Knowledge Hub

Economy

• Significant headwinds lie ahead for Singapore’s small and open economy amid a deterioration in the external economic environment. A silver lining exists however with the reopening of China’s borders and the continued recovery in international travel and tourism. GDP growth is projected to ease to 0.5% – 2.5% in 2023.​

Office

• Prime office rents are expected to continue growing in 2023, albeit at slower rate. The softer market conditions in 2023 could provide a window of opportunity for occupiers to reset and reassess their office requirements. Tenants who are inclined to reduce their office footprint can consider upgrading to smaller but better-quality offices.

Industrial

• With a significant amount of hi-tech supply entering the market in 2023, it will be an opportune time for occupiers to evaluate their space requirements and secure quality and centrally-located space.

• Prime logistics supply for 2023 is still expected to be tight. Logistics occupiers with large space requirements should plan their expansion needs two years in advance or consider build-to-suit solutions.

Retail

• Retail rents in all submarkets will grow further in 2023, particularly in Orchard Road which is likely to benefit from the projected increase in tourist arrivals. Crowds have returned to office areas, which will stimulate leasing demand in CBD retail. Meanwhile, the suburban market will continue to register rental increases amid strong demand.

Residential

• Residential rents have seen a historic run-up since 2021 due to tight supply and robust demand. This unrelenting surge in rents is expected to face resistance in 2023 amid a significant increase in completions. Correspondingly, price growth which was underpinned by strong economic growth and rising rents is set to moderate due to a weaker economic outlook.

Capital Markets

• Despite softening investor sentiments, due to its business-friendly policies and stable political backdrop, Singapore remains a top investment destination in 2023 for investors who are looking to capture the growth potential in Southeast Asia and/or diversify their portfolios.

This report was originally published in https://www.cbre.com.sg/insights/reports/2023-singapore-real-estate-market-outlook

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As international container shipping increases, so does the need for more logistics real estate—especially in seaport markets. In this report, CBRE looks at 18 well-established and emerging seaports to understand their capabilities and connections to other ports, as well as how they influence nearby industrial real estate markets.

Key findings:

• Ocean shipping keeps growing—more than 80% of the world’s merchandise trade by volume is seaborne, of which more than half is shipped in ocean containers—driving strong demand for logistics space near seaports.

• E-commerce sales and holding more inventory to guard against supply chain disruptions are also spurring demand for industrial & logistics properties—especially those with strong transportation links to seaports.

• Transportation costs are a paramount consideration in site selection, accounting for 45% to 70% of logistics spend, versus 3% to 6% for fixed facility costs like rent.

• Ongoing risks—including persistent inflation, rising interest rates, geopolitical tensions and pandemic-related disruptions—are prompting companies to reevaluate supply chain strategies and locations.

This report was originally published in https://www.cbre.com/insights/reports/2022-global-seaport-review

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The 2023 Colliers Global Investor Outlook provides insights from the global survey of our international investor client base, technically analysed by our industry-leading research teams along with views and perspectives from Colliers’ senior experts across markets globally.

Real estate is by no means immune to the volatility impacting capital markets. Yet, it’s also immediately evident that the fundamentals around real estate remain strong. Investors are highly attuned to some advantages that today’s scenario present across asset classes.

As the report highlights, a recalibration is underway in many markets, that we expect to continue well into 2023. Colliers’ consensus is that the global real estate market will start to stabilise by mid-2023 as more certainty emerges around the interest rate outlook. We recommend investors view recent trends not so much as a downturn but as a return to relative rationality.

This report was originally published in https://www.colliers.com/en-sg/research/2023-global-investor-outlook-apac-highlights

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Real estate investors enter 2023 facing a very different investment landscape to the one they encountered at the beginning of 2022. Many property markets were still riding high this time last year. In 2021, they had delivered the strongest returns since before the 2008 global financial crisis (GFC), bouncing back from COVID-19-related weakness on the back of pent-up demand and a particularly buoyant industrial market. As 2022 progressed, however, that pent-up economic demand combined with exogenous supply shocks associated with the Russia-Ukraine war drove inflation to levels not seen in decades.

The future for real estate investing has not been so uncertain since the GFC, and this new environment presents many challenges for investors: Overall deal activity has plummeted as investors pause to reassess the risks they face and underwrite appropriately. While it is clear that sentiment is weak, this pause in activity levels means that pricing evidence is scarce; and for that reason, it will be important to triangulate from a range of data types and sources. Without the tailwind of compressing yields, returns will be driven more by occupier-market fundamentals — which, for office markets, are at a structural turning point. Understanding the interplay of rental growth, occupancy and expenses on delivered income across markets and property types will be key. These factors will be just a selection of the growing number of inputs that may drive asset performance in an increasingly complex investment environment. The ability to attribute risk and performance to a growing number of factors like yield and leasing profile, as well as exposure to more secular risks like climate change, will be increasingly important for investors.

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