Singapore property market offers investors best and worst of Asian real estate

By: Rachel McCormack
Rachel McCormack
Rachel loves food, drinks, broadcasting and financial markets. She enjoys a fine wiskey and some stock market research. read more.
on Feb 16, 2015

The real estate investment market in Singapore saw strong polarization over the course of last year. While office rents in the city’s central business district jumped 14 percent last year, the biggest growth in Asia, luxury home prices slid six percent in the region, according to a research note from property brokerage and consulting company Jones Lang LaSalle Inc. (JLL).

Bloomberg quoted Chua Yang Liang, JLL’s head of research for Singapore and Southeast Asia as saying that the gap is about to get even larger. Prime office rents in the city, the most expensive in Asia following Hong Kong and Beijing, and ahead of Shanghai and Tokyo, are expected to rise by an additional five percent over the course of this year. In his view, high-end homes may post a decline similar to the drop in 2014 on government regulations.

The New York-based newswire cited Chua as saying that Singapore “has seen quite a polarity in its property market compared to the rest of Asia […] As long as the government curbs on housing are in place, we will continue to see this diverging trend.”
Singapore’s house prices fell four percent in 2014, the first year-on-year decline since the 2008 global financial crisis, according to a report from the city’s Urban Redevelopment Authority (URA) last month. In 2013, private residential property prices had risen 1.1 percent. Based on the release from the urban planning authority, prices of private residential properties fell 1.1 percent in Q4, after a 0.7 percent decline in Q3. According to the statement from the URA: “Price decline was observed across all segments of the private residential property market”.

The slump came as officials added more measures to its five-year campaign to rein in property values with some of the strictest measures. The government has sought to cool the city’s property prices to make homes more affordable. It imposed restrictions on the purchase of second homes and limited access to the market for foreigners, as well as capping total debt repayments at 60 percent of a borrower’s income.

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