The worst is yet to come for Singapore’s commercial property

Rents, investor demand are expected to crumble further.

The Singapore commercial property market is headed for further decline, with chartered surveyors predicting rents contracting further in the next 12 months.

According to a report by RICS, rental values are seen to fall by 3.3% at the headline level with industrial properties taking the biggest hit from the negative outlook.

Singapore’s commercial property market in is mid-downturn, with a long way to go before hitting rock-bottom and then rebounding, RICS reports.

More than 7 in 10 (78%), of contributors to the RICS (Royal Institution of Chartered Surveyors) Q2 2016 Global Cities Commercial Property Monitor believe it is set to plunge further. Looking ahead to the coming 12 months, respondents expect capital values to be 2.5% lower than at present.

Investor demand also dropped for the fourth consecutive quarter, as only the office sector saw a marked rise in interest from potential buyers. And despite two record-breaking deals announced in the past quarter, the office space supply glut still outpaces the increase in demand, leading to negative rental values.

“Against a backdrop of substantial supply locally and financial market turbulence regionally, the Singapore commercial property market is expected to further decline as rents fall and demand contracts,” commented Will Myles, Regional Managing Director for Asia Pacific.

“Across all sectors, investment sentiment continues to be dampened by the expectation of falling capital values. Surveyors are predicting a 2.5% decline within the next 12 months—sobering news for the commercial property sector despite improvements in lending conditions,” he added.

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