Private residential rents fall by 0.6% y-o-y in Singapore, but prices rise by 2.2% y-o-y in 2020

SINGAPORE (EDGEPROP) - Singapore will be one of the key markets leading growth in Asia Pacific, with a growth of 4.5% or more, according to Cushman & Wakefield’s latest The Signal Report: Investor’s Quarterly Guide to 2021.

With ample cash reserves, the global economic recovery will strengthen and liquidity is expected to flow into real estate, says Shaun Poh, executive director of Capital Markets at Cushman & Wakefield.

While the office sector bottoms out, Singapore’s logistics market was buoyed by accelerated e-commerce growth and shifting consumer preferences. Demand for other industrial real estate was also boosted on the production side by manufacturers seeking to build safety stock and supported by producers seeking to shorten supply chains. This resulted in the broad increase in rents of local industrial properties in 4Q2020.

Additionally, home values in 2020 have generally increased. However, rental rate growth has softened. “In Singapore, private residential rents fell by 0.6% y-o-y in 2020, but prices continued to trend higher by 2.2% y-o-y over the same period. Developers are looking to acquire land and are keenly watching for opportunities in the en bloc market,” observes Poh.

In 2020, real estate investors adopted a wait-and-see approach, resulting in a decrease of almost 29% y-o-y in total investment volumes (excluding development sites) in 2020. This figure is expected to bounce back in 2021 to about US$165 billion ($221 billion), which is about 90% of the 2019 level. This will be supported by greater investor confidence as Asia Pacific leads recovery globally, as it was the first region to be impacted by the virus. China and South Korea are leading the region in terms of investment activity.

There is a growing consensus that investment activity will be boosted when vaccines are widely distributed in developed countries.

In terms of property types, logistics and multi-family assets have been the ‘pandemic winners’ and will remain attractive investment bets globally, concluded the report. However, the office and retail sectors still present investment opportunities as they continue to evolve, in line with changing lifestyles and work arrangements.