The Singapore real estate market in 2016 will be challenged by a moderately growing economy, coupled with imbalances in demand and supply across the various sectors. These factors will continue to add pressure on occupancy and rents. A weakening occupier market and concerns surrounding rising interest rates will keep investment activity measured. Against this challenging backdrop, however, there remain opportunities for landlords, tenants, and investors:
Office: In light of a more competitive rental climate, ‘flight to value’ is expected to drive leasing activity. A shorter, less volatile rental cycle and limited new supply in the CBD Core past 2016 could mean a faster than anticipated market recovery.
Retail: Current conditions provide an opportune time for landlords to realign and/or re-position their tenant mix and for retailers to evaluate their space options. It is also currently critical for landlords and retailers to maintain an innovative edge and create value for consumers.
Logistics: Operations efficiency for occupiers could be improved through rightsizing their physical footprint and/or relocating to developments with better specifications. Landlords should seek to enhance the quality of specifications in their portfolio to meet the needs of new growth sectors.
Residential: While sales volume remains lukewarm, prices are falling at a more measured pace, suggesting that the market may be approaching its trough in the next 12-18 months. The narrowing premium of prime residential properties vis-à-vis the rest of the market could provide good purchase opportunities.
Investment: Investment offerings are still available in the market for investors with a mid to long-term horizon looking to capitalise on current market conditions. The bid-ask spread could see further narrowing in 2016, contingent on the efforts of buyers and sellers.
Head of Research, Singapore & South East Asia
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Han Huan Mei
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