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February 3, 2017

Singapore’s soft real estate market in Singapore was given a boost last year. Investment volume rose 34 percent year-on-year to US$9.4 billion, underpinned by major deals such as the sale of Asia Square Tower 1 and a series of transactions, including a top bid for the prime Central Boulevard white site in the Marina Bay area.

“The Singapore property market is poised for a recovery in 2017. GDP growth and inflation are expected to pick up in 2017, driving stronger demand for real estate,” says Regina Lim, JLL’s National Director, Advisory and Research, Capital Markets. “In most sectors, we also saw an increase in transaction volumes, including residential property sales and office building transactions.”

The Lion City is traditionally seen as a safe haven for property investment. It is likely that investment volume will hold up 2017 even as new supply continues to enter the market. Among them are Grade A buildings in the Central Business District, Marina One and Tanjong Pagar Centre. These new office buildings have attracted stronger than expected pre-commitments. And about 50 percent of the office space in buildings completed in 2016 to 2017 have already been leased.

The sale of Central Boulevard at S$2.57 billion, or S$1,689 per square foot per plot ratio, which is the highest bid ever for a Government Land Sale site in Singapore, signals strong investor optimism – with projections that prime rents would rise over the next five years.

Read more about Asia Pacific Real Estate market outlook 2017

Retail and residences
“While demand for office, retail and food and beverage real estate slowed between 2012 and 2015, we believe this bottomed out in 2016 and we expect a modest recovery in the next couple of years,” says Chris Fossick, Managing Director, Singapore and Southeast Asia, JLL.

Gross domestic product is expected to grow 2.3 percent in 2017, an increase from 1.8 percent in 2016.

The stronger tourist arrival figures and slightly higher economic growth will help bolster retail assets. “We expect more retail malls to transact. Good quality, well-positioned retail assets are likely to be attractive to core investors as yields are still higher than office assets, and occupancies have always been resilient even in recessions,” adds Lim.

Singapore’s prime residential market remains attractive for investors compared to other global cities. The latest data from JLL shows that prime residential prices are 126 percent higher in Hong Kong, 62 percent higher in New York and 22 percent higher in London.

And based on JLL estimates in a report, luxury prime properties in Singapore have corrected on average 18 percent, while mass market prices have softened about 10 percent.

Developers are keen to attract buyers and beat the deadline of selling units within two years of completion as mandated by the Residential Property Act by offering discounts and block deals. Nearly S$2 billion worth of residential units were sold via block deals or structured vehicles in 2016; more of such deals are expected in the next two years.

Find out more about Asia Pacific Real Estate Market Outlook for 2018

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Regina Lim

Head of Capital Markets Research, JLL Singapore

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