Singapore home prices expected to grow 3% in 2020: Colliers

By Charlene Chin/ EdgeProp Singapore|January 30, 2020 4:28 PM SGT

Source: Colliers

SINGAPORE (EDGEPROP) – Private residential prices in Singapore grew 2.5% in 2019, despite cooling measures imposed by the government in late 2018 and amid a subdued economy, and are forecast to grow 3% in 2020, according to research by Colliers International. The “record high” of housing supply from 2014 to 2017 is expected to taper off from 2018 to 2021, and peak again from 2022 to 2023 once the developments that were sold from the collective sales wave of 2017 to 2018 are completed, notes Colliers. Completions, meanwhile, are expected to be low in 2024. Vacancy has declined steadily to 6.4% from 3Q2017’s rate of 9.3%. Colliers expects that it will improve to 6% by end-2020, before increasing once again as new stock completes from 2021 to 2023. The firm expects rents to grow 5% in 2020 amid declining vacancy. However, rents could see a decline from 2022 to 2023 on rising vacancy.

Developers have been observed to be “active but cautious in their bidding” for sites, says Colliers. Resilient sales in 2019 have helped developers pare down on inventory – 9,850 units were sold in 2019, which is 12% higher y-o-y.In 2020, there are 44 projects estimated to be launched, of which 45% are from the prime districts. This would draw a strong crowd of foreigners, who are attracted to “super luxurious projects”, states the report. Infrastructure developments such as plans for the Greater Southern Waterfront, Jurong Lake District and new MRT lines would also drive buyer interest, it adds.

Hotel and office to offer mid- to long-term growth

Source: Colliers

Colliers predicts that the hotel and office market could offer mid- to long-term growth. In the hospitality industry, RevPAR (revenue per available room) is expected to improve on tight near-term supply since 2017’s recovery, as well as continued growth in visitor arrivals.

Total new hotel supply over 2020 to 2024 is estimated to average around 1,400 rooms per annum, well below the last 10-year average of 2,800 rooms per annum, highlights the report. Although hotel supply could increase in 2023 (with the recent spate of conversions of commercial buildings into hotels), the five-year average would still be half that of the past decade. Large-scale events that are predicted to draw in large crowds include The International Trademark Association’s 142nd Annual Meeting and the 103rd Lions Clubs International Convention.

Source: Colliers

In the office sector, demand is expected to be led by the tech and flexible workspace sectors, albeit at a slower rate than in 2019. In particular, flexible workspace operators are expected to focus more on sustainability and profitability, partly due to limited vacancy.

Grade-A rental growth is forecast to slow to 1% y-o-y in 2020. Rents are currently on a 10-year high and tenants will resist further rent hikes in view of macroeconomic uncertainty, notes the report. Meanwhile, CBD Grade-A vacancy is predicted to increase to 5% in 2020 as net demand declines. However, limited supply in the area from 2020 to 2021 should keep the vacancy below the 10- year average of 6.2%. For the mid- to long term, Colliers is bullish on the Shenton Way/Tanjong Pagar and Beach Road/Bugis micro markets, expecting them to post the highest rental growth.

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