Singapore no home for luxury developers as cooling measures bite

Thu Apr 17, 2014 5:03pm EDT
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By Rachel Armstrong and Anshuman Daga

SINGAPORE (Reuters) - Luxury property developers in Singapore are facing their worst sales outlook in six years as a raft of government measures to cool one of the world's most expensive real estate markets bite.

Sales of private homes, which account for just under one-fifth of the total property market, fell to their lowest in more than four years in January to March, official data showed this week. If the decline continues at the same pace for the rest of this year, analysts expect sales to halve from the 15,000 units sold in 2013.

Prices of private residential properties are also expected to fall this year and the next by between 10 and 20 percent, analysts say. The drop began at end of last year, due to the government measures, reducing prices that had increased by around two-thirds since end-2009.

The weakness in the market is likely to weigh on the sales outlook of smaller listed developers of premium properties such as Wheelock Properties (Singapore) Ltd (WPSL.SI: Quote), Ho Bee Land Ltd HBEE.SI and Wing Tai Holdings Ltd (WTHS.SI: Quote).

Larger developers are less affected due to their more diversified portfolios, but they are also cutting prices. CapitaLand Ltd (CATL.SI: Quote), Southeast Asia's largest listed property developer, is selling units at its Sky Habitat condominium for S$1,370 ($1,100) per square foot compared to as high as S$1,900 when it was launched two years ago, agents say.

"It feels like we're back in 2008," said Christine Li, head of research at real estate firm OrangeTee, referring to the property slump that affected Singapore during the global financial crisis.

"There's quite a difference between the number of people who express interest in a development compared to those who are able to commit," she added.

FEW LOANS FOR HOMES   Continued...

Tourists take a boat cruise along the Singapore River in the central business district in Singapore November 7, 2013. REUTERS/Edgar Su