Singapore
Commentary on URA Q3 2024 statistics - Office, Retail, and Residential
October 25, 2024
Associated Contact
Melvin Lin
Head of Marketing & Communications, Singapore
By Tricia Song (宋明蔚), Head of Research, Southeast Asia, CBRE
This dip has resulted in a smaller year-to-date increase in office rents, which now stands at 0.8% for Q1-Q3 2024, down from 1.3% previously. The prime CBD office space, particularly Category 1 office buildings, showed signs of weakness. Median rents, based on contracts signed, declined by 0.8% quarter-on-quarter in Q3 2024 after a significant 4.0% increase in Q2 2024.
CBRE Research attributes this softness to a recent surge in supply, notably the completion of IOI Central Boulevard Towers, which added 1.2 million sq. ft. of prime office space in the CBD. Consequently, vacancies in Category 1 office buildings have risen to 10.3% in Q3 2024, up from 7.5% at the end of 2023.
The office market has been primarily driven by renewal leases, as occupiers adopt a cost-conscious approach amid high interest rates and a capital-intensive environment. However, there has also been an increase in relocation activities. Some landlords, facing larger volumes of available space, are prioritizing occupancy over securing market-leading rents, contributing to the decline in overall rents for Q3 2024.
Despite these trends, the office sector remains distinctly two-tiered. Competition for premium spaces in the best buildings remains strong, particularly for high floors with unobstructed views and lift lobby frontage. In such cases, tenants are willing to pay a premium over and above the typical Grade A average rent. CBRE Research notes a significant trend of businesses in the legal, emerging tech, and professional services sectors relocating to high-quality buildings in prime city centre locations.
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
According to the latest data from URA, the net supply of office space islandwide increased by 0.39 mil sq. ft. in Q3 2024. This growth was primarily driven by the completion of IOI Central Boulevard Towers (Phase 2) and Labrador Tower but was partially offset by the removal of the Singtel Comcentre development. While Labrador Tower saw healthy take-up rates exceeding 70%, the net absorption for this quarter was a modest 0.18 million sq. ft., likely due to the time lag between physical occupancy and the completion of new buildings.
Outlook
CBRE notes that with the current market conditions expected to be relatively soft in at least the near-term future, some new projects in the CBD such as Keppel South Central and Shaw Tower redevelopment have yet to register pre-commitments. While this could weigh down on rent expectations, there has been some relief in terms of supply injection, including the Shaw Tower redevelopment’s delayed completion from 2025 to 2026, and also the URA’s decision on the non-award of the Jurong Lake District master tender site.
Overall, the office market is expected to face higher vacancy rates due to substantial supply completions in 2024, including significant secondary spaces and largely uncommitted new office buildings in the pipeline. On the demand side, CBRE Research notes that occupier sentiment remains cautious amid global economic uncertainties and the ongoing trend of hybrid work. Although declining interest rates could encourage some companies to expand, the high capital expenditure environment may delay the impact on office space demand.
Consequently, CBRE Research anticipates that office rents will remain soft to stable through the end of the year due to the overhang of space. However, rental growth is expected to resume once market absorption gradually comes through.
URA’s Q3 2024 data showed that rents of retail space in the Central Region rose 0.3% q-o-q after remaining flat q-o-q the previous quarter. CBRE Research observes that secondary spaces are seeing a gradual take-up by retailers that attract niche following, such as gaming and collectibles, while demand for prime spaces continue to be robust. Therefore, islandwide prime floor rents increased by 0.7% q-o-q, extending the rise of 1.1% q-o-q the previous quarter.
Retailers remained optimistic about tourism recovery, boosted by Formula 1 Grand Prix held during the quarter. According to URA data, Q3 2024 saw positive net absorption in the islandwide private retail market for the fourth consecutive quarter. Net demand for space stood at 12,000 sq. m. (about 129,000 sq. ft.), extending the positive net absorption of 36,000 sq. m. (about 388,000 sq. ft.) in Q2 2024. As a result, islandwide private retail vacancy rates fell from 6.6% in Q2 2024 to 6.4% in Q3 2024.
All submarkets experienced positive net absorption in Q3 2024, with the exception of the Downtown Core area which saw negative net absorption of 1,000 sq. m. (about 11,000 sq. ft.), and thus a slight rise in vacancy rates from 7.4% in Q2 2024 to 7.5%.
The outside central region (OCR) submarket outperformed in the quarter, posting positive net absorption of 6,000 sq. m. (about 65,000 sq. ft.), extending the strong positive net absorption of 22,000 sq. m. (about 237,000 sq. ft.) the previous quarter. This could be attributed to full pre-commitment of AEI spaces at Tampines 1, which added approximately 9,000 sq. ft. of retail space and was completed in Q3 2024. Hence, vacancy rates fell from 4.6% in Q2 2024 to 4.0% in the quarter.
CBRE Research is of the view that prime floor rents have sustained its rise in tandem with tourism recovery in Q3 2024. Anecdotally, CBRE Research notes that while F&B operators continue to drive demand, there has been a spate of closures in the fine dining scene recently, with casualties such as Bam! Restaurant. Beauty & health brands also continue to increase their presence during the quarter, including Jungsaemmool and Kilian Paris. Meanwhile, several retailers, such as Sephora and 45R, have refreshed their concepts or revamped their outlets to stay relevant to consumers.
Outlook
While retailers face challenges including manpower shortage, competition from e-commerce and higher operating costs, Singapore remains an attractive market for many global brands. Tourism recovery underpinned by the strong pipeline of MICE events and concerts should support demand for prime retail spaces. Coupled with below-historical-average supply over the next few years, CBRE Research expects overall prime retail rents to sustain their recovery for the rest of 2024.
On the other hand, the rental index of private residential properties rebounded in Q3 2024 after 3 consecutive quarters of correction. URA’s islandwide rental index rose by 0.8% q-o-q, reversing the 0.8% q-o-q fall in Q2 2024. Rents are still down a cumulative 1.9% for the year but 52.1% above the pandemic-low in Q3 2020. Vacancy has also risen amid the larger number of completions in H2 2024. With high completions also expected in Q4 2024 we expect rents to still be under pressure until end of year, before completions decline in 2025 to 5,348 units. We moderate our full year rent decline from 5% to 3%, led by CCR properties which have higher double-digit vacancy.
Following a record half-yearly low for new sales in H1 2024, sales have picked up q-o-q in Q3 2024 on more launched units and major launches in the RCR and OCR and are anticipated to increase more significantly in Q4 2024 on lower interest rates and a healthy pipeline of attractive launches.
While buyers continue to be selective amid a myriad of new launch options and have turned to more competitively priced secondary stock, there is strong pent-up demand for new launches.
New projects launched following September interest rate cut have recorded healthy take-up rates, indicative of a recovery in market sentiment on lower interest rates and a more optimistic economic outlook. CBRE Research expects 5,000 – 5,500 new homes to be sold in 2024. Attractive developer pricing remains key to healthy new launch performance.
Private home prices fell 0.7% q-o-q in Q3 2024, lower than the initial flash estimate decline of 1.1% q-o-q and reversing the 0.9% q-o-q increase in Q2 2024. With this, prices have risen 1.6% in 9M 2024, and are up 34.6% since the COVID-19 trough in Q1 2020. Q3 2024’s private home price decline was led by landed properties which posted a 3.4% q-o-q fall after Q2 2024’s 1.9% q-o-q rise, while price growth in the non-landed segment was more stable, recording a 0.1% q-o-q increase albeit moderating from 0.6% q-o-q growth in Q2 2024.
The price performance across non-landed segments was mixed, weighed down mainly by the CCR which recorded the largest decline of 1.1% q-o-q, extending its 0.3% q-o-q fall in Q2 2024, probably due to discounts offered at CCR projects which still have unsold inventory and nearing completion or recently completed. Comparatively, OCR prices remained unchanged following a flattish 0.2% growth in Q2 2024 while the RCR bucked the trend, rising 0.8% q-o-q after 1.6% growth in Q2 2024. This brings 9M 2024 price growth in CCR, RCR and OCR to 1.9%, 2.7% and 0.4% respectively.
Table 2: Top 10 best-selling new developer sales projects (excluding ECs) in Q3 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 25 Oct 2024.
New home sales picked up q-o-q in Q3 2024 on more launched units and major launches in the RCR and OCR. Despite the August 7th lunar month lull, the quarter saw 1,284 new units launched, doubling the 634 units launched in Q2 2024. 3 major new launches were also recorded in the quarter compared to just 2 in Q2 2024; Sora (440 total units), Kassia (276 units) and 8@BT (158 units). Said launches observed launch weekend take-up rates of 23%, 52% and 53% respectively. Correspondingly, 1,160 new homes were sold in Q3 2024, up 60% q-o-q from the 725 units in Q2 2024 but down 40.4% y-o-y from Q3 2023’s 1,946 units. This brings 9M 2024 new home sales to 3,049 units, 42.8% below 9M 2023’s 5,329 units.
Buyer sentiment in Q3 2024 was still cautious, and buyers were more selective amid weak economic conditions, buyer fatigue and increasing resistance to high price points. There was also interest rate uncertainty for most of the quarter prior to the oversized 50 bps cut from the Fed which came through in September.
Similar to H1 2024, price-conscious buyers have turned to secondary stock as the price gap between primary and secondary stock widens. Resale transaction volumes in Q3 2024 held firm, rising slightly by 1.5% q-o-q to 3,860 units, after 3,802 units in Q2 2024. This was a high since 4,236 units in Q2 2022 before interest rate hikes took effect and also above the 2023 quarterly average of 2,832 units. Resale transactions made up 71.9% of total transactions in Q3 2024, a lower proportion than 77.4% in Q2 2024 as some interest was diverted to the major new launches in the quarter.
Alongside the pickup in new sales, unsold inventory of uncompleted private residential units (excluding ECs) fell 3.0% q-o-q in Q3 2024 to 19,940 units from 20,566 units in Q2 2024, breaking the streak of 2 consecutive increases from 17,262 units in Q4 2023. Including completed units, unsold inventory likewise decreased by 3.1% from 20,758 units in Q2 2024 to 20,122 units in Q3 2024.
• Unsold inventory is still significantly lower than the last peak of 37,799 units recorded in Q1 2019. At 20,122 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 rebounded in Q3 2024 after 3 consecutive quarters of correction. Based on the URA Rental Index for all private residential properties, rents rose 0.8% q-o-q in Q3 2024, reversing the 0.8% q-o-q fall in Q2 2024.
• Q3 2024’s rental increase was consistent across property types, led by landed properties which recorded a moderate 3.2% q-o-q rise compared to the 0.9% q-o-q decrease in Q2 2024 and non-landed properties observing a smaller increase of 0.5% q-o-q following a 0.8% q-o-q fall in Q2 2024. Among non-landed properties, the increase was supported by the OCR and RCR which posted 2.2% and 1.7% q-o-q growth respectively while the CCR underperformed, falling 1.6% q-o-q. This brings 9M2024 rental growth in the CCR, RCR and OCR to -3.3%, -1.6% and -0.5% 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 Q3 2024, 3,253 private residential units were completed -- including One Pearl Bank (774 units), Forett At Bukit Timah (633 units), One Holland Village Residences/Quincy House Singapore (551 units) and The Reef At King's Dock (429 units). This was 72.8% more than Q2 2024’s 1,882 units and takes the 9M2024 tally of new completions to 5,376 units. Another 3,727 units are expected in the Q4 2024 pipeline. This would bring total completions for 2024 to 9,803 units.
• Despite the large number of new completions in Q3 2024, the stock of occupied private residential units (excluding ECs) decreased by 2,051 units in the quarter, compared with an increase of 4,162 units in the previous quarter. As a result, the vacancy rate of completed private residential units (excluding ECs) increased to 7.2% as at end of Q3 2024, from 6.1% in the previous quarter. This could be a sign that the rental market conditions are still challenging.
• Vacancy rates of completed private residential properties as at the end of Q3 2024 in CCR, RCR and OCR were 11.2%, 8.1% and 4.9% respectively, compared with 9.3%, 5.8% and 4.9% respectively in the previous quarter.
Outlook
The cumulative tally of new home sales as of 9M 2024 stands at 3,049 units, 40.4% lower than the 5,329 units sold over the corresponding period last year. Looking ahead, recent interest rate cuts could catalyse a recovery in sentiment and sales in Q4 2024 amid a healthy pipeline of attractive new launches. A more significant rebound in new developer sales however is likely to occur only in 2025 when more clarity is reached on the global economic condition. CBRE Research expects 5,000 – 5,500 new homes to be sold in 2024. Attractive developer pricing remains key to healthy new launch performance.
Rents have fallen a cumulative 1.9% for the year. Moving forward, 3,727 units (excluding ECs) are expected in the Q4 2024 pipeline, higher than Q3 2024’s completions. Rents are expected to continue easing in Q4 2024. 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 3% in 2024, led by the CCR segment due to their existing higher double-digit vacancy rate.
Private residential prices which are up 1.6% cumulatively after Q3 2024’s decline are expected to rebound in Q4 2024 on better sentiment amid lower interest rates and a more optimistic economic outlook - Q3 2024’s GDP flash estimate announced on 14 Oct recorded 4.1% y-o-y growth, its fastest pace since 2022. CBRE Research maintains our price forecast at 3% in 2024. A significant correction is not expected given still-low unemployment rate, resilient household balance sheets, and low unsold inventory.
Read the URA press release here.
Office
The office rental market in Singapore experienced a slight dip in Q3 2024, following a strong rebound in the previous quarter. The URA office rental index (Central Region) increased by 3.1% in Q2 2024 but saw a 0.5% decline this quarter, reflecting ongoing rental volatility since Q1 2024.This dip has resulted in a smaller year-to-date increase in office rents, which now stands at 0.8% for Q1-Q3 2024, down from 1.3% previously. The prime CBD office space, particularly Category 1 office buildings, showed signs of weakness. Median rents, based on contracts signed, declined by 0.8% quarter-on-quarter in Q3 2024 after a significant 4.0% increase in Q2 2024.
CBRE Research attributes this softness to a recent surge in supply, notably the completion of IOI Central Boulevard Towers, which added 1.2 million sq. ft. of prime office space in the CBD. Consequently, vacancies in Category 1 office buildings have risen to 10.3% in Q3 2024, up from 7.5% at the end of 2023.
The office market has been primarily driven by renewal leases, as occupiers adopt a cost-conscious approach amid high interest rates and a capital-intensive environment. However, there has also been an increase in relocation activities. Some landlords, facing larger volumes of available space, are prioritizing occupancy over securing market-leading rents, contributing to the decline in overall rents for Q3 2024.
Despite these trends, the office sector remains distinctly two-tiered. Competition for premium spaces in the best buildings remains strong, particularly for high floors with unobstructed views and lift lobby frontage. In such cases, tenants are willing to pay a premium over and above the typical Grade A average rent. CBRE Research notes a significant trend of businesses in the legal, emerging tech, and professional services sectors relocating to high-quality buildings in prime city centre locations.
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 |
|
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% |
|
Q3 2024 |
$11.73 |
-0.8% |
10.3% |
$6.21 |
-3.6% |
11.3% |
2 Refers to the remaining office space in Singapore which are not included in “Category 1”
Source: URA
According to the latest data from URA, the net supply of office space islandwide increased by 0.39 mil sq. ft. in Q3 2024. This growth was primarily driven by the completion of IOI Central Boulevard Towers (Phase 2) and Labrador Tower but was partially offset by the removal of the Singtel Comcentre development. While Labrador Tower saw healthy take-up rates exceeding 70%, the net absorption for this quarter was a modest 0.18 million sq. ft., likely due to the time lag between physical occupancy and the completion of new buildings.
Outlook
CBRE notes that with the current market conditions expected to be relatively soft in at least the near-term future, some new projects in the CBD such as Keppel South Central and Shaw Tower redevelopment have yet to register pre-commitments. While this could weigh down on rent expectations, there has been some relief in terms of supply injection, including the Shaw Tower redevelopment’s delayed completion from 2025 to 2026, and also the URA’s decision on the non-award of the Jurong Lake District master tender site.
Overall, the office market is expected to face higher vacancy rates due to substantial supply completions in 2024, including significant secondary spaces and largely uncommitted new office buildings in the pipeline. On the demand side, CBRE Research notes that occupier sentiment remains cautious amid global economic uncertainties and the ongoing trend of hybrid work. Although declining interest rates could encourage some companies to expand, the high capital expenditure environment may delay the impact on office space demand.
Consequently, CBRE Research anticipates that office rents will remain soft to stable through the end of the year due to the overhang of space. However, rental growth is expected to resume once market absorption gradually comes through.
Retail
Retail indicators such as the retail sales index declined in Q3 2024, as consumer sentiments have turned more cautious amid the sluggish economic environment. Retail sales (excluding motor vehicles, in chained volume terms) for Jul and Aug 2024 declined by 3.8% and 2.7% y-o-y respectively. Nevertheless, tourism visitor arrivals were at a post-pandemic high in Jul and Aug 2024, reaching 1.60 mil and 1.54 mil respectively. This was comparable to 2019 monthly average of 1.59 mil visitors.URA’s Q3 2024 data showed that rents of retail space in the Central Region rose 0.3% q-o-q after remaining flat q-o-q the previous quarter. CBRE Research observes that secondary spaces are seeing a gradual take-up by retailers that attract niche following, such as gaming and collectibles, while demand for prime spaces continue to be robust. Therefore, islandwide prime floor rents increased by 0.7% q-o-q, extending the rise of 1.1% q-o-q the previous quarter.
Retailers remained optimistic about tourism recovery, boosted by Formula 1 Grand Prix held during the quarter. According to URA data, Q3 2024 saw positive net absorption in the islandwide private retail market for the fourth consecutive quarter. Net demand for space stood at 12,000 sq. m. (about 129,000 sq. ft.), extending the positive net absorption of 36,000 sq. m. (about 388,000 sq. ft.) in Q2 2024. As a result, islandwide private retail vacancy rates fell from 6.6% in Q2 2024 to 6.4% in Q3 2024.
All submarkets experienced positive net absorption in Q3 2024, with the exception of the Downtown Core area which saw negative net absorption of 1,000 sq. m. (about 11,000 sq. ft.), and thus a slight rise in vacancy rates from 7.4% in Q2 2024 to 7.5%.
The outside central region (OCR) submarket outperformed in the quarter, posting positive net absorption of 6,000 sq. m. (about 65,000 sq. ft.), extending the strong positive net absorption of 22,000 sq. m. (about 237,000 sq. ft.) the previous quarter. This could be attributed to full pre-commitment of AEI spaces at Tampines 1, which added approximately 9,000 sq. ft. of retail space and was completed in Q3 2024. Hence, vacancy rates fell from 4.6% in Q2 2024 to 4.0% in the quarter.
CBRE Research is of the view that prime floor rents have sustained its rise in tandem with tourism recovery in Q3 2024. Anecdotally, CBRE Research notes that while F&B operators continue to drive demand, there has been a spate of closures in the fine dining scene recently, with casualties such as Bam! Restaurant. Beauty & health brands also continue to increase their presence during the quarter, including Jungsaemmool and Kilian Paris. Meanwhile, several retailers, such as Sephora and 45R, have refreshed their concepts or revamped their outlets to stay relevant to consumers.
Outlook
While retailers face challenges including manpower shortage, competition from e-commerce and higher operating costs, Singapore remains an attractive market for many global brands. Tourism recovery underpinned by the strong pipeline of MICE events and concerts should support demand for prime retail spaces. Coupled with below-historical-average supply over the next few years, CBRE Research expects overall prime retail rents to sustain their recovery for the rest of 2024.
Residential
In Q3 2024, private housing prices recorded a 0.7% q-o-q decline, reversing Q2 2024’s 0.9% q-o-q rise and breaking a streak of 4 consecutive increases since prices last pulled back slightly by 0.2% q-o-q in Q2 2023. The quarter’s correction was led by landed properties which posted a 3.4% q-o-q fall after Q2 2024’s 1.9% q-o-q rise, while price growth in the non-landed segment was more stable, recording a 0.1% q-o-q increase albeit moderating from 0.6% q-o-q growth in Q2 2024. Among non-landed market segments, the RCR segment bucked the trend with price growth of 0.8% q-o-q, followed by the suburban OCR market where prices were unchanged while the prime CCR market underperformed, recording a 1.1% decline. 9M 2024 private home prices have increased 1.6% after Q3 2024’s decline but are likely to rebound in Q4 2024 on better sentiment amid lower interest rates and a more optimistic economic outlook. We expect prices to rise 3% in 2024. Prices are unlikely to correct significantly due to resilient household balance sheets and low unsold inventory.On the other hand, the rental index of private residential properties rebounded in Q3 2024 after 3 consecutive quarters of correction. URA’s islandwide rental index rose by 0.8% q-o-q, reversing the 0.8% q-o-q fall in Q2 2024. Rents are still down a cumulative 1.9% for the year but 52.1% above the pandemic-low in Q3 2020. Vacancy has also risen amid the larger number of completions in H2 2024. With high completions also expected in Q4 2024 we expect rents to still be under pressure until end of year, before completions decline in 2025 to 5,348 units. We moderate our full year rent decline from 5% to 3%, led by CCR properties which have higher double-digit vacancy.
Following a record half-yearly low for new sales in H1 2024, sales have picked up q-o-q in Q3 2024 on more launched units and major launches in the RCR and OCR and are anticipated to increase more significantly in Q4 2024 on lower interest rates and a healthy pipeline of attractive launches.
While buyers continue to be selective amid a myriad of new launch options and have turned to more competitively priced secondary stock, there is strong pent-up demand for new launches.
New projects launched following September interest rate cut have recorded healthy take-up rates, indicative of a recovery in market sentiment on lower interest rates and a more optimistic economic outlook. CBRE Research expects 5,000 – 5,500 new homes to be sold in 2024. Attractive developer pricing remains key to healthy new launch performance.
Private home prices fell 0.7% q-o-q in Q3 2024, lower than the initial flash estimate decline of 1.1% q-o-q and reversing the 0.9% q-o-q increase in Q2 2024. With this, prices have risen 1.6% in 9M 2024, and are up 34.6% since the COVID-19 trough in Q1 2020. Q3 2024’s private home price decline was led by landed properties which posted a 3.4% q-o-q fall after Q2 2024’s 1.9% q-o-q rise, while price growth in the non-landed segment was more stable, recording a 0.1% q-o-q increase albeit moderating from 0.6% q-o-q growth in Q2 2024.
The price performance across non-landed segments was mixed, weighed down mainly by the CCR which recorded the largest decline of 1.1% q-o-q, extending its 0.3% q-o-q fall in Q2 2024, probably due to discounts offered at CCR projects which still have unsold inventory and nearing completion or recently completed. Comparatively, OCR prices remained unchanged following a flattish 0.2% growth in Q2 2024 while the RCR bucked the trend, rising 0.8% q-o-q after 1.6% growth in Q2 2024. This brings 9M 2024 price growth in CCR, RCR and OCR to 1.9%, 2.7% and 0.4% respectively.
Table 2: Top 10 best-selling new developer sales projects (excluding ECs) in Q3 2024 (ranked in descending order by number of units sold in the quarter)
|
Project name |
Tenure |
Market segment |
Units sold |
Median Price ($psf) |
% Of project sold to date* |
|
KASSIA |
FH |
OCR |
164 |
$2,052 |
59.4% |
|
SORA |
99y |
OCR |
111 |
$2,153 |
25.5% |
|
PINETREE HILL |
99y |
RCR |
88 |
$2,500 |
61.0% |
|
HILLHAVEN |
99y |
OCR |
87 |
$2,111 |
68.3% |
|
TEMBUSU GRAND |
99y |
RCR |
85 |
$2,448 |
78.7% |
|
8@BT |
99y |
RCR |
82 |
$2,730 |
53.8% |
|
HILLOCK GREEN |
99y |
OCR |
63 |
$2,147 |
60.1% |
|
LENTORIA |
99y |
OCR |
53 |
$2,182 |
52.4% |
|
THE LAKEGARDEN RESIDENCES |
99y |
OCR |
46 |
$2,211 |
58.8% |
|
THE CONTINUUM |
FH |
RCR |
35 |
$2,849 |
48.3% |
*Sales status based on caveats from Realis as of 25 Oct 2024.
New home sales picked up q-o-q in Q3 2024 on more launched units and major launches in the RCR and OCR. Despite the August 7th lunar month lull, the quarter saw 1,284 new units launched, doubling the 634 units launched in Q2 2024. 3 major new launches were also recorded in the quarter compared to just 2 in Q2 2024; Sora (440 total units), Kassia (276 units) and 8@BT (158 units). Said launches observed launch weekend take-up rates of 23%, 52% and 53% respectively. Correspondingly, 1,160 new homes were sold in Q3 2024, up 60% q-o-q from the 725 units in Q2 2024 but down 40.4% y-o-y from Q3 2023’s 1,946 units. This brings 9M 2024 new home sales to 3,049 units, 42.8% below 9M 2023’s 5,329 units.
Buyer sentiment in Q3 2024 was still cautious, and buyers were more selective amid weak economic conditions, buyer fatigue and increasing resistance to high price points. There was also interest rate uncertainty for most of the quarter prior to the oversized 50 bps cut from the Fed which came through in September.
Similar to H1 2024, price-conscious buyers have turned to secondary stock as the price gap between primary and secondary stock widens. Resale transaction volumes in Q3 2024 held firm, rising slightly by 1.5% q-o-q to 3,860 units, after 3,802 units in Q2 2024. This was a high since 4,236 units in Q2 2022 before interest rate hikes took effect and also above the 2023 quarterly average of 2,832 units. Resale transactions made up 71.9% of total transactions in Q3 2024, a lower proportion than 77.4% in Q2 2024 as some interest was diverted to the major new launches in the quarter.
Alongside the pickup in new sales, unsold inventory of uncompleted private residential units (excluding ECs) fell 3.0% q-o-q in Q3 2024 to 19,940 units from 20,566 units in Q2 2024, breaking the streak of 2 consecutive increases from 17,262 units in Q4 2023. Including completed units, unsold inventory likewise decreased by 3.1% from 20,758 units in Q2 2024 to 20,122 units in Q3 2024.
• Unsold inventory is still significantly lower than the last peak of 37,799 units recorded in Q1 2019. At 20,122 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 rebounded in Q3 2024 after 3 consecutive quarters of correction. Based on the URA Rental Index for all private residential properties, rents rose 0.8% q-o-q in Q3 2024, reversing the 0.8% q-o-q fall in Q2 2024.
• Q3 2024’s rental increase was consistent across property types, led by landed properties which recorded a moderate 3.2% q-o-q rise compared to the 0.9% q-o-q decrease in Q2 2024 and non-landed properties observing a smaller increase of 0.5% q-o-q following a 0.8% q-o-q fall in Q2 2024. Among non-landed properties, the increase was supported by the OCR and RCR which posted 2.2% and 1.7% q-o-q growth respectively while the CCR underperformed, falling 1.6% q-o-q. This brings 9M2024 rental growth in the CCR, RCR and OCR to -3.3%, -1.6% and -0.5% 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 Q3 2024, 3,253 private residential units were completed -- including One Pearl Bank (774 units), Forett At Bukit Timah (633 units), One Holland Village Residences/Quincy House Singapore (551 units) and The Reef At King's Dock (429 units). This was 72.8% more than Q2 2024’s 1,882 units and takes the 9M2024 tally of new completions to 5,376 units. Another 3,727 units are expected in the Q4 2024 pipeline. This would bring total completions for 2024 to 9,803 units.
• Despite the large number of new completions in Q3 2024, the stock of occupied private residential units (excluding ECs) decreased by 2,051 units in the quarter, compared with an increase of 4,162 units in the previous quarter. As a result, the vacancy rate of completed private residential units (excluding ECs) increased to 7.2% as at end of Q3 2024, from 6.1% in the previous quarter. This could be a sign that the rental market conditions are still challenging.
• Vacancy rates of completed private residential properties as at the end of Q3 2024 in CCR, RCR and OCR were 11.2%, 8.1% and 4.9% respectively, compared with 9.3%, 5.8% and 4.9% respectively in the previous quarter.
Outlook
The cumulative tally of new home sales as of 9M 2024 stands at 3,049 units, 40.4% lower than the 5,329 units sold over the corresponding period last year. Looking ahead, recent interest rate cuts could catalyse a recovery in sentiment and sales in Q4 2024 amid a healthy pipeline of attractive new launches. A more significant rebound in new developer sales however is likely to occur only in 2025 when more clarity is reached on the global economic condition. CBRE Research expects 5,000 – 5,500 new homes to be sold in 2024. Attractive developer pricing remains key to healthy new launch performance.
Rents have fallen a cumulative 1.9% for the year. Moving forward, 3,727 units (excluding ECs) are expected in the Q4 2024 pipeline, higher than Q3 2024’s completions. Rents are expected to continue easing in Q4 2024. 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 3% in 2024, led by the CCR segment due to their existing higher double-digit vacancy rate.
Private residential prices which are up 1.6% cumulatively after Q3 2024’s decline are expected to rebound in Q4 2024 on better sentiment amid lower interest rates and a more optimistic economic outlook - Q3 2024’s GDP flash estimate announced on 14 Oct recorded 4.1% y-o-y growth, its fastest pace since 2022. CBRE Research maintains our price forecast at 3% in 2024. A significant correction is not expected given still-low unemployment rate, resilient household balance sheets, and low unsold inventory.
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 a diverse range of clients with an integrated suite of 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.