Property market of Singapore has improved extremely in its investment prospect rankings, going from near the bottom of the table in 2017 to third place in 2018.
This follows a huge resurgence in investor opinion this year, especially in the office and residential sectors – two markets that are said to have bottomed out, although a survey of 600 real estate professionals reveals some skeptics who think the “bottoming” may be premature.
The appearing Trends in Real Estate Asia Pacific 2018 report, a real estate forecast published by the Urban Land Institute (ULI) and PwC, says that office rents in Singapore have firmed before than expected, while the completion of CapitaLand Commercial Trust’s mega S$2.09 billion acquisition of Asia Square Tower 2 from BlackRock has galvanised the local market and set a new benchmark for evaluation.
The residential sector is also showing signs of recovery with going up transactions and a small increase in pricing for the first time within 4 years. Sales of developer sites have also surged amid tightening supply as developers also try to obtain to replenish their land banks.
“The rebound seems likely to be sustainable, given several years of pent-up consumer demand. The Chinese developers have been very progressive in buying land, pushing up land auction prices for residential sites significantly through 2017,” According to report.
The residential market rebound could have been helped by a partial raise up of government cooling system measures, which very easy the conditions of the seller’s stamp duty in March this year. This does little to help investment funds, however, because surplus costs in the form of other applicable stamp duties are still a balk on returns.
The report is based on the belief of more than 700 real-estate professionals, including investors, developers, company owners, brokers, advisers etc.
There were some responders, who see talk of a worst in Singapore’s office property market as premature. According to one fund manager interviewed, business assurance is still low, supply feature, and renters are not really growing.
According to a fund manager “It’s challenging to bring foreign workers in because the government has reacted to local concerns to protect jobs, at the same time, a lot of the European banks are downsizing, which hits demand for space. I don’t wanna be negative, but we are not seeing a big pipeline of deals that interest us,”
According to Colin Galloway, ULI consultant and principal author of the report, it is “sentiment basically” that has moved Singapore from second- last in a list of 22 investment destinations to third place. Investors wanna get in advance the upturn cycle and are okay if future shows that the market has not yet reached its trough and it continues oblique for a while.
“Investors won’t look at the cities that are at the top; they look at the cities that are at the bottom because they are looking for that response from when blood is on the streets.
“If you get in early, then a lot of people don’t mind overmuch if they have to hold the assets for a couple of years. That’s not a good deal for them… if they lose two years simply because the market is long-play to turn,” said Mr. Galloway.
Adapted from: The Business Times, 22 November 2017