Speaking at the Real Estate Developers’ Association of Singapore’s (REDAS) 55th anniversary dinner at the Ritz-Carlton yesterday (26 Nov), REDAS president Chia Boon Kuah said that the real estate industry could be heading for major trouble unless the government takes “supportive measures” to help property developers.
“(The slowdown and added pressures in the residential market) pose significant challenges to the property sector, and there could be wider impact on the economy,” he said.
Mr Chia is worried that the looming supply of 68,000 completed new residential units in the next few years is likely to cause home vacancy rates to head towards 10%. Presently, the private home vacancy rate is estimated to be at 7.1% in the 3Q of this year.
“This will add even more pressure on the residential market,” Mr Chia said.
“Developers are concerned. Genuine home buyers from the Singapore market have adopted a wait-and-see attitude. The situation poses significant challenges to the property sector, and there could be wider impact. It is in no one’s interests to witness unintended outcomes.”
“We urge the Government to stand ready, to take supportive measures to prevent a tipping point, should the market turn volatile and worsen further.”
National Development Minister Khaw Boon Wan was present at the dinner as REDAS’ guest-of-honour.
With Minister Khaw present at the dinner, Mr Chia took the opportunity to complain that the slew of government’s cooling measures continue to bite and dampen property buying sentiment.
“The data and facts truly speak for themselves,” he added.
He noted the falling transaction volume and declining prices or properties. Private home prices have declined in the last 4 consecutive quarters, while transaction volume has also dipped 50% from 18,000 last year to less than 9,000 expected this year.
Mr Chia also highlighted the importance of the property sector to the Singapore’s economy, “Real estate accounts for about half of the total fixed capital formation. One in 5 people in the workforce is employed by the real estate and construction industry.”
Chia Boon Kuah is Group President and CEO of GuocoLand
Mr Chia is currently the group president and chief executive officer of GuocoLand [Link], which is a member of the Hong Leong Group.
Previously, he was the COO of Property Sales and Executive Director of Far East Organisation for about 10 years. Before this, he was the area vice president of Singapore Airlines for nearly 30 years.
GuocoLand has been making very good profits and revenues in the last few years. In its last financial year ending in 30 Jun 2014, GuocoLand’s revenue was $1.25 billion with Singapore contributing $717 million or 57%.
It made a group profit (before tax) of $410 million or 33% profit margin [Link]:
Past residential property developments undertaken by GuocoLand include [Link]:
- Aquarius By The Park
- Bishan Point
- Cavendish Park
- Chiltern Park
- Elias Green
- Elias Terrace
- Elliot At The East Coast
- Harbour View Towers
- Kew Bungalows
- Le Crescendo
- Leonie Studio
- Loyang Villas
- Melville Park
- Nathan Place
- Paterson Residence
- Sanctuary Green
- Sophia Residence
- Stratford Court
- Tanglin Regency
- The Gardens At Bishan
- The Quartz
- The Stellar
- The Tanamera
- The View @ Meyer
- The Waterline
It’s current property launches include [Link]:
“Located within the Good Class Bungalow enclave, Leedon Residence is yours to call home. Live amidst five hectares of lush greenery, where manicured foliage paves the way to a 200m nature trail. Designed by Chan Soo Khian of SCDA, lofty double-volume living spaces, generous private balconies and magnificent views make home as grand as your dreams. With its freehold status, Leedon Residence lives to tell your story from generation to generation.”
- Site Area: 48,525 sqm
- Number of Units: 381
- Location: Leedon Heights
“An elegant estate for the most discerning of home owners, Goodwood Residence promises to usher in new benchmarks in sophisticated luxury, all in the quiet, green surrounds of Goodwood Hill. Goodwood Residence, just off the Orchard / Scotts Road area, shares a boundary of approximately 150 metres with Goodwood Hill, allowing residents to live near almost 20 hectares of greenery – a rarity in urbanised Singapore.”
- Site Area: 24,845 sqm
- Number of Units: 210
- Location: Bukit Timah Road
MAS: Household debt rising, property prices still at elevated levels
Meanwhile, MAS warned in its annual Financial Stability Review today (27 Nov) that Singapore banks need to be wary about growing debt levels among corporates and households, and the still “elevated” property prices.
“In Singapore, the corporate debt-to-GDP ratio has trended upwards since the Global Financial Crisis, rising from 52 per cent in Q2 2008 to 78 per cent in Q2 2014. The household debt-to-income ratio has also edged up from 1.9 times in 2008 to 2.3 times in 2013,” it said.
“An interest rate hike combined with an earnings shock could increase the number of financially distressed corporates and households.”
It added that while private residential prices have moderated, home prices remain at “elevated” levels.
Should Minister Khaw accede to REDAS’ request for government’s support now that developers are beginning to feel the pain?
What do you think?