Delivering a bullish outlook on Singapore’s property market, Citigroup’s research team yesterday said residential rents could rise 30-40 per cent this year as occupancy hits record highs.

‘Taking into account the recent en bloc sales, we believe real occupancy is already at a record high of 95.7 per cent (as opposed to the official figure of 93.9 per cent),’ said Citigroup analyst Wendy Koh, who covers the Singapore property market.

And on the back of good demand, residential property prices could go up by another 12-15 per cent this year, outstripping last year’s 10.2 per cent increase.

The increase is due to a supply shortfall. Just 5,000 units will be completed this year, and Ms Koh predicts that demand will be substantially higher. Last year, demand for new homes hit 9,000. And over the past 10 years, demand for homes has averaged about 8,000 units a year.

The shortage is expected to continue into 2008, when just 7,000 new homes will become available.

Ms Koh said the luxury market will see a 10-15 per cent price upside in 2007, while prices in the mid-tier segment will grow by 10-20 per cent.

Citigroup is also bullish on the HDB resale market - which has long been stagnant - seeing a 5-10 per cent upside for resale prices of HDB flats. ‘The HDB resale market will likely pick up in both volume and prices, which would in turn help support the mass market segment,’ said the bank in its latest research note. Ms Koh predicted that mass market prices will climb by about 10 per cent this year.

Office rents will also similarly rise, she said. Rents could hit $14.50 psf by end-2007 and $18.50 psf by 2008.

The bank recommended that investors buy shares of City Developments, Wing Tai, Allgreen Properties and Keppel Land.

Source: The Business Times, 24 April 2007