Singapore Home prices rise more slowly in quiet market

Singapore Home prices rise more slowly in quiet market 

Lower-than-forecast 3.7% growth could signal start of decline

By Fiona Chan, Property Reporter 

THE property market may have gone quiet, but home prices continued their steady climb in the first three months of this year, albeit at a much weaker pace.
Private home prices rose 3.7 per cent between January and March, down from the 6.8 per cent growth in the previous three months.

It was also notably lower than the 4.2 per cent rise that had been predicted early this month, based on sales in the first 10 weeks.

This suggests prices may have started declining last month, dragging down the whole quarter.

‘Price growth is starting to weaken severely and the volume of transactions has halved,’ said Mr Chua Yang Liang, Jones Lang LaSalle’s head of South-east Asia research.

‘The rate of increase in coming quarters is likely to be even slower and prices may peak in the third or fourth quarter.’
 WEAKER GROWTH ACROSS THE BOARD
Observers have suggested that private home prices could be holding partly because developers are putting off project launches, thus curbing the supply of new homes.

Developers had 10,239 new units ready for sale in the first quarter that were not launched - that is a three-year high and 3,000 more than in the previous quarter.

The number of units actually launched in the quarter - 1,343 - was the lowest in almost four years.

‘There’s a lot of supply but it hasn’t been released into the market yet, and that could be one reason why prices are still growing,’ said Mr Nicholas Mak, director of research and consultancy at property firm Knight Frank.

Almost half of these unlaunched units were in the core central region, comprising the prime districts 9 to 11, the Marina Bay area and Sentosa. The rest were evenly divided between the city-fringe and suburban regions.

Mr Ku Swee Yong of Savills Singapore said developers may not be delaying launches to deliberately prop up prices but, rather, to wait out the weak market sentiment and uncertain global outlook.

Whatever the reason, the lack of launches has forced buyers to turn to the secondary market, where they bought 2,304 homes in the quarter - three times what they bought directly from developers.

This shows there is still an underlying demand for homes, and may also have helped sustain prices at current levels, analysts said.

The slowdown affected private homes in all areas, from prime to suburban regions. Each region saw prices rise only 3 to 4 per cent, from 7 to 8 per cent the previous quarter.

Sub-sales - this is when a person buys an uncompleted home and then sells it again before it is built - made up a tenth of all sales.

In the case of public housing, resale prices rose 3.7 per cent in the first quarter, down from 5.7 per cent previously. But sales dropped 6 per cent to 6,360 transactions.

The median cash-over-valuation amount - the portion of a flat’s price that buyers have to pay in cash - dipped slightly to $21,000. This shows that buyers are starting to resist having to fork out too much cash for HDB flats, especially since valuations have climbed recently.

All other types of properties also saw lower growth, with office prices logging the biggest slowdown. They rose only 1.1 per cent in the first quarter, down from 8 per cent in the previous three months.

But office rentals stayed strong, as businesses continued to expand and space remained tight.
Source : Straits Times  - 26 April 2008

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Developers hold off launches in quiet market - Singapore

Developers hold off launches in quiet market  - Singapore

Number of private flats that have not been launched hits three-year high

By Joyce Teo, Property Correspondent 
 
DEVELOPERS are so gun-shy of the quiet property market that they are continuing to hold off launching units, creating fears of a supply glut and possible price slump.
The pool of unsold, uncompleted private flats that can be launched for immediate sale rose by more than 3,000 units in the first quarter of this year.

This brings the number of such units to 10,239, a three-year high, according to Urban Redevelopment Authority figures released yesterday.

Of the 10,239 unlaunched flats, 4,824 units were in the core central region, which includes districts 9, 10 and 11. These are areas with high-end properties - the very sort facing lacklustre demand now.

Things are even worse in the rest of the central region, where the number of unlaunched units rose by 77 per cent to 2,934 in the first three months.

High-end projects that have not been launched include Marina Bay Suites, Sentosa Quayside and Nassim Park Residences.
CBRE Research expects more suburban launches this quarter as developers focus on mass market projects.

Developers on the whole remain wary of new launches, said Dr Chua Yang Liang, Jones Lang LaSalle’s head of research for South-east Asia.

But there was significant growth in suburban areas, where 813 units - or 60.5 per cent of total launches - were released in the first quarter. Yet demand was weak.

‘This could result in a supply overhang that may encourage a more conservative approach by developers in the next quarter,’ said Dr Chua.

The industry uses launches to sell units to generate cash flow. Big developers have the resources to hold on for years if the market is flat, but smaller firms may be under pressure to sell at lower prices.

Mr Nicholas Mak, Knight Frank’s director of research and consultancy, said that if sales volume remains thin, more small developers will likely cut prices of their projects to improve cash flow, but the impact of their action may be lost on the market because of their size.

But big-name developers able to launch units may not do so until the United States sub-prime crisis eases, said Mr Ku Swee Yong from Savills Singapore.

Major developers such as Wheelock Properties, Far East Organization, City Developments and Keppel Land have, in the past, been willing to hold back their launches for several years, he added.

Take Far East. It topped up the lease of its 99-year leasehold property, Orchard Scotts, while it delayed the launch several years ago.

While the quarter was flat, there was naturally some sales activity. Developers sold 762 new homes in the first quarter, but that was one of the smallest numbers in 12 years.

By the end of the first quarter, there were 2,526 flats that had been launched but remained unsold. These could include units launched several months ago.

In the pipeline are another 29,920 units that have yet to obtain a sales licence

The vacancy rate of private homes has also been rising steadily since the second quarter of last year, when it was at a low of 4.9 per cent. It hit 6.3 per cent in the first quarter.

Developers sell about 8,000 homes a year. If their inventory of unsold private homes exceeds 17,000, it could indicate a supply glut, said Mr Mak.

We are not anywhere near that point, he added. But it is now a stand-off. Buyers are waiting for prices to fall while sellers are waiting for buyers to return.

But Mr Ku said that unless developers flood the market, which they are not expected to, the significant increase in stock is not a real concern.

Source : Straits Times  - 26 April 2008

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S’pore now a better place for start-ups: Entrepreneur

S’pore now a better place for start-ups: Entrepreneur 

By Ong Bi Hui 
CHANGED CLIMATE: Dr Lou left for Taiwan eight years ago as it had a more accommodating business culture then. Now, he is back in Singapore to work on his projects - with support from the Government. — ST PHOTO: LIM CHIN PING
 
INVESTORS in Singapore have had a tendency to view start-ups with a very cynical eye and keep their wallets firmly closed when it comes to investing. Just ask Dr Lou Choon-Leong.
It was the reluctance of local investors to put money into Dr Lou’s business venture eight years ago that led him to take his idea to Taiwan - and make a killing.

While he is seen as a go-getter that Singapore allowed to let slip, Dr Lou is now back in the Republic getting more of his projects off the ground and encouraging Singaporeans to be a bit more adventurous when it comes to start-ups.

These days, go-getters like Dr Lou can find backing through Spring Singapore’s Technology Enterprise Commercialisation Scheme (TECS), which helps technical enterprises fund research and development (R&D) projects.

That would have been helpful when Dr Lou tried to get his company, STAr Technologies, up and running. The firm tests semiconductor chips, and designs and produces the testing equipment.

However, the Singapore investors he approached eight years ago had many reservations even though they welcomed his idea.

‘They started discounting for whether the venture would be successful, the risks, returns on investment and returns on equity,’ he said yesterday.

‘There was a lot of difficulty in raising capital in Singapore; investors would pay less per share here than in Taiwan.’

Dr Lou opted for Taiwan, partly because its market for semiconductors was four times larger than Singapore’s, but more importantly, because it had a more accommodating business culture then, which was more open to new ideas.

Dr Lou also noted the tendency among Singapore clients to require a finished product before agreeing to a deal. He said the Taiwanese would give the nod to just a preliminary proposal for a piece of equipment.

His company received three grants from the Taiwanese government in the first three or four years of its launch, helping him build a firm that raked in $30 million last year.

He returned to Singapore in 2001 to set up a subsidiary, and plans to pump in ’several million dollars’ to expand manufacturing and R&D projects here, as well as carry out a joint venture with a United States partner.

Dr Lou now finds Singapore a more conducive place for entrepreneurs. He said the situation is much rosier and small and medium-sized enterprises (SMEs) would find it far easier now to secure funding than was the case eight years ago.

He also pointed to the strong support from the Government, something that gave Singapore SMEs a major advantage over their Taiwanese counterparts.

He will be tapping that bank of support himself and working with Spring Singapore and the Economic Development Board to help fund projects here, including a manufacturing plant to turn out chip-testing gear.

‘If TECS had been available then, I would have definitely devoted more resources and projects to Singapore,’ said Dr Lou.

‘This is, after all, where I am from and, of course, I would love to expand my business here.’

Source : Straits Times  - 26 April 2008

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Raising wages to address rising costs not the right solution - Singapore

Raising wages to address rising costs not the right solution - Singapore

By S Ramesh

SINGAPORE: Raising wages to address the issue of rising costs may be an enticing option but that is not the right solution, said Acting Manpower Minister Gan Kim Yong.

He said adjusting wages upwards to meet rising prices would only result in a “price-wage spiral” and Singaporeans should look at the bigger picture.

“What is more important is for us to have a realistic expectation of wages that reflect the underlying economic strength of our industries and also of our productivity. That will allow us to ensure that our economy will be able to sustain its growth momentum,” said Mr Gan.

Since the last two recessions, tripartite partners – the government, unions and employers – have been working hard to encourage companies to restructure their wage systems to make them more flexible. This would allow companies to respond quickly when there is an economic downturn.

One component that has been built into the wage system is the monthly variable component (MVC). Mr Gan said this has worked well, but more needs to be done.

He said: “It is not an easy instrument to introduce because companies have to put in place certain mechanisms, particularly in the small and medium enterprises. Many of them take the position that in any case, their wages are quite flexible because they are small and nimble, and are able to adjust the wages as they go along.

“We do acknowledge that some of these companies already have a flexible wage system in their own structure… but it is also important for us to look at other flexible components of the wage system, including reducing the ratio between minimum and maximum wages.”

A major preoccupation of the Manpower Ministry is to finalise Singapore’s reemployment legislation which is expected to come into effect by 2012.

Mr Gan said that it would not be a top-down approach – there will be widespread public consultation with both employers and unions before the final legislation is crafted.

The acting manpower minister also said the feedback received so far has indicated that employers welcome the initiative and see the benefit of employing older workers.

In fact, the employment rate of those aged between 55 and 64 years went up by 3 percentage points from 2006 to reach almost 56 percent last year. The tripartite partners hope to achieve a 65 percent target by 2012.

Mr Gan said: “Employers are ready and willing to give it a try, and we are now helping them to introduce this system even ahead of the introduction of the legislation.

“Drafting the legislation is not so difficult. What is difficult is to decide what are the criteria, terms within the legislation, and this is something we have to work with the industry and unions so that we can arrive at some common understanding how reemployment is to be implemented.”

A tripartite work group has also been set up and it will visit companies to enhance the consultation process before the final law is introduced.
- CNA/so
Source : Channel NewsAsia  - 26 April 2008

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Singapore BCA Gallery showcases development of Spore’s built environment

Singapore BCA Gallery showcases development of Spore’s built environment

By Lynda Hong,
BCA Gallery’s outdoor sensory garden
   
  

SINGAPORE : A new Building and Construction Authority (BCA) Gallery was opened on Friday to showcase the past and latest technology used to erect buildings in Singapore.

Located at Braddell Road, the gallery’s interactive exhibits show what it takes to erect buildings in Singapore since the post-war period. There is also a sensory garden - an outdoor extension of the gallery - which has access for the handicap.

The gallery was officially opened by Senior Minister of State for National Development and Education, Grace Fu.

With a total floor space of 2,394 square metres, BCA said it hopes the displays will provide insights into its integral role in shaping a safe, sustainable and friendly-built environment.

BCA said the exhibits are designed to provide visitors with the different sights, sounds, textures and smells in a comfortable and calming environment.

BCA’s CEO Dr John Keung said: “With the launch of the new BCA Gallery, we hope to engage the younger generation so that they are more aware of the contributions of the built environment professionals and their achievements.”
Source : Channel NewsAsia  - 26 April 2008

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Singapore URA rejects bid for Choa Chu Kang Rd/Woodlands Rd site

Singapore URA rejects bid for Choa Chu Kang Rd/Woodlands Rd site

By Ng Baoying

SINGAPORE: The Urban Redevelopment Authority (URA) has rejected the highest bid for the residential site at Choa Chu Kang Road/Woodlands Road.

In a press release out on Friday, the URA said the price offered was too low.

The top bid came in at S$61 million, which works out to about S$1,750 per square metre of gross floor area. There was only one other offer at S$45.6 million.

The land parcel – offered on a 99-year lease – was one of the eight residential sites placed for sale through the confirmed list under the Government Land Sales Programme for the second half of 2007.

The tender was launched in December last year and closed on 3 April.
- CNA/so
Source : Channel NewsAsia  - 26 April 2008

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Companies need to step up Singapore corporate governance, transparency

Companies need to step up Singapore corporate governance, transparency

By Rachel Kelly, 

SINGAPORE: Minority shareholders in Singapore have plenty to think about in recent weeks, with the red flag raised on corporate governance and transparency issues in not just one, but three companies.

These companies are Jade Technologies, Swissco International and China Aviation Oil.

Associate Professor Ho Yew Kee, Vice Dean, Finance and Administration, NUS Business School, said: “I think it is a sign that corporate governance is taking an effect on the market and companies suddenly realise that they can no longer do things in the quiet.

“For example, if an independent director is resigning, they can no longer sweep it under the carpet because they realise that they need to prepare statements. They have to explain to the market as to the kind of signal that is being sent by the resignation of the independent director.”

Minority shareholders in Singapore are also increasingly ready to take action when they sense something amiss. But it could be a tall order to keep tabs, especially on smaller firms.

Industry experts said smaller companies are more vulnerable to such issues of corporate governance as they have a limited network of independent directors and a higher pressure for conformance of agreeable or acceptable behaviour.

Nonetheless, experts said regulators can help by taking a more active approach.

“One of the things the regulator can do is to sit down and talk to them on a confidential basis. The regulator has to make an independent decision as to whether there is sufficient merit to pursue the issues on hand, especially when you have a very influential independent director who will step down for that matter,” said Prof Ho.

And if the ambit is too wide for the Singapore Exchange to scrutinise every company, some said a risk-based approach might work, with the spotlight focused on firms with higher risk.
- CNA/so
 
Source : Channel NewsAsia  - 26 April 2008

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S’pore tops business ranking in Asia: EIU

S’pore tops business ranking in Asia: EIU

But it drops two positions in global ranking to third
By NISHA RAMCHANDANI

SINGAPORE is still the best place in Asia to do business.
 
‘Overseas investors are attracted by Singapore’s pro-business approach and favourable economic prospects… ‘
 
- EIU rankings report 
 
 
 
 
But it has slipped two spots in the global ranking to third, pulled down by slower trade growth and limited market size.

Out of 82 countries, Denmark was rated the best place to invest in over the next five years by the Economist Intelligence Unit (EIU). Finland ranked second.

‘Singapore’s economy is undergoing a necessary transition towards more services and domestic demand,’ said EIU associate director Sudhir Vadaketh.

‘This involves the slowing of export and import growth (of goods and non-factor services),’ he said.

The shift will prove beneficial as it will wean the Singapore economy off heavy dependence on exports, he said.

‘However, because of that slowing in trade growth, Singapore falls a bit on the market opportunities measurement in our ranking.’

Singapore’s rising cost of living and higher prices for commercial space were also taken into account.
 
Nonetheless, Singapore remains the most attractive business environment in the Asia-Pacific - four spots above Hong Kong and 15 places above Taiwan.

Singapore was commended for its flexible labour market, favourable tax regime, openness to trade and strong infrastructure.

The corporate tax rate, for instance, has been cut progressively over the years from 40 per cent in 1985 to 18 per cent from this year, in a bid to reduce business costs and attract new corporate investment.

‘Overseas investors are attracted by Singapore’s pro-business approach and favourable economic prospects, as well as incentives available to encourage investment in high-technology industries,’ EIU said in its rankings report.

Singapore’s labour market and high-quality workforce scored well, but EIU said the island faces increasing competition from the rest of Asia with regard to costs.

Denmark did well in all the 10 categories studied by EIU, but its pro-business policies, labour flexibility and fiscal policy pushed it ahead.

Countries were ranked according to criteria such as political environment, market opportunities, policy towards foreign investment and taxes.
Source : Business Times  - 26 April 2008

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Singapore URA decides not to award Ten Mile Junction site

Singapore URA decides not to award Ten Mile Junction site

Top bid of $61m, or $162 psf ppr, deemed too low

THE Urban Redevelopment Authority (URA) yesterday said that it has rejected the bid by Peak Green for a residential site at Choa Chu Kang/ Woodlands Road as the price offered was too low.
Peak Green’s offer was $61 million, or just over $162.40 per square foot per plot ratio (psf ppr).

It was the higher of two bids which the 99-year leasehold site attracted. The only other bid was from Sim Lian Land which offered $45.68 million, or $121.60 psf ppr.

Peak Green is understood to be linked to Kheng Leong, the privately-owned property group controlled by the family of banker Wee Cho Yaw.

The tender for the Choa Chu Kang/ Woodlands Road site was launched last December and closed on April 3 this year.

At the time, estimates by consultants pegged the value of the site, on which the state-owned Ten Mile Junction currently sits, at between $200 psf ppr and $250 psf ppr.

The 15,645 sq metre (168,403 sq ft) site has a residential potential gross floor area of 254,394 sq ft, which can house between 200 and 240 flats or serviced apartments.

The existing commercial gross floor area is 121,191 sq ft.
 
Consultants had been divided on whether the URA would award the site but at least one noted that the bid price was one of the lowest in years.

The last time land tender bids of below $200 psf ppr were submitted was between 2000 and 2002.

Separately, URA said yesterday that it has awarded a transitional office site at the Scotts Road/ Anthony Road area to UOB Kay Hian Trading which submitted the highest bid of $34 million, or $243 psf.

The tender was launched on Feb 28 and closed on Thursday. The 8,683 sq metre site was offered for sale on a 15-year lease.

Source : Business Times  - 26 April 2008

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Singapore HDB resale transactions decline 6% in Q1

Singapore HDB resale transactions decline 6% in Q1

Median COV was $21,000, compared to $22,000 in Q407
By EMILYN YAP

TRANSACTIONS of resale HDB flats fell 6 per cent from the fourth quarter of 2007 to 6,360 in Q1 this year, against the backdrop of rising asking prices and high cash-over-valuation (COV) demands.
 
 
‘With escalating resale prices and more and more COV transactions, we saw the resale market hit resistance in Q4 last year as HDB flat buyers do not have or are not willing to part with so much cash,’ said property agency ERA’s assistant vice-president Eugene Lim. ‘This resistance carried through to the first quarter this year.’

In Q4 2007, a total of 6,750 resale flats changed hands, which was itself a 13 per cent drop from Q3 2007.

HDB’s resale price index rose 3.7 per cent in Q1 this year compared with Q4 2007.

But this increase was lower than the 5.7 per cent quarter-on-quarter rise in Q4 2007.

The median COV of all resale flats in Q1 this year was $21,000, slightly down from $22,000 in Q4 2007.

In some estates, the drop was much larger.

The median COV of executive flats in Bishan, for instance, plunged $25,000-$45,000 in Q1 2008, and that of five-room flats in Marine Parade fell $15,000-$50,000.

On the resale price trend, PropNex CEO Mohamed Ismail believes an increase is sustainable in the long term and that double-digit growth this year is attainable, given the robust economy.

Mr Ismail reckons the falling COV reflects a smaller number of private property and en bloc downgraders in the market.

He expects the COV to stabilise at $20,000 islandwide for the year, as demand for resale flats increases and the number of surplus flats falls.

ERA’s Mr Lim also expects the resale market to remain healthy for the rest of the year, though price growth may be more measured.

‘For the whole year, we do not expect resale prices to increase more than 10 per cent,’ he said.

He noted that some demand for resale flats may be diverted to the increasing number of new flats coming on stream.

‘First-timers and those that can wait a couple of years are likely to go for new flats, as buying direct from HDB involves little or no cash outlay,’ he said.

HDB said yesterday it plans to offer 5,000 new flats under the Build-To-Order (BTO) system during the next six months.

Together with 1,100 launched in Q1, the planned BTO supply of 6,100 new flats for January to September will exceed the numbers of BTO flats launched in 2007 or 2006, which were 6,000 and 2,400 respectively.

Source : Business Times  - 26 April 2008

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Singapore Office property prices edge up by just 1.1% in Q1

Singapore Office property prices edge up by just 1.1% in Q1

Growth slows as foreign investors leave the market, demand lower prices
By ARTHUR SIM

OFFICE property prices took a hit in the first quarter of 2008, with foreign investors either withdrawing from the market or demanding lower prices.
 
There are worries over the impending new office supply from 2010 onwards.
 
 
 
 
 
 
According to data from the Urban Redevelopment Authority (URA), office property prices grew a marginal 1.1 per cent in Q1, compared with an 8 per cent increase in the previous quarter.

DTZ Debenham Tie Leung executive director (research and consultancy) Ong Choon Fah believes the office sector has been bolstered by foreign funds that have since been hurt by the global credit crunch, and that there are worries over impending new supply post-2010.

‘Funding is now an issue,’ she said. ‘Investors are adopting a cautious approach.’

URA said that at end-Q1, a total of about 1.49 million square metres of gross floor area of office space was in the pipeline. This includes the new space from the redevelopment of former UIC Building (79,900 sq m) and the former SPI Building (32,000 sq m), both of which were granted planning approval for development in the quarter.
 
Cushman & Wakefield managing director Donald Han notes that price retreats from Q4 2007 to Q1 2008 could be due to lower prices achieved for 1 Phillip Street and potentially 1 George Street, which saw transactions at $2,500 psf and $2,600 psf respectively. Previous highs include Chevron House and Hitachi Tower at $2,700 psf and $2,900 psf respectively.

On the upside, overall office rents remained relatively stable in Q1, growing 7.3 per cent in Q1 compared with 10.9 per cent in the previous quarter.

‘Yields will rise from 3.5-4 per cent per annum last year to 4.5-5 per cent per annum this year to compensate investors from the global financial market uncertainty,’ Mr Han said.

‘As such, we will see capital values stabilising this year, with moderated rental growth to provide the necessary yield uptick. We will see the emergence of Reits and owner occupiers as primary base investors.’

Knight Frank director (research and consultancy) Nicholas Mak believes one reason for the slower price and rental increases is that office tenants have become resistant to higher asking prices. He also noted some demand has been diverted to office space located outside the CBD.

URA also said a total of 435,000 sq m of business park space is in the pipeline from projects expected to be completed between the current Q2 and 2011.

The overall office vacancy rate rose marginally to 7.7 per cent in Q1, from 7.3 per cent in the preceding quarter. DTZ’s Mrs Ong attributes this to office buildings being vacated for retrofitting or renovation.
Source : Business Times  - 26 April 2008

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Singapore Homes held back from launches in staring game

Singapore Homes held back from launches in staring game

Buyers not forthcoming, so developers delay projects that are ready for market
By ARTHUR SIM

(SINGAPORE) The number of homes that could be launched for sale immediately, but have been held back, has increased to 10,239 in the first quarter of 2008, an increase of 44.2 per cent over the 7,099 units in the fourth quarter of last year. This, perhaps, is a reflection of the standoff between developers and buyers.
 
‘The only project targeted at the mass market, the 405-unit Waterfront Waves (above) at $800 psf, met with a certain degree of success as evidenced by the 108 units sold.’
- CB Richard Ellis director Leonard Tay
The Urban Redevelopment Authority’s (URA) property data for the quarter also revealed that there were 2,526 homes launched, but unsold at the end of the first quarter of 2008, an increase of 22.4 per cent over the previous quarter.

CB Richard Ellis director Leonard Tay said simply: ‘As homebuyers were less forthcoming, developers decided to delay their launches.’

Mr Tay highlighted that most of the new projects launched were small projects located outside the prime residential districts. ‘The only project targeted at the mass market, the 405-unit Waterfront Waves at $800 psf (per square foot), met with a certain degree of success as evidenced by the 108 units sold,’ he added.

According to URA, prices of private residential property increased by 3.7 per cent in Q1 2008 compared to 6.8 per cent in the previous quarter.

Mr Tay said that while there were no new luxury projects launched, a few units from existing projects were known to have been sold at above $3,300 psf in Q1 2008, with several units in Marina Collection sold at above $2,600 psf.

‘These, and probably some high-priced transactions in the resale and sub-sale markets, could have contributed to the 3.7 per cent rise to the private residential price index from the previous quarter,’ he added.

Interestingly, the 3.7 per cent increase in the PPI is lower than the earlier forecast of 4.2 per cent.

URA said that the last time the flash estimate of the change in private residential property price index (PPI) was revised downwards by more than 0.5 per cent points was in Q4 2001, when it was pegged downwards by 1.4 percentage points.

Jones Lang LaSalle local director and head of research (South-east Asia) Chua Yang Liang also noted that PPI was down by 3.1 percentage points from the 6.8 per cent growth recorded in Q4 2007, the biggest quarterly drop since Q3 2000, when prices declined by 4.2 percentage points.

Dr Chua said that overall, developers remained conservative on their new launches.

But while there was a significant growth in Outside Central Region (OCR) where a total of 813 units were released in the quarter - 60.5 per cent of total launches in Singapore in Q1 2008 - he noted: ‘Demand in this region was however not as strong.’

Take-up rate for OCR was only 38 per cent whereas Core Central Region (CCR) and Rest of Central Region (RCR) reported healthier take-up rate of 89 per cent and 71 per cent respectively.

And Cushman & Wakefield managing director Donald Han believes buyers are prepared to wait. ‘Property is sentiment-driven, and if buyers believe the economy will slow down, they will be prepared to wait it out on the sidelines,’ he said.

The disappearance of speculators from the market may have also dampened sales, as reflected by the lower number of subsales at just 346 transactions, down from 649 in the previous quarter.

‘Short-term speculators have been weeded out,’ Mr Han said. But, as Mr Han notes, it is now also ‘a smaller market’.

Savills Singapore director (marketing and business development) Ku Swee Yong also believes sub-sales have reached a plateau with current data ‘reflecting true demand’.

According to Savills’ own basket of properties launched and sub-sold in 2007 and 2008, the level of subsales fell from 34 transactions in Q4 2007 to just six transactions in Q1 2008. Subsale prices, however, remained stable, suggesting that panic selling for the time being at least is unlikely.

On whether the increasing backlog of unsold homes could pose a potential over-supply situation in the future, Mr Ku said that he believes not all the potential developments will be built.

URA projects that 56,501 units are expected to be completed between Q2 2008 and 2011, of which 29,685 units are already under construction.

Mr Ku said there are certain ‘control mechanisms’ which could see a lower number of units completed by 2011 with the first being the construction factors. Mr Ku said that a project that has not already begun construction is not likely to be finished within two years, simply because of the costs and shortages within the construction industry currently.

Another control mechanism lies with developers. ‘In the previous downturn, some developers held off projects for 10 years,’ he said.
Source : Business Times  - 26 April 2008

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