Prices of prime district homes at new high

Outlook for rest of year less rosy as uncertainty in global economy likely to keep buyers away

PRIME property prices are at record highs having surpassed the peak seen in the first quarter of 2008, according to Jones Lang LaSalle (JLL).

Prices of prime homes - in Districts 9, 10 and 11 - shot up 8 per cent in the second quarter, hitting an average of $1,350 psf.

However, prices for luxury prime properties - those in the same districts but at least 3,500 sq ft in size and with ultra-luxurious fittings - are still about 8.4 per cent below the last peak in 2008, at about $2,500 psf.

Early government estimates last week said private home prices rose a higher- than-expected 5.2 per cent in the second quarter after a 5.6 per cent jump in the first.

JLL's report yesterday noted that price growth has been supported by an improved rental market.

Prime rentals have grown by an average of 10.8 per cent over the first half of the year, supported by increased demand from expatriates in the financial and petrochemical sectors, said JLL.

Investment sales also appear healthy.

DTZ Research said in a separate statement yesterday that investment sales for the second quarter posted a 64.1 per cent increase over the previous three months to hit $4.71 billion, of which 58.3 per cent were from residential transactions.

This was driven by a record-breaking quarter in sales of government sites earmarked for residential use. These totalled $1.85 billion in the second quarter, surpassing the $1.51 billion record set in the last quarter of 2007.

However, the outlook for the rest of the year is not as rosy.

JLL's head of research, South-east Asia, Dr Chua Yang Liang, noted that until buyers can predict the impact of the euro zone crisis on the property market, there will be further slowdown in both sales volume and price growth for the next six months.

JLL said the uncertainty in the global economy has kept buyers at bay: 3,127 caveats were lodged in the second quarter, a 21.6 per cent drop from the previous quarter.

Still, this is 78.4 per cent above the average of 1,753 units sold per quarter from 2000 to last year, noted JLL, whose figures are based on Urban Redevelopment Authority (URA) data as of June 26.

Its report found that the number of foreign buyers are falling - down 28.3 per cent to 898 in the second quarter compared with the previous quarter, while the number of local buyers slid by 21 per cent to 2,112 over the last quarter.

Chinese buyers are proving the most resilient.

They accounted for 18.5 per cent of caveats lodged by foreigners for resale private apartments in the second quarter - up from just 6.2 per cent in the first quarter of 2007.

JLL's head of residential, Ms Jacqueline Wong, noted that increasingly, 'Chinese buyers are climbing up the price ladder and buying up properties in the prime market which is traditionally dominated by the rich Indonesians and Malaysians'.

These are high-net-worth individuals who can spend at least $2.5 million, she said.

The caveats lodged by Chinese buyers for resale units priced $1.5million and above are more common today than a year ago, she added.

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RESILIENT

'Chinese buyers are climbing up the price ladder and buying up properties in the prime market which is traditionally dominated by the rich Indonesians and Malaysians.'

Jones Lang LaSalle head of residential Jacqueline Wong


Source: Straits Times, 6 Jul 2010