General market overview
Kenneth Szeto – Partner
Singapore continues to be one of the most vibrant and energetic city-states in the world.
As a thriving financial centre in South-East Asia, Singapore has emerged as one of the world's most attractive real estate markets to invest in, especially given its limited land supply, transparent legal and land ownership system and stable political environment. Notwithstanding the relatively high prices of real estate in Singapore, we expect investors’ attraction to the Singapore real estate market to continue, supported by the following observations:
The residential property market in Singapore was resilient in the face of the COVID-19 global pandemic, the continuing US-China trade war, Brexit and a dimming economic outlook. Despite the national "circuit breaker" measures put in place by the Government to contain the spread of COVID-19, which essentially put a halt on transactional activity for 2.5 months in the second quarter of 2020, private home prices and transactional volume saw an increase in the third and fourth quarters of 2020, a trend which is projected to continue in 2021. A sustained demand for new private homes in 2021 would further deplete the inventory of unsold units currently held by developers, potentially leading to a revival in the residential collective sales market. Singapore also continues to be a popular market for private wealth investment, for ultra-high net worth individuals and family offices to base themselves, and this has contributed to activity in the high end residential property market.
In the industrial property sector, prices and rentals picked up in the fourth quarter of 2020, primarily due to increased demand for pharmaceuticals and electronics. In particular, warehouse leasing demand, arising from the third-party logistics and e-commerce sectors, contributed to an increase in rents in the fourth quarter of 2020, returning them to pre-COVID 19 levels. A large portion of industrial property in Singapore is regulated by the Government, typically on 10 to 30 year leases. JTC Corporation is the main statutory board regulating Government industrial property leases.
The commercial leasing market had witnessed growth in alternate segments such as co-working and co-living spaces. Demand for these sub-sectors have also seen an uptick, after a subdued first two quarters in 2020 resulting from the temporary closure of most workplaces, as more companies seek out flexible working arrangements with shorter lease term commitments. While some companies continue to downsize, there was an increase in leasing activities from the technology and financial services sectors towards the end of 2020, reducing the number of vacant units. With limited supply of Grade A offices projected for 2021 and the displacement of tenants from buildings slated for redevelopment, there are prospects for occupier activity and rents to pick up by the second half of 2021, on the back of improving business sentiments.
Overall, the Singapore property market outlook in 2021 will be impacted by global events and investor sentiments, including the success of the COVID-19 vaccines roll-out and the anticipated relaxation of border and travel restrictions on business activity in Singapore and the region.
Singapore also continues to be a popular market for private wealth investment, for ultra-high net worth individuals and family offices