SINGAPORE (EDGEPROP) - With the real estate sector currently seeing high supply and subdued demand, Real Estate Developers’ Association of Singapore (Redas) president Chia Ngiang Hong has called for property developers to adopt a more prudent approach in land purchase and capital allocation in this challenging market situation.
The residential property market faces “potential downside risks” from “a large supply of unsold units in the medium term and an uncertain economy, if not accompanied by a corresponding rise in demand”, he notes at the Redas 60th Anniversary Dinner on Dec 2.
Furthermore, as observed by the MAS in the past two quarters, the “relatively healthy developer sales” seen in new launches was largely due to project-specific features such as a good location, Chia adds. This is in contrast to other projects that “only saw moderate sales in the initial phase of their launches”, he highlights.
Desmond Lee, Second Minister for National Development, observes that land bids over the past year have been “more cautious”, together with private housing prices that have appeared to be “moving more in line with economic fundamentals” as compared to 1H2018. Lee, who is also Minister for Social and Family Development, was guest of honour at the event.
He adds: “These are signs that the market is not overly exuberant, but growing at a more sustainable pace.”
Chia: The market faces potential downside risks (Credit: REDAS)
With more supply of private housing units expected to come on stream, Lee says that developers should “pace out the launches steadily, to match the demand from buyers”.
Lee also addressed the concern that global economic uncertainty might attract foreign capital inflows to the local property market. He points out that currently, the share of transactions by foreigners remains stable and low and accounts for 5% to 6% of [the] total transactions over the past three quarters.
Reiterating the government’s stance, Lee states that a “hands-off” approach to the property market is not desirable, because experience both here and abroad has shown that left to itself, it tends to go through large price swings, which harms genuine home buyers and homeowners. “Today, the market is broadly stable, in part due to active measures that were implemented in July last year,” he says.
Looking forward
Lee also charted out the possible changes facing the property market in Singapore.
First, Singapore’s skyline “will continue to evolve and change”. This has already started through the government’s long-term plans for the Greater Southern Waterfront, together with the relocation of the Paya Lebar Airbase. More to come are the plans for Jurong Innovation District, and the Underground Masterplan.
Next, green buildings will be made a priority with a continued push for more net zero or super low energy buildings, given the concerns brought about by climate change. To build and maintain a more effective and sustainable city, technology will be deployed, and a focus will be given on research and innovation, done through the BuildSG Transformation Fund and the Built Environment Technology Alliance (BETA).
Finally, through the pilot Business Improvement District (BID) programme, common spaces can be better created, activated and energised. Kampong Glam, Tanjong Pagar and Singapore River, through the BID programme, have new life injected into the area.
Lee: Developers should pace out the launches steadily, to match the demand from buyers (Credit: REDAS)
In support of the government’s initiatives, Chia urges Redas and its members to work even more closely together with one another, to “push the industry transformation, innovation and internationalisation agenda”.
“Much remains to be done and I am optimistic. Singapore is an attractive proposition…Singapore properties remains a viable asset class for Singaporeans and investors,” says Chia.
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