Singapore’s property market to see recovery with population growth and lightened cooling measures, says JLL
Singapore’s property market will likely see a recovery in office demand and retail sales growth in 2017 as the nation’s economy gets a boost from an increase in the number of skilled workers. The residential sector also looks set to improve with the recent ease in cooling measures, says JLL.
According to recently released figures, the number of employment pass holders rose 2.3% in 2016 even though overall employment grew by just 0.5%. In fact, in the last 18 months, the number of employment pass holders rose 7%, compared to just 2% over the 36-month period in 2012-2014, showing there is significant relaxation in the inflow of skilled workers into Singapore. The government targets to create about 25,000 to 40,000 jobs annually for the next few years, double the rate in 2014-2016. JLL estimates this could imply that the city’s population may grow 1.5 to 1.8 per cent per year between 2017 and 2025. This compares to a growth rate of 1.27 per cent in 2014 to 2016.
“We believe that the government’s ambitious target to create new jobs means that Singapore will continue to allow more skilled workers into the country,” says Regina Lim, Head of Southeast Asia Capital Markets Research, JLL. “Singapore’s inflation is expected to hit 1.0 percent in 2017, after two years of deflation. Historically, office demand correlates with GDP growth, and this will likely spur the growth of retail sales and rental values. Singapore’s economy is expected to grow by 2.6 per cent in 2017 and 3.2 per cent in 2018. Putting these factors together, we can expect to see office demand and retail sales to improve after slowing for the last six years.”
Meanwhile the residential market is making its way to recovery following the gradual relaxation of cooling measures. As part of the budget announced in February, the government has increased housing grants for purchase of resale public housing (HDB) flats by S$10,000 to S$20,000. This signals a possible hike in resale sales proceeds, lifting sentiment amongst HDB households aspiring to upgrade to private homes.
“A healthy resale HDB market helps to stabilise the private residential sector, which may translate to a five to 10 per cent increase in mass condominium sales.” adds Ms Lim. “Another adjustment made is the reduction of seller’s stamp duty, which signals to the market that the government is firmly on a relaxation path to gradually remove the property cooling measures as interest rates rise over the next few years.”
Based on JLL estimates, private luxury home transaction volumes could go up by 20 to 30 per cent year-on-year and prices are expected to rise by two to five per cent in 2017.
Source : JLL