Singapore 2008 outlook

Singapore, like many property markets around the world , saw a very lackluster performance in the later part of 2007. Colliers International, Singapore has just released a report on the state of the Singaporean property market. This is a quote from the report:

“The investment sales market suffered a hard landing in the final quarter of the year as total sales garnered for the quarter slid 32% from the record high of $13.17 billion in 3Q 2007 to $8.98 billion in 4Q 2007.”

Qualified by this statement:

“The sharp plunge in total investment sales in 4Q 2007, however, did not prevent the year 2007 from setting a new benchmark in sales value that was 64.7% higher than the historical peak of $26.01 billion recorded in 2006.”

Overall, Colliers feel that the future looks good for Singapore, with more realistic, sustainable growth expected during 2008.

“Moving forward, the residential property market is likely to be supported by a healthier and more sustainable set of demand fundamentals in 2008 in view of the series of measures put in place by the Government, such as the provision of more timely market information, injection of new supply via the land sales program, and the removal of the DPS. Coupled with the looming US recession and sub-prime mortgage crisis, which will likely inject some sense of realism into the minds of potential purchasers, 2008 is likely to see the residential property market entering into a steadier phase compared to 2007.”

I feel this is an overly optimistic outlook. The last quarter of 2007 had an extremely large impact on the year’s overall performance, and there is no reason to suspect this was an isolated quarter. Singapore remains a good long-term investment, but there remains the current problem of over supply in certain sectors and investor worries over the sub prime mess. To my mind, the commercial sector is a far more attractive proposition currently, with Singapore office rents growing at one of the fastest rates in the world. The full report is available here.