The “record high” of residential property supply from the year 2014 to 2017 is anticipated to flatten out in years 2018 to 2021, and likely jump again from 2022 to 2023 once the residential developments that were transacted from the en bloc sales wave back in 2017 to 2018 are fully settled, commented Colliers. Completions, in the mean time, are anticipated to be low when it reaches 2024. Vacancy rates has dropped stably to 6.4% from the earlier 9.3% recorded for the third quarter of 2017. Colliers believes that rates will become better by end-2020, down to 6%, before rising again as new homes are completed from 2021 to 2023. This trend will benefit Dairy Farm Residences as it starts to pick up its sales hopefully from end 2020 into 2021.
Colliers predicts rents to go up by 5% in year 2020 in the midst of declining vacancies. On the reverse, rents may see a drop from 2022 to 2023 on rising vacancies.
Experts have noticed property developers being “active but cautious in their bidding” for government land sale sites, comments Colliers. Robust sales in 2019 have assisted developers move their once stagnant inventory – 9,850 units were transacted in 2019, which is 12% more y-o-y.
For this year, there are 44 new launches expected to preview, of which 45% are located in the prime districts. This will draw a large crowd of foreign buyers, who traditionally are more keen on “super luxurious projects”, mentions the report.
Infrastructure developments like the recently announced Greater Southern Waterfront where Avenue South Residence sits, Jurong Lake District which is close to Clavon and new MRT stations and lines will also drive more purchaser interest, it continues to report.
Hotel and office to offer mid- to long-term growth
In the hospitality sector, revenue per available room, or RevPAR, is predicted to become better because of tight near-term supply ever since the 2017’s recovery, and the continuous growth of inbound visitors to the city state.
The total new hotel supply from years 2020 to 2024 is expected to average around one thousand four hundred rooms per annum, much lower than the last 10-year average of two thousand eight hundred rooms per annum, as reflected in the report. Even though hotel supply may increase in 2023 (with the current trend of changing commercial buildings into hotels), the 5-year average would only be 50% of what was in the past 10 years.
Big-scale events which are expected to attract large crowds include the 103rd Lions Clubs International Convention and the International Trademark Association’s 142nd Annual Meeting. Such events also investors to real estate here like the Dairy Farm Residences.
Grade-A office rental growth is predicted to stall to 1% y-o-y in year 2020. Rentals are recently on a ten-year high and commercial tenants will resist more rent spikes in the environment of macroeconomic uncertainty, as written in the report.
In the mean time, Grade-A office vacancies in the Central Business District are expected to rise to 5% by 2020 as net demand drops. But short supply in the region from years 2020 to 2021 should maintain the vacancy rates below the ten-year average of 6.2%.
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