Emerging Private Sector Activity in Singapore real Estate Scene

There is a dark cloud in the horizon for real estates and private property sales and rental in Singapore. The Deutsche Bank recently reported rentals of office spaces were down by at least 18 % while capital values were off by 8% and that over-all rental yields were down for most investors in 2014. Analysts predict that this long slump in residential and office private property markets are bound to continue in the foreseeable future as declining occupancy continues to manifest even in recent years. But this may only be because regional financial hubs and banks and other key tenants are now looking at new and often better options.

Many real estate and economic analysts believe that for investors who bought private residential units 3-4 years ago, the rising vacancy rates and falling rents coinciding with interest rate hikes would mean shortfall of rental income to service the mortgage payments. Still, a market crash is not expected because the overall price index has already declined 10.8% over 12 quarters but even then, interest rate hikes must be regulated with corresponding economic improvements.

And true enough, the city state’s private property housing prices surged more than 60% from 2009 through 2013, propelled by lowered global interest rates and quantitative easing in many major economies. For this reason, Singapore’s government has already enacted a series of cooling measures from 2011 to prevent the situation from worsening. The measures included an additional buyer’s stamp duty, which adds as much as an additional 15% price for foreigners and appeared to have worked as private property price index falling around 11% percent from 2013 to 2016.
And this is how real estate and private property dynamics are now changing in Singapore. The decline in rentals has been balanced by the slight but promising increase in sales of private properties including real estates and houses. For one, buying demand for residential private property in the area seem to have increased in recent years and is bound to increase with the influx of migrants. Since the purchasing options for foreigners in Singapore are more prohibitive due to the additional buying stamp duty policy, most foreigners tend to rent rather than purchase. But at the same time, this has not translated to increased rental demands but instead to increased demand for other private property sale options. And if there were increasing rentals demand from foreigners, investors are willing to invest in private property such as condominiums.

Due to this trend, a total of 6,333 residential private properties were transacted in 2016, 98.9% higher in the previous years. One of the felt effects of this involvement is the rapidly changing dynamics of property selling and buying in Singapore. Compared to more recent years, Singapore residential property market for 2017 appears to be quite stable. This positive trend is true particularly for sales of condos which recorded impressive showing in increased volume consistently. Among the premiere private condominium launched recently were The Alps Residences, Forest Woods and the new executive condominiums such as The Terrace and Sol Acres and the Singapore market now have a positive quarter on quarter growth of 3.7%. Recent developments in the water cove area which has attracted private property buying from families and individuals looking to purchase their own home is also a positive sign of changing real-estate economics and private sector involvement in what used to be a heavily public regulated nation.

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