The Singapore property market has made an impressive recovery over the past year. Prices of mass-market homes in the residential sectors have exceeded the 2007 peak, with predictions that the luxury segment this year will reach the record highs of 2007.
Things are also going well in the office market, which saw an increase in leasing activity since the fourth quarter last year. Demands are turning on the positive side and predictions of a 30 percent increase in some quarters this year has been made in the Grade A office rental market.
However, everyone should not get carried away, as authorities in many Asian countries are keeping a closer watch on asset bubbles from hot money flowing into the real estate market. Low interest rates and liquidity remain the primary fuel in the upturn of the property market.
The big question is whether this recovery can be sustained, as it depends on how well Singapore and the rest of the world play on the recovery. Concerns on sovereign debt default in several European countries continue to draw worries about a double-dip recession. The drive towards higher labour productivity in Singapore could also give rise to job insecurity and reduce demand from homebuyers.
Completion of several major projects in the country could be seen this year, including the Resorts World Sentosa integrated resorts, the Marina Bay Sands and Marina Bay Financial Centre.
The two IRs are expected to boost Singapore’s tourism industry, which could generate multipliers for the broader economy, making a positive sign in the Singapore property market.
Several property industry players have long been hoping on the IRs to draw high-rollers into town that will be impressed with Singapore and want to invest in the country’s property market. Singapore will also be on the spotlight of many overseas investors if the IRs are successful.
Meanwhile, affordability remains a key issue in the country, especially in the mass-market housing segment. A considerable increase in interest rates could also affect price-sensitive buyers.
The Singapore government has come up with several measures to ease out speculators from the housing market, and has the option to increase land supply in the country.