DTZ Property Times Singapore Q4 2011

Summary

- Economic activity in Singapore slowed in Q4 2011, bringing the full-year economic growth to an estimated 4.8%, in contrast to 2010’s 14.5%. The Singapore economy is forecasted to grow at a sub-par rate of 1-3% in 2012. In view of the slowdown in economic growth, real estate activity in 2012 is expected to be more subdued.  

- Despite more challenging conditions in 2011, real estate investment sales reached $28.6bn, surpassing the $27.9bn of deals recorded in 2010, as investment sales by the public sector increased.

- The weaker economic environment saw office and industrial rents stagnate in H2 2011, with rents remaining unchanged quarter-on-quarter (QOQ) in Q4 2011. For the whole of 2011, office rents in Raffles Place rose 8.9% while average rents for first-storey conventional private industrial space grew by 4.9%. Both office and industrial rents are forecasted to fall in 2012, in view of the slowing economy and cautious sentiment in the sectors.  
 
- Retail rents in Orchard/Scotts Road area were unchanged QOQ in Q4 2011 and registered a modest growth rate of 1.0% year-on-year (YOY) in 2011, while suburban retail rents were unchanged largely due to the substantial pipeline supply. Prime rents in Orchard/Scotts Road are expected to stay largely flat in 2012 as the slowdown in economic growth will have some impact on discretionary retail spending and tourist arrivals.

- Resale prices of private homes across all segments slowed in Q4 2011. For the whole of 2011, private home prices continued to climb, but at a slower pace compared to 2010. The residential market ended 2011 the way it started – with a set of cooling measures. Prices and sale volumes in 2012 will be affected by the Additional Buyer’s Stamp Duty (ABSD) measures announced in December 2011, but the low-interest rate environment and the stronger balance sheets of developers will help to support the residential market in 2012.

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