Property prices to slide for another two years: UBS

Asset values are under threat.

Singapore's real estate market will continue to deteriorate for at least the next couple of years, with occupancy and rents under pressure from slow economic growth, weak demand and high space supply.

According to UBS analyst Wen-Ching Lee, asset values in the city will face obstacles arising from rising financing costs. Capitalization rates are also set to rise for the coming years.

"Property prices across the residential and commercial sectors are likely to decline for at least the coming two years as capitalization rates rise at a time when rents are under pressure from sluggish demand and rising supply. Investors may selectively take profit on their property investment at a time when yields are still historically very low, or significantly lengthen their investment horizon," Lee noted.

In the residential property space, Lee noted that developers have no escape from the continued decline in asset prices even if they delay the launch of their projects.

"Despite developers delaying projects, new units accounting for around 9% of existing stock are expected to be marketed between 2016 and 2018, adding further pressure to vacancies and rents. Higher mortgage rates are discouraging new buyers," she said.

“Singapore's real estate faces a challenging environment with already diminishing office rents and demand, rapidly declining rental reversion for all other sectors, while at the same time supply is increasing and higher interest rates push capitalization rates higher. We see suburban malls as the most resilient sector, while offices and hospitality are more cyclical,” Lee added.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia