Developer sentiment in prime residential market turned negative in 2Q2023

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Rising inflation, investor and consumer confidence, and government intervention are the top risks faced by Singapore’s real estate and development industry, according to the National University of Singapore (NUS) Real Estate sentiment survey for 2Q2023. A slowdown in the global economy, a weakening Chinese economy, and rising interest rates were cited as the most significant risks by 92.5%, 72.5%, and 60% of respondents respectively.

Professor Qian Wenlan, Director of the Institute of Real Estate and Urban Studies, noted that China is Singapore’s largest export market, accounting for nearly 15% of non-oil domestic exports in 2022. The survey showed that the prime residential sector was the most adversely affected in 2Q2023, with a negative net current balance of -40%, due to the fact that foreigners must pay an additional 60% buyer’s stamp duty for any residential property.

The suburban residential sector, however, was more resilient and recorded a negative net current balance of only -8%. Professor Qian attributed this to “pent-up demand arising from construction delays during Covid.” The survey results also indicated that 45% of developers expected a moderately or substantially higher number of units to be launched in the next six months, the top concern of which was financing.