Property market recovery mixed

Property market recovery mixed

SINGAPORE (Dow Jones): Property markets in Singapore, Hong Kong, Japan and the Philippines are poised for recovery, but prospects for China, Malaysia, Thailand and Indonesia aren't as bright, a director of Colliers Jardine Pte. Ltd. said Friday.

David Young, a director for the real estate consultant, told a property seminar in Singapore overall recovery of the regional property market will be modest and less speculative.

A prime reason for a moderate recovery is the oversupply in some of the key markets, such as Bangkok, where vacancy levels have reached 37 percent in the office market and 30 percent in the retail sector, he said.

"The glut has certainly been influenced by the collapse in demand, but this is very much subordinate to the substantial expansion of supply," he said.

The property market recovery will also depend on whether the regional economic recovery can be sustained, particularly on whether domestic demand and regional trade offset slower demand from members states of the Organization for Economic Cooperation and Development, he said.

Also, with economists forecasting moderate levels of economic growth in the post-recovery phase, growth in property markets is likely to be moderate too, Young said.

In China, Malaysia, Thailand and Indonesia funding for new development will remain tight, he said, forecasting that recovery in these countries will be slow in the medium term.

But prospects are better in Hong Kong, Japan, the Philippines and Singapore, Young continued.

Hong Kong's residential property market has bottomed out and prices have recovered by 10 percent to 15 percent, he said, adding that limited supply will help firm up the prices further.

Hong Kong's office rents appear to have stabilized, too, and a lack of supply in the central business district will underpin recovery, he said.

Toyko's residential market has done well because of low prices and interest rates and incentives to home buyers. But commercial property prices will be under pressure because of oversupply, Young said.

In the Philippines, the supply levels and vacancies have not yet peaked, he said. On the residential property side, the condominium market is oversupplied and investment-driven, he continued, while the landed property market is being supported by low interest rates.

Singapore, meanwhile, will see a moderate recovery too, other Colliers Jardine executives said.

The island-state's private residential market recovered because of low prices, easing some of the oversupply. But recovery in the residential market is dependent upon the pace of economic recovery and the stock market's performance, said executive director Ong Teck Hui.

Oversupply in the residential market has eased considerable since mid-1998 when there were 20,600 unsold units, he said, adding that in the first quarter of 1999 the number had dropped to 13,901 units.

Also, Ong said, prices have begun to rise, going up 5 percent in the first quarter and 10 percent to 15 percent in the second quarter. But, he noted, the price rise would have to be in line with economic recovery as too rapid a rise could hamper sales.

Singapore's prime office property market is also set to turn around, said Tay Huey Ying, an associate director.

Prime office rents are expected to hit bottom in the second half of 1999 and rise 5 percent to 10 percent next year.

On the supply side, an average of 1.29 million square feet of space is expected to be added each year for the next five years, she said, compared with a yearly average of 2.9 million square feet over the past five years.