had bought the remaining unsold units at The Nassim luxury condo for $411.6 million.

While he reaped a bulk sale discount of about 18 per cent, CapitaLand avoided having to pay Qualifying Certificate (QC) penalties that would have hit $9.3 million if the 45 units had been left unsold by August. A QC deems that developers that buy private residential land must sell all units within two years of obtaining a temporary occupation permit."

*UOB stock has done well, outperforming CapitaLand (Last: $3.76)

SG:U11 : Last : S$21.80

United Overseas Bank : All-Data : 5-yrs : 2-yrs : 6-mos / UOB-vs-C'Land

UOB-etc_zpsvaaff2pn.gif

It seems to me that Mr Wee would rather pass on (discount-priced) prime Singapore condos to his descendants than more high-priced shares in a bank he knows (super) well.  Or maybe the younger descendants preferred that.

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OFFICE Rents are still under pressure... some expect a bottom by year end

CBD rental rebound may prompt some firms to relocate

26 Apr 2017

260417101537-1.CBD-700x467.jpg

The anticipated recovery in prime office rents in the Central Business District (CBD) next year may prompt some firms to consider relocating to cheaper areas, said consultancy

260417101735-1.1-CBD-Rentals-381x521.jpg

Cushman & Wakefield expects the gap in rents between Grade A offices in the CBD and suburban space to widen to 85 per cent next year and 94 per cent in 2019, up from 75 per cent in the first quarter of this year.

Research director Christine Li noted yesterday that rents for prime CBD offices will be close to bottoming out by the year end. "Once (these) rents return to growth in 2018, we could see decentralisation activities picking up pace."

She noted that monthly rents for Grade A space in the CBD have been sliding since a peak in the first quarter of 2015, when they were more than $10 per sq ft (psf). They continued to decline in the first quarter of this year, falling nearly 1.9 per cent from the fourth quarter of last year to $8.47 psf per month.

Monthly suburban office rents declined by about 1 per cent over the same period to $4.84 psf in the first quarter of this year.

Cushman & Wakefield expects prime office monthly rents in the CBD to ease further this year, before rising to a forecast rate of $8.86 psf at the end of next year and $9.60 psf in 2019.

. . .The projected rental growth is largely due to the limited supply of new office buildings in the CBD from next year to 2020, with less than one million sq ft of additional space coming on in each of those years, it said.

Frasers Tower and Robinson Tower - both in Shenton Way - are expected to be ready next year, adding a combined 823,000 sq ft to the CBD. That is markedly lower than the 2.15 million sq ft from Marina One and 5 Shenton Way that will be completed this year.

"For potential tenants who do not need to be in the prime CBD location, the availability of decentralised office supply in locations such as regional centres will provide more affordable space options," said Ms Li.

> more: https://www.srx.com.sg/singapore-property-news/36142/cbd-rental-rebound-may-prompt-some-firms-to-relocate

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Driving "the bounce" - the Nassim deal, and news stories like these

Upcoming District 9 condos to stir buying interest
Posted on 25 Apr 2017
36112-750x500.jpg

Two prime condominium projects are slated to hit the market in the second half of the year amid a significant pick-up in new private homes sales recently.

xx

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From luxury villas to office space, Hong Kong investors pile into depressed Singapore market

CBRE records S$880m worth of Singaporean properties bought by Hong Kong investors this year

– more than three times the S$250m for whole of 2016

28 February, 2017
900de0fe-fd74-11e6-bf00-4be039112d75_128

Singapore’s gloomy property market is getting some relief from Hong Kong, as China continues to get tougher on capital control measures.

A growing number of Hong Kong investors are on the hunt for office buildings and shopping malls in Singapore with the belief that property prices in the city-state have bottoming out, according to real estate consultancy CBRE.

 

The firm says it has recorded S$880 million (US$626 million) worth of Singaporean properties purchases by Hong Kong investors this year – that’s more than three times the S$250 million for the whole of last year.

It also contrasts sharply with the sluggish S$40 million that has came from mainland China this year.

“Particularly in the last six to 12 months, the volume of enquiries from Hong Kong-based investors has increased significantly, to the extent we have never seen as much interest as we are seeing now,” said Jeremy Lake, executive director of capital markets at CBRE Singapore. “But we have not pinpointed the reason.”

He said investors might be attracted by the relatively lower prices and higher yields, while interest was boosted by a few prominent Hong Kong-linked deals completed last year.

Shun Tak Real Estate, owned by casino tycoon Stanley Ho, bought a bungalow in May 2016 for S$145 million (US$103 million).

 
There is a bit of ‘following the crowd’. Maybe some Hong Kong people have already invested in Australia, London or New York, and now they think Singapore is the missing piece
Jeremy Lake, executive director of capital markets at CBRE Singapore

In September, the Singapore-listed ARA Asset Management, backed by Li Ka-shing’s Cheung Kong Property Holdings, acquired a 50 per cent stake in the Capital Square office tower for S$476 million.

“There is a bit of ‘following the crowd’,” Lake said.

“Maybe some Hong Kong people have already invested in Australia, London or New York, and now they think Singapore is the missing piece.”

. . . Denis Ma, head of research, Hong Kong at JLL, said some investors have turned to Singapore because the market is less competitive and offers lower prices than Hong Kong.

“Most of them would like to invest in Hong Kong for the long term, but the market is toppish. And there are uncertainties,” Ma said. “Singapore is a market that has undergone a correction. It seems to be close to the bottom.”

Expectations that the downward cycle is drawing to its end have seen a growing number of foreign companies and high net-worth individuals entering the real estate market, Lake said.

> more: http://www.scmp.com/property/article/2074700/luxury-villas-office-space-hong-kong-investors-pile-depressed-singapore

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Hi

https://finance.yahoo.com/quote/SGDRUB=X?p=SGDRUB=X

I checked it. The SGDRUB exchange rate in june 2010 was 22.33 and in early 2017 is was around 41.

So I calculated he paid about RUB281 Million when he bought it in 2010 and now has sold is for RUB248 Million.

He had better sold that unit about one year and a half / two years ago when SGDRUB was at around 50.

So taking into account forex changes he lost probably around 10pct in local currency.

Is Singapore a harbinger for the rest of the developed world, and expensive Asia such as HK and Sydney??

https://www.ceicdata.com/en/indicator/singapore/household-debt

 

Prof Keen has been warning about excessive private debt levels for years. So more pain might be coming.

Yes this Russian guy was lucky with his forex gain but local/Asian players are not going to be that lucky IMO.

We might even see 60 to 80pct losses if a real downturn starts in the global economy, -- this might likely

wipe out a lot of overleveraged real estate investors

 

Again, from the data that I see, SINGAPORE is not a good long term investment. So where did it all go wrong?

What happened? Why did it happen? What can we learn from this debacle? and who's next?

What could have predicted this? Did you receive any warning signals from your investment outlook, some indicators which might have predicted this decline? This is getting ugly,

Real estate was only supposed to go up I was told.....My day is spoiled now... Cannot fall asleep tonight

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On 5/2/2017 at 12:52 AM, Euro Chocozone Buyer said:

Haha. Yeah:

"The best time to buy a property is always 5 years ago"

Anyone who says something like that is unaware of cycles - which are real and observable - just look at prices over a long enough period.

Idiot estate agents will show you a graph going back 10-15 years, showing prices rising over the whole period, and think that this makes a case that prices will go on rising. When I see that, I have a model in my mind: "14 years up, 4 years down... the last 2-3 years of the up-phase are the most dangerous."

So if I see 10-12 years of rising market - worse yet: 14 years! - I will be very wary, and want to wait for the drop. That is my attitude towards Hong Kong and Manila right now. I would rather buy in a place like Singapore, after a 3-4 year drop. Even in Singapore, I am somewhat cautious, for reasons that I have described above.

"The best time to buy a property is always 5 years ago"

- was definitely not true in Detroit, where in 4-5 years, nearly a decade of gains were wiped out

slide05-624x468.jpg

And some houses went down to $100-$1000 in value.

Instead:

"The housing price index in Michigan hit its all time low in 2011. The housing index in Michigan is currently at 139.66, 40 percent higher than its value in 1991. This current index is approximately the same as that from 1997."

> source: http://www.drawingdetroit.com/michigans-housing-price-index-compared/

The US House price drop was widespread, and even San Francisco saw a drop of 72 months (= 6 years)

peak-prices-san-francisco-detroit-2.jpg

- so we cannot expect that the entire drop will always be confined to 3-5 years

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EXCELLENT Report - from MDS and UBS !

Summary

UBS's View, 25 April 2017

: Singapore residential prices have fallen 11.7% from their Q3'13 peak.
We expect the downtrend in Singapore residential prices to continue, given rising interest rates, elevated vacancy rates and slower economic growth. Our multivariate regression model ... is pointing towards a 4.5% fall in Singapore residential prices in 2017, fairly close to our country team's estimate of a 6% drop.

: HK : We assume three Fed rate hikes in each of 2017 and 2018, in line with our US economists' revised view. We have assumed the Fed hikes are passed through into higher HK mortgage rates... We estimate absorbing two further hikes ... Our multivariate regression model suggests HK residential price growth of +1% in 2017 and -3.4% in 2018. We note our country team is more conservative, assuming Hong Kong residential prices decline 5-7% in 2017..

: Manila, PH :

Launches in Metro Manila declined 12% in 2016 but take-up improved (+25%) according to Colliers, resulting in a decline in inventory levels from a peak of 2.6 years to 1.7 years. We expect the developers to respond with a pick-up in launches and capex this year. Residential supply is forecast by Colliers to grow by 54% over the next five years, putting downward pressure on rental rates. A decline in rental yields from 6% to 5% may put into question the ability of residential prices to hold in 2018...

: Bangkok, TH :

We expect 2017 to be a better year than last for Thai property given more favourable demand-supply dynamics in the condo segment. House prices are expected to rise moderately on the back of land price appreciation and an increase in the proportion of new condo launches in the high-end segment; ... a short-term strategy employed by a number of big developers to navigate through rising rejection rates in the low-end segment. In 2017, we expect moderately positive house prices growth for the primary market, given rising land prices, and an increase in the proportion of new condo launches in the high-end segment: 85% of the buyers are Thais and the remaining 15% are foreigners. For the secondary market, we expect prices to be flat. In Bangkok there can be a ~30% price difference between primary and secondary pricing, with local consumers strongly favouring primary over secondary property for purchase.

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