Check property prices to stay competitive: MM
His comments come on the back of recent Government moves to cool red-hot market
By Aaron Low
RISING property prices and rents have to be kept in check, or Singapore will lose its competitiveness, Minister Mentor Lee Kuan Yew said last night.
In the strongest comments yet from a minister on the red-hot property sector, he said Singapore ‘must not allow our rents to shoot up as in Hong Kong’.
Property analysts say prime office rents in the territory average $25 to $30 per sq ft - almost double that of Singapore.
Mr Lee, who was speaking at a Tanjong Pagar GRC event, noted that Singapore had attracted many foreign professionals, especially top financial executives, and this was contributing to a demand for office and residential space.
Foreign institutions have been moving their people and headquarters here to manage the wealth flowing in from the Gulf states, the United States, the European Union and Japan.
‘Demand for high-end office and residential accommodation has increased,’ Mr Lee said.
‘Many homeowners who sold their condos in en bloc sales have received windfall gains. Some of them in turn are buying upper-end HDB executive and five-room flats, pushing up their values.
‘We must check this spike in rents for office and residential space or we will lose our competitiveness.’
Mr Lee’s remarks come on the back of a series of recent steps by the Government to cool a property sector that has seen office rents and property prices soaring.
There has been concern that rising rental costs may erode Singapore’s attractiveness as a business centre.
On Monday , the Urban Redevelopment Authority (URA) assured potential home buyers that there were more than 42,000 units of private housing being completed in the next three years.
On Wednesday, it released a plot of land next to Newton MRT station to be developed as temporary office space. More such sites, where low-rise offices can be built quickly, will be released if the move is popular.
According to one property consultancy, prime office rents in May jumped by 85 per cent compared to a year ago.
The Government also announced that Jurong and Paya Lebar - with potentially cheaper office space - have been designated as new business hubs.
The URA also took the unusual step of advising the public to interpret rental projections by consultants with caution.
It was referring to a report by a property firm which warned that Singapore’s office rents could surpass Hong Kong’s by the end of next year.
In his remarks yesterday, Mr Lee also noted that the Government was releasing more land for office blocks and condos.
Property analysts contacted last night saw Mr Lee’s comments on the steps that the Government had been taking as a reassurance to the market over rising prices.
They believed that the Government’s measures thus far were adequate.
Knight Frank’s director for research and consultancy, Mr Nicholas Mak, said the signals from the Government were ‘not to panic’.
‘Last week we had URA do a few things. Now, Mr Lee is giving an assurance that the Government has the sector under control.’
Mr Lui Seng Fatt, regional director at Jones Lang LaSalle, believes that rents and property prices here are currently far from the levels in Hong Kong.
‘On average, prime office space in Hong Kong may be $25 to $30. It is about $12 to $15 here,’ he said.
‘That’s a 70 per cent difference and does not take into account the measures the Government is taking to address the issue.’
Source : The Straits Times, 08 July 2007
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