Raffles Homes
"Location is not Everything"
2007
Market Updates
11/12/07 22:10 Filed in: Market News
Physical
properties have done well in 2007. However, we see
rising systematic risks
as a real issue going into 2008. Possible US sub-prime spillover, rising land costs
and possibilities of further cooling measures from the government are factors that
will likely moderate upside surprises in 2008. On the residential front, we see the
mass market providing most upside at current low base driven by flow of displaced
buyers from enbloc sales, attractive rental yields and recovery in the HBD resale
market. We are less positive on the mid-high segments currently. Overall, our price
forecasts for private mid-high end and mass market housing are lowered from 15%
and 25% to 8% and 15% respectively. While office supply continues to be tight, we
see demand and rental growth for prime office space moderating in 2008 given
rising decentralization trend and resistance in recent commercial land bids. That
said, we maintain our 30% prime rental growth forecast for 2008 as significant prime
office stock are unlikely to come through till 2009-10.
as a real issue going into 2008. Possible US sub-prime spillover, rising land costs
and possibilities of further cooling measures from the government are factors that
will likely moderate upside surprises in 2008. On the residential front, we see the
mass market providing most upside at current low base driven by flow of displaced
buyers from enbloc sales, attractive rental yields and recovery in the HBD resale
market. We are less positive on the mid-high segments currently. Overall, our price
forecasts for private mid-high end and mass market housing are lowered from 15%
and 25% to 8% and 15% respectively. While office supply continues to be tight, we
see demand and rental growth for prime office space moderating in 2008 given
rising decentralization trend and resistance in recent commercial land bids. That
said, we maintain our 30% prime rental growth forecast for 2008 as significant prime
office stock are unlikely to come through till 2009-10.