Time to play it cool

For the second time in three days, the Government has stepped in with a cautioning note to calm the bullish property sector, even going so far as to single out parties that may have helped fan the flames.

Urging the public to take media reports of rising office rentals with a pinch of salt, the Urban Redevelopment Authority (URA) said “the public should take into consideration information on future supply of office space”.

“One example was the recent projection by property consultant Savills that office rentals in Singapore could surpass those in Hong Kong by end-2008,” the URA said in a statement to announce the launch of the first transitional office site at Scotts Road (see map).

“The public should interpret such projections with caution. Whether such projections materialise or not depends on many factors … The consultants may not have taken into consideration the additional supply of office and business park space that will be generated from the latest Government initiatives.”

To give the public a “more balanced perspective”, the URA will soon release more detailed rental and vacancy data on office space.

Meanwhile, it has put up for tender the 1.04-ha land parcel next to the Newton MRT station. With a 10-year lease, a three- to four-storey building yielding 15,666 square metres of transitional office space could be ready within a year. If response is good, said the URA, the Government will release more of such sites for tender.

On Monday, in releasing the latest figures on private home prices, the authority had likewise warned would-be home buyers to be savvy about upcoming supply.

When contacted yesterday, Savills declined to comment on the URA statement. All the director of Savills Residential, Mr Ku Swee Yong, would say was: “These measures reaffirm the very pro-business stance of the Singapore Government. The URA is reacting swiftly to the needs of enterprises growing their operations and tapping on the rosy economic conditions here.”

But analysts point out the consultancy firm was not the only one talking up the market.

“The media has played its role in increasing the profile of the property market, increasing the speed of the property sector,” said Mr Vasu Menon, chief editor of finatiQ.com.

For instance, an HDB flat in Tiong Bahru that fetched $720,000 and the $5,100-per-square-foot price tags for apartments at The Marq had made the headlines, and even front pages, of newspapers.

“The public will worry about these media reports. People could get scared, thinking that they missed the boat,” said Mr Menon.

However, he noted that it was unusual for the Government to single out a particular company — a sentiment echoed by property analysts.

“It is unfair to tar every consultant with a single paintbrush,” said Mr Nicholas Mak, director of research and consultancy at Knight Frank. “However, Savills may have said something that does not serve the nation’s interests.”

While agreeing, Chesterton International’s head of consultancy and research Colin Tan observed that a shortage of office space did exist, and that would inevitably drive rents up.

“Everyone who is renewing leases is facing rents double or triple their existing ones,” said Mr Tan. “If (the URA) doesn’t think there’s a strong demand for office space, then why provide transitional office sites?”

Apart from the Newton site, the URA has also launched for public tender a 0.25-ha commercial site at Anson, with the potential to yield a maximum permissible gross floor area of 23,418 sqm. A developer has committed to bid at least $116.2 million for it.

Together, both sites are expected to “meet demand for office space in the short term”. The announcements come two weeks after the Government said it would make available sites for 534,000 sqm of commercial space in the second half of this year.

Source: Today, 05 July 2007

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