Q2 2024 Real Estate Statistics from URA

Residential

Demand and supply in the private residential market has by now archived balance, with the completion of 19,968 units in 2023 and 2,123 private homes (excluding Executive Condominiums (ECs)) in the first half of 2024. As such, the increases in price have calmed to moderate levels as the URA All Residential Price Index increased 0.9% q-o-q and 2.3% in the first six months of the year.

Homebuyers were more selective in H1 2024, no longer showing the kind of urgency and fear-of-missing-out (FOMO) behaviour at showflats that was a feature of the market from the second half of 2020 to the first half of 2022. Buyers scouring the new home market will continue to take their time to identify the right project with attributes that suit their lifestyle preferences. Prominent new launches that can spur market activity have largely been lacking, against a backdrop of homebuyers on the sidelines who are reticent to commit to any purchase. Nonetheless, private home prices are still expected to grow around 3% to 5% for the full year due to the prices at new launches that are a result of elevated land costs committed some 12 to 18 months ago, as well as prevailing high construction costs.

New homes sales between January and June 2024 were a mere 1,889 units, a 44.2% fall from the 3,383 units in the same period a year ago. However, secondary sales (sub sale and resale)  totaled 7,256 units comprising 79.3% of the all private home sales in 2024 to-date.

With secondary sales leading the market, Knight Frank expects overall private home sales volume to fall between 14,000 and 16,000 for the whole of 2024, down from the 15,000 to 18,000 units initially forecasted. In the new sale market, it is now more than likely that the projected total for 2024 will be between 4,000 and 6,000 units, substantially lower than the 7,000 and 9,000 primary transactions originally anticipated.

In the Core Central Region (CCR), non-landed home prices fell by 0.3% q-o-q in Q2 2024, signalling that prices are plateauing given the hamstrung demand from foreign homebuyers due to the doubling of the Additional Buyer’s Stamp Duty (ABSD) rate for this group of buyers, as well as the lack of prominent new launches to stir the interest of local homebuyers. As a result, new sales declined 23.6% q-o-q to 81 in Q2 2024 with the number of new homes sold in the CCR steadily dwindling after Q1 2023.

Prices of non-landed homes in the Rest of Central Region (RCR) rose 1.6% q-o-q in Q2 2024. The price growth could have been contributed by the launch of The Hill @ One-North that achieved a reported average price of S$2,595 for the 43 units (or about 30%) sold on the launch weekend.

The seemingly evergreen resilience in the landed home market was evident as the URA Property Price Index (PPI) for landed homes recorded three consecutive quarters of price growth, increasing 1.9% q-o-q in Q2 2024, after the 4.6% and 2.6% q-o-q gain in Q4 2023 and Q1 2024 respectively. Landed home prices grew 4.5% in the first six months of 2024, signalling continued strong housing aspirations for these homes against the limited inventory.

Landed homes priced at valuation or slightly under would continue to be quickly snapped up in the current market, notwithstanding the elevated interest rates. However, even though demand for landed homes from Singaporeans moving up the housing aspiration ladder remains intact against limited supply in land scarce Singapore, most sellers continue to maintain asking premiums in this much sought-after housing type. As such, prices of landed homes are expected to be supported with slight increases throughout 2024.

The URA rental index for private homes fell 0.8% q-o-q in Q2 2024, with an overall decrease of 2.7% in the first half of 2024. This is in stark contrast to the annual increase of 8.7% in 2023 and the 29.7% gain in 2022. The landlord’s market has passed and the balance of power has swung towards tenants. With another 6,975 new private homes expected to complete in the second half of 2024, Knight Frank envisages that rents overall will contract between 7% and 10% for the whole of 2024.

Office

The office rental index moved up 3.1% q-o-q in Q2 2024, rebounding from the 1.7% q-o-q decline in Q1 2024. On a half-year basis, rents rose about 1.4%, more subdued than the 7.5% expansion registered in H1 2023.

Some landlords have started to adjust their rental expectations, especially for buildings with pockets of available space. The longer lead time for decanted spaces to be absorbed as well as the space made available at IOI Central Boulevard Towers that completed (in part) in Q2 2024 led to a decrease in occupancy levels islandwide, from 90.4% in Q1 2024 to 89.2% as at the end of Q2 2024. Nevertheless, occupancy levels for most quality office buildings remained healthy, as businesses continued to renew their office space, without mandates to expand or relocate with the prevailing uncertainty and the simmering global political tensions.

Rental growth is expected to ease and flatten in the remaining months of 2024 as occupiers continue to be reticent in deploying capital expenditure and resisting substantial increases in rent. Landlords are increasingly willing to offer reasonable rents to keep buildings filled, especially with space consolidation and reduction by technology firms and banks. With URA office space rental index having increased by an unassuming 1.4% in the first half of the year, Knight Frank expects rents from its basket of Prime Offices to be largely unchanged in the remaining months of 2024, and full year rents to grow between 1% and 3%.

The office price index grew 3.1% q-o-q in Q2 2024, in contrast to the 1.2% q-o-q decrease in Q1 2024. With interest rate cuts expected to materialise in second half of the year, demand for strata office space as well as whole office buildings could improve, and transpose into deals after what has been a relatively quiet first half in the office investment sales arena.

Retail

Rents of retail space remained the same in Q2 2024, following the 0.4% decrease in Q1 2024. In addition, there was no increase compared to the corresponding period in the previous year. Despite the Taylor Swift effect on tourism and spillover effects into the retail space, the stagnant retail rents reflect the challenging operating environment for the retail sector with costs constantly on the rise. Operating conditions for retailers in Singapore have been and are becoming more challenging, to the point that many retailers and F&B establishments have been observed to be stifled by increasing rents and operating costs (i.e., labour, cost of supplies, etc.) that erode much of their profit margins.

Nevertheless, occupancy levels continued to climb, increasing slightly to 93.4% in Q2 2024 from 93.3% in the previous quarter, as Singapore continues to be a good location for international brands to set up shop and expand. Established international retailers who are new-to-Singapore brands have made their way into the domestic retail scene in the past few months. This included names such as Hunter, a British footwear retailer that opened its first store in Singapore at Plaza Singapura and Hoka, a French sportswear brand located in ION Orchard. Other new entrants include food and beverage (F&B) names, such as Ipoh Town, a traditional coffee shop from Malaysia at Jewel Changi Airport and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.

Knight Frank’s tracking of prime retail rents (retail spaces between 350 sf and 1,500 sf with the best frontage, connectivity, footfall and accessibility in a mall, typically located on the ground level and/or the basement level of a retail mall that is linked to an MRT station or bus interchange) island-wide averaged S$27.40 psf pm in Q1 2024, an increase of 0.9% q-o-q and 3.8% y-o-y. Prime retail rents remain on track to increase between 2% and 4% for the whole year. However, despite retail rents and occupancy levels being stable and that are expected to continue growing with more international brands locating and/or expanding operations in Singapore, the growth will be measured and likely at a slower pace for the rest of 2024. As it stands, rising rents and operating costs have begun to deter some retailers from expansions, and might soon threaten to compel others into consolidation instead.