Property prices in Singapore were pushed up by the opening of new MRT stations, making it harder for property developers to find land at viable prices.
Chng Chee Beow, property director of Wing Tai Asia, said: “The transportation networking makes things much closer and that brings up property prices.”
”The biggest headache facing developers now is this: How can you find land with a reasonable price, so that the final cost of the product is reasonable?”
Several analysts believe that property prices still have room to move.
”With 700 sq km of land, and five million people, (prices) can only go one way – up,” said Song Seng Woon, an economist from CIMB-GK Research.
”Opportunities are opening up in Singapore – when we see residential properties popping up, we see businesses setting up shop too. For instance, we are now seeing stronger pick-up in office rental so, all in all, this will support the residential market as well.”
For instance, Keppel Land still has most of its assets in Singapore because the asset value in the country is ”very high”, even though it wants to hit a 50-percent total overseas earnings, said Kevin Wong, chief executive of Keppel Land.
”We have been investing in office buildings… Marina Bay Financial Centre is a good example,” he said
”Other than China, we’re quite big in Vietnam and we’re looking very carefully at Indonesia, where we have quite a significant exposure.”
Mr. Song also pointed out the larger growth story in the region to explain his optimism about property values.
The price increases are “combination of not just local buying, but also because we’ve seen growth around the region and we get more buyers coming in from Hong Kong and mainland China”, said Mr. Song.
Low interest rates have fuelled the property markets to boom across the region, and “property is one asset that you can leverage up on”, he said.
The threat of central banks to roll back on monetary stimulus by increasing interest rates does not worry Mr. Song.
”Even if rates go up, it’s going to be in environment where there’s growth opportunity and momentum. So any tightening at this point will be accompanied by strong growth,” he said.