Slower take-up but most prices continue to rise

PROPERTY INSIGHTS Singapore Quarter 1, 211 Slower take-up but most prices continue to rise Market Overview Following a 14.5% GDP growth in 21, the economy is forecasted to grow by 4-6% in 211. While interest rates remain low, inflation has risen and the Singapore dollar continues to strengthen against the USD. The first quarter of 211 began with another round of government measures being introduced in January to deter speculators and short-term investors. Following the measures, the number of developer sales dipped slightly but the take-up rate fell sharply to 64% in February compared to 97% in January. Prices in most segments of the secondary market continued to rise. The landed segment continued to outshine the non-landed segment in terms of price growth. Nevertheless, the pace of price increase has slowed down in the quarter. We expect the pace of increase in prices to slow down and plateau. There is more uncertainty this year, not just from the possibility of more cooling measures, but also from the recent regional events in the Middle East and Japan, the full impact of which are still not known. Trends & Updates Economic Overview Overall, the Singapore economy grew by 14.5% in 21, driven by the manufacturing sector and services producing industries which rebounded by 29.7% and 1.5% in 21 respectively. Arising from the continued economic growth, the resident unemployment rate in Q4 21 remained unchanged at 3.1% from a quarter earlier (Figure 1). Figure 1 GDP growth and resident unemployment rate % 2 % 5 15 4 1 5-5 Q1 9 Q2 9 Q3 9 Q4 9 Q1 1 Q2 1 Q3 1 Q4 1 3 2 1-1 YOY GDP growth (LHS) Resident unemployment rate (RHS) Source: MOM, MTI, DTZ Research

The 3-month interbank rate held firm at.44% in Q1 211 (Figure 2). The Consumer Price Index (CPI) for the period between January and February went up by 1.82% compared to Q4 21. The CPI in the first two months of 211 went up by 5.2% compared with the same period in 21 due to higher costs of transport, housing and education. The government has forecasted inflation to be between 3 to 4% for 211 (Figure 2). Figure 2 CPI and short-term interest rate 2. % 1.5 1..5. -.5 Q2 9 Q3 9 Q4 9 Q1 1 Q2 1 Q3 1 Q4 1 Q1 11-1. -1.5 CPI change (%) (QOQ) 3-month SIBOR Source: MTI, MAS, DTZ Research *CPI figures for Q1 11 are based on January and February The Singapore dollar continued to strengthen in Q1 211 against the US dollar. It trended lower to reach 1.2617 in end March 211 as compared to the end December 21 figure of 1.2875 (Figure 3). Figure 3 Exchange rate 1.45 1.4 1.35 1.3 1.25 1.2 1.15 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Dec-1 Jan-11 Feb-11 Mar-11 S$ per unit of US$ Source: MAS, DTZ Research Residential Overview The first quarter began with another round of government measures being introduced in January to deter speculators and short-term investors. Following the measures, the number of developer sales dipped slightly but still averaged 1,155 units in each of the first two months of 211 compared to a monthly average of 1,437 units in Q4 21. However, the take-up rate fell sharply to 64% in February compared to 97% in January and an average of 98% in Q4 21 (Table 1 and Figure 4).

Table 1 Selected new launches in Q1 211 Name of development Tenure Estimated no. of units launched Median sale price ($ per sq ft) Waterfront Isle 99 yrs 561 987 Canberra Residences 99 yrs 32 831 Spottiswoode 18 FH 251 1,992 My Manhattan 99 yrs 15 1,219 Suites @ Eastcoast FH 116 1,438 Figure 4 Primary sales volume 3, No. of private homes 2,5 2, 1,5 1, 5 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 1 Jan 11 Feb 11 Sold directly by developers Units launched Prices in most segments of the secondary market continued to rise. The average resale price of leasehold condominiums in the suburban areas inched upwards by.8% while the average resale price of freehold non-landed condominiums in the prime districts of 9, 1 and 11 grew marginally by.4% QOQ. Luxury condominiums in the prime districts continued to see prices maintaining at an average of $2,63 per sq ft on the secondary market for the second consecutive quarter, as there is a smaller pool of buyers for this segment coupled with more supply from newly completed and to-be-completed projects. Prices in this segment are still about 6% below the 27 peak (Figure 5). Figure 5 Average non-landed resale capital values $ per sq ft 3, 2,5 2, 1,5 1, 5 Q1 8 Q2 8 Q3 8 Q4 8 Q1 9 Q2 9 Q3 9 Q4 9 Q1 1 Q2 1 Q3 1 Q4 1 Q1 11 Source: DTZ Research Luxury Prime freehold Non-prime leasehold

The landed segment continued to outshine the non-landed segment in terms of price growth. Nevertheless, the pace of price increase has slowed down in the quarter. Landed resale freehold units in the prime districts rose 2.2% QOQ to $1,73 per sq ft on average, compared to the 5.1% growth in Q4 21. Outside the prime districts, resale landed prices grew 2.3% to an average of $1,15 per sq ft, compared to the 4.3% increase a quarter ago. Despite residential prices having risen above the 28 level for most segments, real estate continues to remain an asset class which people feel secure to park their finances within the current high inflation and low interest rate environment. Nevertheless we expect the pace of increase in prices to slow down and plateau. There is more uncertainty this year, not just from the possibility of more cooling measures, but also from the recent regional events in the Middle East and Japan, the full impact of which are still not known. Feature Story Residential demand trends in 21 Introduction Transactions 1 of private homes in Q4 21, proxied by caveats, amounted to 7,87. The caveats comprised 74% of the 4,241 units sold by developers 2 and 4,741 secondary sales (Figure 1). Figure 1 Private residential transactions by quarter No. of private transactions 14, 12, 1, 8, 6, 4, 2, Q4 7 Q1 8 Q2 8 Q3 8 Q4 8 Q1 9 Q2 9 Q3 9 Q4 9 Q1 1 Q2 1 Q3 1 Q4 1 Sold directly by developers Sold in secondary market Note: Primary sales volume is based on URA s survey returns from developers while secondary sales volume is based on caveats lodged For the whole of 21, the total number of transactions amounted to 35,319, 11% more than that in 29. However, it is lower than the record 37,799 transactions in 27. The total transactional value for 21 stood at $57.9bn, which is also lower than the $62.8bn recorded in 27 and more than the $43.9bn in 29. On a monthly basis, sales volume in the secondary market was considerably lower in October, continuing the trend in September after measures to cool the market were announced on 3 August. Sales however picked up in the last two months of 21, which is usually a quieter period for home purchases. 1 Caveats lodged are used as a proxy for sales transactions, thus the terms transactions and caveats are used interchangeably in this report. 2 The total number of units sold by developers is based on regular surveys carried out by the URA.

Transactional overview There was an increase in the proportion of residential homes transacted above $1m in Q4 21 and the year in total, reflecting that prices have been on the up since early 29 (Figure 2). Figure 2 Private residential transactions by price breakdown 6 % of private transactions 5 4 3 1 <=$1m >$1 to 2m >$2 to 3m >$3 to 5m >$5m 29 Q3 21 Q4 21 21 The proliferation of small units in new developments has led to an increase of units below 1, sq ft transacted in 21 compared to 29. The number of transactions for units below 5 sq ft increased from 883 in 29 to 1,89 in 21, a jump of 114%. Units between 5 sq ft and 1, sq ft also experienced a 28% increase in transactions, from 7,218 in 29 to 9,218 for 21 (Figure 3). Figure 3 Private non-landed residential transactions by floor area 5 45% 4 35% 3 25% 15% 1 5% % of private transactions <5 sq ft 5-1, sq 1,-1,5 1,5-2, 2,-2,5 >2,5 sq ft ft sq ft sq ft sq ft 29 Q3 21 Q4 21 21

Purchasers with public housing addresses The proportion among buyers with HDB addresses in 21 who bought units below 1, sq ft surged from 32% in 29 to 41% in 21. This rise is much faster than that of private addressees. Among buyers with private addresses, the proportion who bought small units increased from 21% in 29 to 26% in 21 (Figure 4). Figure 4 Breakdown of units under 1, sq ft by purchaser s address 45% 4 35% 3 25% 15% 1 5% 4,157 3,943 5,1 29 21 6,1 % of HDB addressees over total purchases by HDB addressees % of Private addressees over total purchases by Private addressees Non-Singaporean purchasers Buyers from the top four countries, namely Malaysia, Indonesia, China and India, made up 73% of total transactions by foreigners and SPRs in Q4 21. Compared to a quarter ago, the proportion of Indonesians and Indian nationals fell while those of Malaysians and mainland Chinese grew (Figure 5). Figure 5 Profile of purchasers by nationality (excluding collective sales) 1 9 8 7 6 5 4 3 1 % of private residential transactions by foreigners and Singapore PRs 44% 42% 4 34% 33% 27% 23% 26% 29% 28% 29% 26% 27% 12% 9% 14% 12% 12% 13% 13% 11% 14% 11% 15% 11% 14% 1 14% 12% 13% 15% 18% 17% 23% 11% 11% 1 16% 16% 19% 22% 24% 26% 29% 27% 25% 23% 23% 21% 25% 19% 18% 18% 23% 14% 21% 18% 19% 15% Q4 7 Q1 8 Q2 8 Q3 8 Q4 8 Q1 9 Q2 9 Q3 9 Q4 9 Q1 1 Q2 1 Q3 1 Q4 1 Indonesia Malaysia China India Others

For 21, the proportion of Indonesian buyers fell to a record low of 18% after accounting for just 15% of non-singaporean purchasers in Q4 21 (Figure 6). Figure 6 Profile of purchasers by nationality (excluding collective sales) 1 9 8 7 6 5 4 3 1 % of private residential transactions by foreigners and Singapore PRs 24% 24% 26% 4% 4% 6% 5% 39% 44% 34% 26% 23% 5% 8% 33% 5% 8% 26% 27% 28% 37% 4 41% 38% 8% 8% 23% 11% 11% 7% 7% 11% 17% 24% 22% 23% 12% 26% 28% 12% 12% 15% 27% 19% 23% 19% 19% 18% 21 22 23 24 25 26 27 28 29 21 Indonesia Malaysia China India Others Malaysians remained the dominant foreign purchasers among the four groups in 21, a position they have maintained since 28. They accounted for 25% of all non-singaporean purchasers for Q4 21 and 23% in 21. The proportion of mainland Chinese group of buyers among non-singaporeans grew from its previous high of in Q3 21 to a new record high of 23% in Q4 21. They also made up a record high of 19% in 21, compared to the previous high of 15% in 29. It is the first quarter and year that they have overtaken the Indonesians to be among the top two groups of foreign buyers of residential properties in Singapore. Outlook Mainland Chinese buyers are expected to continue to be among the top two groups of foreign buyers, as the continued implementation of property market curbs in China and growing wealth of the mainland Chinese will motivate more of them to make purchases overseas, including Singapore. Following more measures to stabilise the residential market in January 211, we expect quieter activity in the market for the year. Sub-sales activity is expected to be lower in 211, as short-term speculation is affected by the seller s stamp duty, which was imposed in August 21 and raised in January 211. This research report has been prepared by DTZ Research specially for distribution to Citibank customers.

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