The latest CB Richard Ellis Market View Report showed that property transactions in the republic peaked to about S$54bil in 2007.
It tumbled by about 66% to S$18bil in 2008 – impacted by the global financial crisis – before plummeting to insignificant levels of transactions in the first quarter this year.
However, the report also indicated that the property sector may have bottomed out, going by the investment transactions worth several billion dollars in the second quarter compared with the first quarter.
The report also showed that the pace of rental drop had eased as stability in the market returned, especially in office space, while pent-up demand for residential sector was seen in the mass market, mid-tier and prime segments.
There was also a significant increase in the volume of resale homes and sub-sales in the secondary market of the residential sector.
But the industrial sector remained sluggish with a slow rate of decline in rental and capital appreciation.
The retail sector showed new supply and new concepts that spelt an exciting era for businesses.
Raffles Quay Asset Management Pte Ltd (RQAM) general manager Wilson Kwong said the company was seeing some early signs of recovery in the property sector and the momentum should improve going into 2010.
RQAM was formed to manage the multi-billion dollar 3.55ha Marina Bay Financial Centre (MBFC) under a tripartite venture between Cheung Kong (Holdings) Ltd, Hong Kong Land Ltd and Keppel Land Ltd.
Kwong said the property revival started in the second quarter with a bit of nibbling by investors of properties in prime locations.
“We are experiencing a healthy pick-up of residential and commercial space at MBFC, with 61% of its three million sq ft of Grade A office space being pre-committed by established tenants,” he noted.
Kwong said the pre-commitment clearly indicated the tenants’ level of confidence in the buoyancy of Singapore’s property sector in the long term, despite the fact that MBFC was being built in phases.
He said rental rates of MBFC office space should be comparable or possibly even higher than the current prices in the central business district of Singapore.
“Marina Bay, including MBFC, was planned to be a seamless extension of the existing central business district to provide a premier waterfront address and a 24-hour live-work-play environment,” he told StarBiz in an interview in Singapore recently.
Kwong said that before the financial crisis, rental in prime locations was at S$18 to S$19 per sq ft but shed 50% to S$9.50 per sq ft after the crisis. The rates are now slowly rising.
On the selling price of prime properties, he said it could be S$2,000 or more per sq ft, especially in choice locations.
On the resilience of the property market, Kwong said it was largely due to the collaborative efforts of the private sector and the government, which had played a huge role by honouring its pledge to fund the infrastructure, especially in MBFC.
Singapore’s National Development Minister Mah Bow Tan said the government had so far invested S$7.5bil in Marina Bay and would spend a further S$1bil for infrastructure work.
Mah said Marina Bay had to date attracted about S$20bil in private real estate investments from local and international investors.
A Singapore-based property analyst said the government had been supportive of the private sector initiatives in further developing the island state as Asia’s commercial hub.
The analyst said the government had assisted in funds as well as working with foreign and local developers via the Urban Redevelopment Authority to ensure projects were not slowed down.
This is especially in areas such as town planning, infrastructure works and efficient transport system to support key growth areas.
“This clearly impressed many foreign investors wanting a base in South-East Asia and who have shown their commitment by investing in prime properties either through rental or purchase in the republic,” he said.
A Malaysian property analyst said there were two other major projects in Singapore that could spark greater investor interest and attract more tourists.
These projects, which could in turn help revive the economy and the property sector, are the US$3bil Marina Bay Sands Singapore Hotel & Casino in Marina Bay and the 121-acre S$5bil integrated casino on Sentosa Island by Genting International.
“These mega projects are slated to open at the same time around March next year. It should be interesting to see how they fare against each other and their impact on other regional casinos,” he said.
By The Star (by Danny Yap)
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