Newsletter Feb 2024
By Kelvin Sin | Livefree.sg | 23 Feb 2024
1. Market
1.1.1 ABSD Refund for Singles, Aged 55 & above
1.1.2 Revision of Property Tax Rates
1.1.3 Revision of ABSD Clawback Rates
2. New Projects
3. Land Sales & Enbloc
1.1.1 ABSD Refund for Singles, Aged 55 & above
Eligible single seniors can now claim a refund on the ABSD paid for their second private property when downsizing. This policy aims to assist seniors in unlocking funds from their existing property to support retirement. The refund is applicable if they sell their first residential property within six months of purchasing the second, with the policy taking effect from February 16. Previous Policy: Before this announcement, only married Singaporean couples with an existing residential property could enjoy an ABSD refund on a replacement private property. This change thus extends the benefit to single seniors as well. The ABSD for a second property purchased by Singaporeans has been 20% since April 2023. This high rate has previously limited seniors primarily to HDB resale flats when considering downsizing. Market Impact: This policy will help seniors financially prepare for retirement by liquidating their first property. It might also increase demand for smaller private homes, such as one- and two-bedroom units, as these are more affordable and suitable for individuals or smaller families. This policy update is a targeted measure to support senior citizens in Singapore by making it easier to downsize and plan for retirement.
1.1.2 Revision of Property Tax Rates
The "two-step increase" in property taxes introduced in Budget 2022 was designed as a wealth tax targeting investment properties and high-end owner-occupied private properties. This was to impact the top 7% of owner-occupied properties but ended up affecting 13% due to sharp rent increases from 2022 to 2023, which raised the annual values (AVs) of these properties. Adjustments in AV Bands: Under Budget 2024, adjustments will be made to the AV bands for owner-occupied residential property tax rates starting January 1, 2025. The tax adjustments aim to ensure those in higher-value properties pay a fair share of taxes. The lower AV threshold will increase from $8,000 to $12,000, and the highest band from over $100,000 to above $140,000, with adjustments to intermediate bands as well. Support Measures: A 24-month interest-free installment plan will be introduced for retirees living in higher-end residential homes to ease cash flow challenges when paying property taxes. To mitigate the impact of these tax changes, the government will provide a rebate this year and may offer another in 2025 if necessary. Property Tax Payable: The tax payable for residential properties with AVs of $50,000, $100,000, and $150,000 will see a decrease by 31%, 28%, and 21%, respectively, from January 1, 2025. This revision is expected to benefit mid-tier property owners the most. The increase in rental prices has pushed many homeowners' AVs above $30,000, leading to higher property taxes. The adjustment for 2025 is seen as timely and fair, especially for those not benefiting from the rental hike, as rental prices are expected to remain stable or not drop significantly due to a lower completion rate of new condos or residential projects. Market Impact: The changes may encourage homeowners, especially retirees with higher-value properties but no/lower income, to retain their properties instead of downgrading, thanks to the revised AV bands and the installment plan. The property tax adjustments in Singapore's Budget 2024 aim to address the wealth disparity in property ownership, provide relief to certain homeowners, especially retirees, and ensure a fair taxation system amidst the dynamic real estate market.
1.1.3 Tiered ABSD Clawback Rate for Developers
A new tiered clawback rate for developers has been introduced, applicable to residential projects where at least 90% of the units are sold within the stipulated five-year timeframe, with an additional six-month extension granted for the Covid period. This adjustment aims to provide developers with some flexibility while ensuring the timely release of housing supply. Industry Reaction: While the industry acknowledges the gesture, the impact of the tiered clawback rate might be limited. Developers are likely to continue their efforts to sell as many units as possible upfront to avoid the ABSD on land. Developer Strategies and Challenges: Developers face multiple challenges, including rising development costs, market cooling measures, and a sluggish economy. The tiered ABSD clawback rate may incentivize developers to offload remaining units, but overall, developers are expected to remain cautious in their land acquisition strategies. Market Impact: The new ABSD rule for developers makes a small change to their financial situation, giving them a bit of help but probably not changing how they act or the overall housing market much. This rule is trying to make sure new homes are sold quickly while understanding the financial challenges developers face due to many other market problems.
1.2 Market Trends 2024
Increasing Demand Among Singaporeans: Singaporeans have been the major buyers in the new private home market, with their share increasing from 75.8% in 2015 to 84.5% in 2020 and maintaining that level since. This trend persists even with recent challenges like higher interest rates, economic slowdowns, and cooling measures introduced in April 2023. Youth-Driven Market: There's a significant shift towards younger buyers, particularly those aged 26 to 35, whose participation in the new private home market has more than tripled between 2015 and 2022. In 2023, young Singaporeans (26-35 years old) accounted for 35% of new private home sales, up from 9% in 2015. The median age of new private home buyers has decreased from 45 in 2015 to 39 in 2023, indicating a younger buyer demographic. Despite a general decline in sales due to cooling measures and economic pressures, the 26-35 age group has shown the smallest decrease in buying activity compared to older cohorts. Economic Factors and Affordability: Rising incomes among young Singaporeans have enabled this demographic to afford new private homes. The median gross monthly income for residents aged 25-29 and 30-34 has increased significantly from 2016 to 2022, making it easier for younger individuals to enter the private housing market. Impact of Interest Rates and Mortgage Eligibility: Higher interest rates since the second half of 2022 have affected mortgage eligibility, particularly disadvantaged older borrowers due to stricter loan conditions and shorter tenures. Shifting Preferences from Public to Private Housing: Young couples earning above the income ceiling for Build-To-Order (BTO) flats are increasingly considering executive condos (ECs) or new private properties as alternatives. Furthermore, changes aimed at ensuring long-term affordability of public housing might encourage more Singaporeans to view private homes as better investment options. Investment and Savings Trends Among Youth: A substantial portion of young Singaporeans are engaged in investing, which helps them accumulate the necessary down payment for home purchases. This investment-savvy behavior supports their entry into the private housing market. Future Outlook: While the trend of young Singaporeans entering the private housing market is clear, its sustainability is contingent on economic conditions, income growth, and personal financial priorities. Upcoming private residential project launches could further stimulate this demographic's participation in the market.
2.1 Lentoria
Preview: 17 Feb to 27 Feb Booking: 2 Mar Developer: TID Residential Tenure: 99yrs Units: 267 Expected TOP: July 2027 Land Size: 114,456 sqft Car Park: 277 Lots with 3 EV Lots Selling Points: A prime residential development in New Lentor Precinct offering unparalleled convenience. With direct access to MRT and retail mall via sheltered walkway, attractive pricing, and proximity to CHIJ St. Nicholas Girls’ School, Lentoria presents an ideal living choice. Residents enjoy an early mover advantage with upcoming developments nearby. Short travel distance to CTE & SLE, plus upcoming North-South Expressway ensures seamless connectivity.
2.2 The Hill at One-North
Preview: Postponed Booking: Postponed Developer: Kingsford Tenure: 99yrs Units: 142 Expected TOP: December 2027 Land Size: 63,901 sqft Car Park: TBC Selling Points: The Hill @One-North is conveniently located within walking distance of both Bouna Vista and one-north MRT stations, it resides in the dynamic business park of one-north, hosting renowned firms in ICT, biomedical sciences, media, and engineering. Notably, The Hill @One-North enjoys proximity to Rochester Mall and The Star Vista, providing a plethora of retail and F&B options. Additionally, it's just an MRT stop away from Holland Village MRT station, offering access to the vibrant neighborhood of Holland Village and the brand-new One Holland Village, spanning over 13,500 square meters of dining, shopping, and lifestyle choices. For families, the development is surrounded by esteemed primary schools, such as Fairfield Methodist School (Primary) within 1km and Henry Park Primary School within 2km.
2.3 Ardor Residence
Preview: 24 Feb - 4 Mar Booking: 6 Mar Developer: Nanshan Group Tenure: Freehold Units: 35 Expected TOP: Q3 2025 Land Size: TBC Car Park: TBC Ardor Residence, where luxury meets convenience With fast key collection in just 18 months, Ardor offers an exclusive living experience with a plethora of amenities including a swimming pool, BBQ pavilion, gym, jacuzzi, and children’s playground. Located a short stroll from the upcoming Tanjong Katong MRT Station, residents enjoy superb convenience with Dunman Food Centre, I12 Katong, Parkway Parade, Kinex, and East Coast Park within walking distance. Reputable schools like Tanjong Katong Primary and Haig Girls are nearby. Plus, its centralized location ensures a short drive to CBD, Suntec City, and Marina Bay. Experience elevated living at Ardor Residence.
2.4 Lentor Mansions
Preview: 1 Mar - 11 Mar Booking: 16 Mar Developer: Guoccoland & Intrepid Tenure: 99yrs Units: 533 Expected TOP: Q3 2027 Land Size: 235,373 sqft Car Park: 533 Selling Points: Lentor Mansion offers residents seamless access to amenities, transportation, and top-notch schools within a kilometer radius. Its strategic positioning ensures effortless commuting through the upcoming North-South Corridor and Lentor MRT station on the Thomson-East Coast line. Lentor Modern Mall, a mere 5-minute walk away, provides a plethora of conveniences including a childcare center, shops, dining options, and a supermarket, directly linked to the MRT station for residents' ease. Developed by GuocoLand and Intrepid Investments, Lentor Mansion epitomizes quality and innovation, promising a balanced urban-natural living experience amidst the tranquil Lentor Hills neighborhood.
3.1 Orchard Boulevard
UOL and Singapore Land Lead Bidding with $1,616 psf ppr for Orchard Boulevard GLS Site In the recent government land sales (GLS) tender, UOL Group and Singapore Land Group have emerged as frontrunners with their bold bid of $428.28 million, equating to $1,616 per square foot per plot ratio (psf ppr), for the coveted Orchard Boulevard site. This prime 99-year leasehold plot spanning 75,686 square feet is earmarked for residential development with commercial elements on its ground floor, boasting a potential gross floor area of 264,911 square feet and the capacity to accommodate approximately 280 residential units. The strategic significance of this bid lies in its alignment with the developers' vision to erect a luxurious 36-storey condominium, capitalizing on the site's unparalleled panoramic vistas and its convenient connectivity to the Orchard Boulevard MRT station. This move underscores a growing trend of developers expressing renewed confidence in the Core Central Region (CCR) and Orchard Road precinct, spurred by the stellar performance and robust pricing achieved in recent projects such as Watten House. Situated within a stone's throw from Tanglin Mall and surrounded by a plethora of upscale amenities including luxury hotels, this development is poised to cater to discerning buyers seeking opulent urban living experiences. Despite its premium positioning, the bid reflects a prudent approach, coming in at 32% lower than a neighboring site's price six years ago, indicative of developers' acknowledgment of heightened risks and escalating development costs, compounded by additional buyer's stamp duty for foreign buyers. Furthermore, this bid marks a strategic move for UOL Group, which has a track record of successful developments in the vicinity including Orchard Bel-Air. Despite a failed collective sale attempt in 2023, UOL remains steadfast in its commitment to shaping the landscape of Orchard Boulevard, solidifying its position as a key player in Singapore's dynamic real estate market.
3.2 Plantation Close EC
Hoi Hup Realty-Sunway Developments Secure Prime Plantation Close EC Site with Top Bid of $701 psf ppr Hoi Hup Realty and Sunway Developments have clinched the top bid for the executive condominium (EC) site at Plantation Close in Tengah, submitting a winning bid of $701 psf per plot ratio (ppr), totaling $423.38 million. This bid emerged as the highest among four received at the close of the tender on Feb 1. The strategic significance of this bid is underscored by the potential amalgamation of this new site with a previous adjacent EC site won by the same joint venture developers, which could result in a mega EC project comprising a total of 1,055 units, subject to authorities' approval. The relatively marginal price difference between the top and second highest bids indicates developers' confidence in the sustained strength of EC demand. Marcus Chu, CEO of ERA Singapore, predicts an estimated selling price starting from $1,500 psf, reflecting this robust demand. This strong developer interest in EC projects is attributed to sustained demand from HDB upgraders, drawn by the affordability of new ECs compared to suburban private homes. Recent successful EC launches like Lumina Grand and Altura further affirm this trend, with high sales figures and competitive average prices. Situated within the future town of Tengah, the Plantation Close site is expected to yield approximately 560 housing units, benefitting from improved connectivity with the upcoming completion of two MRT stations on the Jurong Region Line, enhancing accessibility to the second Central Business District at Jurong East. This successful bid underscores developers' optimism in the EC market, driven by strong demand from HDB upgraders seeking affordable yet luxurious housing options, backed by strategic location and improved connectivity prospects in emerging residential hubs like Tengah.
3.3 Marina Gardens Crescent - Sole Bid of $984 psf ppr Rejected
URA Rejects GuocoLand-Led Consortium's Bid for Marina Gardens Crescent GLS Site The Urban Redevelopment Authority (URA) has rejected a bid of $984 per square foot per plot ratio (psf ppr), totaling $770.46 million, submitted by a consortium led by GuocoLand, Hong Leong Holdings, and TID for a government land sale (GLS) site at Marina Gardens Crescent. This bid was the sole submission for the 1.73-hectare white site. According to URA's press release on Feb 8, the rejection was based on the assessment that the bid was deemed "too low." Consequently, the site will be placed on the Reserve List of the 1H2024 GLS Programme, allowing other interested parties to submit bids with a minimum price acceptable to the government. This decision comes after the awarding of an earlier land parcel in the Marina Gardens area to a Kingsford Group-led consortium last June. The winning bid for that site amounted to $1.034 billion, translating to a land rate of $1,402 psf ppr. Interestingly, the bid from the Kingsford Group-led consortium was 42% higher than the next highest bid, which was submitted by a joint venture between GuocoLand and Hong Leong Group. In addition to the Marina Gardens Crescent site, URA also announced the tender decision for a separate GLS site at Media Circle, which has been awarded to a joint venture comprising Qingjian Realty and Forsea Holdings. This consortium submitted the highest bid of $395.29 million, equating to $1,191 psf ppr. The rejection of the GuocoLand-led consortium's bid underscores the stringent evaluation process undertaken by URA to ensure fair market value and optimal land use for GLS sites. This decision also highlights the competitive landscape of land acquisition in Singapore's real estate market, with developers vying for prime locations to capitalize on future development opportunities.
3.4 Pine Grove 5th Enbloc Attempt
Pine Grove Sets $1.78 Billion Valuation for Fifth Collective Sale Attempt Pine Grove, a 660-unit privatised Housing and Urban Development Co. (HUDC) estate, is embarking on its fifth collective sale attempt, scheduled to launch on Mar 6. The estate, located in District 21, will be relaunched at a valuation of $1.78 billion, marking an 8.7% reduction from its previous reserve price of $1.95 billion. An extraordinary general meeting held on Jan 21 secured over 60% of owners' consent for the revised reserve price, set at $1.78 billion. The revised land rate stands at approximately $1,335 psf per plot ratio (psf ppr), inclusive of a 10% bonus gross floor area (GFA) for balconies, lease top-up, and land betterment charges. The site, completed 40 years ago with a remaining lease of 59 years, spans 893,219 sq ft and has a plot ratio of 2.1, offering redevelopment potential for up to 2,050 residential units. Adjacent GLS sites, Pine Grove (Parcel A) and Pine Grove (Parcel B), were previously sold, providing benchmarks for land value and housing demand in the Ulu Pandan area. Despite no formal offers during the previous tender period, Pine Grove's strategic location and redevelopment potential remain attractive to developers, evidenced by similar successful collective sale attempts such as Pearl Bank Apartments and Peace Centre/Peace Mansion. The upcoming collective sale, the third attempt to secure an 80% consensus among owners, aims to capitalize on the robust demand for residential developments in prime locations. Pine Grove is scheduled for launch on Mar 6, with the tender closing on May 5.