Waking up in Singapore and reading today’s Straits Times that highlighted a new about which Asian property market, Singapore or Hong Kong is seeing the biggest drops in valuations is no exactly joyful business for a Saturday.
Yet during a quick two day visit to the Lion City, the subject of a sluggish Singapore real estate sector came up so many times I lost count. Generally from my talks with owners who were considering exiting, they were opting to hold properties and look at short to medium term rental yields. The local view is that recovery of market levels would occur but it was a long training coming. To expand on this a yvery long train coming.
Interestingly the Strait Times piece was of the opinion that Hong Kong fundaments were stronger given somewhat illogical demand from Mainland China and the fact of a considerably denser population base, hence longer term demand was born from necessity. Barriers to entry in any business are a key supply demand fundamental so this is an important piece of the puzzle.
As for Singapore the cooling measures have been effective and the impact of the broader global financial slowdown are somewhat amplified in the current sluggish market. Likewise the secondary sector is seeing some potential players return to the bench and putting a hold on selling their properties given the sudden impact of receding values.
For smaller investors though they fact the conundrum of a low interest rate environment, a less than sterling stock market and itchy fingers to appreciate returns on their investment portfolio. For now, while Singapore might be forecasted to see a longer term malaise in real estate, Hong Kong is likely to remain substantially more volatile as with every upside there is often a cliff on the other side of the hill.