Issue 188

Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2

FROM THE

EDITOR

Mr. Propwises 2015 Singapore Property

Welcome to the 188th edition of the

Singapore Property Weekly.

Market Outlook

Hope you like it!

p9

Singapore Property News This Week

p13

Resale Property Transactions

Mr. Propwise

(December 9 December 16 )

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SINGAPORE PROPERTY WEEKLY Issue 188

Mr. Propwises 2015 Singapore Property Market Outlook

By Mr. Propwise
How quickly yet another year has flown by.
Its that time of the year where I look back at
whats happened over the past twelve
months, then try and say something intelligent
about the future direction of the property
market over the next year.
As always, 2014 was an interesting year for
the property market. Id sum it up as the year
when policy finally worked. In 2013, despite
seven rounds of cooling measures and a
property tax hike,

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SINGAPORE PROPERTY WEEKLY Issue 188

the residential property market simply
shrugged it off for the first three quarters,
resulting in the URA Property Price Index
(PPI) clocking a positive 2.0% move.
TDSR the straw that broke the property
markets back
But the figurative straw that broke the camels
back was the MAS Total Debt Servicing Ratio
(TDSR) framework introduced at the end of
June 2013, which significantly limited the
ability of buyers to lever up and buy property
despite the signs pointing to an overheated
and overpriced market. Really, the MAS was
just trying to save buyers from themselves
(sometimes there are benefits to living in a
nanny state).
This final straw then led to four consecutive
quarters of decline of the PPI from 2013Q4 to
2014Q3 for a total decline of 3.9% over this
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period. This figure likely understates the

magnitude of the decline as we know that
developers have been offering all kinds of
incentives (e.g. tax rebates, renovation
vouchers etc.) to get buyers to bite without
having to lower the headline price.
How much further will the property market
fall?
Looking at monthly property indices such as
the SRX Property Index (SPI) and the NUS
Singapore Residential Price Index (SRPI)
suggests that the Fourth Quarter of
2014should to continue to be weak, although
the decline is likely to be small.
And despite the warning, threatening and
finally pleading of the property developers
and agents, the government is right the
correction of property prices so far has been
very mild.
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SINGAPORE PROPERTY WEEKLY Issue 188

and then more recently from 2008 to 2009
during the Global Financial Crisis. During
those downturns, the URA PPI corrected by
19.9% and 24.9% respectively. So if I had to
hazard a guess, Id say wed have another 10
to 20 percent more downside to go before the
government would deem the correction to be
meaningful and start easing some of those
measures.
Figure 1 Change in URA PPI since 2000
(Source: URA,
PropertyMarketInsights.com)
The million dollar question is what does the
government think a meaningful correction
is? Its important because theyve indicated
that the property cooling measures are here
to stay until such a correction has occurred.
We can get some clues from the previous two
corrections that occurred from 2000 to 2004
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3 reasons why the market will continue to

be weak in 2015
There are three reasons why the current
market weakness is likely to continue into
2015 and beyond.
First, the HDB Resale Price Index (RPI) has
continued to decline and has been weaker
than the URA PPI since 2013Q2. A doubling
of HDB prices since 2005 created a wealth
effect that supported mass market prices as
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SINGAPORE PROPERTY WEEKLY Issue 188

HDB flat owners could sell their unit at a high
price and upgrade to a private condominium.
Now that HDB prices are falling, this effect
will shift into reverse gear, where HDB
owners find it difficult to sell their flat at a
good price, thus sapping demand from the
mass segment of the market, which
incidentally has been the strongest segment.

Second, record upcoming completions are

likely to put pressure on both property prices
and rentals, especially coupled with slower
expected
population
growth
as
the
government continues to tighten the inflow of
foreigners coming into Singapore due to the
locals unhappiness. Conspiracy theorists
posit a loosening of the foreign talent spigot
post a surprise 2015 General Election, but
really, who knows?
Based on URA data, there are close to
75,000 units of private residential properties
that will be completed in the next few years.
Looking at the breakdown of supply, 2015
and 2016 will see completions of over 20
thousand units per year. This is nearly twice
the yearly average of fewer than 10 thousand
units per year between 1996 and 2012.

Figure 2 URA PPI vs HDB RPI (Source:

URA, HDB, PropertyMarketInsights.com)
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SINGAPORE PROPERTY WEEKLY Issue 188

multiple rounds of Quantitative Easing (QE)
by the US Federal Reserve post the Global
Financial Crisis. This has propped up the
prices of most yield-based assets, including
property. While the Fed has indicated a gentle
pace of QE tapering, the market reaction to
any significant tightening of liquidity could be
stronger and more violent than people expect.

Figure 3 Upcoming private residential

supply (Source: URA,
PropertyMarketInsights.com)
And if we add on the completions of public
housing, the upcoming supply tsunami looks
daunting.
Prospects of QE tapering
Finally, we should keep in mind that the root
cause of the buoyant property prices is the
protracted low interest rate environment after
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Figure 4 URA PPI vs 3-Month SIBOR

(Source: URA,
MAS,PropertyMarketInsights.com)
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SINGAPORE PROPERTY WEEKLY Issue 188

And even if interest rates do not shoot up
right away, borrowing costs can still rise as
banks charge a higher margin (SIBOR + X%)
to give themselves a buffer against rising
interest rates and greater mortgage
defaults.And when borrowing costs rise, the
stress on heavily leveraged buyers will go up,
and the attractiveness of property itself as an
asset class also decreases as the net
cashflow it provides falls. This will be
exacerbated if rentals are also under
pressure at the same time.
Ive talked about this before, but I think many
property buyers are still blas to the impact of
rising mortgage rates (whether from rising
interest rates or banks raising their lending
spread) on their ability to meet their monthly
payments, so I hope to make it more concrete
by using an example.

Lets take the case of the Lees, a young

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professional couple who bought their dream

condo for $2 million (before the TDSR rules
came into effect). They took an 80% loan
($1.6 million) with a 30-year tenor. With the
current low floating mortgage rate of 1.2%,
their monthly payment is $5,294, a
manageable 50% of their total household
income.
Fast forward a couple of years, when the Fed
has raised rates and mortgage rates in
Singapore have returned to their long term
average of around 4%. The monthly payment
will get re-priced upwards to $7,639, and now
accounts for a hefty 72% of their household
income (assuming no pay increments). This
represents a 44% increase.
The Lees are starting to sweat, and are
barely making ends meet. And Lord forbid if
either of them were to lose their job. Not to
mention that this rise in rates is coupled with
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SINGAPORE PROPERTY WEEKLY Issue 188

weak rentals and record completions, and
property prices falling every quarter.
Have you imagined
happening to you?

such

scenario

So what should buyers and investors do?

I do not like making forecasts about when or
how much property prices will fall, because I
believe the exact timing and magnitude of
property price movements is dependent on
too many unknowable events. Instead, I
prefer to base my property investment
decisions (there are different considerations if
you are buying for own stay) on my analysis
of where we are in the cycle and what has
historically been the best actions to take at
each point.

know that we are currently in the Early Bear

stage of the Property Market Cycle Model.
This means that the best thing to do is to sit
tight and wait for further correction before
entering. The time to buy will come when we
enter the Late Bear and Early Bull stages of
the market. You might have to wait for years,
but its much better than giving in to the
pressure to buy now at a high price and then
see your life savings get wiped out, dont you
agree?
Heres wishing everyone a Happy New Year
and a Healthy and Wealthy 2015!
By Mr. Propwise, the founder of Singapore
property blog www.propwise.sg, which aims
to help people make better real estate buying,
selling, renting and investing decisions.

Members of Property Market Insights will

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SINGAPORE PROPERTY WEEKLY Issue 188

Singapore Property This Week

Residential
More properties sold at auctions in Q4
According to JLL, properties at auctions sold
at a faster rate in Q4 as compared to the
previous quarters. JLL said that as buyers
and sellers expectations converge, property
sales at auctions have picked up in 2014. In
its report, JLL said that to meet buyers
expectations, sellers have been more willing
to lower their prices. In Q4 this year, the
proportion of properties sold during their first
auction listing has increased to 90 percent
from 80 percent in Q3. As such, $13.7 million
worth of properties were sold at auctions in
Q4 this year. However, this year, the total
sales value of properties sold at auctions fell
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by 27 percent from that in 2013 to $72.5

million. Nonetheless, Mok Sze Sze from JLL
is optimistic about property sales at auctions
in the coming year. She believes that there
will be a steady increase in mortgagee sales.
Despite the weak leasing market, buyers
investment sentiments have not been
affected, added Mok.
(Source: Business Times)
Commercial
Centurion
and
LianBeng
Group
collaborates to build workers dorm
In collaboration with Centurion Corporation,
LianBeng Group will build a 7,900-bed
dormitory at JalanPapan.
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SINGAPORE PROPERTY WEEKLY Issue 188

This dormitory will be catered to workers from
the process industry, and it will include a
3,000 sq metre training centre for residents of
the dormitory. The dormitory is expected to be
about 1.5 ha and should be completed by
2016. It will be located near Jurong Island so
that workers may commute to work easily.
The tender for the dormitory was awarded by
Association of Process Industry (Aspri), which
aims to increase productivity of workers
through skills upgrades and other training.
(Source: Business Times)
Two tenders awarded for industrial sites

An industrial site at Tuas South Street 9 and

another at Tampines North Drive 1 has been
awarded by JTC Corporation to Prospaq
Group and Goldprime Land respectively. The
former plot was awarded for $6.88 million
while the latter plot of land was awarded for
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$64.4 million. The industrial site at Tuas is

zoned for Business 2 use and has a gross
plot ratio of 1.0. It is 8,369 sq metres large
and has a 20-year-and-8-months tenure. On
the other hand, the industrial site at Tampines
is larger at 27,395.2 sq meters. It has a gross
plot ratio of 2.5 and its tenure will last 30
years.
(Source: Business Times)
DTZ expects rental demand for small retail
units to fall
According to DTZ, rental demand for smaller
retail units may fall as competition from eretailers heightens. Furthermore, DTZ
predicts the low labour supply and tough
operating environment will affect rental
demands for such retail units. Nonetheless,
capital values of strata retail space increased
by 1.3 percent in 2014 from 2013 in
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SINGAPORE PROPERTY WEEKLY Issue 188

Orchard/Scotts Road and other suburban
areas, said the Business Times. This is
despite the implementation of the total debt
servicing ratio. However market experts
caution that rentals for retail space may fall
further in Q4 this year due to reduced
shopper traffic particularly in the financial
districts. According to DTZ, the gross fixed
monthly rental value for Orchard/Scotts Road
has fallen by 0.3 percent to $30.03 psf in Q4
this year from the previous quarter. Similarly,
the rental value of units in the other city areas
have also fallen by 0.7 percent quarter-onquarter to $17.98 psf in Q4 from Q3 this year.
Ong ChoonFah from DTZ said that the limited
supply of new units in the Orchard/ Scotts
Road area may have contributed to the
relatively better retail rents compared to retail
units in the other areas. Not only so, Orchard
Road is a known tourist destination and as
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such is expected to command a higher rent

compared to the suburban areas.
(Source: Business Times)

Gross floor area for medical clinics to be

capped at 20%
Medical clinics that are located in commercial
developments will not be allowed to expand
beyond 3,000 sq meters or 20 percent of the
total floor area that has been approved for
commercial use, whichever is lower. This new
guideline has since been effective according
to a circular issued by the Urban
Redevelopment Authority (URA) and the
Ministry of Health (MOH). Nonetheless,
existing medical clinics and formal planning
applications that were submitted before Dec
23 this year will not be affected by the new
guidelines.

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SINGAPORE PROPERTY WEEKLY Issue 188

This new guideline aims to prevent
commercial buildings from turning into de
facto medical centres. According to the
circular, medical centres need to be located at
sites that are zoned for that specific use.
Nicholas Mak from SLP International said that
this new guideline will help to regulate the
supply of medical centres in commercial
buildings and will help to optimise the use of
the space.

the new site. Other tenders that have closed

recently include a site at Tuas South Street 9
that was won by Asiaone Logistics and
Warehousing Pte Ltd for $78.13 psfppr; and
another site at Tampines North for $87.34
psfppr.
(Source: Business Times)

(Source: Business Times)

Bid for TanjongPenjuru site won by UBTS
A logistic and warehousing company, UBTS
Pte Ltd won the highest bid for a site at
TanjongPenjuru at $9.3 million. The 1.6 ha
site has a 20-year tenure and is zoned for
Business 2 use. It also has a plot ratio of 2.5.
Nicholas Mak from SLP International believes
that UBTS will be relocating its operations to
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SINGAPORE PROPERTY WEEKLY Issue 188

Non-Landed Residential Resale Property Transactions for the Week of Dec 9 Dec 16

Postal
District
3
4
4
5
5
5
8
8
9
9
9
9
10
10
10
10
10
11
11
11
12
13

Project Name
RIVER PLACE
REFLECTIONS AT KEPPEL BAY
CARIBBEAN AT KEPPEL BAY
BLUE HORIZON
HERITAGE VIEW
DOVER PARKVIEW
CITY SQUARE RESIDENCES
CITY SQUARE RESIDENCES
ESPADA
THE METZ
WATERMARK ROBERTSON QUAY
ST THOMAS SUITES
NASSIM PARK RESIDENCES
NASSIM MANSION
THE GRANGE
BELMOND GREEN
GALLOP GREEN
TEN @ SUFFOLK
SHELFORD SUITES
ADAM PARK CONDOMINIUM
VISTA RESIDENCES
BELLA VISTA

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Area
(sqft)
797
1,798
1,356
1,216
1,163
936
1,216
1,518
344
3,240
893
4,672
3,477
2,852
2,293
1,270
3,272
1,087
3,584
1,765
646
893

Transacted
Price ($)
1,320,000
3,650,000
2,000,000
1,425,000
1,360,000
990,000
1,820,000
2,100,000
925,000
6,000,000
1,608,000
7,250,000
13,700,000
8,362,500
4,200,000
2,300,000
5,824,160
1,549,000
3,800,000
1,663,000
1,060,000
910,000

Price
Tenure
($ psf)
1,657
99
2,030
99
1,475
99
1,172
99
1,170
99
1,057
99
1,496
FH
1,384
FH
2,685
FH
1,852
FH
1,800
FH
1,552
FH
3,940
FH
2,932
FH
1,832
FH
1,811
FH
1,780
FH
1,425
FH
1,060
FH
942
FH
1,641
FH
1,019
FH

Postal
District
14
15
15
15
16
16
18
18
18
18
18
18
19
19
19
19
19
21
23
23
23
23

Project Name
THE WATERINA
RIVEREDGE
SANCTUARY GREEN
ESTERINA
CASA MERAH
CASAFINA
WATERVIEW
LIVIA
CHANGI RISE CONDOMINIUM
CHANGI RISE CONDOMINIUM
EASTPOINT GREEN
RIS GRANDEUR
THE QUARTZ
PALM GROVE CONDOMINIUM
COMPASS HEIGHTS
RIO VISTA
EVERGREEN PARK
PINE GROVE
TREE HOUSE
MI CASA
GLENDALE PARK
PALM GARDENS

Area
(sqft)
893
1,604
1,281
2,045
1,259
1,238
786
915
1,130
1,130
1,173
3,294
1,141
1,399
1,324
1,238
1,345
1,755
1,249
1,098
1,216
1,216

Transacted
Price ($)
1,015,000
2,000,000
1,425,000
1,630,000
1,530,000
1,030,000
850,000
900,000
945,000
900,000
900,000
2,120,000
1,220,000
1,420,000
1,250,000
996,000
1,050,000
1,580,000
1,250,000
1,030,000
1,058,000
890,000

Price
Tenure
($ psf)
1,136
FH
1,247
99
1,112
99
797
FH
1,215
99
832
99
1,082
99
984
99
836
99
796
99
767
99
644
FH
1,069
99
1,015 999
944
99
805
99
780
99
901
99
1,001
99
938
99
870
FH
732
99

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SINGAPORE PROPERTY WEEKLY Issue 188

Postal
District
25
27
27
27
28
28

Project Name
THE WOODGROVE
THE ESTUARY
ORCHID PARK CONDOMINIUM
EUPHONY GARDENS
SELETAR SPRINGS CONDOMINIUM
SELETAR SPRINGS CONDOMINIUM

Area
(sqft)
1,184
1,119
1,572
1,076
1,335
2,077

Transacted Price
Tenure
Price ($) ($ psf)
868,000
733
99
1,050,000 938
99
1,150,000 732
99
750,000
697
99
958,000
718
99
1,300,555 626
99

NOTE: This data only covers non-landed residential resale property

transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.

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