Turning point in Singapore’s property cycle

SINGAPORE — The Republic’s property market may be closer to a bottom than Hong Kong’s, according to LaSalle Investment Management, which oversees more than US$58 billion (S$79.8 billion) in real estate funds.

Governments in Asia’s two most expensive residential markets have imposed curbs in recent years to tame prices and improve affordability. As demand has dropped amid a slowdown in the region’s economies, home prices in both cities are in the midst of a correction.

Prices in Singapore have fallen 1.2 per cent since September and 9 per cent from the peak in 2013 as property curbs cooled demand. Singapore prices had surged 92 per cent from 2003 until the record set in September 2013. Upcoming executive condo include Treasure Crest and Northwave EC while existing ones include The Terrace EC, Brownstone, The Visionaire EC, Parc Life EC , Waterwoods EC, Signature at Yishun, Skypark Residences, Wandervale EC, The Vales EC, The Criterion EC, Bellewaters EC, Bellewoods EC.

“Hong Kong and Singapore are in a different cycle,” said LaSalle’s managing director Chris Chow. “Although Hong Kong also has government austerity measures for residential, that hasn’t really translated into an actual price correction until recently, even though the measures came in a couple of years before.”

In Hong Kong, prices surged 370 per cent from their 2003 trough through a peak in September before the correction began, as fears of a slowing economy in China damped sales. Home prices in Hong Kong have dropped about 13 per cent since September.

Hong Kong’s office market is still seeing strong demand from Chinese investors for core office buildings in the central business district, said Mr Chow. LaSalle has been stepping back from investments in Hong Kong for a few years, even though they may yield good returns, because the risk is not justified at the current level, he said.

A turning point in Singapore’s property cycle “is probably closer and more advanced than Hong Kong’s, so we feel the market is bottoming out”, said Mr Chow.

LaSalle is focusing on investments in China and Japan, especially in the logistics sector, he added. The asset manager, which has three logistics funds in Japan, is planning more investments in the country as modern warehouses are less than 10 per cent of the total stock, so there is potential for upgrading demand, said Mr Chow.

As of March, LaSalle had about US$7 billion of its assets invested in the Asia-Pacific region. LaSalle plans to raise its fifth Asia Opportunity Fund after it has almost fully invested the fourth fund. It raised US$585 million for the fourth fund in 2014, targeting investments in China, Japan, South Korea and Australia.

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