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Wednesday, July 31, 2013

Real estate cycle near inflexion point: Redas

Ong Chor Hao

THE head of the Real Estate Developers' Association of Singapore (Redas) has said that Singapore's real estate cycle is approaching an "important inflexion point".

Chia Boon Kuah said two clear trends are emerging - increased market volatility and a maturing property cycle.

Speaking at the Redas Property Prospects Update 2013 Seminar, he said that on one hand, record low interest rates and sustained inflation growth have driven buyers towards property, which has become "a strong magnet as a store of wealth".

On the other hand, risks remain in the real estate market from a combination of factors. Among these are a potential pullback on the US' easy monetary policy, which will push up interest rates; China's recalibration of domestic policies which will also affect the global economy, as will a steady supply of real estate becoming available here in the next four years.

Mr Chia said that against this backdrop, "prudence and a long-term perspective are essential for the health of the property market eco-system".

He said the government's slate of cooling measures were achieving their intended outcomes on the property market: private home prices rose just 1 per cent in the second quarter of the year on falling sales volumes, and HDB resale prices climbed at their slowest pace since the first quarter of 2009.

Property developers will stay invested in Singapore; they have invested between $10 billion and $12.6 billion annually in the past three years in tenders called under the Government Land Sales (GLS) programme, he noted.

"Our interests are aligned to realise a stable, sustainable and resilient property market that can stay the course through many market cycles."

And when Redas members are collectively successful, they will be able to give back to the community, he added. Redas announced in February that it will set up Redas Foundation, a non-profit body that will "coalesce the efforts and resources" of its members to improve not only their welfare but also the living environment and the future of communities.

Mr Chia said that the Redas seminar should examine various outlooks, trends and opportunities in the market.

Besides him, other executives and consultants from various estate, architectural and construction agencies also spoke at the event at the Grand Copthorne Waterfront Hotel.

Petra Blazkova, the head of research for Singapore and South-east Asia at CBRE, for example, presented a breakdown on capital inflows into Singapore.

She said domestic investors have comprised up to 85 per cent of the $109 billion in Singapore property transactions since the global financial crisis. Net buyers are real estate investment trusts (Reits) and listed companies, with foreign investors offloading their assets.

Ku Swee Yong, the chief executive of International Property Advisor, offering his take on how the government can tackle rising housing prices, said the first step is to rein in the rise in prices of Housing and Development Board flats. The rapid growth in prices for HDB flats has created a pool of upgraders who are driving up suburban condominium prices.

Mr Ku also suggested tweaking the GLS system by holding open auctions like in Hong Kong. This will prevent the "winners' curse", where a developer bids well in excess of his nearest competitor.

Lee Lay Keng, the head of Singapore research at DTZ, spoke about how Singapore and Hong Kong differ in their approach to decentralising office space. Hong Kong has made several areas, notably Kowloon East, key nodes in this effort, so the bulk of the upcoming office supply will be in Kowloon East.

Singapore, on the other hand, has gone for a mix of decentralised, CBD and fringe CBD space in the upcoming supply to 2017, so the overall composition of supply in Singapore will remain largely the same.

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