Singapore Private Residential
Property Report:
Current situation and outlook for foreign investors and expatriates
Private Residential Sales Market Singapore
As Singapore’s fiscal health continues to slip, official statistics correspondingly reflect a somewhat distressed private residential property sector. However, there are also some silver linings in the figures released.
Accordingly to the Urban Redevelopment Authority’s (URA) quarterly statistics, overall prices in Singapore’s private residential property market have eased by 14.1% quarter-on-quarter (qoq) in 1Q 2009. This was more pronounced than the 13.8% qoq decrease based on flash estimates, an indication that the average price contraction accelerated in the last three weeks of 1Q 2009. The deteriorating quarterly price growth of 14.1% qoq was also the most significant since 1990. Almost similar quarterly reduction in price growth was captured in 3Q 98 when prices eased by 13.2% qoq. Specifically, both overall landed and non-landed properties witnessed a more marked fall this quarter, by 9.2% qoq and 15.2% qoq respectively.
In terms of the non-landed market segments, while it is no longer unexpected that all three regions experienced continued reduction in prices, it was the mid-tier Rest of Central Region that recorded the sharpest fall (-17.0% qoq). This was followed by the prime Core Central Region and the mass Outside Central Region that witnessed prices wane by 16.2% and 7.3% respectively. In particular it was the larger volume of home sales in the mass market that aided in the lesser rate of price decline in this region.
Total primary sales in the suburban Outside Central Region in 1Q 2009 reached a level to almost what was achieved in the entire 2008. A total of 1,637 units were sold in the primary market, amounting to 64% of all primary market sales islandwide. On the contrary the prime market managed to garner a meagre 9.5% of all primary market sales. The launch market performed similarly, with 63% of all new launches found in the mass market. This compared to the record low (data available since 1Q 2004) 100 units launched in the prime market in 1Q 2009.
The residential rental market, though not as equally fraught as residential prices, experienced its third consecutive quarterly decline, falling by 8.5% qoq in 1Q 2009. In terms of the non-landed market, it was the prime market with the steepest fall of 10.3% qoq followed by the mid-tier and mass market segments that eased by 7.2% and 6.5% respectively. The weakening rental market illustrated that islandwide rentals are 14.2% shy of the peak achieved in 2Q 2008.
Source: Knight Frank Research
See also : Buyers' Guide and Investors' Guide
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Outlook Private Residential Sales 2009
Going forward, it is anticipated that private home prices and rent will contract sharply in the first half of 2009, but the rate of decline will decelerate consequently. In regard to sale volume, it is unlikely that the low sale volume in the primary market experienced in 2008 would be repeated this year. Based on the encouraging home sale volume achieved by developers in the 1Q 2009, the total primary market sale level this year is projected to range between 6,500 and 8,000, about 50% to 90% higher than that in the previous year.
Source: Knight Frank Research
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Residential Leasing Market Singapore 1st Quarter 2010
According to Urban Redevelopment Authority, the pace of rental decline moderated from 5.2% qoq decline in 2Q 2009, to 2.2% qoq decline in 3Q 2009. The fall was uniform across the three planning regions, with rents of non-landed properties in Core Central Region falling by 2.1%, while that in Rest of the Central Region and Outside Central Region each dropped by 2.3% qoq. Click below map to view core central regions.
Similarly, Knight Frank’s basket indicates rents of all non-landed private residential properties fell marginally in 3Q 2009. The fall was led by non-landed residential properties the prime districts. Specifically, rents of luxury residential properties dropped by 3.8% qoq, while that in other prime districts dropped by 3.9% qoq.
The rental fall was less significant outside the prime districts, with rents of non-landed residential properties typically fell by 1-2% qoq. Rents of non-landed residential properties in Prime East Coast fell 1.5% qoq, while that in Lower Bukit Timah fell 1.4% qoq in 3Q 2009. Meanwhile, rents of non-landed private residential properties in the West declined by 2.0% qoq while that in the East decreased by 2.4% qoq.
The fall in rents of non-landed private residential properties in 3Q 2009 suggested that the marginal increase in 2Q 2009 was seasonal, as leasing activity improved on the back of expatriates locking in leases before the summer holidays. However, with such a marginal decline in 3Q 2009, it suggested that rents of non-landed residential properties are increasing stable. The marginal declines also reflect an easing in the pace of rental decline, as overall private residential sentiments remain positive.
Rate of rental decline for detached homes island wide was slower at –2.7% in 3Q 2009 compared to 4.3% in 2Q 2009.
Source: Knight Frank Research
Copyright © Knight Frank Pte Ltd 2009. This material may not be published, rewritten, or redistributed unless by the intended recipients identified by Knight Frank Pte Ltd.
See also Housing Market Singapore - Rental Guide
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Outlook Residential Leasing 2010
A favourable projected economic recovery for 2010 should set the stage for a property market recovery. If the economy heads for the better beyond 2009, barring any unforeseen circumstances, which can severely affect economic performance, businesses may be more willing to hire expatriates than before. This should however be seen more prominently from end 2010 instead of 1H 2010, as it requires awhile for businesses to assess performance before deciding on corporate expansions involving costlier headcounts.
The rental market can hope to benefit when the integrated resorts are completed, as there may be a number of senior management and foreign gaming experts and professionals who will be seconded to Singapore for strategic management of the IRs.
Additionally, only 5,737 private residential units scheduled for physical completion in 2010, 30% fewer than 8,263 units in 2009. This ensures that tenants will not be further flooded with choices. However, 11,673 and 13,081 units are scheduled for completion in 2011 and 2012. This is likely to add some pressure for the leasing market after 2010.
Rents of private residential properties are expected to increase by about 5% for the whole of 2010, but this will be property specific. There may be a number of well-positioned developments and quality completions, which have opportunities to achieve rental growth exceeding 5%. The Good Class Bungalows where supply is lean will attract senior expatriates who remain for strategic portfolio and who are still willing to pay a rental premiums. As such, rents of GCBs may be able to increase by an average of 15% in 2010.
Source: Knight Frank Research
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