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Property developers sell just 376 units last month despite launching four times as many units

Sales of private homes continued to languish last month, with the poor sales in August - the Hungry Ghost month - proving to be more than just the usual annual blip.

It was more of a sign of things to come, as the ongoing financial turmoil takes its toll on home-buying sentiment.

According to data released yesterday by the Urban Redevelopment Authority (URA), property developers sold 376 units in September - just 51 more than in the preceding month - despite launchingalmost four times as many units. In stark contrast, developers launched more than 1,000 units in June and July and sold more than 800 in each of those months.

The latest figures come a day after an official with Malaysian plantation giant IOI Corporation told Malaysian newspaper The Star that the company is postponing the launch of Sentosa Cove due to the slowdown in the residential property market.

Property consultants had been predicting sales to rebound after August. But the collapse of United States bank Lehman Brothers and the US government bailout of insurance company AIG on Sept 15 put paid to such hopes.

But although macro economic conditions continue to look unfavourable, with Singapore slipping into recession, analysts are split over whether private home prices would come down drastically in the months ahead.

Chesterton Suntec International associate director Colin Tan, for one, believes the latest data have erased any ambiguity over whether Singapore’s property market has turned.

Noting that developers were “resisting making deeper price cuts”, Mr Tan said: “Developers are under pressure to maintain their revenue flow - that’s why they have to launch new units. The fundamentals have actually deteriorated quite sharply. The writing is on the wall: If you don’t lower prices, you can’t sell.”

Commenting on the latest private home sales figures, Jones Lang Lasalle said in a press release that the “aggressive supply far exceeded what the market could digest”.

It added that the “apparent supply overhang” is most severe in the core central region, where only 70 out of the 258 units launched were actually sold.

While high-end projects such as Orchard Scotts, Martin No 38 and Reflections at Keppel Bay all sold units above $2,000 per sq ft,median prices were generally heading south - although CB Richard Ellis executive director Li Hiaw Ho maintained that there was “still no broad-based decline”.

Singling out a “slight easing of prices” in the Bukit Timah and Newton areas,Mr Li noted that prices of units at Madison Residences and Floridian along Bukit Timah Road have fallen some 10 per cent, compared to last year.

Prices of apartments at Viva and Park Infinia - at Lincoln Road and Thomson Road respectively - are about 5 per cent lower than those achieved by comparable projects in the beginning of the year.

And buyers are still shying away from the luxury market.

While luxury development Nassim Park Residences sold eight units at a median $3,349 psf in August, only one unit was sold this month, fetching a price of $3,197 psf - an indication of a “weakened market for high-end properties”, according to PropNex chief executive Mohd Ismail.

Taking a more optimistic view,Mr Mohd Ismail felt the property market was “recovering”, and he did not expect developers to drop prices in the next few months. “Singapore’s economy is expected to weather the storm and property here remains a viable and lucrative investment,” he said.

Pointing out that the number of units sold had increased by 17.5 per cent as compared to August, he noted the fact that almost six out of 10 of the units purchased had a median price of over $1,000 psf - the highest proportion for the year so far.

He said: “Stocks, shares, equities and other such financial investments are now largely avoided. People here are looking to a ‘bricks-and-mortar’ investment, and choose therefore to plant their funds in property.”

URA’s preliminary estimates showed private home prices dropping 1.8 per cent in the third quarter, after having climbed 3.9 per cent in the first six months of this year.

Based on the latest figures, the total sales for private homes in the first nine months of the year hit 3,890.

And Mr Li expects a demand of “1,000 to 1,400 new homes” in the final quarter of the year, with prices set to fall by between 2 and 4 per cent.

With the HDB resale market going strong - HDB resale prices rose 4.2 per cent in the third quarter - Mr Li expects HDB upgraders to continue to shore up demand for private homes.

He added: “But other potential buyers would prefer to wait on the sideline for a more sustainable solution for the global financial turmoil.”

Source : Today - 16 Oct 2008

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Sales of private homes in Singapore improved 17.5 per cent in September, compared to the previous month.

But analysts said the pickup fell short of expectations, given the low base in August caused by the Hungry Ghost Festival. The seventh month of the Lunar calendar is traditionally regarded as an inauspicious period and buyers usually refrain from making purchases during that time.

Almost 300 per cent more units were launched for sale in September, compared to August. Property developers sold 376 units in September, just 51 units more than the preceding month. Nonetheless, some analysts see something to cheer about in the data.

Ku Swee Yong, director, Marketing & Business Development, Savills (Singapore), said: “I already see that as a positive (sign) because in September, the stock market beat the whole market down, so many investors were spooked.”

The stock of private residential properties has been building up in the past year and was compounded by a large oversupply in September.

As buyers become more cautious in light of the economic downturn, prices are expected to fall.

Nicholas Mak, director, Consultancy & Research, Knight Frank, said: “Whatever gains made in the first half of this year will probably be lost by Christmas. Depending on how the global economic and financial situation plays out, I think there’s still a lot of uncertainty and turmoil out there.

“There is a possibility we could see further weakness in home prices in 2009, especially if the Singapore economy were to slip into a prolonged recession.

“At the moment, we haven’t seen some of the major bad news like massive retrenchments or fall in salary levels. If such a thing were to happen, we could see people giving up homes or downgrading.”

Knight Frank said bad economic outlook could result in a double-digit fall in home prices in 2009. But others are not as pessimistic.

Ku said: “Private residential prices in mass market will still hold up very well, probably for the next 18 months… we believe so because the demand for public housing is still strong.

“In the third quarter, HDB price index for resale HDB (flats) still managed to climb 4.2 per cent. That should support mass market prices for HDB upgraders very well.”

However, all agree that within the private residential sphere, luxury properties will bear the brunt of price pressures.

“For luxury and mid-tier residential market, we think that over the next 18 months, we might see about 5, 10 per cent drop. For the very luxurious properties, about 15 per cent drop in prices,” Ku added.

Luxury properties tend to attract speculators who have retreated from the market in the current unpredictable financial environment.

Source : Channel NewsAsia - 15 Oct 2008

The 99-year leasehold Parkway Centre has been put up for collective sale.

The commercial property, which is located in the Marine Parade town centre, can be redeveloped into an office-cum-retail development, with a gross floor area of up to 157,625 square feet.

The building is located opposite Parkway Parade and near Roxy Square. It is surrounded by residential projects like Parc Seaview, Silversea and Amber Residences.

The property is linked to the East Coast Park Expressway and is near Singapore’s central business district.

Jones Lang LaSalle is the sole marketing agent for the project.

The tender will close at 3pm on November 19.

Source : Channel NewsAsia - 15 Oct 2008

S’pore is the only key Asian nation the bank expects to post negative growth

CITIGROUP now expects the Singapore economy to contract 1.2 per cent next year - the only key Asian economy it sees shrinking in 2009.

Expectations of a more severe recession in the US prompted the bank to make further cuts to its Asian GDP forecasts for 2009.

In a report released yesterday, Huang Yiping, Citigroup’s chief Asia economist in Hong Kong, cut Singapore’s 2009 GDP growth forecast from plus-2.5 per cent to minus-1.2 per cent.

‘So far, Singapore is the only economy in our forecasts (that is tipped) to post negative growth in 2009,’ Dr Huang said. ‘For them, domestic demand is simply not big enough to offset weakness in external demand.’

Citigroup has kept its 2009 CPI growth forecast for Singapore at 2 per cent.

The bank has cut 2009 GDP growth forecasts for 12 of the 13 countries it tracks in the region.

Malaysia is the sole economy for which its forecast has been maintained - at 5.1 per cent growth.

Hong Kong’s growth forecast has been cut from 3.8 to 2.8 per cent.

Dr Huang said that Singapore and Hong Kong are probably the most open economies in the region, so they are likely to suffer from sharper growth deceleration.

Economies with larger domestic markets and greater policy flexibility should perform better than the rest, he said. ‘China and India provide two different examples. The Chinese economy is relatively open, but flexibility in both fiscal and monetary policy means China should be more able to offset weakness in external demand and maintain strong growth. The South Asian region, including India, Bangladesh and Sri Lanka, is relatively closed and therefore is less exposed to the risk of a growth slowdown.’

Citigroup now expects the Asia-Pacific region as a whole to grow 6.3 per cent next year, down from its previous estimate of 7.2 per cent.

‘While it would be Asia’s lowest growth rate for the past eight years, it’s still pretty decent performance, especially compared with 2.1 per cent in 1998 during the East Asian financial crisis and 4.8 per cent in 2001 when the US experienced one-quarter negative GDP growth,’ Dr Huang said. ‘While growth risks have increased sharply, it’s not as bad as during the Asian financial crisis.’

But corporate earnings and financial asset quality could suffer significantly, according to Citigroup.

It said that Asian central banks, led by the People’s Bank of China, will probably cut rates aggressively alongside major global central banks.

Citigroup also reckons Asian currencies are likely to remain weak in the near term. The bank noted that its forecasts are subject to revision as global markets evolve.

Separately, ING said that data from its quarterly Investor Dashboard Survey showed a 39 per cent fall in sentiment in Asia over the past 12 months.

The survey tracks the sentiment of mass-affluent investors each quarter in 13 Asia-Pacific markets including China and Singapore. In Q3 this year, the Index fell to 86 - from 109 in Q2 - as investors took stock of global market and economic developments.

The data suggests that investors in more US-dependent markets such as China, Hong Kong, Singapore, Korea and Taiwan are more sensitive to volatility in global markets, ING said.

Source : Business Times - 15 Oct 2008