When the world began battling the COVID-19 pandemic in 2020 it was clear that many industries, particularly the tourism and event management sectors, would inevitably take a hit. Singapore’s real estate industry is no exception.
When circuit breaker measures were implemented, house viewings were halted and the growth of the private residential property market was uncertain. Unemployment and the overall financial impact of the pandemic on potential homeowners were also factors to be considered.
Now in 2021, what lies ahead for the Singapore property market?
Analysts say that despite the setback caused by the COVID-19 pandemic in many economies around the world, including Singapore, the real estate market is showing signs of growth.
According to data from the Urban Redevelopment Authority (URA), prices of private residential properties rose by 2.1% in the fourth quarter of 2020, compared to the 0.8% increase in the previous quarter.
As for the whole of 2020, the market experienced a 2.2% increase in prices of private residential properties, which is lower compared to the 2.7% growth in 2019.
Rentals of private residential properties, meanwhile, saw a 0.1% increase in the fourth quarter of 2020—a slight improvement given the 0.5% decrease in the previous quarter. However, looking at the whole of 2020, rentals decreased by 0.6% in comparison with the 1.4% increase in 2019.
What remains to be clear is that many still view the Singapore property market as a good investment.
5 reasons to invest in the Singapore property market
Why does the Singapore property market remain attractive? Here are five reasons.
1. Positive market sentiment
Many are maintaining an optimistic outlook, particularly because of the rollout of COVID-19 vaccines in Singapore and other countries, as well as improving economic conditions overall.
According to property analysts in a TODAY report, the government’s swift roll-outs of supplementary budgets and economic stimulus kept employment rate high, which is good news as far as the property sector is concerned. Nicholas Mak, head of research and consultancy at real estate firm ERA Realty, explains in the report that when there is a threat to people’s job security, buying property would be the least of their priorities.
Buying activities may also begin to rebound in particular locations as circuit breaker measures ease and some foreign buyers return after the travel restrictions are lifted, writes OrangeTee & Tie's Christine Sun in a 2020 market analysis.
Sun notes that over the past two years, Chinese buyers made up the biggest foreign buyer group and may continue to be so given pockets of growth across sectors, such as IT, biomedicine, and healthcare. As such, Sun expects these buyers to consider purchasing properties in Singapore.
2. Demand for a different home
The TODAY article also highlights the demand for a different kind of home, more specifically one that would cater to the new needs that arose during the pandemic. Mental wellness, the article says, will be a top consideration when people choose homes as the country has adapted to remote work.
People may be looking for more spacious and well-ventilated homes, for instance, given the stress and tension they might experience should a lockdown occur. The article cites online property portal PropertyGuru as having identified the trend, noting that as remote work continues buyers will be looking at bigger homes in the suburban districts that provide more value for money, as opposed to properties located in near the business districts.
3. Office space remains relevant
While many businesses have adopted the work from home arrangement, real estate services and investment firm CBRE projects that while this trend will continue in 2021, there are still opportunities in the physical office space, especially with the rise of the hybrid workforce. After all, the office is still essential in fostering productivity and engagement among employees.
In its Singapore Market Outlook 2021, CBRE notes that the overall office market is seen to benefit from the gradual economic recovery this year, as well as gains in employment. In addition, office demand will be supported not just by traditional occupants like banks and accounting firms, but also by growing industries, such as the technology, financial services, and professional services sectors.
CBRE cautions, however, that it will not be a uniform recovery across all office buildings. As such, landlords need to be flexible in rental incentives and negotiations.
4. Singapore as a regional hub
Singapore has always been viewed as a top investment destination, as well as a safe haven for investors because of the country’s low taxes, rule of law, and one of the world’s best airports. It is home to 46% of Asian regional headquarters across a diverse range of industries, according to the Economic Development Board.
Steadily, Singapore is poised to become the tech hub of Asia as tech giants from China and the United States set up shop in the city-state. In terms of multinational tech companies, Singapore accounts for more than half of Asian regional headquarters.
So it comes as no surprise that some of the world’s wealthiest and most highly educated would want to live and work in Singapore, thus driving up demand for properties.
5. Singapore government
Singapore is known for its transparency, political stability, and ease of doing business—factors that people look for in an investment destination.
Moreover, government policies in Singapore support the creation and growth of industries and businesses, including the startup ecosystem.
In 2020, the government implemented financial relief measures to buoy individuals and businesses affected by the COVID-19 pandemic. The Monetary Authority of Singapore later announced that the government will be extending support to those who need more time to repay their loan.
To be sure, the pandemic will continue to pose challenges to any industry moving forward. That’s why it’s important to be prepared to leverage on the growth and recovery of these industries, including the Singapore property market.
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