EDMUND TIE’s comments: URA Q2 2023 real estate statistics
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  • 28 July 2023

EDMUND TIE’s comments: URA Q2 2023 real estate statistics

SINGAPORE, 28 July 2023 – Mr Lam Chern Woon (蓝振文), Head of Research and Consulting at EDMUND TIE comments on the URA Q2 2023 real estate statistics.



  • Prices of office spaces in the Central Region picked up by 1.0% q-o-q in 2Q 2023 after remaining unchanged in the previous quarter. The return of the workforce has strengthened the thesis of the workplace as an essential element for collaboration, learning and networking. The growing interest in strata-titled office spaces has pushed up capital values, especially with the restriction on future strata subdivision of commercial spaces in selected precincts within the Central Area. Strata office spaces at Solitaire On Cecil have seen sales at record prices in Q2 2023, following from strong sales in Q1 2023 and is reportedly fully sold. SBF Centre also saw strata office spaces put up on the market. Interest in strata office units is largely coming from foreign high-net-worth individuals and family offices, and we expect such interest to continue. Moreover, with the recent changes to the Residential Property Act (RPA), more interest may be diverted to strata office assets that will not require foreign buyers to obtain purchasing approval for sites zoned Commercial and Residential.

Demand and rents

  • Positive office demand was recorded for the fifth consecutive quarter in 2Q 2023, which saw demand accelerating to 30,000 sqm from 21,000 sqm in the previous quarter, led by the Downtown Core planning area (+33,000 sqm) that saw the highest net absorption since Q1 2020. Outside Central Area (OCA) posted positive net absorption of 16,000 sqm in Q2 2023, a reversal from the 2,000 sqm contraction in the previous quarter. Some firms could have opted for decentralised locations to manage their occupier costs amid the challenging business environment. Negative absorption was recorded in Orchard (-1,000 sqm), Rest of Central Area (-12,000 sqm) and the Fringe Area (-6,000 sqm). The islandwide vacancy rate decreased by 0.4 percentage points to 10.8%, the lowest since Q4 2019. From EDMUND TIE’s research, CBD Grade A office spaces recorded 95.3% occupancy rate in Q2 2023, compared to 89.0% across all grades in the Downtown Core planning area, as firms favour quality spaces to enhance collaboration and retain talent.
  • Despite the recovery in overall demand, office rental growth softened in the Central Region from 5.1% qoq in 1Q 2023 to 2.3% qoq in 2Q 2023. Rental growth in the Central Area also declined for the second consecutive quarter to 1.5% qoq in 2Q 2023 from 6.6% qoq in 4Q 2022. However, rental growth held up relatively well in the Fringe Area at 8.1%, likely due to the affordable rental levels for spaces in these precincts.


  • We expect the economic uncertainties to curb the appetites of corporates in expanding their office footprint, with most opting for renewals as a safe status quo measure. Looking ahead, drivers of demand include flexible space operators, coupled with the entry of more MNCs and family offices. Hiring intentions for 3Q 2023 also picked up, according to the Manpower Group, with hiring intentions strongest in the energy/utilities and finance/real estate sectors. Firms will continue to strive for efficiency and cost management in right sizing their spaces, alongside the implementation of hybrid work arrangements. Certain industries such as accounting have adopted offshore hiring and require smaller spaces as a result. Higher demand for smaller fitted-out spaces under 5,000 sqft is observed, as compared to large office spaces that are in the 15,000 sqft range.
  • Supply pressures will moderate after the future completion of IOI Central Boulevard Towers. In 2024, we expect the completion of projects like Keppel South Central (57,000 sqm GFA), Labrador Tower (75,000 sqm GFA) and Paya Lebar Green (36,000 sqm GFA). However, the subdued business climate and overall cautious market sentiment, our 2023 growth forecast for Premium and Grade A office rents in the CBD is revised from 1-3% to 0.3-0.5%.



  • The retail sector posted overall net absorption of 27,000 sqm in Q2 2023, reversing the contraction of 7,000 sqm in the previous quarter. The pickup in demand in the quarter was broad-based across all segments, with the exception of a 3,000 sqm contraction in demand in the Downtown Core. Driven by continual improvements in visitor arrivals, the Orchard planning area recorded the largest improvement in demand, from a 24,000 sqm contraction in Q1 2023 to 3,000 sqm in Q2 2023. As more workers returned to the offices, retail spaces in the Rest of Central Area have also seen a improvement in demand from -3,000 sqm in Q1 2023 to 8,000 sqm in Q2 2023. Consequently, both Orchard and Rest of Central Area recorded an increase in occupancy rates by 0.7% points to 86.8% and 90.5%, respectively. Islandwide, net absorption outpaced the 18,000 sqm net increase in supply, resulting in a slight decline of the vacancy rate to 7.5% in Q2 2023 from 7.6%.
  • Q2 2023 saw numerous openings of new-to-market brands such as Sun and Sand Sports in Raffles City and international luxury brands including Aluxe, Grand Seiko and Atelier Cologne. The market also welcomed new food and beverage (F&B) entrants such as Mister Donut, Luckin Coffee, Jamba Juice and Chaffic Bubble Tea, while there were also several market returns by F&B and lifestyle retailers, such as Ben’s Cookies and Marimekko; all of which attest to retailers’ confidence in Singapore.


  • Retail space completions during the quarter include The Woodleigh Mall (12,400 sqm GFA) and The Singapore Edition hotel at 38 Cuscaden Road (4,000 sqm GFA).

Prices and rents

  • In Q2 2023, both retail prices and rents in the Central Region rose by 0.3% qoq, a reversal after five quarters of declines. Underpinned by a relatively tight supply pipeline, we expect the Central Region retail rents to bottom out towards end-2023, with fuller tourism recovery and clearer economic trajectory.


  • The retail climate remains challenging, as evinced by the moderation in retail sales growth to 1.8% yoy in May 2023 from 4.7% yoy growth in 1Q 2023, owing to the economic slowdown, inflationary pressures and a seepage in spending as more residents took to overseas travel. Nonetheless, we could see some light at the end of the tunnel as the tourism recovery continues, driven by a host of catalysts from upcoming events like the Grand Prix and high-profile concerts, new retail and entertainment openings. For instance, The Palawan@ Sentosa, a new entertainment precinct, has just opened, featuring an electric go-kart experience called HyperDrive and a 18-hole mini golf course, along with numerous other attractions scheduled to launch in the coming months, as the island destination’s rejuvenation continues apace. We can also expect Asia’s first snow, ski and skate attraction, Trifecta by The Ride Side, at Somerset. The stronger return of tourists from Mainland China will be an added boost to retail spending, as well as the frontloading of purchases ahead of the GST hike next year. Inflationary pressures are subsiding steadily, and we expect local spending to pick up gradually in the coming months.
  • Prime first-storey rents in Orchard are expected to lead rental growth, with a forecast of between 4% and 5% in 2023. For the other retail segments, we forecast rental growth of between 1% and 3% for prime retail spaces in 2023.


Sales volumes

  • In Q2 2023, primary sales volumes rose by 69% qoq to a total of 2,127 units, continuing the 82% qoq growth recorded in Q1 2023. The sales performance in Q2 2023 can be attributed to the robust sales performance in some of the major new project launches in the RCR, such as The Reserve Residences, Tembusu Grand, Blossoms by The Park and The Continuum. The number of units launched in Q2 2023 doubled to 2,374 units from 1,312 units in Q1 2023, resulting in a fall in the take-up rate from 95.7% in 1Q 2023 to 89.6% in Q2 2023 – the lowest in 10 quarters since Q4 2020.
  • Small units dominated new home sales; the share of primary home unit size below 700 sqft rose for the second consecutive quarter to 39% in Q2 2023, from the 33% and 27% recorded in Q1 2023 and Q4 2022 respectively, as affordability remains paramount. In fact, the sweet spot for new home purchases in Q2 2023 was the $1.5-$2.0 million price bracket, which accounted for 36.5% of new home sales.
  • Sub-sales rose for the second straight quarter to 285 units, the highest in a decade (since Q2 2013), and accounted for over 5% of total residential sales for the third straight quarter. Given the elevated home prices and a relatively healthy labour market, the rising spate of sub-sales can be attibuted to homeowners taking profits as opposed to selling their homes under duress.
  • Secondary sales volume in Q2 2023 rose for the first time in four quarters since Q1 2022 by 13.8% qoq to 3,261 units. This is a reversal from the 1.1% qoq decline in the previous quarter. It was fuelled by the OCR, which accounted for 51% of overall secondary sales as homebuyers favoured affordable mass market properties amid the tight financing climate. Public (HDB) resale prices grew by 1.5% qoq in Q2 2023, picking up pace up from the 1.0% qoq growth in the previous quarter, and helped sustain upgrader demand, especially for suburban homes.

Foreign demand

  • In Q2 2023, foreign non-landed demand fell by a fifth to 204 units from 260 units in the previous quarter. The proportion of foreign purchases in non-landed private homes fell to 4.1% in Q2 2023 from 6.9% in Q1 2023. Americans overtook the Mainland Chinese again in Q2 2023 as the top foreigner purchaser since Q3 2022, as the share of American homebuyers rose from 23.5% in Q1 2023 to 27.9% in Q2 2023. This is driven by sustained demand from American purchasers, considering the free-trade agreement that exempts them from paying ABSD on their first residential property purchase. Purchases by the Mainland Chinese almost halved from 98 units in Q1 2023 to 52 units in Q2 2023. The impact of the April cooling measures on foreign demand was felt most keenly in the CCR segment, which has a high prevalence of foreign purchasers; the share of foreign purchasers declined from 15.6% in Q1 2023 to 11.3% in Q2 2023.


  • Property prices in Q2 2023 dipped for the first time since Q1 2020 by 0.2% qoq. This decline was primarily attributed to a 0.6% qoq decrease in the non-landed segment, with the RCR recording a notable fall of 2.5% qoq. As there were four major launches (Tembusu Grand, Blossoms by the Park, The Continuum and The Reserve Residences) in the RCR during the quarter, developers may have priced their projects more competitively to improve sales take-up rates.

Completions and rentals

  • The pace of completions picked up in 2Q 2023 with 4,401 units completed, about 48% higher than 2,965 units completed in 1Q 2023. Major projects completed in the quarter include Riverfront Residences (1,472 units), Affinity At Serangoon (1,052 units) and The Woodleigh Residences (667 units). The pickup in completions contributed to a 0.3 percentage points increase in the vacancy rate to 6.3%, the highest in almost two years. Looking ahead, with almost 12,000 units expected to come onstream in the second half of 2023, and around 9,000 units for 2024, we expect the rental market to soften further. The soft economic outlook, coupled with cost of living pressures, is likely to cap rental housing budgets. Rents are likely to correct in the second half of this year, but will still post growth of 5% to 10% for the whole year, after a steep 29.7% growth in 2022.

Supply pipeline

  • The supply pipeline remains broadly manageable. Units without planning approvals ballooned to 10,138 units in 2Q 2023 from 7,744 units in 1Q 2023 as a result of the bump-up in the 2H 2023 GLS programme. However, it will take some time for units from the upcoming GLS tender sites to be launched. Unsold units with planning approvals (including completed units) rose to a two-year high of 17,924 units in 2Q 2023, but this is not unduly excessive given an expected sales pace of 7,000 to 8,000 units per annum presently. Unsold inventory pressures in the near-term are limited; for units coming onstream in 2H 2023, over 95% of units are sold, while for units coming onstream in 2024, 88% of units are sold.


  • The property market’s overall fundamentals remain stable, underpinned by strong organic demand due to a relatively stable labour market and consistent wage growth. Looking ahead, with launch activity picking up in the second half of this year, this would help support new home sales which is poised to reach about 7,000-8,000 units for 2023, up from 7,099 units in 2022. Against the backdrop of macroeconomic headwinds and tighter financing conditions, we expect a moderation in the sales volume in the secondary market to 8,000-10,000 units, following 14,791 units in 2022. Overall property prices are anticipated to see a more sustainable growth rate of 3-5% in 2023, following the 8.6% growth observed in 2022.


For further information, please contact:

Seah Li Ching (Ms)

Corporate Communications

DID: +65 6393 2369

Email: liching.seah@etcsea.com

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