facebookWhy is it that there is an oversupply of 40,000 existing and new private apartments and there is still an uptake of more condo releases coming up? What are the developers thinking? - Seedly
Seedly logo
Seedly logo
 

Advertisement

Josh Ng

Posted on 04 Jul 2019

Why is it that there is an oversupply of 40,000 existing and new private apartments and there is still an uptake of more condo releases coming up? What are the developers thinking?

0 comments

2 answers

Discussion (2)

Siow Nan

Siow Nan

Level 9. Genius

Updated on 09 Jul 2019

Developers bought the land earlier on especially during the recent enbloc fever. From the developer’s point of view, they need to quickly launch their projects in order to get enough buyers first, rather than to delay and give the chance for other Developers to capture the same group of eligible buyers.

Also, as above, many enbloc owners are only recently displaced and will have the means to purchase a replacement home and even an additional investment home from their enbloc gains.

Developers with sufficient buyers initially will have the sufficient means to hold and wait for the supply to dwindle later on, as they would have broken even from their initial sales. Which is why you don’t see property prices going down, and may still increase as recent URA flash estimates show.

many Developers with completed projects would have to replace their land banks, and with gls supply dwindling as well, Developers will also be bidding for the lower supply as well. They are planning ahead years in advance.

2

Josh Ng

Josh Ng

08 Jul 2019

The enbloc piece makes sense but outside of that, it's hard to see how 40k supply can be absorbed with new apartments coming up? I lean on the skeptical side of things when it comes to property purchase at this time and now. I came across propertysoul's blog and found her views to be v negative on the current market (but good to hear the extreme) to build your own pov. Thanks anyway!

Siow Nan

Siow Nan

09 Jul 2019

Yes, there are lots of different views and takes on this topic but its truly hard to see beyond the crystal ball on what is to come in the future. Macro and Micro events around the world can affect the situation dynamically. Eg recession estimates in the coming quarters vs foreign influx of investments like from Hong Kong, etc etc. In the economic sense, everything will still be bound by supply and demand, and once developers have exhausted all their options, we may still see property prices dip to cope with the lower demand. In land scarce Singapore, properties are seen even as a safe haven investment in bad economic times and may hold their value better than cash. We can refer back to historic records and see how our average income levels rise alongside with the property price index and inflation levels to gauge possible future trends.

Post

Zen Rogue Xuan

Zen Rogue Xuan

Level 8. Genius

Updated on 08 Jul 2019

Developers don't really have a choice. Much emphasis is placed on the cooling measures consumers face, but developers will have to pay extension fees based on Qualifying Certificate (QC) rules for unsold units. As such they have no choice but to hope to sell them off.

2

Josh Ng

Josh Ng

08 Jul 2019

I think you are answering to my context but not my question. If there are already oversupply which is clearly the case, why can't developer delay their launch or building until the existing pipeline clears up? What's interesting is developers are still bidding aggressive for land.

Zen Rogue Xuan

Zen Rogue Xuan

08 Jul 2019

They can't delay it for those who have bought the land. In addition, Singapore's property market still is relatively attractive to overseas developers who face greater competition at home who are cash rich. See https://www.scmp.com/property/international/article/2094899/chinese-developers-submit-another-record-bid-land-time

Post

Write your thoughts