To buy or not to buy?
Prominent developers share their views on where the property market is headed
PRIVATE residential prices in Singapore have been climbing since the second quarter of last year, prompting home seekers and investors who haven't gotten their feet wet to wonder: 'Should I still buy now?'
Some of the most prominent developers in Singapore - who are also past winners of the Singapore Business Awards - shared their views on where the property market is headed with The Business Times in April (before the government announced its land sales programme for H2 2010).
Ho Bee Investment chairman and CEO Chua Thian Poh, who took home the Businessman of the Year award for 2006, sees the residential market continuing to do well. Hong Leong Group executive chairman Kwek Leng Beng, who won the same award for 1996, believes Sentosa will be where the action is in the next five years. And CapitaLand president and CEO Liew Mun Leong, who was the Outstanding CEO for 2005, reminds us that location is key when it comes to buying a home.
BT: Many market watchers say that 2010 is the year for high-end private home sales to pick up. Do you agree, and why?
Chua Thian Poh: Prices for mass market homes have already surpassed the previous peak but not those for high-end private homes, which are still about 20 per cent to 30 per cent below the peak. As this recovery is led by the mass market, I believe the recovery is more sustainable and as such, the momentum of the recovery would filter upwards to the high-end segment.
Kwek Leng Beng: High-end private home sales are beginning to pick up definitely, but not as fast as one would expect. There is a strong sentiment in the market with low interest rates for housing loans and high liquidity. The market is now moving very nicely. Signs of economic recovery are real as the first quarter GDP confirms that Singapore is fast recovering from the recession. The definition of high-end is very broad and those exceeding $2,500 per sq ft find slower pick up than those below $2,500 psf. A lot also depends on the districts and locations of this type of property.
Liew Mun Leong: This year, we foresee prices rising by between 10 per cent and 20 per cent for the mid- to high-mid segments of the market. While sales remain brisk, prices for mass market projects are likely to remain steady and affordable.
Market sentiments improved significantly since the third quarter of 2009 as the global financial situation has stabilised and economies worldwide show signs of recovery. The Ministry of Trade and Industry has said that the overall outlook for external economies has improved for the rest of 2010 and that it expects the Singapore economy to grow by 7-9 per cent in 2010.
Late last year, we launched our high-end condominium, Urban Suites; it enjoyed strong sales. From then on, we saw strong buying interest for projects in the high-end segment of the market.
Sales of mass-market private homes remain brisk. Do you see this trend continuing, and why?
Chua: As long as the economy is on the recovery path, demand for mass market homes should continue to be strong. Most people would want to upgrade.
Kwek: I agree that the mass market continues to perform well though it is not as hot as before. You can see genuine investors who realise that spare cash earns very little interest. Prices in this sector are still affordable.
Liew: For 2010, the Singapore real estate market will reap the benefits of the remaking of Singapore with the opening of the two integrated resorts. Well located projects, particularly those at the city fringe or near MRT stations, will do well.
In April, we started phase two sales of The Interlace, a new residential destination at Depot Road/Alexandra Road. It is one of the largest and most ambitious residential developments in Singapore and will be a new postcard landmark for Singapore. The site has a good location at the Southern Ridges of Singapore and is seeing strong interest from homebuyers.
Liquidity, low interest rates and lack of investment products or opportunities will lead to further interest in property investment.
The government will be releasing more residential sites for sale. Do you think this will bring land prices down, and to what extent?
Chua: This is a fundamental economic principle. With more land supply, prices should moderate to a more reasonable level.
Kwek: The release of more residential sites is a welcome move for developers as many are looking to replenish their land banks. However, land prices have been increasing with each tender because developers believe the market will continue to trend up with anticipation of better economic numbers. Offering more sites will not bring prices down immediately but the tender prices going forward will not be so fierce.
Most important is to bear in mind that there is a lag time between actual supply of land and the completion of the condominiums. The actual demand in terms of occupancy can be ascertained only on completion of the projects. Before completion, it is only a projection which may not be accurate.
Liew: We welcome the release of more residential sites. This will give developers a chance to replenish their land banks and cater to a broad spectrum of homebuyers across different market segments and locations.
What opportunities do you see in Singapore's property market in the next five years?
Chua: Owning a private home has always been the aspiration for most Singaporeans. With the economy doing well, and coupled with the intention of the government to increase the population, we should see the residential market continuing its good run.
Kwek: As Singapore's economy recovers from the economic downturn, I am optimistic about the property market. The integrated resorts (IRs) are basically aiming at visitors of a different kind and when their operations stabilise within the next two years, we should see more foreigners buying condominiums in Singapore.
Liew: Looking ahead, Singapore's economic prospects are positive, coupled with rising business and consumer confidence. MTI expects the Singapore economy to grow by 7-9 per cent in 2010. We expect the renewed momentum of the Singapore economy to drive growth in the real estate market, as the two are closely interlinked.
In particular, the opening of the two integrated resorts in 2010 is widely anticipated to benefit the Singapore residential market, with prime projects attracting strong interest from both local and foreign buyers.
How is your company positioning itself to exploit these opportunities?
Chua: We will be selective in sourcing for land that has good attributes and amenities to build homes that are demanded by the general public.
Kwek: We continue to believe in Singapore's market and will continue to offer customers good value and quality projects at realistic prices.
I see within five years, prices of property units in Sentosa going up a lot more than those on the main island as there could only be 2,500 units in Sentosa and there is no more land for tender or for en bloc sale there. Supply is limited in Sentosa but demand will continue to grow.
Liew: For us, we have a strong brand position as a leading developer in Singapore with an established track record of building premier homes. We have consistently delivered quality projects that are beautifully designed and well-located, and this will keep us in good stead in the coming years.
We are encouraged by the renewed strong buying interest for our projects. We have a number of projects in the pipeline that will be launch-ready over the next 12 months, including the development on Farrer Road, Urban Resort Condominium and The Nassim.
We are comfortable with our healthy pipeline of over 2,600 residential units. Even with this healthy pipeline, we will be interested in any well-located and attractively priced site available.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
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