Singapore properties remain much sought after

IN most economies, while land and buildings generally form a significant portion of national wealth, the situation is more acute in land scarce Singapore and Hong Kong.

Although Singapore offers a plethora of investment instruments, property continue to be a much sought after asset to have.

Says an observer: “The government wants every Singaporean to have a home. That is why we have HDB (Housing Development Board) homes for everyone. There are the lower end HDB apartments and the more expensive ones. Then there is private housing.”

Malaysians today make up the city state’s third largest investors, says a property consultant.

Be it by marriage or Malaysians seeking permanent resident status or economies, the two countries share close ties.

To appreciate the dramatic hike in Singapore’s property sector today, there is a need to go back a decade.

Says a Malaysian hotel owner: “A decade or more ago, I was offered a hotel in Singapore at S$180mil. Today, it has gone up to S$350mil. I’ve made some good moves, but I lost that one.”

In 1998, parts of Asia were grappling with the Asian financial crisis and sentiments were poor, as with today. Over in Malaysia, property prices were also tumbling after a heady 1995-96 era when prices peaked.

While Malaysian properties were hit by the credit crunch, the Singapore property sector rolled with a certain level of resilience. Then came the severe acute respiratory syndrome (SARS) and the good times came to an end. The pain was short and intense, on every front.

By early 2005, prices began to escalate again, says sdb Asia Pte Ltd sales and marketing executive Jean Tan.

At the end of 2005, the Singapore government announced the setting up of the integrated resorts with casinos on Marina Bay and Sentosa Island.

Investors sat up and began pouring money into Singapore real estate one year later, especially Orchard and the surrounding areas like Tanglin, Bukit Timah Road, known as district 9 and 10.

“In 2007, the en bloc sale of apartment units resulted in prices going overboard. What was bought for S$800,000 went up to S$1.3mil during that period,” she says.

Prices reach a peak in August/September 2007. The tumble came in December after the government did away with the deferred payment scheme.

The scheme essentially requires a buyer to pay 20% upfront on signing of the sales and purchase agreement and paying the remaining 80% on completion.

This was done away with and buyers took this negatively, says CB Richard Ellis team director Dave Peh. There were also the measures by the government to cut down on supply.

“But these are not the only reasons. The world is going through a global economic crisis. It may take longer to sell, unlike the time when all the units were sold in two weeks,” he says.

By The Star (by Thean Lee Cheng)