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SG Look overseas for better returns

Property Here - Thursday, June 20, 2013

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With the prospect of little price appreciation at home in the near future Singaporean buyers and investors should look overseas for better returns.

This advice comes courtesy of IP Global in its latest Property Market Barometerreport, which notes that while the Singapore property market remains stable, there are reasons for concern about the mid- to long-term prospects for real estate investment in the city.

Statistics released by URA show that private residential property prices increased by 0.6 percent in the first quarter of 2013, reflecting a significant moderation in the 1.8 percent price growth recorded in the previous quarter.

Oversupply in the city state is also a factor for concern, the report said, with uncompleted units now numbering 88,623 (35,564 of which remain unsold). An additional 11,938 units are in the pipeline, making for a total of 100,561 units. This is the highest figure recorded since data was first made available in 2002.

Alex Bellingham, Director (Head of Singapore Office) for IP Global, said: “Record-high supply, coupled with waning demand, indicates that the Singapore property market is likely to see very little price-appreciation in the foreseeable future, if any. Investors should look out for opportunities elsewhere in the region and beyond.”

The report identifies potential property investment locations.

Jakarta, Indonesia. Indonesia’s strong investment climate is due in part to the continued increase in its middle-class and affluent consumer population which is expected to reach 141 million by 2020. There is also strong growth in the luxury residential sector with current yields at 9.5 percent.

Kuala Lumpur, Malaysia. The report noted that this is still an excellent market for real estate investment. Excellent national growth in the face of an Asia-wide slowdown looks set to continue, with confident forecasts following the recent elections, while locally 2012 saw the city’s all price house index rise 8.3 percent.

Bellingham said: “Jakarta and KL are both poised to continue on their path of steady economic growth, which bodes well for their real estate markets. Amid interest on Iskandar property investments among Singapore investors, we are of the view that KL remains a better investment due to the much higher concentration of regional and multinational businesses there, its established rental market, as well as the lifestyle options available.”

Besides KL and Jakarta, Mackay in Australia is also rated as promising by the report, underpinned by continued expansion of the mining and export sectors. Annual growth in house prices is now the highest in the Queensland region, and residents’ weekly income is now 27 percent higher than the rest of Australia. Its 2.2 percent projected population growth per annum provides stable support for housing demand.

Bangkok, Thailand is perceived as a prominent emerging market. Its fast growing economy with Q1 2013 GDP growth at 5.3 percent and its thriving medical tourism market are boosting consumer demand in the retail sector. It also has witnessed a 26.1 percent growth rate in high prime luxury property prices.

Andrew Batt, International Group Editor of PropertyGuru, wrote this story. To contact him about this or other stories email andrew@allproperty.com.sg