Singapore, 1 November 2023 – EDMUND TIE is pleased to share our Q3 2023 DIGEST, which affirmed an expected slowing of market activity for rest of 2023.
- Real estate investment sales increased in Q3 2023 by 125% to S$7.3 billion, from S$3.2 billion in Q2 2023, with activity seen across the public and private investment sales and collective sale market. Notably, in contrast to the previous quarters where transactions were generally of lower quantum deals below S$100 million, Q3 2023 saw several larger quantum deals.
- The public investment sales market recorded some S$4.1 billion, with the award of the Marina Gardens Lane, Tampines Avenue 11, Jalan Tembusu, Plantation Close EC, Lentor Central and Champions Way sites. Overall, bidding activity remained relatively muted, as developers have also adopted a more cautious stance and leaned towards more conservative bid prices.
- On the back of the uncertain economic climate with the ongoing Israel-Hamas conflict and rising interest rates, investors are likely to remain cautious and selective with investment deals. However, the hospitality and shophouse sectors may see continued interest with the brighter tourism outlook and ABSD exemption.
- Investment sales are expected to moderate from S$28 billion last year to S$18-20 billion this year.
- Office rents remained flat as leasing demand were driven largely by renewals. Despite the tight supply of office spaces, demand is curbed by the availability of fully fitted-out shadow spaces.
- Overall occupancy rate in the CBD increased by 0.8 percentage point to 95%.
- With the new supply of quality office spaces coming onstream in 2024, the office market will likely see a wave of relocations rather than expansions as firms actively choose to right-size based on actual space required.
- EDMUND TIE’s 2023 growth forecast for Premium and Grade A office rents in the CBD is revised from 1-3% to 0.3-0.5%, given the subdued business climate and overall cautious market sentiment.
- Industrial rents experienced growth across all sectors in Q3 2023, with hi-tech industrial spaces recording the highest growth of 1.6% qoq.
- Industrial prices and rental indices continued its upward trajectory for the 12th straight quarter.
- Amid a ramp up in industrial supply coupled with a relatively sombre economic outlook, demand for industrial space likely to remain strong. Growth sectors, such as advanced manufacturing and e-commerce, will continue to support demand for industrial spaces.
- Industrial rent growth is anticipated to moderate in 2024 amid a surge in completions, with new supply outpacing demand.
- Retail rents witnessed an increase across all regions, with prime first-storey rental rates at Orchard/Scotts Road seeing the highest increase of 1.5% qoq to S$40.40 psf.
- Concept stores with immersive experiences and sustainability in retail were trends seen being incorporated into the likes of Coach’s sub brand Coachtopia launch and Marimekko’s first store opening with a café concept in ION Orchard this September.
- Prime first-storey retail space in Orchard/Scotts Road micro-market is expected to lead rental growth for 2023 at between 4% and 5%, underpinned by the gradual tourism recovery and limited supply pipeline.
- Retail rents in Other City Areas are expected to increase by 1-2% in 2023, while those in the Fringe/Suburban Areas are expected to grow 2-3% for the year.
- Total sales transaction volume fell by 3.5% qoq in Q3 2023 on the back of a seasonal lull period during the Hungry Ghost month and buyer fatigue.
- Sale volume in the secondary market dipped by 0.2% qoq in Q3 2023.
- Given the punitive hike in ABSD for foreign buyers, the homebuying share of foreign demand slipped to 1.9% in Q3 2023. Comparatively, the homebuying share of foreign demand in Q2 2023 was 4.1%.
- Total private home rental transactions in Q3 2023 rose by 17.3% qoq to 23,145 units.
- The juxtaposition of property prices growth and slower transaction volumes in Q3 2023 could lead to prices trading sideways in the coming months. Overall price growth is expected to moderate and rise at a more sustainable level of 3-4% in 2023, following 2022’s 8.6% growth.
- With a lineup of new launches coming onstream in the final quarter of 2023, new home sales are poised to reach 6,500-7,500 units for 2023. This is comparable to 2022’s 7,099 units.
- Secondary sale volume could moderate to 10,000-11,000 units this year, down from 14,791 units in 2022.
Click for the full Q3 2023 DIGEST
For further information, please contact:
Seah Li Ching (Ms)
DID: +65 6393 2369