Market Trends of Singapore Real Estate Industry
Rise in the Residential Segment of the Singapore Real Estate Market
- Singapore's property prices rose for the 12th consecutive quarter, shrugging off a global slowdown in housing and leading authorities to increase levies on foreign buyers that have slowed down the market. Even as cities from Hong Kong to London face price declines, Singapore's housing market has remained strong. In March 2023, housing sales rose to a six-month high as the supply shortage eased and buyers remained resistant to rising interest rates and inflation.
- In the last three months of 2023, housing prices increased by 2.7% compared to the preceding quarter, up by 0.5%.
- Singapore's property market has been resilient after the COVID-19 pandemic, with private house prices rising by 10.6% in 2021 and 8.6% in 2022, unlike Britain or New Zealand, where housing prices have fallen due to high interest rates.
- Although prices in the central region are rising slower than in recent years, buyers still sell private apartments for about SGD 3,000 (USD 2,252) per square foot.
- As the underlying demand for these homes is expected to remain resilient, developers will look at attractive development sites from the Land Sales Programme and those that could be developed into significant market housing developments. More significant headwinds will be faced by collective sale transactions on sites in the upper-end market.
Understand The Key Trends Shaping This Market
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Increase in Government Investment
- In the third quarter of 2024, Singapore witnessed a notable uptick in real estate investments, marking the first increase in nearly two years. Deal volumes surged by 75%, reaching SGD 6.9 billion (USD 5.0 billion), driven by robust government land sales.
- Property giants CapitaLand Development and UOL Group joined forces in a significant move, securing the largest land purchase of 2023. Their winning bid of SGD 1.2 billion (USD 0.88 billion) secured a mixed-use site at Tampines Avenue 11. This parcel of land allows for the potential development of 1,190 new homes and a commercial space spanning 13,600 square meters (146,390 square feet).
- Government Land Sales (GLS) significantly contributed to investment sales in 2023, amounting to USD 7.8 billion, a 40% increase from the previous year. In 2023, GLS investments accounted for 38.0% of the total, double the share of 19.2% seen in 2022. Notably, the government awarded 14 GLS sites in 2023, with four of them materializing in the fourth quarter, totaling USD 2.9 billion.
- In January 2024, a residential project is set to replace the existing sports facilities adjacent to Kembangan MRT station. The Urban Redevelopment Authority (URA) unveiled its proposed amendment to the master plan, focusing on rezoning multiple land parcels to accommodate housing. Alongside the residential units, the development will feature a new neighborhood park and commercial and recreational amenities. The earmarked land for residential purposes spans nearly 2 hectares, equivalent to roughly three football fields. Initially designated for mixed-use, with residential units and shops on the ground floor and a plot ratio of 2.5, it will now be exclusively residential with an increased plot ratio of 3.2. This revision potentially enables the project to soar beyond 36 stories.
