To Buy Or Not To Buy: The Truth About The Current State of Singapore Real Estate

Recent speculations about the Singapore property market have been a tad bit off-putting, considering the fact that doom sayers claim the market has reached saturation point. Some are even predicting that the market will deteriorate even further.

People choose to believe this based on two arguments; first, the Singapore property market’s historical performance and secondly, the comparison with the properties in the outskirts and suburban area with the belief that these two market segments are interdependent.

1996 marked the peak of the Singapore property market in the high-end areas. In a bizarre case of conviction, people believe that the prices of housing, apartments, luxury condos, or any real estate properties back then proves that the Singapore property market has hit saturation point and the property prices then were nothing close to that of what we’re seeing right now.

In addition to the pessimistic belief, people conclude that changes in prices of the Singapore real estate property value in the outskirts and in the city somewhat causes a chain effect. Should the rates at the outskirts go higher or lower, the city’s rates go higher or lower too, and vice versa. Many cannot see property prices going too high which may become out of reach to the to the average Singapore citizen. As such, they believe that this will hold back the price of high-end properties in Singapore.

Having mentioned the arguments above, I would choose to differ from it. Let’s take the case of the three key areas in Singapore. First, the Financial district, second, the Shopping belt, which traditionally has been the front runner in the real estate market, and finally, the Lifestyle region that features the Waterfront Living close to the city and in Sentosa.

Allow me to give everyone a heads up to reasons why I contradict the two arguments. The comparison between the 1996 real estate property market high and the current one doesn’t give enough justification. The Singapore of today is not the same as the Singapore 12 years ago, as well as the Singapore of today will not be the same as the Singapore 5 years from now. In fact, the Singapore government is doing everything possible to turn Singapore into a more cosmopolitan and globalised country, striving to be on par with elite cities like London, New York, Tokyo, Hong Kong, and so on.

When Singapore attains the same kind of attraction as those cities especially to the High Net Worth Individuals (HNWI) from around the world, demand for high-end properties in Singapore will also go up. These HNWI has driven property prices from those cities to phenomenal levels with little or sometimes no bearing on the property prices in the mass market.

The argument about the chain effect on Singapore’s real estate market value between the outskirts and the cities is also not fundamental in any way. Most governments in the world would constantly implement policies to control the price of necessities like basic food but they don’t really care if someone wants to pay S$150 for a can of abalone. Prime property in Knightsbridge, London would cost a whopping estimate of £4000/sq foot and yet if you drive a short distance out of the city into one of the suburbs, one could perhaps acquire a little house or apartment as low as £200-300/sq foot. The same thing goes with other globalized cities like New York, Tokyo, Hong Kong, Mumbai and so on. In general, the same principle applies to all countries.

In relation to that, the Singapore property prices in the outskirts have absolutely NOTHING to do with the prices in the city, and vice versa. Obviously, an investor of a luxury condo in the city is totally different from a buyer of an average cost housing or apartment in the suburbs. In common sense, the Singapore real estate properties in the cities cater to the more prominent names whereas the real estate properties in the suburbs cater to the mass market. As such there is no relation as to the pricing of these two types of properties.

Therefore, governments in all countries would be more concerned about the prices of a real estate property that cater to the MASS market. However, they may not really bother them as much if a Donald Trump or a Bill Gates would want to buy a penthouse in these high-end markets for $15,000,000.

You might say that the property prices increase in these high-end places did eventually lead to the increase in prices of properties in Singapore in the mass markets. Yes, but that is mostly driven by people having this hype of the connection between the two types of properties and other fundamentals like increase in demand in the mass market because of population increase, etc.

I strongly believe that in the coming years, we may find property prices in the high-end property segments in Singapore reaching levels close to that of New York, London, Moscow, Tokyo and Hong Kong etc..

In my next update, I will give you more facts and stats that will prove the points I have made here to be accurate, and at the same time give you unbiased and professional advice on what types of properties you should consider investing in.