View Full Version : Housing oversupply on the horizon, says Wing Tai boss
http://www.businesstimes.com.sg/premium/top-stories/housing-oversupply-horizon-says-wing-tai-boss
Published June 07, 2012
Housing oversupply on the horizon, says Wing Tai boss
People bringing forward their decision to buy property means there could be less demand in the future
By Kalpana Rashiwala
[SINGAPORE] Just as pent-up demand saw housing prices shoot up over the past few years, a reverse situation could be at play now, says Wing Tai chairman Cheng Wai Keung.
People are bringing forward their decision to buy property as they fear prices may rise. As a result, demand in subsequent years may be lower than what is projected based on current demand. This could worsen an oversupply situation. "On top of that if the economy is not so good at that time, it will compound the problem," says Mr Cheng in an interview.
"The current housing cycle has lasted longer than I expected," he adds. "The effects of five rounds of property cooling measures have been short-lived. And despite the fact that the government has increased supply for so many years, the property market has not subsided. This means the pent-up demand is more than I expected."
He attributes this to a cocktail of past undersupply, Singapore's population growth and liquidity.
"In 2003, 2004, 2005, when the economy was not so good, only people who really needed property would go out and buy. The people who were concerned about whether their jobs are secure tended to delay their purchase and that was why after the global financial crisis, all of a sudden, demand shot up in 2009, 2010 and 2011.
"Now, it's the reverse. Because of liquidity, people feel more secure, and even though the government continues to say that the economy is not doing well, apparently Singaporeans are still confident in general. Now some people may be bringing forward their buying (decision), thinking: 'I'd better buy now because prices are going up'.
"But my argument is that there is a danger of people bringing forward their demand, so subsequent years' demand may be lower than what they call average demand every year (based on current demand statistics).
"This will create an even bigger supply and demand inequilibrium; it will create an oversupply more than we think."
Analysts have also attributed strong property demand since 2009 to investors' distrust of financial instruments following Lehman's collapse. Strong liquidity and low interest rates and the onset of inflation have made property investment all the more alluring.
In addition, developers have also taken to minting small apartments to keep lumpsum investment size affordable, to draw a wider buying catchment.
Mr Cheng also acknowledges that global liquidity is a problem. "This is speculative flow of money, which is no good in the long run but we as a country have no way of preventing that. We are just a follower of the global liquidity. Nowadays, all countries are all for themselves. They don't care for other people. So whether this printing of money will affect other countries, nobody cares. They want to save themselves first. We as a small country, can't prevent that."
Mr Cheng says that he understood the government's measures to cool the property market but has a suggestion. "Government policies, especially tactical policies, must have a sunset clause because they are enacted to deal with certain dislocation of market forces.
"It's a temporary phenomenon, and if you don't remove the policy as fast as possible when the problem no longer exists, you're creating a distortion yourself, the other way."
He also says that because Singapore's economy is now more complex than when he arrived in Singapore nearly four decades ago, any policy introduced today may have unintended consequences.
He cites the example of the introduction last December of the 10 per cent additional buyer's stamp duty on foreigners buying any residential property here.
"So where do the foreigners go to now? They go to strata industrial, office, shops and shophouses. So when you fill up the hole on one side, a new hole pops up on the other side!"
Wild Falcon
07-06-12, 13:58
SINGAPORE'S MRT network, along with a lethargic high-end market, has led to a narrowing price gap between suburban condos near MRT stations and those in the CBD/prime districts.
One way for the authorities to cool the mass segment of the private housing market would be to release more sites further away from MRT stations, reckons Wing Tai chairman Cheng Wai Keung.
He also notes that the network of MRT stations around the island has also reduced price differentiation between various suburban locations.
"The MRT transport network is so good that what is important now is not how far a property is from the centre or CBD; it (the price) is now more defined by how close you are to the MRT station.
"Two MRT stations, three stations, although you may think that it's far but in actual travelling time, it's not so much difference."
Besides MRT stations, the government has done a good job providing amenities.
"Today, living in a place like Sengkang is not so unbearable. There's an MRT station, a mall, library, everything." In some locations, there are also office buildings "so you don't have to come to town to work".
In short, shopping malls and other amenities that were in the past offered only in urban locations are now duplicated in suburban areas.
"This convenience has narrowed the price difference between urban and suburban areas, and also between the different suburban centres," Mr Cheng says.
SLP International managing director Peter Ow estimates that average launch prices for new suburban condos near MRT stations, excluding small units, are around $1,000 per square foot (psf).
Some market watchers have also commented that there was hardly a price gap between Sky Habitat in Bishan, which sold at a median price of $1,583 psf in April, and d'Leedon in the Farrer Road location, with a median price of $1,603 psf in April based on developer sales data lodged with the Urban Redevelopment Authority. Both are 99-year leasehold condos.
Mr Cheng, however, does not believe that the price gap will continue to narrow between suburban and prime locations such as Orchard because of the "perceived prestige . . . snob value".
"High-end locations still have a certain brand value."
One solution for the government to tackle the rise in property prices in the suburbs would be to release more land that is not next to MRT stations.
Land and property values for such sites are lower than those next to MRT stations.
While Mr Cheng acknowledges the motivation for government to tender out plots closer to MRT stations, to intensify land use near major transport nodes, he highlights some of the benefits of selling more land further away from MRT stations.
"You bring down the price . . . psychologically (when) you don't see at every tender, prices continuing to move up, with 15 developers going in to fight for a choice site. This will reduce the anxiety of people . . . and help to moderate the urge to quickly want to buy (a property) before price goes up."
Secondly, by selling land that is further from an MRT station, "you allow people a choice to have cheaper housing".
In exchange for this, they may be willing to give up the convenience of living closer to the MRT station. "They can walk (longer), take a transfer bus to the MRT station."
From the state's perspective too, it makes economic sense to release not-so-conveniently located sites in a hot market rather than in a dull market.
"At the end of the day, you have to release that site anyway, but if you release it in a dull market, the price will be even more depressed . . . or nobody may want it."
In the current market, there will still be some takers for such plots.
"So you also safeguard a certain value of the land. It's a good time to release more of not-so-choice sites in a hot market," Mr Cheng says.
Source: Business Times
Wild Falcon
07-06-12, 14:03
This Wing Tai Chairman finally sees the charm in suburban properties near transport nodes. But his suggestion for government to release suburban land far away from MRT stations or future MRT stations is silly because the purpose of MRT and transport lines is to serve as many people as possible. And if new land releases are all far from MRT stations, it will drive up the prices near MRT station even further because they are more "rare".
This Wing Tai Chairman finally sees the charm in suburban properties near transport nodes. But his suggestion for government to release suburban land far away from MRT stations or future MRT stations is silly because the purpose of MRT and transport lines is to serve as many people as possible. And if new land releases are all far from MRT stations, it will drive up the prices near MRT station even further because they are more "rare".
Someone once say, never listen to what the developers say just observe what they do instead.
i think what wingtai want is to have a more gradual and sustainable growth instead of short term spike.
Someone once say, never listen to what the developers say just observe what they do instead.
i think what wingtai want is to have a more gradual and sustainable growth instead of short term spike.
when you are rich and holding the cards you can say what you want its the poor that have to listen and follow...:cool:
Housing oversupply on the horizon, says Wing Tai boss
People bringing forward their decision to buy property means there could be less demand in the future
An oversupply is good, the bigger the better, current prices should be lowered a lot. Younger Singaporeans should have cheaper and more affordable private housing in their own country.
Big developers like Wing Tai have priced their properties as high as possible and have profited tremdendously from Singaporeans over the many years, and their top people like Mr Cheng are paid huge remunerations for doing so. They have shrunk property sizes to shoeboxes to maximised profitability. I have no empathy for their problems, when they have are out to squeeze as much profits out of Singaporeans like myself, and it is rather disgusting to listen/read their whining asking Govt to change policies that are unfavourable to them. :2cents:
phantom_opera
07-06-12, 16:51
Forestkill ... Essential Sky, Hideous Residences are among the top rip-off projects of WingTai Asia
May be he is short of land banks liao
Forestkill ... Essential Sky, Hideous Residences are among the top rip-off projects of WingTai Asia
May be he is short of land banks liao
with the growing small developers and construction companies banding together, I think it will give all these big guys a run for their money.
I am looking forward to see what Oxley is going to do with the hongleong shopping project.
Wing Tai has sifted its position to become a high end property developer believing that property prices in Singapore would emulate that in Paris and London with the two IRs. It did not happen and now the boss is crying foul. Unlike most other developers with a more diversify business, Wing Tai only targets the high end segment. In business, the board would have him fired. Fortunately for him, he owns a fair share of the company and is "untouchable" despite the wrong call.
phantom_opera
07-06-12, 17:07
Wing Tai has sifted its position to become a high end property developer believing that property prices in Singapore would emulate that in Paris and London with the two IRs. It did not happen and now the boss is crying foul. Unlike most other developers with a more diversify business, Wing Tai only targets the high end segment. In business, the board would have him fired. Fortunately for him, he owns a fair share of the company and is "untouchable" despite the wrong call.
His Hideous Residences ... first page is ang moh already .. ABSD is a big blow to him
http://www.heliosresidences.com.sg/
Wing Tai has sifted its position to become a high end property developer believing that property prices in Singapore would emulate that in Paris and London with the two IRs. It did not happen and now the boss is crying foul. Unlike most other developers with a more diversify business, Wing Tai only targets the high end segment. In business, the board would have him fired. Fortunately for him, he owns a fair share of the company and is "untouchable" despite the wrong call.
exactly same situation with SIA.
Obviously Wing Tai wants the government to release less desirable land, so that the competition for its properties is lesser. MRT and decentralisation are indeed creating havoc for high-end property developers.
Obviously Wing Tai wants the government to release less desirable land, so that the competition for its properties is lesser. MRT and decentralisation are indeed creating havoc for high-end property developers.
perhaps they are looking forward to bid for these less desire plot so that they can use their branding to make a killing for themselves
TheOnlyGayInTheVillage
07-06-12, 18:15
When you cant beat them, join them
When you cant join them, criticise them
Wing Tai has sifted its position to become a high end property developer believing that property prices in Singapore would emulate that in Paris and London with the two IRs. It did not happen and now the boss is crying foul. Unlike most other developers with a more diversify business, Wing Tai only targets the high end segment. In business, the board would have him fired. Fortunately for him, he owns a fair share of the company and is "untouchable" despite the wrong call.
You are right that the boss should be fired. He screwed up big time, profits dived 74% and revenue dropped 69% in the previous quarter, and this quarter could be worse. Getting desperate now, so he is whinging to the media and probably Govt officials hoping to presuade/influence policies changes to benefit his company. Very rich people can behave so shamelessly to protect their business interest and preserve their wealth.
I think he has been talking to Basic......now panic....
TheOnlyGayInTheVillage
07-06-12, 21:44
You are right that the boss should be fired. He screwed up big time, profits dived 74% and revenue dropped 69% in the previous quarter, and this quarter could be worse. Getting desperate now, so he is whinging to the media and probably Govt officials hoping to presuade/influence policies changes to benefit his company. Very rich people can behave so shamelessly to protect their business interest and preserve their wealth.
If top officials in govt agencies can be shameless, so can developer bosses. Its a lesser evil afterall.
"The MRT transport network is so good that what is important now is not how far a property is from the centre or CBD; it (the price) is now more defined by how close you are to the MRT station."
He can also hope for more mrt break downs, then ppl will die die want to stay near centre again...
i tcss only (dun flame me) :D
honky mentality is very different.
back in hk, they famously tell the gov and citizens that houses must be sold at HIGH price so that the economy will be GOOD.:beats-me-man:
i do agree that resale hdb will face a "crisis" in 3-5 yrs time but not private.
Allthepies
08-06-12, 08:01
wingtai bosses r currently increasing their hlding by additional 15%. so dont believe what they say, only believe what they are doing : ) just like many singaporeans (15% first time wannabe buyers) crying foul tat hdb prices r too expensive for the POOR to afford, in the end they r just using the poor as an excuse to fight for their own benefits : ) all equally disgusting, the rich, the middle class, the average class.
wingtai bosses r currently increasing their hlding by additional 15%. so dont believe what they say, only believe what they are doing : ) just like many singaporeans (15% first time wannabe buyers) crying foul tat hdb prices r too expensive for the POOR to afford, in the end they r just using the poor as an excuse to fight for their own benefits : ) all equally disgusting, the rich, the middle class, the average class.
...these are the same Singaporean who would immediately sell their Central/mature HDBs upon MOP to upgrade to PCs...esp those with combined income close to the ceiling, by which time they would have crossed the ceiling.....or like a certain Y who would hang on to the HDB and buy a 2nd property.....but I think KBW should use Y as an example of how one with 7K household income could afford more than 1 property.....
...these are the same Singaporean who would immediately sell their Central/mature HDBs upon MOP to upgrade to PCs...esp those with combined income close to the ceiling, by which time they would have crossed the ceiling.....or like a certain Y who would hang on to the HDB and buy a 2nd property.....but I think KBW should use Y as an example of how one with 7K household income could afford more than 1 property.....
I am in negotiation with my ever-first purchase of the Year 2012 - Ridgewood in D10. I hope I will clinch it.
I am in negotiation with my ever-first purchase of the Year 2012 - Ridgewood in D10. I hope I will clinch it....so you are looking at big ones:
RIDGEWOOD MOUNT SINAI DRIVE Condominium 1,960,000
1,981 Strata 990psf Aug-11?
,,,GOOD LUCK,,,,,,,
Thanks. I wonder if the owner(s) will burge on my offer(s).
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