High capital growth for landed housing in Singapore

Attendees were keen to find out more about the investment potential for landed housing in Singapore.

Industry experts indicate that now is the best time to invest in Singapore property market.

By Mindy Chong

Singapore’s property market has seen a limited supply of landed property over the past five years. Despite the scarcity of landed homes, the number of unsold inventory has been at a record low, with limited freehold supply coming into the market.

The total number of transactions for landed projects in 2018 is expected to be around 300 units, with the majority of units sold outside the Core Central Region, based on a research done by CBRE. The firm also believes that freehold projects will present a better value over leasehold projects in the growing landed property market.

But the question remains of the investment potential of landed housing in Singapore and whether investors can preserve the value of such properties in the long run. This was discussed during PropertyGuru’s recent Guru Talk seminar held at the Watercove sales gallery in Sembawang.

Held on 12 May, the event drew more than 70 attendees looking to gain fresh insights from esteemed speakers Joseph Tan, executive director, residential Singapore at CBRE, Kevin Lim, chief agency director of ERA Realty, and Jacintha Pillay, partner at Sim Mong Teck & Partners.

The event started with Tan providing an overview of the private residential market in 2018.

“As of now, the total number of housing units offered in the market is 380,000. Landed properties only consist of 1.5 percent of the total housing stock, a small supply compared to non-landed properties which comprise 98.5 percent. Around 90 percent of landed properties are freehold while the remaining 10 percent are leasehold,” he said.

“Non-landed homes priced at $1 million to $2 million remain most favoured amongst Singaporeans. For landed homes, most investors prefer those priced at $2 million to $3 million. However, the gap between property prices for 99-year leasehold and freehold landed properties is quite narrow due to the scarcity in this category,” he noted.

He added that as of March, unsold landed homes have dropped to 300 units compared to 552 units last December. The URA property price index also shows that prices of landed homes peaked at 179 percent in 2013 before declining 15 percent by Q3 2017.

Commenting on transaction volumes of landed homes in District 27, Tan said it has been increasing over the past five years from 43 units in Q1 2013 to 110 in Q1 this year. The supply of landed homes in this district also stayed consistent, with Bukit Sembawang, the developer behind Watercove, topping the list.

Speaking on the legal considerations when buying landed properties, Pillay said: “A lot of people who want to buy a Singapore property have to think about paying ABSD (Additional Buyer’s Stamp Duty). They can be local, PRs or even foreigners. One of the most common approaches in buying a property is through de-coupling,” she said.

She explained that de-coupling means removing the owner’s name from the existing property. For instance, if a married couple want to purchase another property and do not want to pay the additional ABSD, one of them must remove their names from the existing property. To do that, they can either look at gift transactions or part sale.

By way of gift transactions, the property is fully encumbered and has no existing mortgage loan, hence, the owner can give away the property as a form of a gift. The second and most common form of de-coupling is fractional sale in which the property is encumbered and has an existing mortgage sale. The individual who wants to acquire the share of the property will have to buy it over.

Pillay also talked about the regulatory differences between buying landed property from a developer and from the resale market.

Separately, ERA’s Lim gave updates on the robust en bloc market and what this means for Singapore property.

“By 2030, Singapore is expected to have a 6.9 million population, but as of now, we have 5.79 million. With the national statistics indicating that there are 3.5 people per household, we would be expecting a pent-up demand for 26,429 housing units. Therefore, there should be more demand for housing instead of an oversupply in the coming years,” he said.

On en bloc transactions, he explained that statistics have shown that sales volumes from 2016 till H1 2017 reached $6 billion. In 2018, sales are expected to increase by 33 percent to $15 billion. Although there have been 16 en bloc sites sold this year, there are 140 more en bloc projects in the pipeline.

As part of the exclusive benefit of purchasing a unit on the day of the event, eight limited star-buy units were offered with savings of at least $30,000.

If you missed the seminar, please watch the video at bit.do/gurutalkwatercovevideos. For more information on upcoming Guru Talks, go to: pgevents.propertyguru.com.sg.

PropertyGuru has launched our PropertyGuru Great Singapore Specials 2018. Learn how you can make savings of up to $58,000 on limited star-buy units at Watercove.