Singapore’s private property market has witnessed stellar growth in recent years, yet that outstanding performance has also seen a rise in the number of empty homes in the city state.
At the end of last year, there were 15,890 unsold homes in Singapore – a substantial increase on the 12,740 at the start of the year. Right now, almost six percent of all private homes in Singapore remain empty.
However, some industry insiders are far from worried. “Over the last few years since 2007, the private residential segment has seen an average of 5.4 percent vacancy rates for completed units. It is common to see this trend as units are usually sold upon completion as buyers are able to see the actual development,” said Mohamed Ismail, CEO of PropNex Realty.
“In fact, during the Lehman crisis in Q4 2008, the vacancy rate was at 6.1 percent, which means the current percentage is relatively conservative. In 2011, comparing the 4.9 percent vacancy rate in Q1 with the 5.9 percent in Q4, naturally this increase is mainly attributed to the cooling measures introduced in 2011 and the global uncertainty. This led to potential investors taking a wait-and-see approach,” added Ismail.
According to Ong Kah Seng, Director at R’ST Research, the cautious economic sentiment has led to a rise in expatriates not seeing employment contract terms renewed upon expiry, leading to a growth in vacant stock.
Meanwhile, it appears as though a significant number of these units are in the mid- and high-end sectors and are located in prime areas. Agents who operate in these areas suggest higher asking prices are directly proportionate to the number of empty properties.
“Affordability is like a pyramid. The more affordable it is, the higher the demand. At the top end of the market, the number of people who can afford such properties will significantly reduce,” said Getty Goh, Director of Ascendant Assets Pte Ltd.
A glance at listings on PropertyGuru can provide some insight. Developments such as Helios Residences, Grange Infinite, Aalto and The Marq boast a number of units for sale at well above the average price point and providing more evidence of the number of vacant units at the top end of the market.
Unit size might also be a contributing factor. Feng Shui expert-cum-architect Shang Zong Wei said, “It has more to do with the relatively new housing typology – ‘shoe box’ units, whose demand is essentially driven by people’s desire to create wealth through property transactions. While such properties are apparently good for investment in a modern city like Singapore, they are definitely not ideal for long term living.”
From a Feng Shui point of view, Shang said we are now living in Period 8 where high-rise developments with small units and expensive pricing will become the norm.
“In Feng Shui, the 20 years spanning 2004 to 2023 is known as Period 8. This is represented by the trigram Gen (艮), a characteristic of Qi (气) normally relating to mountains, children, feet, ankles and so on. Hence, in Period 8, erection of high-rise housings may be anticipated – modern structures manifesting as ‘mountains with livable caves’, complete with ‘mountain-high’ prices. The trend of dwelling units becoming smaller and smaller may seem a natural response to market demand, but it can also be just a natural tendency towards ‘children scale’. What is really uncanny is the nickname given to such units – ‘shoe box’, because Gen (艮) also relates to feet and ankles.”
The market is already seeing a decline in the number of transactions in the higher echelons of the market, so the prospect of any decline in the number of empty units looks remote.
“The luxury market caters to rich foreigners and the additional stamp duty will definitely put off some buyers. These foreigners are affected by macro issues like the Eurozone crisis, the slowing growth of China and the anemic economic outlook in the United States and the global economy. Activity for the high-end strata will not be robust,” said Goh.
Source : PropertyGuru – 13 Feb 2012