Key points from URA’s 3Q2019 property market statistics release


Property prices (landed and non landed) rose 1.3% on a quarterly basis in 3Q2019.

This is slightly lower than 2Q2019’s 1.5% increase, but still a good showing.

Landed property prices rose 1.0%, compared to -0.1% in the previous quarter.

Non landed property prices rose 1.3%, compared to 2.0% in the previous quarter.

Among non-landed properties, prices rose the most in the core central region by 2.0%, followed by the rest of central region at 1.3% and then outside central region at 0.8%.


Property consultant JLL commented that there was strong transaction momentum in 3Q 2019, where developers launched 3,628 private residential units for sale, selling 3,281 units, which reflected a 90.4% take up rate. This is a stronger market momentum compared to 2Q19, when 2,502 new private homes were launched and 2,350 units were sold. It reflects a positive outlook by both developers and buyers in spite of the economic slowdown. The 3,281 new private homes sold in the primary market in the third quarter is the highest quarterly sales volume since 2Q13 when the TDSR was launched.

Of the 3,281 units sold in the primary market in 3Q19, 47% or 1,542 units were in Rest of Central Region (RCR) while Outside Central Region (OCR) accounted for 47.6% or 1,563 units. Affordability remains a key demand driver for most projects.  

In OCR, the bulk of sales in 3Q19 were contributed by projects such as Parc Clematis (434 units), The Florence Residences (293 units), Treasure at Tampines (270 units), Parc Botannia (120 units) and Riverfront Residences (97 units). Their median prices ranged from $1,308 psf to $1,616 psf/$919,000 to $1,195,000, which are palatable to many suburban home buyers aspiring for entry-level private housing.  

In RCR, the top selling projects during the quarter were Avenue South Residence (361 units), One Pearl Bank (235 units), Parc Esta (160 units), Stirling Residences (109 units) and Sky Everton (73 units). Their median prices varied from $1,679 psf to $2,566 psf/$1,291,000 to $1,870,000.

3Q19 prices rose more than flash estimates  

According to 3Q19 flash estimates, the overall price index rose 0.9%, taking into account the 1.7% growth in the non-landed index and the -2.2% drop in the landed index.  

In the actual data for 3Q19, the non-landed index rose at a lower 1.3% but the landed index posted a surprising reversal, rising by 1.0%. The unexpected change in the landed index from -2.2% (flash) to 1.0% contributed to the upward revision of the overall index.   With private home prices rising 1.3% in the third quarter, following the 1.5% increase in 2Q19, the market appears headed for a gradual price increase in the short-term.

Unsold inventory easing  

3Q19 URA Realis data shows that there are 32,677 uncompleted as well as completed private residential units that are unsold. This is 5.2% less than that in 2Q19 and 13.6% below that in 1Q19. Two consecutive quarters of downtrend suggests that the oversupply is not worsening.  

After the cooling measures were implemented in July 2018, residential land sales have been relatively subdued. As the addition to supply inventory from post-cooling measures land sales has been outpaced by primary market unit sales, the inventory of units for sale may have started to decline.

Signs of softening in rental market  

After a more positive 1.3% rise in the residential rental index in 2Q19, a marginal increase of only 0.1% was recorded in 3Q19. Rents for landed homes dropped moderately by -2.3% during the quarter compared to a 0.3% rise in 2Q19. The non-landed rental index which rose 1.4% in 2Q19, increased a milder 0.4% in 3Q19.  

While overall vacancy rate improved from 6.4% in 2Q19 to 6.1% in the third quarter, the changes in the sub-markets were mixed. RCR registered an improvement in vacancy rate from 6.4% in 2Q19 to 6.0% in 3Q19, accompanied by a 1.6% rise in the rental index for non-landed homes. In OCR, non-landed rents also improved by 0.8% as vacancy reduced from 5.7% in 2Q19 to 5.3% in 3Q19.  

Bucking the trend, CCR’s vacancy increased from 7.8% in 2Q19 to 8.2% in 3Q19 while its non-landed rents eased -0.7%. While the supply of newly completed units has been low, the economic slowdown has resulted in businesses being cautious and there have been reports of restructuring.  


Exuberance eased in office leasing market  

URA’s 3Q19 real estate statistics released today showed office rents in the Central Region eased by a marginal 0.6% quarter-on-quarter (q-o-q).  This was dragged down by rents of offices in the Fringe Area which recorded an erosion of 2.8% q-o-q, while rents in the Central Area continued to firm at a similar pace seen in the preceding quarter i.e. 0.4% q-o-q.  

The correction in URA’s rental index for offices in the Fringe Area is likely due to the effect of supply pressure amid weakened occupier demand, on the back of the increasingly uncertain business prospects. The Fringe Area has contributed to more than half of the islandwide’s net increase in supply since 1Q18, with the three office towers in Paya Lebar Quarter being a major completion during this period.  

In contrast, in spite of rising external headwinds, URA’s rental indices for offices in the Central Area have stayed on the growth trajectory in the last two quarters, albeit modest at 0.4% q-o-q each.  This underscores the underlying strength of occupier demand for office space in the Central Area. Nonetheless, the availability of new good quality supply outside the Central Area has helped to ease upward pressure.  Additionally, the clouded business prospects on the back of slowing economy have tempered market exuberance and caused occupiers to be more rent-sensitive, thereby putting a check on rent growth.   

JLL’s research similarly showed that Grade A office rents in the CBD are facing increasing friction but remained resilient to downward pressure.  The average monthly gross effective rents of Grade A offices tracked by JLL posted two consecutive quarters of deceleration in q-o-q rental growth in 2Q and 3Q19. Still, rents managed to edge up a marginal 0.2% q-o-q in 3Q19 to SGD 10.81 per sq ft from SGD 10.79 per sq ft three months ago. This brings the first three quarters’ growth in Grade A CBD rents to just 5.4%.  

Given the continued headwinds foreseen for the rest of the year, we expect more occupiers to put on hold expansion and relocation plans while remaining rent sensitive. This will provide little impetus for rent growth in 4Q19.  Full-year rent growth for Grade A CBD rents is thus projected to come in at below 6%, lower than the 11.8% staged for 2018. Should the external environment stabilises or improves, there is potential for rents to strengthen modestly towards the end of 2020, especially if more owners bite on the CBD Incentive Scheme and withdraw their qualifying office assets for redevelopment, thereby tipping the market dynamics in favour of landlords.   In the immediate term, we foresee office leasing demand to remain driven by the technology sector, while expansion activity from flexible space operators could ease following the growth spurt witnessed in the last few years.  Enquiries from professional services sectors such as legal, finance and insurance could moderate given their greater sensitivity to the external environment.


Healthy report card for retail property market but outlook remains fragile  

URA issued a healthy 3Q19 report card for Singapore’s retail property market.  Rents and prices of retail properties recorded q-o-q gains across all regions tracked by the URA in 3Q19, while islandwide vacancy rate tightened amid continued net absorption of retail space.  

Most significantly, rents of retail properties in the Central Region turned positive in 3Q19 and the 2.3% q-o-q gain in rents is the steepest since the start of the series in 1Q11. This could have come on the back of retailers’ cautious optimism on the back of the growing tourist arrivals, and their confidence that the various Government initiatives to revitalize Orchard Road and the retail scene could succeed in drawing in more consumers and boosting their tills.  

JLL’s research showed that there was firm demand for retail spaces from both new-to-market and brand expansions in 3Q19 although these are primarily from the food and beverage sector. For example, bubble tea chain, Chicha San Chen, which entered the local scene in May 2019, already has six outlets by the end of 3Q19. Activity-based retailers were also still seeking retail spaces to enter the market.  

Nonetheless, the retail sector was not without casualties in 3Q19. For instance, BAKE Cheese Tart would be closing at the end of the October and will be replaced by sister brand Croquant Chou Zakuzaku. Theme cafes Gudetama and My Melody Café announced that both outlets in Suntec City Mall will be closed on November 17. Hawker QSR by No Signboard closed all 3 outlets in Esplanade Mall, Jewel Changi Airport and Kent Ridge while Metro and Times bookshop moved out from Centrepoint.   Hence, while the healthy 3Q19 report card is encouraging and raises hope that Singapore’s retail property market has stepped onto the recovery path, the journey could remain patchy given external headwinds ahead and continued operational challenges.


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