January 5, 2007, 5.05 pm (Singapore time)

CityDev says S'pore home prices may rise 20% in 2007

SINGAPORE - The head of City Developments, South-east Asia's second-largest developer, said on Friday that foreign investment would help drive up Singapore's property prices by as much as 20 per cent this year.

'There is a lot of liquidity in the world chasing too few good assets. What do these foreign funds do? They have to find different assets and Singapore is a top investment city,' Kwek Leng Beng, executive chairman of City Developments (CityDev), told reporters at a residential property launch.

Mr Kwek said prices for luxury private homes could rise between 10 per cent and 20 per cent this year, while mid-priced private properties could see an increase of 6 per cent to 10 per cent.

The property tycoon, who was ranked Singapore's second-richest person by Forbes magazine in 2005, said his latest residential project, a twin-tower development in Singapore's commercial district, had drawn strong interest from investors. He said he had turned down two foreign investment funds which had wanted to buy the entire residential development even before its Friday launch.

The funds offered CityDev an average $1,692 per square foot for the 40- and 50-storey project, which has a total area of 420,000 square feet, but he said he preferred to sell the apartments to individuals at $1,500-$2,000 per square foot.

Singapore's property sector recovery gained momentum after the government introduced measures in July 2005 to ease real estate financing rules and foreign investment. Private home prices rose 10 per cent last year, with a few luxury properties in prime districts selling at prices last seen before the 1997-98 Asian financial crisis. But resale prices for public housing flats, where 83 per cent of Singaporeans live, have remained flat. -- REUTERS