50% of developers in Singapore will probably cut down the prices of their new project launches

    • Fifty percent of the local property developers have decided to lower down the prices of their new launches as their confidence has gone down due to the effects of the Covid-19 and the suspected economic recession post recovery from Covid-19 on the Singapore real estate market.
    • The above mentioned statistics are taken from the latest Real Estate Sentiment Index (RESI) which has registered a record low in Q1 2020 due to the Covid-19 outbreak. RESI is published by National University of Singapore Real Estate.
    • The current sentiment index dropped to 4 in Q1 2020 from 4.4 in Q4 2019 while the future sentiment index dropped from 4.1 in Q4 2019 to 3.5 in Q1 2020.
    • A RESI score of 5 and above shows that the market conditions are improving while a score below demonstrates that the conditions are worsening.
    • The composite sentiment index which is a derivative indicator for overall RESI went down to a historical low score of 3.2 in Q1 2020 even down from the previous low score of 3.3 in Q4 2011.
    • The RESI is a quarterly survey which takes into account the sentiments of senior executives of real estate companies. The latest survey showed that most of the developers are tensed due to the job losses and drop in the new job opportunities as well as due to the global economic slowdown.
    • Job loss and declines in the new job opportunities were the top two risk factors in the next six month and everyone selected them in the survey conducted in Q1 2020 as compared to 79.2% and 56.3% in the last quarter of 2019.
    • The financing/liquidity tightening risk in debt markets went up from 12.5% in Q4 2019 to 75.8% in Q1 2020.
    • The risk related to excess new development land supply and the rise in the price of real estate went down to nil in Q1 2020 from 10.4% in Q4 2019.
    • There were mixed emotions on the pricing of new launches in 2020. With half of the lot expecting the developers to maintain their current pricing in the next 6 months while the other half lot of the respondents expected the prices to go down in the next 6 months.
    • 54% respondents expect the prices to drop down by 2% to 5% in 2020 while the remaining 46% expect the prices to go down by 5% to 8% in 2020.
    • 31% respondents expect the sales of new projects to plunge by 8 to 10 percent while 21% expect it to go down by 20% to 30% in 2020.
    • 25% respondents expect the rate of launch of new projects to be the same as it is currently in the next 6 months while 44% respondents expect the projects launch to fall moderately in the next 6 months.
    • 34% respondents expect the occupancy rate in the rental market to go down by 2% to 5%.
    • 22% respondents expect that the developers would extend or postpone project completion or launches to reduce the impact of Covid-19 while 25% expect that developers will use e-platforms for their new project launches to lower down the impact of Covid-19.
  • 36% respondents expect that the government would extend Additional Buyers’ Stamp Duty (ABSD) deadline due to Covid-19 while 18% suggest that the ABSD time span to be put at halt temporarily till the circuit breaker measures are lifted.

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