Turning point looms in property cycle: Redas chief
http://www.straitstimes.com/archive/...chief-20130731
Turning point looms in property cycle: Redas chief
Published on Jul 31, 2013
By Melissa Tan
SINGAPORE'S property market has been achieving record prices recently. But it could soon face a turning point, a top official from the industry body said yesterday.
"We are approaching an important inflection point in the real estate cycle," said Mr Chia Boon Kuah, president of the Real Estate Developers' Association of Singapore (Redas).
Mr Chia, who is also chief operating officer at Far East Organization, said property has "become a strong magnet as a store of wealth to investors and end-users alike".
He said this was the result of high levels of liquidity and effectively negative real interest rates - that is, where inflation is higher than interest rates.
But risks remain in the Singapore property market, he told a Redas Property Prospects Update seminar held at Grand Copthorne Waterfront Hotel.
Mr Chia cited, for instance, a possible easing in monetary stimulus by the United States, leading to a rise in interest rates, and China recalibrating its domestic policies.
He also pointed to the pipeline of expected property completions here and the physical supply of real estate that will hit the market within the next four years.
"Against this backdrop of increased market volatility and a maturing real estate cycle, prudence and a long-term perspective are essential for the health of the property market."
Mr Chia added that property developers would stay invested here, noting that the private sector invested $12.6 billion in sites released under the Government Land Sales (GLS) programme last year. This was up from $12 billion in 2011 and $10 billion in 2010.
International Property Advisor director Ku Swee Yong, another speaker at the Redas seminar, said that to stop home prices from continuing to grow, the Government should boost the available supply of completed Housing Board flats.
Public housing prices have risen at a faster pace than private housing prices, he said, adding that home prices have been rising despite a "patchwork" of cooling measures.
He noted that tightened foreign worker inflows have led to lengthier construction periods, meaning that HDB flats take longer to reach the market.
"Focus on physical, completed, available supply. It's about TOPs (temporary occupation permits), not GLS or launches," he said.
Mr Ku suggested that the Government temporarily allow construction firms to hire more foreign labour to complete HDB flats faster.
Other speakers at the Redas seminar included analysts from property consultancies DTZ, CBRE, Savills and Knight Frank as well as OCBC Bank.
[email protected]
Real estate cycle near inflexion point: Redas
http://www.businesstimes.com.sg/arch...redas-20130731
Published July 31, 2013
Real estate cycle near inflexion point: Redas
Govt measures are achieving their intended outcomes
By 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.
