SINGAPORE - Singapore developers are very concerned about lacklustre new home sales despite an uptick in private property prices in the second quarter, said Chia Ngiang Hong, president of the Real Estate Developers Association Singapore (Redas) on Friday (Sept 13).
Mr Chia said that although prices of private residential properties increased by 1.5 per cent in the second quarter, this "does not reflect the true state of the market".
"New home sales remain lacklustre on the back of existing cooling measures, abundant unsold stock and worrying economy. The general take-up rate is also at a slower pace as compared to the total number of units available for sale," he said at the Redas Mid-Autumn Festival lunch.
Based on URA data, as at the end of Q2 2019, there was an estimated total supply of about 54,000 uncompleted private residential units in the pipeline with planning approvals. Of this number, 35,500 units remained unsold.
Adding this number to a potential supply of 7,100 units from GLS sites and successful collective sale sites sold over the year that have not been granted planning approval yet, approximately 43,000 units are estimated to be available for sale in the near future, said Mr Chia.
In the first half of 2019, developers sold a total of 4,188 private residential units (excluding executive condominiums, or ECs).
Said Mr Chia: "Assuming the present rate of take-up continues, we will see a total sales volume of about 8,000+ units for the whole of 2019. Based on this take-up rate and barring any unforeseen circumstances, we would require four to five years for the market to absorb the estimated 43,000 units available for sale."
Mr Chia was also cautious about the outlook for the different segments of the real estate market in Singapore given the challenging geo-political and economic environment and the heightened risks arising from the US-China trade tensions.
"As developers, we are very concerned with the present challenging market situation of high supply and subdued demand. We have shared our concerns with the Government and it has assured us that it is monitoring the market closely and will act appropriately at the right time when the situation warrants."
"We are comforted by this assurance and trust the Government will monitor and manage the market carefully... with the aim of maintaining a stable and sustainable market in line with economic fundamentals," he added.
Still, the property market seems to be holding up fairly well, Mr Chia said.
With strong hotel bookings in July and August, and more conventions and exhibitions to be staged in Singapore in the last quarter of this year, Singapore hotels are expected to turn in a healthy performance for the year. However, hoteliers are mindful of the challenging times ahead due to geo-political climate and trade tensions, he said.
Real estate investment deals also continue to remain relatively healthy according to analysts. Occupancy for office space has remained steady as well on the back of limited near-term supply and growing office demand and rental is expected to remain relatively healthy.
The retail scene, on the other hand, is expected to remain challenging in the near term. With continuing competition posed by e-commerce disruption and manpower issues, malls are venturing into experiential retail concepts and prioritising digital marketing efforts to try to attract shoppers, Mr Chia said.
Redas also lauded the recent changes in manpower policy announced during the National Day Rally in view of Singapore's rapidly ageing population.
With tighter foreign manpower restrictions, there is a shortage of manpower faced by labour-intensive sectors like F&B hotel and retail, including the Built Environment (BE) sector.
The BE sector is facing a shortage of experienced engineers and technicians, Mr Chia said.
"There is also difficulty in attracting the young to take up engineering study and join the profession. This could affect the quality of maintenance of buildings and infrastructure resulting in poor upkeep, accidents due to deteriorating standards of maintenance and loss of asset values. Indeed, this manpower issue affects a broad spectrum of businesses," he added.