8 minute read
SINGAPORE SEEKS BALANCE
LOSS OF BALANCE
Singapore’s response to the pandemic has been predictably thorough, but supply chain issues have sent property prices into overdrive
BY GEORGE STYLLIS
SINGAPORE’S SUBSIDISED HDB HOUSING HAS LONG BEEN A CORNERSTONE OF AFFORDABLE LIVING, BUT PRICES IN THIS SECTOR ARE RISING FAST
When the pandemic hit Singapore, the country responded with predictable urgency. Tight border controls and lockdowns achieved the desired effect of keeping the virus from spreading and causing the kind of casualties seen elsewhere. But the health crisis has upset what has been a source of pride for many years: the country’s finely balanced housing market. In 2021 the city saw its highest price rises in more than a decade. After year-on-year growth of 3.3% in the first quarter of last year, prices soared to finish the year with a lurch upwards of 10.6%, according to figures from Singapore’s Urban Redevelopment Authority.
Sales galleries were shut, and viewings were prohibited during four months of strict restrictions. Once these were lifted, a wave of demand was unleashed, and sales volumes and prices started to rise.
“It was flat from the end of 2017 to the third quarter of last year,” says Kristin Thorsteins, head of partnerships at IWC Plc, which provides companies with flexible working spaces. “The price index hardly moved. There was a balance in supply and demand. You didn’t have foreigners rushing in to buy real estate.
“And then there was the uptick towards the end of last year,” she adds.
The year saw landed property prices surge highest at 13.3%. Prices for non-landed homes jumped 9.8%. Indicative of this rampant demand, the landed development Belgravia Ace sold an impressive 72% of units in the month of its launch in January this year.
One of the main reasons for the price increases has been a delay in the construction of new projects. Labour shortages, lockdowns, and price rises for raw materials because of the pandemic have created a “perfect storm”, says Thorsteins.
This, she says, has disrupted the balance in the housing market. People are fearful of waiting for new builds to be completed due to rocketing prices. But values of the
THE PRICE OF LANDED PROPERTY IN SINGAPORE SURGED BY AROUND 13.3% IN 2021
GENTING RAISES THE STAKES
The pandemic may have upended the tourism industry, but Genting Singapore still believes there is still everything to play for as it pledges to invest USD300 million to revamp its casino resort and theme park.
The gaming company said it will renovate its three hotels, with over 1,200 rooms, at Resorts World Sentosa from the second quarter onwards through 2023.
“The current lull period from the pandemic presents us a window of opportunity to renovate and refresh our hotel offerings,” said Genting.
The announcement comes as Genting’s rival Marina Bay Sands, which recently reported improved earnings at its Singapore casino, also announced plans for an upgrade of its iconic property to the tune of USD1 billion.
Genting said it is also expanding its Universal Studios Singapore theme park, with the construction of new attractions such as Minion Land and Singapore Oceanarium, which will be three times bigger than the current Southeast Asia aquarium.
“As we anticipate a gradual return of visitors from our traditional markets over the next two years, we remain resilient and continue to harness opportunities to refresh and build new visitor offerings to emerge stronger from the pandemic,” it said.
existing secondary property market are also shooting upwards as impatient investors vie for deals.
“It seems to be for residential that it’s caught in a perfect storm where you’ve got lots of developments that have been delayed,” she says. “The workers couldn’t get into the country. So people have not moved out of their houses and into their built-to-order.
“When the pandemic hit, everyone was expecting an avalanche of distressed sales but there is just so much money chasing these deals that prices haven’t come down at all.”
While the resilience of the housing market is a testament to the city-state’s strong economic fundamentals, it has strained a model the government has long tried to keep stable.
For decades, Singapore’s government has kept close tabs on property prices to ensure housing remains affordable for locals and stays in step with economic fundamentals, with officials aware of it being a haven investment for wealthy foreigners.
One of the main ways it has done this is with a subsidised housing scheme. Since its launch in 1960, the Housing Development Board (HDB) has been tasked with rapidly increasing the supply of affordable homes to rent. The scheme is widely seen as a success. Around 80% of the country’s population live in an HBD unit. The enlightened policy is a key factor in why Singapore’s property market has avoided the sheer imbalance witnessed in regional rivals like Hong Kong and Seoul.
Yet analysts fear that might soon change unless prices come down and the supply of new properties increases.
“You have for the first time SGD1 million (USD737,520) HBD flats. They had never hit a million dollars until two years ago when the pandemic hit,” says Tee Khoon Tan, country manager of PropertyGuru Singapore.
“Last year we had about 150 HDB flats that were sold for a million dollars.”
The dwindling affordability of HBD flats is more pressing given the rise of WFH culture and the trend for young couples and singles to seek their independence rather than live in multi-generational homes.
According to official data, the demand for build-to-order flats jumped 70% in 2020 with some 87,800 applications.
SINGAPORE’S GLITTERING FINANCIAL DISTRICT IS ALSO HOME TO SOME OF THE CITY-STATE’S MOST EXCLUSIVE REAL ESTATE
F1 GETS GREEN LIGHT
Singapore will continue to host its F1 Grand Prix for another seven years, potentially helping lure back the hundreds of thousands of tourists that visited before the pandemic. Around 268,000 spectators filled the stands at the Marina Bay Sands circuit in 2019. The tournament was cancelled in 2020 and 2021 due to the virus.
“I am delighted that Formula 1 will continue to race in Singapore for another seven years,” says Formula 1 President and CEO Stefano Domenicali.
Tourism businesses and retailers have welcomed the news. Since debuting in 2008, the F1 race in Singapore has generated more than SGD1.5 billion (USD1.1 million) in tourism receipts, with much of the event’s planning and development sub-contracted annually to Singapore-based companies.
“Singapore holds a special place on the F1 calendar, and this extension is part of our long-term commitment to continue to grow the sport in Asia,” said the company. Keith Tan, chief executive of the Singapore Tourism Board, told Channel News Asia the agency was “confident that the race will continue to generate significant economic benefits and global branding value for Singapore”.
THE ICONIC RAFFLES HOTEL WILL SOON BE JOINED BY A SECOND SINGAPORE ITERATION OF THE FAMOUS BRAND ON SENTOSA
Ng Kok Hoe, a research fellow at the Lee Kuan Yew School of Public Policy, said unless prices come down to pre-pandemic levels, people will feel priced out as they did in the lead up to the 2011 general election when housing affordability was thrust into the spotlight.
“Singaporeans have always been sensitive to cost-of-living issues. We should expect housing costs to continue to weigh on people’s minds, and on electoral behaviour,” he told the media.
In a bid to cool down the market, the government introduced cooling measures in December last year to stabilise the market. It raised the additional buyer’s stamp duty (ABSD) for foreigners from 20% to 30%. It also increased the rate for citizens buying their second homes from 12% to 17%. For third and subsequent homes, the rate rose from 15% to 25%. “If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to a possible rise in interest rates in the coming years,” the government said in a statement.
Analysts expect prices to continue to rise this year but to between 1% and 4%, with the measures having less impact on Singaporean citizens and permanent residents who are buying a home to live in than on foreigners looking to buy. Trisni Djohari, a PropNex real estate agent, said of her Indonesian clients in a media interview: “Most of them state that now they have to think twice [before they] buy property in Singapore,” she said.
For the government that might be a price worth paying if an order is to be restored to its housing market.
RAFFLES GOES BACK TO ITS ROOTS
Iconic hotel brand Raffles is due to open its second property this year as Singapore’s first all-villa resort more than a century after opening its original in 1887. Raffles Sentosa Resort & Spa Singapore will be set in 100,000 sqm of lush tropical gardens.
The property, being developed by Accor Group in partnership with Royal Group, will comprise 62 villas of between 260 sqm to 450 sqm, each with its private pool and terrace area, and will include restaurants, a bar and a fitness centre. Room rates are expected to be higher than those of the original Raffles Hotel, said a spokesperson, at between SGD875 to SGD2,500 per night.
“The original Raffles Hotel was conceived as a beachfront property, but as Singapore has grown, now it’s located in the thriving centre of the city,” said Peter Wilding, managing director of Royal Group.
“Raffles Sentosa Resort & Spa Singapore will return the brand to the beach and create a modern resort experience that captures the balance of tradition and modernity in a serene and idyllic setting.”
