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Sectoral Updates and Market Outlook for 2020



Despite the slow GDP growth in 2019 and higher entry barrier for buyers as a result of the cooling measures introduced in July, the Singapore residential market continued to trend well – demonstrating great resilience amid strong market liquidity. The initial concerns that the residential market could weaken significantly was unfounded given that Singapore, when compared to other financial hubs, still stacked up competitively in terms of quality of living.

New sales continue to dominate the overall volume – forming 52 per cent of the total year-to-date transactions (7,469 new homes vs 6,607 resale homes). As of end November, the market saw 51 new launches. It is expected that the year will end with the highest number of new launches since 2013, where 97 new projects were launched.

An attempt to beat the five-year additional buyer’s stamp duty (ABSD) deadline saw developers racing to launch their projects ahead of their competitors. Launch prices remained elevated due to the high land premium paid during the last en bloc boom.

Land premium for government land sales remained largely unchanged from the pre-July period before the introduction of cooling measures with steady transaction volumes and latent demand supporting take-up rates and prices.

Private property prices are up 2.1 per cent year-to-date (YTD). The increase in prices is broad-based, with all segments of the market showing an increase. YTD, Rest of Central Region (RCR or mid-tier) rose the fastest at 4.2 per cent, followed by Outside Central Region (OCR or mass market) and Core Central Region (CCR or high-end) which rose by 1.4 per cent and 1.2 per cent respectively. Landed home prices also rose 2.2 per cent YTD. The strong showing in numbers is mainly driven by sound fundamentals and buyers’ confidence in the long-term prospects of the Singapore housing market.

Private residential non-landed rents continue to move up, supported by low levels of newly completed supply and higher population growth. Only 5,229 private residential units have been completed in the first three quarters of 2019 with an additional 2,704 units expected to be completed in Q4 2019, bringing the total expected completions in 2019 to 7,933 units, substantially lower than the 10 year (2009-2018) annual average of 14,211 units. Population growth reached 1.2 per cent in 2019, higher than 0.5 per cent in 2018.

Rents are expected to continue to trend upward, given the low number of new completions over the next few years. The influx of new supply will only come in between 2022 and 2023, when new completions are expected to reach 15,106 and 16,704 units respectively.

Moving forward, provided sales momentum does not slow down significantly, it is unlikely that developers will need to lower prices, although some have started to incentivise salespersons with higher commissions to drive sales for older launches. The market is not experiencing launch fatigue as buyers are still attracted to projects that offer a reasonably high value proposition.

Demand for small-format homes may see a renewed interest in the near-term once the minimum-size rule kicks in for future launches. With these homes becoming short in supply, buyers may start to show keen interest in these affordable units before prices escalate beyond their reach. Furthermore, with interest rates coming off their recent peaks and are expected to remain low due to the global monetary easing wave, buyers will have more confidence to enter the housing market. Nevertheless, the stronger headwinds in the macroeconomic environment and the less-than-ideal take-up rates in the recent launches are likely to nudge developers into pricing their projects more sensitively in the coming year. This will help to move sales and better manage their inventory in view of the five-year ABSD deadline. Prices are expected to remain sticky with an upward bias of up to 3 per cent for the whole of 2020 barring unforeseen circumstances.

Year No of projects launched Total no of units


(launched and unlaunched units)

2008 123 9,197
2009 117 14,487
2010 116 16,827
2011 112 17,992
2012 110 19,167
2013 97 18,477
2014 36 10,183
2015 15 8,060
2016 20 5,605
2017 22 5,189
2018 45 15,043
Jan-Oct2019 45 13,435

Source: URA, Cushman & Wakefield Research

Note: 2019 will overtake 2018 in terms of number of projects and total number of units. Sengkang Grand Residences (2nd Nov launch, 680 units), Urban Treasures (30th Nov launch, 237 units), Diary Farm Residences (expected to launch in Dec, 460 units), One Holland Village Residences (30th Nov launch, 296 units) Pullman Residences (9th Nov launch, 340 units) are not included yet.


Office rental growth has been slowing in the recent quarters, signalling that rents are nearing their peak. Despite lower market confidence due to weaker economic growth and the escalation of the US-China trade war, landlords have been able to hold their rents steady for the moment due to tight vacancies and limited upcoming supply. Based on Cushman & Wakefield Research’s basket of Grade A office properties, the Grade A CBD rent increased by 2.7 per cent to S$10.65 per square foot per month (psf/mo) during the first three quarters of 2019. This has significantly slowed down from the preceding year, which recorded a rental growth of 12.7 per cent. URA private office rents in Central Region have pretty much stagnated, growing by merely 0.1 per cent YTD. This is in sharp contrast to 2018 when office rents rose 7.4 per cent.

Grade A CBD Gross Effective Rents

Source: Cushman & Wakefield Research

With supply easing from the preceding year, demand has also retreated from the high of 1.33 million square feet (msf) last year. YTD, demand measured by net absorption of Grade A CBD office space amounted to 379,000 square feet (sf). This is expected to rise to around 760,000 sf in Q4 upon the completion of 9 Penang Road, which is fully pre-leased by UBS. However, the estimated absorption for the full-year of 2019 is still 43 per cent lower than that in 2018, on the back of subdued leasing demand arising from weaker economic outlook.

Grade A CBD Supply, Absorption and Vacancy

Source: Cushman & Wakefield Research

During the year, co-working operators expanded aggressively to dominate market share in the flexi office space. YTD, major co-working operators took slightly over 1 mil sf of spaces, an increase from 600,000 sf in 2018. However, the pace of expansion will slow as co-working players become more aware of the need to reduce cash burn and adopt a more conservative approach.

Although the situation in Hong Kong seems to have a long-lasting impact on its economy, we do not expect multi-national corporations (MNCs) to uproot themselves and relocate to Singapore in the immediate future. Such decisions are usually not taken lightly given the complexity of relocating business functions. There could be some diversion in terms of expansion needs to other offices away from Hong Kong, and Singapore being one of the regional headquarters in Asia, could potentially capture some of the demand.

Going forward, Grade A CBD rents are expected to moderate slightly in 2020 as the global economy continues to face headwinds from the on-going trade war, and the resultant slower growth in the US, Eurozone and Singapore in 2020. Uncertainties are taking the toll on the ability of some companies to secure budget for relocation and expansion, limiting the net demand for office space. In order to stay put in the CBD, corporate occupiers are exploring ways to optimise the use of office space, such as reconfiguring office layout, putting people on flexi hours and reducing the size of work stations. Nevertheless, further tightening of the office supply due to potential redevelopments and the subsequent expiry of transition offices in the city fringe could help to cushion the softening in rents.


Industrial rents were mainly stable during 2019 as the gloomy economic outlook and oversupply from preceding years continued to weigh down the market. Business confidence was impacted by the US-China trade war and economic weakness in the US and Eurozone. While some are optimistic that there could be some improvement for the industrial sector going forward, concerns still remain that Singapore could be significantly affected by slowing growth in the US, Eurozone, and China. Accordingly, in the absence of a catalyst to spark a strong recovery, industrial rents are expected to remain flat for the rest of 2019 and experience a slight moderation in 2020 as the global economic outlook remains subdued.

Factory Segment

The single-user factory segment remained stable in 2019. Q3 YTD, both net supply and absorption were around 5.7 msf, with vacancy rate inching down to 8.9 per cent. Meanwhile, there was some improvement in the multiple-user factory segment. In Q3 2019 YTD, net absorption of 1.0 msf outpaced net supply of 0.4 msf, leading to a decline in vacancy rate to 12.9 per cent.

Single-User Factory Supply, Absorption & Vacancy Rate

 Source: JTC, Cushman & Wakefield Research

Demand and Supply Chart of Multiple-user Factory

Source: JTC, Cushman & Wakefield Research

Warehouse Segment

The US-China trade war led to shifts in the regional supply chain, dampening the warehouse demand. In Q3 2019 YTD, net supply of 3.0 msf was significantly higher than the net absorption of 1.0 msf, resulting in the vacancy rate rising to 11.9 per cent.

Source: JTC, Cushman & Wakefield Research

Business Park Segment

With office rents nearing its peak, cost-conscious occupiers are choosing to locate at business parks as an alternative to the CBD. The business park segment saw improved absorption of 452,000 sf during Q3 2019 YTD, led by the strong take-up at the newly completed 5 Science Park Drive by Shopee, resulted in the vacancy rate falling to 13.8 per cent.

Business Park Supply, Absorption and Vacancy

Source: JTC, Cushman & Wakefield Research

The commercial sector was the main driver of the investment market in 2019. The 2019 YTD volume currently amounts to S$28.1 billion due to the significant Q3 contribution, and it is possible that the 2019 full-year volume will surpass 2018’s volume of S$34.0 billion.

Investment Volume by Sector

Source: Cushman & Wakefield Research


The Grade A CBD office capital value recorded a marginal increase to S$2,930 psf, while yields remained stable at 3.2 per cent. While the office market has been quiet in Q4 thus far, more office properties could be placed on the market as funds seek to capitalise on record prices.

Grade A CBD Office Capital Value & Cap Rate

Source: Cushman & Wakefield Research

Hospitality assets are still in demand due to favourable fundamentals. Tourism arrivals continue to increase, and hotel occupancy rates remain high. YTD investment volume of S$4.2 billion achieved in 3Q 2019 is already 3 times the S$1.4 billion volume generated for 2018.

The hospitality sector continues to heat up with the investment volume in Q4 already exceeding S$1.8 billion. This will result in the full-year 2019 volume exceeding the previous record of S$4.7 billion in 2013. The most notable transaction in Q4 was Hoi Hup Realty’s acquisition of Andaz hotel, part of the DUO integrated development, from M+S for S$475.0 million. There were also a slew of deals relating to CDL and CapitaLand’s redevelopment of Liang Court.

For the industrial sector, some activities were seen for the business park segment. CapitaLand injected Nucleos and FM Global Centre into Ascendas REIT for S$289.0 million and S$91.0 million, respectively. Meanwhile, IBM divested IBM Singapore Technology Park to Boustead Projects and Abu Dhabi Investment Council for S$77.4 million.

Slight yield compression in the commercial sector could occur in 2020 if investors’ demands for assets in safe havens like Singapore increases amidst greater unrest in Hong Kong and the escalation of the US-China trade war. However, gains in capital values could be mild as rents are expected to peak in the near term in view of the subdued economic outlook. Nevertheless, in the absence of a full-blown recession, overall investment volume is not expected to decrease significantly in 2020.


In Q3 2019, overall retail prices and rents rose by 1.1 per cent and 2.3 per cent, respectively. During Q3 YTD, overall retail prices and rents remained almost flat at -0.4 per cent and +0.5 per cent, respectively. Overall island wide demand rose to 958,000 sf, much higher than the net supply of 344,000 sf. This could be due to demand playing catching-up, since Jewel Changi Airport was completed in the last quarter of 2018.

Islandwide Retail Supply, Absorption and Vacancy

Source: URA, Cushman & Wakefield Research

Nonetheless, this is unlikely the start of a recovery as the market remains bogged down by a challenging operating environment and declining revenue. Furthermore, given the subdued economic outlook, consumers are likely to remain prudent in their spending, leading to lower retail sales. As of August 2019, retail sales (excluding motor vehicles) have fallen by 1 per cent YoY.

Given changing consumer expectations and e-commerce, there is a stronger focus on curating shopping experience to help shoppers discover interesting products based on their personal preferences. This has led to increasing allocations of retail space to food and beverage, fitness, lifestyle and entertainment services. Malls are also exploring new tenant pool such as co-working operators to absorb large vacancies in the mall.

Pipeline supply remains extremely limited as future supply is expected to fall sharply after 2019. This should help cushion any decline in retail rents.

A two-tier market continues to hold, with well-located and better-managed malls drawing the bulk of retail demand. For example, the majority of REIT-controlled malls enjoy high occupancy rates and are visibly more vibrant during weekends. This compares with many strata-titled malls which have dwindling footfalls and many vacant units.

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