Private property price growth eases in Q3 following cooling measures

The Business Times - Oct 27
Private homes prices grew at a slower pace in the third quarter as the latest property cooling measures kicked in, although the top end of the market proved to be more resilient.

Prices edged up 0.5 per cent - in line with earlier flash estimates - in Q3, compared to an increase of 3.4 per cent in the previous quarter, according to the latest report from the Urban Redevelopment Authority (URA).

Market watchers pointed to disruptions during the quarter, namely the July 6 cooling measures which brought higher additional buyer's stamp duty (ABSD) and tighter loan-to-value limits, as well as the Hungry Ghost festival which generally sees slower sales.

Tricia Song, Head of Research:
Cumulatively, private home prices have climbed by 7.9% in the first three quarters of 2018, 9.6% above the recent trough in Q2 2017. Home values are still 3.2% lower than the peak in Q3 2013. 

Although the new measures have broadly weakened sentiment and stemmed a sharp increase in prices, we note that market confidence seems to be improving on the back of relatively positive sales for new launches last month. We believe there are still genuine buyers in the market seeking suitable and competitively-priced units. With a healthy pipeline of new launches coming up, developers who are better in recalibrating their pricing strategy will likely see better turnover.

In the near-term, we do not foresee developers offering deep discounts to move units, with home prices likely to remain flat in Q4 2018. Colliers Research has projected private home prices to rise by 8% for the full year in 2018 and potentially climb by 3% in 2019, in line with the economic growth – barring any external shocks. Click here for our analysis.


Strong demand drives up Q3 office rents in central region

The Business Times - Oct 27
Office rents in Singapore's central region rose at a faster clip in the third quarter - amid continuing strong demand.

Islandwide net demand of office space, as reflected in the change in occupied space, is likely to end the year on a six-year high.

Based on Urban Redevelopment Authority (URA) data, the figure for the first nine months of this year has already totalled 133,000 square metres. The last high, 174,000 sq m, was in 2012.

URA's office rental index for the central region posted a 2.5 per cent quarter-on-quarter gain in Q3 2018.

Duncan White, Head of Office Services:
Sales prices and rents of office properties continued to recover in Q3 2018, thanks to stronger demand for space from a broad range of sectors, as well as improved investment appetite for prime office assets.

Based on Colliers International’s research, during Q3, cognizance of tightening vacancy likely drove a series of consolidation and relocation activity by multinational corporations. Colliers continues to see broad-based expansionary demand, mainly financial, professional services, technology and flexible workspace firms. 

Going forward, the overall property outlook could be clouded by global economic uncertainties. After a strong front-loaded recovery since Q2 2017. We expect prime office rent growth to taper off to single digits in 2019, but should still be supported by limited new prime supply from 2018-2021 and strong demand from flexible workspace operators. It was reported recently that JustCo is taking up the second floor of China Square Central by Q4 2019, adding to its portfolio of 13 centres. Click here for our analysis.


Retail rents in Central Region slip 18.1% in Q3 this year from 2014 peak

The Business Times - Oct 27
Retail rents in Singapore's central region have slipped 18.1 per cent from their most recent peak in the fourth quarter of 2014 to the third quarter this year, based on official data.

The familiar string of woes that has plagued brick-and-mortar retailers in the last decade - including competition from online shopping and e-commerce, labour shortage and leakage of shopper dollars as residents here prefer to shop overseas - is expected to continue depressing retail rents on the whole, making the recovery long and slow.

Tricia Song, Head of Research:
Consumer spending has remained cautious. Excluding motor vehicles, retail sales index increased 0.1% and 2.4% year-on-year (YOY) in July and August 2018 respectively. According to CapitaLand Mall Trust, in the nine months ending September 2018, shopper traffic at its portfolio of 15 predominantly suburban malls declined 1.8% YOY while tenants’ sales psf per month increased by 0.5% YOY over the same period. Colliers believes landlords need to continue to engage shoppers with new offerings and enhanced experiences in the new era of omni-channel shopping lifestyles. 
 
Broadly, we expect the overall retail property market to stabilise over 2018 and 2019 as rental declines have edged down each year over the past two years. YTD 2018, rents have declined 2.2%. For the whole of 2017, rentals of retail space in the Central Region fell by 4.7%, a substantial drawdown from the decrease of 8.3% recorded in 2016. 

Ground floor retail rents in prime shopping centres along Orchard Road should lead the recovery, rising 1% to 3% YOY in 2018. For the Regional Centres, select shopping malls should outperform, particularly those in suburban locations with significant catchment areas. Click here for our analysis.


Industrial property sector outlook stable in Q4 and beyond

The Business Times - Oct 26
The outlook for the industrial property sector is expected to remain stable going into the fourth quarter and beyond, although the impact from the US-China trade war remains a potential risk.

In the third quarter, industrial prices edged up 0.1 per cent from the previous quarter, while industrial rents slipped 0.1 per cent - marking a decline for the 14th consecutive quarter - owing to softer rents in multiple-user factories, single-user factories and business parks, JTC's quarterly report showed.

Compared to a year ago, prices of industrial space softened 1.1 per cent, while rents dipped 0.4 per cent.

Tricia Song, Head of Research:
Rents and prices of the overall industrial property market remained relatively stable in Q3 2018 while overall occupancies have improved.
Industrial rents decreased marginally by 0.1% quarter-on-quarter (QOQ). This is the 14th consecutive quarter that All-Industrial rental index fell, at the same rate as Q1 and Q2 2018, signaling a continuous trend towards stabilisation. This brings the All-Industrial Rental Index to 13.7% below the peak in Q2 2014.

Overall occupancy turned around from the decline in Q2 and improved QOQ across most segments in Q3, by 0.4 percentage point (pp) QOQ to 89.1%. This is the highest All-Industrial occupancy level since Q1 2017.

Dominic Peters, Senior Director, Industrial Services:
Dyson’s recent announcement that it will be making electric cars in Singapore represents a trophy win for Singapore’s aspirations to move up the value chain for the manufacturing sector.  We expect spillover effects to other parts of the value chain in the industrial property sector. 

Data Centres have also been a bright spot, with more data centres in the pipeline. 

We are cautiously optimistic on the industrial property sector, pending the severity of the trade war.  

2019’s new industrial supply looks to remain similar to 2018’s. Going forward, we expect the industrial market to be two-tiered – with rents for the high-specs and business park space inching up while the older space could still decline slightly to flattening out. Click here for our analysis.


SLA appoints Colliers to lease, manage 183 black-and-white heritage bungalows

The Business Times - Oct 29
Colliers International has been appointed by the Singapore Land Authority (SLA) to lease and manage 183 black-and-white heritage bungalows across various Singapore neighbourhoods.

The bungalows under Colliers' care range in land area from 800 to 13,200 square metres and are located at various exclusive residential neighbourhoods including Adam Drive, Holland Road, King Albert Park, Tanglin Road and Watten Estate Road.

Of the 183 properties - which were built in the late 19th century - less than 30 are vacant and available for lease, Colliers said in a press statement.

Tang Chee Charn, Head of Real Estate Management Services:
Colonial bungalows are highly sought-after properties owing to their iconic design, rich history, prestige factor, as well as generous land space and large private gardens. We have received many leasing enquiries for the black-and-white bungalows.

Barring any unforeseen external shocks, the leasing prospects for these heritage houses remain fairly positive amid the stable economic growth outlook for Singapore over the next year. Singapore continues to be an attractive business destination for multinational corporations, and their setting up or expansion in operations here will present leasing opportunities for the black-and-white bungalows.