Property market sentiment declines in 4Q2021, but remains positive: NUS Real Estate

/ EdgeProp Singapore |
The Singapore real estate market saw a decline in sentiment, according to quarterly findings of the Real Estate Sentiment Index (RESI) published by National University of Singapore Real Estate (Photo: Samuel Isaac Chua/The Edge Singapore)
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SINGAPORE (EDGEPROP) - The Singapore real estate market saw a decline in sentiment, according to quarterly findings of the Real Estate Sentiment Index (RESI) published by National University of Singapore Real Estate (NUS+RE).
RESI comprises a Current Sentiment Index and a Future Sentiment Index, tracking changes in sentiments over the past and the next six months respectively, and a Composite Sentiment Index, which is the derived indicator for the current overall market sentiment.
In 4Q2021, the Composite Sentiment Index declined to 5.4 from 6.6 in the previous quarter. NUS+RE notes that despite the decline, sentiments on the current and future conditions remained positive.
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“The [Composite] Sentiment Index remains above 5, suggesting that the market conditions will continue to improve, but at a slower pace,” NUS+RE states in its 4Q2021 RESI report.
The Current Sentiment Index decreased to 5.4 in 4Q 2021 from 6.7 in 3Q 2021. Similarly, the Future Sentiment Index decreased from 6.6 in 3Q2021 to 5.5 in 4Q2021, as executives felt less optimistic compared to the previous quarter due to the new Covid-19 variant and cooling measures announced in December 2021.
exhibit 1 - EDGEPROP SINGAPORE
Sing Tien Foo, professor and head of real estate at NUS, notes that the prime residential sector was the most adversely affected in the 4Q2021 sentiment survey due to the new cooling measures.
RESI uses a “net balance percentage” approach to reflect market sentiment, with a positive net balance indicating optimism and a negative net balance showing the opposite.
For current net balance, the office, suburban retail, and industrial/logistics sectors tied for the top spot with +35%. The current net balance for the Prime Retail sector improved the most, increasing by 49%, from -33% in 3Q2021 to +16% in 4Q2021.
Meanwhile, the prime residential sector moved into negative territory as the current net balance decreased by 67%, from +54% in 3Q 2021 to -13% in 4Q2021.
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For future net balance, the industrial/logistics sector had registered the highest number of +54%, followed by hotel/serviced apartment and office sectors, with +49% and +43% respectively.
In contrast, the future net balance for the prime residential sector had the largest decrease of 72%, from +46% in 3Q2021 to -26% in 4Q2021.
exhibit 2 - EDGEPROP SINGAPORE
In its report, NUS+RE highlights potential risks that may adversely impact on market sentiment in the next six months, including rising inflation and interest rates, which was flagged by 92.1% of respondents as a concern, up from 74.4% in the previous quarter. Correspondingly, 65.8% of respondents indicated tightening of financing/liquidity in the debt market as a key risk in 4Q2021, higher than the 32.6% in 3Q2021.
exhibit 3 - EDGEPROP SINGAPORE
In 4Q2021, about 30% of the developers surveyed expected moderately or substantially more units to be launched in the next six months. About 47% of developers expected a moderately or substantially fewer number of units to be launched over the next six months.
About 59% of the developers expected unit prices of new launches in the next six months to be moderately or substantially higher. About 35% expected the prices of new launches to maintain at the same level. (Browse newly launched condos in Singapore right now)
Survey findings indicate that there will be lower interest in government land sales (GLS) and en bloc exercises. About 33.3% of the respondents expect the level of interest in GLS to be moderately or substantially lower in the next six months. About 38.9% of the respondents expected the interest to stay the same.
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Separately, about 61.1% of the respondents expected the level of interest in en bloc sales to be moderately or substantially lower over the next six months. (See potential condos with en bloc calculator)
“Despite the cooling measures and rising inflation, most respondents maintained a cautiously optimistic outlook on the private residential market,” says Lele Nai Jia, deputy director of the NUS Institute of Real Estate and Urban Studies (IREUS).
“A confluence of factors — including the recovering economy, diminishing supply arising from delayed project launches and the perception of property as a resilient asset class — has created robust demand from upgraders and first-time home buyers,” he adds.

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