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News Release

Singapore

JLL’s perspective: URA 1st quarter 2015


​​​​​Singapore, 24 April 2015

RESIDENTIAL

Residential property prices in continual decline with OCR showing less resilience

The private residential price property index continues to soften by another 1.0 per cent in 1Q15, bringing the total decline from the peak in 2013Q3 to -5.9 per cent. Decline in prices for non-landed private homes in the Core Central Region (CCR) has slowed to 0.4 per cent from 0.9 per cent in 4Q14, while Rest of Central Region (RCR) and Outside Central Region (OCR) both had steeper falls of 1.7 per cent and 1.1 per cent in 1Q15 compared to 1.3 per cent and 0.8 per cent in 4Q14 respectively. The larger decline in the OCR is possibly due to the lack of support from HDB upgraders as resale prices and volume in the HDB market continue to soften by 1 per cent and 10.8 per cent q-o-q respectively.


Landed property prices likewise softened by a further 0.9 per cent in 1Q15 albeit lower than the 1.3 per cent in 4Q14, driven by the weaker buyers' interest as the overarching policies in the housing market dampen confidence.

Overall vacancy rate (private residential excluding EC) in 1Q15 improved marginally to 7.2 per cent from 7.8 per cent in the previous quarter supported by the overall lower rents as indicated by the 1.8 per cent q-o-q decline in Rental Index for non-landed housing. Vacancy rate of Executive Condominiums has spiked to 15.1 per cent from the 11.5 per cent in 4Q14 on the back of continual supply of newly completed units of over 1,136 this quarter compared to 416 in 4Q14. 


OFFICE

Rents and prices have fallen

Lan
dlords' growing concerns over the impending large supply completion have translated to a slower rental increase of only 0.6 per cent in the Central Region, compared to the average of some 2.4 per cent q-o-q in 2014. Prices have consequently taken a hit, falling by 0.1 per cent q-o-q – a first decline since 2Q12. The supply under development has however declined to a five year low of 992,000 sqm (on gross basis). Net take-up in the market remains at a positive level of 19,000 sqm although lower than the average of 36,500 sqm over the past four years (2011-2014). Should demand remain tepid going forward, the rental market would face greater downside pressure.

RETAIL​

Retail Property Market Weakens​

With 34,000 sqm retail space added to the total stock, untenanted space has increased by 59,000 sqm, reflecting the weak retail business sentiment. Islandwide vacancy rate has thus jumped to 6.8 per cent, the highest since the start of the URA series in 1Q11 driven largely by the withdrawals of major retailers in Orchard, Downtown Core (mainly the Central Business District) and plausibly Rochor and Outram areas. In fact the vacancy rate in the Downtown Core recorded a historical high of 11.7 per cent.


Rental Index of private sector retail space in Central Area slipped by 0.5 per cent q-o-q after three consecutive quarters of sub-1 per cent increases. As tourist arrivals have fallen since the second half of 2014, business sentiment in Central Area has been badly affected.
 Rental Index for Fringe Area also dropped marginally by 0.1 per cent q-o-q (the first dip since 2Q13). This segment of the retail market ​is less reliant on tourism consumption and mostly supported by residents' spending. Price index held mostly flat in 1Q15 with slight drop in Fringe Area, reflecting potential downside risk believed to be affected by the rising interest rate environment and persistently subdued investment climate.

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