Highline Residences: Good buyers’ interest = Good take-up?

It was reported in ST today that Highline Residences in Tiong Bahru is drawing quite good response with more than 300 cheques collected from prospective buyers since the preview held about a week ago.

However, it remains to be seen how this translates to sales.

Many of the buyers are investors who are keen on the smaller units, particularly the one- and two-bedroom types.

The 500-unit development is being marketed at an average price of $2,000psf but could dip to $1,900psf after discount.

Pricing of the units has yet to be finalised but the estimated asking price for one-bedroom is between $1 – 1.2 million; two-bedroom between $1.25 – 1.6 million; three-bedroom between $1.6 – $2.5 million; and four-bedroom between $2.4 – 2.8 million. The six penthouses are likely to be priced at about $5 million each.

Despite the significant buyers’ interest in Highline Residences, recent launches have seen take-up rate of only 30 to 50% of the units released. New launches nearby include the 469-unit The Crest and the 429-unit Alex Residences. Both were launched at about $1,600 – 1,700psf and have sold less than 50% of their units so far.

Highlight Residences is expected to launch on Sep 13, and only units in the two 36-story blocks are likely to go on sale.

When interviewed by ST, a prospective buyer said that the indicative prices at Highline Residences were “a bit high” for a 99-year leasehold project. He would prefer to wait as property prices are likely to ease further.

The wife and I felt that he is being way too polite with the “a bit high” comment. Even at $1,900psf, we maintained that Highline Residences is going to be a hard-sell given the current market climate.

 

But we will love to be proven wrong as always…

 

 

London property remains hot with Asians

London property is hotter than ever, with Asian investors – especially those from Singaporeand Hong Kong – and increasingly confident British buyers snapping up units, consultants say.

But although prices continue to rise, there does not appear to be a bubble forming.

Average prices in prime Central London have risen 10.09% over the past four quarters to about GBP1.64 million ($3.4 million), property consultancy London Central Portfolio (LCP) said last week.

Long-term growth has averaged 10.5% a year since January 1996.

LCP noted that prime Central London transactions are at their highest level since 2007. There have been 6,546 transactions over the past four quarters, up 19.34% year-on-year.

Prices in Greater London are also on the rise, posting an annual growth rate of 8.53%, which brings average values to about GBP530,000.

Transactions here for London properties are at their highest level since 2007 as well, with 116,551 sales over the past four quarters, up 28% year-on-year.

“People buying now can see the benefit of slightly fringe locations, looking at them for the longer-term prospects,”said Mr Liam Bailey, global head of residential research at Knight Frank.

He added that while it has been a well-established trend for foreigners to buy in London, new buildings in recent years have seen especially strong take-up among Asian investors.

Singapore buyers have long been keen on London property.

“It’s almost like a commodity that people buy and sell… investors here like London as it’s a tested and proven market,” said Ms Doris Tan, head of international residential properties at JLL.

London developments continue to stage launches here because of the high level of interest they garner.

Principal Tower, a 50-storey, 243-unit luxury residential building located in the City of London, was launched on Friday.

The prject is part of Principal Place, a mixed-use development that will feature a 15-storey commercial building and retail outlets as well as a piazza that could become a neighbourhood centre, said W1 Developments.

It is being jointly developed by W1 Developments, Brookfield Office Properties and Concord Pacific.

Principal Tower is being exhibited at the St Regis Singapore hotel. Apartments range from 500sqft for one-bedders to 2,500sqft for three-bedders, for about GBP1,450sqft. Price start at GPB600,000.

As at Friday, more than 30 units had already been sold through pre-sales.

“It’s unusual to have an exclusively residential high-rise building at such a prime address,” said W1 Developments managing director Christopher Murray.

The Landau, a 89-unit luxury building in Fulham, London, was also exhibiting yesterday, at the Regent Singapore hotel. Prices start at GBP915,000 for a one-bedroom apartment.

 

Overall, the pound sterling is likely to remain stable in the short to medium term, and should not strengthen significantly against other currencies during the remainder of teh year, noted Mr Bailey.

“As the major issue in Britainis deflation rather than inflation, the bank is unlikely to raise rates.”

Source: ST

Much has been said and written about the current state of the Londonproperty market and more importantly, whether a bubble is forming (if not already). While many have acknowledged that the bull is running a tad slower these days – prices have fallen for the past 2 consecutive months – home prices in London are currently still hovering at its peak. If long-term price growth for Central London has averaged 10.5% a year since 1996, current prices are already more than 6 times what it was 18 years ago (if our maths are correct)!

So with transactions for both Central and Greater London being at their highest levels since 2007, the much bigger investment quantum needed given that prices are at their peaks and properties being labelled as “a commodity that people buy and sell”, the underlying risk has definitely become greater when come to investing in a Londonhome.   

Having said that, there is always money to be made in any kind of market. Key to this is always the “right” timing of entry and more importantly, exit. While the wife and I do not think that the Londonproperty market will crash anytime soon, we do believe that a bubble is forming slowly but surely. Going forward, it will be increasingly challenging to make money out of this market.

 

This is mainly the reason why we have decided to exit the London market… but not discounting the UK altogether… yet.

 

 

Average price by market segment: Q2′ 2013 – Q2′ 2014

Below is compiled by Knight Frank Research.

 

 

The wife and I have no idea what the “basket” that was used in the calculation of average prices constitute but we reckon it is likely to be a mix of new and resale properties. 

So how does one distinguish between “Ultra-luxury” from the “High-end” segment? According to Knight Frank 

·         “Ultra-luxury” segment consist of condominium or apartment with a prestigious address, offering a generous living space of at least 260sqm (around 2,800sqft) unit size, with a current price of around $3,000psf or higher. Ultra-luxury residential developments are mainly located at Orchard Boulevard, Scotts Road, ArdmoreRoad, Paterson Roadand Nassim Road. 

·         “High-end” segment are prime residential properties mainly in Districts 1, 2, 4 (Keppel Bay/Sentosa Cove), 9 and 10. High-end residential developments consist mainly of a wider mix of unit types, ranging from two to four-bedroom configurations. Unit sizes that fit the qualities of a high-end residential home typically start at 150sqm (1,615sqft), with prices above $2,000psf to $2,800psf.  

And before the collective sale frenzy between the mid-1990s and mid-2000s, the average price of a District 9 new sale and sub-sale units (of 160sqm in size or larger) was supposedly only about $1,400sqft! 

Maybe this is what “more affordable level” means to some Singaporeans? However, if prices of District 9 properties were to revert back to such level, imagine what the prices for the rest of Singaporewill look like.  

Surely it be great for those who are looking to buy and have the ability to pay for the property concerned with little or no loans. But will the prevailing economic conditions that result in such halving of market prices (psf basis) for the prime districts necessary mean that more Singaporeans can better afford their dream private homes then? If recent history is any indication (post 1997, post 2009 etc.), one may not be as hasty in wishing for a steep price fall in private home prices…

 

 

Living 180 University @Toronto, Canada

The wife and I were at the road-show of Living 180 University – quite a mouthful for a project name, so we shall shorten it to L180U for convenience  sake – last weekend. This is a residential project located above the Shangri-la hotel in Toronto, Canada. 

 

 

The reason for our interests are two-fold:

·         We were drawn by the fact that L180U was developed by Westbank, the same developer for Vancouver House 

·         We were curious as to why L180U is only selling its residential units now when the project had supposedly TOP in end-2012 

L180U is a freehold project consisting of 395 residential apartments. It is housed in the same building as the Shangri-la Toronto, which standing at 214 metres, is one of the ten tallest building in Toronto. Shangri-la was also the second deepest excavation for a building in Canada’s history at 102 feet (31 metres). This was done to create 8  levels of basement parking for the building.  

Shangri-la hotel itself occupies the first 17 floors of the building. The residential component are housed on the 18th – 67 floors and consists of 2 category of units – the “Residences” from Floors 18 – 49 and the “Private Estates” from Floors 50 – 66. The primary difference (other than price point) between the 2 category are (1) Dedicated lifts that served the “Private Estates” units and (2) Higher quality furnishings and fittings (from Dornbracht, Miele, Sub-Zero and Kohler etc.) for the “Private Estates” units. This is similar to the make up of Vancouver House. 

 

Now back to the question of the “delayed sales” of its residential units:

 

The “Residences” units were fully sold to local residents in Torontoback in 2011-12 but Westbank had decided to hold back on the release of the higher-floor “Private Estates” units. Developer felt that they can fetch a higher price for these “premium” units once the building is completed and occupied. They have only decided recently to put the remaining 60 units in L180U for sale to foreign buyers. Singapore is supposedly the first stop of their Asian road-show and they will be heading to Hong Kongin 2 weeks’ time. 

Location wise, L180U is located within Downtown Toronto along University Avenue. This is the main avenue leading to The University of Toronto, which is either a 2-subway stop or 15-minutes walk away. LU180 is sandwiched between the Central Business District (where most of the major banks and financial institutions are found) on one side and the Fashion District – a popular shopping area that sells clothing directly from manufacturers – on the other. And underneath the building is PATH – the largest underground shopping mall in the world according to the Guinness Book of Records – with 4 million sqft of retail spaces!

 

Facilities wise, buyers of L180U can expect the following:

·         An exclusive entrance and lobby area separate from the main hotel lobby  

·         24-hour concierge and security services 

·         Health club with heated indoor pool (hotel facility available to residents) 

·         5-star spa (hotel facility available to residents) 

·         Internationally acclaimed restaurants that include Momofuku – helmed by Chef David Chang, who was named Time Magazine’s 100 most influential people in 2010 

·         The larger apartments (i.e. 1,900sqft and above) comes with their own “private parking garage” in the basement – they get 2 dedicated parking lots that come with shutters that can be open/shut for privacy. 

Pricing wise, the smallest unit currently available is a 1386sqft, 2-bedroom apartment selling at CAD1,574,600. This translates to about CAD1,136psf. There were supposedly 2 units of one-bedders for sale but these had been snapped up by a single buyer at the beginning of the road-show. The next smallest unit is one of about 1500+sqft (also 2-bedder) while the rest are 3-bedders or more that are in excess of 1800sqft. 

Here are some reasons why the wife and I felt that L180U is worthy consideration for a foreign property investment buy: 

·         Location – being right smack within Downtown Toronto, accessibility and convenience are key selling points. Toronto, together with New York and London, are considered the Top 3 financial centres in the Northern Hemisphere. And at CAD1,136psf (less than S$1,400psf), one can forget about buying an apartment in our own downtown CBD!

·         The gross rental yields in Downtown Toronto averages about 6% p.a., while capital appreciation averages around 8 – 10% p.a. One may certainly get higher returns elsewhere (like Brazil, allegedly) but we consider the return for L180U decent especially by Singaporean standards. Even if one takes a loan, the 3% nett yield after mortgage repayment (interest rate at around 3%) is still not too shabby. 

·         Westbank (the developer) is providing a rental guarantee of 8% p.a. for the first 3 years of purchase –  the rental payment starts from the first month after purchase, irrespective of whether the unit is tenanted or vacant. This provides immediate rental income that is above market average at least 3 years. 

·         The Shangri-la branding, which is an endorsement of the quality of L180U.  We reckon that Shangri-la will probably not want to associate itself with a sub-par project. 

·         We like the spacious units and the view from the apartment is promised to be quite spectacular.

 

 

Now for the “not so good” bits: 

·         As L180U is a “move in” project, the terms of payment is rather severe – you have to put 10% down 7 days after the execution of the S&P with balance due at closing of the purchase. This means that the full purchase amount is payable within 3 months of execution of S&P. And given the bigger purchase quantum (in view of the larger-sized apartments) and a maximum of 65% loan available from Canadian banks (no Singaporean banks will provide financing for Canadian properties), the financial outlay may be too much/too quick for many prospective buyers. 

·         Some market analysts have indicated that chances of a steep fall in Canadian home prices have increased in the past year, particularly for Torontoand Vancouver. This is because house price increases have significantly exceeded income growth. There is also the added concern of increasing supply of condos especially in downtown Toronto. However, the same have been said about the London market for years and prices are still rising albeit at a slower pace.  

·         The wife and I have read about several instances of glass panes falling from Shangri-la Toronto over the past 2 years – the latest incident happened as recently as July of this year. Hopefully the problem is fixed now.

 

Disclaimer: This is NOT an advertorial and we are not helping anyone to sell anything here. So Caveat Emptor!

 

 

SG PropTalk now tweets… again!

The wife and I had gotten ourselves a twitter account since 2012 but we were never very diligent about it. 

However, our housing minister has inspired us to post a tweet tonight. So we are trying to “get the bird chirping” again and more regularly this time around.

Please follow our twitter feeds on @SG_PropTalk .

 

Tweet Tweet…

New project info: Highline Residences

Keppel Land is expected to begin sales of its Highline Residences condo, diagonally opposite Tiong Bahru MRT Station and Tiong Bahru Plazamall, on Sep 13. 

Market watchers note this will be the same day the showflat for Marina One Residencesis expected to open for viewing. 

Keppel Land‘s spokeswoman could not confirm the date when sales will begin for Highline Residences but said: “We have given a market guide price of $2,000psf (on average) and response has been good.” 

The guide price is before an undisclosed “special preview discount” that will be given for purchases by registered prospects. 

Prospective buyers were invited to a preview of the project last weekend. Another session will be held this weekend. 

Market watchers guessed that after discounts, the average price could be around $1,800 – 1,900psf.

They noted that sales at The Crest along Prince Charles Crescent have been sluggish. As at end-July, only 39 of the condo’s 469 units had been sold, based on government data on developer sales. The project was released in June this year, with 35 units sold at a median price of $1,682psf in that month.

The Crest, being developed by a Wing Tai-led consortium, is a stone’s throw from Jervois Road and the Chatsworth Park Good Class Bungalow (GCB) area. It is about 450 metres from Redhill MRT station and features spacious units.

Closer to Redhill station, Alex Residences was released last November, with 171 units sold at the $1,706psf median price in that month. As at end-July, 208 of the project’s 429 units had been picked up.

Location wise, Highline Residences is deemed the most attractive given its proximity to Tiong Bahru MRT station, which is closest to town. Redhill MRT station is one stop away. The Tiong Bahru location also has more amenities, including a mall and eateries. 

All three projects are sited on 99-year leasehold land sold at sate tenders. The Crestsite fetched $960psf ppr at a state tender that closed in September 2012. The Alex Residences site was transacted at $970psf ppr in December 2012. Highline Residences’ site was secured at $1,163psf ppr in April 2013. 

 

Highline Residences will comprise 500 units housed in two 36-storey towers, a 22-storey tower and four low-rise blocks.

Unit size range from 506sqft for one-bedders to 1,227sqft for four-bedroom dual key units. Highline Residences will also have six penthouses of between 2,174 to 2,260sqft.

The project is designed by Mok Wei Wei of W Architects. The development will feature a rooftop communal garden facility to encourage urban farming and healthy lifestyles.

Residents may also tap concierge services such as limousines and housekeeping, in addition to enjoying complimentary golfing at Keppel Land’s Ria Bintan Golf Club.

Info Source: BT

 

So the much anticipated project at the City fringe has finally been put out for sale. The wife and I have passed by the boarded site of Highline Residences several times over the past months and have been wondering when Keppel Landwill do the launch.  

While we agree that the location of Highline Residences triumphs over both The Crestand Alex Residences in terms of convenience (Tiong bahru Plaza and Tiong Bahru market) and “hip” factor (the much-lauded Tiong Bahru Estate precinct), The Crest probably score better in the “exclusivity” department (i.e. on the “correct” side of Alexandra Road bordering District 10 and surrounded by mostly condos and GCBs ).

Comparison aside, the wife and I feel that given the current market climate, the $1,800 – 1,900psf price tag for Highline Residences may be a tad of a hard-sell for a 99-year leasehold project in Tiong Bahru, even with the free golfing (in Bintan) thrown in…

 

 

Weather forecast for shoeboxes: Stormy with a likelihood of flood!

According to a ST report today, owners of shoebox apartments outside of the city centre may be in for a fix next year. This is because of the 53,900 new condo units expected to come onstream within the next 30 months, most will be small or shoebox apartments with a floor area of up to 506sqft.

The greater choice available may spell bad news for suburban shoebox homes, which have a limited appeal given their location and relatively cramped living space.

Shoeboxes became popular in 2009 and of the 12,097 units sold since then, about 47% were in the city fringe areas and around 37% in the suburbs. There are no official figures available on the number of shoebox units that are on the market, but URA’s projection in September 2012 put it at about 2,400 units as at  2011, with the figure rising to 11,000 by the end of next year.

These small homes featured heavily at newly launched projects from 2009 to 2012, including the 293-unit Alexis in Alexandra Road, the 138-unit Parc Imperial in Pasir Panjang Roadand the 72-unit Suites @Guillemard in Lim Ah Woo Road. Although these apartment type tend to sell at a higher psf because of their small size, they were popular with investors due to the smaller total quantum, which make them more affordable. 

Rental yields of shoebox units typically range from 3 – 4%, higher than the 2 – 3% yields for residential developments islandwide. However, rents for shoeboxes are expected to soften in line with the flood of newly completed condos. 

Outlook for capital appreciation for shoebox units also appears bleak – the median prices (psf basis) have risen by about 24% in the four years since the Q2 2009. Median prices fell by 5% against a 2% depreciation for non-landed homes after tighter property financing rules were imposed in Q2 2013. 

Despite so, there were 710 shoebox units sold in the first half of the year.

Followers of SG PropTalk will probably know how big of a fan (NOT) the wife and I are when comes to shoeboxes. And we have posted quite a bit on this subject since 2011 – just key in “shoebox” on our “Search this Blog” function to find these. Our previous blog posts had also generated numerous comments and even debates about the liveability and long-term prospects of such unit type. 

While we agree that shoeboxes will continue to see some demand from singles and DINKs (double income, no kids), and probably expats on local employment terms, we have always been of opinion that the number of units that have come/are coming onto the market since 2009 far exceed the actual demand for such units.  

We also firmly believed that majority of shoebox units that were purchased since 2009 were not for self-stay – we do not have the figures to substantiate our claim so we are prepared to “agree to disagree” on this point.

For existing owners who have bought shoeboxes for investment purposes, they will be competing for rentals with not just the brand new units that are expected to flood the market next year but also with the bigger apartments. Given the current depressed state of the rental market, which looks to get worse next year, landlords are likely to drop asking rentals to get tenants rather than leaving their apartments vacant. This will sure to put additional downward pressure on rental yields for shoeboxes – given a choice between a shoebox and a bigger apartment at about the same monthly rent, it is a no-brainer as to which a potential tenant will opt for. 

And to add salt to injury, existing owners – especially those whose units are outside the city centre – may find it near to impossible to resell their units profitably, thus fulfilling the prophesy of a “cannot rent, cannot sell” scenario that we made back in 2011-12…

 

 

 

Start of the GIS (Great Iskandar Sell-off)..?

It looks like cracks are starting to show in the once-booming property market at Iskandar Malaysia.

UEM Sunrise Bhd, considered a bellwether to Iskandar, last week slashed its sales target for 2014 to RM2billion ($792 million) from RM3.2 billion, citing weakness in the market for homes in the economic corridor south of Johor.

This comes as a slew of high-rise apartments – many of them from the Chinadevelopers, and many of them on the waterfront – are set to flood the market. And things could get worse before they get better. It is believed that about half of the condominiums in Country Garden Danga Bay, which last year rolled out a record 9,000 high-rise units, have remained unsold, and the Guangdong-based property giant is now looking increasingly desperate to unload its stock by either hiking discounts of dropping prices, although the exact quantum is unknown.

The Danga Bay project was launched with much fanfare last year at an average of RM900psf. Most of the real estate firms in Johor Baru have been roped in to sell homes for Country Garden Danga Bay, and it is dangling commissions of up to 8% versus the typical 2 – 3% as an added incentive.

In fact, according to an agent, three people were spotted carrying sandwich boards near a bank in Johor Baru last month advertising units in Country Garden Danga Bay. It is not clear who they were representing, but property executives speculate they could be acting for Country Garden’s foreign buyers.

Checks with agents reveal that the Phase 2 units are going for the same price for all floors, a departure from the usual practice of pricing the topmost levels at a premium.

Buyers can opt for the promotion price, which in some instances adds up to a 40% discount, provided they pay for the property in cash over several transactions. Doing so will shave RM300,000 off the price of a single-room unit measuring between 400 to 500sqft, which would normally cost RM800,000.

Country Garden hasn’t raised its maximum discount beyond 21% since launch day, say agents familiar with the matter, but it may not be long before the company has to dump prices. Right next door, China’s state-owned Greenland Group will soon launch 2,478 units of apartments and townhouses. Also, R&F’s Princess Cove project will introduce about 3,000 units of apartments in the first phase and another 30,000-plus units thereafter.

“There are also a few other projects in the Danga Bay area being prepared for similar types of developments,” he said.

The problem here is clearly one of mismatch between demand and supply. Demand remains strong for affordable homes costing below RM400,000, yet much of the new supply is heavily skewed towards high-rises. Records have indicated that slightly more than 100 high-rise projects scattered throughout Johor Baru and Iskandar Malaysia, comprising a little over 100,000 units, are expected to come onstream in the next few years. One-third of that is within the R&F site, and another 10% within known projects at DungaBay, where CountryGarden and Greenlandare based. 

The proposed Forest City at the Second Link in Nusajaya is another huge project on the horizon.

All that has led to a visible slowdown over the past 10 months. Many investors, particularly foreigners appear to be adopting a wait-and-see attitude. This is not helped by the changing policies and price threshold limits.

Sentiments could get worse in 2015-16, when a large number of the high-rises sold during 2012 and 2013 are handed over. The problem may be especially acute in hot spots such as Nusajaya, Medini and Danga Bay.

Info source: BT

Looks like Iskandar Malaysiais going to be raining condos come 2015-16, much like what is expected in Singapore. And the blood-letting by China developers seemed to have begun even earlier than what the wife and I had predicted before (refer to our previous blog posts below).

And if our rusty memories served us right, GIC had recently announced that they will enter into the fray to invest in residential projects in Iskandar Malaysia. Maybe they know something that we don’t but that decision may warrant a re-think. Then again, we are mere laymen while GIC are run by … professionals.

 

What Iskandar really need is not more “Star Power” (aka Mainland Chinese actress Tang Wei and some of our own Mediacorp artistes), rather the army of Mainland Chinese buyers/ investors that the China developers have been saying will come to snap up homes in Danga Bayand the likes soon.

The wife and I are not holding our breaths on that one though…

 

 

 Click on link below to read our previous post on Iskandar Malaysia:

http://sgproptalk.blogspot.sg/2014/07/chinese-developers-are-flocking-to.html

http://sgproptalk.blogspot.sg/2014/06/iskandar-still-good-buy-now.html