By Romesh Navaratnarajah: Rental movements across Singapore's office, retail, industrial and residential segments are expected to be moderate this year, according to a report by Colliers International.
Compared to 2012, rents of Grade A buildings are forecast to decline by five percent in 2013, while capital values could rise by five percent. Rents of luxury non-landed private housing could fall by 10 percent, while capital values may dip five percent.
At the same time, rents of ground floor retail space could fall by five percent, but capital values may rise by three percent. Industrial rents are forecasted to increase by five percent, while capital values will remain the same.
Chia Siew Chuin, Director of Research & Advisory at Colliers International, said: "Additional challenges will loom in the retail and industrial sectors, as a more difficult business and operational environment – including slower economic growth, manpower shortage and increasing business costs – will weigh down on the demand for space."
Moreover, landlords will face stiffer competition for tenants due to the continuous flow of new supply.
Nonetheless, "real estate will remain an obvious investment choice for investors, given that the world is now awash with central bank-created liquidity, and interest rates remain low", noted Chia.
In particular, Singapore's property sector will continue to see an influx of funds thanks to its status as a safe investment haven.
Moving forward, prices of office and retail strata-titled spaces are likely to remain robust, on the back of shifting demand from Singapore's heavily-regulated housing market. The industrial strata-titled sector will also remain relatively stable despite the imposition of the Sellers' Stamp Duty (SSD).
However, the luxury non-landed housing segment will remain unattractive to foreign buyers due to the 15 percent additional buyer's stamp duty (ABSD). Romesh Navaratnarajah, Senior Editor of PropertyGuru, wrote this story. To contact him about this or other stories email email@example.com Related Stories: Keppel REIT welcomes new CFO UE bids to takeover WBL Mapletree deal to be S'pore's biggest Reit IPO