Range of data points to uptick in market, while conditions for recovery may have legs
Comments from CapitaLand’s chief executive officer Lim Ming Yan last week that there are signs the private residential market could be bottoming out made market watchers sit up for its positive tone from Singapore’s largest property player.
The comments jive with a range of data pointing to an uptick in the market. The latest second-quarter numbers from the Urban Redevelopment Authority (URA) show that prices fell 0.1 per cent, less than the 0.4 per cent in the second quarter. But is the market bottoming out to remain flat, or could Singapore even be embarking on a fresh property cycle?
While no other major developer has been as outspoken recently as Mr Lim, their bids have done the talking for them in two ways.
One is through the bullish bids by developers at the government land sales site tenders. The latest was an aggressive top offer of $446.3 million from a joint venture between Keppel Land and Wing Tai Holdings in Serangoon; 16 players were part of the crowded field. Recently, too, a 99-year leasehold site in Stirling Road went for a record $1 billion to a Chinese consortium in a heated contest featuring 13 bidders.
Another is through the en-bloc market. In contrast to the $1 billion transacted last year, as of this month, the amount already stands at $2.5 billion. This includes smaller developments such as 1 Draycott Park in the prime Orchard Road area as well as the wallet-busting amount of $575 million for former HUDC estate Rio Casa by a consortium led by Oxley Holdings.
Even as the developers are looking more optimistic than a year ago, other indicators are also looking up.
The vacancy rate, which stood a year ago at 8.9 per cent, fell to 8.1 per cent in the first quarter and remained at that level in the second quarter. This indicates that the market is better able to digest some of the completed units coming onstream without the proportion of vacant units rising.
Another aspect of the market which also bears noting is that the number of unsold units continues to fall. At the end of the second quarter, it stood at 15,085 (executive condominiums not included), lower than the 15,930 units as at the end of the first quarter.
At the same time, transaction volumes are also sustained. Previously, while new sales started to edge up, the resale market had remained stuck in the doldrums. But in this second quarter, even the resale market saw a lift with the data showing that resale transactions surged by 70.4 per cent to 3,698 units.
Taken as a whole, the private residential market has now logged a double-digit fall – that of 11.6 per cent – since its peak in the third quarter of 2013. For July, the latest SRX numbers estimate that resale prices of non-landed private homes declined by 0.5 per cent compared with June.
