Monday, December 22, 2008

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Deferred Enbloc redevelopment cuts supply of 1,000 new apartments

Continue from Enbloc Properties put back on Rental Market: Expected to further depress rental market

Another consequence of deferred en bloc redevelopment is the impact this has on future supply.

Savills Singapore estimates that based on the en bloc deals between 2005 and 2007, over 23,000 new units could be added to the market.

But, as Nomura notes, supply has been increasingly pushed to 2012. As at the third quarter of this year, it found that some 16,762 units are scheduled for completion in 2012, versus the previous quarter's estimate of 14,179 units.

Based on an analysis of official data since Q499, it also found that actual completions lagged behind forecast completions.

The Urban Redevelopment Authority (URA) has also clarified that while developments are deemed 'under construction' in its database, this does not necessarily mean construction has begun.

A spokesman for URA said that it considers a project to be 'under construction' once the Building and Construction Authority records indicate that a project has been issued a permit to commence structural works.

As at Q308, there are 10,007 units under construction. URA said: 'As developers do not have to inform the government of actual ground-breaking after obtaining the permit to commence structural works, URA does not have information on the number of units, expected to be completed in 2009, which have actually broken ground.'

However, it added that it understands that actual construction for a project typically begins within 1-3 months after the developer obtains the permit to commence structural works for the project.

The number of developments that could be deferred will remain unknown. CB Richard Ellis executive director Jeremy Lake pointed out: 'Even if the property has been demolished, a meaningful number of projects will be delayed as construction costs are expected to fall over the next 18 months.'

Extract:BT 22 Dec 2008
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2 comments:

Anonymous said...

People are always talking how dire the economy is and how badly the companies will fare in 2009. But really, the last few years have really been fat years and company's profits and coffers have been fattened. Are things really as bad? or are the capitalists being opportunistic to slash jobs and cut pay? Also, there were many en bloc millionaires. Retrenched bankers are still buying branded watches on the quiet.

Smart Buyer said...

Dear Anonymous,
If our govt is digging into our national reserve, it's got to bad. But there'll be a time lag from people getting retrenched to becoming financially distressed. We really don't know how many of those en bloc millionares have not yet put back their millions into the market? Or possibly more? But we can be quite sure that the number is too small to impact the market. Besides, if they're smart, they may be quite happy to wait for the market to plunge. After all, a huge percentage of these people have a second property. As for the retrenched bankers, good luck to all their high living.

For the down-to-earth people, it's best to stay prudent in my view.

Best wishes.

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