Here is What the Wuhan Coronavirus Might Mean for Singapore Property

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I personally don’t see the coronavirus lowering home prices, because I’m now 300 per cent more willing to buy a property with strong locks and an air filter. But according to actual experts we talked to, the Wuhan coronavirus can in fact make a dent in our property market. Here’s what they have to share:

Opinion 1: The risk to our real estate market depends on the precautions we take now

Alan Cheong, Executive Director of Research & Consultancy at Savills (Singapore), notes that the ball is “in our court, not China’s court“. There’s no longer any uncertainty that an epidemic is occurring, we know it as a fact. The risk to our real estate market depends on whether we can implement effective measures to control its spread in Singapore.

Alan also notes that awareness of the outbreak happened during the festive period, which didn’t coincide with any major launches. However, the stock market has been hit, with Asian stocks plunging today. If we receive information that the virus is worse than reported (e.g. numbers turn out to be under-reported, or the fatality rates are more significant than we thought), then negative sentiment will impact the market across the board; it’s not just real estate that will start trending downward, but a broad range of asset classes.

One area of real estate that’s sure to be hit, however, are marketing trips to China (this is when developers send potential buyers on a holiday-esque trip, to check out their offerings in China). As these all involve major cities in China, it’s likely that these trips are going to stop for the time being.

Opinion 2: Slower sales but a generally stable market, unless a SARS-like situation develops

Dr. Lee Nai Jia, Senior Director and Head of Research at Knight Frank (Singapore), says we might see a slowdown in sales, although the overall real estate market should remain stable.

However, all this assumes the situation remains as is. If the outbreak intensifies, and we have a SARS-like situation, then we may need to revise our outlook. A situation that drastic could result in price growth moving into a negative region.

Opinion 3: The commercial property segment is the one to worry about

Ryan Ong is an editor at 99.co, and an expert on things that go viral (e.g. when he bribes people to share his articles). He feels there a more specific risk to commercial properties.

If coronavirus does turn out to be worse than expected, then tourism takes a hit. There’s a notably higher risk to commercial properties, such as F&B and retail spaces, or properties related to tourism (e.g. hotels), as tenants become more likely to default or even close their businesses.

Even outlets that don’t depend on tourism – such as hawker centres – are likely to suffer, as more Singaporeans choose to eat in rather than risk going out. We saw just such a situation during the six-month SARS outbreak, back in 2003.

Watsons and Guardian, however, can probably pay the year’s rent from selling N-95 masks alone.

Overall conclusion:

When it comes to residential properties, we can expect an initial knee-jerk reaction, with some investors choosing to wait and see. But genuine home buyers are the ones who make up the bulk of the property market right now – and most of them are more concerned with getting the unit they want, than with issues like investment returns.

As such, we don’t think the coronavirus is going to make a genuine home buyer rethink their purchase; but there will be some dip in sales as the pure investors pull back.

Mind you, all of this assumes the unfolding situation doesn’t get much worse. If it does, then you can think of the Wuhan coronavirus as nature’s cooling measure. At least private home prices will become more affordable.

Do you think the Wuhan coronavirus will affect the property market? Voice your thoughts in our comments section or on our Facebook community page.

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