| BY LIN ZHIQIN |

Preliminary estimates indicate that rents for shoebox units dipped 1.9% quarter-on-quarter in 3Q2015. Mass- market shoebox units led the decline as monthly rents fell 3.5% or $73 from $2,089 in 2Q2015, to $2,016 in 3Q2015. On a brighter note, shoebox rents in the city fringe stayed

unchanged from the last quarter at $2,380 per month. In the high-end segment, monthly shoebox rents fell 2.1% or $59 from $2,815 in 2Q2015, to $2,756 in 3Q2015 (see Table 1).

Shoebox units in the mass market continue to face strong competition from HDB flats for tenants. For the same rents, tenants could get a three-room HDB unit with two bedrooms and share their rental expenses with a flatmate. Based on HDB subletting contracts, the island-wide monthly rents for HDB flats averaged $1,958 for three-room units and $2,297 for four-room ones in 3Q2015.

On the other hand, shoebox units in the high-end and city-fringe segments are more attractive, particularly to tenants who work in the CBD as they can save on commuting costs and time. At the same time, they offer value alternatives to bigger units. CONTINUES ON PAGE EP4

Risk and opportunityOutlook for the prime residential market PG2

Feng shuiBoosting property sales amid challenging times PG4

Deal watchArdmore II unit sold below $2,500 psf PG8

Mass-market shoebox rents dip 3.5% in 3Q2015

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M A K E B E T T E R D E C I S I O N SMCI (P) 046/03/2015 PPS 1519/09/2012 (022805)

THE WEEK OF OCTOBER 19, 2015 699

SMALL UNITS, big challenges

Mass-market shoebox units lead rental decline

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The analysis was based on a basket of properties tracked by The Edge Property. The figures differ slightly from those in our previous article owing to changes in the basket. Shoebox units are defined as private non-landed homes that are up to 550 sq ft in size in this article. “High-end segment” refers to the Core Central Region (CCR), while the city fringe and mass market refer to the Rest of Central Region (RCR) and Outside Central Region (OCR), respectively.

Between 3Q2013’s peak and today, shoebox rents have fallen around 18% or $500 from $2,905 to $2,371 per month.

Segment- wise, monthly rents for shoebox units have fallen 20% in the high-end submarket, 14% in the city fringe and 22% in the mass market.

In comparison, rents for non-shoebox units have been more resilient. The URA rental index for private non-landed homes fell 7.2% in the high-end segment, 3.1% in the city fringe and 6.7% in the mass market between the last peak and 2Q2015.

The soft rental market continues to dent the profitability of shoebox transactions. Based on URA caveat data, 8% of

MONTHLY RENT ($ PSF) DECLINE SEGMENT 3Q2013 2Q2015 3Q2015 3Q2013 TO 2Q2015 TO URA RENTAL INDEX 2Q2015 (%) 3Q2015 (%) (LAST PEAK TO 2Q2015) (%)High end 3,445 2,815 2,756 20 2.1 7.2City fringe 2,767 2,387 2,380 14 — 3.1Mass market 2,552 2,089 2,016 21 3.5 6.7

Table 1

EP2 • THEEDGE SINGAPORE | OCTOBER 19, 2015

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THEEDGE PROPERTY PROPERTY TAKE

FUN

FACT

The maximum building height

allowed in Singapore is

280m. Tanjong Pagar Centre has obtained

special permission to be built up to

290m.

Are there prospects for the prime residential market?

Districts 9, 10 and 11 in Sin-gapore are considered home to the most prime residen-tial properties on the island. Over the past few years,

high-end properties have been hit hard by a series of government cool-ing measures. The capital value of luxury prime residential property has dropped some 20% since its peak in 2011, while developer sales in prime districts fell 68%, from 1,302 units in 2011 to 422 in 2014 (see Chart 1).

Foreigners accounted for a sig-nificant portion of private housing buyers in prime districts, but the in-troduction of the additional buyer’s stamp duty (ABSD) in December 2011 and its upward revision in Jan-uary 2013 has slowed demand from them. In 2011, 31% of transactions of non-landed homes in prime districts were by foreigners, but they account-ed for only 16% of the non-landed sales volume in 2014, having been deterred by the 15% ABSD imposed.

Over the last three years, these measures, as well as the total debt servicing ratio (TDSR), have also reduced purchases by Singaporeans and permanent residents in the prime districts, with volume falling 50% to 55%. Both local and foreign investors have been significantly affected by the cooling measures, resulting in a considerable fall in prices and trans-action volume in the prime districts.

Unsold stock significant, but expected to ease graduallyThe slow demand and low transac-

tion volume arising from the cooling measures have led to an oversup-ply of residential units in the prime districts. Slow developer sales have meant that many new projects are completed with unsold stock. This has led to the number of complet-ed but unsold units almost doubling from 715 units in 2Q2012 to 1,420 units in 2Q2015 (see Chart 2). How-ever, the moderation in new launch-es has kept the 1,221 launched but unsold units in 2Q2015 quite similar to the 1,194 units in 2Q2012.

The lack of collective sales since 2012 and the focus of government residential land sales on non-prime locations have reduced the number of potential new developments in prime districts. Consequently, the number of units with sale prerequisites that are yet to be launched has almost halved, from 4,047 units in 2Q2012 to 2,044 units in 2Q2015. The current unsold supply, comprising completed and unsold units, units launched but unsold and units with sale prereq-uisites yet to be launched, amounts to 4,685 units. It is a considerable quantum compared with the take-up of 422 units in 2014, but appears manageable if the market eventual-ly normalises at the 10-year average take-up of 2,196 units per annum.

A soft rental marketdeters investorsIn the past few years, there was a trend towards a higher number of new com-pletions in the prime districts. The number of units completed between

2011 and 2014 was 22% higher than that in the preceding four years. This widened the supply for leasing signifi-cantly, while rental demand from expa-triates has been stagnating. For exam-ple, the number of employment passes issued by the Ministry of Manpower increased only marginally by 2% from 175,400 in 2011 to 178,900 in 2014, owing to policy tightening on the in-take of foreign workers. The conse-quence is a decline in rents during this period, with prime-market monthly rents dropping about 25%, from $5.23 psf in 2Q2011 to $3.93 psf in 2Q2015. The challenging leasing market and reduced rental returns would be an-other deterrent to investors looking at the prime residential market.

Prime residential prices in Singapore have becomemore attractive relative to other global citiesAs Singapore globalised, many inves-tors were attracted to its prime resi-dential market, taking into account sound economic fundamentals, po-litical stability, a reliable legal frame-work and market transparency. This has led to the city-state being com-pared with London, New York, Hong Kong, Tokyo and other global cities as potential destinations for real estate investment. We compared high-end residential prices in these four cities with those in Singapore from 2007 to 2015, in US dollar terms (see Chart 3). In 2007, prices in Hong Kong were 41% higher than those in Singapore, but the gap in 2015 has jumped to 165%. In 2007, before the global fi-nancial crisis, the price gap between prime central London and Singapore properties was 70%, but it narrowed to 34% in 2010, as the British pound weakened during that period.

However, in the past few years, the

prime central London market strength-ened, while Singapore’s prime market weakened, leading to prices in the city-state lagging those in London by 92%. In New York, prime residential prices were 48% higher than those in Singapore in 2008, but with the downturn in the US, they dropped to slightly below prime prices in Sin-gapore in 2011. However, a recovery in the New York market in the past few years led to its prices leading Singapore’s by 82%. On the back of a stronger Japanese yen previously, Tokyo prime residential prices were on average about 30% higher than Singapore’s between 2009 and 2012. A weakening of the Japanese yen in the recent few years narrowed the price gap to 14% in 2014.

OutlookDemand in the prime residential mar-ket will continue to be impeded by the cooling measures, while the economic slowdown and the rise in interest rates could be additional dampeners. The soft rental market is another negative factor, as investors will be deterred by challenging leasing conditions and weak rental returns. Prices are expect-ed to soften into 2016, although they could stabilise when the cooling meas-ures are relaxed. While the oversupply in the prime segment is significant, owing to the recent low level of trans-actions, it appears manageable when the market recovers and take-up nor-malises. A comparison with other global cities shows the price gap be-tween the prime residential market of Singapore and those of Hong Kong, London and New York has widened significantly.

Prime residential prices in Singa-pore have become relatively more at-tractive, but investors remain wary, as the ABSD raises the cost of entry and there is limited scope for price appreciation while the cooling meas-ures remain in place. However, should positive outcomes arise from policy changes, a recovery in the prime res-idential market could yield good in-vestment returns, considering the ex-tent that it has been suppressed.

Ong Teck Hui is national director, re-search & consultancy, JLL Singapore. He can be reached at teckhui.ong@ap.jll.com.

| BY ONG TECK HUI |

Developer sales volume in prime districts4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

–

Num

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2007 2008 2009 2010 2011 2012 2013 2014

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Unsold units* in prime districts7,000

6,000

5,000

4,000

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1Q101Q11

1Q121Q13

1Q141Q15

2Q102Q11

2Q122Q13

2Q142Q15

3Q103Q11

3Q123Q13

3Q144Q10

4Q114Q12

4Q134Q14

Not launched but with prerequisites for sale Launched but unsold Completed and unsold

*Excludes potential projects without prerequisites for sale

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Prime residential price gap between Singapore and other major cities in US dollar terms

180

160

140

120

100

80

60

40

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2007 2008 2009 2010 2011 2012 2013 1H20152014

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%

Hong Kong, 165%

London, 92%

New York, 82%

Tokyo, 14%

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Chart 1

Chart 2 Chart 3

If you wish to contribute columns, please write in to propertyeditor.sg@bizedge.com

THEEDGE SINGAPORE | OCTOBER 19, 2015 • EP3

EP4 • THEEDGE SINGAPORE | OCTOBER 19, 2015

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THEEDGE P R O P E R T Y FENG SHUI

COVER STORY

Three ways feng shui can boost property sales| BY ANTHONY LEE |

The slew of cooling measures has dampened sales activities in recent years. With leads becoming scarce and valuable, here are three ways realtors can use feng shui to boost sales in a challenging market.

• Choose a good day for viewingEthnic Chinese often consult the Tong Sheng to pick an auspicious date and time for special occasions, such as weddings, moving to a new house or opening a business. Realtors and businessmen can similarly make use of the Tong Sheng to set a favourable appointment date and time to boost their chances of closing a deal.

The simplest way would be to identify the unfavour able day and time that would be incompatible with the realtor’s and his client’s zodiac (see calendar). There is a more advanced way of identifying the most auspicious appointment date and time, but we will not discuss that here.

• Declutter the propertyClutter interferes with the flow of qi or energy around a property. A home with a balanced qi brings peace and tran-quillity to those who step into its space.

Leaving footwear around the doorstep will hinder the flow of positive qi into the property. Shoes and slippers should be properly stored in a shoe rack to enhance the flow of qi and wealth into the house.

• Avoid having the kitchen door facingthe main door This layout may lead to loss of wealth. However, the problem can be easily countered by installing a curtain over the kitchen door.

Anthony Lee is a feng shui consultant at Lee Metaphy sics Consulting, with more than 10 years’ experience. He can be reached at leemeta physics@gmail.com.

Timings for business appointments

Auspicious date/time for business appointments Inauspicious date/time for business appointments * Conflicting zodiac — avoid making business appointments

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OTHER ZODIACSOCTOBER 2015 DAY CONFLICTING* 9AM TO 11AM TO 1PM TO 3PM TO 5PM TO 7PM TO ZODIAC 10.59AM 12.59PM 2.59PM 4.59PM 6.59PM 8.59PM15 Thur Horse 16 Fri Goat 17 Sat Monkey 18 Sun Rooster 19 Mon Dog 20 Tues Pig 21 Wed Rat 22 Thur Ox 23 Fri Tiger 24 Sat Rabbit 25 Sun Dragon 26 Mon Snake 27 Tues Horse 28 Wed Goat 29 Thur Monkey 30 Fri Rooster 31 Sat Dog NOVEMBER 2015 CONFLICTING* 9AM TO 11AM TO 1PM TO 3PM TO 5PM TO 7PM TO ZODIAC 10.59AM 12.59PM 2.59PM 4.59PM 6.59PM 8.59PM1 Sun Pig 2 Mon Rat 3 Tues Ox 4 Wed Tiger 5 Thur Rabbit 6 Fri Dragon 7 Sat Snake 8 Sun Horse 9 Mon Goat 10 Tues Monkey 11 Wed Rooster 12 Thur Dog 13 Fri Pig 14 Sat Rat

residential shoebox units (15 of 185 trans-actions) were sold at a loss in the second-ary market. In comparison, only 3% (eight of 307 transactions) of shoebox units were sold at a loss in 2013 and 7% (14 of 215 transactions) in 2014 (see chart).

In the city fringe, the average loss for unprofitable shoebox transactions has risen from $31,080 (5%) in 2014 to $60,395 (10%) year to date. Similarly, those in the mass mar-ket rose from $25,509 (4%) to $79,112 (13%) over the same period. Bucking the trend was the high-end segment. The ave-rage loss for its unprofitable transactions pared down to 6% (see Table 2). The trend echoes the relative rental resi lience in the various market segments. But the average gain per profit-able trans action has generally diminished from last year’s.

Nonetheless, shoebox landlords have strong holding power owing to the affordability of the units. According to JLL, only six shoebox units were listed for auction in 3Q2015, down from nine in the same period last year. “We do not expect [a] significant in-crease in such units put up in 2016 and perhaps one to two more units in 4Q2015,” says JLL head of auction Mok Sze Sze.

Avoid having the kitchen door facing the main door Install curtain over kitchen door if it faces the main door

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No of unprofi table shoebox transactions on the rise

FROM PAGE EP1

Bigger losses and smaller profi ts

Table 2

MARKET SEGMENT PERIOD LOSS ($/%) GAIN ($/%)CCR 2014 243,079/18 130,409/17 2015 to date 59,053/6 119,126/15RCR 2014 31,080/5 133,908/25 2015 to date 60,395/10 109,253/19OCR 2014 25,509/4 108,556/20 2015 to date 79,112/13 104,228/20

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Chart

Shoebox landlords have holding power as units affordable

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THEEDGE SINGAPORE | OCTOBER 19, 2015 • EP5

EP6 • THEEDGE SINGAPORE | OCTOBER 19, 2015

EP8 • THEEDGE SINGAPORE | OCTOBER 19, 2015

the 118-unit project hovered between $2,800 psf and $3,000 psf in 2013 (see Table 1). No caveat was lodged in 2014.

According to flash estimates by the URA, prices of non-landed homes in the high-end segment, or Core Central Region, softened by another 1.3% q-o-q in 3Q2015, putting it at 9% below their peak in 1Q2013.

A location scan of properties within 500m of Ardmore II shows potential value deals at below $2,000 psf, or just over $2,000 psf. Gross rental yields were generally between 2.2% and 2.6% (see Table 2).

Scan the QR code for value deals in Ardmore II and nearby projects

As we are not party to the contract between the client and agent, we are not able to verify in-formation provided by the agent

‘Edge Fair Value’ is a tool on TheEdgeProperty.com to determine the fair value of a property

‘Location scan’ tool is a search engine for property data around a specific landmark. It is available on TheEdgeProperty.com for reg-istered users. Please write in to propertyeditor.sg@bizedge.com to request for access.

NON-LANDED

PROJECT DISTRICT AREA (SQ FT) SOLD ON SALES PRICE ($) BOUGHT ON PURCHASE PRICE ($) PROFIT ($) PROFIT (%) HOLDING PERIOD (YEARS)

1 Park Infinia At Wee Nam 11 2,002 16-Sep-15 3,500,000 26-Oct-05 1,862,190 1,637,810 88 9.9

2 Amber Point 15 1,690 18-Sep-15 2,250,000 21-Jan-02 1,050,000 1,200,000 114 13.7

3 The Trillium 9 2,217 23-Sep-15 4,700,000 17-Apr-07 3,528,000 1,172,000 33 8.4

4 Country Esquire 20 1,679 17-Sep-15 1,900,000 28-Feb-06 750,000 1,150,000 153 9.6

5 Twin Regency 3 1,776 6-Aug-15 2,550,000 21-Nov-06 1,400,000 1,150,000 82 8.7

6 Tanglin Park 10 1,335 22-Sep-15 2,350,000 27-Jan-00 1,515,000 835,000 55 15.7

7 Trevose Park 11 2,196 16-Sep-15 3,323,000 17-Feb-10 2,525,000 798,000 32 5.6

8 Kovan Melody 19 1,690 23-Sep-15 1,670,000 16-Mar-07 929,700 740,300 80 8.5

9 Urbana 9 1,313 21-Sep-15 2,350,000 28-May-09 1,680,640 669,360 40 6.3

10 Westmere 22 1,249 18-Sep-15 1,170,000 25-Sep-96 520,500 649,500 125 19.0

LANDED

1 Detached/Belmont Road 10 31,129 5-Jun-15 44,188,000 22-Jul-09 30,500,000 13,688,000 45 5.9

2 Terrace/Jalan Kemaman 12 1,550 23-Sep-15 3,228,000 2-Oct-06 540,000 2,688,000 498 9.0

3 Terrace/Duku Road 15 1,938 23-Sep-15 2,600,000 11-Apr-97 1,080,000 1,520,000 141 18.5

4 Semi-Detached/Blandford Drive 19 2,799 25-Sep-15 4,020,000 10-Aug-12 3,100,000 920,000 30 3.1

5 Terrace/Jalan Gembira 13 990 28-Jul-15 1,770,000 6-Jan-10 858,000 912,000 106 5.6

PROJECT DISTRICT AREA (SQ FT) SOLD ON SALES PRICE ($) BOUGHT ON PURCHASE PRICE ($) LOSS ($) LOSS (%) HOLDING PERIOD (YEARS)1 The Light @ Cairnhill 9 2,024 18-Sep-15 3,700,000 5-Oct-10 5,400,000 1,700,000 31 5.0 2 Ardmore II 10 2,024 25-Sep-15 5,050,000 28-Aug-07 6,100,000 1,050,000 17 8.1 3 One Shenton 1 1,582 21-Sep-15 2,360,000 12-Oct-07 3,386,880 1,026,880 30 7.9 4 The Sixth Avenue Residences 10 1,356 15-Sep-15 1,500,000 19-Jan-10 1,871,280 371,280 20 5.7 5 Terrace/Waringin Park 14 1,798 30-Aug-15 2,000,000 15-Dec-14 2,200,000 200,000 9 0.7 6 The Sail @ Marina Bay 1 861 23-Sep-15 1,445,000 21-Dec-07 1,635,900 190,900 12 7.8 7 Lagoon View 15 1,647 18-Sep-15 1,280,000 18-Jul-07 1,400,000 120,000 9 8.2 8 Prestige Heights 12 344 25-Aug-15 500,000 30-Nov-11 575,000 75,000 13 3.7 9 The Tropica 18 1,238 25-Sep-15 950,000 29-May-12 1,025,000 75,000 7 3.3 10 Palm Spring 10 947 25-Sep-15 1,458,000 23-Sep-11 1,500,000 42,000 3 4.0 11 Terrace/Jalan Kampong Chantek 21 3,778* 17-Sep-15 2,180,000 17-Dec-10 2,188,000 8,000 0.4 4.8

New caveats uploaded on Oct 2 and 6

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Most profi table deals

Non-profi table deals

FACTS + FIGURES

*Refers to strata area. Otherwise, area stated for shophouses and landed properties refer to land area.Tables compiled by Tan Chee Yuen

THEEDGE P R O P E R T Y DEAL WATCH

Third unit at Ardmore II sold below $2,500 psf this year

| BY TAN CHEE YUEN |

A 2,024 sq ft high-floor unit in Ardmore II was sold for $5.05 million ($2,496 psf) in September, based on cave-ats listed by the Urban Redevelop-ment Authority (URA). The price

was slightly below The Edge Fair Value of $2,530 psf.

The sale represented the third value deal in the project this year. In September, a mid-floor unit changed hands for the same price as the subject property. Another mid-floor unit was sold for $4.7 million ($2,323 psf) in March.

Based on URA caveats, prices last touched the $2,500 psf level in December 2011 and March 2012 when comparable units were sold at $2,574 psf and $2,570 psf respectively. Ard-more II is a luxury freehold development in Dis-trict 10 that was completed in 2010. Prices in

Location scan of properties within 500m of Ardmore II

PROJECT NAME TENURE COMPLETION AVERAGE SALES AVERAGE RENTAL RENTAL PRICE VOLUME RENT VOLUME YIELD ($ PSF) ($ PSF PM) (%)The Draycott Freehold 1980 1,729 2 3.1 14 2.27 Draycott Freehold 2000 1,900 1 – – –The Arcat Draycott Freehold 2008 1,913 1 5.1 10 3.2St RegisResidences Singapore 999 years 2008 2,123 5 4.6 23 2.6Orion Freehold 2008 2,269 1 4.3 6 2.3The Claymore Freehold 1985 2,539 1 3.8 21 1.8Ardmore II Freehold 2010 2,619 3 4.8 19 2.2Ardmore Park Freehold 2001 2,957 5 5.6 51 2.3

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Table 2

Transaction volume and prices in Ardmore II(2011 to 2015)

YEAR SALES VOLUME PRICE RANGE (UNITS) ($ PSF)2011 9 2,574 to 2,9402012 6 2,520 to 2,8412013 2 2,841 to 2,9502014 – –2015 4 2,323 to 2,866

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Table 1

Prices of high-end non-landed homes softened by another 1.3% q-o-q in 3Q2015, says URA

E