Core Central Region leads in resale condo market

For the second consecutive year, the prime area or Core Central Region (CCR) has outperformed the rest of the island in terms of resale prices for non-landed private homes, according to latest data from SRX Property.

Moreover, the volume of resale transactions of private apartments and condos in CCR rose 52.5 per cent to 2,048 units last year – a faster clip than the increases of 24.2 per cent in the city fringe or Rest of Central Region (RCR) and 18.2 per cent in the the suburbs or Outside Central Region (OCR).

“CCR prices have outperformed the other regions, as increased demand for CCR properties has helped support prices,” noted OrangeTee’s head of research and consultancy Wong Xian Yang. “Buyers are slowly coming back as they find value emerging in the market, with prices at some projects having corrected significantly.”

Another reason demand improved last year in the CCR is that buyers were enticed by attractive packages including deferred payment schemes that developers dangled for delicensed projects, he added. Sales by developers in delicensed projects are classified as resale transactions by the Urban Redevelopment Authority as well as SRX Property.

“CCR prices could have been partially supported by these schemes, as developers may not have to substantially lower prices to attract buyers,” said Mr Wong.

Based on SRX Property’s December 2016 flash estimates data, the resale price index for private apartments and condo units in the CCR posted a 1.8 per cent year-on-year gain – against declines of 0.9 per cent in the city fringe or Rest of Central Region (RCR) and 0.4 per cent in the suburbs or Outside Central Region (OCR). The overall index inched up just 0.1 per cent .

SRX Property’s December 2015 indices also showed that prices in the CCR climbed 2.7 per cent year-on- year, a better showing compared with an increase of 1.4 per cent in RCR and a drop of 4.3 per cent in OCR; the overall index slipped 2.1 per cent.

Putting things in perspective, JLL national director Ong Teck Hui noted that in the early stage of the current downcycle, prices came down faster in the CCR than the other two regions. “CCR took a greater hit as the effects of the property cooling measures were felt mostly by investors, and a significant proportion of buying in CCR is by investors,” said Mr Ong.

Market watchers noted that the positive sentiment sparked by CapitaLand’s successful launch in March last year of Cairnhill Nine in the primary market spread to other CCR projects, including developers’ sales in delicensed projects such as OUE Twin Peaks and Ardmore Three, and volumes in the CCR began to pick up.

Said Mr Ong of JLL: “Sentiment has improved amid a perception that prices in the prime market could be bottoming out – drawing investors back to the market.”

OrangeTee’s Mr Wong said that the percentage growth in the volume of resale deals in CCR this year may again outperform the rest of the island as developers of more delicensed projects offer novel schemes to draw out buyers.

Pricewise, too, CCR will continue to show greater resilience than the other two regions – due to its relatively lower supply. Mr Ong of JLL agreed that transaction volume in CCR in 2017 will continue to build on the improvement last year, though prices are more likely to “stabilise rather than rah-rah” as economic conditions are not rosy.

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