SINGAPORE - Rents for non-landed properties such as condominiums are rising at a slower pace. Latest data from the Urban Redevelopment Authority (URA) showed such rentals rose just 3.6 per cent in the third quarter, compared to 6 per cent in the preceding quarter and 4.8 per cent in the first quarter.
Property analysts said the downward trend indicates that the market has reached a sustainable level and the growth is in tandem with the capital values of property, which have seen slower rates of increase as well.
"If capital values are going up but rentals don't increase, this might mean there's an asset bubble," said Mr Donald Han, managing director of Cushman and Wakefield.
Property prices have stabilised due to the recent cooling measures by the Government. Still, a robust economy that is expected to bring in more foreign workers will likely buoy the rental property market, analysts said.
Already demand for rental properties has been growing. Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, said the number of rental contracts increased 5 per cent per month for the first nine months of this year.
Yet the increase in what landlords can expect is slowing - and this could be due in part to the bigger supply of housing offered by owners who had bought the units mainly for investment purposes.
"The proportion of owner-occupier purchases has come down significantly, so the supply of rental units is actually greater. When supply is higher relative to demand, rentals decline or show a slower pace of increase," he said.
For the next year, analysts expect rentals to continue to rise steadily at about 2 to 3 per cent quarterly.
"The bulk of supply that we are seeing in mass and mid-end markets will be completed in 2013. That will be 22,000 units coming on board. The market may soften then but rental recovery will be strong for the next 24 months," said Mr Han.
Source: Jo-ann Huang Weekend Today 6 Nov 2010
Saturday, November 6, 2010
Friday, November 5, 2010
Is your condo going en bloc?
Collective sale transactions have totalled $975.6 million so far this year and over 90 per cent of this total is made up of residential transactions. Renewed confidence in the Singapore home market and an increasing number of residential transactions over the past months lead us to believe that the "en bloc" trend will continue to gain momentum moving into next year.
Since the phenomenon of collective sales began in the mid-1990s, more than 400 buildings have been sold en bloc. Historically, the focus has always been on the residential sector rather than mixed-use developments as the latter often face challenges that arise when apportioning the sales proceeds to satisfy the owners.
This is further complicated by the allotment of share value, which vests more shares per square metre for shops in comparison to offices or residential units and the location or frontage of the units.
Despite these challenges and among a handful of total mixed-use collective sales, Jones Lang LaSalle successfully brokered most of such sales, including Katong Mall, Kim Seng Plaza and Eng Cheong Tower. It is currently marketing Paramount Hotel and Shopping Centre, the tender of which closes on Nov 23.
The rise in the popularity of collective sales this year could be attributed to improving fundamentals of the Singapore property market and the widening gap between new sale and resale prices for homes.
Median prices for new sales average 48 per cent above those of resale transactions during the first three quarters of this year. These factors seem to have encouraged owners of older properties to band together and attempt a collective sale of their estates.
The collective sale process begins with the formation of a sales committee. The committee appoints solicitors and a real estate consultant to act on its behalf, for the owners' consideration. The appointment of the sales committee, real estate consultants and solicitors, and the terms and conditions of the collective sale agreement, are finalised through extraordinary general meetings.
Most importantly, a reserve price and a method of apportioning the sale proceeds have to be approved by the owners. Following this, the collective sale development has a maximum period of 12 months to secure the mandate from at least 80 per cent of the owners by both share value and strata floor area if the estate is older than 10 years.
Upon achieving this 80 per cent mark and before the next 12 months are up, the site is launched for sale by tender. Upon the award of tender or the final negotiation of the sales and purchase agreement, the owners will apply to the Strata Title Board (STB) for an order for sale. If there is 100 per cent consensus to sell from the owners, the STB application process is not required.
Mediation and the STB order for sale follow. However, if the STB order is not obtained, application to the High Court is required and the time required to obtain the sale order will be subjected to the proceedings of the High Court. Minority owners may contest the sale of the property - often this occurs when there is a difference over the apportionment method. In this case, the STB will be the mediator.
Completion of the sale typically takes three months and is then followed by a four-to-six month period of vacant possession. Generally speaking, the end-to-end collective sale process takes between 18 and 36 months and requires matching a developer or investor to the site for sale.
Apartment owners in a building opting for a collective sale are usually seeking a potential price gap or "premium" from selling their apartment by collective sale as opposed to an individual sale. In the case of owner-occupiers, the cost of a replacement property is a major consideration.
Developers or investors are often seeking potential gains from the pricing gap between new sale and resale transactions, as mentioned earlier. When the forward cycle remains on the uptrend, potential gains will be maintained if not widened.
Developers or investors are also seeking gains from land intensification - or the gap between baseline and maximum permissible gross floor area (GFA) for redevelopment purposes.
The property measures announced in August may have some impact on the prices of new residential launches, especially in the upgraders market. However, developers, especially the small to medium-sized ones, will look to replenish their land supply in a strong and improving economic situation.
In the current market for collective sales, investor interest seems to be focused on the Central, City fringe and East Coast. However, successful collective sales have been recorded mainly in upgraders' locations, including Balestier and Toa Payoh (District 12), Geylang and Eunos (District 14) and Serangoon, and Hougang (District 19).
In particular, District 19 has stood out this year in terms of transactional value. Jones Lang LaSalle recently closed the collective sale of Glenville at Lim Tua Tow Road off Upper Serangoon Road for $39.5 million and set a benchmark price in excess of $700 per square foot per plot ratio (psf ppr) for the Serangoon area.
In line with the increase in the popularity of residential collective sales, we are seeing a bounce back in terms of transactional values. The largest collective sale transacted so far this year was the sale of Meng Garden in the River Valley area, which sold for $137 million or $1,380 psf ppr. This is a significant quantum and still competitive when compared with the latest collective sales in the vicinity that were transacted in 3Q07.
Considering that Jones Lang LaSalle's prime capital values have returned to the 3Q07 level, land values have yet to catch up when compared to Grange Court, which sold for $72.8 million or S$1,710 psf ppr, and Char Yong Garden for $420 million or $1,800 psf ppr. Incidentally, Char Yong Garden was successfully sold by Jones Lang LaSalle.
As long as economic conditions continue to improve, we expect collective sales prices will continue to trend up. Collective sale volumes will be maintained next year, in line with moderate growth in capital values expected off the back of recent government measures, as the price gap between new sale and resale prices remains large.
Source: Weekend Today by Stella Hoh , Head of Investments at Jones Lang LaSalle.
Since the phenomenon of collective sales began in the mid-1990s, more than 400 buildings have been sold en bloc. Historically, the focus has always been on the residential sector rather than mixed-use developments as the latter often face challenges that arise when apportioning the sales proceeds to satisfy the owners.
This is further complicated by the allotment of share value, which vests more shares per square metre for shops in comparison to offices or residential units and the location or frontage of the units.
Despite these challenges and among a handful of total mixed-use collective sales, Jones Lang LaSalle successfully brokered most of such sales, including Katong Mall, Kim Seng Plaza and Eng Cheong Tower. It is currently marketing Paramount Hotel and Shopping Centre, the tender of which closes on Nov 23.
The rise in the popularity of collective sales this year could be attributed to improving fundamentals of the Singapore property market and the widening gap between new sale and resale prices for homes.
Median prices for new sales average 48 per cent above those of resale transactions during the first three quarters of this year. These factors seem to have encouraged owners of older properties to band together and attempt a collective sale of their estates.
The collective sale process begins with the formation of a sales committee. The committee appoints solicitors and a real estate consultant to act on its behalf, for the owners' consideration. The appointment of the sales committee, real estate consultants and solicitors, and the terms and conditions of the collective sale agreement, are finalised through extraordinary general meetings.
Most importantly, a reserve price and a method of apportioning the sale proceeds have to be approved by the owners. Following this, the collective sale development has a maximum period of 12 months to secure the mandate from at least 80 per cent of the owners by both share value and strata floor area if the estate is older than 10 years.
Upon achieving this 80 per cent mark and before the next 12 months are up, the site is launched for sale by tender. Upon the award of tender or the final negotiation of the sales and purchase agreement, the owners will apply to the Strata Title Board (STB) for an order for sale. If there is 100 per cent consensus to sell from the owners, the STB application process is not required.
Mediation and the STB order for sale follow. However, if the STB order is not obtained, application to the High Court is required and the time required to obtain the sale order will be subjected to the proceedings of the High Court. Minority owners may contest the sale of the property - often this occurs when there is a difference over the apportionment method. In this case, the STB will be the mediator.
Completion of the sale typically takes three months and is then followed by a four-to-six month period of vacant possession. Generally speaking, the end-to-end collective sale process takes between 18 and 36 months and requires matching a developer or investor to the site for sale.
Apartment owners in a building opting for a collective sale are usually seeking a potential price gap or "premium" from selling their apartment by collective sale as opposed to an individual sale. In the case of owner-occupiers, the cost of a replacement property is a major consideration.
Developers or investors are often seeking potential gains from the pricing gap between new sale and resale transactions, as mentioned earlier. When the forward cycle remains on the uptrend, potential gains will be maintained if not widened.
Developers or investors are also seeking gains from land intensification - or the gap between baseline and maximum permissible gross floor area (GFA) for redevelopment purposes.
The property measures announced in August may have some impact on the prices of new residential launches, especially in the upgraders market. However, developers, especially the small to medium-sized ones, will look to replenish their land supply in a strong and improving economic situation.
In the current market for collective sales, investor interest seems to be focused on the Central, City fringe and East Coast. However, successful collective sales have been recorded mainly in upgraders' locations, including Balestier and Toa Payoh (District 12), Geylang and Eunos (District 14) and Serangoon, and Hougang (District 19).
In particular, District 19 has stood out this year in terms of transactional value. Jones Lang LaSalle recently closed the collective sale of Glenville at Lim Tua Tow Road off Upper Serangoon Road for $39.5 million and set a benchmark price in excess of $700 per square foot per plot ratio (psf ppr) for the Serangoon area.
In line with the increase in the popularity of residential collective sales, we are seeing a bounce back in terms of transactional values. The largest collective sale transacted so far this year was the sale of Meng Garden in the River Valley area, which sold for $137 million or $1,380 psf ppr. This is a significant quantum and still competitive when compared with the latest collective sales in the vicinity that were transacted in 3Q07.
Considering that Jones Lang LaSalle's prime capital values have returned to the 3Q07 level, land values have yet to catch up when compared to Grange Court, which sold for $72.8 million or S$1,710 psf ppr, and Char Yong Garden for $420 million or $1,800 psf ppr. Incidentally, Char Yong Garden was successfully sold by Jones Lang LaSalle.
As long as economic conditions continue to improve, we expect collective sales prices will continue to trend up. Collective sale volumes will be maintained next year, in line with moderate growth in capital values expected off the back of recent government measures, as the price gap between new sale and resale prices remains large.
Source: Weekend Today by Stella Hoh , Head of Investments at Jones Lang LaSalle.
Wednesday, November 3, 2010
Developers set for new launches before holidays
Some developers are trying to release new projects before the year-end holiday season sets in.
UOL Group is expected to preview the freehold Spottiswoode Residences condo next week, and the price is expected to be about $2,000 per square feet (psf).
The project, a 36-storey tower, is next to Spottiswoode Park, a green lung in the area, and close to Tanjong Pagar, which is slated to be transformed into a new bustling waterfront district after the container terminals in the vicinity eventually move out. 90 per cent of the 351 units comprise of one-bedroom, one-plus-study and two-bedroom apartments.
The Tanjong Pagar Railway Station site is also expected to be redeveloped after Keretapi Tanah Melayu vacates the site under a historic land-swap deal between Singapore and Malaysia announced in September.
Over at Robinson Road, agents are gathering interest for the freehold Robinson Suites at prices ranging from $2,300 psf to $3,300 psf. The 42-storey project on the VTB Building site, comprises 167 apartments and three ground-floor shop units. All the apartments are either one-bedroom-plus-study units or two-bedders. Unit sizes start at 484 sq ft.
The developer – a consortium whose shareholders include Cheong Sim Lam (whose family developed International Plaza), Fission Holdings, Tan Koo Chuan and Saw Pik Kee – is pitching the project as the ‘first-ever freehold apartments in the CBD’.
CapitaLand is getting ready to release the first phase of its 1,715-unit condo on the 99-year-leasehold Farrer Court site. The 36-storey Zaha Hadid-designed project will feature one to four-bedroom apartments, penthouses and six pairs of strata semi-detached houses.
Sim Lian is said to be looking to release Waterview, a 99-year-leasehold condo comprising 696 units at Tampines Ave 1/10 facing Bedok Reservoir, once it gets all the necessary authorities’ approvals.
The project will comprise two, three and four-bedroom apartments and penthouses. The expected price is in the $820-920 psf range.
Far East Organization will be officially launching the 214-unit The Lanai – which consists of two-, three- and four-bedroom units that range from 947 sq ft to 1,615 sq ft – along Hillview Avenue this weekend.
The 999-year leasehold project has already sold 76 units at a preview last month, which included a bulk purchase, with prices starting from $1,290 psf.
UOL Group is expected to preview the freehold Spottiswoode Residences condo next week, and the price is expected to be about $2,000 per square feet (psf).
The project, a 36-storey tower, is next to Spottiswoode Park, a green lung in the area, and close to Tanjong Pagar, which is slated to be transformed into a new bustling waterfront district after the container terminals in the vicinity eventually move out. 90 per cent of the 351 units comprise of one-bedroom, one-plus-study and two-bedroom apartments.
The Tanjong Pagar Railway Station site is also expected to be redeveloped after Keretapi Tanah Melayu vacates the site under a historic land-swap deal between Singapore and Malaysia announced in September.
Over at Robinson Road, agents are gathering interest for the freehold Robinson Suites at prices ranging from $2,300 psf to $3,300 psf. The 42-storey project on the VTB Building site, comprises 167 apartments and three ground-floor shop units. All the apartments are either one-bedroom-plus-study units or two-bedders. Unit sizes start at 484 sq ft.
The developer – a consortium whose shareholders include Cheong Sim Lam (whose family developed International Plaza), Fission Holdings, Tan Koo Chuan and Saw Pik Kee – is pitching the project as the ‘first-ever freehold apartments in the CBD’.
CapitaLand is getting ready to release the first phase of its 1,715-unit condo on the 99-year-leasehold Farrer Court site. The 36-storey Zaha Hadid-designed project will feature one to four-bedroom apartments, penthouses and six pairs of strata semi-detached houses.
Sim Lian is said to be looking to release Waterview, a 99-year-leasehold condo comprising 696 units at Tampines Ave 1/10 facing Bedok Reservoir, once it gets all the necessary authorities’ approvals.
The project will comprise two, three and four-bedroom apartments and penthouses. The expected price is in the $820-920 psf range.
Far East Organization will be officially launching the 214-unit The Lanai – which consists of two-, three- and four-bedroom units that range from 947 sq ft to 1,615 sq ft – along Hillview Avenue this weekend.
The 999-year leasehold project has already sold 76 units at a preview last month, which included a bulk purchase, with prices starting from $1,290 psf.
Monday, November 1, 2010
75% of units at The Glyndebourne snapped up over weekend
The Glyndebourne, a 150-unit freehold condominium, met with good response over the weekend’s private preview.
75 per cent, or 112 units, of the development have been sold over the weekend in a statement released by City Developments (CDL).
The selling price ranged from S$1,900 to S$2,350 per square foot, giving an average price of about S$2,100 per square foot.
The development, which comprises eight towers of 5-storey residential apartments, is situated in District 11 on the site where the Copthorne Orchid Hotel Singapore currently stands on.
The site has an area of 180,000 square feet and is a mere 5-minute drive from the Orchard Road shopping belt, said CDL. It is also within walking distance to the upcoming Botanic Gardens and Stevens Road MRT Stations, which are scheduled for completion in 2015.
CDL’s group general manager, Chia Ngiang Hong, said: “Based on feedback from our buyers, the development’s excellent location and easy access to amenities is a key draw.
“Its freehold status, sizable plot of land and the array of well appointed, quality apartments with various sizes to cater to the differing needs of our clients are also plus points.”
He added that “The Glyndebourne offers exceptional value for a prime property in District 11″.
All 1-bedroom plus study, 2-bedroom and 3-bedroom plus study units have been snapped up. Ten out of the 23 penthouses have also been sold.
CDL said 70 per cent of the buyers are Singaporeans, with the remaining 30 per cent taken up by permanent residents and foreigners from Malaysia, US, Indonesia, China, India, Myanmar, Korea, Thailand, Taiwan and Brunei.
Source : Channel NewsAsia – 1 Nov 2010
75 per cent, or 112 units, of the development have been sold over the weekend in a statement released by City Developments (CDL).
The selling price ranged from S$1,900 to S$2,350 per square foot, giving an average price of about S$2,100 per square foot.
The development, which comprises eight towers of 5-storey residential apartments, is situated in District 11 on the site where the Copthorne Orchid Hotel Singapore currently stands on.
The site has an area of 180,000 square feet and is a mere 5-minute drive from the Orchard Road shopping belt, said CDL. It is also within walking distance to the upcoming Botanic Gardens and Stevens Road MRT Stations, which are scheduled for completion in 2015.
CDL’s group general manager, Chia Ngiang Hong, said: “Based on feedback from our buyers, the development’s excellent location and easy access to amenities is a key draw.
“Its freehold status, sizable plot of land and the array of well appointed, quality apartments with various sizes to cater to the differing needs of our clients are also plus points.”
He added that “The Glyndebourne offers exceptional value for a prime property in District 11″.
All 1-bedroom plus study, 2-bedroom and 3-bedroom plus study units have been snapped up. Ten out of the 23 penthouses have also been sold.
CDL said 70 per cent of the buyers are Singaporeans, with the remaining 30 per cent taken up by permanent residents and foreigners from Malaysia, US, Indonesia, China, India, Myanmar, Korea, Thailand, Taiwan and Brunei.
Source : Channel NewsAsia – 1 Nov 2010
Sunday, October 31, 2010
It all boils down to demand and supply
We need good data and solid reference points to navigate towards investment decisions. A good source of raw data, with solid data integrity and consistency of reporting, layered with reasonable assumptions, deep experience and objectively interpreted and analysed will mean the difference between a mediocre investment versus a wildly profitable one.
With several rounds of policy changes imposed on the residential sector within the last 12 months, more investors are asking "What new policies next?", "Should we divest now?" and "Should we wait a year or two before investing?"
The market is directionless, with indicators pointing in opposing directions: Low holding costs versus low rental yields against a backdrop of prices for mass market residential setting records in Yio Chu Kang, Ang Mo Kio, Pasir Panjang, Pasir Ris, Serangoon, etc, where demand remains strong.
So, what numbers can guide us to a decision?
IPA's work and discussions involve high-net-worth investors (who may be buyers or sellers at any one time), mortgage lenders, developers, construction firms, institutional funds, private equity players, funds who lend for project financing, equities analysts, etc. Our basis of discussions for the residential market relies heavily on data provided by several sources.
In Singapore, the bulk of raw data comes from official sources. Databases we rely on are: URA Realis, SISV-Realink (whose main data source is caveats filed with SLA), HDB's announcements and SingStat for population growth, household formation and income.
In the private residential sector, market watchers are very focused on a few key data points:
1. Number of units sold by developers monthly and quarterly, by project
2. Monthly lowest, highest and median prices of each project sold by developers
3. Number of units sold in the primary, sub-sales and resale markets
4. Number of units launched and sold, number of units launched but unsold
Perhaps this is because the equities analysts require these data sets to gauge the financial health of the listed developers whose stocks they cover - and these analysts are the voices most often heard by financial investors.
The larger listed developers have "investor relations" personnel to liaise with analysts and fund managers. Healthy share-price performances are important for the market's short term confidence in the developers' financial strength and perhaps also allow the developers access to more favourable credit terms.
In fact, the same mentality applies to data for public housing: Analysts are focused on selling prices, COVs, BTOs, DBSSs, launch prices, how many units launched and sold, over-subscribed or not, etc. Few enquire about the net new supply of HDB flats, which is the new supply minus the demolitions due to the Selective En Bloc Redevelopment Scheme (Sers) and other upgrading programmes.
So, which are the data sets that would form a solid basis and reference for a direct real estate investor's decision making?
None of the above data sets matters as much as rentals, vacancies and real physical demand and supply. Forecasting future rentals and vacancies depends on our view of future demand - physical demand from home users, as opposed to demand based on buy-sell transactions.
Projecting future demand is about as easy as reading tea leaves and cloud patterns. However, we have a lot more certainty when it comes to predicting supply. We can be especially confident about supply that is coming in the next three years as many of the "under construction" condominiums can be completed within 36 months.
LESSONS FROM THE RECENT PAST
When vacancies are dropping and rentals are climbing fast, we can safely predict that property prices will move up. This was the case in 2006-2008, when tenants were at the mercy of landlords when it was time to renew their leases.
With hindsight, we see that the population increase over the two years of 2005-2006 was about 235,000 (see table).
Assuming the new population growth is based on households of four, we would require about 59,000 residential units. The net new supply in 2005 and 2006 was 17,000 residential units. Therefore, we can safely assume that a portion of the new population moved in to take up the vacant units (which at that time was about 7-8 per cent) while others moved in with friends and relatives or sought accommodation in hostels and serviced apartments.
The story continued through 2007 into 2008, when the physical demand for residential units skyrocketed due to the inflow of 438,000 into our population in 2007 and 2008. That period also saw many en bloc sales and HDB SERS projects, followed by demolitions such that the net new supply of residential units was only about 13,000 units.
Now, squeezing 438,000 newcomers into 13,000 new private residential and HDB units is not simple. Vacancies have dropped to around 5 per cent (there is a structural persistent vacancy of around 1 per cent which are apartments or houses which are not in usable condition or are intended for demolition).
Therefore, lesson here is: We need to keep a close tab on physical supply completions.
by Ku Swee Yong
The writer is the founder of real estate agency International Property Advisor, which provides services to high-net-worth individuals.
With several rounds of policy changes imposed on the residential sector within the last 12 months, more investors are asking "What new policies next?", "Should we divest now?" and "Should we wait a year or two before investing?"
The market is directionless, with indicators pointing in opposing directions: Low holding costs versus low rental yields against a backdrop of prices for mass market residential setting records in Yio Chu Kang, Ang Mo Kio, Pasir Panjang, Pasir Ris, Serangoon, etc, where demand remains strong.
So, what numbers can guide us to a decision?
IPA's work and discussions involve high-net-worth investors (who may be buyers or sellers at any one time), mortgage lenders, developers, construction firms, institutional funds, private equity players, funds who lend for project financing, equities analysts, etc. Our basis of discussions for the residential market relies heavily on data provided by several sources.
In Singapore, the bulk of raw data comes from official sources. Databases we rely on are: URA Realis, SISV-Realink (whose main data source is caveats filed with SLA), HDB's announcements and SingStat for population growth, household formation and income.
In the private residential sector, market watchers are very focused on a few key data points:
1. Number of units sold by developers monthly and quarterly, by project
2. Monthly lowest, highest and median prices of each project sold by developers
3. Number of units sold in the primary, sub-sales and resale markets
4. Number of units launched and sold, number of units launched but unsold
Perhaps this is because the equities analysts require these data sets to gauge the financial health of the listed developers whose stocks they cover - and these analysts are the voices most often heard by financial investors.
The larger listed developers have "investor relations" personnel to liaise with analysts and fund managers. Healthy share-price performances are important for the market's short term confidence in the developers' financial strength and perhaps also allow the developers access to more favourable credit terms.
In fact, the same mentality applies to data for public housing: Analysts are focused on selling prices, COVs, BTOs, DBSSs, launch prices, how many units launched and sold, over-subscribed or not, etc. Few enquire about the net new supply of HDB flats, which is the new supply minus the demolitions due to the Selective En Bloc Redevelopment Scheme (Sers) and other upgrading programmes.
So, which are the data sets that would form a solid basis and reference for a direct real estate investor's decision making?
None of the above data sets matters as much as rentals, vacancies and real physical demand and supply. Forecasting future rentals and vacancies depends on our view of future demand - physical demand from home users, as opposed to demand based on buy-sell transactions.
Projecting future demand is about as easy as reading tea leaves and cloud patterns. However, we have a lot more certainty when it comes to predicting supply. We can be especially confident about supply that is coming in the next three years as many of the "under construction" condominiums can be completed within 36 months.
LESSONS FROM THE RECENT PAST
When vacancies are dropping and rentals are climbing fast, we can safely predict that property prices will move up. This was the case in 2006-2008, when tenants were at the mercy of landlords when it was time to renew their leases.
With hindsight, we see that the population increase over the two years of 2005-2006 was about 235,000 (see table).
Assuming the new population growth is based on households of four, we would require about 59,000 residential units. The net new supply in 2005 and 2006 was 17,000 residential units. Therefore, we can safely assume that a portion of the new population moved in to take up the vacant units (which at that time was about 7-8 per cent) while others moved in with friends and relatives or sought accommodation in hostels and serviced apartments.
The story continued through 2007 into 2008, when the physical demand for residential units skyrocketed due to the inflow of 438,000 into our population in 2007 and 2008. That period also saw many en bloc sales and HDB SERS projects, followed by demolitions such that the net new supply of residential units was only about 13,000 units.
Now, squeezing 438,000 newcomers into 13,000 new private residential and HDB units is not simple. Vacancies have dropped to around 5 per cent (there is a structural persistent vacancy of around 1 per cent which are apartments or houses which are not in usable condition or are intended for demolition).
Therefore, lesson here is: We need to keep a close tab on physical supply completions.
by Ku Swee Yong
The writer is the founder of real estate agency International Property Advisor, which provides services to high-net-worth individuals.
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