By Cheryl Tay:
The recent introduction of market cooling measures is unlikely to have much impact on commercial and overseas real estate investor sentiment, according to some analysts.
Last week’s launch of Alexandra Central (pictured) next to Ikea saw nearly all of its strata retail units snapped up in a single day, giving weight to predictions that many industrial property investors will shift their focus to retail and office units.
Toby Dodd, Country Manager (Singapore) at Cushman & Wakefield (C&W), believes that “strong investment demand is likely to remain, given the sound economy, ample liquidity, low interest rates and a lack of alternative investments. Investors’ risk appetite will likely continue under these fundamentals”.
At the same time, office, retail and overseas properties which are not affected by the measures are expected to garner more attention.
According to Dodd, “overseas buyers had already started to look away from Singapore after its previous round of cooling measures and we have seen a recent increase in overseas sales to Asians, especially in Malaysia, Australia and the UK. A knock-on effect of these measures could see a decrease in appetite from developers and thus a cooling of Government Land Sales (GLS)”.
Meanwhile, smaller office and retail units offering lower entry levels, stronger tenant demand and rental growth are likely to continue attracting investors shying away from the residential and industrial markets.
Commenting on prices, Dodd said: “We do forecast an increase in both retail and office pricing but nothing similar to that seen in the industrial market over recent years. There will be a clear first mover advantage as investor focus switches sectors.”
But he noted that the government will closely monitor the market over the next few quarters and respond with more curbs “if pricing and volumes follow unhealthy trends. For investors, the message is to purchase prudently and ensure acquisitions are not reliant on short-term exits and financing”.
Cheryl Tay, Editor of CommericalGuru, wrote this story. To contact her about this or other stories, email cheryltay@propertyguru.com.sg
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