Property indices being considered: Minister Lim

Industry players are currently studying the construction of property indices based on the Singapore property market, revealed Trade and Industry Minister Lim Hng Kiang yesterday.

The introduction of these property indices would enhance information on Singapore's property market, he said during a conference. They would also provide benchmarks for structuring property derivatives and other innovative investment products, said Mr Lim at the Citigroup Asia Pacific property conference.

"These developments will add to the breadth and depth of Singapore's markets by providing investing and hedging tools for market participants in a cost-effective and flexible manner," he said.

In his speech, Mr Lim also added that Singapore's real estate investment trust (Reit) market has become the biggest in the Asia Pacific region, outside of Japan — without giving a size of the Japanese market. Since the first Reit listing in 2002, Singapore now has 16 listed Reits with a total market capitalisation of $26 billion, he said.

"Singapore Reits offer investors access to a diversity of real estate assets including retail malls, office buildings, industrial properties and serviced apartments," Mr Lim said. Last year, Singapore saw its first dedicated hotel Reit and Asia's first healthcare Reit, said Mr Lim,

Meanwhile, rental rates for residential properties in Singapore are expected to rise up to 40 per cent this year as occupancy levels hit record highs, according to Citigroup. Its latest Asia-Pacific property strategist report noted that the general occupancy level of residential properties is already at a record high of 95.7 per cent, if the recent en-bloc sales were taken into account.

This level would rise to 97 per cent within the next two years, even if there is no other en-bloc sale, it noted.

Overall residential property prices are expected to rise between 12 per cent and 15 per cent per year over the next two years. — Agencies