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Vacancy may rise to 10%; govt should intervene

Posted on 3 Dec 2014 | Comments Off

Data from the Urban Redevelopment Authority (URA) showed vacancy rate of private homes stood at seven percent in Q3 2014. It could reach up to 10 percent due to the upcoming supply of 68,000 new units over the next few years, according to Chia Boon Kuah, President of the Real Estate Developers’ Association of Singapore (REDAS) in media reports.

“The industry is expecting unabated headwinds as the slew of cooling measures continue to bite and dampen buying sentiment. The looming supply in the next few years is likely to cause home vacancy rate to head towards 10 percent,” he said during the 55th anniversary of REDAS held last night at The Ritz-Carlton, Millenia hotel.This will add even more pressure on the residential market, he opined.

The URA expects that more than 20,000 new units will enter the market annually from 2015 to 2016, before moderating to about 15,000 units by 2017.

Additionally, new private homes sales are forecasted to plummet from 18,000 units for the whole of 2013 to under 9,000 units by year-end, noted Chia. Combined with the significant stock in the pipeline, the challenges the private housing market is getting greater, and this could affect the economy.

in addition, 20 percent of the adult population here works in the real estate or construction industry, and 25 percent of the top 20 listed firms are involved in this sector.

“It is in no one’s interest to witness unintended outcomes. We, therefore, urge the government to stand ready to take supportive measures to prevent a tipping point should the market turn volatile and worsen further,” he added. However, Chia did not specify what kind of measures the government ought to implement.

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Posted in Property Market / Real Estate

Tagged private homes, Private Residential home, Singapore Property Market, Urban Redevelopment Authority

2014 “most dismal year since 2008”

Posted on 3 Dec 2014 | Comments Off

As 2014 nears its end, developers are likely to time the launch of their projects to avoid the year-end lull period.

Chia Siew Chuin, Director of Research & Advisory at Colliers International, said, “With the window of opportunity closing in due to the fast approaching festive and holiday season, developers may hold back launches and focus on marketing the units in previously launched developments.”

She added average monthly primary market sales volume is predicted to be around 400 to 700 units for November and December, bringing the total sales tally for 2014 to around 7,500 to 7,900 units. This is lower than the 14,984 units sold for the whole of 2013.

Alice Tan, Director and Head of Research at Knight Frank Singapore, expects to see few new project and unit launches in November and December. “However, we believe there could be more project launches and re-launches in January and February 2015, particularly approaching and during the Chinese New Year period. Some high profile and well-received projects located in fringe and central locations are expected to intensify marketing efforts and launch more units for sale,” she said. If this happens, 600 to 800 units could be sold each month in the first two months of 2015.

Ong Teck Hui, National Director for Research and Consultancy at JLL, added, “Due to the challenging market conditions, developers seem to prefer to let the year slip by and tackle the challenges afresh in 2015.”

Developers’ uncertainty about the market’s ability to absorb supply is making them cautious about launching too many units. PropNex CEO Mohamed Ismail Gafoor said it is difficult for developers to achieve more than 80 percent sales at the initial launch date in the current market, as buyers need more time to sort out their finances. Developers will continue to push previous launches as seen with projects such as Coco Palms and Lakeville which are priced right and continued to sell in the following months after their launch.

Ong said, “It is unlikely that the market will see any significant resurgence in launches and sales for the rest of 2014 and it looks set to close as the most dismal year since 2008 when the market was hit by the global financial crisis.”