Turning points in Singapore’s property markets

PRIVATE home prices in Singapore dipped 0.2 per cent in the second quarter of 2023, the first time the price index has registered a decline in three years. But the bigger takeaway from the latest government data was the significant slowdown in the residential rental market, writes Kalpana Rashiwala. 

Some are now expecting housing rents to fall in the second half, after topping out in April and in the wake of a blistering 30 per cent increase in 2022. Overall, private residential rents are up 57 per cent since bottoming in the third quarter of 2020.

While private housing prices fell in Q2, sales volume continued to rise - in developers’ sales, sub-sales and the secondary market. Liquidity is clearly present. But a rebalancing of demand is perhaps playing out, as buyers weigh options in the new and resale markets at today’s high prices. Analysts anticipate new condo sales will jump in July and in the weeks ahead, with many new launches on offer, though developers may take longer to clear projects.  

Signs point to the HDB resale market peaking, after prices rose 1.5 per cent in Q2, Samuel Oh reports. The rise in prices outpaced the first quarter’s 1 per cent growth but came in below the average 2.5 per cent quarterly growth seen in 2022. 

In the office sector, rents rose at a slower pace in Q2 and may soften further. Shadow space looms large in some buildings, and demand is expected to lag supply in the near term, analysts tell Ry-Anne Lim. The industrial space market, meanwhile, continues to see demand holding up rents but signs of weakness are emerging in the business park sector.

While private condo rents appear to have hit a ceiling, HDB rents rose in June, as tenants priced out of their condos decamped to public housing.  

Over the last six to seven quarters, rents in both private and public housing have risen over 40 per cent. At today’s levels, Leslie Yee believes there are sound reasons why rents could continue to be supported. Provided employment levels stay high and wage growth remains firm, tenants will be able to afford the higher rents, he writes in The Level Ground. Key to the scenario is that Singapore continues to move up the value chain and draw high-income talent to these shores. 

The first of a batch of prime luxury projects in the downtown CBD area has come to market, three months after steeply higher stamp duty rates kicked in for foreign purchasers and for Singaporeans eyeing property for investment. TMW Maxwell opened for previews over the last weekend, with most units priced between S$1.5 million and S$2 million. About 60 per cent of the 324 units are studios sized under 500 sq ft. Prices start at around S$3,100 psf. 

CEL Development, SingHaiyi and Chuan Investments are building TMW Maxwell where Maxwell House stood. Three more new launches are lined up for the CBD, and developers are no doubt watching the Maxwell launch closely for cues on pricing.

City Developments Ltd’s Newport Residences is coming up at the former Fuji Xerox building location, while Perennial Holdings and Alibaba are developing 8 Shenton Way on the AXA Tower plot. IOI Properties’ Marina View Residences is the biggest of the batch, with some 900 units planned - and a hotel - on a sprawling state land site in Marina Bay.

Deals 

Wing Tai pulled out of a S$76.3 million deal to buy Holland Tower in a collective sale. The deal was said to have been derailed as planning conditions required by the developer to rebuild on the designated “Good Class Bungalow Area” site were not met. It’s not clear if the property will go back up for sale.

Top Global, taken private by Indonesian shareholder Sukmawati Widjaja, has sold the ground floor at 15 Scotts to jewellery store House of Hung for S$31.08 million. The sale of the two freehold retail units works out to S$4,828 psf of strata area, below the asking price of S$38.8 million, or around S$6,027 psf, that was indicated when the space was marketed for sale in May. House of Hung operates out of premises at Far East Shopping Centre, which last week was put up for collective sale at a guide price of S$928 million.

With higher stamp duties weighing on returns for residential property, it seems that high-net-worth wealth has turned its attention back to the shophouse market. Shophouse sales rose 7 per cent in the first half of 2023, a Knight Frank report showed. Interest returned after a slow second half of 2022 when transactions plunged after the market raced up in 2021.  

Reit earnings 

Singapore-listed Reits are in the thick of earnings season, and results tracked sector prospects closely. Hospitality Reits did well as revenues rose strongly with the rebound in travel, while many Reits with commercial holdings saw distributions fall, impacted by interest cost and expenses. More asset divestments are expected.

CapitaLand Ascott Trust’s manager eyes stronger second half amid travel recovery

CDLHT posts 23% rise in H1 DPS on stronger portfolio performance

OUE C-Reit posts 23.1 per cent rise in H1 net property income to S$115.3m

CapitaLand China Trust posts 8.8% drop in H1 DPU to S$0.0374

CapitaLand Ascendas Reit H1 DPU declines 2% on higher interest expense, enlarged unit base

Suntec Reit posts 27.7% drop in H1 DPU to S$0.03476