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Commentary on Urban Redevelopment Authority's Q3 2022 real estate statistics

Colliers' commentary on Urban Redevelopment Authority (URA)'s Q3 2022 Real Estate Statistics

Office Sector

  • Supported by strong back-to-office momentum and tight supply, the URA office rental index in the Central Region climbed 2.1% QoQ, slowing from the 2.4% growth in the preceding quarter. 
  • Rental growth was broad-based with contacted median rents of of Category 11 office spaces trending higher by 5.6% QoQ, whereas Category 22 office spaces grew by a slower pace at 3.0% QoQ.
    1 Refers to office space in buildings located in core business areas in Downtown Core and Orchard Planning Area which are relatively modern or recently refurbished, command relatively high rentals and have large floor plate size and gross floor area.
    2 Refers to the remaining office space in Singapore which are not included in “Category 1”
  • Similarly, based on the basket of office buildings tracked by Colliers, rents of the Core CBD Premium & Grade A segment grew by 1.8% from the preceding quarter to S$11.30 psf per month, underpinned by occupiers’ preference for better located and higher quality office buildings, as well as increases in service charges.
  • Island-wide office saw a positive net absorption of 24,000 sq m in Q3 2022, similar to Q2 2022. Island-wide vacancy rate tightened to 11.7% at the end of Q3 2022, from 12.0% at the end of the preceding quarter.
  • Colliers has observed weaker leasing enquiries in Q3 2022 and the availability of higher quality offices in the Core CBD remains tight due to a lack of  new supply and ongoing withdrawal of existing office stock for redevelopment.

  • For the rest of 2022, geopolitical and economic headwinds as well as higher volatility in the equity markets have led to some firms announcing a hiring freeze or layoff. With firms becoming more conservative in their hiring or expansion plans, leasing demand is likely to be impacted. 
  • However, Colliers expects that multi-national firms with healthy financials will continue to be attracted to Singapore for its macroeconomic stability and geopolitical neutrality.
  • On the supply front, the availability of good quality office stock in the Core CBD remains tight. This is due to a lack of new supply coming onto the market, as IOI Central Boulevard Towers will only be completed in 2H 2023. As such, some landlords might have been emboldened to raise asking rents. 
  • Besides the tight supply, some landlords are passing on increasing operational costs to tenants in the form of higher service charges, resulting in higher gross effective rents. Based on Colliers’ research, service charges in some office buildings have increased by between 10% and 30%.
  • Hence, the upward rental growth trajectory is expected to remain well-supported. With office rents in the Core CBD Premium & Grade A segment tracked by Colliers having grown by 5.0% year-to-date 2022, Colliers expects the full year 2022 rental growth for this segment to come in at around 6-7%.


Retail Sector

  • Rents of retail space in the Central Region declined by 0.4% QoQ, almost similar to the 0.5% QoQ decline in the preceding quarter.
  • Nevertheless, other retail indicators continued to show further signs of recovery, in tandem with the substantial relaxation of safe management measures and border restrictions. Retail sales (excluding motor vehicles) continued its positive growth since Feb 2021 at 14.0% YoY in August 2022, after accounting for seasonal effects. Singapore’s international visitor arrivals grew for the eighth straight month in September, at around 752,305, up from the 728,744 recorded in August.
  • Based on Colliers’ basket of retail malls, prime retail rents remained flat, while suburban rents have increased by 0.7% QoQ. 
  • Leasing demand in Q2 2022 was healthy, with new entrants such as sportswear retailer Kydra setting up shop at Takashimaya, as well as online fashion brands Neonmello at Plaza Singapura, and Young Hungry Free at Funan, respectively.
  • In addition, a handful of openings have been announced at Raffles City after the completion of its AEI. These include the flaghip store of Paris Baguette, Lululemon, Sephora, Creed, Guerlain, Givenchy Beauty, Acqua di Parma, L’occitane and Aesop. These new openings are likely to provide an uplift to rents for downtown retail space. 
  • Islandwide quarterly net absorption in the private retail segment came in at a stronger 30,000 sq m in Q3 2022, compared with the 8,000 sq m in the preceding quarter. 
  • The vacancy rate of the suburban private retail market (as measured by OCA) came in at 6.1% in Q3 2022, similar to Q2 2022. Suburban rents is the only sub-market bucking the declining rental trend, with rents having increased by 1.2%, signalling the earlier recovery of suburban retail. 
  • Despite the tightening of vacancy rates in the Orchard and Central Area Outside Orchard sub-markets, rentals have yet to fully recover given that tourist numbers, especially those from North Asia, are not back in full force. As such, median rents of the Orchard sub-market and Central Area Outside Orchard segments declined by 1.1% and 0.2% respectively in Q3 2022.

  • Higher inflation and recession concerns weighing on consumer confidence will reduce retail spending in the coming months. However, suburban retail and non-discretionary categories, such as food & beverage, as well as supermarkets will remain resilient. 
  • Nevertheless, prime and downtown retail looks on track to recover this year and next with the return of tourists, as well as the resumption of MICE events and business travels. 
  • More recently, consumers have been incentivised to purchase from brick-and-mortar stores for smaller purchases and only go to e-commerce for bulk purchases. This is due to e-commerce players charging higher delivery charges for smaller deliveries as a result of surging logistics costs. This had led to many online players setting up physical stores to complement their e-commerce strategy. 
  • Further, given the shift from goods to services post-COVID, and the removal of restrictions as well as the resumption of events and atrium activities, improved retail footfall and sales is likely to spur healthier leasing activity.
  • Another positive for the retail market is the upcoming new retail supply is expected to be muted. In particular, the average new retail supply in the next few years is approximately 30% of the historical 10-year average with limited supply for prime retail. As such, this could lend support to a more meaningful improvement in rents and occupancies in the coming quarters.

Residential Sector

  • Singapore’s Q3 2022 home prices rose 3.8% QoQ, accelerating its pace of 3.5% in the preceding quarter, driven by strong sales at new launches in the suburbs which hit new benchmark price amid healthy local demand.
  • Prices are now +8.2% year-to-date and +23.5% from its recent trough in Q1 2020 to reach a historical high.
  • Non-landed homes rose 4.4% QoQ led by 7.5% QoQ rise in outside central region (OCR), followed by rest of central region (RCR) at 2.8% and core central region (CCR) at 2.3%. Price growth in the OCR was due to robust pricing for new launches - Lentor Modern (517 units, $2,107 psf), AMO Residence (364 units, $2,110 psf), and Sky Eden@Bedok (120 units, $2,118 psf). Together, these projects drove about 80% of Q3’s new sales in the OCR, and 45% of total Q3 new sales. That said, this Q3 jump in OCR new sales prices is likely to be a one-off, as the aforementioned projects have largely been sold out.
  • Notably, the number of unsold units (including ECs) in the quarter has increased to 17,737 this quarter from 17,506 in the previous quarter. In addition, there is a potential supply of around 5,800 units which have not been granted planning approval, and 23,500 units which will be made available for sale in the coming months. As such, there will be a substantial supply of private housing available over the next few years.
  • Rentals of private residential properties accelerated from the 6.7% increase in Q2 2022 to 8.6% in Q3 2022 (+23.9% YoY and +32.9% since its last trough in Q3 2020). Higher rents may be fuelled by the tight supply in the market, but further upward pressure may be alleviated as more homes get completed; the 28,800 private residential units which have been completed or are expected to be completed in 2022-2023 will be almost triple the 10,400 units in the preceding two years (2020 and 2021). These newly completed homes will be able to cater to those looking to rent or buy in the near term. 


  • Q3 2022 figures have continued to demonstrate the strong purchasing power of home buyers, with higher mortgage rates appearing to have a limited impact on sentiments. The rise in prices have been led by the mass market, with strong take up at some projects reflecting pent-up demand for attractive projects with strong attributes such as location and proximity to amenities. 
  • For the rest of the year, upcoming launches are concentrated in the OCR, and are targeted at the mass market. These mass market launches would attract upgraders and genuine occupier demand, which are likely to cause OCR prices to continue to rise, albeit at a slower pace. 
  • This is because most of the more attractive projects have largely been sold out; in addition, with the year-end holiday season and higher mortgage rates, both buyers and developers are likely to sit out the rest of the year to see how the market plays out post the 29 September cooling measures.
  • Notably, it is also first-time buyers who depend most on financing, which is now more costly. Therefore, sales are expected to slow on the back of the recent property cooling measures to ensure prudent borrowing and moderate demand as tighter limits on property loans will impact affordability. 
  • Finally, the increasing supply of homes, in terms of unsold inventory, pipeline coming onto the market and newly completed units, will help to alleviate the supply crunch, as well as moderate price and rental growth.
  • Consequently, Colliers expects new sales (including ECs) to come in at around 8,000 units, with a full year price growth of between 9% and 10%; a moderation from the 13,027 units and 10.6% price growth registered in 2021.  

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