IRs to stoke housing demand, say analysts

Source : Today - 7 Jul 2008

Property analysts say prices are likely to fall further in the third quarter, but experts rule out massive declines because of the multiplier effect from Singapore’s two multi-billion-dollar integrated resorts (IR) now under construction.

Housing demand is expected to pick up when the first IR in Marina Bay opens next year employing thousands of workers, said Mr Chua Yang Liang, Jones Lang LaSalle’s head of South-east Asia research.

Some of the workforce for the resorts will likely come from foreign countries. “To staff these people, you need housing so there will be a potential effect,” he said.

Foreigners currently make up more than 20 per cent of Singapore’s 4.6 million population, but going forward the proportion is expected to grow as the country’s headcount expands.

The Marina Bay Financial Centre, a new financial district under construction which will also feature luxury apartments, should also underpin the market in the longer term, analysts said.

Colliers International real estate consultants director for research Tan Huey Ying thinks prices are not about to spiral downwards even though second-quarter figures indicate the residential property market may have peaked.

“Singapore’s positive mid-term prospects on the back of the completion of the two integrated resorts and the Marina Bay Financial Centre will help to prop prices up,” said Mr Tan.

Values may hold or decline by no more than 3 per cent in the third quarter, but overall, for this year, home prices could still rise 4 to 8 per cent, he added.

Analysts from DTZ real estate consultancy said buyers are still interested in project launches.

“Some residential projects are enjoying sell-out status while others are being well received,” said Margaret Thean, DTZ’s executive director for residential.

Last year, Singapore’s housing market was described by real estate giant Jones Lang LaSalle as the world’s hottest in 2007, when prices surged 31 per cent overall.

Government approval for the two IRs in 2005 was one of the major factors behind the revival of Singapore’s property market, which had been stuck in a rut stemming from the 1997 Asian financial crisis.

Efforts to woo wealthy foreigners to take up residence in Singapore, along with an all-out bid to attract skilled foreign migrants, also drove the property market revival, analysts said.

However, the rebound has left many expatriates and locals alike struggling to cope with soaring rents which in some cases doubled over the past year.

Private home prices rose 0.4 per cent in the second quarter, the slowest increase in four years, the government’s preliminary figures showed last week.