Property News & Market Trends

1st Qtr up 4.6%. Is that a good sign?

What does it mean when URA says that the 1st Qtr flash estimate is a 4.6% compared with previous Qtr?

It's a modest estimate. In reality, the prime properties in Orchard & Marina/Shenton area has skyrocketed past 12% in just 3 months! This astromonical price spike is heaving its effect now. The prime office rental is next in line.

The mood is so buoyant, these prime residential price increase paled compared to the frenziness of prime office space. In fact, property agents specialised in these areas are feeling the heat from landlords.

Just last december, rentals at the Gateway, outside CBD is only asking for $6.20-$6.50! Today, nobody wants to let go for anything less than $7.80psf! That's 25% hike in 3 months! Talk about inflation.

The interesting fact is - some desperados will take the offer, without much consideration. I heard these spaces get snapped up within 2 weeks. Just last year, it would have taken 2 months to rent it at $6.50!

Mr Mah, our ND Minister is trying to ease the office crunch. Guess what? It's just an effort too late. Many development will be ready earliest 2009. That's 2 years from now. How much would prices jump by then? Ask the analysts.

Enter a pretty scary scenario. Many sites are bought at current high prices and developers are anticipating that the rental prices should increase steadily over the next 5 years due to the IR investment.

In 2009, there will be an estimated 2million sqft of prime office space added on. With many companies committing for 2 years at record high rental price now, economy has better be good by 2009. If the IR don't fly, the commercial buildings you see right now may be hit by a glutted tsunami.

Even if the IR is on track, mass exodus of big multinationals will evacuate the current shenton site and migrate to the new and more vibrant Marina Bay area. Phew... that's some major geographic movement.

If the economy did not grow as fast, not many companies can take over the big Corporations' leftover. Indigestion or stomach upset? You decide.

My take? I'll hedge with some selective property stocks. - Danny 'Bingo'

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