2018新加坡房地产市场展望（英文版）_30页-6mb

2018 Asia-Pacific Real Estate Market Outlook - Singapore Summary

Core Content Overview

This report provides an outlook on the Singapore real estate market for 2018, covering the office, retail, logistics, and residential sectors, as well as the capital markets. It is based on economic fundamentals, industry trends, and market dynamics, with a focus on growth, supply, demand, and the evolving role of technology and innovation.

Economic Outlook

• GDP Growth: Singapore's GDP grew by 3.6% in 2017, surpassing initial estimates, and is expected to grow at a CAGR of 2.6% from 2018 to 2023.
• Sector Performance:
  • The manufacturing and finance & insurance sectors were key contributors to GDP growth in 2017.
  • A more broad-based recovery in domestic demand is expected in 2018, supported by the Smart Nation Initiative and Industry Transformation Maps (ITMs).
• Challenges:
  • An ageing population and restrictions on foreign labor remain constraints on economic growth.
  • A faster-than-expected normalization of interest rates could negatively impact global financial markets.
• Sustainability:
  • Continued focus on digitization and innovation will be critical for long-term growth.

Office Sector

Main Points

• Demand:
  • Stronger economic fundamentals and increased activity in key service sectors (finance & insurance, information & communications, business services) are expected to drive demand.
  • Technology firms were the most active in the office leasing market in 2017, accounting for about one third of total new leasing activity.
• Supply:
  • The supply pipeline for new office space is tapering, with an estimated average of 1.24 million sq. ft. over the next five years (2018-2022).
  • Limited quality stock is expected to tighten availability in 2019-2021.
• Occupancy:
  • Vacancy rates in the Grade A Core CBD are expected to trend downward due to strong pre-commitment and limited supply.
  • Frasers Tower, 79 Robinson Road, and the redevelopment of Golden Shoe Car Park are key upcoming developments.
• Rents:
  • Office rental growth is expected to accelerate, especially in the Grade A Core CBD, due to reduced supply and increased landlord confidence.
• Opportunities:
  • Workplace evolution and flexibility will be key trends, with co-working spaces and innovative designs playing a larger role.
  • Tenants are advised to take early action on office space decisions to secure favorable terms.

Retail Sector

Main Points

• Demand:
  • Retail sales (excluding motor vehicles) showed ten consecutive months of growth in 2017, though the latest results were only a marginal increase of 0.1% y-o-y.
  • Segments like wearing apparel, luxury goods, and department stores improved after underperforming for two years.
  • F&B demand remained robust, but the sector is showing signs of saturation.
• Supply:
  • Approximately 1.22 million sq. ft. of new retail supply is expected in 2018, mainly in suburban and fringe areas.
  • Major developments include Paya Lebar Quarter and Century Square.
• Rents:
  • Average prime rents declined by 2.9% in 2017, but the trend is expected to stabilize or rise slightly in 2018.
  • The Orchard Road submarket is poised for a recovery, especially with increased tourist arrivals and spending.
• Opportunities:
  • Placemaking and innovative retail formats (flagship stores, pop-up stores) are becoming more important.
  • Technology integration, such as smart sensors and augmented reality, is expected to enhance the consumer experience.
  • Pop-up stores are gaining traction across various sectors, including luxury fashion.

Logistics Sector

Main Points

• Demand:
  • Logistics demand was driven by third-party logistics providers (3PLs) and occupiers with diverse inventory needs.
  • The manufacturing sector, particularly in precision engineering and electronics, supported logistics activity.
  • Private consumption is expected to drive further logistics demand in 2018.
• Supply:
  • Warehouse supply reached a record level in 2017, with net absorption of 8.61 million sq. ft., a 114.7% increase from 2016.
  • Major developments included CWT Distripark, Carros Centre, and Toll City.
• Forecast:
  • Total logistics supply for 2018-2020 is projected at 4.27 million sq. ft., a 3.8% increase from existing stock.
  • The logistics sector is expected to see a shift towards automation and more specialized facilities.

Residential Sector

• Market Trends:
  • Home prices are expected to turn around due to positive sentiment and a short-term supply squeeze.
  • Higher land costs are a primary driver of this trend.
• Supply Constraints:
  • Limited quality residential supply is expected to persist, potentially leading to increased demand in the secondary market.
• Investment Focus:
  • Developers are focusing on capital stock investment to improve productivity and meet demand.

Capital Markets

• Investment Activity:
  • Investment is expected to be driven by the search for higher returns in development sites and alternative assets.
• Market Dynamics:
  • The market is evolving with a focus on innovation and productivity, supported by government initiatives.

Key Risks and Considerations

• Labour Constraints:
  • An ageing population and restrictions on foreign labor remain significant challenges.
• Interest Rates:
  • A faster-than-expected rate normalization could negatively impact financial markets.
• Global Shifts:
  • Geopolitical and economic shifts, including changes in trade dynamics, may affect Singapore's position as a global trading hub.
• Technology and Innovation:
  • Landlords and occupiers must adapt to the growing demand for flexible and tech-integrated spaces.

Conclusion

Singapore's real estate market is poised for moderate growth in 2018, driven by improving economic fundamentals, a shift towards technology and innovation, and a more balanced supply-demand dynamic. The office and retail sectors are expected to see stronger recoveries, while the logistics sector continues to evolve with automation and specialized facilities. Residential and capital markets will also benefit from the ongoing focus on productivity and development.