EDMUND TIE’s commentary: URA’s announcement on Q2 2022 real estate statistics
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  • 22 July 2022

EDMUND TIE’s commentary: URA’s announcement on Q2 2022 real estate statistics

SINGAPORE, 22 July 2022 – Mr Lam Chern Woon (蓝振文), Head of Research and Consulting at EDMUND TIE comments on URA’s Q2 2022 real estate statistics.


Prices of private residential properties increased by 3.5% qoq for the 9th consecutive quarter in 2Q 2022, compared with the 0.7% increase in the previous quarter. Both landed and non-landed prices continued to forge ahead by 2.9% qoq and 3.6% qoq respectively in 2Q 2022, supported by robust labour market and healthy demand-supply dynamics in the property market. Despite the rising mortgage rates, property developers are unlikely to lower prices of upcoming launches due to rising land prices and construction costs, as well as low inventory of unsold units. 

While the residential vacancy rose slightly to 5.4% in 2Q 2022 from 5.3%, it remains low. The opening of our borders will help to bolster rental demand. In the near term, coupled with tight supply, this will lead to strong rental growth. However, pipeline completion is expected to increase substantially in 2023, this will result in an increase in vacancy rate causing a slowdown in rental growth.

Overall primary and secondary sales volume rose 31% and 25% qoq respectively in 2Q 2022. In the same period, primary sales volume rose by 64% and 53% qoq respectively in the CCR and RCR segment driven by a surge in new launches. Although primary sales volume in the OCR segment fell for the 3rd straight quarter by 18% in 2Q 2022 due to a lack of launches, demand remains strong with the highest take up rate at 174% in this segment, supported by strong sales in previously launched projects like The Florence Residences, The Watergardens at Canberra and The Gazania. 

We are seeing a revival in foreign buying demand in 2Q 2022 after the cooling measure led to a knee jerk adjustment in 1Q 2022. Foreigners (non-PRs) accounted for 4.9% of non-landed home sales in 2Q 2022 as compared to 3.1% in the previous quarter. Americans took the top spot in foreign demand in all segments (i.e. CCR, OCR and RCR) in 2Q 2022, accounting for about 22% of the transactions by foreigners. Meanwhile, the Mainland Chinese and Indonesians ranked a distant second and third in 2Q 2022. The primary reason is that buyers from the United States of America are exempted from paying any ABSD on the first residential property purchase in Singapore due to free-trade agreement. If borders continue to open and if China relaxes its zero Covid-19 policy, foreign demand and pricing in the CCR could surprise on the upside.

Price growth has gained momentum in Q2 2022. Notwithstanding the economic and geopolitical headwinds as well as rising interest rates, property price growth could reach around 8% this year, given the still healthy demand-supply dynamics. Other demand driver includes a tight labour market and strong balance sheets of household. However, developers need to calibrate their pricing to maintain affordability amid rising mortgages. In addition, our base projection is for a moderation of primary sales to about 10,000 units for 2022 – on the back of slower overall launch activity this year. 


Based on URA’s data, office rent increased for two consecutive quarters across all planning segments despite geopolitical tensions and economic uncertainty, as most firms have seen a strong return of the workforce. In Q2 2022, office rent in the Central Area and Central Region saw a 1.6% and 2.4% qoq increase respectively. In the Fringe Area, office rents hit a 7-year peak with an 8.8% qoq increase. The consistent rental growth is supported by firms choosing to maintain their office footprint as they define hybrid work arrangements. Demand for office spaces will likely continue to be supported by flight-to-quality relocations, development of commercial nodes across the island and the growing emphasis on ESG, sustainability and wellness. 

Notable leasing activity in Q2 2022 includes Amazon’s reported take-up of 369,000 sq ft of space at the upcoming Central Boulevard Towers and Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, doubling its office footprint. The upcoming Guoco Midtown development also gained traction in leasing activity during the quarter, with tenants like ConocoPhillips and Swiss Re on board. With employees returning to the workplace after the easing of pandemic restrictions on 26th April, there is an increase in business confidence and occupiers are looking to lock in rents given that the office rental up cycle has taken hold. Amid economic uncertainty, the demand for office spaces is also driven by businesses looking to gain a strong foothold in the Southeast Asian market through Singapore as a gateway.

The islandwide office occupancy rate increased slightly by 0.8% pts to 88.0%, with office buildings in the Central Region reaching an occupancy rate of 88.5% and other office buildings at 82.6%. Based on EDMUND TIE’s research, Grade A office spaces in the CBD saw a high 94.1% occupancy rate as compared to occupancy rate of 87.6% across all grades in Downtown Core, indicating occupiers’ preference for quality office spaces. The robust demand for office spaces in the CBD in Q2 2022 is also reflected with office buildings in the Central Region registering a positive net absorption of 22,000 sq m, a reversal after five consecutive quarters of negative net absorption. 

Based on URA’s data, prices of office spaces in the Central Area are at its lowest since Q4 2010, with a 5.3% decrease from the previous quarter. Prices of office spaces in the Central Region saw a similar 5.1% qoq decrease, while office spaces in the Fringe Area decreased by 3%. The fall in office prices in contrast to rising rents reflects the expansion in office cap rates that is driven by the current interest rate up cycle.

Given the limited supply and sustained demand, Central Region office rents are likely to continue trending northwards, driven by high rental growth and occupancy rates, although the softening economic outlook could tamper some business and corporate real estate plans. 


Islandwide net absorption had recorded a positive figure (+86K sq ft), a reversal from the negative net absorption (-129K sq ft) in the previous quarter. The overall vacancy rate eased slightly to 8.2% from 8.3% in Q1 2022. The further easing of community and border measures in April and June have largely supported overall retail demand in the quarter. However, both prices and rents declined slightly in Q2 2022, a continuation from their downward trends experienced in the previous quarter, reflecting the retail market’s rocky road to recovery amid the softening economic climate. 

As at 2Q 2022, the Fringe Area recorded the lowest vacancy rate at 7.4% among various subzones and fell for the second consecutive quarter, which demonstrated its continued resilience amid the entrenchment of hybrid work arrangements. The Downtown Core experienced the greatest fall in vacancies to 11.8%, its lowest level since 4Q 2021, due to the full back-to-office workforce since late April. Notably, Orchard was the sole planning area which recorded negative net absorption and a rise in the vacancy rate. Despite the gradual return of tourists, the retail climate continued to be challenging especially for the prime shopping belt, but the future trajectory is positive. 

Landlords have seized the opportunities to conduct timely renovations and facelifts for their malls. For example, Wisma Atria is undergoing upgrading works. Some have also embarked on refreshing their tenant mix offerings, including integration of various uses within the same retail space, to stay relevant and attract shoppers. For instance, CapitaLand is anticipated to launch a selection of offerings across its downtown malls.

Technology has also been increasingly integral, and it is crucial for landlords to experiment with its integration to create an elevated omnichannel shopping experience. For instance, Keppel Land recently introduced Bistro Bytes at i12 Katong. Suntec City had also previously introduced a similar concept known as Suntec+ Eats. 

As consumers tighten their purse strings amid rising inflation, the bulk of their spendings are projected to be towards non-discretionary items. Accordingly, we expect suburban retails rents to lead the market recovery and clock around 8% rental growth this year, while other segments are poised for between 3 to 5% rental growth in 2022. However, the tourism recovery could prove to be faster than expected, especially if China relaxes its Covid policy alongside the return of Chinese tourists, and the possibility of prime retail rental growth outpacing suburban retail cannot be ruled out. 

With a stabilised local epidemic situation, Singapore had lowered its Disease Outbreak Response System Condition (Dorscon) framework from orange to yellow and we have all but returned to pre-pandemic normalcy, apart from mask-wearing requirements in selected settings. Consumers are also largely back in droves to shopping malls and the tight local labour market would support consumer spending.

The considerable headwinds going forward such as at the softening economic outlook, possible emergence of new Covid variants as well as any retightening of travel borders and local measures may affect retail sentiment and consumer confidence, which may likely put a lid on retail spending and rental growth. The inflation woes and higher operating costs for retailers may also mean that landlords are unlikely to push for high rental escalations in the current business climate, while rising interest rates and tighter mortgage repayments may also further cap consumer spending. 


For further information, please contact:

Seah Li Ching (Ms)

Corporate Communications

DID: +65 6393 2369

Email: liching.seah@etcsea.com

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