Property cooling measures 'unlikely to be eased this year'

Mr Tan, president of Redas, said weak market sentiment is weighing heavily on the real estate market. Representatives of real estate firms and a financial institution at a Singapore property seminar yesterday suggested that with interest rates set to
Representatives of real estate firms and a financial institution at a Singapore property seminar yesterday suggested that with interest rates set to stay low for some time, cooling measures introduced by the Government to moderate demand for homes are not likely to be eased this year.ST PHOTO: DESMOND WEE
Mr Tan, president of Redas, said weak market sentiment is weighing heavily on the real estate market. Representatives of real estate firms and a financial institution at a Singapore property seminar yesterday suggested that with interest rates set to
Mr Tan, president of Redas, said weak market sentiment is weighing heavily on the real estate market. ST PHOTO: DESMOND WEE

Property cooling measures are not likely to be relaxed this year, speakers at a Singapore property seminar said yesterday.

Representatives of real estate firms and a financial institution suggested that with interest rates set to stay low for some time, the cooling measures - introduced by the Government to moderate demand for homes - are not likely to be eased.

Mr Augustine Tan, president of the Real Estate Developers' Association of Singapore (Redas), said the successive introduction of the measures since 2009 had led to a sharp fall in demand for private residential property amid hefty supply.

He said weak market sentiment continues to weigh heavily on the real estate market here.

Addressing the Redas Property Market Update Seminar 2016 held at the Grand Copthorne Waterfront Hotel, he said that as of May, a total supply of 57,597 private residential units and 12,077 executive condominiums were in the pipeline.

Mr Tan, who is also the executive director of property sales and corporate affairs at Far East Organization, said that with 15,000 unsold units to date, that number is significant in view of the prevailing weak demand.

"With the cooling measures still in force, the real estate market continues to face disruptive forces on multiple fronts - from weak demand and hefty supply to manpower constraints and a challenging business environment.

"With the drop-off in demand, landlords and developers of retail, commercial and industrial properties are also beginning to feel the pressure on rentals and high vacancy rates," he said.

To move sales, Mr Tan said developers have taken price cuts ranging from 5 to 25 per cent for some of their projects. At some new property launches, sales have petered out after the initial launch.

"Industry experts estimate full-year sales to come in at between 7,500 and 8,000 units this year, a level well below what would sustain a healthy property market," he said.

He added that pressures continue to loom for developments affected by the qualifying certificate (QC) and the Additional Buyer's Stamp Duty (ABSD).

Some 1,100 to 1,200 unsold units across 17 developments will be affected by QC rules by the end of this year with estimated charges of nearly $138 million, he said.

About 5,300 units which remain unsold at 47 developments - excluding executive condominiums - will be affected by the ABSD remission clawback from the end of this year to 2018.

Under QC rules, foreign developers must sell all units at their projects on private residential land within two years of obtaining a Temporary Occupation Permit.

Failing that, the developer pays extension charges pro-rated to the proportion of unsold units.

ABSD rules, introduced in December 2011, require developers to build and sell all new units within five years of a site's contract purchase date or pay a 10 per cent levy - later raised to 15 per cent for sites bought from Jan 12, 2013.

Property markets, Mr Tan said, are driven by both economic fundamentals and market sentiment. Market conditions, he added, have become more fast-moving and property cycles have become shorter.

Keeping abreast of the latest market events and development trends is critical in order to retain a competitive real estate advantage, he stressed.

A version of this article appeared in the print edition of The Straits Times on July 13, 2016, with the headline 'Cooling measures 'unlikely to be eased this year''. Print Edition | Subscribe