Singapore residential, office and retail markets face headwinds on slow growth

Global growth prospects have deteriorated, with the World Bank adjusting its 2019 growth forecast from 2.9% to 2.6% on the back of a slowdown in trade and global investment. At the same time, investment risks remain amid the ongoing US-China trade tensions and concerns over a no-deal Brexit. What does this mean for the residential, office and retail property markets in Singapore?
“Real estate is highly correlated with GDP growth and I think growth prospects now are definitely mixed,” says Tricia Song, head of research at Colliers International. She was speaking at the Real Estate Developers’ Association of Singapore (Redas) Property Market Update 2019 Seminar on July 11. “The US-China trade war has cast a pall over Asia and definitely for Singapore: it’s a small and open economy, and there are more uncertainties in the outlook, so there should be some impact on that.”
In addition, existing cooling measures, coupled with lower GDP growth forecasts, are expected to dampen demand in the residential property segment.
Low pipeline of office supply is expected until 2022 (Photo credit: Samuel Isaac Chua/EdgeProp Singapore)

Residential: ‘High supply and subdued demand’

Based on URA data, there are some 43,000 private housing units in the pipeline that remain unsold. There are around 24,000 vacant units and new supply in the Government Land Sales programme. Over the last five years, annual sales averaged 8,400 units.
“The current situation of high supply and subdued demand is indeed very challenging. We are somewhat comforted that the government will continue to monitor the property market closely, and stands ready to act to ensure a healthy and sustainable market,” says Chia Ngiang Hong, president of Redas.
When it comes to new launches, Selena Ling, OCBC’s head of treasury research and strategy, points out that the take-up rate of new launches still falls short. She expects prices to decline by a “low single digit” in 2019 and highlights that the market has yet to feel the impact of a large uptick of launches. Ling estimates that it will take three years or more for the unsold units to be sold.
Regina Lim, JLL’s head of capital markets research, Southeast Asia, agrees. “Take-up rate of new launches...