Singapore’s housing market, which was hot just a few years ago, is starting to cool. Prices for private real estate slipped past In 2023, this figure will be 6.8%, which is lower than the 8.6% recorded a year earlier. Resale prices of the city’s world-class public housing are also falling. I’m just jumping 4.8% in 2023 compared to 10.4% in 2022.
While this may be good news for Singaporeans looking for a new place to live, the situation has been tougher for the city’s property companies and developers, some of which have reported a sharp drop in revenue. benefit as the Singapore government tried to take control of the market.
Singapore officials have described their so-called cooling measures as a way to return the market to owner-occupiers and “relax demand” from local and foreign investors for the city’s residential properties.
“If we don’t take early proactive measures, we may see an increase in investment from both locals and foreigners, and this will add stress to Singaporeans who are looking to buy residential properties primarily for owner occupancy,” Desmond Lee, Singaporean Director Minister of National Development, told reporters in April 2023, following the government’s latest cooling measures.
However, the market was still hot enough for PropNex, a real estate firm with no real estate projects of its own, to qualify for the program. Luckthe first Southeast Asia 500 list, ranking the region’s largest companies by revenue.
Singapore-based PropNex, the only real estate company on the list, makes most of its income from commissions collected by its army of real estate agents. PropNex accounted for 63% of property sales in Singapore last year, according to the company’s annual report. (According to the Singapore government, the total number of transactions and the value of property sales are approximately $48,500 and $45.7 billion respectively). The realtor earned $624 million in revenue in 2023, enough to rank 395th.
“We did exceptionally well,” says PropNex CEO Ismail Ghafoor, noting that the company had record market share last year.
PropNex’s revenue fell compared with 2021 and 2022, the peak of Singapore’s recent property boom. Like many cities, house prices in Singapore have risen as families stuck at home reconsider their living conditions. Housing supply has also been limited as the pandemic has disrupted construction schedules.
The influx of new migrants flocking to the relatively more open Singapore (which eased COVID measures earlier than many other Asian countries) has also boosted private housing prices.
Lionel Ng – Bloomberg/Getty Images
“When people didn’t travel for one or two years, they had a lot more savings. And when they were forced to work from home, many people realized that perhaps their current home was not ideal,” says Ghafoor.
Real estate sentiment has soured over the past year. Ghafoor blames higher interest rates, ongoing concerns over the conflict in Ukraine and, importantly, Singapore’s property cooling measures.
But Ghafoor is hopeful that Singapore’s property market will recover quickly. “This year should be about the same as last year, maybe a little better. But we are very excited to move forward into 2025 and beyond,” he says.
What is PropNex?
Ghafoor became interested in real estate while serving full-time in the Singapore Army. In his free time, he and his wife, also in the military, attended open houses to learn more about the market. The two founded their own real estate firm, Nooris Consultants, in 1996, after Ghafoor completed 13 years of service.
In 2000, Gafur became a partner in three other real estate firms. install PropNex. The company started out by helping Singaporeans sell their public housing flats (known locally as HDB flats, after the city’s Housing Development Board) and then expanded to cover private ownership and corporate rentals.
PropNex is now the largest listed property agency in the country after debuting on the Singapore Stock Exchange in 2018. PropNex’s 12,000 agents account for a third of all registered agents in Singapore.
Most of PropNex’s revenue comes from Singapore, but the agency plans to expand internationally. Its overseas presence currently includes Indonesia, Malaysia, Vietnam, Cambodia and Australia.
What’s happening to the Singapore property market?
In Singapore, the homeownership rate is almost 90%. This is partly due to government policies that have long viewed home ownership as key to nation-building.
Public housing makes up the majority of Singapore’s residential real estate. Leonard Tay, head of Singapore research at global property consultancy Knight Frank, estimates that about 72% of Singapore’s 1.5 million homes are HDB. Singapore offers support to those wishing to purchase public housing: now more than 80% of Singaporeans to live in houses built by the government, while the rest live in residential buildings built by the private sector.
Lorin Ishak – Bloomberg/Getty Images
The concept of “public housing” sometimes gets a bad rap in some other housing markets. However, in Singapore, public houses are well built, well maintained and in high demand. sale for over S$1 million (US$739,000) on the open market.
These sale prices could give sellers the “financial fuel” to move into private housing, says Tay. Due to less supply, these homes tend to cost more than their HDB counterparts.
Ghafoor notes that a significant portion of PropNex’s revenue comes from the HDB market, which is less exposed to the influence of the Singapore government. cooling measures. Fees from public housing resales accounted for 18% of PropNex’s revenue in 2023, up from 15% a year earlier. The estate agency’s share of the rental market also rose to 22% in 2023, up from 17%.
However, private real estate sales and related activities accounted for 56% of PropNex’s 2023 revenue. This sector is much more susceptible to government measures to reduce price increases.
Singapore is trying to contain the property market from the end of 2022. For example, he forced owners of private houses under the age of 55 wait There were 15 months between selling the house and moving into public housing.
The waiting period targets the practice of some Singaporeans trying to take advantage of the price difference between private and public housing. Private homeowners can sell their private property, buy an HDB flat on the open market and pocket the difference. Singapore speaks During the waiting period, priority is given to public housing for Singaporeans with more pressing needs.
But despite the drop in sales, Ghafoor believes Singapore’s cooling measures are a good thing.
These restrictions ensure that only “true buyers enter the market with a desire to hold, preserve and grow, meaning property prices remain more resilient in the face of unforeseen circumstances,” he says.
Rampant speculation means property prices will “go up and down,” says Ghafoor. “This does not provide stability for investors.”