Singapore property prices expected to move up, fuelled by en bloc market

Singapore

PROPERTY prices are expected to move up in the coming months and now may be a good time to start looking if you have not bought your property, said Carmen Lee, head of research for OCBC Investment Research, during a briefing on the mid-year market outlook on Friday.

The rosier outlook for the Singapore property market could be fuelled by the collective sale market, which has seen three major en bloc sales within a week, which would take about 800 to 900 units off the market.

Ms Lee said: "If we look at this versus last year, when the en bloc market was actually very slow, you know that the interest coming into the market in the next six to nine months and then 12 months will perhaps be quite aggressive from these 900 people who need to look for new units to buy."

The latest en bloc sale was in Eunos, where the 330-unit privatised HUDC estate Eunosville was sold at S$765 million - the second highest price ever for such a property. The price represents a premium of more than 17 per cent over the S$643 million to S$653 million the owners had asked for when the site was launched for tender in April.

Ms Lee said: "If you look at the Paya Lebar area, which is just one station away (from Eunos), we are talking about a per square foot of about 1,800 to 2,000 and that's higher than what we are currently seeing in the CBD (central business district) area."

She said that "mispricing situations" like this happen and thus rebalancing will follow, with prices of properties moving slightly higher in the coming months.

She also noted that the government has already done some fine-tuning measures for the property market and thus "the heavy sort of measures are not going to be lifted anytime soon".

"But the signalling is very positive," she said.

She also felt that investors should stay invested in the real estate investment trust (Reit) space, even though interest rates will possibly head higher.

She said: "Reits at this point in time are still quite interesting investment asset classes. Some of our key picks are FCT (Frasers Centrepoint Trust), FLT (Frasers Logistics & Industrial Trust) as well as Keppel DC Reit."

Ms Lee noted that close to 80 per cent of its stock picks are in the property sector. She said: "I think we have seen the price trend in the last couple of months - we've seen that the banks actually did very well. If you drill further down, the best sector is actually real estate. In fact, the real estate index has outperform the STI (Straits Times Index)."

However, she cautioned investors to watch out for oil and commodities, where the volatility in these two sectors would impact Singapore.

High valuations, particularly in sectors like banks, which have done very well, are also reasons to be cautious, said Ms Lee. "We have downgraded the banking sector from a 'buy' last quarter to a 'neutral' at this point in time. Selectively, we still like a lot of the property stocks but one or two have gone way ahead of the market so again, do be careful."