Optimism On Singapore Office Market Falls In Q4
SINGAPORE – Senior executives and industry experts have become less upbeat over the current state and outlook of the city-state’s office market, according to the latest Real Estate Sentiment Index (RESI) published by the National University of Singapore (NUS) Real Estate (NUS+RE) on Thursday afternoon (9 February, SGT).
During the fourth quarter of the prior year, the current net balance declined sharply to 13 percent from 54 percent in Q3 2022. Over the same period, the future net balance fell from 11 percent to 0 percent.
Notably, the current net balance refers to the overall outlook of respondents on how Singapore’s office property market fared from now and until the last six months. On the other hand, the future net balance pertains to their expectations for the next six months.
Meanwhile, the current net balance for business parks and hi-tech space plummeted from 35 percent during the third quarter of 2022 to 0 percent, while the future net balance dropped further from -3 percent to -9 percent.
In Q4 2022, the top potential risks identified by the respondents were rising interest rates with 100 percent of respondents saying so, followed by a slowdown in the global economy (90.6 percent).
“The rising cost of inflation and the credit crunch induced by high interest rates may have put many expansionary plans on hold and at the same time raised caution in firms,” noted Qian Wenlan, a Professor and Director at the NUS Institute of Real Estate and Urban Studies (IREUS).
“After announcing an interest rate hike of 25 basis points on 1 February, the US Federal Reserve cautioned that it would be premature to declare victory over inflation,” she said, adding that conditions are still skewed to the downside, and sentiments may not recover anytime soon until we see more stability in financial markets and loosening credit availability.”
RESI objectively gauges the confidence of senior executives and industry experts in Singapore’s real estate and development industry. The survey gauges respondents’ perceptions and expectations regarding current and future property market conditions. Respondents include developers, consultants, financial institutions, professional firms and service providers.