The real estate sector could be heading for major trouble unless the Government takes “supportive measures” to help set it right.
The stark warning came last night from the leading industry body, Real Estate Developers’ Association of Singapore (Redas), which pointed to falling sales and declining prices.
Its president, Mr Chia Boon Kuah, said at the organisation’s 55th anniversary dinner: “(The slowdown and added pressures in the residential market) pose significant challenges to the property sector, and there could be wider impact on the economy.
“It is in no one’s interest to witness unintended outcomes… We urge the Government to stand ready, to take supportive measures to prevent a tipping point, should the market turn volatile and worsen further.”
He declined to elaborate when asked later about what measures could be taken.
In his speech at Ritz-Carlton, Millenia Singapore, Mr Chia said the sector is expecting “unabated headwinds”, with the slew of cooling measures continuing to bite and dampen buying sentiment.
“The data and facts truly speak for themselves,” he added.
Transaction volume has fallen from about 18,000 last year to less than 9,000 expected this year. Overall private home prices fell in the last four consecutive quarters as well, he noted.
The supply of 68,000 completed new residential units over the next few years is likely to push home vacancy rates towards 10 per cent, Mr Chia added.
“This will add even more pressure on the residential market.
“Developers are concerned. Genuine home buyers from the Singapore market have adopted a wait-and-see attitude.”
Mr Chia had earlier also pointed to the industry’s importance to the economy. “Real estate accounts for about half of the total fixed capital formation. One in five people in the workforce is employed by the real estate and construction industry.”
He also signalled appreciation for the Government’s moderation of land sales this year. Redas had raised concerns at last year’s dinner about the substantial amount of residential sites heading for the market.
Mr Chong Chou Yuen, chief financial officer of Tuan Sing Holdings, noted that while the Government has said property prices have not yet seen a “meaningful correction”, developers hope it will cut back on cooling measures soon before the situation turns too dire.
“The Government should also allow the high-end market to be more active – it is Singapore’s loss in foreign exchange if we can’t attract foreigners to buy such properties here, and wealthier Singaporeans end up going overseas to invest,” he added.
Mr Chia also reaffirmed Redas’ efforts to work closely with the Government and industry partners in real estate development.
A recent key initiative is a push for Building Information Modelling (BIM), which facilitates collaboration and raises productivity in the industry.
Ten developers, including CapitaLand and Far East Organisation, have signed up to pilot the concept. Each developer will form a consortium consisting of those in its value chain like architects, engineers and quantity surveyors.
Design information will be shared from start to end, and workflow better managed – preventing construction clashes and less need for reworks, overall shortening the construction cycle.
Redas signed an agreement yesterday with four BIM partners – Autodesk, Aconex, DCA Architects and Surbana – to establish the cloud-based infrastructure to support the initiative.
“Once successful, we will scale it up for the entire industry,” said Mr Chia.