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After its second phase of reopening since the start of the Circuit Breaker period, Singapore has been doing well in terms of the property market industry despite all restrictions and regulations imposed. Since the general election was made last July 10 wherein the top party has received the highest number of votes shared, GuocoLand and other real estate marketers have elected and weighed what it would be like for the property industry for the start of the second half of 2020 during an EdgeProp e-forum in relation to Real Estate Investment last July 11.
Savills Singapore’s Alan Cheong, who is also the head of research and consultancy, advised that the residential property market in the country has been doing great despite all the strict regulations and restrictions made for most leisure and travel within Singapore. During the first quarter of 2020, most transactions made within residential properties increased by 16.9 percent.
In the second quarter, new home transactions have grown from 280 units sold to 980, as noted by Cheong. For this second phase of reopening, all transaction counts are still expected to improve. As per Cheong, the number of buyers will maintain its good standing during this time and the chance of seeing an increase in its cost and pricing would be around the third phase of reopening if it continues to rise.
Cheong advised that the location of where the property will be purchased does not matter. So whether someone purchased a property in the Outside Central Region (OCR), Core Central Region (CCR), or Rest of Central Region (RCR), it does not have a relative effect since these market segments are relatively connected. It is not just the URA Master plan that needs to be checked, but the macroeconomic inclination should also be seen.
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Reduced Cost of Interest Rates Causes Residential Markets to Recover Well
As discussed by Cheong, the residential market’s standing was able to recover well and effectively saved by lower interest rates. Those on standby were finally able to commit to purchases as these reduced interest rates mean lower interest pricing for most home buyers and businesses. This also secures foreclosure to be avoided by most.
Aside from these details, it is also believed that most residential properties in the country would have greater value as generations passed by, which attracts more buyers to purchase home properties at this time so this could increase its value over many generations. Starting in 1975, Cheong has quoted that residential property values have increased effectively as time goes by, though gaps can be seen, it still goes to having a competitive value at the end. Same with the current situation in which most people still decide to enter the residential market and commit to purchases despite the period of the circuit breaker. Though equity corporations and the market may not have the same view.
Cheong also compared the residential market’s resiliency to how China was able to bounce back and recover after the COVID restriction period on which residential properties remain steady and even get higher for some cities.
Because of this, Cheong has added that the residential market is going to secure its current state of resiliency and even deal as more established compared to other markets and sectors like industrial properties, commercial, or even corporate offices. At the end of the day, securing some homes for people would still be on the top list and he believed that most from equities, REITs, and other financial mechanisms would switch to the residential market.
Commercial Properties May Have Lesser Demand, but With Higher Chances for Some Industrial Properties
The current economic situation, as well as COVID 19 pandemic, has significantly affected almost all industries within Singapore. The property market is one of the industries affected, one of which is commercial properties that receive less demand as most businesses establish more flexible working arrangements due to circuit breaker period restrictions and commercial rental spaces have decreased since most work remotely.
Though the same is also expected to happen with industrial sector demand, there is just one side that may not be affected which is logistics as almost everyone needs this for trading and contactless transactions for businesses. Restrictions and regulations to secure social distancing would also affect the headcount of workers, while other corporations and huge businesses may be forced to close prematurely, which may result in fewer industrial property demands.
It is presumed that some corporations may switch to robotic mechanisms and automated machines for production as it secures lower chances of person-to-person contact so there would still be chances that renting of warehouses and industrial cold storage rooms may recover well due to demands.