Singapore Property Market Outlook 2023
Join us as we uncover the complex web of forces shaping Singapore’s ever-evolving property landscape and see why property prices keep on rising.
As developers move funds away from projects near completion, new residential launches such as Lumina Grand EC should remain modest this year. Yet local demand should remain strong and rental prices resilient.
Office Real Estate
After an uninspiring start to 2023, the office property market rebounded with 87 deals totalling $566 million in Q2. This marked an encouraging sign and confirmed the resilience of this sector.
Demand for office space remains strong with numerous companies transitioning from flexible workspace operators to more permanent offices across the country. Furthermore, adding smaller bite-sized offices should help support demand – particularly within Core Central regions.
Because supply in the resale market remains limited and rental prices continue to climb, many developers are unwilling to lower project prices – leading to slower price rises for non-landed private properties than over the last three years. Experts do not anticipate an overall decline in property prices; rather, they anticipate higher rent growth rates in city centres for Grade A office spaces.
Industrial Real Estate
Singapore’s strategic position and pro-business policies continue to attract investors, as evidenced by investment sales volumes surpassing office and industrial property for the first time since H2 2020.
Still, the ample supply pipeline will limit conventional factory and business park growth in 2023 while simultaneously decreasing warehouse demand, despite secular trends like automation and digitalisation driving demand for state-of-the-art facilities with flexible floor plans.
Higher interest rates could reduce investor appetite for income producing properties; however, private equity funds may resume their acquisitive activity focused on high-specification industrial assets.
E-commerce tenants require warehouse facilities with specific ceiling height and floor loading specifications for maximum profitability, making ramp-up warehouse developments with these specifications very popular with investors. Furthermore, investors may consider purchasing freehold industrial properties on privately owned land; this would enable them to expand and reconvert into different uses later while increasing future value; but such investments require significant upfront capital outlay.
Residential Real Estate
Residential real estate markets should remain active through 2023. According to Mr Mak from ERA Realty, HDB upgraders and those seeking relief from rising rents will continue to drive demand for resale flats.
However, the market could slow slightly in the second half of 2018 due to rising interest rates and developers testing new benchmark prices for their new launches – this could cause home price growth to slow, according to him.
Residential rental markets should see improvement during the second half of 2019 as more private residential projects near completion and help address shortages of units, pushing rents downward. However, overall trends could take time as supply catches up with demand only by 2024.
Commercial Real Estate
Singapore’s commercial real estate market is driven by both local and global factors, including regulatory changes, COVID-19 pandemic, geopolitical tensions between China and US and US-China trade war. Investors need to be aware of these trends to make informed investment decisions in property.
Although prices have somewhat softened since September’s cooling measures and higher interest rates, it is unlikely they will decrease significantly due to developers incurring significant costs through collective enbloc sales or government land sales – leaving limited margins.
Industrial property market performance improved significantly during the second quarter, thanks to increasing business demand for larger spaces to manufacture or store goods. This trend should help cushion industry from current uncertainty; however, its ultimate success ultimately rests with how resale properties perform with regards to price and leasing volume.