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Tuesday, February 10, 2009

Investment sales for Singapore’s residential properties down 81%

PETALING JAYA: Singapore’s residential property investment sales were down 81% to S$6.3 billion last year compared to S$32.7 billion in 2007 as developers turned cautious due to poor response to new property launches.

AmFraser Securities Pte Ltd analyst Lau Wei Chong said in a report Tuesday that one indication for the drastic drop in investment sales was the sharp decline in enbloc transactions.

He said there were seven deals last year compared to 111 in 2007.

“Developers were reluctant to commit in view of poor responses to new property launches, a more stringent credit approval process and higher costs of building,” Lau said.

Due to scarcity of land, developers on the island-state often buy older properties on an enbloc basis and then redevelop it. Singapore, which slipped into recession in the third quarter of 2008 (3Q), saw private home prices fall by 6.1% in 4Q as demand for new housing slipped.

This followed a 2.4% decline in 3Q. For 2008, prices slipped by 4.7%.

Data from the Urban Redevelopment Authority (URA) further exemplified a demand-led softening in residential property sales.

Only 4,006 units were sold of 6,107 uncompleted units launched last year. In 2007, the take-up rate was 100% and 94% in 2006.

As of December 2008, the total number of uncompleted units in the pipeline stood at 64,982, of which 43,414 were unsold.

By The Star (by Fintan Ng)

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