Weak sentiment still weighing down Singapore property market, says Redas chief Augustine Tan

Aerial view of private housing in Potong Pasir on April 7.
Aerial view of private housing in Potong Pasir on April 7. PHOTO: ST FILE

SINGAPORE - Weak market sentiment continues to weigh heavily on the real estate market in Singapore, Real Estate Developers' Association of Singapore (Redas) president Augustine Tan said on Tuesday (July 12).

Mr Tan said that since the successive introduction of property cooling measures from 2009, the demand for private residential property has fallen sharply on the back of a hefty supply.

Addressing the Redas Property Market Update Seminar 2016 in Singapore, Mr Tan said that as of May 2016, there is a supply in the pipeline of 57,597 new private residential units and 12,077 executive condominiums. While unsold units stand at around 15,000, the supply is still significant in view of the prevailing weak demand, said the Redas chief.

"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 challenging business environment," said Mr Tan, who is also the executive director of property sales and corporate affairs at Far East Organization.

"With the drop off in demand, landlords and developers of retail, commercial and industrial properties are also beginning to feel 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 new property launches, sales have been seen to peter out after the initial launch, he added.

"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.

Mr Tan said pressures continue to loom for developments affected by the qualifying certificate and the Additional Buyers' Stamp Duty (ABSD).

He explained that some 1,100 to 1,200 unsold units across 17 developments will be affected by qualifying certificate (QC) rules by end 2016 with estimated charges amounting to nearly S$138 million. About 5,300 units remain unsold in 47 developments, excluding executive condominiums, which will be hit by the Additional Buyers Stamp Duty (ABSD) remission clawback from end 2016-2018, he said.

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