Thursday, October 12, 2006
[RealEdge] BT Property Supplements : A brighter outlook
| Published October 12, 2006  | |||
| A brighter outlook
By UMA SHANKARI
Prices in the property market are rising with a seemingly unstoppable momentum. And the trend appears to be holding true for all sectors -- residential, office, retail and hotel.
The office and hotel markets, in particular, seem set to do well. Given the tight supply situation for both hotels and office space, rents should continue to escalate. Right now, occupancy of prime Grade A office space is at an all-time high and new supply is not likely to come onstream anytime soon. While the upcoming Marina Bay Financial Centre is expected to boost prime office supply in Singapore significantly, tenants can only start moving in in 2010. In the meantime, rents are on their way up, and should soon match their 1996 peak. Rentals at some developments are already well on their way, with rents at the upcoming One Raffles Quay hitting $10 per sq ft per month. The same holds true for the hotel industry. After years of settling for rates well below those in other major cities, hotel operators are beginning to nudge up room rates. If tourism targets set by the Singapore Tourism Board are met, the demand for hotel rooms is likely to surge -- allowing hoteliers here to achieve their dream of pushing rates up even higher. To date, however, the most buoyant aspect of the property market has been the high-end residential segment. Both foreign and Singaporean buyers have been snapping up multiple units in much-publicised luxury projects, such as St Regis Residences and Ardmore II. But whether this momentum can last remains to be seen. There are always fears that buyer interest for such upmarket developments can wane. Much better for developers, and the Singapore economy as a whole, will be a recovery in the mass-market residential market. But while everyone seems optimistic that the mass market will eventually pick up, no-one can say for sure when this will happen. Right now, the boom in the high-end residential segment seems to have had little impact on the rest of the residential market. But having said that, it is hard to judge the performance of the mass market due to the small number of projects being released by developers, who are afraid to put out too many too soon. Recent launches that have sold well, such as The Centris at Jurong West, have been attributed to pent-up demand by observers. But this is set to change soon, with a respectable number of mass-market residential projects soon to be launched. If these see good demand as well, everyone will be happy. CREDITLINES: | |||
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