Buyer caution prevails amid challenging market conditions

• A Prime non-landed project, 32 Gilstead, debuted in the quarter with a 29% take-up during its launch month at a median price of SGD 3,443 per sq ft. Other top-selling projects were the previously launched Klimt Cairnhill, Watten House and 19 Nassim.
• Prime buying demand and activity remained under the weight of elevated interest rates and the April 2023 cooling measures. New home sales volume fell amid limited new launches while the mismatch in buyer-seller price expectations capped resales.

A surge in new completions expands Prime vacancy

• Information as of end-June showed that eight Prime non-landed projects obtained Temporary Occupation Permits (TOPs) in Q2 2024. Two more projects could also complete in the quarter, subject to government processes that may delay their TOP issuance.
• Prime vacancy rose q-o-q on the back of a spike in new completions, with the physical occupation of units typically lagging behind new completions.

Developers stay cautious about landbanking amid market challenges

• Prices in the Prime market were stable q-o-q, supported by healthy demand from local buyers who perceive value in owning Prime properties. However, foreign buyers and investors remained deterred by the high Additional Buyer’s Stamp Duty (ABSD).
• Non-landed residential rents in the Prime market continued to fall in Q2 2024 with subdued leasing demand. However, the rate of decline was notably slower compared to the previous quarter, suggesting a potential stabilisation in rents going forward.

Outlook: Prime rents projected to stabilise in H2 2024

• We expect the ABSD hike in April 2023 to keep foreign buyers and affected property investors at bay, while demand from local buyers seeking value deals is likely to remain healthy, lending support to prices in the Prime areas in the near term.
• The Prime leasing market is expected to stabilise before gradually picking up over the next few quarters, bolstered by potential economic upside and improved hiring by businesses towards the end of the year.