Industry Experts Less Pessimistic About Office Market In Q3
SINGAPORE – Pessimism over the current situation and outlook of the city-state’s office property market lessened during the third quarter, according to the latest Real Estate Sentiment Index (RESI) published by the National University of Singapore (NUS) on Thursday afternoon (29 October).
The office property sector recorded a current net balance and future net balance of -69 percent and -47 percent respectively in Q3, an improvement from the -88 percent and -60 percent seen during the prior quarter.
RESI utilises a “net balance percentage” to indicate market sentiment regarding the present state as well as prospects of a particular real estate segment. A positive net balance means an upbeat sentiment, while a negative figure indicates pessimism.
“Despite the uncertainties in economic and employment outlooks, the [overall] real estate market sentiment has rebounded strongly. However, the recovery is not broad-based. While the performance has improved in [the] suburban residential sector, the outlooks in the office, retail and hotel sectors remain subdued,” said NUS Department of Real Estate’s Head, Professor Sing Tien Foo.
In terms of potential risks, almost all respondents concurred that a slowdown in the global economy (96.2 percent) and job losses/decline in Singapore’s economy (100 percent) are the leading risks for the overall real estate market over the next 6 months. Notably, some of those surveyed think that these 2 risks may drag down property sales and prices.
The proportion of respondents that identified rising costs of construction as a potential risk factor also rose to 76.9 percent in Q3, up from 69.2% percent during the previous quarter. Conversely, those that cited tightening of financing/liquidity in the debt market dropped from 46.2 percent to 38.5 percent in the third quarter.
Data for the index is compiled and calculated by the National University of Singapore Real Estate (NUS+RE), which collectively represents the school’s Institute of Real Estate and Urban Studies (IREUS) and Department of Real Estate (DRE).
RESI measures the confidence of senior executives regarding Singapore’s property and real estate development sector. Specifically, the survey gauges respondents’ perceptions and expectations about current and future property market conditions – that is from the past 6 months until the present and over the next 6 months.
Respondents comprise industry experts such as consultants, property developers, professional firms, service providers, and financial institutions. The poll is carried out every quarter in March, June, September, and December.