A recent OCBC Investment Research report said that unlike non-landed properties which rebounded 1.3 percent in 2017, landed properties fell by 0.5 percent. But this is set to change according to iCompareLoan‘s chief mortgage consultant Paul Ho.
In an interview with the Singapore Business Review, Mr Ho said that “as the sales proceeds start to come in from the en bloc sales completion from now till 2019, landed properties, especially the Inter-terrace segment will hot up.”
This Mr Ho believes is because en bloc sales homeowners who are flush with cash, will resort to value hunting instead of choosing smaller condominiums which are beginning to sell at unbelievable prices.
In the interview, Mr Ho also referred to CDL’s New Futura condo launch which sold 48 units at an average price of over $3,200 per square feet (psf). The non landed property market has not seen such prices since 2013,
The upward trend in the price of non landed properties is in its early stages and so is sustainable, Mr Ho believes. He referred to Fourth Avenue government land sales to Allgreen properties for $533m to drive home his point.
“Dynasty lodge has also been sold en bloc. Bukit Timah private residential properties in District 10, one of Singapore’s most sought-after district is starting to see action after being sluggish for a long time.”
Mr Ho attributes the bullish non landed property market to the recent en bloc activities, which has seen a record number of en bloc collective sales of older condominiums. “This has led the property sellers to ask for higher selling prices,” he noted.
OCBC analyst Andy Wong Teck Ching supported Mr Ho’s views on the upward trend of non landed property and pointed to a number of notable transactions in the high-end segment.
“For example, City Developments Limited’s (CDL) freehold New Futura project at Leonie Hill Road saw 48 units sold (75% out of the 64 units launched) at an average selling price of over $3,200 psf (as of 22 Feb 2018). Gramercy Park, another freehold project in the Orchard Road vicinity (Grange Road), is now 97% sold with achieved ASP in excess of $2,800 psf.”
Such upward price surge for non landed properties however, may not hold true for cheaper estates or districts will have lesser branding for developers to do their markups, Mr Ho believes. “If you want to build a ‘Landmark’ project, you pay a good price for the land, you will also need a similarly remarkable ‘Brand-able’ district in order to hype it up for a larger selling price,” Ho said.
A traditionally non-luxury district will not be able to command a similar price premium regardless of how much the developer bought the land for.
“Hence I see certain segments of orchard road, River Valley, Commonwealth, Tanglin, Sixth Avenue to emerge. They are driven by selling prices of potential new launch.”
This can however be mitigated according to Mr Ho if developers held power and pay the property agencies top commissions. buyers who hold out will eventually give way and give in to the higher prices, the consultant said. “This will inflate the entire market around the vicinity.”