ANALYSTS ARE expecting lackluster residential property prices and transaction volumes to continue, after new home sales fell 27% month-on-month in Sep to 911 units and new launches fell 9% to 1,058 units.
To recap, the austerity measures are:
1. Restrictions on Concurrent HDB Ownership
2. Increase of HDB Minimum Occupancy Period (MOP) to 5 years
3. Extension of seller’s stamp duty to properties sold within 3 years
4. Lowering of loan-to-value (LTV) limit to 70% for second home purchases
5. Increase of minimum cash deposit from 5% to 10% on second home purchases
Even though the measures are meant to curb speculative demand on HDB homes, the high-end residential sector has also been affected, with transaction volume falling 50% for units priced over S$2,000 psf.
Goldman Sachs, in its 15 Oct report cautions that there will be downward pressure on private mass market demand in the fourth quarter as “developers are poised to launch more executive condos (public housing) in Punggol and SengKang”.
And analysts are recommending a switch into the industrial, office and hospitality property segment.
”We remain cautious on the residential developers especially after recent outperformance and prefer office & integrated players such as Capitaland, KepLand & CCT,” according to Deutsche Bank analysts Elaine Khoo and Gregory Lai, in a reported dated 15 Oct.
So what alternatives are there to mass to mid-end housing for personal investments?
One may consider Wee Hur’s maiden industrial development, Harvest@Woodlands, which is also being promoted as an alternative personal investment.
Located at the junction of Woodlands Ave 4 and Admiralty Road West, the industrial property units are currently going for S$200 to S$380 psf.
The low cost of investment compared to condominiums (which were selling from S$731 to S$3,473 psf based data on new launches in Sep compiled by Deutsche Bank analysts) is translating into relatively lucrative rental yields.
Based on its estimated rental of S$1.40 per square foot per month, gross rental yield for a 1,906-square foot unit is as good as 8%, compared with 2% for residential units, according to Ms Tricia Teo, who is executive director of property consultancy SLP International.
The 10-storey, multiple-user building was launched in Jun and is 50% sold to-date, mainly to corporations purchasing it for internal operations.
A leading local main contractor experienced in a wide spectrum of property sectors, Wee Hur, had forayed into property development by purchasing 70% of Villas@Gilstead for S$9 million late last year.
Villas@Gilstead is a boutique residential development comprising 18 units of landed housing in prime district.
The new player in property has another two plots of industrial land.
It secured an URA tender to buy a piece of industrial land at Kaki Bukit for S$76.8 million last month.
This follows its move to exercise options to purchase an industrial property in Macpherson for S$3.85 million in Jul.
It also has purchased a residential property development at Upper Paya Lebar Road for S$15.2 million in Jun.
It intends to redevelop these properties. Construction work will be undertaken by a group subsidiary.
Related story: WEE HUR: Forays Into Property Development With S$9 Million M&A
