Don't Buy, Don't Sell

Source : The Straits Times, Dec 6, 2008

ADVICE TO PROPERTY INVESTORS

Sit tight and wait for recession dust to settle, say financial and real estate experts in a survey

PROPERTY investors here might feel like cutting and running but the best advice is to sit tight and hold on, according to a PricewaterhouseCoopers (PwC) report.

The report, now in its third year, asked about 180 experts from across the region - in fields from real estate to banking and property development - for their strategies on whether to hold their investments, buy more or sell.

Mr Stephen Blank, senior resident fellow of finance at the research firm Urban Land Institute, a co-publisher of the report, described the mood: 'Interviewees say that we are in a wait-and-see mode, and everyone's sitting on the sidelines waiting for the dust to settle.'

About 65 per cent of those polled urged investors in Singapore real estate to hold on to their investments in the hotel sector and in rental apartments.

'Visitor numbers have been slipping, and in 2009, the hotel sector might not perform as well as 2008,' said Mr Nicholas Mak, director of consultancy and research at Knight Frank.

'Nevertheless, the mid-term outlook is still positive due to the many new offerings in the tourism and Meetings, Incentives, Conventions and Exhibitions (Mice) market, which resulted in the relatively high hold calls.'

Other sectors here, namely office, retail and industrial/distribution, each attracted hold recommendations from at least 50 per cent of those surveyed.

This was up on last year, when the hold recommendations varied from 29 per cent in the office sector to 48 per cent in the industrial/distribution sector.

The strongest buy recommendations came from the industrial/distribution sector, with 34.8 per cent of respondents urging investors to plough in more cash.

Mr Colin Tan, director of research and consultancy at Chesterton Suntec International, said: 'The industrial sector is pretty diverse. Pockets of industries are doing well. This will help cushion the decline for the industrial sector.'

But there was a strong recommendation to steer clear of the residential rental sector, with only 11.6 per cent of respondents suggesting that now is the time to buy.

'There are many owners whose units are completing in the coming 12 months. As supply outstrips demand, there will be intense competition, which will drive rents down,' Mr Tan said.

The report also stated that the moment of truth has yet to arrive in the Asia-Pacific, indicating more gloom to come.

'The biggest threat to Singapore, other than the squeeze on credit, is the seemingly generous pipeline of development projects which may be completed during a period of sagging interest from foreign investors,' said Mr David Sandison, tax partner of PwC.

'Apart from this, local players in retail and office space are also seeking to cut costs by downsizing and relocating to more affordable parts of the island.

'Acceleration of government infrastructure projects and other measures aimed at buoying the economy should, however, be sufficient to stabilise the market.'

There was one bright spot in the report: Singapore maintained its second position from last year among 20 Asia-

Pacific cities for investment prospects. Tokyo was first.