Singapore
Commentary on URA Q2 2024 statistics - Office, Retail and Residential
July 26, 2024
Associated Contact
Melvin Lin
Head of Marketing & Communications, Singapore
By Tricia Song (宋明蔚), Head of Research, Southeast Asia, CBRE
Office
• The Singapore office rental market appears to have demonstrated a strong rebound in Q2 2024, with the URA office rental index (Central Region) increasing by 3.1% in Q2 2024. This marks a reversal from the previous quarter’s 1.7% decline. Consequently, office rents in the Central Region have risen by 1.3% year -to-date in the first half of 2024.
• Prime CBD office space has seen particularly strong rental increase, as indicated by the performance of Category 1 office buildings. The median rents (by contract date) experienced an increase of 4.0% q-o-q in Q2 2024. This uptick can be attributed to increased demand for high-quality office space in prime locations. Although the office market has been primarily characterised by renewal leases due to occupier’s cost-conscious stance amid high interest rate and capital-intensive environment, relocation activities have also been on the rise. These occupiers are prioritizing space quality over size and are willing to pay premium rents to secure desirable locations. CBRE Research notes that legal firms and some tech companies have been driving demand, as they seek spaces in prime locations to attract and retain talent.
• Despite the positive rental growth, market challenges persist. Economic uncertainties and ongoing workplace changes continue to impact the sector. Additionally, the recent completion of IOI Central Boulevard Towers has increased office supply, providing tenants with more options and potentially moderating rental growth as landlords adjust their pricing strategies to maintain occupancy.
Table 1: Median rentals based on contract date
1 Refers to office space in buildings located in core business areas in Downtown Core and Orchard Planning Area which are relatively modern or recently refurbished, command relatively high rentals and have large floor plate size and gross floor area.
2 Refers to the remaining office space in Singapore which are not included in “Category 1”
Source: URA
Outlook
• According to URA data, net absorption has been weak and vacancies have increased, but rents had actually moved up quite substantially in Q2 2024. According to CBRE Research data, Q2 2024 Core CBD (Grade A) gross effective rents paused after 12 straight quarters of increase, bringing H1 2024 to a modest 0.4% rental growth. The difference between URA and CBRE’s data could be due to different methodologies.
• Weighing the higher vacancy in the market due to the substantial supply completions in 2024, and potential increase in activity and limited new supply in the next few years, especially if business confidence returns after rate cuts materialised, CBRE Research expects effective rents could be relatively flattish in the near term before strengthening in the medium term. CBRE Research maintains its 2% to 3% rental growth forecast for Core CBD (Grade A) offices for 2024.
Retail
• Retail indicators such as the retail sales index declined in Q2 2024, following the high-profile concerts in Q1 2024. Retail sales (excluding motor vehicles, in chained volume terms) for Apr and May 2024 declined by 6.2% and 2.0% y-o-y respectively.
• URA’s Q2 2024 data showed that rents of retail space in the Central Region remained flat q-o-q, following the decline of 0.4% q-o-q the previous quarter. CBRE Research observes that the retail market continues to be two-tiered in Q2 2024, characterised by softer leasing demand in secondary locations and strong demand in prime spaces. Therefore, islandwide prime floor rents increased by 1.1% q-o-q, extending the rise of 1.0% q-o-q the previous quarter.
• Retailers remained optimistic about tourism recovery and consumer spending upon the disbursement of CDC vouchers. According to URA data, Q2 2024 saw positive net absorption in the islandwide private retail market for the third consecutive quarter. Net demand for space stood at 36,000 sq. m. (about 388,000 sq. ft.), extending the positive net absorption of 5,000 sq. m. (about 54,000 sq. ft.) in Q1 2024. With a net increase in stock of 39,000 sq. m. (about 420,000 sq. ft.), islandwide private retail vacancy rates remained unchanged q-o-q at 6.6% in Q2 2024.
• All submarkets experienced positive net absorption in Q2 2024, with the exception of the Orchard area which saw no net absorption. The outside central region (OCR) and rest of central (RCR) submarkets outperformed in the quarter, posting positive net absorption of 22,000 sq. m. (about 237,000 sq. ft.) and 6,000 sq. m. (about 65,000 sq. ft.) respectively. The strong take-up of space in these submarkets could be attributed to the completion of major projects Pasir Ris Mall and New Bahru in Q2 2024.
• Despite the strong positive net absorption in the OCR, with Pasir Ris Mall adding approximately 278,000 sq. ft. to private retail stock, vacancy rates in the submarket rose from 4.4% in Q1 2024 to 4.6% in Q2 2024. On the other hand, the RCR submarket saw vacancy rates fall from 9.0% in the previous quarter to 8.5% in Q2 2024, the lowest vacancy rate since the onset of the pandemic. Orchard Road vacancy went up to 6.7% from 6.6% due to a very marginal increase in new supply and no net absorption.
• CBRE Research is of the view that prime floor rents have continued to recover alongside tourism recovery in Q2 2024. Anecdotally, CBRE Research notes that demand was primarily driven by F&B operators, with some concepts partnering with other retailers, such as Na Oh with Hyundai Motor Group and Alchemist & Arcade. Beauty & health and fashion brands also increased their presence during the quarter, including Jungsaemmool, Novela, Vivaia and Clémence by Rue Madame.
Outlook
• While a myriad of new-to-market brands are making their foray into Singapore, there are also numerous closures and consolidations as retailers face manpower shortage, competition from e-commerce and higher operating costs. Nonetheless, tourism recovery underpinned by the strong pipeline of MICE events and sell-out concerts should support demand for prime retail spaces. With supply over the next few years remaining below historical averages, CBRE Research expects overall prime retail rents to sustain their recovery in 2024.
Residential
In Q2 2024, the rental index of private residential properties fell for a third consecutive quarter, by 0.8% q-o-q, and cumulatively fallen by 4.8% from the peak in Q3 2023. Rents are down 2.7% in 1H 2024, but still up 50.9% above last pandemic low in Q3 2020. Vacancy, however, improved to 6.1% from 6.8%, showing progressive digestion of bumper 19,968 units completions in 2023. With completions expected to pick up to 6,975 units in H2 2024 from the 2,123 new private home completions in H1, we expect rents to be still under pressure until end of year, as 2025 completions will decline to 5,306 units. We maintain our full year rent decline of 5%, led by RCR and CCR properties which have higher vacancy and upcoming completions.
On the other hand, private housing prices continued to rise in Q2 2024, up 0.9% q-o-q, albeit slowing from the 1.4% increase in Q1 2024. The quarter’s increase was led by the landed segment which rose 1.9% q-o-q. Among non-landed market segments, the RCR segment saw the strongest price growth of 1.6% q-o-q, followed by the suburban OCR market which grew at a marginal pace of 0.2% while the prime CCR market recorded a 0.3% decline. With H1 2024 private home price increase of 2.3%, and a continued easing in prices in H2, we expect prices to rise 3-4% in 2024. Prices are unlikely to correct significantly due to resilient household balance sheets and low unsold inventory. That said, the unsold inventory has started to inch up due to slower developer take-up, albeit still below historical average levels.
Overall prices have run up 35.5% since the onset of COVID-19, mainly driven by locals’ pent-up demand and the slower completions over 2020-2022. There have been indications of an increasing resistance to high price points in 2023 amid higher interest rates and the punitive 60% ABSD for foreigners effective late April 2023. This led to full year 2023 developer sales coming in at 6,421 units, a 15-year low and H1 2024 sales falling to the lowest half-year developer sales on record at 1,889 units, below the previous floor of 1,977 units in H2 2008 during the Global Financial Crisis (GFC). However, the key difference between now and H2 2008 is that secondary sales volumes are holding up in 2024, as the market is still interested but price-conscious buyers have turned to secondary stock as the price gap between primary and secondary stock widens. Secondary sales transaction volumes in Q2 2024 rose to 4,190 units, up from 3,066 units in Q1 2024, and an increase compared to the quarterly average of 3,156 units in the full year 2023. In 2008, property prices, developer volumes and secondary volumes plummeted together as the property bubble burst during the GFC.
Despite the tentative sentiment for new projects launches, there is still good demand for well-priced and well-located projects in H1 2024, but buyers are highly selective and price sensitive. With the expectation of a delay in interest rate cuts amid protracted economic uncertainty, the timeline for a significant recovery in new developer sales is likely to be pushed to 2025. CBRE Research expects 5,500 – 6,500 new homes to be sold in 2024. While H1 2024 sales have been weak so far, overall sales for the year could come close to 2023’s 6,421 units with more major launches anticipated in the H2 2024 pipeline. Attractive developer pricing remains key to healthy new launch performance.
Table 2: Top 10 best-selling new developer sales projects (excluding ECs) in Q2 2024 (ranked in descending order by number of units sold in the quarter)
Source: URA, CBRE Research
*Sales status based on caveats from Realis as of 26 Jul 2024.
Table 3: Top 10 best-selling resale projects (excluding ECs) in Q2 2024 (ranked in descending order by number of units sold in the quarter)
Source: URA, CBRE Research
*Sales status based on caveats from Realis as of 26 Jul 2024.
• New home sales slumped in Q2 2024 on fewer major project launches as developers held back on launches amid near-term interest rate uncertainty, the June Holiday lull and current tentative buying sentiment. The quarter only saw small launches such as The Hill @ One-North (142 units) and The Hillshore (59 units). Overall, 634 units were launched in the quarter, less than half of Q1 2024’s 1,304 units. Correspondingly, 725 new homes were sold in Q2 2024, a 37.7% plunge from 1,164 units in Q1 2024. This brought developer sales for H1 2024 to 1,889 units, the lowest half-year developer sales on record below the previous floor of 1,977 units in H2 2008 during the Global Financial Crisis (GFC).
• Buyers are now more selective amid more choices and high price points, with near-term sentiment further dented by unfavourable newsflow on a delay in the timeline of US interest rate cuts. They are also generally gravitating to earlier launches or the secondary market which are priced more competitively relative to recent new launches.
• Price-conscious buyers have turned to secondary stock as the price gap between primary and secondary stock widens. Resale transaction volumes in Q2 2024 surged 41.4% q-o-q to 3,802 units, up from 2,689 units in Q1 2024. This was a high since 4,236 units in Q2 2022 before interest rate hikes took effect and above the 2023 quarterly average of 2,832 units. Resale transactions made up 77.4% of total transactions in Q2 2024, a higher proportion than 63.6% in Q1 2024 on muted new sales.
• Unsold inventory of uncompleted private residential units (excluding ECs) rose further in Q2 2024 to 20,566 units from 19,936 units in Q1 2024. Including completed units, unsold inventory likewise increased by 2.7% from 20,204 units in Q1 2024 to 20,758 units in Q2 2024.
• Rentals of private residential properties fell for a third consecutive quarter in Q2 2024. Based on the URA Rental Index for all private residential properties, rents declined 0.8% q-o-q in Q2 2024, albeit easing from the 1.9% fall in Q1 2024 on the back of abundant completions in 2023.
Q2 2024’s rental decline was consistent across property types, with landed properties recording a 0.9% q-o-q decline compared to the 4.2% q-o-q decrease in Q1 2024 and non-landed properties observing a decline of 0.8% q-o-q following a 1.6% q-o-q fall in Q1 2024. Among non-landed properties, the decline was also consistent across market segments, with non-landed RCR rents leading, down by 1.4% q-o-q, followed by the OCR and CCR which posted falls of 1.3% and 0.1% q-o-q respectively.
19,968 private homes (excluding ECs) were completed in 2023, the largest number of completions since 20,803 units in 2016. The bulk of completions (8,517 units) were recorded in Q3 2023. As a result of the bumper completions, vacancy spiked, resulting in rentals easing since Q4 2023. In Q2 2024, 1,882 private residential units were completed -- including Clavon (640 units), Hyll on Holland (319 units), Midtown Bay (219 units) and One-North Eden (165 units). Including the 241 units completed in Q1, 2,123 private residential units have been completed in H1 2024 and 6,975 units are expected in the H2 2024 pipeline. This would bring total completions for 2024 to 9,098 units.
Despite the limited new completions in H1 2024, the stock of occupied private residential units (excluding ECs) increased by 4,162 units in Q2 2024, compared with the increase of 5,423 units in the previous quarter. As a result, the vacancy rate of completed private residential units (excluding ECs) decreased to 6.1% as at end of Q2 2024, from 6.8% in the previous quarter.
Vacancy rates of completed private residential properties as at the end of Q2 2024 in CCR, RCR and OCR were 9,3%, 5.8% and 4.9% respectively, compared with 8.9%, 6.6% and 6.0% respectively in the previous quarter.\
Outlook
• The current tally of new home sales as of H1 2024 stands at 1,889 units, 44.2% lower than the 3,383 units sold over the corresponding period last year. Looking ahead, H2 2024 could see a pickup in new sales amid more major launches. However, the timeline for a more significant recovery in primary sales is likely to be pushed back to 2025 on delayed interest rate cuts and protracted economic uncertainty. CBRE Research expects 5,500 – 6,500 new homes to be sold in 2024. The anticipated pickup in sales for H2 2024 could bring overall sales for the year close to 2023’s 6,421 units. Attractive developer pricing remains key to healthy new launch performance.
• Rents have fallen a cumulative 2.7% for the year. Moving forward, 6,975 units are expected in the 2024 pipeline, tripled H1 2024’s 2,123 units. With more completions anticipated for the rest of the year, rents are expected to continue easing in H2 2024. More pressure would likely be observed in the RCR and CCR which account for 43% and 33% of H2 2024 completions respectively. However, rents are unlikely to fall back to pre-2022 levels, due to increased property taxes, higher prices (requiring higher returns), higher mortgage payments from higher interest rates, and higher rental demand from the imposed 15-month wait-out period for downgraders (buying resale HDB) under Sep 2022’s round of cooling measures. We expect rents to ease 5% in 2024, led by the RCR and CCR segments due to their existing higher vacancy rate and supply completions.
• Private residential prices which are up 2.3% in H1 2024 are expected to stabilise and rise at a slower pace in H2 2024 with the pushback in the timeline for interest rate cuts and anticipated economic recovery. CBRE Research maintains our price forecast at 3 – 4% in 2024. A significant correction is not expected given still-low unemployment rate, resilient household balance sheets, and low unsold inventory. HDB resale price index rose 2.3% q-o-q in Q2 2024, accelerating from the 1.8% in Q1 2024. Barring a major economic shock, the public housing market could continue to support the OCR and RCR segments of the private market going forward.
Read the URA press release here.
Office
• The Singapore office rental market appears to have demonstrated a strong rebound in Q2 2024, with the URA office rental index (Central Region) increasing by 3.1% in Q2 2024. This marks a reversal from the previous quarter’s 1.7% decline. Consequently, office rents in the Central Region have risen by 1.3% year -to-date in the first half of 2024.
• Prime CBD office space has seen particularly strong rental increase, as indicated by the performance of Category 1 office buildings. The median rents (by contract date) experienced an increase of 4.0% q-o-q in Q2 2024. This uptick can be attributed to increased demand for high-quality office space in prime locations. Although the office market has been primarily characterised by renewal leases due to occupier’s cost-conscious stance amid high interest rate and capital-intensive environment, relocation activities have also been on the rise. These occupiers are prioritizing space quality over size and are willing to pay premium rents to secure desirable locations. CBRE Research notes that legal firms and some tech companies have been driving demand, as they seek spaces in prime locations to attract and retain talent.
• Despite the positive rental growth, market challenges persist. Economic uncertainties and ongoing workplace changes continue to impact the sector. Additionally, the recent completion of IOI Central Boulevard Towers has increased office supply, providing tenants with more options and potentially moderating rental growth as landlords adjust their pricing strategies to maintain occupancy.
Table 1: Median rentals based on contract date
|
|
Category 11 |
Category 22 |
||||
|
|
Rents ($ psf/month) |
Q-o-q |
Vacancy |
Rents ($ psf/month) |
Q-o-q |
Vacancy |
|
Q2 2023 |
$11.49 |
6.7% | 9.2% | $6.19 | 6.7% | 11.5% |
|
Q3 2023 |
$11.22 |
-2.3% | 8.0% | $5.91 | -4.5% | 10.9% |
|
Q4 2023 |
$11.52 |
2.7% | 7.5% | $6.04 | 2.2% | 11.0% |
|
Q1 2024 |
$11.37 |
-1.3% | 7.9% | $6.08 | 0.7% | 10.3% |
|
Q2 2024 |
$11.83 |
4.0% | 10.1% | $6.44 | 5.9% | 11.1% |
2 Refers to the remaining office space in Singapore which are not included in “Category 1”
Source: URA
Outlook
• According to URA data, net absorption has been weak and vacancies have increased, but rents had actually moved up quite substantially in Q2 2024. According to CBRE Research data, Q2 2024 Core CBD (Grade A) gross effective rents paused after 12 straight quarters of increase, bringing H1 2024 to a modest 0.4% rental growth. The difference between URA and CBRE’s data could be due to different methodologies.
• Weighing the higher vacancy in the market due to the substantial supply completions in 2024, and potential increase in activity and limited new supply in the next few years, especially if business confidence returns after rate cuts materialised, CBRE Research expects effective rents could be relatively flattish in the near term before strengthening in the medium term. CBRE Research maintains its 2% to 3% rental growth forecast for Core CBD (Grade A) offices for 2024.
Retail
• Retail indicators such as the retail sales index declined in Q2 2024, following the high-profile concerts in Q1 2024. Retail sales (excluding motor vehicles, in chained volume terms) for Apr and May 2024 declined by 6.2% and 2.0% y-o-y respectively.
• URA’s Q2 2024 data showed that rents of retail space in the Central Region remained flat q-o-q, following the decline of 0.4% q-o-q the previous quarter. CBRE Research observes that the retail market continues to be two-tiered in Q2 2024, characterised by softer leasing demand in secondary locations and strong demand in prime spaces. Therefore, islandwide prime floor rents increased by 1.1% q-o-q, extending the rise of 1.0% q-o-q the previous quarter.
• Retailers remained optimistic about tourism recovery and consumer spending upon the disbursement of CDC vouchers. According to URA data, Q2 2024 saw positive net absorption in the islandwide private retail market for the third consecutive quarter. Net demand for space stood at 36,000 sq. m. (about 388,000 sq. ft.), extending the positive net absorption of 5,000 sq. m. (about 54,000 sq. ft.) in Q1 2024. With a net increase in stock of 39,000 sq. m. (about 420,000 sq. ft.), islandwide private retail vacancy rates remained unchanged q-o-q at 6.6% in Q2 2024.
• All submarkets experienced positive net absorption in Q2 2024, with the exception of the Orchard area which saw no net absorption. The outside central region (OCR) and rest of central (RCR) submarkets outperformed in the quarter, posting positive net absorption of 22,000 sq. m. (about 237,000 sq. ft.) and 6,000 sq. m. (about 65,000 sq. ft.) respectively. The strong take-up of space in these submarkets could be attributed to the completion of major projects Pasir Ris Mall and New Bahru in Q2 2024.
• Despite the strong positive net absorption in the OCR, with Pasir Ris Mall adding approximately 278,000 sq. ft. to private retail stock, vacancy rates in the submarket rose from 4.4% in Q1 2024 to 4.6% in Q2 2024. On the other hand, the RCR submarket saw vacancy rates fall from 9.0% in the previous quarter to 8.5% in Q2 2024, the lowest vacancy rate since the onset of the pandemic. Orchard Road vacancy went up to 6.7% from 6.6% due to a very marginal increase in new supply and no net absorption.
• CBRE Research is of the view that prime floor rents have continued to recover alongside tourism recovery in Q2 2024. Anecdotally, CBRE Research notes that demand was primarily driven by F&B operators, with some concepts partnering with other retailers, such as Na Oh with Hyundai Motor Group and Alchemist & Arcade. Beauty & health and fashion brands also increased their presence during the quarter, including Jungsaemmool, Novela, Vivaia and Clémence by Rue Madame.
Outlook
• While a myriad of new-to-market brands are making their foray into Singapore, there are also numerous closures and consolidations as retailers face manpower shortage, competition from e-commerce and higher operating costs. Nonetheless, tourism recovery underpinned by the strong pipeline of MICE events and sell-out concerts should support demand for prime retail spaces. With supply over the next few years remaining below historical averages, CBRE Research expects overall prime retail rents to sustain their recovery in 2024.
Residential
In Q2 2024, the rental index of private residential properties fell for a third consecutive quarter, by 0.8% q-o-q, and cumulatively fallen by 4.8% from the peak in Q3 2023. Rents are down 2.7% in 1H 2024, but still up 50.9% above last pandemic low in Q3 2020. Vacancy, however, improved to 6.1% from 6.8%, showing progressive digestion of bumper 19,968 units completions in 2023. With completions expected to pick up to 6,975 units in H2 2024 from the 2,123 new private home completions in H1, we expect rents to be still under pressure until end of year, as 2025 completions will decline to 5,306 units. We maintain our full year rent decline of 5%, led by RCR and CCR properties which have higher vacancy and upcoming completions.
On the other hand, private housing prices continued to rise in Q2 2024, up 0.9% q-o-q, albeit slowing from the 1.4% increase in Q1 2024. The quarter’s increase was led by the landed segment which rose 1.9% q-o-q. Among non-landed market segments, the RCR segment saw the strongest price growth of 1.6% q-o-q, followed by the suburban OCR market which grew at a marginal pace of 0.2% while the prime CCR market recorded a 0.3% decline. With H1 2024 private home price increase of 2.3%, and a continued easing in prices in H2, we expect prices to rise 3-4% in 2024. Prices are unlikely to correct significantly due to resilient household balance sheets and low unsold inventory. That said, the unsold inventory has started to inch up due to slower developer take-up, albeit still below historical average levels.
Overall prices have run up 35.5% since the onset of COVID-19, mainly driven by locals’ pent-up demand and the slower completions over 2020-2022. There have been indications of an increasing resistance to high price points in 2023 amid higher interest rates and the punitive 60% ABSD for foreigners effective late April 2023. This led to full year 2023 developer sales coming in at 6,421 units, a 15-year low and H1 2024 sales falling to the lowest half-year developer sales on record at 1,889 units, below the previous floor of 1,977 units in H2 2008 during the Global Financial Crisis (GFC). However, the key difference between now and H2 2008 is that secondary sales volumes are holding up in 2024, as the market is still interested but price-conscious buyers have turned to secondary stock as the price gap between primary and secondary stock widens. Secondary sales transaction volumes in Q2 2024 rose to 4,190 units, up from 3,066 units in Q1 2024, and an increase compared to the quarterly average of 3,156 units in the full year 2023. In 2008, property prices, developer volumes and secondary volumes plummeted together as the property bubble burst during the GFC.
Despite the tentative sentiment for new projects launches, there is still good demand for well-priced and well-located projects in H1 2024, but buyers are highly selective and price sensitive. With the expectation of a delay in interest rate cuts amid protracted economic uncertainty, the timeline for a significant recovery in new developer sales is likely to be pushed to 2025. CBRE Research expects 5,500 – 6,500 new homes to be sold in 2024. While H1 2024 sales have been weak so far, overall sales for the year could come close to 2023’s 6,421 units with more major launches anticipated in the H2 2024 pipeline. Attractive developer pricing remains key to healthy new launch performance.
Private home prices rose 0.9% q-o-q in Q2 2024, lower than the initial flash estimate of 1.1% q-o-q and moderating from the 1.4% q-o-q increase in Q1 2024. With this, prices have increased 2.3% in H1 2024, and are up 35.5% since the COVID-19 trough in Q1 2020. Q2 2024 private home price growth was led by landed properties which posted an increase of 1.9% q-o-q after Q1 2024’s 2.6% q-o-q rise, while price growth in the non-landed segment moderated to 0.6% q-o-q from 1.0% q-o-q growth in Q1 2024.
The increase in prices of non-landed properties was mixed, with RCR prices up 1.6% q-o-q in Q2 2024, while OCR grew a very flattish 0.2% and CCR declined 0.3%. This compares to price growth of 3.4%, 0.3% and 0.2% in Q1 2024 for the CCR, RCR and OCR respectively.
• The CCR saw some price adjustments likely on the re-launches of The Residences at W Sentosa Cove and Cuscaden Reserve in the 1H 2024 at lower average prices of S$1,780 psf and S$2,900 psf respectively.
• In the RCR, 2 relatively small new launches, The Hill @One-North and The Hillshore launched at high price points to lukewarm response, while recently-completed projects such as Parc Esta, Jadescape and Stirling Residences continued to trade higher with their attractive location near MRT stations.
• In the OCR, ongoing launches such as The Myst, The Botany at Dairy Farm and the various Lentor projects continued to sell at a steady rate at stable pricing. Secondary sales transactions at mega projects Treasure at Tampines, Affinity at Serangoon and The Florence Residences observed flat pricing, possibly due to the larger number of units available for sale.
The increase in prices of non-landed properties was mixed, with RCR prices up 1.6% q-o-q in Q2 2024, while OCR grew a very flattish 0.2% and CCR declined 0.3%. This compares to price growth of 3.4%, 0.3% and 0.2% in Q1 2024 for the CCR, RCR and OCR respectively.
• The CCR saw some price adjustments likely on the re-launches of The Residences at W Sentosa Cove and Cuscaden Reserve in the 1H 2024 at lower average prices of S$1,780 psf and S$2,900 psf respectively.
• In the RCR, 2 relatively small new launches, The Hill @One-North and The Hillshore launched at high price points to lukewarm response, while recently-completed projects such as Parc Esta, Jadescape and Stirling Residences continued to trade higher with their attractive location near MRT stations.
• In the OCR, ongoing launches such as The Myst, The Botany at Dairy Farm and the various Lentor projects continued to sell at a steady rate at stable pricing. Secondary sales transactions at mega projects Treasure at Tampines, Affinity at Serangoon and The Florence Residences observed flat pricing, possibly due to the larger number of units available for sale.
|
Project name |
Tenure |
Market segment |
Units sold |
Median Price ($psf) |
% Of project sold to date* |
|
THE BOTANY AT DAIRY FARM |
99y |
OCR |
86 |
$1,994 |
96.4% |
|
HILLHAVEN |
99y |
OCR |
63 |
$2,100 |
44.0% |
|
LENTOR HILLS RESIDENCES |
99y |
OCR |
55 |
$2,140 |
91.3% |
|
THE HILL @ONE-NORTH |
99y |
RCR |
43 |
$2,615 |
31.0% |
|
HILLOCK GREEN |
99y |
OCR |
42 |
$2,124 |
49.4% |
|
LENTOR MANSION |
99y |
OCR |
32 |
$2,230 |
83.3% |
|
THE LAKEGARDEN RESIDENCES |
99y |
OCR |
31 |
$2,136 |
56.9% |
|
PINETREE HILL |
99y |
RCR |
31 |
$2,524 |
44.4% |
|
THE CONTINUUM |
FH |
RCR |
30 |
$2,865 |
45.1% |
|
THE LANDMARK |
99y |
RCR |
29 |
$2,876 |
99.0% |
*Sales status based on caveats from Realis as of 26 Jul 2024.
|
Project name |
Tenure |
Market segment |
Units sold |
Median Price ($psf) |
|
TREASURE AT TAMPINES |
99y |
OCR |
78 |
$1,695 |
|
THE RESIDENCES AT W SINGAPORE SENTOSA COVE |
99y |
CCR |
70 |
$1,802 |
|
CUSCADEN RESERVE |
99y |
CCR |
43 |
$3,066 |
|
STIRLING RESIDENCES |
99y |
RCR |
28 |
$2,301 |
|
PARC ESTA |
99y |
RCR |
27 |
$2,254 |
|
SIMS URBAN OASIS |
99y |
RCR |
26 |
$1,881 |
|
THE MINTON |
99y |
OCR |
25 |
$1,490 |
|
HIGH PARK RESIDENCES |
99y |
OCR |
23 |
$1,508 |
|
THE GARDEN RESIDENCES |
99y |
OCR |
20 |
$1,798 |
|
KINGSFORD WATERBAY |
99y |
OCR |
20 |
$1,457 |
*Sales status based on caveats from Realis as of 26 Jul 2024.
• New home sales slumped in Q2 2024 on fewer major project launches as developers held back on launches amid near-term interest rate uncertainty, the June Holiday lull and current tentative buying sentiment. The quarter only saw small launches such as The Hill @ One-North (142 units) and The Hillshore (59 units). Overall, 634 units were launched in the quarter, less than half of Q1 2024’s 1,304 units. Correspondingly, 725 new homes were sold in Q2 2024, a 37.7% plunge from 1,164 units in Q1 2024. This brought developer sales for H1 2024 to 1,889 units, the lowest half-year developer sales on record below the previous floor of 1,977 units in H2 2008 during the Global Financial Crisis (GFC).
• Buyers are now more selective amid more choices and high price points, with near-term sentiment further dented by unfavourable newsflow on a delay in the timeline of US interest rate cuts. They are also generally gravitating to earlier launches or the secondary market which are priced more competitively relative to recent new launches.
• Price-conscious buyers have turned to secondary stock as the price gap between primary and secondary stock widens. Resale transaction volumes in Q2 2024 surged 41.4% q-o-q to 3,802 units, up from 2,689 units in Q1 2024. This was a high since 4,236 units in Q2 2022 before interest rate hikes took effect and above the 2023 quarterly average of 2,832 units. Resale transactions made up 77.4% of total transactions in Q2 2024, a higher proportion than 63.6% in Q1 2024 on muted new sales.
• Unsold inventory of uncompleted private residential units (excluding ECs) rose further in Q2 2024 to 20,566 units from 19,936 units in Q1 2024. Including completed units, unsold inventory likewise increased by 2.7% from 20,204 units in Q1 2024 to 20,758 units in Q2 2024.
While unsold inventory is still significantly lower than the last peak of 37,799 units recorded in Q1 2019, the ramp up in GLS confirmed list supply appears to be trickling into the market, coupled with the slowdown in developer sales over the past two years. At 20,758 units, this implies more than two years’ of landbank based on the 5-year annual average new home sales (2019 – 2023) of 9,288 units.
• Rentals of private residential properties fell for a third consecutive quarter in Q2 2024. Based on the URA Rental Index for all private residential properties, rents declined 0.8% q-o-q in Q2 2024, albeit easing from the 1.9% fall in Q1 2024 on the back of abundant completions in 2023.
Q2 2024’s rental decline was consistent across property types, with landed properties recording a 0.9% q-o-q decline compared to the 4.2% q-o-q decrease in Q1 2024 and non-landed properties observing a decline of 0.8% q-o-q following a 1.6% q-o-q fall in Q1 2024. Among non-landed properties, the decline was also consistent across market segments, with non-landed RCR rents leading, down by 1.4% q-o-q, followed by the OCR and CCR which posted falls of 1.3% and 0.1% q-o-q respectively.
19,968 private homes (excluding ECs) were completed in 2023, the largest number of completions since 20,803 units in 2016. The bulk of completions (8,517 units) were recorded in Q3 2023. As a result of the bumper completions, vacancy spiked, resulting in rentals easing since Q4 2023. In Q2 2024, 1,882 private residential units were completed -- including Clavon (640 units), Hyll on Holland (319 units), Midtown Bay (219 units) and One-North Eden (165 units). Including the 241 units completed in Q1, 2,123 private residential units have been completed in H1 2024 and 6,975 units are expected in the H2 2024 pipeline. This would bring total completions for 2024 to 9,098 units.
Despite the limited new completions in H1 2024, the stock of occupied private residential units (excluding ECs) increased by 4,162 units in Q2 2024, compared with the increase of 5,423 units in the previous quarter. As a result, the vacancy rate of completed private residential units (excluding ECs) decreased to 6.1% as at end of Q2 2024, from 6.8% in the previous quarter.
Vacancy rates of completed private residential properties as at the end of Q2 2024 in CCR, RCR and OCR were 9,3%, 5.8% and 4.9% respectively, compared with 8.9%, 6.6% and 6.0% respectively in the previous quarter.\
Outlook
• The current tally of new home sales as of H1 2024 stands at 1,889 units, 44.2% lower than the 3,383 units sold over the corresponding period last year. Looking ahead, H2 2024 could see a pickup in new sales amid more major launches. However, the timeline for a more significant recovery in primary sales is likely to be pushed back to 2025 on delayed interest rate cuts and protracted economic uncertainty. CBRE Research expects 5,500 – 6,500 new homes to be sold in 2024. The anticipated pickup in sales for H2 2024 could bring overall sales for the year close to 2023’s 6,421 units. Attractive developer pricing remains key to healthy new launch performance.
• Rents have fallen a cumulative 2.7% for the year. Moving forward, 6,975 units are expected in the 2024 pipeline, tripled H1 2024’s 2,123 units. With more completions anticipated for the rest of the year, rents are expected to continue easing in H2 2024. More pressure would likely be observed in the RCR and CCR which account for 43% and 33% of H2 2024 completions respectively. However, rents are unlikely to fall back to pre-2022 levels, due to increased property taxes, higher prices (requiring higher returns), higher mortgage payments from higher interest rates, and higher rental demand from the imposed 15-month wait-out period for downgraders (buying resale HDB) under Sep 2022’s round of cooling measures. We expect rents to ease 5% in 2024, led by the RCR and CCR segments due to their existing higher vacancy rate and supply completions.
• Private residential prices which are up 2.3% in H1 2024 are expected to stabilise and rise at a slower pace in H2 2024 with the pushback in the timeline for interest rate cuts and anticipated economic recovery. CBRE Research maintains our price forecast at 3 – 4% in 2024. A significant correction is not expected given still-low unemployment rate, resilient household balance sheets, and low unsold inventory. HDB resale price index rose 2.3% q-o-q in Q2 2024, accelerating from the 1.8% in Q1 2024. Barring a major economic shock, the public housing market could continue to support the OCR and RCR segments of the private market going forward.
Read the URA press release here.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2024 revenue). The company has more than 140,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves clients through four business segments: Advisory (leasing, sales, debt origination, mortgage servicing, valuations); Building Operations & Experience (facilities management, property management, flex space & experience, digital infrastructure services); Project Management (program management, project management, cost consulting); Real Estate Investments (investment management, development). Please visit our website at www.cbre.com.