Despite benchmark prices at recent property launches, the upswing in Singapore home prices is only just beginning, according to an analyst at banking giant Citigroup.

Yesterday, Ms Wendy Koh told reporters that the residential market is still in an ‘early phase’ of a cyclical upswing.

The property market recovery starting this year is across the board, she said.

Prior to a pickup in the mid-market segment in the second half of last year, the upturn was clearly visible only in the luxury home sector.

According to Ms Koh, demand continues to outweigh supply and occupancy rates are likely to reach new highs.

Taking into account recent collective sales, real occupancy is already at a record high of 95.7 per cent versus the reported 93.9 per cent, and it will rise further, she said.

That means home prices are expected to keep rising this year and next, she said. The luxury home market will continue to rise by another 10 per cent to 15 per cent this year.

The mid-market segment may go up by 10 to 20 per cent, the mass market by 10 per cent and the Housing Board (HDB) market by 5 to 10 per cent, she said.

The HDB market is helped by the lessening supply of unsold but completed HDB flats, she said. There are now 4,000 such flats, dramatically down from 25,000 units a few years ago.

Ms Koh also said the office market will be strong, with prime Grade A rentals rising from $11.80 per sq ft to $14.50 psf by the end of the year and to $18.50 psf by the end of next year.

She was speaking yesterday at a media conference held alongside the Citigroup Asia Pacific Property Conference, which was closed to the media.

Trade and Industry Minister Lim Hng Kiang made the opening speech, distributed to the media.

He said: ‘Singapore can play an important role as a gateway for global investors to access Asian opportunities via our capital markets.’

A property derivatives market is a potentially exciting area for innovation, he added. If such a market were developed, Singapore would need ‘transparent, reliable and well-followed’ direct property indexes.

Industry players are currently studying the construction of such indexes, he said. These indexes would enhance information on Singapore’s property market and provide benchmarks for structuring property derivatives and other innovative products.

Derivatives are instruments taking their value from another underlying asset, such as a stock or even a stock index.

Generally positive sentiment suggests that this year and the years ahead will be exciting for Asia and its property sector, Mr Lim concluded.

‘I am certain that with judicious planning and sound execution, the sector will see strong growth, sustained by liquidity from the capital markets,’ he said.