Economy: With the pandemic contained locally and access to vaccination secured, brighter prospects are expected for the local economy towards the latter half of 2021. Nonetheless, this is likely to be a slow and uneven recovery, as the global COVID-19 situation remains volatile. Meanwhile, prolonged low interest rates are poised to create a favourable real estate investment environment.
Office: 2021 is envisaged to be a year of two halves for the office market. While the first half of 2021 is expected to still be under some pressure, the latter half is likely to witness some improvement. The underlying strength of the office market is attributed to the diversified occupier profile seen today. With continued demand for office space, coupled with the limited Grade A supply in the pipeline, this would support office rental growth in the second half of 2021.
Retail: Store expansions and openings are expected to go ahead as retailers readapt to the new retail environment post COVID-19. Recovery of the retail market is expected to be long drawn, given the risks and uncertainties that still linger, though it will be mitigated by the moderate level of upcoming supply. Widening of the two-tier market will continue to hold, although rental corrections and vacancies for the secondary locations and floors in prime locations could present opportunities.
Residential: Emboldened by 2020’s sales performance, developers are likely to capitalise on this sales momentum to clear their remaining project inventory in the coming year. Quantum size for new sales transactions are expected to continue to widen, as price sensitivity is likely to decrease with the aid of low interest rates. Buying sentiment is expected to remain strong and help support demand for upcoming new launches though underlying risks still remain as Singapore remains widely exposed towards its external environment.
Logistics: Logistics has remained a resilient asset class amid the pandemic, with stable rental growth expected in line with the gradual recovery of Singapore’s economy. Further, the subdued supply pipeline will continue to lend support to occupancy.
Capital Markets: Barring any unforeseen circumstances, CBRE believes that investment sales volume in 2021 is likely to rebound by around 30% from 2020. This will be led by residential, office, and industrial sales. On the back of improved sentiments and consumer confidence, there will also be renewed interest in retail and hospitality assets, as investors would be on the lookout to acquiring these assets at more opportunistic levels.