According to the latest Real Estate Sentiment Index (RESI) published by the National University of Singapore (NUS), property buying sentiment in Singapore has improved in the third quarter of 2024. The RESI, which surveys senior executives of real estate firms, is measured quarterly by NUS’s Department of Real Estate and the NUS Institute of Real Estate and Urban Studies (IREUS) to gauge the overall sentiment of the private real estate market. The sentiment index for the current quarter has increased from 4.8, recorded in the previous quarter, to 5.9. Likewise, the future sentiment index has also risen from 5.1 to 5.8.
The composite sentiment index has also experienced a surge, climbing to 5.9 from 4.9 in the previous quarter. This is the first time all three indices have crossed the neutral score of 5, indicating a growing optimism in the market. This positive sentiment is attributed to the US Federal Reserve’s rate cut in September, the first since 2019, and another reduction in November. The expectation of more cuts in the future is expected to improve credit availability and reduce the costs of doing business, leading to a rise in market sentiment.
Professor Qian Wenlan, director of IREUS, states that the positive sentiment is also supported by the performance of the suburban residential, hotel/service apartments, and suburban retail sectors. Suburban residential and hotel/serviced apartments have recorded the highest current net balances of +35%, followed by suburban retail with +26%. The outlook for these sectors is also optimistic, with suburban residential scoring +29% for future net balance, while hotel/serviced apartments and suburban retail scored +35% and +19%, respectively.
International investors must possess a comprehensive knowledge of the rules and restrictions surrounding property ownership in Singapore. While owning landed properties entails stricter guidelines, foreigners have relatively fewer limitations when it comes to purchasing condos. However, it is important to note that foreign buyers are subjected to the payment of the Additional Buyer’s Stamp Duty (ABSD), which currently stands at 20% for their first property purchase. Despite this additional cost, the stability and potential for growth in the Singapore real estate market continue to attract foreign investments. This is evident in the continuous stream of foreign investment flowing into new condo launches all over the country through websites like New Condo Launches.
However, Provost’s Chair Professor Sing Tien Foo from the NUS Department of Real Estate notes that global economic uncertainty remains a top risk concern for developers. 67.7% of respondents have indicated a decline in the global economy as a potential risk, followed by job losses, a decline in the domestic economy, and an excessive supply of new property launches, ranking at 41.9%. While the current sentiment is positive, there are still potential risks that need to be monitored and addressed in the coming quarters.