Huge surge in demand sees property investors queuing for new developments in Singapore
Surging demand for residential property in Singapore could result in a real estate bubble in 2010, according to analysts.
Demand is so high that potential buyers are queuing for hours before new launches and there are even claims that some have left blank cheques with their property agents to fill out as they are so desperate to secure an apartment.
The global economic downturn hit the country hard with Singapore one of the worst affected in Asia. Recession took a heavy toll on the property market.
Property consultancy DTZ said that the number of property transactions it handled last year was down about 35% on the number of units sold in 2007.
Prices of non-landed freehold private homes in the island state’s prime districts fell by 21.6% year on year in 2008.
Prices of government-built Housing Development Board (HDB) flats also suffered, with many apartments sold at or below market valuation.
Bearish sentiment, unsold inventories and the potential for buyer default risk had led to industry analysts predicting that high end property prices could fall by up to 20% in 2009 and for the mainstream market by up to 10%.
But the last few months have seen a remarkable turnaround. Private sector developers launched 2,878 new flats in July, an all time high, and 2,767 of them were sold out within a month.
Sales of new luxury developments in Singapore’s reclaimed areas on the offshore island of Sentosa, where prices average S$2,000-S$3,500 per square foot, are reported to be steady.
Property agency PropNex chief executive Mohamed Ismail said he believes that re-sale prices are on course to rise 2% to 3% over the fourth quarter of 2009.
The fact that there is a scarcity of land for development is also pushing up prices.
Although newly married couples are among those rushing to buy, rich foreign buyers are driving up prices.
According to real estate ERA foreigners with permanent resident status accounted for 40% of their recent buyers, up from 20% three years ago