It is too early to tell if the US sub-prime market woes would derail the real estate boom in Singapore. Nobody, not even the Federal Reserve in the US, knows the extent of the damage done to the stock market and how long the regional bourses will hold out.

Property investor’s sentiment is clearly hurt and the insatiable appetite shown early in the high-end residential segment in Singapore seems to have been abruptly curtailed. The week-long volatility in the stock market has done little to convince anyone that the US sub-prime problem was just a passing shower.

If the crisis of confidence prolongs, some of the financial institutions who had in the first place driven up rents in Central Business District here may have to pack their bags and the demand for office space may subside as a consequence. However, at the moment, if they are feeling the strain they are not showing. So, everybody is still holding the baby together.

On a brighter note, the market liquidity is unlikely to disappear overnight with the overall economic fundamentals looking brightly as ever. Though the local banks are all compromised in their involvements in structured products backed by United States sub-prime mortgages, the potential losses will not significantly exhaust their capital. In other words, the banks still have their shirts on.

Feel-good factors such as job prospects, wage gains and government spending are still intact – which suggests that once the confidence with the stock market is repaired, the real estate bull will test another milestone.

This does not look like another Asian Currency crisis.

Written by Sam Gian
(Singapore's Independent Real Estate Trainer & Consultant)