Market Outlook

With Singapore’s economy in a position of strength, being forecasted to surpass pre-pandemic average annual growth numbers by growing 3.8% year-on-year in 2022, Cushman & Wakefield’s latest Singapore Market Outlook H2 2022 report expects the overall Singapore property market to see relatively strong but slower growth as investors seek out safe havens for wealth preservation and diversification amidst global uncertainties.

This report was originally published in https://www.cushmanwakefield.com/en/singapore/insights/singapore-market-outlook-h2-2022

Despite the easing of Covid’s fifth wave in Hong Kong1, the US Fed increasing interest rates has hindered the investment market recovery and delayed investors’ decision-making in Q2. We expect sentiment will pick up in H2 2022 when investors gain more clarity on the rate hike, economic outlook and more relaxed social-distancing rules.

Supported by the strong demand and rental performance, industrial assets should remain the most preferred asset type, while co-living and residential developments are also attractive given solid housing demand. We expect to see funds and real estate firms, which accounted for 87% of the investment volume in Q2, to remain the key driver of the investment market for rest of 2022.

In H1 2022, despite the economic slowdown in Hong Kong, the market still witnessed solid demand from third-party logistics players (3PLs). This, coupled with tight vacancy, pushed rents up further by 1.1% QOQ in Q2 2022. We recommend landlords or investors consider partnerships with operators from fast-growing sectors like logistics, cold storage, self storage, or data centres by arranging long leases to secure stable rental income and higher yields.

In Q2 2022, the office market witnessed a pickup in momentum driven by rising leasing enquires and inspection activities, but commitment in leasing deals remained slow. The overall vacancy rate continued to climb up during the quarter, rising by 0.4 ppt to 11.2% in Q2 2022.

Favored by decentralization demand from cost-saving tenants, rents in Tsim Sha Tsui and Kowloon East slightly recovered (up 1.1% and 0.8% QOQ, respectively). We recommend occupiers to explore flight-to-quality moves as more available new stock comes online in H2 2022.