Property Times

Singapore residential demand Q1 2014

Change in buying patterns amidst fall in transactions

DTZ Research



27 May 2014

Contents
Transactional overview 2
Buyers profile 3
Price analysis 4
Size analysis by purchaser address 5
Outlook 6

Author
Hanna Safdar
Research Analyst
+65 6393 2382
hanna.safdar@dtz.com

Contacts
Lee Lay Keng
Regional Head (SEA), Research
+65 6393 2329
laykeng.lee@dtz.com

Ong Choon Fah
Regional Head (SEA), Consulting &
Research
+65 6393 2318
choonfah.ong@dtz.com

Dominic Brown
Head of South East Asia and Australia
New Zealand Research
+ 61 431 947 161
dominic.brown@dtz.com

Hans Vrensen
Global Head of Research
+ 44 (0)20 3296 2159
hans.vrensen@dtz.com
Transactions of private homes fell by approximately 45% quarter-on-quarter
(q-o-q) in Q1 2014 to 2,406 units, the lowest number of units transacted in a
quarter since Q4 2008. The q-o-q fall in transactions was greater in the primary
market as developers scaled back on new launches in Q1.

While there was a decrease in the number of transactions across all buyer
groups, the proportion of purchases by non-Singaporeans increased q-o-q by
4.0 percentage-points in Q1 to 29%. This was the highest proportion of private
home purchases by non-Singaporeans since the Additional Buyers Stamp Duty
(ABSD) was first introduced in December 2011.

Mainland Chinese buyers were the most active non-Singaporean buyers in Q1,
as their purchases made up 31% of all transactions by non-Singaporeans.
Malaysian buyers were close behind at 28%, while the share of private home
purchases by Indonesians and Indians were at 12% and 11% respectively.
Private home purchases by Indonesian buyers in Q1 2014 reached a new low
since Q1 2009, coming in at 81 units.

In Q1, 42% (1,004 units) of private homes purchased were below $1.0m, while
another 30% were priced between $1-1.5m. The proportion of units transacted
below $1.0m amongst the top four groups of non-Singaporean buyers alone
was higher, representing 50% of their overall purchases (Figure 1).

The proportion of buyers with public housing (HDB) addresses increased by 4.0
percentage-points in Q1 to 47%. Compared to buyers with private addresses,
buyers with HDB addresses were keener on smaller-sized units. While this has
been an ongoing trend, it has become more pronounced in the last year, after
the higher ABSD and Total Debt Servicing Ratio (TDSR) rules came into effect.

The expectation of price declines will continue to weigh on buying sentiment
going forward. Both potential homeowners and investors will be more inclined
to hold back on opportunities to buy until market conditions are more certain.

Figure 1
Private residential transactions by top non-Singaporean buyers by overall
quantum (Q1 2014)

Source: URA REALIS, 20 May, DTZ Research
0
20
40
60
80
100
120
140
>$1 mill > $1 mil to
$1.5 mil
> $1.5 mil
to $2 mil
> $2 mil to
$3 mil
> $3 mil to
$4 mil
> $4 mil to
$5 mil
> $5 mil
Indonesian Chinese Indian Malaysian
Singapore residential demand Q1 2014
www.dtz.com Property Times 2

Transactional overview

This report provides an update on the profiles of the buyers
of private residential properties in Singapore in both the
primary and secondary markets in Q1 2014. The demand
analysis is based on caveats
1
lodged for both primary and
secondary sales. Secondary sales refer to both resales and
sub-sales.

Transactions
2
of private homes, proxied by caveats lodged,
fell by around 45% q-o-q from 4,351 units transacted in the
previous quarter to 2,406 units in Q1. The caveats
comprised 1,059 units sold in the secondary market and
77% (1,347 units) of the 1,744 units sold by developers
3

(Figure 2). Cumulatively, this was the lowest number of
units transacted in a quarter since Q4 2008.

The q-o-q fall in transactions was greater in the primary
market as developers scaled back on new launches in Q1.
Alongside a 25% q-o-q drop in the number of new units
launched in Q1, primary market transactions plummeted by
54.6%. The secondary market, on the other hand, saw a
comparatively smaller q-o-q fall of 23.3% in the number of
transactions in Q1.

If a similar pace of buying continues for the rest of the year,
the total volume of transactions in 2014 could reach a new
10-year historical low, coming in at below 10,000 units.





1
Caveats were downloaded from URA REALIS on 20 May 2014. Some caveats may not be lodged
immediately after an option is exercised. Records in the transaction database are therefore incremental over
time. Hence q-o-q/y-o-y declines are best proxies for maximum declines while q-o-q/y-o-y increases may
reflect minimum increases.
2
Caveats lodged are used as a proxy for sales transactions, thus the terms transactions and caveats are
used interchangeably in this report.
3
The total number of units sold by developers is based on regular surveys carried out by the Urban
Redevelopments Authority (URA).
Figure 2
Private residential transactions based on caveats

Source: URA REALIS, 20 May, DTZ Research

0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Q
1

1
1
Q
2

1
1
Q
3

1
1
Q
4

1
1
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1

1
2
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2

1
2
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2
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1
2
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1

1
3
Q
2

1
3
Q
3

1
3
Q
4

1
3
Q
1

1
4
Sold in primary market Sold in secondary market
No. of launched units
Avg 8,057 units
per quarter
Avg 8,835 units
per quarter
Avg 5,502 units
per quarter
Singapore residential demand Q1 2014
www.dtz.com Property Times 3

Buyers profile

Increase in the share of non-Singaporean purchases
While there was a decrease in the number of transactions
across all buyer groups, the proportion of private home
purchases by non-Singaporeans (PRs and foreigners)
increased by 4.0 percentage-points q-o-q in Q1 to 29%
(Figure 3). This is the highest proportion of private home
purchases by non-Singaporeans since the ABSD was first
introduced in December 2011.

This could reflect that PRs and foreigners are getting more
used to paying the ABSD on residential property purchases
in Singapore. Conversely, the lower share of purchases by
Singaporeans in Q1 could indicate that this group of buyers
is increasingly affected by the ABSD as well as the TDSR
rules that were implemented in end June last year.

In addition, as most Singaporeans already own one
property, those who are waiting to purchase a second or
subsequent property, could continue to stay on the
sidelines in anticipation of further price declines before
entering the market. Correspondingly, the proportion of
purchases by Singaporean buyers fell to its lowest since the
ABSD was first introduced, to 70% (1,689 units) in Q1.

Amongst the non-Singaporeans, mainland Chinese buyers
were the most active in Q1. They bought 218 units, making
up 31% of purchases by non-Singaporeans (Figure 4).
Malaysian buyers were close behind, accounting for 28% of
non-Singaporean purchases in Q1, while purchases by
Indonesian and Indian buyers made up 12% and 11%
respectively. In absolute terms, private home purchases by
Indonesian buyers in Q1 2014 reached a new low since Q1
2009, coming in at 81 units.

Malaysians and mainland Chinese seek out new launches
while secondary market is more popular among Indians
Private home purchases by Malaysian and mainland Chinese
buyers have consistently been concentrated in the primary
market. For Malaysian buyers, their 142 transactions in the
primary market in Q1 accounted for more than 70% of their
total transactions in the quarter. For mainland Chinese
buyers on the other hand, their proportion of primary
market transactions was slightly lower at 60% (130 units)
(Figure 5).

As a large proportion of their purchases were in the primary
market, private home purchases by mainland Chinese and
Malaysian buyers increased in Districts 19, 28, 21 and 23 in
Q1. Major new launches during the quarter included The
Hillford, Riverbank @ Fernvale and Rivertree Residences.

Interestingly, it was noted that while the majority (75%) of
primary sales purchases by Malaysians were by PRs, the
split was more equal for mainland Chinese buyers where
49% of their primary sales purchases were by PRs.

In contrast to the other top three groups of non-
Singaporean buyers, private home purchases by Indian
buyers were mainly in the secondary market. In Q1, 58
units, or 75%, of their purchases were in the resale market.
Out of these 58 resale units transacted, 56 were bought by
PRs.

Figure 3
Profile of purchasers by residential status

Source: URA REALIS, 20 May, DTZ Research
Figure 4
Profile of purchasers by nationality

Source: URA REALIS, 20 May, DTZ Research
Figure 5
Profile of purchasers by nationality and sale type in Q1 14

Source: URA REALIS, 20 May, DTZ Research
68%
79%
73%
78%
75% 73%
70%
14%
15%
17%
14%
15% 16%
19%
16%
5%
10% 7% 9% 9% 10%
3% 1% 1%
0%
20%
40%
60%
80%
100%
Q
1

1
1
Q
2

1
1
Q
3

1
1
Q
4

1
1
Q
1

1
2
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2

1
2
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3

1
2
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1
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1
3
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2

1
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3

1
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Q
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1
3
Q
1

1
4
Singaporeans Singapore PR Foreigners Companies
ABSD ABSD
2% 1% 1%
TDSR
0%
12%
28%
31%
11%
18%
0%
20%
40%
60%
80%
100%
2009 2010 2011 2012 2013 Q1 14
Indonesia Malaysia China India Others
0%
20%
40%
60%
80%
100%
Indonesia Malaysia China India Others
Primary Sales Secondary Sales
Singapore residential demand Q1 2014
www.dtz.com Property Times 4

Districts 9, 10, 11 losing shine with Indonesian buyers
Indonesian buyers have in the past displayed greater buying
interest in the prime districts of 9, 10 and 11. This trend
appears to have softened over the past two quarters as
their purchases in these prime districts accounted for only
19% and 17% respectively of all their private home
purchases in Q1 2014 and Q4 2013 (Figure 6). This is
significantly lower than the average of 32% between Q1
2011 and Q3 2013. As a consequence, Indonesian
purchasers have shown a greater interest in other districts
in Q1, namely Districts 19 and 28, which respectively
accounted for 19% and 15% of all purchases.

Price analysis

Most units transacted in Q1 were less than $1m
In Q1, 42% (1,004 units) of all private homes purchased
were transacted at prices below $1.0m, while another 30%
(713 units) were priced between $1-$1.5m. In comparison,
33% and 34% of private home purchases in 2013 were
priced at below $1.0m and between $1-1.5m respectively.

The top four groups of non-Singaporean buyers comprised
mainland Chinese, Indians, Indonesians and Malaysians.
Across these groups, 50% of units transacted in Q1 cost
$1.0m or less in overall quantum. This represented the
highest proportion since Q1 2012, when units below $1.0m
made up 52% of all private home purchases by these four
groups. However, in absolute terms, the 644 units
transacted below $1.0m in Q1 2012 were still substantially
higher than the 287 units sold in Q1 2014.

In Q1, Malaysian buyers purchased 131 units in the sub-
$1.0m range, the highest out of these top four groups of
non-Singaporean buyers. In contrast, private home
purchases by mainland Chinese buyers were more spread
out between units less than $1.0m and units costing
between $1.0-1.5m (Figure 7).

Private homes less than $1.0m dominate purchases by
Indonesian buyers in Q1
Coinciding with the fall in purchases by Indonesian buyers in
the prime districts of 9, 10 and 11, the proportion of private
residential units above $2.0m bought by Indonesians fell to
20% in Q1, down by 10 percentage-points q-o-q (Figure 8).
Private home purchases above $2.0m represented only 16
out of their 81 purchases for the quarter.

This compares against the 34% of private home purchases
above $2.0m by Indonesians in 2013. This fall in purchases
of private residential units with a larger price quantum
suggests increasing price sensitivity amongst Indonesian
buyers. Indeed, the majority, or 35%, of units bought by
Indonesian buyers in Q1 cost $1.0m or less. Although
Singapore property remains an attractive option for
Indonesian buyers, especially in light of the upcoming
presidential elections in Indonesia in July, Indonesian buyers
could be holding back on their purchases or lowering their
budgets, due in part to the slowing economic growth in
their home country.

Figure 6
Major buying activity by districts of Indonesian buyers

Source: URA REALIS, 20 May, DTZ Research
Figure 7
Private home purchases by top non-Singaporean buyers by
overall quantum (Q1 2014)

Source: URA REALIS, 20 May 2014, DTZ Research
Figure 8
Indonesian private home purchases by price range

Source: URA REALIS, 20 May 2014, DTZ Research
33%
25%
41%
19%
67%
75%
59%
81%
0%
20%
40%
60%
80%
100%
Q
1

1
1
Q
2

1
1
Q
3

1
1
Q
4

1
1
Q
1

1
2
Q
2

1
2
Q
3

1
2
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4

1
2
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1

1
3
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2

1
3
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3

1
3
Q
4

1
3
Q
1

1
4
Districts 9,10,11 Other districts
28
22
92
69
36
25
131
42
0
20
40
60
80
100
120
140
>$1 mill > $1 mil to
$1.5 mil
> $1.5 mil
to $2 mil
> $2 mil to
$3 mil
> $3 mil to
$4 mil
> $4 mil to
$5 mil
> $5 mil
Indonesian Chinese Indian Malaysian
0%
20%
40%
60%
80%
100%
Q
1

1
1
Q
2

1
1
Q
3

1
1
Q
4

1
1
Q
1

1
2
Q
2

1
2
Q
3

1
2
Q
4

1
2
Q
1

1
3
Q
2

1
3
Q
3

1
3
Q
4

1
3
Q
1

1
4
< $1 mill > $1 mil to $1.5 mil > $1.5 mil to $2 mil >$2 mill
Singapore residential demand Q1 2014
www.dtz.com Property Times 5

Size analysis by purchaser address

More buyers with public housing (HDB) addresses in the
primary market
For all private residential transactions in Q1, the proportion
of buyers with HDB addresses increased by 4.0 percentage-
points to 47% (Figure 9). However, the 1,127 transactions
by buyers with HDB addresses in Q1 2014 still represented
the lowest volume recorded since Q4 2008. Of this, 761
units were primary market transactions while another 366
units were purchased in the secondary market (Table 1).

In the primary market, private home purchases by buyers
with HDB addresses in Q1 were 30% higher than those with
private addresses who only purchased 586 units. This
represents a reversal from the previous quarter where
primary sale purchases by buyers with private addresses
outstripped the number of purchases by buyers with HDB
addresses by close to 15%.

This could be due to the location of launches in Q1 2014
which were set in close proximity to HDB estates within
Sengkang, Punggol and Yio Chu Kang, compared to Q4 2013
where the bulk of new launches were in the Core Central
Region (CCR). It is therefore likely that these developments
attracted a greater level of demand from HDB upgraders in
Q1, who usually prefer to stay within the same
neighbourhood.

Buyers with HDB addresses gravitate towards smaller-
sized units
Buyers with HDB addresses were keener on smaller-sized
units. While this has been an ongoing trend, it has become
more pronounced in the last year, after both the higher
ABSD and TDSR rules came into effect.

In Q1, 53% (573 units) of all non-landed private home
purchases by HDB addressees were less than or equal to
800 sq ft in size. This compares against the proportion of
49% and 45% respectively in Q4 2013 and Q3 2013 (Figure
10). This larger proportion of smaller-sized units amongst
private home purchases by HDB addressees could be due to
them being more active in the primary market. Developers
of new launches have kept units small so that the overall
price quantum remains affordable for potential buyers, in
light of the TDSR rules.

On the other hand, a significantly smaller proportion of 31%
of non-landed private home purchases by buyers with
private addresses in Q1 were for units less than or equal to
800 sq ft. Instead, the bulk, or 46%, of their purchases were
for units sized between 1,000 2,000 sq ft.
Figure 9
Breakdown of units by purchaser address type

Source: URA REALIS, 20 May 2014, DTZ Research
Table 1
Breakdown of units by sale type and purchaser addresses
Buyer address
Primary
sales
Secondary
sales
Primary
sales
Secondary
sales
Q1 2014 Q4 2013
HDB address
761
(68%)
366
(32%)
1,380
(74%)
487
(13%)
Private address
586
(46%)
693
(54%)
1,590
(64%)
894
(36%)
Source: URA REALIS, 20 May 2014, DTZ Research
Figure 10
Breakdown of non-landed private homes purchased by
HDB addressees
Source: URA REALIS, 20 May 2014, DTZ Research
30%
35%
40%
45%
50%
55%
0
3,000
6,000
9,000
12,000
15,000
Q
1

1
1
Q
2

1
1
Q
3

1
1
Q
4

1
1
Q
1

1
2
Q
2

1
2
Q
3

1
2
Q
4

1
2
Q
1

1
3
Q
2

1
3
Q
3

1
3
Q
4

1
3
Q
1

1
4
Purchasers with HDB addresses
Purchasers with private addresses
% purchasers with HDB addresses (RHS)
20%
25%
30%
35%
40%
45%
50%
55%
60%
0
1,000
2,000
3,000
4,000
5,000
Q
1

1
1
Q
2

1
1
Q
3

1
1
Q
4

1
1
Q
1

1
2
Q
2

1
2
Q
3

1
2
Q
4

1
2
Q
1

1
3
Q
2

1
3
Q
3

1
3
Q
4

1
3
Q
1

1
4
Private home purchases <800 sq ft by buyers with HDB addresses
Other private home purchases by buyers with HDB addresses
% of total units (<800 sq ft) (RHS)
Singapore residential demand Q1 2014
www.dtz.com Property Times 6

Outlook

Q1 2014 recorded the lowest level of buying activity in the
primary and resale markets since Q4 2008. Although global
economic sentiment remains moderately positive, the TDSR
and earlier cooling measures have cast a shadow on the
residential market in Singapore.

In the secondary market alone, the 1,059 transactions in Q1
2014 represented the lowest volume recorded since Q1
2003. If the pace of buying continues as such, the total
number of private residential units transacted for 2014
could fall below 10,000 units, a new 10-year historical low.

Largely owing to the impact of the TSDR framework which
has resulted in limited financing capabilities, a growing
proportion of buyers are observed to eschew units with a
larger quantum value. Instead, demand is increasingly
gravitating towards units below $1.0m. This could also
potentially create a change in the buying patterns of foreign
buyers, especially of the Indonesians, who have been
known in the past to favour the more prime districts of 9,
10 and 11.

The expectation of price declines will continue to weigh on
buying sentiment in the upcoming months, especially after
the Minister for Finance has indicated that cooling
measures will not be removed yet. Both potential
homeowners and investors will be more inclined to hold
back on opportunities to buy until market circumstances are
more certain. In view of this, developers for upcoming
launches are likely to continue to highlight product
differentiation and rely on realistic and competitive pricing
strategies to entice buyers.

Notwithstanding, there are still buyers active in the market.
For example, it was reported that 270 units have been sold
at Commonwealth Towers after its launch in early May
while City Developments Ltd also sold 490 units out of 600
units launched at Coco Palms. Consequently, we expect that
projects with the advantage of good location and
competitive pricing, as highlighted above, will continue to
receive healthy interest.

Singapore residential demand Q1 2014
www.dtz.com Property Times 7

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DTZ Business Contacts


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Henry Arundel
Phone: +61 (0)2 9492 8818
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Residential
Edmund Tie
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Resale
Thomas Lee
Phone: +65 6725 3989
Email: thomas.lee@dtz.com


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Edmund Tie
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DISCLAIMER
This report should not be relied upon as a basis for entering into transactions without seeking
specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no
responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this
report. Information contained herein should not, in whole or part, be published, reproduced or
referred to without prior approval. Any such reproduction should be credited to DTZ.
DTZ May 2014