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News Release

Singapore

JLL’s perspective: URA 2nd quarter 2014

Residential market – gradual softening continues


SINGAPORE, 25 July 2014

​RESIDENTIAL

Prices and sales volume

Moderation in decline of the private residential property price as well as the improvement in units sold by developers and in the secondary market in the second quarter shows that the residential market has adjusted to the effects of the TDSR and is slowing but in a stable manner.

While the overall price index has only eased 3.2 per cent, the softening in the residential market has been uneven, with certain segments taking a bigger hit than others. For example, the price index for apartments in the north-east has fallen 14.5 per cent for four quarters, while that for central region condominiums has declined 7.2 per cent over six quarters. The price index for detached homes in the central region has also dipped 8.6 per cent from 3Q13 to 2Q14.

Growing momentum of units being completed

In 2Q14, 4,902 private homes were completed, a 19.2 per cent increase from 1Q14. In 1H14, 9016 units have been completed, a substantial completed supply when compared to 13,150 units completed in 2013 and 10,329 units in 2012.

The large completion number has resulted in total stock of completed private homes increasing by 4,715 units in 2Q14 and vacancy rates rising from 6.6 per cent in 1Q14 to 7.1 per cent in 2Q14. With significantly more units being completed, more rental units are also coming onto the market exacerbating an already softening rental market. This is reflected by the 0.6 per cent decline in the residential rental index as rents continue easing.

Unsold units in launched projects

Since TDSR was imposed in mid-2013, the fall in demand has resulted in a steady increase in unsold units in launched private residential projects, from 5,243 units in 2Q 13 to 6,311 units in 2Q14, a 20.4 per cent increase. This is due to the generally weak take-up at new sales launches and the inability of launched projects to make fair progress in sales after initial launch.

 

OFFICE

The office rental index rose 2.8 per cent in 2Q14, following a 2.4 per cent increase in the previous quarter as steady demand, driven mainly by smaller space occupiers led to a growth in absorption by 22,000 sqm. The absence of new supply during 2Q14 also resulted in island-wide vacancies declining from 10 per cent in 1Q14 to 9.6 per cent in 2Q14. However within the CBD, vacancy rates in 2Q14 were even lower, at 5.8 per cent based on JLL's research data. Office buildings with low vacancy rates are benefitting most from rental increases as the office market improves.

The prices of offices remained stable in 2Q14, supported by the launch of Vision Exchange which accounted for 42 per cent of the office transactions during the quarter and fetching prices ranging from $1,907 to $2,341 psf.​

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