New Reporter
02-11-23, 15:48
Largely stable Singapore property market expected for 2024: Savills
Oct 31, 2023
DEVELOPERS are expected to lower their bids for Government Land Sales (GLS) sites due to uncertain market conditions, thinning margins and previous record-breaking bids, but Savills Singapore expects residential values to remain resilient.
In a market-outlook briefing on Tuesday (Oct 31), the real estate consultancy noted that the Additional Buyer’s Stamp Duty (ABSD) has had an impact on both the price and volume of non-landed transactions in the Core Central Region (CCR) in the third quarter.
However, prices of private residential properties islandwide still rose 0.8 per cent during the quarter; Savills expects them to remain flattish in 2024.
The consultancy projects that residential rents could fall by up to 5 per cent with the ramp-up in supply: 17,000 private residential units are expected to be completed in 2023, and another 9,875 units in 2024.
Three major launches are expected in the last quarter of the year; J’den booking sales start on Nov 11, and Watten House and Hillock Green are also in the immediate pipeline. GLS sites such as Lentor Gardens and Marina Gardens Lane are expected to be redeveloped from 2024.
In the office segment, Savills noted that the rents of Grade-A offices in the Central Business District rose for the seventh consecutive quarter in Q3 2023.
Based on the basket of office properties it tracks, the highest rentals are in Marina Bay, at S$12.67 per square foot per month (psf pm), followed by the City Hall area (S$10.10 psf pm) and Raffles Place (S$9.98 psf pm).
In terms of capital values, CBD Grade-A offices have remained stable at S$2,874 psf in Q3.
However, economic challenges have sent vacancies up, as companies have become cautious about their space requirements, and are more likely to renew their leases than to relocate.
Alan Cheong, Savills Singapore’s executive director of research and consultancy, said rents may soften by 2 per cent to 3 per cent as the new supply comes up. “Any decline is expected to be mild, as landlords still have holding power, and the prospect of interest rates peaking reduces pressure on them to slash rents,” he added.
In the industrial sector, Savills expects rents for multiple-user factories to remain unchanged year on year, as businesses are likely to be cautious about expanding amid a potential slowdown in the Singapore economy.
However, as new food factories are completed in the near term, warehouse and logistics rents are likely to rise by up to 3 per cent on a yearly basis.
Cheong is also bullish on retail rents in Orchard Road; he expects them to go up by 3 per cent to 5 per cent year on year in 2024, as tourist arrivals continue growing.
But he believes that suburban malls – resilient during the Covid-19 pandemic – may have “had their day in the sun”: “With more people returning to the offices and travelling, we are forecasting less consumption spend in the residential heartlands. Rents for 2024 are likely to remain flat.”
Investment sales have been hit by higher borrowing costs and the recalibration of the ABSD for foreign buyers, said Cheong. Savills classifies sales as such when the value is S$10 million or higher for transactions across the various real estate segments – GLS land sales and sales in the residential, industrial and office sectors.
Savills has therefore adjusted its full-year estimate of the total value of investment sales in 2023 to between S$19 billion and S$21 billion – down from between S$24 billion and S$25 billion before.
Cheong said: “The relatively low base of 2023 and the trajectory of interest rates now seen to be peaking gives rise to optimism that we may get more deals through the line in 2024.”
On a global scale, investment activity is also expected to rebound in Q3 2024, Savills said. From its survey of 25 country heads of research, it found that more than half of them said they expected a moderate rise in investment in the industrial, retail and residential sectors in 2024.
Paul Tostevin, director of world research at Savills, said: “With inflation seen to have peaked and some possible rate cuts starting in the US next year, the International Monetary Fund has declared a forecast for a soft landing for the economic outlook.
“This view is supported, given the resilience of labour markets, the strength of household and corporate balance sheets, the recovery in real wages, mitigated by higher interest rates, all resulting in sub-trend growth.”
https://www.businesstimes.com.sg/property/largely-stable-singapore-property-market-expected-2024-savills
Oct 31, 2023
DEVELOPERS are expected to lower their bids for Government Land Sales (GLS) sites due to uncertain market conditions, thinning margins and previous record-breaking bids, but Savills Singapore expects residential values to remain resilient.
In a market-outlook briefing on Tuesday (Oct 31), the real estate consultancy noted that the Additional Buyer’s Stamp Duty (ABSD) has had an impact on both the price and volume of non-landed transactions in the Core Central Region (CCR) in the third quarter.
However, prices of private residential properties islandwide still rose 0.8 per cent during the quarter; Savills expects them to remain flattish in 2024.
The consultancy projects that residential rents could fall by up to 5 per cent with the ramp-up in supply: 17,000 private residential units are expected to be completed in 2023, and another 9,875 units in 2024.
Three major launches are expected in the last quarter of the year; J’den booking sales start on Nov 11, and Watten House and Hillock Green are also in the immediate pipeline. GLS sites such as Lentor Gardens and Marina Gardens Lane are expected to be redeveloped from 2024.
In the office segment, Savills noted that the rents of Grade-A offices in the Central Business District rose for the seventh consecutive quarter in Q3 2023.
Based on the basket of office properties it tracks, the highest rentals are in Marina Bay, at S$12.67 per square foot per month (psf pm), followed by the City Hall area (S$10.10 psf pm) and Raffles Place (S$9.98 psf pm).
In terms of capital values, CBD Grade-A offices have remained stable at S$2,874 psf in Q3.
However, economic challenges have sent vacancies up, as companies have become cautious about their space requirements, and are more likely to renew their leases than to relocate.
Alan Cheong, Savills Singapore’s executive director of research and consultancy, said rents may soften by 2 per cent to 3 per cent as the new supply comes up. “Any decline is expected to be mild, as landlords still have holding power, and the prospect of interest rates peaking reduces pressure on them to slash rents,” he added.
In the industrial sector, Savills expects rents for multiple-user factories to remain unchanged year on year, as businesses are likely to be cautious about expanding amid a potential slowdown in the Singapore economy.
However, as new food factories are completed in the near term, warehouse and logistics rents are likely to rise by up to 3 per cent on a yearly basis.
Cheong is also bullish on retail rents in Orchard Road; he expects them to go up by 3 per cent to 5 per cent year on year in 2024, as tourist arrivals continue growing.
But he believes that suburban malls – resilient during the Covid-19 pandemic – may have “had their day in the sun”: “With more people returning to the offices and travelling, we are forecasting less consumption spend in the residential heartlands. Rents for 2024 are likely to remain flat.”
Investment sales have been hit by higher borrowing costs and the recalibration of the ABSD for foreign buyers, said Cheong. Savills classifies sales as such when the value is S$10 million or higher for transactions across the various real estate segments – GLS land sales and sales in the residential, industrial and office sectors.
Savills has therefore adjusted its full-year estimate of the total value of investment sales in 2023 to between S$19 billion and S$21 billion – down from between S$24 billion and S$25 billion before.
Cheong said: “The relatively low base of 2023 and the trajectory of interest rates now seen to be peaking gives rise to optimism that we may get more deals through the line in 2024.”
On a global scale, investment activity is also expected to rebound in Q3 2024, Savills said. From its survey of 25 country heads of research, it found that more than half of them said they expected a moderate rise in investment in the industrial, retail and residential sectors in 2024.
Paul Tostevin, director of world research at Savills, said: “With inflation seen to have peaked and some possible rate cuts starting in the US next year, the International Monetary Fund has declared a forecast for a soft landing for the economic outlook.
“This view is supported, given the resilience of labour markets, the strength of household and corporate balance sheets, the recovery in real wages, mitigated by higher interest rates, all resulting in sub-trend growth.”
https://www.businesstimes.com.sg/property/largely-stable-singapore-property-market-expected-2024-savills