Date: 15 January 2009 | PDF version

Analysis of URA monthly private residential statistics for the month of December 2008

Singapore
Residential property launches

The Urban Redevelopment Authority (URA)’s private residential projects’ statistics for the month of December illustrates that the number of new launches totaled 157 housing units, which was the lowest number since such statistics became available in mid-2007. December’s figures indicate a fall of about 59%, compared to November, where 382 units were launched then. The number of units launched increased from 174 in October to 382 units in November, raising hopes that the market may have stabilized after the global financial crisis. However, looking at how launch activity has decreased again in December, the improvement in November was due to a slight pent-up demand that was unsustainable.

Developers took the cue from the discouraging investment climate and generally avoided launching projects in December. A total of 713 units were launched in 4Q 2008. This was the least number of units launched per quarter in 2008. It was also slightly more than half of 1,395 units launched in 1Q 2008 - the quarter with the second least number of units launched in 2008. On the whole, based on the figures released today, 6,212 units were reportedly launched in 2008, less than half of that launched in 2007. It was also lower than the figures in 2005 and 2006, where at least 8,000 units were launched in each of these years.

A total of 113 housing units were launched in the mid-tier Rest of Central Region (RCR) in December 2008. But this consists of the majority (72%) of the units launched last month. For 4Q 2008, each of the three regions, comprising RCR, Outside Central Region (OCR) and Core Central Region (CCR), accounted for similar shares in terms of the number of units launched. Considering the year of 2008 as a whole, the prime CCR was the region with the least number of units launched. The number of units launched in CCR in 2008 totaled only 1,451 units, accounting for a 23% share of all units launched in 2008. This was much lower than that in OCR and RCR, which accounted for 38% and 39% of units launched in 2008 respectively. The demand for high-end residential property depended on a relatively larger extend on foreigners. Therefore as the global economic slowdown adversely affected the global investment climate, the demand for high-end residential properties was also impacted. As a result, developers held back their high-end projects in the CCR in the hope to launch them at a more favourable environment in the future.

Residential property sale by developers

Developers in Singapore sold only 131 housing units in December 2008, 32% fewer than the units that developers sold in November. This was also among the least number of units sold in each month
since the information become available in July 2007. It was just higher than 118 units sold by developers in October 2008, which was the least number of units sold in each month since the information was available. After seeing no units sold at above $2,500 psf by any developer in October and November, there were 8 units which were sold for more than $3,000 psf in December, with the priciest unit transacted at $3,709 psf. All these 8 units were in The Ritz Carlton Residences, with a median selling price of $3,086 psf. The lowest-priced unit sold by developers continued to come from Rosewood Suites, sold at $524 psf.

On a quarterly basis, 4Q 2008 was the quarter in 2008 with the least number of units sold by developers in 2008 – there were only 442 units sold by developers in 4Q 2008, way below the next highest quarter in 2008, i.e. 1Q 2008, where 762 units were sold in the primary market. This was due to the stream of negative news in the global financial markets during that period. For the whole of 2008, developers sold 4,382 units. This was significantly lower than 2007’s, where developers sold
14,811 units. The suburban OCR accounted for the majority, or 43%, of all units sold in 2008, higher than CCR that accounted for 23% and RCR, which accounted for 34% of all units sold in 2008.

2008 was the year where property market sentiments drastically deteriorates and home buying interest were exceptionally affected. Home-seekers were generally cautious and are increasingly realistic in their home purchasing criteria, looking at mere functionality, as economic conditions and employment opportunities remained subdued. As market conditions suddenly worsen in the second half of 2008, property launches and take-up were the first to be hit, while property prices were not affected to the same extend. Developers generally withhold project launches to monitor the market situation, instead of resorting to drastic measures to reduce prices. Should more projects be attractively re-priced in 2009, the number of units launched and take-up can expect to sustain or marginally improve, as there is some latent demand from bargain hunters.

For the first half of 2009, launch and sales activity are expected to remain subdued, as the economic
situation remains uncertain and banks continue to tighten credit. The festive season in December 2008 will be extended to January 2009 due to the Lunar New Year. Therefore the performance of the
residential property market in the last month of 2008 is likely to be repeated in the first month of 2009.

For further information, please contact:

Nicholas Mak, Director of Consultancy & Research Department, Knight Frank, +65 6228 6821

Notes to Editors

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