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« on: 17 July 2008, 9:26:57 am » |
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HOMES for the masses have always been
the backbone of Singapore’s residential
market. And, with the two integrated resorts
(IRs) expected to employ some 75,000
people, demand for such housing is likely
to go up.
Both IRs are expected to draw a significant
influx of “foreign talent”, simply
because Singapore does not have enough
people with the right skills for the various
jobs that will be created.
When the IRs were first announced
in 2005, the Government said that the
IRs were expected to bring in about
$5 billion of total investment and create
35,000 new jobs. Today, the impact is likely
to be much larger, after the consortiums
behind Marina Bay Sands and Genting Resorts
World increased their investments to
over $6 billion each.
Up to 75,000 new jobs are expected to
be created, of which 30,000 will be from
Marina Bay Sands and 45,000 from Genting
Resorts World. This figure is more than half
of the 140,000 people currently employed
in the industry.
Over the past 12 to 18 months, the
labour market saw record employment
creation on the back of strong economic
growth. With the unemployment standing
at a low of 2 per cent (54,400 people), the
need to attract foreign talent with the right
set of skills has become a priority.
As few Singaporeans are trained in this
area, it is likely that many of the vacancies
would have to be filled by foreigners.
Assuming 30 per cent of the jobs (some
23,000 of them) are taken up by locals and
the remaining 70 per cent (52,000 jobs) by
foreigners, this would generate a substantial
demand for housing, especially in the
rental market, and to a certain extent, the
primary and secondary sales market.
It is estimated that around 44,000 resort
workers will most likely reside in the
lower tier of the housing market. Hence,
it is clear that most of the demand would
enter both the HDB, as well as the lower
end of the mass private residential housing
rental market, as these are more affordable.
According to the 2005 General Household
Survey, the average household size
is expected to be 3.7 persons. Assuming
that five foreigners share one house, the
minimum requirement would translate
to 8,800 home between 2009 and 2010.
The entrance of these foreigners would
definitely have a very positive effect in all
layers of the housing market.
Although the Urban Redevelopment
Authority’s first quarter figures show that
there were 14,862 vacant private residential
units available in the market, we at
Savills Singapore believe that they could
include units from condominiums that
had been sold en bloc and old apartments
in unliveable conditions.
Hence, the current available private
units could be as few as 7,500 units.
Moreover, the mass segment will see a
moderate supply of only 8,400 units to be
completed between 2008 and 2010. This
modest supply, coupled with the strong demand
in the rental market, is likely to boost
homebuyers’ as well as investors’ confidence
in the residential mass-market.
More jobs will be created not just from
the effects of IRs, but also other ongoing
mega-projects from Exxon Mobil and the
soon-to-be-completed shopping malls, like
ION Orchard, Orchard Central and Somerset
Central. This, together with the Government’s
efforts to attract foreign investment,
will ensure the continued influx of
foreigners, which will, in turn, help sustain
rental demand, especially at lower tier of
the housing market.
With so much potential, we believe
that the demand for mass-market homes
will remain strong in the coming months,
barring any unforeseen circumstances that
could rock the global economy.
The rentals for HDB are around 2 - 2.5k. This will most probably rise further when the IR workers arrive. The rentals for the mid-tier market will be weel supported by the mass market HDB/condo rents. That will take care of the rents for 95% of the property market. Only the top end may see their rents declining but their overall impact on the rental market will be neglible. In fact the median URA rental figures are going to show a rise in 2009/2010.
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