Fears escalate as private residential investment sales hit 5-year low in Q2

It’s a double whammy of TDSR and lukewarm developer interests.

Cautious developers are turning their noses up on Singapore’s private residential market. The country’s private residential investment sales slumped to a five-year low in Q2, as developers remained lukewarm on the en bloc and strata-titled properties investment market.

According to a report by Colliers, private residential investment sales hit $606.31 million in Q2, contracting 6.4% from the $648.07m recorded in Q1.

“This stemmed from the double whammy of frail investor interests in en bloc and strata-titled properties as well as anaemic developers’ quest for land acquisition via collective sales. The confluence of multiple cooling measures and the Total Debt Servicing Ratio (TDSR) framework have put investors into a cautious stance, bringing about sluggish sales activity for the en bloc and strata-titled properties investment market in 2Q 2014,” the report noted.

Here’s more from Colliers:

In fact, the sluggish home-buying momentum was extended to the market at large. This, coupled with the record pipeline supply of new private residential homes that will be completed by 2018, have restrained developers’ offering prices for collective sales sites.

This has exacerbated the mismatch in buyer-seller price expectations and hampered deal closures. 

As a result, the collective sales market, which has ceased to be developers’ preferred land banking avenue for a long while now due to its cumbersome and lengthy sales process, stood still for the third successive quarter in 2Q 2014

The fall in Singapore’s property investment sales in 2Q 2014 was led by the plunge in the sale of residential properties. In fact, the residential sector suffered the deepest cut with total investment sales thinning by 22.5% QoQ to $1.96 billion from the $2.53 billion transacted in 1Q 2014.

A key reason for the dive in residential investment sales value was the dent in public residential land sales. During the quarter, only four residential State land parcels (including two for the development of executive condominiums) were scheduled for public tender and sold for a total of some $1.36 billion.