Singapore investors said to hold back on purchases

EVEN as Malaysians seek bricks and mortar abroad, three Singapore-based property consultants say Singaporeans are likely to hold off property purchases in Malaysia, particularly Iskandar Malaysia in Johor.

Savills Singapore senior director Alan Cheong says Singaporeans need time to digest what they have purchased over the past year. He says although the ringgit has weakened against the Singapore dollar since August this year, this does not mean Singaporeans will flock over to buy.

The volatile currency may put off the more risk-averse, he says.

“Singaporeans need to see good value for money in terms of exchange rate,” he says, adding that they may consider buying once the ringgit stabilises.

For years, developers in Johor, both local and foreign, have targeted Singapore and other countries. However, for Iskandar Malaysia to succeed, it is crucial for Singaporeans to invest. The last few years have seen Singaporeans on a buying spree as a result of the rising prices back home, although one consultant is of the view that most of the buyers are Malaysians working in Singapore.

As for the ringgit gyration which started in August, SLP International Property Consultants Pte Ltd executive director David Neubronner says the spate of ups and downs has affected Johor the most.

He says sales volume and prices have declined the most in Johor compared with Penang and the central region of Kuala Lumpur.

“This trend is expected to continue given the oversupply in Iskandar, in particular Nusajaya,” says Neubronner.

Residential schemes by reputable developers and with strong unique selling points like waterfront homes and gated and guarded landed developments will be less affected by the crisis. They offer viable lifestyle and investment options for those who are able to capitalise from this meltdown. In choppy times, the strategy is to pick up blue chip assets, like Emerald Bay, which offers luxury lifestyle waterfront homes in Nusajaya, Iskandar, Neubronner says.

High rise apartments in mixed developments, which target Singaporean and Chinese buyers, however, are expected to bear the brunt of the market correction, he says.

Singaporeans and China buyers are most sensitive to the ongoing political and ethnic uncertainties, Neubronner says.

The single over-riding factor is confidence, he says. Contrary to the belief that a weak ringgit will pull in sales, he says it is precisely the weak and volatile ringgit that is creating a loss of confidence. Until that confidence and stability are restored, interest from overseas will remain muted.

His comments concur with that of Jones Lang LaSalle head of research for South-East Asia Chua Yang Liang. Chua says the volatility in the ringgit is a real concern.

Says Chua: “Singapore’s interest is sentiment-driven. There was a rush to buy, on news about the High Speed Rail and investments by CapitaLand group. The situation has turned. The market is softer, the currency is weaker. There is a pullback.

“There is anxiety over the longer term with regards price sustainability in Iskandar. There is a supply glut, so there is anxiety if price will hold. It is essentially ringgit issues, while the underlying issues are political. Now there is ethnicity issues and that has raised concerns as well,” says Chua.

As for Malaysians buying Singapore real estate, Chua says it could be that they are parking their money there as a security measure. Indonesians have, for a long time, done so. They use their home in Singapore as a social security, says Chua.

“The political situation and the weakening economic conditions has resulted in a flight to value. A property purchase revolves around sentiments and we are seeing that now,” says Chua.