Sales prices and vacancy of office properties continued to recover in Q1 2019 despite a dip in rents, thanks to stronger demand for space from a broad range of sectors, as well as improved investment appetite for prime office assets.
In Q1 2019, URA’s Office Rental Index for the Central Region dipped after rising for six consecutive quarters. Rents declined 0.6%, after growing 0.5% in Q4 2018. Colliers proprietary data suggests rents of CBD Premium Grade A and Grade A offices are still rising, hence we believe the drag could be attributed to office buildings outside the basket of properties tracked by Colliers. URA’s Office Rental Index for the Central Region is 8.6% below the most recent peak in Q1 2015.
Nonetheless, island-wide vacancy as tracked by URA declined 0.3ppt QOQ to 11.8% during Q1 2019, as net demand expanded from a broad range of sectors. 

Office sales prices on the other hand grew at an accelerated pace, on the back of more en bloc transactions during the quarter such as the sale of Manulife Centre which was jointly acquired by ARA Asset Management and British property group Chelsfield for SGD555.5 million; six levels at Suntec City which were reportedly sold to Alpha Investment Partners for SGD160 million and another floor at the same property that was sold to an unnamed party for SGD8 million.  URA’s Office Price Index for the Central Region rose 3.0% QOQ in Q1 2019 as compared to 2.4% QOQ in the preceding period. Office prices in the Central Region are now 8.9% above the recent low in Q2 2017.  

The punitive additional buyer’s stamp duty (ABSD) measures on the residential sector since July 2018 should continue to fuel a shift in investor interest towards the commercial sector. 


Based on Colliers’ research, CBD Premium and Grade A gross effective rents grew 2.3% QOQ to SGD9.64 psf in Q1 2019. Increasing landlord confidence underpinned lower incentives and rental uplift.

Q1 2019 net absorption was driven by technology and flexible workspace sectors, as vacancy tightened to 3.9% as of end-March 2019 from 5.4% as of end-December 2018.
Colliers Research forecasts that with a higher base for comparison in 2018, CBD prime office rents will likely grow at a slower pace – at about 8% - in 2019. Meanwhile, Grade A and Premium CBD office vacancy is expected to continue to trend below 6% until 2022. 

We believe the growth momentum in the office property sector will continue to carry through from 2018 into 2019, supported by healthy occupier demand.

In the new Draft Master Plan 2019 released on 27 March 2019, to encourage the redevelopment of older buildings and rejuvenate the Central area, two new incentive schemes, the CBD Incentive Scheme and the Strategic Development Incentive (SDI) Scheme, were proposed to allow for potential GFA increase for the redevelopment of old office buildings in strategic areas. 

We expect these schemes, if taken up, to reduce the availability of office space in the CBD and drive up rents. Affected occupiers should explore options to move to newer space within the CBD, or move to city fringe offices or even to business parks, if applicable. Investors could also look to add value with redevelopment premiums to older buildings. 

Broadly, we expect reduced new CBD Grade A office supply over 2019–2021, with annual expansion averaging 2% of stock, and the continued tightening of vacancy should support rental growth.


URA’s retail real estate indices for Q1 2019 declined after some respite in the last quarter, amid an increase in vacancy and as consumer and investor sentiments remain subdued.

URA’s Retail Rental Index for the Central Region dipped marginally by 0.2% QOQ, compared to the 1.2% increase in Q4 2018.  Except for a blip in Q1 2018 which showed a 0.1% QOQ uptick, rents have declined a cumulative 18.1% between Q1 2015 and Q3 2018, and while we believe rents have started to stabilise, we do not expect any significant improvement given a lack of catalyst.  

URA’s Retail Price Index for the Central Region was down 1.9% QOQ; lagging rents. We expect investor interest and transaction volumes to pick up going forward. In Q2 2019, we saw Chinatown Point sold for $520 million. 

Meanwhile, island-wide retail vacancy increased for a third consecutive quarter, as more retail stock was granted Temporary Occupation Permit (TOP). Retail vacancy increased by 0.2 ppt QOQ to 8.7% in Q1 2019. On a year-on-year (YOY) basis, vacancy increased by 1.2 ppt. During the quarter, 28,013 sq m of retail space was completed. The most significant supply came from 11,300 sq m of Gross Floor Area (GFA) additions to the existing podium of TripleOne Somerset. Meanwhile, 18 Robinson also saw 7,400 sq m of GFA of retail space completed. 

Consumer spending remains cautious. Based on figures released by the Singapore Department of Statistics, the retail sales index (excluding motor vehicle sales) increased by 5.3% YOY in January 2019 but declined by a higher 10.7% YOY in February 2019. The large variance in retail sales between the two months was mostly attributed to the Chinese New Year festive season, which occurred in early February this year, but was celebrated in mid-February in 2018. 

Recent retail mall REITs’ financial results showed some improvement in shopper traffic in their malls in Q1 2019, as well as positive rental reversions, underscoring some success in their proactive asset and lease management. Landlords need to continuously engage shoppers with new offerings and enhanced experiences in the new era of omni-channel shopping lifestyles.

Besides the continued challenge from e-commerce, we expect elevated new retail space supply in the central region, city fringe and suburban areas in 2019 (equivalent to 2.0% of current stock). Upcoming supply in 2019 includes Raffles Hotel Arcade, Funan, and PLQ Mall. Supply should taper off significantly from 2020. 

In 2019, we expect ground floor retail rents in prime shopping centres along Orchard Road to rise marginally by 1-2% YOY, due to the lack of new stock; while prime floor rents for Regional Centres (suburban) should stabilise.

For the Regional Centres, those in suburban locations with significant catchment areas and MRT connections, should outperform the less strategically-located suburban malls.


The decline in private home prices in Singapore gathered pace in Q1 2019, dipping by 0.7% from the previous quarter – a sharper decline compared with the 0.1% decrease in Q4 2018. It is also slightly steeper than the initial estimates of a 0.6% decline released earlier this month. 

This marked the second straight quarter of price decline in the private residential sector. Overall private home prices are now 0.7% below the most recent peak in Q3 2018 and 3.9% below the all-time peak in Q3 2013. 

The property cooling measures of July 2018 – like speed bumps – have been effective in bringing down prices and total transaction volumes. Developers’ new sales in Q1 2019 were flat QOQ at 1,838 units, from 1,836 units in Q4 2018, but were still up 16% YOY due to more attractive launches. Meanwhile, resale transactions declined 5.7% QOQ and nearly halved YOY to 1,858 units. 

Non-Landed Private Residential
Notably, prices of non-landed properties decreased by 1.1% QOQ in Q1 2019, after climbing by 0.5% in Q4 2018 and flat in Q3 2018. This is the first decline in the non-landed price index since July 2018’s cooling measures, as the impact of the new curbs reverberated more uniformly across the market segments: Core Central Region (CCR); Rest of Central Region (RCR); and Outside Central Region (OCR).

The decline in prices of non-landed homes was largely due to a steeper price drop of 3.0% in CCR, and a 0.7% decline in RCR. Home value in OCR still grew by 0.2% QOQ, but the pace of growth slowed from the 0.7% gain in Q4 2018.

Core Central Region (CCR)
According to URA’s data, the CCR led the price decline in Q1, falling by 3.0% (compared to 2.9% in the flash estimates, signaling worse performance in the last 2-3 weeks of March, as flash estimates are based on data gathered in the first 10 weeks of the quarter) from the previous quarter. This is the sharpest quarterly price decline for the CCR segment since the 5.2% fall in Q2 2009, in the wake of the Global Financial Crisis. This is also the second consecutive quarter of decline in CCR, bringing total price decline to 4.0% since its recent peak in Q3 2018. 

The decrease in Q1 non-landed CCR prices was much steeper than our expectation. A closer look at the transactions during the quarter suggests that the decline in median prices for certain projects could have contributed to the sharper drop as developers seek to clear inventory in their completed projects. These included Lloyd Sixtyfive, New Futura, and TwentyOne Angullia Park. 

• Lloyd Sixtyfive sold 3 units in Q1 2019 at a median price of SGD2,852 psf, down 13.6% from the median price of SGD3,301 psf for the 2 units sold in Q4 2018. 
• New Futura sold 3 units in Q1 2019 at a median price of SGD3,471 psf, down 6.1% from the median price of SGD3,698 psf for the 12 units sold in Q4 2018. 
• TwentyOne Angullia Park sold 4 units at SGD3,362 psf, down 4.5% from the median price of SGD3,520 psf for the 3 units sold in Q4 2018. 

That said, we note that some projects that launched in Q1 2019 had achieved benchmark pricing, including Fourth Avenue Residences, RV Altitude and Boulevard 88.   
• According to caveats lodged as of April 25, Fourth Avenue sold 77 units at a median price of SGD2,411 psf in Q1 2019. This is the highest price on psf for a 99-year leasehold project along Bukit Timah Road. 
• RV Altitude sold 19 units at a median price of SGD2,834 psf, the highest for projects along River Valley Grove. 
• Boulevard 88 sold 26 units at SGD3,613 psf, one of the highest-priced on psf for a large format project in Orchard Boulevard.

Residential developments that may be launched for sale in CCR this year include: Wilshire Residences, Juniper Hill, Holland mixed development etc. 

Rest of Central Region (RCR)
Meanwhile, non-landed home prices in RCR fell by 0.7% (versus 0.2% in flash estimates), overturning the 1.8% increase in the previous quarter. Prices appear to be normalising, after the uptick spurred by new launches such as Arena Residences, Kent Ridge Hill Residences, Parc Esta in Q4 2018. 

We see some earlier launches such as Margaret Ville, Mayfair Gardens and The Tre Ver moving more units in Q1 2019 versus Q4 2018 while maintaining prices. Park Colonial, which has crossed 72% sales mark of its total 820 units as of March 2019, has started to raise prices, achieving a median price of SGD1,791 psf in Q1, from SGD1,750 psf in Q4.   

We estimate that RCR private home values could firm up in H2 2019. Developers in general have priced freehold or attractively-located projects at a premium and there is still time to clear their inventory before the five-year ABSD timeline is up. We expect some attractive new launches in the next few quarters such as former Pearl Bank Apartments, Avenue South Residence, Coastline Residences, Amber Park, Mayfair Modern. 

The developer of the former Normanton Park project has been issued a no-sale licence, prohibiting it from selling units before the Temporary Occupation Permit (TOP) is obtained. This could create some overhang and price pressure when the 1,862-unit project is eventually launched.  

Outside Central Region (OCR)
Non-landed home values in OCR rose 0.2% (versus flat in flash estimates), following the 0.7% increase in the previous quarter. OCR prices continued to be resilient, given the boost in sentiment from the Cross Island Line announcement which helped developers hold onto prices. Projects such as Affinity at Serangoon, Gardens Residences and Riverfront Residences continued to do well. 

Nonetheless, given the substantial new residential supply in the OCR - such as the 2,203-unit Treasure at Tampines and 1,410-unit The Florence Residences – which launched in Q1 2019 and moved 13% and 5% of their total units respectively, we expect prices in OCR could soften into the rest of 2019.

Landed Homes
Prices of landed properties increased 1.1%, after it fell by 2.0% QOQ in Q4. We think the relatively large increase in landed home values is counter-intuitive as we would expect the reduced loan-to-value (LTV) and higher Additional Buyers’ Stamp Duty (ABSD) should have some negative impact on larger quantum landed homes. However, the defensiveness in landed home prices could be due to supply scarcity, and the owner-occupation buyer profile which are less affected by the cooling measures.  

The increase brings landed home prices to +9.4% since Q2 2017. Prices are still 8.1% below their Q3 2013 peak.

Supply pipeline and vacancy: Supportive in near-term
During Q1 2019, 2,262 private homes obtained Temporary Occupation Permit (TOP), compared to 4,720 in Q4. Along with another 6,717 private homes expected to be completed for the rest of the year, we expect total completions of private homes in 2019 to be 8,979 units, relatively on par with 9,112 units completed in 2018. These are sharp declines from 2017’s 16,449 units and 2016’s historical high of 20,803 units. 

URA expects 4,231 and 13,078 private home completions in 2020 and 2021 respectively, which are below historical average completions. However, completions could rise sharply to 20,116 units in 2022 before falling to 12,472 units in 2023, due to the bumper en bloc transactions from 2016 to mid-2018.

For the non-landed segment, vacancy rate continued to improve to 6.7% in Q1 from 6.8% in Q4. The peak vacancy was 10.4% in Q2 2016. 

The overall private residential rental index increased 1.0% QOQ in Q1 2019, after a surprising drop of 1.0% in Q4 2018. The rise in rents could be due to the past year’s below-average supply completions.
We expect rents to go up 3% in 2019, as more well-located projects are completed - which could help to boost rents. In addition, the anticipated decline in new completions and potentially demand for rental homes from displaced en bloc sellers could also lend some support to the leasing market.

The recent announcement of an additional SGD9 billion investments committed by Singapore’s two integrated resorts (IRs) could boost employment, GDP growth, and thus confidence in property. It could also draw more foreigner interest in Singapore residential property, notwithstanding the 20% Additional Buyers’ Stamp Duty (ABSD).

We estimate that overall private home prices could stabilise in the second half of 2019, and rise by 1% for the full year 2019.  Supporting factors that could hold up prices in the coming quarters include: halt in interest rate increases, continued benign economic growth, and en bloc beneficiaries buying replacement homes. 
For 2019, we estimate that developers could potentially sell 9,000 new homes amid the varied launch pipeline and gradual market acceptance of the new cooling measures. We note that the launch pipelines could also ease going forward as most of the bulky ones have been launched or are being launched.