New Reporter
06-07-23, 18:09
In the shadow of peaking markets
Michelle Low
Jun 27, 2023
ONE look at the lunchtime queues in the Market Street Hawker Centre, and it would appear that the CBD is firmly back in business. Office workers are back in their gleaming glass-clad buildings. Raffles Place is bustling.
Singapore’s office market is far from distressed, but pockets of weakness are opening up in prime Grade A CBD space. Rents flattened in the second quarter, with more shadow space emerging and some landlords reportedly coming down on rates. The next six months could see office rents in correction mode, a JLL report said.
Current estimates of shadow space put the volume of potentially vacant floor area at around 600,000 square feet. That’s now competing with new and upcoming office space for tenants. It’s still being paid for, but shadow space puts pressure on office landlords to fill a hole that will open up when their current tenants opt not to renew their leases. A large chunk of such space is being released by occupiers in the newly cost-conscious tech sector.
The latest to disclose mass layoffs was Grab, which last week rolled out 1,000 job cuts. Tech companies from Amazon, Google and Meta to Twitter and Netflix have all axed jobs in the last year and cut their office space requirements.
Supply is also increasing in the housing market. Government land sales for the second half of 2023 will unload enough land for 5,160 residential units, including 560 executive condominium (EC) units. This is 26 per cent higher than the H1 pipeline and the biggest stock to be released in a decade. A mega mixed site in the new Jurong Lake District is also now up for tender, which will test the market for office demand outside the Central Business District.
Meanwhile, the wider economic picture has dimmed discernibly. Economists warned of a heightened risk of a technical recession in the first half of 2023 as factory output contracted further in May, after non-oil domestic exports also fell.
There are signs, too, of cutbacks in consumption. Fine-dining restaurants in Singapore, where you couldn’t get a table for months, now have trouble filling seats. Some high-profile names have already thrown in the towel. Even the wealthy are feeling the pinch. Singapore is, after all, newly crowned as the most expensive city in the world for the rich to live well, a report from Swiss private bank Julius Baer showed.
With private housing prices where they are today, has owning a private property turned into an impossible dream for young Singapore couples? Leslie Yee thinks not. He lays out the numbers for a couple, starting with a new 4-room HDB flat. There are several assumptions to bear in mind, of course, and trade-offs to be considered.
Those now in the market for a new home will have plenty of options next month. Two projects - City Developments Ltd’s The Myst and Hong Leong’s Lentor Hills Residences - start booking sales next week. Two more - SingHaiyi’s Grand Dunman and UOL’s Pinetree Hill - are expected to come to market soon.
Sharply higher stamp duty rates may have stifled demand for residential property from foreigners in the last two months, but buying from permanent residents (PRs) is holding up.
Wealth continues to flow into real estate in Singapore. A buyer from China picked up six conservation shophouses along Circular Road in District 1 for S$80 million in March, Kalpana Rashiwala reports. The 999-year properties were sold by Lim Teck Lee, a century-old family business controlled by Lim Kaling, a founding investor of gaming company Razer.
Our Thailand correspondent Peter Janssen writes that Chinese buyers have moved in on the Bangkok luxury residential market. In the first quarter of this year, 1,747 condo units were sold to Chinese buyers out of a total of 3,773 units sold to foreigners. This was nearly double the 940 units sold to Chinese, out of a total of 2,017 foreign transfers, in the same period last year.
In Singapore, condo resale volume rose in May after taking a dive in April. Overall prices also rose but at a slower pace, while prices in the city fringe region fell. Notably, deals surged in the subsale market - where new units are sold before the project is completed and where transactions are usually subject to a seller’s stamp duty.
The collective sale standoff continues, but it seems owners are now prepared to lower asking prices. King’s Road condo Charming Garden made a third bid for sale at S$175 million with owners resolving to agree to a lower reserve price. At Shenton House, the wheels are in motion for a 10 per cent reduction in reserve price to S$538 million.
Three state land tenders closing this evening will be a litmus test for developer sentiment. How they bid for the plots in Marina Gardens, Tampines and Tengah will also point to where the projects’ pricing may land. Watch out for our stories on the tender results tonight.
https://www.businesstimes.com.sg/property/shadow-peaking-markets
Michelle Low
Jun 27, 2023
ONE look at the lunchtime queues in the Market Street Hawker Centre, and it would appear that the CBD is firmly back in business. Office workers are back in their gleaming glass-clad buildings. Raffles Place is bustling.
Singapore’s office market is far from distressed, but pockets of weakness are opening up in prime Grade A CBD space. Rents flattened in the second quarter, with more shadow space emerging and some landlords reportedly coming down on rates. The next six months could see office rents in correction mode, a JLL report said.
Current estimates of shadow space put the volume of potentially vacant floor area at around 600,000 square feet. That’s now competing with new and upcoming office space for tenants. It’s still being paid for, but shadow space puts pressure on office landlords to fill a hole that will open up when their current tenants opt not to renew their leases. A large chunk of such space is being released by occupiers in the newly cost-conscious tech sector.
The latest to disclose mass layoffs was Grab, which last week rolled out 1,000 job cuts. Tech companies from Amazon, Google and Meta to Twitter and Netflix have all axed jobs in the last year and cut their office space requirements.
Supply is also increasing in the housing market. Government land sales for the second half of 2023 will unload enough land for 5,160 residential units, including 560 executive condominium (EC) units. This is 26 per cent higher than the H1 pipeline and the biggest stock to be released in a decade. A mega mixed site in the new Jurong Lake District is also now up for tender, which will test the market for office demand outside the Central Business District.
Meanwhile, the wider economic picture has dimmed discernibly. Economists warned of a heightened risk of a technical recession in the first half of 2023 as factory output contracted further in May, after non-oil domestic exports also fell.
There are signs, too, of cutbacks in consumption. Fine-dining restaurants in Singapore, where you couldn’t get a table for months, now have trouble filling seats. Some high-profile names have already thrown in the towel. Even the wealthy are feeling the pinch. Singapore is, after all, newly crowned as the most expensive city in the world for the rich to live well, a report from Swiss private bank Julius Baer showed.
With private housing prices where they are today, has owning a private property turned into an impossible dream for young Singapore couples? Leslie Yee thinks not. He lays out the numbers for a couple, starting with a new 4-room HDB flat. There are several assumptions to bear in mind, of course, and trade-offs to be considered.
Those now in the market for a new home will have plenty of options next month. Two projects - City Developments Ltd’s The Myst and Hong Leong’s Lentor Hills Residences - start booking sales next week. Two more - SingHaiyi’s Grand Dunman and UOL’s Pinetree Hill - are expected to come to market soon.
Sharply higher stamp duty rates may have stifled demand for residential property from foreigners in the last two months, but buying from permanent residents (PRs) is holding up.
Wealth continues to flow into real estate in Singapore. A buyer from China picked up six conservation shophouses along Circular Road in District 1 for S$80 million in March, Kalpana Rashiwala reports. The 999-year properties were sold by Lim Teck Lee, a century-old family business controlled by Lim Kaling, a founding investor of gaming company Razer.
Our Thailand correspondent Peter Janssen writes that Chinese buyers have moved in on the Bangkok luxury residential market. In the first quarter of this year, 1,747 condo units were sold to Chinese buyers out of a total of 3,773 units sold to foreigners. This was nearly double the 940 units sold to Chinese, out of a total of 2,017 foreign transfers, in the same period last year.
In Singapore, condo resale volume rose in May after taking a dive in April. Overall prices also rose but at a slower pace, while prices in the city fringe region fell. Notably, deals surged in the subsale market - where new units are sold before the project is completed and where transactions are usually subject to a seller’s stamp duty.
The collective sale standoff continues, but it seems owners are now prepared to lower asking prices. King’s Road condo Charming Garden made a third bid for sale at S$175 million with owners resolving to agree to a lower reserve price. At Shenton House, the wheels are in motion for a 10 per cent reduction in reserve price to S$538 million.
Three state land tenders closing this evening will be a litmus test for developer sentiment. How they bid for the plots in Marina Gardens, Tampines and Tengah will also point to where the projects’ pricing may land. Watch out for our stories on the tender results tonight.
https://www.businesstimes.com.sg/property/shadow-peaking-markets