Published February 8, 2007

Sand shortage may curb property upswing

If the IRs are delayed, economic activity will also be held up: analyst


SAND, or the lack of it, could derail the current upswing in the property market.

Speaking at a property seminar organised by the Singapore Press Club yesterday, Winston Liew, senior investment analyst (properties) at OCBC Investment Research, said that the recent ban on sand exports to Singapore by the Indonesian government could affect the property market adversely by delaying construction and increasing construction budgets.

He also said: 'The integrated resorts are expected to increase the GDP by 1-2 per cent. If the IRs are delayed, this economic activity could also be delayed.'

Mr Liew also believes that there does not appear to be any immediate solution in sight. 'If we buy sand from Vietnam or Cambodia, the transport costs would be prohibitive.'

He also pointed out that resorting to steel construction could raise expenses by 30-40 per cent.

Mr Liew was responding to a question from the floor about possible 'shocks' that could disrupt the current mood of optimism in the property market. To this end, he also said that bird flu and government intervention, like the anti-property speculation measures seen during the previous property boom in the mid-1990s, could also put a damper on the property market. 'The government has always intervened,' he said, highlighting that recent changes on the payment of stamp duty and the release of more comprehensive property data by the Urban Redevelopment Authority could be interpreted as 'warnings'. 'They warn you and if things still don't cool down, interventions like those seen in 1996 could shock the market,' he added.

Property prices in the high-end market and the level of speculation dominated much of the discussion at the seminar.

Also speaking was Knight Frank Singapore managing director Tan Tiong Cheng who noted that even though high-end prices had increased by as much as 50-70 per cent in the last 18 months, the Housing and Development Board (HDB) market was not doing as well. He cautioned: 'Until the HDB market recovers, the mass market won't recover.'

Asked why the gap in property prices between the high-end and mass market was so wide, Mr Tan said property was 'sentiment driven'.

Taking a more bullish stand was Savills Singapore director of marketing and business development Ku Swee Yong who said that property prices were sustainable for at least the next 24 months.

Mr Ku cited the impending supply crunch due to collective en bloc sales and the increase in numbers of foreign talent as factors for upward pressure on prices and rents. He said: 'We are advising MNCs to revise their budgets for housing expenses as we expect rents to increase by 20-30 per cent.'

Mr Ku also said that 2007 would be the year that sees more global funds entering the Singapore property market.

For those who were still keen to invest in property, Peter Chiang, senior investment director, DBS Asset Management, had this simple advice: 'Go into stocks that are leveraged on office property.'