Agents show no hope for prime homes, office, biz park sector

The general sentiment of Singapore’s real estate market continued improve in the first quarter of 2024. But, some industry professionals are now more pessimistic about the prime residential, office and business park/hi tech space sectors.

Real estate executives polled by the Institute of Real Estate and Urban Studies (Ireus) of the National University of Singapore (NUS) identified important economic indicators that point to higher growth, low unemployment rates and the slowing of inflation core as the main reasons for the overall improvement in sentiment.

But, the respondents were more skeptical about the potential residential opportunities for prime property than positive.

As the government has increased the supply of government-owned land in the past few quarters, we worry about a potential oversupply. There is a possibility that cooling measures are always a concern.

The outlook for the premier residential sector is still subdued. The Additional Buyer’s Stamp Duty still impacts demand from foreign buyers and investors.

Prices of residential property rose in 1.4 percent in the first quarter of 2024. This was less than the 2.8 percent increase recorded in the Q4 of 2023. This is the lowest quarterly increase since Q3 of 2021.

Real estate agents didn’t anticipate developers to delay or reduce new launches, but less were expecting them to increase prices.

In Q1 22.2% of respondents predicted that prices for unit units of new launches will be slightly higher over the next six months, compared to 42.9% in the previous quarter. However, 72.2% of them thought the prices would remain similar. This is an increase from 47.6 percent during the prior quarter.

Only 5,6 percent of real estate agents expect prices to be slightly lower.

Ireus found that 27.8 percent of respondents are expecting to see a slightly higher or larger number of units in the upcoming half-year dropping by 29 percentage points from Q4 2023. However, 72.2% of respondents expect the number to stay the same. This is an impressive rise from the prior quarter’s 42.9%.

None of the people surveyed believed that the number units being launched would decline.

Homebuyers are becoming more sophisticated and resistant to high prices, despite the availability of many new projects. Developers are likely to use a more discerning pricing strategy, but major price changes are unlikely due to the construction and land costs already committed.

The healthy balance sheets of households and the prevailing low unemployment rate are expected to keep boosting price and demand.

Ireus, the company that conducts this quarterly survey, reported that the respondents were the most optimistic about the future for the hotel/serviced apartment sector. The optimism was further boosted by the booming arrivals of tourists and the receipts that they earned.

Industry experts also offered a more positive view of suburban retailing and industrial/logistics businesses.

Ireus reported that the future sentiment index that reflects the mood for the next six-month period it has reached 5.1 points, above neutral for the first five consecutive months.

The current sentiment index, reflecting sentiment over the past six months, inched up to 4.7 in Q1 from a score of 4.4 in the preceding quarter. The sentiment index has increased in the last six months. The index edged up from 4.2 in Q3 2023 to 4.4 at the close of the year.

Overall the macroeconomic indicators of Singapore are in good shape with no unexpected surprises. These indicators, if they do not happen suggest a strong economy that may be able to rebound in the next year.


According to the Ministry of Commerce and Industry’s Q1 report, the economy expanded by 2.7 per cent per year in the first quarter of 2018 which was higher than the 2.2 per cent growth recorded in the prior quarter. The growth forecast in 2024 will be between 1 and 3 percent.

The more robust Singapore dollar has helped reduce inflation also played a role in the positive mood of Q1.

In the prime residential sector where the participants in the industry were most pessimistic, responses showed the future balance was minus 44% as compared with less than 18% in the prior quarter.

The office market, as well as business parks were also a bit pessimistic.

The URA figures show that the index of office rentals in the central region decreased by 1.7 percent in Q1 2024 after having increased by 27.5 percent over nine quarters.

This is in contrast to the 0.3 percent increase in quarter-on-quarter seen at the end of 2023.

Work-from-home arrangements dampen office morale and encourage a flight to quality within firms.

A slowdown in global economic growth was again the most important risk factor to monitor, but slightly less people were citing it this time in Q1 – 73.5 percent of those polled, compared to 89.5 percent who said so last quarter. Another 55.9 percent of respondents in Q1 mentioned the deterioration of the domestic economic situation as a major risk aspect. This compares to 57.9 percent in the fourth quarter of 2023.

The risk of rising inflation and interest rates were ranked third in the most risky risks, with 50 per cent, up from 44.7 percent in Q4.

Property executives in Q1 mentioned the increasing liquidity of financing on the debt market, which increased from 42.1 percent in the in the last quarter to 47.1 percent. In the first quarter, the growing quantity of development land prompted concerns as it increased from 23.7% in Q4 up to 29.4% this quarter.

However, respondents seemed less concerned in the first quarter about the increasing cost of construction, the oversupply of new property launches and the government’s intervention to cool the market.

The most risky was a bubble in real estate which grew to 2,9 percent in Q1 compared to 2,6 percent in Q4.

Labour and land were cited as the top two concerns for the coming six months by the respondents in Q1. Other aspects that respondents were concerned about were finance (16.7 percent) and building materials (11.1 per cent).

The Real Estate Sentiment Index was compiled from a survey of senior executives in the Singapore real estate sector. This includes consultants, developers as well as professional firms, financial institutions, and service providers.