What you need to know about the residential transactions in January

Find out what CBRE, Savills, Jones Lang LaSalle, and Colliers International have to say after the encouraging new home sales volume of 1,872 units in January.

CBRE Research: Li Hiaw Ho, Executive Director

“Despite the latest cooling measures being in place, new home sales volume in January 2012 turned out to be a strong 1,872 units. This is nearly three times the 632 units sold in December 2011, and higher than the 1,701 units sold in November, before the measures were announced.

As in the previous quarters in 2011, sales in January 2012 were driven by mass-market homes in Outside Central Region (OCR) which account for 94.1% of the sales (1,761 units). The three top-sellers were Watertown in Punggol Central with 770 units sold (median price $1,169 psf), The Hillier in Hillview Avenue with 387 units sold ($1,289 psf) and Parc Rosewood in Woodlands with 198 units sold ($951 psf). Both Watertown and The Hillier are mixed developments comprising a retail mall with towers of residential apartments sitting atop. Watertown’s accessibility is further enhanced by its integration with Punggol Central MRT station while The Hillier is within walking distance to the future Hillview MRT station of the Downtown Line. Parc Rosewood, which comprises largely one- and two-bedroom units, is located close to theAmerican School and Sports School where there is a strong expatriate presence.

In the EC market, The Rainforest which was launched in January 12 sold 172 units at $753 psf. Ongoing sales from the other projects contributed another 33 units, bringing the total EC sales in January to 205 units.
In the high-end segment, another nine units of The Scotts Tower were sold at a median price of $3,331 psf, after 16 units were sold in the previous month. A unit in The Laurels was sold at $3,062 psf while a unit in The Vermont On Cairnhill was sold at $2,700 psf.

Savills Singapore: Alan Cheong, Head of Research
“The January sales numbers very importantly highlight the point that perceptions of the ABSD having an abject impact on the general market were completely untrue. On the contrary, by including or excluding ECs, sales numbers were higher than any of the months in 2011, matched only by those recorded in Nov 2010. However, to be objective, the increased sales numbers came from OCR where projects such as Watertown (770 units sold) and Parc Rosewood (198 units sold) lifted the market. Excluding these 2 projects, total developer sales excluding ECs would have been below 1,000 units.

However, the fact of the matter remains that despite the ABSD, the high sales numbers imply that effective demand is still very strong. Prices for non-landed launches are also very firm. For example, Watertown’s pricing is still a high water mark for the locality.

Some inferences can be drawn from the data:
Notwithstanding a seemingly harsh ABSD measure given the uncertainty in the global economy towards the end of 2011, the market thought otherwise with demand coming in very strongly for mass market projects.
Project sales at CCR have fallen very sharply to 17 units in January 2012. It was 35 in December 2011 and 200 in January 2011.

Colliers International: Ms Chia Siew Chuin, Director of Research & Advisory
The Outside Central Region (OCR) continued to take centre stage in January 2012, accounting for 89.8% and 94.1% of all private home units launched and sold by developers, respectively. This dominance by the mass-market segment is unprecedented since launch and sales data are made available from June 2007 and bear testimony to the latent strength of mass-market housing demand.

Indeed, encouraged by the strength of the mass-market as well as the sterling sales performance of past integrated or mixed residential-retail projects, Far East Organization launched two of such projects in the OCR - Watertown and The Hiller. This was during the period where both developers and prospective homebuyers stayed cautious and were monitoring the market closely.

Buyers were clearly drawn to the two integrated projects’ development concept and their proximity to the MRT station. Watertown located in Punggol was the chart-topper, with 770 units sold from the 992 units available, followed by 528-unit The Hillier situated next to the upcoming Hillview MRT Station, with 387 options issued.

As such, sales in the first month of the year, mainly boosted by the popularity of the two integrated projects, were exceptionally strong. Noteworthy, the total sales generated from these two projects constituted 65.7% and 61.8% of all new private home sales in the OCR and in the entire private residential market in January 2012.

Other projects that debuted in the OCR in January 2012 include the 689-unit Parc Rosewood in Woodlands and the 590-unit Riversound Residence in Sengkang.

Overall, sales in the other developments were evidently less robust as potential buyers remained prudent and price-sensitive and are less willing to commit on the back of economy uncertainties and the expectation that prices will fall going forward.

Jones Lang LaSalle: Dr. Chua Yang Liang

Further analysis of January’s sales data highlights the existing residual demand, especially for mass market projects, as Singaporean buyers continue to purchase new homes as they are launched. While the addition of Watertown and The Hillier have inflated the numbers this month, if we exclude them from the totals we can see that demand remains strong for mass market projects. While the overall take-up rate for the market is 85% in January 2012, excluding these developments this jumps to 105%, highlighting the underlying strength of demand in the mass market without the addition of these exceptionally large projects. The same is also true of the overall take-up, with the number of units sold in the OCR up 24% m-o-m if we exclude these developments.

“We maintain our view that the underlying Singaporean buyers’ demand market is likely to continue to support the mass market in 2012. With some developers’ absorbing part of the additional stamp duty, this has effectively mitigated the impact of the recent government policy. Excluding these two large launches, the number of units sold in January is 715, if the situation remains stable, some 11,500 – 12,000 units could be sold by end 2012” reckons Dr Chua.

In light of the strong demand for mass market homes, the HDB released this morning, some four parcels in Punggol and Sengkang that could yield some 2,070 housing units. The demand for executive condominiums has been strong, especially those in Punggol such as Prive and Riverparc Residence which have been completely sold. “Moving forward, we can expect some downside bias given the risk from the looming Euro-zone sovereign debt crisis. Developers are likely to be more conservative with the bids for any government sites. For these executive condo parcels in Punggol, the bid prices could range between $300-$380 psf”, Dr Chua added.