THE sentiment of real estate players had marginally improved in the second quarter, according to the latest survey by the Real Estate Developers' Association of Singapore (Redas) and the National University of Singapore (NUS).
The Composite Sentiment Index, which is an indicator for overall real estate market sentiment in Singapore, edged up to 4.7 in Q2, from 4.6 in Q1.
The Current Sentiment Index, where respondents rate overall Singapore real estate market conditions now as compared to six months ago, increased nominally from 4.8 in Q1 to 4.9 in Q2.
Similarly, the Future Sentiment Index, where respondents rate overall property conditions over the next six months, increased from 4.4 in Q1 to 4.5 in Q2.
The Real Estate Sentiment Index (RESI) is based on a quarterly structured questionnaire survey conducted among senior executives of Redas member-firms - mostly developers. About 70 respondents - largely the same - took part in the Q1 and Q2 surveys.
The indexes range from 0 to 10, with a score of above five showing improving market conditions and of below five indicating deteriorating conditions.
According to respondents, the top three potential risks that may adversely impact market sentiments are a slowdown in the global economy (cited by 96 per cent of respondents), an oversupply of new property launches (61 per cent) and an oversupply of new development land (56 per cent).
The survey also found that fewer developers are likely to increase private residential unit launches and the majority of them expect unit price to hold at the current level.
While the general tone was one of caution, industry players indicated varying sentiments about the different property sectors.
Hotels were the clear favourites with a net positive sentiment of 33 per cent while the office sector continued to draw pessimism from the respondents with a net negative sentiment of 31 per cent.
This underperformance of the office sector is expected to continue in the near term owing to uncertainty in global economic outlook.
"The uncertainty arising from the European sovereign debt crisis instills some degrees of risk-aversion in developers and buyers. Some developers are adopting the 'wait and see' approach by moderating down new launches to the market," said Professor Sing Tien Goo of NUS' Department of Real Estate.