TODAY ONLINE : What price flooding?

What price flooding?

Homeowners worried property values in flood prone areas could fall

05:55 AM Jul 22, 2010

by Esther Ng



SINGAPORE - The floodwaters have receded, and the worry now on the minds of some homeowners in low-lying areas is that property and rental prices will follow.

Real estate experts have mixed views on whether values will dip or if this is just a premature, knee-jerk reaction.

"It's already clear in people's minds which areas are flood-prone. This could dampen demand and prices for these places," said ERA's Asia-Pacific associate director Eugene Lim, who reckoned that both residential and commercial premises could take a hit of 10 to 15 per cent.

While it is unlikely that homeowners will rush to sell their property, "potential rental values" in these areas, which include Telok Kurau, Opera Estate and Thomson, "could possibly be affected", he added.

Ngee Ann Polytechnic lecturer Nicholas Mak agreed: "There's always a risk that flooding will damage cars, paintwork, plants or cause the electrical system to short circuit, something which tenants will bear in mind."

Mr Faiek Peck, a tenant at one of the townhouses on Gentle Road, off Dunearn Road, told MediaCorp on Tuesday that he planned to move out. "We're discussing with the owner whether we can get out of the contract or not ... If he's not willing to improve the situation to do something to prevent it again, we've got to see what we can do, get lawyers involved and get out of here," he said.

While some homeowners may want out, buyers may not want to buy, said Mr Mak.

This was on the mind of a homeowner at the Gentle Reflections development, who has been staying at a hotel with her family of four since last Saturday's flood.

Declining to be named, she said: "Who's going to buy now after the bad publicity?"

Yet, in the past few days, Knight Frank's head of business unit Daniel Leong has received a few calls from buyers interested in Tessarina, a development along Wilby Road which has been hit twice by the floods, the first in November last year.

"They're hoping the owners would give up and sell at rock-bottom prices," said Mr Leong. "But these owners are not moving. If they have to sell, it's because they need a quick sale, but homeowners in Bukit Timah are solid financially."

While property consultants agree that property values in flood-prone areas may head south if flooding becomes a regular occurrence and flood-alleviating solutions prove ineffective, it is "too early to see long-lasting change in buying and renting preferences", said Mr Karamjit Singh, managing director of real estate consultancy Credo.

He described the three floods in the last month as "the exception" - a sentiment shared by property firm Cushman & Wakefield's managing director Donald Han.

"Bukit Timah is famous for flooding, yet districts 10 and 11 are the preferred location for prestigious living - people buy with their eyes open," he said.

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