A series of blockbuster land deals in Singapore this year signal the property market is set to break out of its prolonged slump next year.
A Chinese group lobbed a winning record bid for a residential plot, while Guocoland paid a record per-square-foot price for an office development site in the Central Business District. Office rents last quarter rose for the first time in 2½ years and home prices ended a four-year slide.
The spending spree may not be over, with more than $3.3 billion of land deals set to be completed by the end of the year, pushing the annual total to $14 billion, the highest since 2011.
Singapore’s residential and office market has passed its inflection point, embarking on an exciting recovery journey, said an analyst.
With brighter economic prospects and improved market sentiment in the next two to three years, developers are increasingly sourcing land sites to ride the wave of growth for the rest of the 10 years.
In March Singapore has relaxed from some home-buying rules, unleashing inhibited demand in a market where property relation as a proportion of social unit assets is near a record low.
Home prices could rise as much as 10% next year, according to analysts from Morgan Stanley, BNP Paribas, and UOB Kay Hian.
Brokers predict office rents will increase 7% to 9% as an over-supply of space eases.
The resurgence in deals suggests Singapore is on course to emulate Hong Kong’s red-hot property market, where home prices have to record highs – following a growth in land prices last year – and office towers have fetched eye-popping prices.
Residential and Grade A office assets are poised to remain investor favorites for the rest of this year and next year.
Residential land sales were raised by redevelopment deals, where a unit of owners come together to sell the whole apartment, allowing developers to sound them down and build anew in a city.
This year these deals have topped with approx $6.3 billion, and this is a record since 2007.
Adapted from: The Straits Times, 15 November 2017