reporter2
16-03-22, 10:58
Will escalating Russia-Ukraine conflict add to headaches for property sector?
Mar 15, 2022
AS DEVELOPERS, buyers and sellers digest the latest round of property cooling measures as well as the higher property taxes announced during February's Budget, the Russia-Ukraine conflict adds a layer of uncertainty to the mix.
Oil and commodity prices have shot up to stratospheric levels, further stoking fears of inflation and roiling the stock markets just as the US Federal Reserve is expected to hike interest rates this month.
Persistently elevated energy prices could derail a fragile post-pandemic recovery and raises the threat of an economic slowdown as consumers tighten their purse-strings and companies grapple with higher costs. On the property front, construction costs could also head north.
Vijay Natarajan, real estate analyst at RHB Singapore, reckons any impact on the private residential market will ultimately depend on how long the conflict drags on and the magnitude of the fallout on the global economy.
"The risk of stagflation and possible recession has increased. At this point, it is hard to say how big the impact will be," he said. "A slowdown in the Singapore economy and stagnation in wage growth or job losses could affect buyers' inclination to purchase property assets."
For now, market watchers don't see the war directly impacting the private residential market here.
Arguably, foreign buyers and investors are more likely mulling over the cooling measures, which brought yet another increase in the Additional Buyer's Stamp Duty (ABSD) rate. Transaction volumes in the primary residential market are expected to drop in 2022, owing to the property curbs as well as the limited pipeline of launches. Last year, developers sold over 13,000 new private homes.
Huttons' head of research Lee Sze Teck projects that 8,000 to 9,000 units - excluding executive condominiums (ECs), which are a public-private hybrid - could be released for sale this year, down from 10,496 units launched in 2021.
Amid shrinking inventory, developers haven't appeared to have lost their appetite to acquire land, especially for sites in the suburbs. The cooling measures have largely spared first-time buyers and HDB upgraders, and most of the demand should come from this segment of buyers this year.
State tenders that closed last week for a 99-year leasehold site along Dairy Farm Walk and a 99-year leasehold EC site at Bukit Batok West Avenue 8 both saw keen interest and firm bid prices.
Preliminary data extracted by analysts from the Urban Redevelopment Authority's (URA) Realis platform showed that the number of new private homes moved in February by developers dropped about 27 per cent month on month and 24 per cent year on year to 490 units. The tally is lower than the 673 units sold in January.
Analysts attributed the drop in transactions in the primary market to the Chinese New Year holidays, the absence of new major launches as well as dwindling unsold inventory. As at end-2021, there were 14,154 unsold units, down about 17 per cent from Q3 2021.
There were few launches in the first two months of this year, and just one project launched in February - a boutique freehold development Royal Hallmark in District 15 that sold 10 of its 32 units at a median price of S$1,904 per square foot (psf).
With more launches slated for Q2 2022, transaction volumes should get a boost vis-a-vis Q1 2022, according to PropNex's head of research Wong Siew Ying. Upcoming property launches include Qingjian Realty's The Arden at Phoenix Road, Bukit Sembawang's Liv @ MB (former Katong Park Towers) at Arthur Road, Sing Holdings' EC North Gaia at Yishun Ave 9 and Piccadilly Grand at Northumberland Road, jointly developed by City Developments (CDL) and MCL Land.
Over the course of the pandemic, the resilience of the private residential market has been almost astonishing at times.
Still, recent months have piled on the pain: cooling measures, costlier property taxes, the prospect of higher interest rates and now, shockingly, a war that shows no signs of letting up anytime soon. Property players and participants alike will need to keep a watchful eye on geopolitical tensions for any signs of further escalation.
Mar 15, 2022
AS DEVELOPERS, buyers and sellers digest the latest round of property cooling measures as well as the higher property taxes announced during February's Budget, the Russia-Ukraine conflict adds a layer of uncertainty to the mix.
Oil and commodity prices have shot up to stratospheric levels, further stoking fears of inflation and roiling the stock markets just as the US Federal Reserve is expected to hike interest rates this month.
Persistently elevated energy prices could derail a fragile post-pandemic recovery and raises the threat of an economic slowdown as consumers tighten their purse-strings and companies grapple with higher costs. On the property front, construction costs could also head north.
Vijay Natarajan, real estate analyst at RHB Singapore, reckons any impact on the private residential market will ultimately depend on how long the conflict drags on and the magnitude of the fallout on the global economy.
"The risk of stagflation and possible recession has increased. At this point, it is hard to say how big the impact will be," he said. "A slowdown in the Singapore economy and stagnation in wage growth or job losses could affect buyers' inclination to purchase property assets."
For now, market watchers don't see the war directly impacting the private residential market here.
Arguably, foreign buyers and investors are more likely mulling over the cooling measures, which brought yet another increase in the Additional Buyer's Stamp Duty (ABSD) rate. Transaction volumes in the primary residential market are expected to drop in 2022, owing to the property curbs as well as the limited pipeline of launches. Last year, developers sold over 13,000 new private homes.
Huttons' head of research Lee Sze Teck projects that 8,000 to 9,000 units - excluding executive condominiums (ECs), which are a public-private hybrid - could be released for sale this year, down from 10,496 units launched in 2021.
Amid shrinking inventory, developers haven't appeared to have lost their appetite to acquire land, especially for sites in the suburbs. The cooling measures have largely spared first-time buyers and HDB upgraders, and most of the demand should come from this segment of buyers this year.
State tenders that closed last week for a 99-year leasehold site along Dairy Farm Walk and a 99-year leasehold EC site at Bukit Batok West Avenue 8 both saw keen interest and firm bid prices.
Preliminary data extracted by analysts from the Urban Redevelopment Authority's (URA) Realis platform showed that the number of new private homes moved in February by developers dropped about 27 per cent month on month and 24 per cent year on year to 490 units. The tally is lower than the 673 units sold in January.
Analysts attributed the drop in transactions in the primary market to the Chinese New Year holidays, the absence of new major launches as well as dwindling unsold inventory. As at end-2021, there were 14,154 unsold units, down about 17 per cent from Q3 2021.
There were few launches in the first two months of this year, and just one project launched in February - a boutique freehold development Royal Hallmark in District 15 that sold 10 of its 32 units at a median price of S$1,904 per square foot (psf).
With more launches slated for Q2 2022, transaction volumes should get a boost vis-a-vis Q1 2022, according to PropNex's head of research Wong Siew Ying. Upcoming property launches include Qingjian Realty's The Arden at Phoenix Road, Bukit Sembawang's Liv @ MB (former Katong Park Towers) at Arthur Road, Sing Holdings' EC North Gaia at Yishun Ave 9 and Piccadilly Grand at Northumberland Road, jointly developed by City Developments (CDL) and MCL Land.
Over the course of the pandemic, the resilience of the private residential market has been almost astonishing at times.
Still, recent months have piled on the pain: cooling measures, costlier property taxes, the prospect of higher interest rates and now, shockingly, a war that shows no signs of letting up anytime soon. Property players and participants alike will need to keep a watchful eye on geopolitical tensions for any signs of further escalation.