Recovery in the sector is now more broad-based

The property market, which in the past few months has been driven largely by an interest in high-end residential developments, is starting to enjoy a more broad-based recovery.

This observation was made by Mr David Neubronner, executive director of Savills Residential, at a weekend property seminar organised by Singapore’s largest private developer (Far East Organization) in conjunction with Today and DBS Bank. The seminar, entitled “Seize the fantastic opportunity in the real estate market at the right time”, saw strong attendance, with more than 120 people making their way to Far East’s Icon Sales and Design Centre opposite Tanjong Pagar MRT station on Saturday.

Mr Neubronner, whose company provides comprehensive agency and consultancy services, credits the broader recovery to conducive factors such as a low mortgage rate, which has remained at around the 3.5-per-cent level for the past six months or so, and low unemployment.

Singapore’s strong economic fundamentals, with the whole year’s GDP figure projected to be between 7 per cent and 7.5 per cent, is another driver.

Concurring with this view was Today Editor-in-Chief and MediaCorp Press managing director, Mr Mano Sabnani, who opened the seminar with a “big picture” perspective on the market.

“The property cycle, which follows the economic cycle, is driven by good employment and rising income, and these are two things which we are experiencing right now,” Mr Sabnani said.

“Employment is at a 15-year high, and wages are on an uptrend.

“With rising wages, the ordinary person is likely to plough his savings back into the property market. For businesses, when they are doing well, they are more likely to invest in better offices.”

Based on this, Singapore can expect to see demand for residential, industrial and office markets pick up.

Considering that the average property market cycle from peak to peak lasts about 10 to 12 years, the time appears to be about right for most investors to dip their feet into the market before the next peak comes along.

“We had property peaks in 1972, in the early 80s and an extended one from 1993 to 1996, which was the last peak,” recalled Mr Sabnani.

“If you go by extrapolation, I mean, it may be a bit simplistic but it makes sense that you can expect a much more buoyant property market.”

He added that the next peak might be between 2008 and 2010 when the full impact of the opening of the integrated resorts (IR) and foreign investment will be realised by the property market.

So, where to buy?

According to Mr Neubronner, the proposed IRs at Marina Bay and Sentosa have served as a catalyst to drive up local property prices.

“We are likely to see an increase in demand for short-term accommodation due to the inflow of foreign consultants working on the IRs,” he predicted.

Marina Bay, for instance, is set to become the place to work, live and play with attractions such as the new Botanic Gardens and Esplanade close by.

He expects demand for serviced apartments and traditional residential properties in luxury residential areas and apartments near the two IRs to remain high in the medium term, while interest in both residential and commercial properties will develop over the longer term.

So, as interest in property filters from the higher end towards heartland condos and landed property in the suburbs, Mr Sabnani’s advice to would-be buyers is to be selective in their purchases, as the property market does not move in a straight uptrend.

Buyers must be able to withstand the occasional dip in the market, especially if they are buying the property as an investment.

“Reits, or real estate investment trusts, are another way of investing in property, especially if you don’t want to own a property. You just enjoy the tax-free yields.” 

Source: TODAY, 17 October 2006 

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