Tuesday, July 29, 2008

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Marina Bay Integrated Resorts Estimated Housing Demand ~8800 units with most going to HDB flats rather than Private Properties

According to an estimate by Ku Swee Yong, director of marketing and business development at Savills Singapore; the minimum requirement for housing demand generated by the IRs would translate to 8,800 units between 2009 and 2010.

The following are some views expressed in the Singapore Property Forum:

Forumer 1:
The IR effect on condo demand is only 8,800+ units on an optimistic estimate. The holdings of investors plus projects in the pipeline far exceed that number.
Most of the IR workers will be staying in HDB. If you want to catch them, go invest in HDB.

Forumer 2:
Very sharp analysis there. Good job!!

8,800 is a very optimistic estimate base on 5 foreigners per household. I think it's more like 6-10 per household cos those are the limits set by HDB which should reduce housing demand to half or less.

Don't forget that shrinking growth in other sectors will also reduce number of foreigners. The actual demand will indeed be much smaller than this estimate.

IR will itself take time to become profitable. In fact, it's a big risk itself.

For F1, it has benefited our neighbours. So how cost competitive can we be??

Take an honest, rational look. Can the jobs generated justify the current property prices for the mass market?

High end properties would depend if we can attract the really super-rich. It's a high risk bet.

Most of the jobs would support HDB demand, as the report said. It's a commonsensical thing that speculators failed to see during the heat of 2007. They assumed that all these IR jobs would support private property prices at $1000psf - $1500psf.

The mid-range executives may be paid $4K-$5K. Can they afford the mass condos rent of $4-$5K to justify condos of >$1M to give rental yield of 4-5%?? They'd probably also squeeze into HDB flats, unless landlords of mass condos sponsor them which landlords will have to as vacancy rate increases, rather than leave their condos vacant.

Nobody can deny that IR will add value to our economy but up to this point, I think it's largely over-blown.

We must also not let this sort of exuberence cause us to overlook the risks of prolonged global economic slowdown. Would-be-buyers should have their feet planted in the ground. For one thing, it does not look like the IR will create a lot of well-paying jobs for Singaporeans to help them pay for the skyhigh property price.

May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase


Anonymous said...

Not to forget also, IR is hotel and servicing industry. The company themselve might probably provide hostel for their workers within the work place. Jst take Genting Highlands as example, hostel is provided to their staff.

Hermann said...

Hi, i have learnt a lot from this website due to a google search on the recent DBSS Park Central@AMK...

I was wondering who contributes the articles?

It's extremely informative.

Smart Buyer said...

Dear Anonymous,
You are right! Hostels! I've overlooked that too.

I see many sharp-minded people like you around who quickly see through all these over-blown sales pitch about the IR.

Thank you for your contribution.

Smart Buyers said...

Dear Herman,
Thank you for your compliment.

Several articles are extracted from the Singapore Property Forum: http://property.utalkitalk.com/viewtopic.php?p=8535#8535
There're some very wise people there at the forum that I've learnt a lot.

Other posts are based on my own experience, mainly lessons learnt from the past property cycles, and some research.

I hope to share all this info with other property buyers, especially the younger ones who may be in the property market for the first time.

Ps promote the site if you find it useful so many more people can benefit from it. For a starter, I'd greatly appreciate a link to this site.

Anonymous said...

all these things about IRs causing property price are hypes created by developers, property firms and sellers to talk up the market..

Anonymous said...

Ku Swee Yong said number of jobs from IRs is 40 thousand but PM said only 20 thousand .. see it's hype again.

Anonymous said...

Many agents are still sales pitching at the Sail now about the effect of the upcoming IR justifying the high asking price. They make you feel that it will be your loss if you miss this deal of a lifetime. Strangely, there is almost certainly going to be another buyer putting in an offer soon after you view the unit. They tell you that prices will bounce back to 2007 level when IR is up.

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