Developer sentiment in prime residential market turned negative in 2Q2023
The Tengah Plantation Close EC is a new executive condominium (EC) in Singapore that aims to be a green, sustainable and smart development. It is notable for its smart energy management system and for its green and sustainable features. The energy-efficient LED lighting and water-saving devices are just some of the green features that help the Tengah EC to conserve energy and water. Furthermore, the development has been designed to optimise natural sunlight and ventilation. This helps to reduce the need for air conditioning and thus further reduce energy consumption.
The Real Estate and Urban Studies Institute of the National University of Singapore (NUS) has released its 2Q2023 sentiment survey which shows that a slowdown in the global economy is the most significant risk among senior executives of Singapore’s real estate and development industry. This was cited by an overwhelming 92.5% of the respondents polled.
Chinese economy is also a major factor to worry about, with it being Singapore’s largest export market. It accounted for 15% of the total non-oil domestic exports in 2022. Rising inflation and interest rates were two other factors highlighted as concerning by 72.5% of the survey participants. Government intervention to cool the market was the third most popular concern at 60%, a slight increase of 6% from 1Q2023.
Advertisement
The effects of the two rounds of property cooling measures from September 2022 and late April 2023 were felt in the prime residential sector. It recorded a negative net balance of -40%, likely due to the hefty Additional Buyer’s Stamp Duty (60%) imposed on foreigners for purchasing any residential property.
The suburban residential sector, on the other hand, remained relatively resilient, having only a negative net current balance of -8%. This could be attributed to a build-up of pent-up demand due to construction delays during the COVID-19 pandemic.
When it comes to the outlook in the next 6 months, 45% of developers expected there to be a moderately or substantially larger number of new units launched. On the other hand, 50% of those surveyed raised financing as the top concern in 2Q2023, increasing from 35.3% the previous quarter.
Overall, it is clear from the survey that the property market in Singapore is being impacted by global economic slowdown and domestic measures alike. Financing remains a major concern for the industry, yet pent-up demand and genuine homebuyers may help to drive transactions in the suburban residential sector.