The general consensus of the property market appear to be bullish. Judging from the number of sellers withdrawing from sale and the high expectation of the seller, Singapore property market is set to see the upward trend in the coming months. According to CitiGroup -

1. Price rise likely to be 20-25% in 2007 — URA price index showed a +4.8% qoq rise compared to +3.8% in 4Q06, the steepest increase since 4Q99. Similarly, the rental index showed the steepest rise of 7.8% qoq on the back of the tightening supply. As occupancy continues to rise, rental and price rise are likely to accelerate.

2. Occupancy and rental to reach new highs — Net negative supply in 1Q07 as 885 units were demolished compared to the 716 units completed. Demand remained strong at 2,225, pushing occupancy rate to a record of 94.9%. With just 4,573 scheduled for completion for the rest of 2007 and possibly another 2600 units demolished, we think that both rental and occupancy rates will likely reach new highs of 96.6% by end 2007 and 97.2% by end 2008.

3. Transaction volume at record high — 4,565 uncompleted units were sold in 1Q07, surpassing the last record of 4,162 in 4Q06. 4,282 units were transacted in the secondary market, which is the highest since 2Q96.

4. Mass market likely to catch up — Attractive rental yields of around 5.3%, is likely to continue to draw investors into this segment of the market. Positive sentiment and strong affordability amongst the first time buyers, is also likely to drive prices sharply higher in this segment.

5. Negative supply of office in 1Q07 — Net supply fell by 43,000sqft in 1Q07 while demand remained strong at 660,000sqft. Signing rental at prime grade A office space in Raffles Place has reached S$13-14psf compared to S$10-11psf in 4Q06. With more demolition scheduled than completion resulting in a net fall in supply of 600,000sqft in 2007E, occupancy and rental rates should continue to rise.

6. Office rents and capital values continue to surge — According to JLL, prime grade A office rental rose some 20% to S$11.80psf. We maintain our forecast of S$14.50psf by end-2007 and S$18.50psf by 2008. We also highlight that a new benchmark transaction price of S$2013psf was set by a relatively small building along Robinson Road.

Eddie
http://www.propertyhomeowners.net