Source : Straits Times – 31 Jul 2009
PROPERTY developers are enjoying the surge in interest from buyers but they do not believe that speculation has reached a stage where the Government needs to step in.
They also maintain that the prevailing economic conditions will begin to cool the buying frenzy and stop a bubble forming in its tracks.
‘It’s not a bubble, it’s just a blister after the pain we experienced in the global financial crisis and it comes before a recovery,’ said Cushman and Wakefield managing director Donald Han.
But some developers and industry insiders acknowledge that the comments from National Development Minister Mah Bow Tan this week are timely.
Mr Mah cautioned about a bubble forming, hinted at intervention if speculation got out of hand and advised buyers to tread carefully and not charge headlong into the market.
‘The Government’s message is quite clear: Don’t rush as there is a lot of supply coming onstream,’ said Sing Holdings chief executive Lee Sze Hao.
‘It’s good as a reminder so that people do not over-buy, over-chew. Developers do not want irrational exuberance,’ said Mr Han.
A property consultant who declined to be named told The Straits Times: ‘There shouldn’t be panic-buying. Buyers may pull back a bit, not knowing whether the Government will step in or not. The fact is that the Government has opened its mouth; it can do things indirectly.
‘But if the market hype continues to rise, they will have to do something.’
Many feel the hype, which centres on several condominiums, will likely be short-lived amid a recession.
‘Inevitably, there will be speculative buyers, but they are for the smaller units…If the market is too speculative, you build up a bubble and that’s not real demand,’ said Mr Lee.
The market is seeing cashed-up investors ready to spend, which is different from speculators looking to buy another apartment to make a quick buck, he said.
The Government will do something only if there is a queue at every project and every unit is snapped up, he added.
The Real Estate Developers Association of Singapore (Redas) pointed out on Wednesday that only a selected few launches have been highly successful for various reasons.
Buyers have certainly been out in droves visiting the new showflats and buying new homes off the plan. Queues have been forming and developers have raised prices in response.
The interest was evident last night at Tanah Merah, where crowds gathered at the 297-unit Optima showflat although the public launch is scheduled for today.
The response was so strong that the developer TID held a ballot at midnight for about 300 genuine buyers who were queueing outside the showflat earlier so they did not have to stay overnight.
They had submitted cheques together with their application form by 9.30pm for the 120 units on offer at an average early-bird price of $790 per sq ft (psf), said a spokesman.
Another suburban launch, the 329-unit Centro Residences in Ang Mo Kio apparently attracted more than 80 buyers, even though it is priced at $1,150 psf and above – levels more suitable for prime or city-fringe projects.
Such enthusiasm for new projects, which is reminiscent of boom times, and the sudden spike in prices are likely causes for concern, said a developer who declined to be named.
Prices of some new mass market projects have gone above the peak 2007 levels, he said. ‘But can the market sell 1,500 units every month in the next 12 months? I don’t think so.
‘The Government is observing, but it will cease to be overly concerned when things return to normal.’
CapitaLand chief executive Liew Mun Leong said at its results briefing yesterday that there is ‘exuberance’ in the market but no bubble. ‘If it’s investment driven, you could call it a bubble…but in our case, it is demand driven.’
He also said he would be the first to be worried if this frenzy is being driven by speculative demand.
He said there are buyers flushed with cash from collective sales in the recent property boom.
Mr Liew estimated there were about 13,000 home owners displaced by en-bloc deals from 2005 to 2007 and these buyers have ready cash of anywhere between $1million and $2 million each to spend.
TIMELY ADVICE
‘It’s good as a reminder so that people do not over-buy, over-chew. Developers do not want irrational exuberance.’ – Cushman and Wakefield managing director Donald Han
INDIRECT ACTION
‘There shouldn’t be panic-buying. Buyers may pull back a bit, not knowing whether the Government will step in or not. The fact is that the Government has opened its mouth; it can do things indirectly. But if the market hype continues to rise, they will have to do something.’ – A property consultant who declined to be named
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