Still Bullish On Singapore Property

Source : The Business Times, April 5, 2008

DESPITE the US subprime crisis, which will have a cyclical impact, Liew Mun Leong remains bullish on Singapore’s property market in the medium term.

‘Main street America is suffering from the sins and mistakes of Wall Street,’ he says. ‘And when main street gets hit, that will affect Asia, we can’t run away from it.’

However, Singapore’s property market has some strong underpinnings, he maintains. Most importantly, the drivers of Singapore’s property market have changed in recent years. ‘The rise in property prices since 2002 is no longer due to domestic policy changes such as the liberalisation of CPF and the HDB sub-sale policy.

‘It is driven by the remaking of Singapore. Singapore as a global city, as a gateway to Asia, the integrated resorts, plus the displacement demand from en-bloc sales.’

The change in the number and profile of foreign buyers is also notable, he points out. ‘In the past foreign buyers were mainly from Malaysia and Indonesia. But now, there are big buyers from at least 12 countries.’

The proportion of foreign buyers for private properties has also risen from 13.7 percent of the total in 1996 to 25 per cent in 1997. And the number of foreign professionals coming to live in Singapore has tripled over that period, as has foreign direct investment.

At the same time, the affordability of private residential properties as measured by mortgage payments as a percentage of household income has improved, going from around 46 per cent to 36 per cent.

And then Mr. Liew points to the big picture: ‘Singapore has 700 sq km, with 4.5 million people. The population is projected to grow to more than 6 million, but the city cannot grow. If we reclaim another 11 per cent we’ll be in international waters already.’

‘Another point, I tell foreigners. Compare putting $5 million in a house in Singapore with putting $5 million in a house in, say, Bangkok or Jakarta. In Singapore, the government provides so much support in the form of infrastructure. What infrastructure support would you get in Bangkok or Jakarta? This is an important issue when you buy property. Investors realise this.

‘So, if you analyse all the fundamentals, Singapore as a global city is a winning formula. And I’m not saying this because I’m selling property.’