Friday, June 17, 2011

Condo demand comes off! It’s all about future demand, dear!

Hi guys! I am writing this on the plane heading back from China. The last few days have been very fruitful as we looked at various opportunities.

The recent press articles highlighting the sharp slowdown in demand for private homes have certainly reinforced my lack of enthusiasm for residential properties, especially mass market condos. The key is that demand will taper off in line with the government’s cooling measures. This sector also happens to be where the government can release more land to increase supply. I am really not surprised that the take up rate is not that strong.

Prices will hold for the time being as developers are well capitalized at this point. They can hold out for prices that they want. They have bided for very expensive land and they are not likely to take a loss. It will be a tug of war for the next few months and it will be interesting how everything will pan out.

For now, for those of you still in the market, please be very careful of what you are going to acquire.

Your Friend
Andy Ong