• 717274caecff6640d2aa574984bcb542_0_0 Perspective: A review of news from 15 Jan to 22 Jan 717274caecff6640d2aa574984bcb542_0_0 Perspective: A review of news from 15 Jan to 22 Jan

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Perspective: A review of news from 15 Jan to 22 Jan

22 Jan 2018
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Global economy anticipated to grow strongly amid uncertainty

The global economy is expected to expand at a faster pace, according to reports from the World Bank, International Monetary Fund and Asian Development Bank. The stronger growth is backed by increased consumer spending, the recovery of investments, manufacturing and international trade. To benefit and compete effectively in the global economy, Singapore seeks to restructure its sectors by adopting automation, analytics and digitisation. For instance, the future Tuas mega port will be an “efficient and intelligent” port that harnesses emerging technology to optimize operations.

Notwithstanding, the global economy faced short-term risks such as geopolitical tension and countries facing bad debt. According to Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), there are three bears to look out for. The “papa bear” of inflation may come back, and monetary policy could tighten quickly. Separately, the ‘mama bear” of protectionism is also a concern, given the geopolitical situation. The “baby bear” of financial instability due to the high leverage built up in both G-7 economies and emerging Asia also present risks to investors.

Office market is likely to improve as office spaces in recently completed and upcoming buildings are steadily taken up

The office market continued to show signs of improving, as office spaces in recently completed and upcoming buildings are taken up. Paya Lebar Quarter, reportedly secured tenants for more than 50 per cent of its office space, including some that are in an advanced stage of negotiation. Its prospective tenants included both local and multinational corporations in finance, technology and real estate sectors. Separately, Marina One and Duo were recently opened by Singapore Prime Minister Lee Hsien Loong and Malaysia Prime Minister Najib Razak. Tenants in Marina One include Julius Baer, Facebook, PwC Singapore, Prudential, Grab, Olam International, BP Global and Daiwa Capital and Mitsubishi UFJ Financial Group. The tenants in DUO include Abbott Laboratories, Mastercard, Regus Serviced Offices, Amcor and Chevron.

The residential market and collective sales

The residential market performed exceedingly well in 2017 according to data from URA, with developer sales of private homes and executive condominiums reaching the highest in four years. There were about 14,707 units transacted, with Qingjian Realty, Frasers Centrepoint and City Developments Limited among the developers to record more than 1,000 sales. The sales momentum continued in 2018, with City Developments Limited selling 18 units of its high-end condominium project, New Futura, at an average selling price of $3,200 per sq ft. The positive response is likely to trigger more launches. Two-thirds of the buyers were permanent residents and foreigners. Singapore’s relative affordability compared to other regions attracted more overseas bueyrs, especially since Singapore is just coming out of a downturn. We anticipate home sales to reach about 15,000 to 17,000 units in 2018, barring any external shocks.

The stronger sales continued to encourage collective sales. Kismis View, a 99-year leasehold condominium in Upper Bukit Timah was sold to a joint venture between Roxy-Pacific Holdings’ wholly owned unit RP Ventures and TE2 development, a private family office of Tong Eng Group’s managing director, Teo Tong Lim, at $102.75m ($941 per sq ft per plot ratio, including the development charge to top up the lease).

Some of the collective sales launched in the past week include

Existing Development Tenure Location Existing Gross Floor Area (sq ft) Maximum Gross Floor Area (sq ft) Asking Price Estimated DC Payable Land Rate (Including DC, excluding Balcony Bonus)
Hollandia Freehold Holland V N.A 107,688 $163m None $1515 per sq ft per plot ratio
Dunearn Gardens Freehold Off Newton Road - 267,329 $488.8m $35.7m $1,962 per sq ft per plot ratio
Balmoral Gardens Freehold 11b Balmoral Road - 58,814, with height limit to 12 storey $92m $18.1m $1,872 per sq ft per plot ratio
Eunos Mansion Freehold Along Bedok Reservoir Road and Jalan Eunos - 178,835 $218m None $1,219 per sq ft per plot ratio

Source: Straits Times, Business Times, Edmund Tie & Company

Retail sector: Attracting the millennials

Retailers are relying on data analytics to understand their customers and technology to attract the millennial customer. For instance, United Overseas Bank piloted a new concept at its Tampines branch, using insights from its customers. One of the new features of the branch is a QR code wall that allows customers to scan a QR code using their smartphone. They will then be directed to the information they need. There were five self-service machines that are accessible at any time of the day. To enhance the user experience, the bank tied up with Sugarhaus, a local ice-cream parlour and café, to operate at the adjoining space.

Setting the bar higher was Amazon, which set to open its automated grocery store in Seattle to the public.

Summary

Foreign Markets

Market Country Trend Cause
Commercial and industrial real estate Eastern Europe Prices are surging despite the political uncertainty. Excess liquidity
Residential Market London, United Kingdom Prices for London homes fell in Dec 2017, largest decline since financial crisis Higher purchaser taxes on expensive homes, Brexit, and concerns of financial sector
Housing Market Sweden Worst housing market downturn since global financial crisis Surge in construction

 Source: Straits Times, Business Times

 

By Dr Lee Nai Jia
Head of Research
Edmund Tie & Company
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Disclaimer: This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, Edmund Tie and Company can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to Edmund Tie and Company.

© Edmund Tie & Company 2018

 
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