Last week in Singapore, property developers met with valuers amidst some quarters’ complaints about conservative ratings, which blocked a number of property transactions because possible home buyers could not procure the needed loans from the banks.
The valuers’ decision to disagree with the developers was understood by BT, saying that the developers’ ratings had been excessively conservative and it was the banks that were not lending loans to potential buyers.
“Generally, if there are transactions, we’ll match (with valuations). It’s the banks that are more cautious about lending to certain profiles of borrowers like investors, especially if they are foreigners” one valuer said to BT.
The recent issues that had been encountering by the valuers, like the shortage of comparable deals, were also raised in the meeting. The ways they applied to achieve certain valuations in certain situations were explicated at that time.
“We explained that some banks require valuers to look at three comparable transactions, and how we generally do not take into account outlier transactions that may perhaps reflect ‘depressed’ prices”, said by another valuer.
Some sources said that the meeting went fine, drawing the attention of the leaders of property consulting groups, more than 20 valuers, and Singapore Real Estate Developers Association’s members of executive committee, which Simon Cheong, the president of the association, headed.
When asked, the Redas spokesperson said, “We wanted to better understand issues that valuers may have in their day-to-day valuation and what else the profession may need from developers to enable them to give (as) updated and relevant (a) valuation as possible”.
“The discussions were general in nature and discrepancies in valuations in some instances were highlighted and analysed. Valuers shared with us some of the constraints they are facing such as the lack of or insufficient comparable sales data and other issues”.
“The session was fruitful as it helped us understand one another better and we agreed to look into areas where communication and interaction could be improved upon”.
One property advisor told BT that it is odd to see similar banks that were eager to lay a 75 percent or 80 percent loan on a top-end residential unit valued at $2,000 per sq ft (therefore presuming a disclosure for nearly $1,500 to $1,600 per sq ft) to reluctantly give even 50 or 60 percent loan when the value of the property will be on a much lower value of $1,200 per sq ft (working out to $600–700 per sq ft for the bank).
The property advisor said, “It’s particularly difficult for foreign buyers, even PRs in some instances, to get loans for investment properties. Banks are more willing to lend to Singaporeans buying residential properties for owner occupation”.
“Some of the bigger banks should take the lead and be more proactive in lending to property buyers, not just for entry-level but also luxury homes, given that spot prices have already come off about 40 per cent”.
“We provide the valuations. It’s up to the banks whether they want to lend, and how much. It’s a commercial decision for them”, another valuer said.