Singapore residential landscape (Credit: Samuel Issac Chua / The Edge Singapore)
SINGAPORE (EDGEPROP) - The Singapore property market has shown “a broad-based recovery”, with improvement in metrics recorded across most segments, according to a 1Q2022 report by CBRE. The report comes ahead of property market data for 1Q2022 expected to be released by URA at the end of the month.
According to CBRE, both sellers and buyers adopted a wait-and-see approach post-cooling measures, with only 1,716 new private homes (excluding executive condominiums or ECs) sold in 1Q2022, well below the five-year average. “Private home price growth plateaued in 1Q2022 as cooling measures took effect,” the report explains.
Private residential landed properties saw a marginal 0.4% increase q-o-q in prices, compared with a 5.0% surge in the preceding quarter. Overall non-landed home prices saw a 0.6% decline q-o-q, reversing from the 5.3% growth in 4Q2021.
Government land sale sites Jalan Tembusu and Lentor Hills (Parcel A) saw subdued bidding as developers showed restraint post-cooling measures. Dairy Farm Walk and Bukit Batok West Avenue 8 EC site performed better, as confidence returned in March. “Smaller collective sales also saw some success given the lower cost and development risk,” the report adds.
CBRE expects new home sales to reach between 9,000 and 10,000 units, with prices rising by 3%, in 2022.
The office market continued to show strong momentum carried over from end-2021, as Singapore continued to open up, CBRE notes. The office market registered a third consecutive quarter of positive demand in 1Q2022, with a positive net absorption of 307,292 sq ft. Rents for Grade-A space in the core CBD increased by 1.4% q-o-q.
Non-bank financial institutions and technology companies underpinned primary leasing demand, according to the report. Other rapidly growing sectors included pharmaceuticals, fast-moving consumer goods and flexible workspace operators.
CBRE forecasts core CBD Grade-A rents to grow by 6.9% y-o-y for 2022, on the back of the relaxation of workplace measures and limited supply.
“Occupier demand has generally improved across all submarkets, with islandwide business parks recording a positive net absorption of 186,982 sq ft in 1Q2022,” the report states. Business park demand is in recovery, rebounding from negative levels in the preceding quarter.
Occupancy has improved in the city fringe, as well as in existing spaces such as the International Business Park, Changi Business Park and Singapore Science Park. Occupancy of business parks in the rest of the island was impacted by new completions and declined by 0.9% q-o-q.
“The rental gap between city fringe and rest of island submarket widened further in 1Q2022,” says CBRE, as rents in the rest of island submarket stayed constant while rents in the city fringe increased for the fourth consecutive quarter by 0.8% q-o-q.
Pharmaceutical and biomedical firms, as well as the tech and chemical industries, remained key drivers for business park demand. CBRE expects leasing momentum to pick up in the coming quarters.
Retail sales for the first two months of 2022 grew by 7.7% y-o-y, primarily supported by local spending and the improved business expectations with the relaxation of Covid-19 safety measures.
“While the recovery of the retail market was still capped by restrictions on social gatherings in most of the quarter, leasing activity continued to be stable,” the report states, as prime retail rents for Orchard Road, City Hall/Marina Centre and fringe areas stabilised for the second consecutive quarter.
The limited retail supply, along with Improved shopper traffic and eased travel restrictions, may offset the impact of inflationary challenges on retail.
Overall industrial sentiment remains positive, underpinning industrial leasing demand, notes CBRE. In particular, leasing demand for storage requirements from the semiconductors, food, pharmaceutical and biomedical sectors remains resilient, in addition to renewed interest from the aerospace industry as border restrictions are further relaxed.
“Due to limited availability in existing prime logistics buildings, rents inched up by another 1.4% in 1Q2022,” according to the CBRE report. Meanwhile, warehouse and factory rents increased by 1.2% and 0.6% q-o-q respectively.
CBRE expects sustained rental growth for logistics space in the medium term, as occupiers look to maximise inventory potential to deal with supply-chain issues and transport costs.
Total investment sale volume reached a four-year high in 1Q2022, expanding by 29.4% q-o-q to reach a whopping $9.9 billion, propped up by public land sales and big-ticket commercial deals. The office sector saw major growth following residential cooling measures in December 2021.
Office investments surged 79.5% q-o-q to $3.4 billion in 1Q2022, on the back of large deals such as Twenty Anson which was sold for $599.5 million (or $2,907 psf) to US private equity group KKR. Kajima Corp purchased 55 Market Street for $286.95 million (or $3,450 psf) and a joint venture between SMFL Mirai Partners, Kenedix and ARA invested $297.0 million in Capital Square.
Retail investment saw significant growth, recording a volume of $1.929 billion on the back of several suburban mall sales. The acquisition of JCube by CapitaLand for $340.0 million (or $1,618 psf) and the purchase of a 68.2% stake in Jem by Lendlease REIT for $1.418 billion (or $2,850 psf) were the largest acquisitions across all sectors. In addition, the collective sale of Tanglin Shopping Centre in the Orchard Road submarket was carried out, with Pacific Eagle Real Estate as the buyer at $868.0 million (or $2,769 psf).
Investment activity is expected to benefit from Singapore’s “safe haven” status as investors look to park their capital amid geopolitical tensions. CBRE expects 2022 investment volume to grow 10% to $31 billion, led by commercial and industrial sales.