July 2012: Landed Homes and Industrial Properties are Still Hot

Landed properties still in hot demand

Straits Times: Sat, Jul 28
LANDED home prices moved up a notch in the second quarter as demand for the pricey properties stayed buoyant. Values increased 0.4 per cent from the previous three months, according to the Urban Redevelopment Authority (URA) index out yesterday. Terraced homes showed the largest increase at 1.2 per cent, followed by semi-detached at 0.6 per cent, while detached homes declined by 0.4 per cent. Property consultants noted that landed home prices have outperformed those of private flats since the third quarter of 2010. Over the last seven years, prices of such homes have doubled, said Knight Frank research head Png Poh Soon. They are perceived as better investment 'given the limited supply of landed properties in land-scarce Singapore with a growing population, rising affluence of local families and influx of new wealthy citizens'. One example of the robust sector can be found at Haus@Seran- goon Garden where buyers have snapped up 39 out of 50 landed houses released in just two weeks. The two-storey homes - with an attic and basement - developed by City Developments and Hong Realty do not come cheap. A 1,615 sq ft intermediate terraced unit goes for at least $2.4 million while at least $2.8 million is needed for a 2,284 sq ft corner home. Mr Png noted that landed prices have 'risen substantially' since the second quarter of 2009, rising nearly 80 per cent by the second quarter this year. Terraced homes had the highest price increase of 84 per cent over that three-year period. Detached house prices were up 83 per cent while semi-detached home prices rose 71 per cent. Terraced homes in the west - favoured for its lower absolute prices - have risen 97 per cent in the past three years while those in the east and north-east were up 89 per cent, Mr Png said. 'Demand for terraced homes has increased along with rising mass affluence of local buyers, who upgrade their homes for larger living spaces... and to capitalise on the current low favourable interest rates,' said Mr Png. Savills Singapore data reveals a similar rosy picture. Research head Alan Cheong said that over the last decade, landed prices have grown at an average of 7 per cent a year, exceeding the increases for apartments and condos. R'ST Research director Ong Kah Seng pointed to a 20 per cent dip in prices between July 2008 and June 2009 but they have picked up at least 70 per cent since. He cited a 1,701 sq ft terraced house in Frankel Estate that was sold for $2.9 million in March, well up on the $1.55 million it went for last year. Consultants said demand for landed properties is expected to stay resilient. 'The outlook is excellent... As more private properties are derived from government land sales, the limited pool of freehold landed properties find their share of the total housing stock shrink over time,' Mr Cheong said. It 'pays for upgraders to aspire to move into this type of housing' as the relatively quick capital gains 'will make it a superior hedge against not only inflation but also against social-class stagnation'. But Mr Ong said well-heeled buyers may look to non-landed homes in prime locations for their better rental yields and demand. Property investor Magdalene Lee, 54, bought a house at Haus@Serangoon Garden for about $2.4 million on the first day of its launch. 'I thought the price was reasonable, and within my budget... It works out to less than $700 per sq ft, cheaper than some condos asking for $1,000 psf,' she said. 'It'll also be easy to rent out because it's near international schools, in a new neighbourhood but established residential area.' [e-mail] Source: The Straits Times
Industrial property prices continue on upward path	Straits Times: Sat, Jul 28
PRICES in the sizzling industrial market continued to defy gravity in the second quarter, shooting up 8.4 per cent. The hefty increase in the three months to June 30 came on the back of a sharp 7.3 per cent surge in the first three months of the year, while other sectors slowed. Prices overall have rocketed 48 per cent since the start of last year, driven by continued investor interest and economic expansion. Such robust numbers are raising concerns that the once-unglamourous sector is getting a bit too frothy, while smaller companies are complaining about rents going up on the back of higher valuations. Industrial rents were up 2.8 per cent in the second quarter, adding to the 1.8 per cent increase in the previous three months, according to the Urban Redevelopment Authority yesterday. It was a completely different picture on the commercial front, with prices and rents mostly flat or dipping slightly. Office rents fell 0.5 per cent, while sale prices eased by 0.9 per cent. However, prices of shop spaces rose 0.7 per cent, although rents fell 0.3 per cent. The hot spot these days is clearly in the industrial sector, with some eye-watering prices being recorded. Some units at freehold project AZ@Paya Lebar, for example, have been going for more than $1,000 per sq ft (psf). Savills Singapore research head Alan Cheong expects industrial price gains to 'remain at elevated levels' for the rest of the year. 'Prices are pushing northwards as new high-tech firms such as game developers and social media companies enter the fray,' he noted. 'Occupiers in industrial estates like Defu, which is being redeveloped, are also beginning their move out to alternative locations. 'There is extreme fluidity in the market and, in the process, rentals will similarly be bootstrapped up.' Colliers International research and advisory consultant Tay Huey Ying said low interest rates and cooling measures in the residential sector will continue to favour the strata-titled industrial market. She expects prices and rents to continue increasing for the rest of the year, though at a slower pace. Small and medium-sized enterprises do not need reminding of that. Mr Thomas Pek, managing director of Tai Hua Food Industries, said the rent for his industrial facility at Jalan Besut went up 5.5 per cent in April, which came on top of other increases over the past few years. 'If rents keep increasing, we might have to move a portion of our business to Malaysia eventually,' he added. 'It's not something we want to do, but no one wants to make a loss. The high costs make it hard for us to be competitive.' The trend cannot go on, according to one industrial developer, who said quarterly price gains of 7 per cent to 8 per cent are 'unsustainable'. The developer, who declined to be named, added that the freehold industrial segment, in particular, might be in a bubble, given many projects like M38 at Jalan Pemimpin are setting benchmark prices and crossing the $1,000 psf mark. There have been some government attempts to rein in prices. The latest move came last month, when lease terms for industrial sites under the government land sales programme to be sold from now to December were capped at 30 years. More sites of smaller size and shorter tenure will continue to be released to meet the demand of industrialists who might prefer to build their own facilities rather than rent. A bumper supply of industrial sites has also been pushed out. [e-mail] Source: The Straits Times