More homes in the pipeline

More than 40,000 units are due to come onto the market over the next few years

PROPERTY supply is not a problem, according to National Development Minister Mah Bow Tan. He believes that there are plenty of homes in the supply pipeline for Singaporeans, pointing out at a recent event that more than 40,000 units are due to come onto the market over the next three or four years.

The latest market data certainly supports his view. Figures from Savills Research and Consultancy point to a healthy stream of launches.

It says 5,753 units will become available in the second half of this year and 5,576 units next year. In 2011, 13,418 will be launched; 13,751 in 2012; and 11,058 in 2013.

Of those becoming available between this year and 2012, the bulk - 52 per cent - will be in prime districts 9, 10, 11 and 15, which analysts suggest is a direct consequence of the en bloc buying sprees in these districts in 2005 and 2006.

The rest will largely come from city-fringe developments at Sentosa and the new Marina Bay.

2009

OF THE 5,753 units becoming available in the second half of the year, most are mid-tier and mass-market units. They number 2,292 and 2,083 respectively.

These include 556 units in Casa Merah at Tanah Merah, 610 units in The Centris at Boon Lay and 338 units in Carabelle on the west coast.

But more than 90 per cent - 5,284 units - have already been sold, so Savills anticipates no oversupply situation this year.

2010

ANALYSTS have mixed views about the supply situation next year.

The 5,576 units available next year will be concentrated in prime areas, with 3,304 units up for grabs.

They include 428 units at Marina Bay Residences and 231 units at The Trillium along Kim Seng Road. Savills estimates about 75 per cent of the uncompleted units have been sold, leaving little room for oversupply.

Instead, the concern is insufficient supply given the drastic fall in supply numbers.

In the first quarter of last year, 17,545 units were projected for completion in 2010. The number tumbled to 8,538 in last year's third quarter and continued downwards to 5,394 from the second quarter of this year, according to the Urban Redevelopment Authority.

But Ms Tay Huey Ying, director for research and advisory at Colliers International, feels the supply trend is in line with expected economic conditions, making a supply shortage an unlikely scenario.

'While the worst may be over for Singapore's economy, growth will remain slow for a few more quarters. Moreover, the major economies of the United States and European Union remain weak,' she says.

'Hence, Singapore's expatriate population is largely expected to see only moderate growth in 2010.'

DTZ senior director and head of Southeast Asia research, Ms Chua Chor Hoon, adds that with the economy apparently on the mend, rent declines will begin to moderate and could bottom out in the first half of next year.

2011

2011 will bring an explosion in supply, particularly in the prime districts.

Some 13,418 units are slated to be completed during the year, Savills figures indicate.

About half, or 6,512 units, will be situated in the prime districts and 4,224 in the mid-tier districts.

Among the developments in the prime districts, Martin Place Residences in River Valley, for example, will offer 302 units. Scotts Square in Orchard will have 338 units and One Shenton in the Central Business District another 341 units.

About half of the 13,418 units have been sold, while the remainder are unsold or have yet to be launched.

The demand for uncompleted units between 2000 and 2008 has hovered at an average of 7,230 units per year.

With a high of almost twice this number becoming available in 2011, market watchers fear oversupply.

But some factors may help mitigate this.

Developers are likely to pace construction and launches in line with market needs; the Government's move to suspend the sale of confirmed sites helps sustain demand; and, if the economy returns to growth in 2011, accompanying growth in the expatriate population will support demand for new homes.

One upside to any glut - if you are a tenant - is that new supply will keep rental increases down, says DTZ's Ms Chua.

2012

THE 13,751 units to be completed in 2012 will further boost supply.

Some 6,414 units will be located in the prime districts and 4,774 from the mid-tier market. The rest will be for the mass market.

Mid-tier offerings include Soleil at Sinaran in Novena with 417 units, Rosewood Suites in Woodlands with 200 units, and The Arte@Thomson with 336 units.

Of these, 30 per cent of units planned and under construction have been sold.

These numbers are, however, subject to change with developers adjusting project timings to market conditions, says Ms Chua.

And Collier's Ms Tay thinks a return of collective sale market fever could be a factor that moderates the net new supply coming on stream in 2011 and 2012.

2013

HOW the supply situation in 2013 will pan out is too far ahead to determine right now.

Source: Straits Times, 22 Aug 2009