Condo lights tell a similar story, 1 year on

THEN... The Interlace in a photo taken last year. The development received its Temporary Occupation Permit in September 2013.
Condo lights tell a similar story, 1 year on

...AND NOW: It is the only one among 10 developments that is visibly more lit up than a year ago. PHOTOS: THE BUSINESS TIMES


    Jun 26, 2015

    Condo lights tell a similar story, 1 year on

    AMPLE data is available on the overall rise in vacancy rates in Singapore's private residential property market, but there are no official statistics on vacancy rates in individual completed condo developments.

    Comparing photos taken at night in May last year and about the same time this year of 10 developments provides some clues.

    The findings: Only one of the 10 developments was visibly more lit up than a year ago - The Interlace, a 1,040-unit condo along Depot Road.

    The other projects were, at best, just slightly brighter than 12 months ago.

    This result is somewhat surprising.

    Half the 10 dark condos have been fully sold by their developers: The Laurels, The Vermont on Cairnhill, RV Edge in Shanghai Road, Canberra Residences in Sembawang and NV Residences along Pasir Ris Grove.

    Units in three other developments have been mostly sold. As of June 11, 98.6 per cent of the units at Marina Bay Suites had been sold; the figure for Goodwood Residence in Bukit Timah was nearly 91 per cent and The Interlace, 85 per cent.

    The developers of the two remaining projects, Cape Royale and Hilltops, are focused on leasing out the units.

    Leasing activity has also been decent at all the projects, going by the volume of lease commencements.

    Property consultants and developers offered a few explanations for why the majority of the sample of dark condos have stayed relatively dark a year later.

    One is the changing profile of expat tenants, in tandem with Singapore's rise as a regional business hub and a gateway city.

    Jacqueline Wong, head of residential leasing and ad-hoc sales at Savills Singapore, said: "These days, Singapore attracts more foreigners who are based here, but travel around the region for work."

    "Such tenants may have leased apartments here, but are out of the country for more than half of the lease period, so from the outside, the units look unoccupied, and this is especially obvious at night," she added.

    Another reason, said consultants, would be that units in prime locations bought by well-heeled foreigners are among the several properties they own around the world.

    These may be holiday homes, occupied only a few times a year, and so, are unlit the rest of the time.

    Ong Kah Seng, director at R'ST Research, also points out that some local high-net-worth individuals (HNWIs) may be holding off from renting out newly-completed properties, given the weak rentals.

    Agreeing, CBRE executive director for residential properties Joseph Tan added that these investors may prefer to keep the unit empty for an easier sale to a buyer looking to occupy it.

    Agents said the unoccupied units in those mass-marketed developments could be the result of their HDB-upgrader owners having been caught by the cooling measures, which have weakened resale prices of public-housing flats.

    These upgraders could thus have decided to stay on in their HDB flats, in hopes of getting a higher price for their flats before moving to their private condo unit.

    Of the 10 projects, The Interlace showed the most marked increase in the proportion of lit units between May 2014 and May this year.

    It had received its Temporary Occupation Permit (TOP) in September 2013, and as of June 11, the developer (a consortium comprising CapitaLand, Hotel Properties and National University of Singapore) had sold 882 of its 1,040 units.

    A CapitaLand Singapore spokesman said the majority of buyers are Singaporeans.

    Sited on the former Gillman Heights site in Depot Road, the 24-storey project comprises two to four-bedders and penthouses.

    On the other hand, the proportion of lit units at four upscale projects - Marina Bay Suites, Goodwood Residence, The Laurels and The Vermont on Cairnhill - had made little improvement between May 2014 and May this year.

    Foreign buyers bought substantial proportions of units from the developers of these projects.

    The arguments from the experts do not diminish the gravity of the overall supply overhang in Singapore's housing market, given the ramp-up in private home completions that began last year.

    The number of units that obtained TOP surged 51.6 per cent from 13,150 units in 2013 to a record 19,941 units last year.

    Completions are expected to step up in the Q2-Q4 period this year, which will continue to push up vacancy rates.

    Then there is also the ongoing slowdown in the hiring of foreign expats - core contributors to private residential leasing demand.

    With rising completions and vacancies, rents have eased.

    The Urban Redevelopment Authority's overall rental index for private homes has fallen 5.1 per cent from the Q3 2013 peak to Q1 2015.

    Private residential rents are expected to continue facing downward pressure as the supply of private residential properties completed this year is higher than the leasing demand can comfortably absorb, said Savills.