Published November 02, 2012

Developers see funds flowing here after QE3

They expect more inflows into Reits, bigger demand for commercial property

By ong chor hao

TWO-THIRDS of property developers in Singapore expected the third round of quantitative easing (QE3) in the US to result in more funds flowing into real estate investment trusts (Reits), a survey showed.

The poll by the Real Estate Developers' Association of Singapore (Redas) and National University of Singapore (NUS) also revealed that a sizeable ratio of industry players expected QE3 to have an impact on the property market in other ways.

Nearly half of the 66 respondents expected greater demand for commercial and industrial properties, while 40 per cent believed that there would be more aggressive bidding for land. Foreigners would also buy more residences in Singapore, 44 per cent of developers believed.

The questions about QE3's impact formed part of the Real Estate Sentiment Index (RESI) survey by Redas and the Department of Real Estate (DRE) at NUS.

The overall Composite Sentiment Index, which reflects the general feel about the property market in Singapore, rose to 4.9 in the third quarter, from 4.7 in Q2.

It was the third straight quarter of increase. However, it remains below the 5.0 mark which separates optimism from pessimism.

Sing Tien Foo, associate professor at DRE, said that developers are generally upbeat currently. "However, they remain alert of possible macro and policy risks that could destabilise the market in the next six months," he added.

Within the various sectors in the property market, sentiment was mixed.

Developers were most optimistic about the current and future outlook in the hotels and service apartment sector.

But the office sector remained a drag with a continued negative current and future outlook.

Developers were also pessimistic about the industrial and logistics sector in the near future, although they currently hold positive sentiments.

There was improvement in sentiment towards the prime residential sector compared with the second quarter, and the current view and outlook for the suburban residential sector remained positive.

Reflecting this, most (71 per cent) developers surveyed expected more residential units to launch in the next six months, and one in three expected a moderate rise in unit prices, up from 15 per cent in the previous quarter.

Interest picked up for land sales as well, compared with the previous quarter, the survey showed.

But developers grew more concerned about costs this quarter. Some 55 per cent of those polled were worried about labour cost increases, versus the 47 per cent in Q2, while 38 per cent expressed concern over high land prices, up from 31 per cent.