Tag Archives: REDAS

Singapore developers more pessimistic

Business sentiment among property developers in Singapore fell further in Q4 2015, reported The Business Times, citing a survey by the Real Estate Developers’ Association of Singapore (Redas) and the National University of Singapore (NUS).

The Current Sentiment Index, which monitors changes in sentiment during the last six months, dipped to 3.6 in Q4 from 3.7 in the previous quarter.

On the other hand, the Future Sentiment Index, which monitors sentiment in the next six months, dropped to 3.4 in Q4 from 3.7 in the quarter before.

As a result, the Composite Sentiment Index slid to 3.5 from 3.7 previously. A score of less than five indicates deteriorating market conditions while a score of more than five implies improving conditions.

Conducted among senior executives of Redas’ member firms, the quarterly survey showed that nine in 10 developers expect the global economy to slow down, with three in four expecting the increase in interest rates and inflation to affect market sentiment over the next six months.

“Job losses, decline in domestic economy, excessive supply of new property launches are other potential risks that will adversely impact the market sentiment,” the report said.

Meanwhile, seven in 10 of the respondents expect new launches to moderately increase, while more than a fifth of the developers said they will launch relatively fewer units.

On price changes, six in 10 expect residential property prices to drop moderately in the next six months.

As for the impact of the cut in supply of the first half 2016 Government Land Sales (GLS) programme, around six in 10 anticipate minimal impact on demand in the commercial and residential property sectors.

One developer noted that a lack of new launches may see buyers revisiting the secondary market. “The lower GLS supply will provide support for prices, which lead to lower new developer sales. Some buyers will revisit unsold and resale units in existing projects.”

Waning property demand ‘could damage economy’

Cooling measures may depress consumer sentiments excessively.

DEVELOPERS are keeping close tabs on the residential market, as waning property demand could pose a danger to the wider economy.

“The fear is that when consumer sentiment declines too much as a result of measures designed to cool the market, there could be a broader impact on the economy,” said Mr Chia Boon Kuah, president of the Real Estate Developers’ Association of Singapore (Redas).

He was speaking yesterday at the annual Mid-Autumn Festival lunch at the Grand Copthorne Waterfront Hotel.

Mr Desmond Lee, Minister of State for National Development, and City Developments chief Kwek Leng Beng also attended.

Mr Chia called for more dialogue between developers and the Government as the industry goes through “challenging times”.

He pointed to the swelling stock of unsold units sitting on developers’ balance sheets. Banks, which give out loans to developers and home buyers, are increasingly concerned, too.

A recent report from investment bank UBS said household balance sheets have been underpinned by high home prices and debt, and that a 10 per cent to 15 per cent dip in prices would badly affect consumer spending.

“This shows that even when a small segment of mortgages sours, it can have a negative impact on the broader market,” Mr Chia said.

So far, in the first half of the year, prices of private condominiums have eased 2.3 per cent while prices of Housing Board resale flats are down 3 per cent, Urban Redevelopment Authority figures showed.

To prevent a destabilising economic slowdown, said Mr Chia, Redas “stands ready” for more collaboration with the authorities.

However, Mr Donald Han, managing director of Chestertons, noted that developers may be hit by thinning margins, but most have built up strong balance sheets during the bull run in the property market over the past three years. Banks are also in a much stronger state now, compared with the period of the global financial crisis.

Mr Alan Cheong, research head at Savills Singapore, said that while developers are concerned about how a slowing property market could affect the economy, the Government’s primary concern is to ensure financial prudence among borrowers. But this seems to be at the expense of the growth in deposits, even as consumer loan levels have eased.

In July, deposits growth rose by just 0.1 per cent, down from 10 per cent a year ago – before the total debt servicing ratio kicked in, said Mr Cheong. In comparison, consumer loans grew at about 10.5 per cent in July, down from about 20 per cent a year earlier.

“The measures could have been calibrated at too high a level,” noted Mr Cheong. “Singaporeans are put off by the total debt servicing ratio and foreigners are not bringing in the money because of the additional buyer’s stamp duty. Money is flowing out.”