The general sentiment of Singapore’s real estate market continued increase in the first quarter of 2024. However, the industry players are becoming more cautious regarding the most desirable residential, office and business parks/hi tech space sectors.
The Institute of Real Estate and Urban Studies of the National University of Singapore, Ireus conducted a survey of real estate professionals to assess their general optimism. They pointed to the low unemployment rate as well as an increase in growth rate as the primary motives.
However, respondents to the survey were more skeptical about the potential residential opportunities for prime properties than positive.
The government has stepped up the amount of land owned by the government over the last few quarters. We are worried about an oversupply. There is a possibility that cooling measures are always a concern.
The outlook for the primary residential market is still a bit sluggish. Foreign investors and buyers are still impacted by the Stamp duty for Additional Buyers.
The cost of housing for residential properties increased in 1.4 percent during the first quarter of of 2024. This was less than the 2.8 percent increase recorded in the fourth quarter of 2023. This is the smallest quarter-on-quarter increase since Q3 2021.
Real estate investors didn’t anticipate developers to delay or reduce the launch of new projects, but they were expecting them to increase prices.
In the first quarter of Q1, 22.2 percent of respondents believed that the prices of units for new launches will be slightly higher over the next six months, compared to 42.9 percent in the previous quarter. However, 72.2% of them believed that prices would be similar. This is an increase from 47.6 percent in the previous quarter.
Only 5,6 percent of real estate agents believe that prices will be a little lower.
Ireus found that 27.8 percent of respondents anticipate an averagely or significantly more units over the coming quarter which is a decrease of 29 percentage points when compared to the Q4 2023. But, 72.2% of respondents believe that the numbers will remain at the similar. This is an impressive improvement over the prior quarter’s 42.9 percent.
Nobody in the survey thought the number of units released would decrease.
Buyers of homes are becoming more selective and resistant to price hikes despite the fact that there are numerous new developments. Developers are likely to use a more discerning pricing strategy however, major price adjustments are unlikely due to the construction and land costs already incurred.
Prices and demand are likely to be aided by strong households’ balance sheets, low unemployment, and an economy that is stable.
Ireus The company that conducts the quarterly survey, revealed that respondents were among the most optimistic about the future for the hotel/serviced apartment sector. This optimism was amplified by the booming arrivals of visitors and the revenue they brought in.
Industry professionals also shared an overall positive outlook on the suburban retailing industry and industrial/logistics companies.
Ireus reported that the index of future sentiment that measures sentiment over the next six months it has reached 5.1 points, which is above neutral, in the initial five months in a row.
The current indicator of sentiment that measures the mood for the past six months, has increased by 4.7 from 4.4 in the prior quarter. The mood has improved over the last six months. The index grew from a value of 4.2 in the third quarter of 2023, to an index of 4.4 at the close of 2018.
The macroeconomic indicators of Singapore are generally positive and if they don’t experience any unexpected shocks, they suggest an economy that is healthy which could be able to recover in the next year.
In the Q1 update released by the Ministry of Trade and Industry The economy grew by 2.7 percent annually in the first quarter, which is higher than the 2.2 percent growth reported in the prior quarter. The expected growth rate in 2024 will be between 1 to 3 percent.
The more robust Singapore dollar that helped to reduce inflation is also a factor in the improvement of mood during Q1.
In the residential sector, in which industry professionals were the most optimistic, the responses revealed an overall balance of less than 44%, compared to less than 18% in the prior quarter.
The office industry and business parks were also pessimistic.
The URA data indicate that the office rental index in the central region dropped by 1.7 percent in the first quarter of 2024 after increasing by 27.5 percent over the course of nine quarters.
The rise in the quarter-on-quarter rate of 0.3 percent at the end of 2023 is stark contrast from the 0.3 percent growth in quarterly revenue in the present.
Work-from-home plans can lower morale in offices and can encourage a desire to quality within firms.
A slowdown in the global economy was once again the top risk factor to be aware of however, slightly fewer people mentioned it this time in Q1 – 73.5 percent of those polled, compared to the 89.5 percent who said so in the previous quarter. Another 55.9 percent of respondents in Q1 mentioned the deterioration in the national economy as a significant risk aspect. This is in contrast to 57.9 percent in Q4 of 2023.
Concerns about inflation and interest rates ranked third with 50%, as compared to 44.7 percent in the fourth quarter.
Property executives in Q1 mentioned the increasing liquidity of financing on the market for debt that increased from 42.1 percent in the in the previous quarter to 47.1 percent. In the first quarter, the increasing quantity of development land prompted questions ranging as it increased from 23.7 percent in Q4 to 29.4 percent this quarter.
In Q1 the respondents expressed less worry about the increasing costs of construction, the over-spreading of residential launches, and the government’s efforts to cool down the market.
The most risky was a bubble in real estate that grew to 2,9 percent in Q1 from 2,6 percent in Q4.
The issue of labour and land was identified as the two top issues for the upcoming six months by the people who took part in Q1. Finance (16.7 percent) and building materials (11.1 percent) were other factors that people cited as causes of concern.
The Real Estate Sentiment Index was taken from a survey of top executives in the Singapore real estate sector. This includes developers, consultants professional firms, financial institutions and service providers.