Singapore’s property market has rebounded from the bottom of the table in 2017 to third place in 2018, drastically improving its investment prospect rankings.
The office and residential sectors are said to have bottomed out, following a huge resurgence in investor sentiment this year.
A real estate forecast report published by the Urban Land Institute (ULI) and PwC, Emerging Trends in Real Estate Asia Pacific 2018 report noted that office rents in Singapore have firmed earlier than expected. The completion of CapitaLand Commercial Trust’s S$2.09 billion acquisition of Asia Square Tower 2 from BlackRock has also set a new benchmark for valuations for grade A office spaces.
The residential market experienced rising transactions and a slight uptick in pricing. Sales of developer sites have also surged amid tightening land supply as developers replenishes their depleted land bank.
The residential market rebound is boosted by a partial lifting of government cooling measures which relaxed the conditions of seller’s stamp duty in March this year.
There are also some respondents who think a bottoming in Singapore’s office property market as premature. They think that business confidence is still low, supply abounds, and tenants are not really expanding.
They feel that it is challenging to bring foreign workers in because the government has responded to local concerns to protect jobs, and at the same time a lot of the European banks are downsizing, which hits demand for space.
Colin Galloway, ULI consultant and principal author of the report, said it is “sentiment ” that has moved Singapore from second- last in a list of 22 investment destinations to third place. Investors want to get in early on the upturn cycle, and are okay even if future performance shows that the market has not yet reached its trough and it continues sideways for a while.
“If you get in early, then a lot of people don’t mind too much if they have to hold the assets for a couple of years while the market turns around. That’s not a big deal for them… if they lose two years simply because the market is slow to turn,” said Mr Galloway.