Summary
Any Developers that focuses solely on Singapore property development especially on the high end sector will really need to buffer up their cash-flow seriously. The only reason why Singapore is still attractive to foreigners is the political stabilty of the Goverment. Elections in Indonesia, Malaysia & Thailand makes Singapore a safer place for their business & their children. The double whammy is that USA, China ( including Hong Kong), India & Indonesia by sheer virtue of the mass population (property to people ratio) will recover much faster then Singapore in terms of 'excess properties' built especially in the prime districts. However the US still needs to re-engineer their financial fundementals so that it does not operate like a 'single financial socket point'. The Asian economy will take a while to kick start especially on the export sector.
Analysis
Since the Great Depression....the financial world was plugged into a single electrical socket that had many extention cords, multiple adapters & wires that run many appliances such as Credit, Mortage,Insurance, stocks, bonds,factories, fuel both physical & virtual.....then one day the 'property appliances' blew the fuse & burned out the Singular financial socket point.
BoB the Builder realised that the 'singular financial socket' was not the way to go & is now tyring to 'FIX-IT' with new socket points for different usage.
The people realised that the 'property applainces' has to continue running regardless of the burnt socket so they brought out their generators to run it.
I am sure it will recover much faster then the other 'applainces ( such as car manufactures, consumer products etc etc ) since everyone must have a home to live in (basic necessity). UNlike cars & consumer products they go out of fashion very fast...a home can last much longer.
So how does this effect Singapore Developers, Products & Services?
We must first understand the behavioral patterns of people & their needs for Singapore Properties.
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1) Foreigners prefer brick & motar investments then Singapore bank interest rates as it is really not attractive at all.
2) Property is a form of Hard Insurance & is also a good hedge against other currencies esp their own.
3) Since Realtors only serve their needs & not product push( bankers, Insurance products etc etc)....investors have a peace of mind to focus & grow their core business as we manage their assets.
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The cardinal rule for properties ( location, location & location) would mean that ready cash foreign buyers are NOW more keen to engage in the olders projects built in the 80s/90s & early 2000 since newer launches in the same prime location are 'high' because Developers purchased the land site from owners en-bloc few years ago at a premium$$.
There is already a current over-supply of apartments in D09 & D10 with so many new units for lease ( mainly owned by foreigners) versus developers who still hold some of these sites which they purchased en-bloc but did not demolish.
The market will still continue to be slow till 2010. ( if everything else remains the same except for politcal unstabilty surrounding Singapore which will then absorb the excess units since many will prefer to reside in Singapore rather then their own country)
Indonesia has been spared the sub-prime because the people do not take long term loans for their housing needs ( average 36 repayaments) as the interest rates are high ( ++12%) & only suffer on their export sector.
As a matter of fact Bali has seen tremendous growth due to the tourism & property prices has increased. Hotel occupancy is almost full year round as tourist dollars flows lesser to Thailand. ( pardon the side-tracking but Singapore is also tourist reliant)
+++++So what has Singapore Properties got to offer?++++++ Plenty!
The recent arguement between Valuers & Developers shows that there is still room for good deals.
Paper value does not equate to Developer's Value....Banks are still not helping as they too are still not confident to be plugged into the 'new improved socket points' which is still under-going testing.
In Summary, Singapore based developers needs to realise that their property products cannot just be 'made in Singapore' for the affleunt.
To serve the community must be a holistic approach & not just for the creme de la creme. Property Owners wants to live a lifestyle Not struggle to attain a lifestyle.
The lesser fortunate should also be able to enjoy as much as their richer relatives with their homes. If developers can make the general population happier with better living enviroment, demand will increase.
Developers services to their clients ( including real estate agencies) can also be further improved.
Real Estate Agencies will see an increased number of transaction & volume as many owners & landlords will adjust their cashflow & expectations.
There will be a still be a big gap & differences on opinions as valuers battle this out with Banks & Developers. Till then, the consumer who has been prudent during the upswing will emerge the winner now.
At Least this year is a huge improvement from the last where everyone just stood on the side & stare....
