Singapore Property | With residential properties expected to record slow, marginal price growth, RHB Research anticipates no near-future accelerator for property developers with exposure to the big local market.
This arises after evaluation of new launches by RHB revealed low occupancy rate of between 10 and 20 percent during launch weekends compared to between 30 and 60 percent a year earlier.
“This is not unusual, as price-conscious buyers are using a wait-and-see approach amid a big supply in the offing,” observed Vijay Natarajan, an RHB analyst.
He anticipates the trend to carry on, with only some properties with strong features and interesting pricing outdoing the rest. Generally, Natarajan predicts that the volume of primary sales will be between 8,000 and 10,000 units in the entire 2019.
“We anticipate primary sales volumes in the private resale market to remain stable compared to last year in the brink of collective sellers searching for instant replacement properties, demand spillover from recent launches, and the launch of units formerly held back in anticipation of possible en bloc sales.”
The Urban Redevelopment Authority (URA) has put out flash estimates, showing that the general property price recorded a 0.6 percent quarter-on-quarter drop after a 0.1 percent quarter-on-quarter decline in quarter 4 of 2018.
The luxurious section recorded the largest dip at a 2.9 percent quarter-on-quarter. According to RHB, this drop was due to the vulnerability of the luxurious segment to new cooling measures because a large number of its purchasers are prominent investors and foreigners.
With the launch of not more than 50 projects underway, buyers have a wide array of options, which limits the pricing power of developers.
“Developers also are in tight corner as far as lowering prices of new launches are involved because many of their properties are occupying expensive land bought during the latest en bloc cycle.” For this reason, RHB anticipates price growth to remain muted in the range of 0 to 2 percent this year. Take a look at some launching soon developments like a mixed development in District 19, Sengkang Central Residences or another mixed development in District 3, Avenue South Residence.