Surging S’pore land bids not sustainable, executive warns
SINGAPORE: Surging bids for Singapore land aren’t sustainable in a market constrained by demographics and the government’s cooling measures, according to the head of a developers’ association.
“It is not sustainable to continue at this rate,” Augustine Tan, president of the Real Estate Developers’ Association of Singapore, said in a speech.
“With property measures in place, slow growth in Singapore’s population and manpower curbs, we do not see a runaway demand in sales transaction volume and property prices in the next few years.”
His comments strike a note of caution as land auctions and redevelopment deals set records, and after home prices rose for the first time in four years in the three months through September, snapping a record run of declines.
City Developments Ltd, Singapore’s second-largest listed developer, and a partner yesterday won a S$907mil bid for a residential redevelopment project, a record price for a freehold deal of that type.
Tan’s comments contrast with Singapore developer Oxley Holdings Ltd saying on Tuesday that it had turned “very bullish” and saw home prices elevated by developers who paid high prices for land.
According to Tan, buyers are still price-sensitive and he argues that many may downgrade to public housing because of weak economic and job growth or, in some cases, after selling their apartments for redevelopments.
Meanwhile, Tan said if the prevailing “bullish” appetite for residential land persisted and demand is not sustained, that would feed into a mix of increased supply, high vacancy rates and rising interest rates.
He said rents are falling and new completions are adding to inventory just when multinationals are downsizing or cautious about hiring. Vacancies of private homes are at 8.1%.
Tan said of a supply of 35,400 uncompleted private residential units, 43% remained unsold as of June 30.
He added that 17 redevelopment deals were signed this year and a potential eight such deals are in the pipeline, possibly yielding 13,000 homes over two years.