The property buying sentiment in Singapore has experienced a notable shift in 3Q2024, as indicated by the latest Real Estate Sentiment Index (RESI) published by the National University of Singapore (NUS). This index tracks the general market sentiment based on surveys of senior executives within real estate firms.
In 3Q2024, the current sentiment index saw an increase, rising from 4.8 in 2Q2024 to 5.9. This suggests a more positive outlook among industry professionals regarding the state of the private real estate market. Similarly, the future sentiment index also improved, moving from 5.1 in 2Q2024 to 5.8 in 3Q2024, signaling optimism about future market conditions.
The RESI is measured quarterly by NUS's Department of Real Estate and the NUS Institute of Real Estate and Urban Studies (IREUS). This upward trend in the sentiment indices reflects a shift in how senior executives perceive the market, likely influenced by various economic and market factors shaping the real estate landscape in Singapore.
Meanwhile, the composite sentiment index grew to 5.9, up from 4.9 in 2Q2024. This is the first time that all three indices have gone above the neutral score of 5, which IREUS attributes to a growing optimism in the market at large.
IREUS director Professor Qian Wenlan attributes the positive sentiment to the US Federal Reserve rate cut in September — the first since 2019 — and another reduction in early November.
“With more cuts anticipated in the months ahead, we expect both credit availability and the costs of doing business to improve, which would, in turn, raise market sentiment,” she says.
Professor Sing Tien Foo, Provost's Chair Professor at the NUS Department of Real Estate, observes that the positive performance of the suburban residential, hotel/service apartments, and suburban retail areas also propped up the general market sentiment.
Suburban residential and hotel/serviced apartments recorded the highest current net balances of +35%, followed by suburban retail (+26%). The outlook for these sectors was also positive, with suburban residential scoring +29% for future net balance, while hotel/serviced apartments and suburban retail scored +35% and +19%, respectively.
Despite the positive shift in property buying sentiment in Singapore, Professor Sing, an expert from the National University of Singapore (NUS), highlights that global economic uncertainty continues to be a major risk factor for developers. According to the latest findings from the Real Estate Sentiment Index (RESI), 67.7% of respondents view a decline in the global economy as a potential risk that could impact the real estate market.
Other concerns that follow closely include:
Job losses and a decline in the domestic economy, both of which were cited by 41.9% of respondents as significant risks. Additionally, developers are wary of an excessive supply of new property launches, which could oversaturate the market and lead to a potential slowdown in demand.
These concerns underscore the cautious optimism observed in the sentiment index, with developers balancing positive sentiment about the market with significant apprehension over external and domestic economic risks.