Apartment vacancy rates in Singapore are almost at a 10-year high, with about 9.2 percent of units sitting empty in Q2 2015, the highest since a 9.8 percent rate was recorded in end-2005, reported The Straits Times.
The rise in vacancy rates may be due to the record number of home completions. In 2014 alone, 19,941 private homes were completed while another 42,606 units are expected to be completed this year and in 2016, of which 96 percent are non-landed homes, according to SLP Research.
The oversupply is partly a result of the government’s efforts to cool the residential market. And as housing demand fails to grow along with supply, rents are expected to remain under pressure. This resulted to the government releasing ewer development sites available for sale, with units on the land sold only enter the market after four to five years.
Meanwhile, on the demand side, it is reported that immigration is key to boosting the numbers but it is widely unpopular. The government has been restricting the number of people coming to Singapore, a policy which has contributed to higher vacancy rates.
The slowdown in the global economy is also making matters worse, with many agents facing lease terminations for expats working in industries faring poorly like oil and gas and banking.
In fact, demand could be hit further by a new policy unveiled by the Ministry of Manpower which would raise the minimum salary cap for foreigners working in Singapore to apply for visas for their family members. Nonetheless, market watchers feel the government has shown signs of softening its stance.
Speaking at a recent dialogue, Prime Minister Lee Hsien Loong said it makes economic sense to accept foreign labour as well as immigrants, even though it may be emotionally hard to accept. He said “we need to make the best possible decision for Singaporeans.”
Decisions in this area impact housing, the outlook of which is bleak should demand fail to grow. With the non-landed vacancy rate likely to hit 10 percent by end-2015, SLP Research expects the woes of property developers and landlords to continue.
New HDB scheme to offer shorter, cheaper leases
National Development Minister Khaw Boon Wan recently wrote on his blog that extensive public consultations are currently underway as to how studio apartments and 2-room flats can be combined into the new 2R Flexi scheme, but still retain their objectives.
Mr Khaw explained that singles and families will still be able to purchase a new 2-room flat from HDB on a 99-year lease, but elderly households aged 55 and above can choose a shorter lease period based on their age and preference under the unified scheme.
The lease options range from 15 to 45 years in 5-year increments, and will be granted provided the chosen lease allows applicants and their spouse to live in the flat till age 95 or above.
Prices of the 2R Flexi flats will take into account the lease tenure and whether they are bought by first-time or second-time buyers.
“Shorter lease flats will be cheaper than longer lease flats. Second-timer buyers will pay more than first-timers as the latter will get more subsidies. Through a combination of pro-rated grants for first-timers and pro-rated resale levy for second-timers, we will be able to price the 2R Flexi flats so that recent buyers of SA or 2R flats will find the 2R Flexi scheme to be fair. New buyers of 2R Flexi flats will also find the flats affordable,” wrote the Minister.
The government is expected to launch the unified scheme during the next Build-to-Order (BTO) exercise in September.
Quality of HDB flats now better
Assessors from the Building and Construction Authority (BCA) will conduct inspections on a new public housing unit – checking the quality, workmanship and whether it is safe to live in – before keys to the apartment are presented to homeowners.
A Straits Times report said the checks will be scored under the Construction Quality Assessment System (Conquas), reflecting the unit’s overall workmanship quality. As such, a higher score implies better workmanship. Aside from structural works, the Conquas score also takes into account electrical and mechanical works.
Meanwhile, the housing board revealed that despite recent reports of defects found in several new Build-to-Order (BTO) flats, the Conquas score for HDB flats has been steadily increasing.
The average HDB Conquas score improved from 65.7 in 1989 to 88.6 in 2014. Notably, public housing projects have been registering a Conquas score of more than 81 since 2008.
A spokesperson for the Ministry of National Development (MND) attributed the higher score to “a robust framework of quality assurance and checks that HDB has put in place”.
Ex-site for columbarium in Sengkang attracts four bids
A land parcel at Fernvale Link in Sengkang that was to be developed into a Chinese temple attracted four bids during the close of its tender earlier this month.
Thye Hua Kwan Moral Society submitted the highest bid of $6 million, followed by the Buddhist Compassion Relief Tzu Chi Foundation (Singapore) at $4.58 million.
In July last year, the site was awarded to Eternal Pure Land (EPL), which planned to build a columbarium. However, the tender was recalled by the Ministry of National Development (MND) after nearby residents objected to the company’s plan for the site.
Earlier in May, MND revealed it would re-tender the 2,000 sqm site for its original purpose – as a Chinese temple.
The top bid by Thye Hua Kwan Moral Society was more than the $5.2 million bid by Eternal Pure Land back in 2014.
Higher demand for APAC office spaces in Q2
Demand for office space in the Asia Pacific region soared in Q2 2015, with gross and net leasing volumes surging 41 percent and 76 percent year-on-year respectively, revealed JLL.
India and mainland China were the top performers, with the former contributing 40 percent of the overall regional gross absorption and its volumes nearly doubling from the level seen in Q2 2014. On the other hand, leasing activity was muted in Singapore.
Propelled by the strong appetite for space by technology firms, office leasing volume across the world increased by eight percent on an annual basis, reaching its highest level for more than three years.
Despite this, gross global leasing volume is only expected to increase by up to five percent year-on-year in 2015. Nevertheless, the Asia Pacific figure is expected to rise sharply by 15 to 20 percent.
Bank lending hits 5-month high
On the back of higher loans in the building and construction sector as well as general commerce, Singapore’s total bank lending rose to a five-month high in June, revealed latest data from the Monetary Authority of Singapore (MAS).
The data shows that total loans and advances by domestic banks increased 1.6 percent to $606.8 billion last month, the highest since January and from $597 billion in May. Bank lending in June also grew 1.5 percent compared to a year ago at $597.8 billion.
Housing and bridging loans increased 0.5 percent from $179.4 billion in May to $180.3 billion in June. The loans amounted to $171.8 billion in the same period last year.
Total consumer loans climbed 0.6 percent month-on-month to $238.8 billion, while credit card loans rose 1.0 percent from $9.64 billion in May to $9.74 billion in June.
Sing dollar weakens further, hits 5-year low
Following the surprising change in China’s foreign exchange policy Tuesday (11 August), the Singapore dollar weakened against the greenback and is now down to a five-year low at S$1.40 per US dollar. It fell about 1.14 percent against its US counterpart to its lowest level since June 2010.
China’s surprise move to devalue its tightly-controlled yuan caused its currency to post its biggest one-day loss against the US dollar in 20 years, reported Channel NewsAsia.
Other Asian currencies also reported losses, with the Philippine peso falling to a five-year low, while the Korean won weakened to hover around a three-year trough. Meanwhile, the Malaysian ringgit and Indonesian rupiah fell to lows last seen during the Asian financial crisis 17 years ago. The ringgit weakened further against the Singapore dollar at RM2.84 per S$1.
Analysts and traders believe the yuan is included in the basket of currencies used by the Monetary Authority of Singapore (MAS) to manage its monetary policy, therefore it is closely monitored against the local currency.
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