The National University of Singapore’s Department of Real Estate (DRE) has teamed up with the Real Estate Developers’ Association of Singapore (Redas) to create a Real Estate Sentiment Index (RESI), which shows a lower reading in Q2 this year than in the previous quarter.
Industry players and property developers still have positive sentiments but expect less robust market conditions, according to DRE and Redas.
More respondents were still optimistic about the overall performance of the suburban and prime residential markets over the second half, but the consensus weakened in Q2 than in the previous quarter, as indicated by net balances.
Meanwhile, there was a substantial improvement in the net balance for offices, with improving sentiment in this sector in the April to June period.
About 51 percent of developers polled in the second quarter expect a price increase for new residential launches, compared with 85 percent in the first quarter.
The survey also found that 68 percent of developers polled in Q2 expect the launch of more units over the next six months, down from 83 percent in the first quarter.
Several market watchers welcomed the efforts of Redas to come up with an objective method of measuring the confidence level of developers’ senior executives. “It’s good to hear from the horse’s mouth,” said Ong Choon Fah, executive director of DTZ.
Steven Choo, chief executive of Redas, noted that, “while business expectation surveys are available for the manufacturing and service industries, there is currently no indicator specifically tracking sentiment in the fast-paced real estate market of Singapore”.
The quarterly structured-questionnaire poll is given to senior executives of Redas’ member companies, mostly property developers, but also to architects, property consultants, quantity surveyors and other professionals.
Dr. Choo said, “The partnership between NUS and Redas has ensured academic rigour and added credibility to the new index. We are confident that in time, RESI will become an authoritative index and a highly-valued forward indicator for the property market, as well as an invaluable tool to guide the market and industry players, including investors and policymakers.”
The RESI is comprised of three indices: the Future Sentiment Index, where respondents rate overall property market conditions over the following six months; the Current Sentiment Index, where respondents rate the current real estate market conditions in Singapore compared with the previous six months; and the Composite Sentiment Index, which is the two indices’ average.
The Current Sentiment Index slipped to 5.8 in Q2 from 7.2 in Q1, while the Future Sentiment Index fell to 5.9 from 6.4. The decline in both indices resulted in the decline of the Composite Sentiment Index, down from 6.8 in Q1 to 5.9 in Q2.