Industry observers expect more high-end projects in 2010

Industry observers expect more high-end projects in 2010
Dec 10, 2009 - PropertyGuru.com.sg

Singapore's property market is beginning to stabilize and developers in the country are ready to launch more expensive homes. Industry observers remain positive for the high-end residential sector, which may have more launches in 2010 if the economy continues to move smoothly towards recovery.

Based on the estimates of Colliers International, 10,671 private homes are set to be launched in 2010, and 4,958 units or 46 percent will be in the core central region (CCR).

Prime projects that are expected to hit the market include Ardmore 3 of Wedlock Properties and the former Farrer Court site, which CapitaLand and partners purchased in 2007 through a collective sale.

The rest of central region (RCR) will account for another 3,498 units or 33 percent. The remaining 2,215 launch-ready units or 21 percent will come from the outside central region (OCR).

Distribution of homes that were launched in 2009 was almost accurately the reverse, with the bulk of units derived from the prospering mass-market sector. Colliers estimates that around 13,542 homes will be released by end-December, wherein 5,822 units or 43 percent will come from OCR.

About 3,291 units or 24 percent will be from CCR, while 4,429 units or 33 percent will come from RCR.

“Developers are likely to be encouraged to release more mid-tier or high-end units in 2010,” says Tay Huey Ying, research and advisory director at Colliers. She cites several reasons - signs of foreign buyers and investors returning, the opening of integrated resorts and improved economic prospects.

The strong take-up rate at the recent preview of Marina Bay Suites has raised hopes. Of the 90 released units, 87 were sold at an average price ranging from $2,200 to $2,500 psf.

“Positive sentiment from high net worth individuals and wealthy foreign buyers could return by H1 2010 and support transactional activity,” added Chua Yang Liang, Jones Lang LaSalle’s (JLL) head of research for Southeast Asia.

To support this view, Barclays Wealth’s recently conducted a study and the Economist Intelligence Unit learned that affluent individuals in the country plan to allot a bigger portion of their investment portfolios to property in the next two years.

As doubts linger over the sustainability of economic recovery, how much developers can sell pricey homes for remains a big question.

Prices of non-landed properties in CCR are still under the 2008 peak – 16.8 percent down at Q3, according to Urban Redevelopment Authority indices. In comparison, prices of non-landed properties in OCR shot up in 2009 and were just 2.5 percent short of the peak.

Analysts of Deutsche Bank wrote in a report on Monday that high-end prices are likely to escalate by 5 to 10 percent in the coming year.

However, even as optimism grows, some market players remain cautious of uncertainties in the economy. Dr. Chua of JLL stresses that emerging demand for property has to be supported by regional or global economic growth.