ST : Gradual price rises work best for developers: Redas chief

Dec 04,2010

Gradual price rises work best for developers: Redas chief

By Cheryl Lim & Esther Teo
ROCKETING real estate prices might sound good for developers at first glance. But a calmer market, with values rising in a smooth line, works best, according to an industry leader last night.

Mr Simon Cheong, president of the Real Estate Developers' Association of Singapore (Redas), said at the body's 51st anniversary dinner that developers should welcome gradual price increases.

'It is in our interest to see a more graduated trend in value movements, in order to realise a sustainable environment for real estate development, rather than face the volatility from mismatched market forces,' he said.

Investors most want certainty, political stability and a stable policy framework: three attributes which the Singapore market has, he added.

Although many investors are concerned that real estate cycles are getting shorter and price swings are becoming more pronounced, they still believe that Singapore has sound fundamentals and a long-term policy framework to deal with the changes taking place, he said.

Mr Cheong also touched on the eventful year which developers have had.

Urban Redevelopment Authority (URA) statistics for the second quarter recorded a new peak in developers' sales, reaching 2,208 units in April alone, he said. In the same quarter, the URA property price index also surpassed its former all-time peak in the second quarter of 1996.

The Government Land Sales Programme has also added about $9.4 billion in revenue to state coffers - more than five times the $1.8 billion in sales recorded for the whole of last year.

But signs of a slowdown are appearing, he said, with prices moderating to 2.9 per cent in the third quarter from 5.3 per cent in the second quarter.

However, private home prices are still up 14.4 per cent for the first nine months of the year.

Mr Cheong is confident about the long-term prospects of developers.

'We are positive about the real estate market in Singapore, given the Government's continuous drive to reposition the economy. We believe that the market will continue to be underpinned by sound economic fundamentals and a favourable business environment,' he said.

Some experts say that while the market appears to have moderated after the Government introduced cooling measures in August, additional steps could be taken should prices and activity start to shoot up again.

At the dinner last night, Cushman & Wakefield Singapore vice-chairman Donald Han told The Straits Times that although transaction volumes have slowed, the Government might still step in if the pace of private home sales returns to the buoyancy of April.

But Knight Frank chairman Tan Tiong Cheng said that developers have already turned more cautious, as reflected in their more realistic bid prices for land: 'It's a sign that they feel the market won't be charging ahead. In such a scenario, there is no need to introduce measures to curb demand.'

Trade and Industry Minister Lim Hng Kiang was guest of honour at last night's dinner, held at The Ritz-Carlton, Millenia Singapore.