Private property demand not expected to ease up

Demand for private properties in Singapore is not expected to ease up in the coming months despite the stock market turmoil and uncertainties in the developed economies of Europe and the United States.

Market experts said that the demand for private properties here will be propped up by the pent up demand in the public housing market which will in turn result in more Housing and Development Board (HDB) upgraders moving into the private property segment.

Analysts say that the recent private homes sales data for August is yet another sign of demand resilience and highlighted the growing trend of public housing owners upgrading to the private homes segment.

The recent stock market turmoil and uncertainties in developed markets are not expected to dent demand for private housing as the local market is driven by strong fundamentals that are not linked to the external economy, said analysts.

While some had expected investors to run for cover, instead investors were active, supporting projects that had been competitively priced, most of which were located in the suburbs.

Mr Donald Han, vice-chairman at property consultants Cushman & Wakefield said that the underlying strength of the market should not be underestimated as events in the US and Europe have brought about a continued and prolonged low-interest-rate environment in Singapore.

US Federal Reserve chairman Ben Bernanke has promised to keep US interest rates at current low levels till 2013 which will ripple to the Singapore market.

“The continued low interest rate environment will see more liquidity pumped into the property market in search for higher yielding assets”, added Mr Han.

Mr Nicholas Mak, executive director of research and consultancy at SLP International said that the segment with the strongest condominiums, with prices ranging from $800 per sq ft to more than $1,000 plus per sq ft, depending on the location and type of units.

Mr Han adds that private condominiums and especially executive condominiums in the suburbs and new townships continue to attract HDB upgraders – due to HDB asset price inflation and the desire to own private properties.

Meanwhile, demand for luxury properties in central areas showed steady growth, suggesting that sentiment in the broad market remained firm and is not likely to crumble as some sceptical investors are hoping for.

Mr Alan Cheong, associate director at Savills Research & Consultancy, notes that the gap between the mid-tier (rest of central region or RCR) and mass market (outside central region or OCR) has narrowed marginally from 40 per cent in July to 38.6 per cent in August.

So what happens post 2013 – with potential increase in interest rates and a large amount of supply coming on stream, will the market slow?

Mr Cheong adds that if Singapore were to bring in around 60,000 foreign professionals per year in the mid to upper segment income bracket, “this group could very easily take up the over 50,000 units that are currently left unsold by developers. Together with existing local and foreign upgrader/investor demand this group of buyers would also be able to absorb the annual Government land supply of 15,000 units coming on stream in future”.

Source :  Today – 19 Sep 2011

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