According to a poll conducted by the National University of Singapore’s Institute of Real Estate and Urban Studies, property investors are more concerned about the market outlook for the next six to twelve months due to numerous global economic risks (IREUS).
According to the Real Estate Mood Index (RESI) poll, over 97% of respondents cited increasing inflation or interest rates as the top probable risk factor that might negatively influence market sentiment over the next six months. Approximately eight in ten respondents cited “a deterioration in the global economy” and “tightening financing and liquidity in the debt market” as additional possible dangers.
The proportion of respondents concerned about growing building prices decreased from 94.9 percent in the first quarter to 80 percent in the second quarter, although it remains one of the top four threats. In the meanwhile, “the real estate bubble or excessive speculative activity” and “job losses or downturn in the domestic economy” received around 16.7% and 36.7% of the votes, respectively.
Unidentified respondent: “Developers will want to debut fast while attitudes are good and prior to future interest rate increases. In this strong market, prices for new projects are anticipated to be somewhat higher because to high land prices and increased building expenses. But developers must price them competitively since rising interest rates and inflation may affect purchasers’ capacity to purchase.”
64% of poll respondents anticipate that unit pricing of new products introduced during the next six months will be somewhat or significantly higher. About 31% anticipated that the pricing of newly introduced products would remain unchanged, whilst just 6.3% anticipated that costs would be significantly reduced.
In the following six months, around 44% anticipate an increase in the number of units introduced, while another 44% anticipate a similar volume.
Developers, consultants, financial institutions, professional companies, and service providers provided replies for the IREUS real estate sentiment index survey. Its composite sentiment index, a derived indication of total real estate market mood, decreased from 6.1 to 5.7 in the second quarter. According to IREUS, the fall was likely prompted by increased global economic uncertainties.
In response to the Urban Redevelopment Authority’s Long-Term Plan Review, which was launched last month and includes transformation to implement commercial sites that has shorter leases and also changes the Central Business District (CBD) into a “live, work, and play” environment, the institute interviewed 30 senior real estate executives. About 70% were more interested in residential buildings near emerging economic hubs, while 56.7% were more interested in mixed-use developments outside of the CBD.
On the other end of the spectrum, 43,3% of developers reported less interest in commercial properties with shorter leases. Only 16.7% of respondents said that developer enthusiasm will increase.
Nearly half of respondents felt that mixed-use complexes with hotel, residential, retail, and office space would contribute to the vitality of the central business district, while 33 anticipated that mixed-use buildings with hotel, residential, and retail components would boost vitality.
However, few individuals believed that office-dominated mixed designs would contribute to a thriving CBD. Additionally, the majority of respondents indicated that professional talent would still choose to live and work in the Central Core region.
“Some respondents emphasized that zoning restrictions should be more flexible and provide developers greater freedom to switch uses during and after construction.” This will enable landlords to be more adaptable and adapt rapidly to new demands. IREUS observed that some developers believed that additional incentives, such as increased GFA bonuses, are required to balance the costs of innovation and sustainability projects and encourage landlords to engage in such value-added activities.