Developer sentiment in prime residential market turned negative in 2Q2023
The National University of Singapore (NUS) Real Estate in the 2Q2023 sentiment survey, released on Aug 30, has revealed a number of potential risks threatening Singapore’s real estate and development industry.
92.5% of respondents to the survey cited a slowdown in the global economy as the biggest risk and considering that China is the nation’s largest export market, accounting for 15% of non-oil domestic exports in 2022, it’s easy to see why.
The survey indicated that rising inflation and interest rates also posed a risk according to 72.5% of the respondents. Government intervention to cool the market has been mentioned as a risk factor for 60% of the respondents, a slight increase from 54.5% in 1Q2023.
The survey also revealed the effects of the property cooling measures in September 2022 and late April 2023, with the prime residential sector being the most adversely affected in the second quarter of 2Q2023. Foreign buyers account for a sizeable demand for high-end properties in Singapore and they are now subject to an additional 60% ABSD that has had a direct impact on the property market in 2Q2023.
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On a more positive note, suburban residential sector recorded a relatively resilient negative net current balance of -8%. Among other factors, pent-up demand arising from construction delays during Covid will continue to drive transactions.
Due to these findings, 45% of developers who responded to the survey expected a moderately or substantially higher number of units to be launched in the next six months. In terms of concerns, 50% of developers identified financing as the top issue in 2Q2023, an increase from 35.3% in the previous quarter.