Resilient growth: Singapore’s real estate market holds strong in 2024

Robust demand and strategic policies sustain property market stability

The Singapore residential market is showing signs of stability, with both demand and asking prices in Q1 2024 maintaining levels similar to those observed in Q4 2023. From Q3 2023 to Q1 2024, demand fluctuated within a narrow range, while the median asking prices experienced a year-on-year increase of one percent in Q1 2024, according to PropertyGuru Singapore. 

Macro trends and market performance 

Singapore’s economic fundamentals have remained robust. On February 15, 2024, the Ministry of Trade and Industry (MTI) projected the economy to expand by 1 to 3 percent in 2024, following a growth of 1.1 percent in 2023. 

Additionally, the unemployment rate in February 2024 stayed at two percent, consistent with the previous months. The cost of financing property also remained stable as the Monetary Authority of Singapore (MAS) maintained the prevailing rate of appreciation of the S$NEER policy band. The US Federal Reserve kept interest rates steady at 5.25 to 5.50 percent after its January and March 2024 meetings, contributing to a stable financing environment. 

Residential market insights 

In Q1 2024, PropertyGuru’s Singapore Property Sale Demand Index for residential homes saw a moderate increase of 2.9 percent. This index has remained stable over the past three quarters, despite minor fluctuations. However, the demand index was 17.1 percent lower compared to Q1 2023.  

Simultaneously, the Singapore Property Sale Supply Index rebounded by 5.6 percent in Q1 2024, recovering from a dip in Q4 2023 attributed to the festive season and school holidays. From a year-on-year perspective, the supply index has largely remained unchanged since Q1 2023. This balance of supply and demand led to a moderate 2.1 percent quarter-on-quarter increase in the Singapore Property Sale Price Index, supported particularly by the HDB resale market, which saw a more pronounced 6.4 percent decrease in listings compared to a 2.5 percent decrease in interest in HDB resale flats.

Rental market trends 

The rental market exhibited signs of cooling, with a fourth consecutive quarterly decline in the Singapore Property Rental Price Index, which serves as a proxy for median asking rents. This decline was primarily driven by a 13.5 percent decrease in demand in Q1 2024. 

The completion of both private and public housing projects, delayed due to COVID-19, alleviated rental demand pressures and introduced new supply into the market. Notably, the completion of 21,284 new private homes, including Executive Condominiums, in 2023 exerted additional downward pressure on rental prices. Despite an increase in Work Permits issued in 2023, the influx of foreign workers was insufficient to counterbalance the diminished demand from local renters. 

Commercial real estate investments 

Meanwhile, the commercial real estate transactions rose by 14 percent year-on-year to USD2.2 billion in the first quarter of 2024, driven by significant investments in the retail and hospitality sectors. According to JLL’s latest Capital Tracker, as published by the Singapore Business Review, the islandwide retail vacancy remains low, while capital values for prime and suburban malls continued to rise by 0.6 percent year-on-year. The hospitality sector also contributed to the strong performance, drawing in global investors eager to ride the robust tourism rebound. Private equity players have been particularly active in this sector. 

Heritage shophouses: A unique asset class 

Singaporean heritage shophouses, comparable to New York’s brownstones or London’s Soho properties, have become some of the world’s most expensive properties. Despite a slowdown in sales volume due to a significant money-laundering investigation, prices have remained high. These colonial-era buildings have been fetching record prices, attracting family offices, billionaires, and local developers. Shophouses in the city centre have sold for as much as USD5,900 (SGD8,000) per square foot, comparable to retail spaces on New York’s Fifth Avenue, revealed the Financial Times.  

Investor demand for shophouses soared during the pandemic, with their value continuing to rise even then. The government’s move to double the Additional Buyer’s Stamp Duty (ABSD) for foreigners to 60 percent in April 2023 further boosted the appeal of commercial shophouses, which are exempt from these higher fees. However, the market saw a slowdown following a major money-laundering investigation, which impacted transaction volumes. Despite this, local industry players see this as an opportunity to rethink the role of shophouses within communities.

Recognising excellence in real estate development 

The resilience and vibrancy of Singapore’s property market are also reflected in the achievements celebrated at the 13th PropertyGuru Asia Property Awards (Singapore) 2023. GuocoLand was honoured as the Best Developer, highlighting their contribution to Singapore’s urban landscape. Bukit Sembawang Estates Limited was recognised as the Best Landed Developer, Frasers Property Singapore received the award for Best Mixed Use Developer, Da Vinci Land was acknowledged as Best Breakthrough Developer, while The Assembly Place was celebrated as Best Co-Living Operator. Solitaire Cecil Pte Ltd (TE Capital Partners and LaSalle Investment Management) was awarded Best Commercial Developer, Hoi Hup Realty Pte Ltd was named Best Lifestyle Developer, and UOL Group Limited was distinguished in multiple categories, winning Best Residential Developer, Best Hospitality Developer, and Best Sustainable Developer.

Singapore’s property market is poised to maintain stability in 2024 despite global uncertainties. The balanced demand and strategic interventions by the government and key market players have contributed to this resilience. As the year progresses, the market is expected to navigate through potential risks and capitalise on emerging opportunities, ensuring sustained growth and stability in the real estate sector.

Know any award-worthy residential, commercial, or industrial projects in the country? Nominate them for the 14th annual PropertyGuru Asia Property Awards (Singapore) on or before 30 August 2024. To know more, visit AsiaPropertyAwards.com/Award/Singapore/.

Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: [email protected].