North Gaia will be the first new executive condo (EC) that is set to open in 2022. We will explore its North Gaia location, the price trends and reasons why it is a good investment.
Developers are showing strong interest in the North Gaia landsite
North Gaia was subject to intense competition from developers. There were 7 bidders competing for the site. It was ultimately awarded to Sing Holdings Limited at a tender price $373.5 million. This is $576 per square feet per price ratio (psf per price ratio).
The last EC launch was in Yishun in 2015. The projects were Signature at Yishun (525 units), and The Criterion (505 unites). There were 6-8 bidders competing for the respective sites.
The written permission was obtained from URA and indicated that North Gaia has 616 units. This is more than any previous EC launch.
Launch of EC units is becoming slower
While it seems like there has been an increase in the number launched EC units in recent years, the actual number of projects each year remains low. There were 1,609 units launched in 2021.
This was due to 3 projects: Parc Central Residences and Parc Greenwich. These projects have sold between 80-90% and 90% of their units as of the writing of this article. Due to the scarcity of EC units, there is usually a strong demand.
Lower land sales prices for ECs
An EC site is generally more expensive than a regular condominium. We can see that the land prices for EC sites are higher than condo sites in the Outside Central Region (OCR), according to our analysis of recent sites under the Government Land Sales program (GLS).
An EC site’s average land sale price is lower than a condo. An example: The average land sale price for an EC site in 2021 was $631 psf ppr, compared to $1,195 psf ppr of a condominium. The difference in prices between these two types of sites is $563 per square foot.
Developers can pass along their savings by lowering the price of EC projects. As you can see, this is possible.
ECs are usually sold at a lower cost.
We compared the prices of ECs to condos in the OCR section. We chose condos in OCR to compare because ECs often reside in these segments. It will be a more fair comparison to see these prices.
Our research shows that ECs sell at a lower average price than condominiums. The reason ECs have lower prices than other private properties is that developers can enjoy lower land bid costs.
Price appreciation of ECs
An additional advantage to purchasing an EC is the potential capital appreciation that it offers over time.
We compared EC project prices from 2012 with their resale values in 2021. It is clear that 5 of the projects on the table have seen price appreciation over time.
From 2012 when the project was sold, to its resale in 2021, the average price went up 40%.
Signature At Yishun, and The Criterion were both launched in ECs in Yishun before. Both have seen a significant price increase over the years.
Signature At Yishun launched in 2015 at a unit price average of $773 psf and was subsequently sold for $942 psf. This resulted in a 21.9% increase in the price of the development.
The Criterion launched in 2015 at an average price $796 per square foot and was sold for $955 per square feet in 2021. The price of the Criterion also increased by 20.0%. The projects were both sold within three years of their launch.
Outlook for North Gaia
North Gaia will be the first new executive condo (EC) that is set to open in 2022. We will explore its location, the price trends and reasons why it is a good investment.…
At 5pm today, 77 of 85 units were sold. This reflects a 90.6% take-up rate. Two of the three terraced homes were sold for an average price of $4 million. The majority of semi-detached homes sold at prices between $4.3 million and $4.6 million.”We were happy with the sales performance because it shows genuine interest by expectant owner occupiers,” Terence Teo, executive vice president of Tong Eng Group, says on behalf Fairview Developments. This joint venture is between Yeap Holdings and the Teo-family-controlled Tong Eng Group. This is due to many factors, such as the freehold tenure and superior product. We feel that the price paid was fair.
Mark Yip, CEO at Huttons Asia, stated that “the excellent sales at Belgravia Ace indicates a few things; the ample liquidity on the market; and the profile of buyers, which is primarily first-timers so that the cooling effects may not be keenly felt.According to Doris Ong (deputy CEO of ERA Realty), the response was strong with most buyers being future owners. “Most buyers were first-home buyers while some have sold their homes.” We saw extended families buy together and parents buying for their children.Belgravia Drive is located near Ang Mo Kio Avenue 5. It is also close to shopping malls like Heartland Mall, Seletar Mall, and Compass One in Sengkang. These malls are popular for their F&B and retail amenities. However, they also have a lot to offer in the way of quality tuition and enrichment centers. According to ERA’s Ong. While Belgravia Ace may be in a peaceful, landed residential enclave it is close to many amenities.
“Mak also points out that there is a limited supply of all types and types of landed housing. Are Belgravia Ace sales reflective of the wider residential market? He says that the landed housing market does not depend on foreign demand and therefore doesn’t necessarily reflect condominium demand.PropNex CEO Ismail Gafoor believes that the housing market is resilient, despite the cooling measures implemented Dec 15.
According to Gafoor, 13,000 homes were sold last year at new launches. Gafoor says that 95% of units were bought by Singaporeans and Permanent Residents (PRs).Foreign home buyers were the most affected by the property cooling measures. This included the increase in ABSD. It is a flat 30 percent. Singaporeans and PRs are not affected by the higher ABSD if they buy multiple properties.Gafoor notes that buyers are more discerning about choosing well-designed developments at a fair price. Developers need to be careful about pricing. Prices will rise more this year than last year when private home prices rose more than 10%.
The Good Class Bungalow (GCB) market saw a strong performance in 2021. However, this year is expected to see a decrease in sales volume.
1. GCB sales volume expected to decrease in 2022 but prices to remain stable
Market watchers predict that the volume of Good Class Bungalows will decrease this year, as more supply has been removed from the market following the strong sales momentum between Q4 2020 & Q3 2021
Despite this, GCB prices will continue to rise, albeit at a slower rate, due to the high demand for these properties. KH Tan, Newsman Realty’s Managing Director, sees GCB price increases of at least 10% over the next twelve months.
“Most sellers are strong holders and don’t want to sell. According to BT, they will only consider selling if they are offered at current prices or higher,” stated Steve Tay (List Sotheby’s International Realty’s Senior Vice-President), as quoted by BT.
2021 saw an increase in the number GCBs sold. This was due to a series of high-profile transactions by tech CEOs and their families. Most GCBs are purchased to live in. Due to the low supply of GCBs and rising prices, buyers who plan to purchase GCBs will likely make a purchase if they find a suitable property. This keeps demand strong.
2. Increasing interest rates will cause auction listings to rise
As the government’s extended credit support measures end and interest rates rise, more properties will be put up for auction.
The auction success rate may decrease from 4.8% in 2021. Properties will take longer to sell.
Knight Frank data revealed that auction listings (including repeat listings, but excluding properties not sold at auction) rose by 35.4% annually to 670 in 2021.
MAS has warned Singaporeans about rising mortgage debt in the face of increasing mortgage rates. This could dampen the interest of potential buyers who want to practice financial prudence.
3. Private home sales that are not landed increase by 57.4% in 2021
Despite the recurring flareups in COVID-19 variants as well as changing restrictions, Singapore saw its transaction volume for private non-landed homes rise 57.4% to 28,795 units by 2021.
Despite the fact that Q4 2021 transaction volume fell 20.1% to 6,375 units, this increase is still significant.
Cushman & Wakefield also revealed that Singapore’s realty market had attracted nearly $26.2 billion in investment sales in 2021. This is 10.4% more than the previous year. Quarterly, investment volume slowed to $7.4 Billion in Q4 2021. 38% of total sales were made by the private residential market.
4. For BTO projects that were launched within the past two years, there is a waiting period of three to five years
The waiting time for Build-to-Order projects (BTO), that have been launched in the last two years will be between three and five years. This is similar to BTO projects that were launched before the pandemic.
It expects that flat buyers will be able to move into their new homes in four to five years from the date they book their flats. After taking into consideration the six- to twelve month delays caused by the pandemic, and excluding any other unforeseen circumstances, this is what the ministry expects.
BTO delays have impacted young couples and their families. Many are now looking to rent or resell HDB properties. We can only hope that the affected people will get their keys sooner than we expect due to the continuing manpower shortage and rising material costs.
River Peaks I &II, the Rochor BTO project launched in Nov 2021. Source: HDB
5. There are no boundaries to new HDB flats in prime locations
This is because HDB and MND must consider many factors such as market values and local attributes “before deciding whether or not to apply the PLH method to a specific site”.
MND explained that current intentions are to “apply the new model to select public housing projects in central areas such as the city center and surrounding areas, including GSW that have very high market prices and would require substantial additional subsidies to make flats affordable”.
It is still a hot topic to discuss the location and timing of a BTO project using the PLH model.
6. New, resale HDB flats remain affordable
(MND) revealed that all new Housing and Development Board flats (HDB) are priced below market.
The ministry replied to Parliament in writing, explaining that HDB determines the market value of new flats by first comparing the prices of similar resale flats near them as well as the individual characteristics of the flats and the prevailing market conditions.
HDB applies a substantial subsidy to the assessed value to ensure affordable first-time homes. Eligible first-time buyers may also be eligible for up to $80,000. To ensure that such flats are affordable to first-time buyers, the government offers up to $160,000 in housing grants. To ensure that resale flats are affordable for families with first incomes, the government provides housing grants of up to $160,000.
Housing affordability is a major concern, especially among SIngaporeans. It is clear that the Singapore government is closely monitoring housing supply and prices as HDB resale values rise for seven consecutive quarters.
7. Construction of Serangoon North and Tavistock stations will begin in Q2 2022
The LTA has awarded two civil contracts totaling $861 million. Hock Lian Seng Infrastructure won the contract to design and construct Serangoon North station, tunnels and station. Sato Kogyo(S) was awarded the contract to design and build Tavistock station, tunnels and station.
CRL is Singapore’s eighth MRT line. Its first phase will be available for passenger service in 2030.
Stage 1 of CRL will see 12 stations constructed, serving over 100,000 households in the Loyang Pasir Ris and Tampine areas.
8. Three foreigners were responsible for a woman being jailed for purchasing properties from her
Two weeks imprisonment was given to a Singaporean woman for buying three detached properties for three foreigners. The intention was to transfer ownership after they obtained Singapore citizenship.
Song Fanrong was sentenced to one year in prison for violating the Residential Property Act. He was accused of purchasing a restricted residential property for a foreigner. Song Fanrong had offered to buy a Belgravia Villas residential unit for Wang Chen, a Chinese national.
The sentencing considered two similar charges against the two properties.
9. Edmund Tie is cautiously optimistic about real estate in 2022
Edmund Tie is cautiously optimistic about the prospects for the residential, investment, industrial and retail real estate markets this year. The office segment will see positive net absorption growth and rental growth.
It also noted that the prospects for industrial sectors remain strong and intact, especially for high-specification logistics. Edmund Tie anticipates that certain sectors, such as precision engineering, logistics, and electronics, will see expansions despite businesses being cautious about their space needs.
Retail sentiment will improve as COVID-19 is accepted in the community. The retail sector is likely to stabilize this year. Edmund Tie predicts that residential price growth will slow following the introduction cooling measures.
10. CBD Grade A office demand rose by more than 8x between 2021 and 2021
CBD Grade A office space has seen a more than eight-fold increase in demand, reaching 0.8 million square feet by 2021.
This rise in demand can be attributed to the shift towards quality office space, driven by technology and financial sectors. These branches accounted to at least 72% in new CBD leases last year according to Cushman & Wakefield data.
“Resurgent office demand, tight supply, and expected tightening vacancy rate are expected to propel CBD grade A office rents up by 4.6% in 2022,” stated Wong Xian Yang (Cushman & Wakefield Research Head for Singapore).
11. Omicron affecting Singapore REITs: Singapore REITs will continue to recover
UOB KayHian believes that Singapore’s REITs will continue to recover despite the Omicron variant’s threat, owing to the city-state’s high vaccination rates, and opening of borders.
Singapore has agreements with 24 countries on vaccination travel lanes (VTL). The border between Singapore, Malaysia and Singapore remains open.
The Good Class Bungalow (GCB) market saw a strong performance in 2021. However, this year is expected to see a decrease in sales volume.
Jonathan Koh, UOB KayHian’s CFA, expects that the reopening and expansion of VTLs will occur in 2H 2022. He also anticipates new agreements being introduced. This will increase the recovery of the hospitality industry to 2H 2022.…