We had an interesting evening, starting with some beer tasting followed by dinner. It was good to see Devashish, Ram, Matt and Michelle again, since they've been busy traveling etc. For a change, Clarke Quay seemed a bit empty, looks like the recession has taken a toll. On the other hand, our group continues to grow and we expect to see some more new members next month.
We spent the evening discussing Singapore's residential market and its recent developments. Whether its really picking up in a meaningful way remains an unanswered question, but anecdotally it seems clear that prices are now going up again and have done so for 1-2 months already. There is less evidence of rents going up, which indicates that the upturn in prices is based on expectations and/or sentiment as opposed to a real change in the underlying supply-demand picture. Two alternative, but not necessarily mutually exclusive views on what is driving price increases were advanced. One is that it is driven by liquidity, both from money fleeing the US and Asian money seeking a safe haven. The other is that is mainly based on sentiment linked to the stock market and the "green shoots" in the world economy. Fears of future inflation may also drive investments in real estate.
However, the general view of the group was that although this trend can go on for a while (the rest of this year), it is probably not sustainable due to new supply coming onto the market and expats continuing to leave Singapore (especially in June as the school year is over). We shall see how things develop in this market and other Asian real estate markets. We live in interesting times...
