Pipeline of private properties will require 5 years to be absorbed: Redas

Pipeline of private properties will require 5 years to be absorbed: Redas

Barring unforeseen circumstances, it will take around five years for the market to fully absorb almost 46,000 private residential units that could potentially come onstream by 2020.

And as a result of the “sedate” property market, developers are adopting a more “prudent approach” when acquiring land and allocating capital, said Real Estate Developers’ Association of Singapore (Redas) president Augustine Tan on Wednesday (Sept 19).

Mr Tan, who was speaking at the association’s annual Mid-Autumn Festival lunch, noted how the cooling measures imposed by the Government on July 6 had “bewildered” the market, and caused a turnaround in sentiments and outlook.

“In February this year, … I spoke about the improved sentiments and brighter forecasts for the broader economy and the property market. … Six months on, the market saw an about turn. This time in reverse course,” he added.

Sales of private homes fell 64.3 per cent in August compared to the previous month, although July’s large volume of transactions was due to panic buying before the cooling measures kicked in

Still, the Government’s intervention has weakened market sentiments and demand, by raising “the barriers of entry for all categories of buyers”. The current momentum of a 3 to 4 per cent increase in property prices every quarter will not be sustained, Mr Tan said.

He added that rentals of private residential private properties are expected to record moderate growth, as vacancies remain high and new completions are added to the total stock.

Speaking after Mr Tan at the event, Second Minister for National Development Desmond Lee reiterated the Government’s rationale for imposing the cooling measures.

Mr Lee, who is also Social and Family Development Minister, said: “(It is) essentially to keep prices in line with economic fundamentals. As acknowledged by Redas, a large supply of private residential units is coming onstream and interest rates are going up. And to avoid a severe correction later, which can have a more destabilising set of consequences, we decided to act earlier to maintain a stable and sustainable property market.”

Mr Tan acknowledged that residential properties in Singapore “remain a viable asset class for Singaporeans and investors”, given the country’s stable political situation and sound economic fundamentals. “Home prices in Singapore, particularly prime properties, are still attractive compared to other global cities,” said Mr Tan, who added that there are “bright spots” in the retail, office and industrial sectors. “As developers, we take a long term view of real estate development and support a business environment which provides stability and growth,” he said.

Breakdown of potential supply glut:

  • 27,000 unsold units out of a pipeline supply of 45,000 uncompleted private residential units, based on the Urban Redevelopment Authority’s second quarter data.
  • Potential supply of 19,000 units from Government Land Sales sites and awarded en-bloc sale sites that have not been granted planning approval.
  • An estimated 8,500 to 9,000 private home sales from developers for the whole of this year — a 15 to 20 per cent drop compared to last year.

Non-residential properties outlook:

  • Rental in office market had picked up 1.6 per cent in the second quarter, compared to the previous three months.
  • Over the same period, overall vacancy rate of office space has dropped from 12.5 per cent to 12.2 per cent.
  • Grade A office space projected to grow 9 to 10 per cent over the next 12 months.
  • Overall vacancy rate of retail space has decreased to 7.3 per cent in the second quarter, from 7.5 per cent in the previous quarter.
  • Rental and prices of industrial space has remained stable due to sustained leasing activities and limited supply coming onstream.


  • On July 6, the Government imposed a 5 per cent increase in Additional Buyers’ Stamp Duty (ABSD) for individuals, and a 10 per cent increase for entities, such as property developers.
  • A non-remissable 5 per cent ABSD is also imposed on property developers who buy residential sites for redevelopment purposes.

Source: Today – 19 Sep 2018