SINGAPORE dropped from 17th place in 2015 to 75th place in 2016 on JLL's City Momentum Index (CMI).
It has gone from being one of the top rental performers globally in 2014, to languishing in the third quartile of some 120 cities analysed by the real estate consultancy.
While JLL does not publish city names beyond the 20th place, it told The Business Times that Singapore belongs to the same cluster as Perth, Bangkok, Osaka, Shenyang and Jakarta. For comparison, Hong Kong is ranked 24th, and Taipei 26th.
The index tracks cities' short-term socio-economic and real estate momentum, in combination with measures of whether they have the longer-term foundations for success - in terms of education, innovation and environment.
By these metrics, it sounds like Singapore should rank highly. But in capturing the dynamics of a city's real estate market, JLL also considered factors such as its price movement and the attraction of a city's built environment for cross-border capital and corporations.
In fact, short-term indicators - which include rental growth and investment volume - account for about 70 per cent of the index.
These factors killed Singapore's performance. The city-state is undergoing a slowdown in its property market due to cooling measures put in place by the government - both on the supply and credit side. Additional buyer taxes have also tempered foreigners' demand for real estate here.
The year 2015 saw sharp rental corrections and lower levels of real estate investment, despite Singapore being one of the most popular investment destinations globally, JLL said.
According to its data, office rents fell by around 10 per cent in 2015, with a further 10-20 per cent decline forecast for 2016. Rents have also fallen in the retail sector.
According to data from Real Capital Analytics, the inflow of foreign capital into the Singapore property market was stable at US$3.51 billion in 2015, but it was dominated by a development site in Paya Lebar which was sold to a joint venture between Abu Dhabi's sovereign wealth fund and Australian developer Lend Lease for a whopping US$1.28 billion.
When queried on Singapore's rankings, Jeremy Kelly, director of JLL's global research, said: "While its low rank is indicative of weaker momentum, it should be stressed that differences in CMI score between cities that are ranked between 50 and 90 are relatively marginal.
"Currently, the short-term indicators are showing that that there is a short-term oversupply, but it will serve Singapore well in the future."
Looking at the long-term indicators, Singapore is actually doing better than Hong Kong in terms of providing space for real estate needs.
Singapore also has its own "transformative" infrastructure and real estate projects which it will reap benefits from in the longer run, he added.
The top-ranked cities all tend to be building such "transformative" projects that contribute to their economic growth and competitive advantage.
For example, London, which ranked first for the second straight year, is building a US$22 billion Crossrail project - the largest transport scheme in Europe. Its universities Imperial College and UCL are also expanding their campuses. Other developments include the massive regeneration of the Nine Elms zone and extension of the London Underground's Northern Line.
Bangalore, dubbed the "Silicon Valley of India" and which came in the top city in the Asia-Pacific and fourth worldwide, is seeing rapid progress in its technology sector and the presence of international IT giants drive its real estate growth. The city is in the midst of expanding its Namma Metro, and developing Chennai-Bangalore and Mumbai-Bangalore Industrial Corridors to boost commerce.
In its report, the consultancy said: "In producing this Index, JLL's intention is to alert the market to signals of change and to highlight the defining features which are enabling cities to successfully compete in a new economic landscape."
The top cities would thus be those where change is occurring most rapidly. It does not mean that they will provide the most immediately attractive real estate investment environments, as strong momentum can pose both opportunity and risk, it said.