Industrial, office and hotel sectors to bottom out in 2018: DBS Group Research

Singapore’s industrial, office and hotel property sectors are likely to approach a cyclical bottom in 2018, says a report by DBS Group Research. It came to the conclusion based on sentiment that new supply for these sectors is expected to taper off next year.

According to DBS Group Research, new industrial supply is likely to decrease by nearly 50% in 2018, as warehouse and business park space completions are projected to peak this year. Business parks are poised to see a rise in demand from firms in the telecommunications, media and technology sector. However, REITs with interest in industrial and business parks will continue to expect downside risks for the sector for the rest of this year.

New commercial property and hotel room supply is also set to fall in 2018. The commercial sector will see a low number of new supply additions until 2020 following the supply boom in 2016 and 2017, while hotels are likely to see additional room demand from the return of major conferences and events in 2018.

Source: Wee Hur Development

The report cites a projected growth in GDP of 2.5% to 2.8% per annum over the next two years as the reason hotels and office space will see an increase in demand, particularly because the two sectors are closely correlated with a buoyant economy. DBS Group Research believes hotels and commercial properties will lead market recovery.