What’s behind the resilience of Singapore real estate?

Updated from : The Business Times, 16 Sep 2021

THE housing market has again taken centre stage in what many have described as a property boom, with homebuyers and investors steadily picking up residential properties of all types.

Across the board, price increases appear to be on the cards, be it for landed homes including Good Class Bungalows (GCBs), condominiums, executive condominiums (ECs), apartments in integrated developments, or Housing Board (HDB) resale flats.

The possibility of fresh cooling measures does not seem to have dampened spirits significantly. In fact, analysts have observed the “fear of missing out” taking root among some buyers.

Buzz is also growing in the collective-sale scene, albeit still a far cry from the frenzy of the last cycle that ended in mid-2018.

In this edition of The Business Times’ property supplement, we delve into the segments that have been driving the resilience of the Singapore property market in the midst of a global pandemic.

For instance, recent private residential project launches have been breaking price records. Could these new-launch projects pressure prices upwards for other condominiums in the vicinity?

Similarly, HDB flat owners are enjoying a seller’s market, with resale prices climbing and more buyers paying cash-over-valuation amounts. August’s prices are just 0.1 per cent off the peak in April 2013, according to SRX data. Is the double- digit year-on-year price growth seen in the second quarter of 2021 a cause for concern?

There are also hints that the GCB market may be poised for a surge in transaction prices, following a “sudden reawakening”. The supplement examines anecdotal and empirical evidence as to whether this potentially nascent trend has legs. Investors weighing whether they should purchase new or resale residential properties may refer to the analysis of non-landed homes’ financial performance in a special report, which also lists out the pros and cons of the two options.

In addition, the residential components of integrated developments have long captured the attention of purchasers. Find out why some of these apartments are able to command price premiums over comparable condominiums nearby.

It’s not all rosy, however. Much has been said about the K-shaped trajectory for economic recovery, and a similar picture can be painted for Singapore’s real estate market. Fates are diverging for the different sub- and micro-segments, even as the residential upcycle continues to hog the spotlight.

As a whole, the landed housing segment continues to shine. More buyers, cooped up at home during the pandemic, are looking for bigger houses. Still, some districts saw bigger price gains for landed homes than in other locations.

The supplement thus compares the top and worst performers by transaction volumes, and also identifies where the next hotspots for landed housing might emerge.

In the rental market for private homes, tenant profiles are changing. Will the fresh demand support a recovery in rents?

Rents of Grade A and B offices in the central business district have been growing further apart, in yet another example of uneven recovery paths. Read about how this comes amid a thriving flexible-workspace sector, which has presented a double-edged sword: in part bolstering leasing demand for prime Grade A offices, while also drawing potential tenants away from traditional spaces in Grade B buildings.

Also in the office sector, more occupiers have been eyeing locations farther away from the city centre to woo talent, while others rejig their real estate footprint to enable employees to work in less-dense spaces. Does this mean tenants might take up more office space to achieve de-densification? And which decentralised office submarkets will see stronger growth prospects?

As for industrial real estate, the robust growth momentum has persisted. New warehouse supply is slated to come online, with notable projects in Singapore’s western region including Logos EHub, which accommodates a wide spectrum of e-commerce uses. Find out more about what industrial occupiers are seeking and the latest demand drivers, in this supplement.

Over on the retail front, a long-awaited code of conduct has been rolled out to level the playing field for tenants and landlords, as the sector continues to trudge through its recuperation from the pandemic’s pummelling.

The new code aims for fair and balanced lease negotiations. Desmond Sim, Edmund Tie CEO and a member of the Fair Tenancy Industry Committee, notes: “By eliminating unfair practices, it allows both the landlord and tenant to focus on bringing sustainable values to the retail sector.”

In the meantime, the trade mix at Singapore’s malls has continued to evolve. This supplement lays out the retail categories that are in vogue, as well as those losing flavour. As more shoppers venture online, what might our malls look like in the future?

And in the property investment sales market, total deal values in the year to date have already almost matched 2020’s total, buttressed by the residential, office and industrial sectors. If the potential key transactions in the pipeline materialise, Singapore’s property investment sales may soon rebound to pre-pandemic levels.

JLL Singapore’s head of research and consultancy Tay Huey Ying describes the Republic as well-positioned to tap on the liquidity-flush global capital market, given its reputation as a safe investment haven backed by sound property market fundamentals.