Home sales hit new highs on silent buying frenzy

Source : Business Times – 16 Jul 2009

Developers sold more units in June than in 2007 peak but the momentum may not last

The buying frenzy in Singapore’s property market has now eclipsed even the dizzy heights of the last property boom. Developer sales of new private homes in June hit 1,825 units – topping the previous peak of 1,723 units homes sold in August 2007 at the property market peak.

But analysts are unsure if the buying momentum can continue for much longer.

June marks the fifth straight month where the number of transactions has exceeded 1,000. To capitalise on the bullish sentiment, developers increased supply by 41 per cent month-on-month to launch 1,637 units in June.

In the first half of 2009, developers sold more than 7,300 units in all. If this momentum is sustained, new home take-up for the full year will exceed 14,000 units.

That figure could be met, some analysts said. In 2007, a record 14,811 units were sold, in what one analyst said was ‘the climax of the bull run in terms of sales volume’. CB Richard Ellis (CBRE), for example, said that it is likely that the whole year’s new home take-up will be around 12,000-14,000 units.

But others are more doubtful. DBS Vickers analyst Adrian Chua expects developers to sell just 9,000 new homes in 2009. That figure is itself an upgrade from his previous assumption of 6,000 units.

Colliers International’s director for research and advisory Tay Huey Ying noted that June’s record number of primary home sales is driven by pent-up demand from both owner- occupiers and investors, and was also helped by the fact that home prices remained largely at a discount from their peaks despite recent signs of strengthening. Official data shows that private home prices fell 14.1 per cent in Q1 2009 and another 5.9 per cent in Q2.

‘As the primary market is perceived to have bottomed, people have rushed in to buy ahead of sharp price increases and the Hungry Ghosts Month,’ Ms Tay said. ‘Nevertheless, buyer sentiment and buying momentum remain susceptible to downside risks as well as runaway home prices as buyers remain price-sensitive, given the lack of economic and income growth.’

But analysts are encouraged by two factors: firstly, the fact that the high-end market seems to be picking up. Colliers’ analysis showed that some 11 units were transacted at more than $2,500 per square foot (psf) in June, up from just three units in May. By contrast, no new homes were sold for more than $2,500 psf in the first four months of the year.

In addition, the $3,000 psf mark was breached as well. UOL managed to sell one unit at Nassim Park Residences at $3,813 psf, which is the high watermark price for the year so far. A unit in the Ritz-Carlton Residences was sold at $3,404 psf while another in The Orchard Residences was sold for $3,299 psf. In fact, seven units at The Orchard Residences were sold in the price range of $2,700-$3,299 psf.

The trend, at least, looks set to continue in July. Analysts said that several other luxury units have also changed hands so far this month.

And, secondly, some are optimistic as this rally is a bottom-led recovery, which analysts said should be more sustainable than the previous boom. The 2006-07 run-up was led by investment interest in the high-end segment.

‘This time, mass market projects (supported by the relative stability of the HDB resale market, which is still seeing limited supply) are driving the market bottom- up,’ said DBS Vickers’ Mr Chua. ‘Also, smaller units continue to be snapped up first, in contrast to the penthouses and larger units in the 2006-07 run-up. We believe the current run-up is still largely premised on affordability (with investment interest skewed towards rental yields) whereas the 2006-07 run-up was based on an investment interest premised on capital appreciation and the luxury scarcity factor.’

And there still appears to be support at the bottom. According to an analysis by Jones Lang LaSalle (JLL), the price gap between non-prime residential projects and HDB resale flats has come off from the peak of 67 per cent in 2007 to a low of 54 per cent in 2009. ‘In our opinion, the narrower price gap is a major factor behind the bullish sentiment, especially among HDB upgraders. As long as this gap remains tight, this stream of HDB upgraders into the private residential market is likely to continue,’ says Chua Yang Liang, JLL’s head of research for South-east Asia and Singapore.

For them, a 25-year love affair

Source : Today – 16 Jul 2009

MR MASAMITSU Okada has been living in Singapore for the last 25 years. But instead of renting or buying a home, the Japanese expatriate has chosen to live in the same Ascott Somerset Liang Court serviced apartment for a quarter of a century.

Not that housing is paid for by his company, as this benefit ceased 12 years ago when he retired from auditing firm Deloitte. Since then, he has been running his own business consultancy here – and footing the bill for 13 years’ worth of serviced apartment rates on his own. Seems like an eye-popping splurge? Mr Okada, 77, concedes just as much.

“I could’ve bought a house and be a millionaire now!” he told Today, laughing.

The fact is, he hadn’t expected to remain in Singapore for so long when he first arrived in 1985. “I would’ve bought a home here if I had a long-term plan from the beginning – but I didn’t.”

For contractual reasons, his room rates cannot be disclosed. But according to the Singaporean company’s website, a 30-day stay at Ascott Somerset Liang Court starts at well over $7,700 currently. At face value, this would amount to a total of over $1.1 million over the course of 12 years.

However, since it is not unusual for serviced apartments to give a discounted lease rate to long-staying guests, we can safely assume that Mr Okada paid less than $1.1 million – especially since current room rates are higher than they were years ago including during the property bull run of 2006 and 2007.

Even so, all that money could have helped Mr Okada own a piece of private property, and possibly in a prime location, here.

Any regrets? They didn’t show. The Japanese professional is so taken with his Ascott lifestyle that he has no plans to move out of the comfortable two-bedroom apartment.

Equipped just like a regular apartment, with a kitchen and separate living and dining areas, serviced apartments aim to evoke a sense of home but without the hassle of cleaning, as housekeeping services are provided. It may even be better than home for the long-staying traveller, with its condominium-like facilities, such as swimming pools and playgrounds, and hotel-like services such as laundry and even babysitting.

“It’s very secure and I feel very comfortable here, the people are friendly,” said Mr Okada.

His wife also appreciates being able to go grocery shopping at a Japanese supermarket next door.

Watching their lifestyle, a few of their Japanese expatriate friends living in regular housing here have actually become converts to Ascott’s serviced apartments over the years.

It is due to residents like the Okadas that the serviced apartment industry has been showing resilience amid uncertain economic times.

Ascott, which owns nine serviced apartments or 980 units in Singapore, reports an occupancy rate of about 90 per cent. “Travellers and companies increasingly prefer serviced residences,” said Ascott Hospitality’s chief executive Gerald Lee.

Similarly, competitor Frasers Hospitality has reported healthy occupancy despite the downturn and has its fair share of guests who stay for years on end.

Companies have taken a liking to the concept with the flexible leases and better value for money. “Instead of putting up their employees in a room at a hotel, more companies are choosing two- to three-bedroom serviced apartments,” Mr Lee said. “In this way, their employees will still have the privacy of their own room within an apartment, at a fraction of the cost compared to staying at separate hotel rooms.”

Then, there is the human touch. The Okadas are familiar to the Ascott employees. Likewise, Mr Okada tends to recognise staff who have relocated from Ascott Somerset Liang Court to other Ascott developments in other cities around the world.

He said: “I miss this place when I’m back in Japan.”