Residential:
• Unsurprisingly, URA’s overall residential price index for 4Q 2018 took a turn after 5 consecutive quarters of recovery to register a slight decline of -0.1%; this decline can be attributed to the combined impact of the July cooling measures and revised guidelines introduced in the second half of 2018.
Prices seemed to have been dragged down by transactions in the CCR (-1.0% q-o-q) and landed property segment (-2.0% q-o-q), while the other two segments saw healthy growth, especially in the RCR region (+1.8% q-o-q). This can be attributed to successful launches in the quarter such as Parc Esta and Stirling Residences. Nevertheless, the overall residential price index still registered a robust 7.9% recovery in 2018.
• For the whole of 2018, developers sold 8,795 units, 16.8% lower than last year’s 10,566 units, despite having launched more units (8,769 in 2018 compared to 6,020 in 2017). It appears that the cooling measures are taking their toll on sales, with recent launches showing disappointing take-up rates.
• In addition to 35,649 unsold units (including ECs) with planning approval, there is a potential supply of 9,800 units from GLS sites and awarded en-bloc sites that have not been granted planning approval. CBRE expects that the bulk of these will be launched this year with some spill-over into 2020.
• 2019 will be a year of which the home buyer will be spoilt for choice with the buffet of projects coming onto the market. Amid cautious and tepid sentiments, demand will also be kept in check with tighter financing requirements as well as higher financing costs in a rising interest rate environment. CBRE expects a more moderate and sustainable pace of growth in prices, with take-up to be driven by the pace of launches.
Office:
• Despite a relatively subdued performance in Q4 2018, indicators for the office market were largely positive for the whole year. The rental index registered a slower pace of 0.5% q-o-q, slowing from the 2.5% in Q3 2018.
• For the whole year however, rents have increased 7.4%. Flight to quality and new builts continue to feature heavily. Vacancy for Category 1 offices tightened from 15.7% a year ago to 11.0%. Category 2 offices, on the other hand, saw vacancy increasing from 11.2% to 12.6% over the same period.
• Overall, the outlook appears positive for the next couple of years. Demand is steady while supply is tapering; interest for upcoming projects is also fairly strong with some notable pre-commitments already executed in 2019 and 2020. That said, it will be important to monitor underlying economic growth with trade risks and heightening market volatility.
Retail:
• URA’s retail property rental index for the Central Region increased by 1.2% q-o-q in Q4 2018, after a slight decline in the previous quarter. For the whole of 2018, retail rents still registered a marginal decline of 1.0%, but at a slower rate as compared to the decline of 4.7% in 2017. This shows that there is still underlying uncertainty in the sector, despite the market showing positive signs from a gradual increase in retail sales and tourism growth.
• The performance of malls in the secondary locations and corridors is still showing weakness, as vacancies in the Downtown core and Fringe areas continued to increase. The shift in tenancy mix towards activity-based retail and pop-up concepts could also put a dent to average rents as these tenants typically pay lower rentals.
• CBRE expects to see some rental growth in 2019, with the momentum will be mainly driven by prime properties. In the mid to long term, a strong rebound is unlikely as challenges still plague the market. Aside from the tight domestic labour market and competitive e-commerce scene, there are growing concerns over China’s slowdown from the impact of the trade conflict, the Chinese government’s crackdown on overseas purchases and the alignment of luxury goods prices in China to global standards, which could potentially dent tourist spending and retail sales in Singapore.
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• Unsurprisingly, URA’s overall residential price index for 4Q 2018 took a turn after 5 consecutive quarters of recovery to register a slight decline of -0.1%; this decline can be attributed to the combined impact of the July cooling measures and revised guidelines introduced in the second half of 2018.
Prices seemed to have been dragged down by transactions in the CCR (-1.0% q-o-q) and landed property segment (-2.0% q-o-q), while the other two segments saw healthy growth, especially in the RCR region (+1.8% q-o-q). This can be attributed to successful launches in the quarter such as Parc Esta and Stirling Residences. Nevertheless, the overall residential price index still registered a robust 7.9% recovery in 2018.
• For the whole of 2018, developers sold 8,795 units, 16.8% lower than last year’s 10,566 units, despite having launched more units (8,769 in 2018 compared to 6,020 in 2017). It appears that the cooling measures are taking their toll on sales, with recent launches showing disappointing take-up rates.
• In addition to 35,649 unsold units (including ECs) with planning approval, there is a potential supply of 9,800 units from GLS sites and awarded en-bloc sites that have not been granted planning approval. CBRE expects that the bulk of these will be launched this year with some spill-over into 2020.
• 2019 will be a year of which the home buyer will be spoilt for choice with the buffet of projects coming onto the market. Amid cautious and tepid sentiments, demand will also be kept in check with tighter financing requirements as well as higher financing costs in a rising interest rate environment. CBRE expects a more moderate and sustainable pace of growth in prices, with take-up to be driven by the pace of launches.
Office:
• Despite a relatively subdued performance in Q4 2018, indicators for the office market were largely positive for the whole year. The rental index registered a slower pace of 0.5% q-o-q, slowing from the 2.5% in Q3 2018.
• For the whole year however, rents have increased 7.4%. Flight to quality and new builts continue to feature heavily. Vacancy for Category 1 offices tightened from 15.7% a year ago to 11.0%. Category 2 offices, on the other hand, saw vacancy increasing from 11.2% to 12.6% over the same period.
• Overall, the outlook appears positive for the next couple of years. Demand is steady while supply is tapering; interest for upcoming projects is also fairly strong with some notable pre-commitments already executed in 2019 and 2020. That said, it will be important to monitor underlying economic growth with trade risks and heightening market volatility.
Retail:
• URA’s retail property rental index for the Central Region increased by 1.2% q-o-q in Q4 2018, after a slight decline in the previous quarter. For the whole of 2018, retail rents still registered a marginal decline of 1.0%, but at a slower rate as compared to the decline of 4.7% in 2017. This shows that there is still underlying uncertainty in the sector, despite the market showing positive signs from a gradual increase in retail sales and tourism growth.
• The performance of malls in the secondary locations and corridors is still showing weakness, as vacancies in the Downtown core and Fringe areas continued to increase. The shift in tenancy mix towards activity-based retail and pop-up concepts could also put a dent to average rents as these tenants typically pay lower rentals.
• CBRE expects to see some rental growth in 2019, with the momentum will be mainly driven by prime properties. In the mid to long term, a strong rebound is unlikely as challenges still plague the market. Aside from the tight domestic labour market and competitive e-commerce scene, there are growing concerns over China’s slowdown from the impact of the trade conflict, the Chinese government’s crackdown on overseas purchases and the alignment of luxury goods prices in China to global standards, which could potentially dent tourist spending and retail sales in Singapore.
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Disclaimer:
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.