Singapore’s property sector will remain weak for the next two to three years despite the economic recovery, according to Standard and Poor’s.
S&P credit analyst Greg Pau says that despite recent signs of a general economic recovery, any positive effect on the Singapore real estate sector is likely to be modest in the next two to three years.
Pau says any significant increase in property prices and rents will happen only after the current oversupply is reduced.
“Overall, most Singapore property companies exhibit average to below-average credit profiles, given the difficult industry environment and generally aggressive financial profiles,” says Pau in a new S&P report.
S&P believe that whilst some companies have cut debt over the past two years by selling assets to improve their risk profiles, others remain vulnerable because of high debt levels.
Pau says that many Singaporean firms are exposed tin overseas markets.
“The only bright spot in Singapore property is the commercial retail segment, which has demonstrated more resilience than other segments despite weak retail sales,” Pau says.
”This resilience is largely due to limited supply in prime locations and attractiveness of the suburban shopping malls that serve a large population base.”
The property sector led the Singapore economy until the 1997 Asian financial crash which sent property prices reeling.
