http://www.businesstimes.com.sg/prem...hases-20130828

Published August 28, 2013

PROPERTY OUTLOOK

Wing Tai to look for opportunistic site purchases

By Kalpana Rashiwala [email protected]


[SINGAPORE] Wing Tai chairman Cheng Wai Keung says that the group will take an opportunistic approach in buying Singapore residential development sites, given the current abnormal market trends.

For one thing, the upcycle in the Singapore private housing market, now in its eighth or ninth year, is one of the longest ever, fuelled by the flood of liquidity from overseas.

The unprecedented environment of very low interest rates for a long time has been sustaining the property boom for the past few years, Mr Cheng said.

"So the chances of the market turning this year are quite high. If it doesn't turn down this year, (the chances of this happening) next year will be even higher," Mr Cheng said at Wing Tai's full-year results briefing yesterday.

While a spiralling upwards of interest rates will trigger the inflection point for the current cycle, this could happen even sooner. "If you have read government statistics, unless you are very optimistic, certainly oversupply is on the horizon," he added.

Another unusual trend in the private housing market today is that prices of high-end homes are roughly double those in the upgrader or mass-market segment. "Generally it is about three times."

And during the 2007 luxury property boom, high-end prices were around 3.5 to 4 times those of the upgrader market. "In 2007, the upgrader market was $800 psf and the high-end, over $3,000 psf. Now, the upgrader market is at least $1,200-1,300 psf", while prices in the high-end segment today at best can be said to have consolidated at 2007 levels, Mr Cheng argued.

"No matter how you explain, it doesn't make sense. So that means that the two markets are converging, which if you really want to look at it, something is wrong."

Mr Cheng said that he does not expect prices in the upgrader market to correct this year, as "people are still buying". Wing Tai has issued options for 220 units at its freehold Tembusu condo in Tampines Road, where sales booking began a fortnight ago. The average price is said to be around $1,500 psf.

Describing the latest property cooling measures as "long overdue", he noted that the authorities have "tightened on a lot of loopholes from the past". "They have weeded out a lot of weak demand . . . I think it's a good thing because you don't want the financially weak purchaser rushing into the market because these are the sort of people who will be the least able to sustain payment."

When the market turns, "(they) will precipitate the speed of the downmarket", noted Mr Cheng.

Given that the market is not operating in a "normal sense", Wing Tai will buy residential sites in a more opportunistic fashion. "But judging from the land available for the next six months, plus the price of land at this level, we most probably will have a more wait-an-see attitude," he added.