The escalating prices seen in the local property market are not likely to come down anytime soon, although the market might be near its peak, said Mr. Song Seng Wun, an economist from CIMB-GK, during a panel discussion on Singapore’s building and construction industry.
According to Mr. Song, prices may continue to rise, given the low interest rate environment and the view that property is an asset class that can be leveraged upon.
“And if you take the view that it doesn’t look like (interest) rates are going to go up anytime soon this year – and even if rates go up it is going up in an environment where there is growth opportunity and growth momentum – any tightening at this point will be accompanied by strong growth,” he said.
Increases in demand from both foreign and local buyers are also pushing up prices, he added.
However, if historical data is anything to go by, the market might be near its peak.
Mr. Song stressed that the year-on-year increase at this juncture has hit 30 percent.
“I notice that when we get to a point where property prices year-on-year start to reach the region of 30-40 percent, it tends to signal the peak of the market over previous cycles, so we are nearly there in terms of year-on-year numbers,” said Mr. Song.
The panel discussion, which included panelists such as WingTai Asia’s Property Director Chng Chee Beow, Keppel Land Group Chief Executive Kevin Wong, and City Developments Ltd’s Deputy General Manager for design and projects Anthony Chia, also tackled on growth in Asia, with all the property developers on the panel expressing an interest to expand within the region.
According to Mr. Wong, Keppel Land, for one, is expecting to get 50 percent of its earnings from overseas markets.
Keppel Land’s earnings from overseas in the last fiscal year represented about 31 percent of its attributable profit.
However, Mr. Chia said that venturing overseas is not easy, and it is important to know the target market to turn into a successful global entity.
“There is very little shortcut to that and that’s how tough it is in some of these foreign markets…it’s all about culture, it’s all about people and understanding the market.”