Top predictions for 2016
10 experts look into their crystal ball to offer insights into the Singapore and overseas property markets.
By Romesh Navaratnarajah
The general sentiment among property watchers is that this year will be a turning point for Singapores housing market, with private home prices likely to fall further, which should attract genuine buyers back into the market. Good opportunities are also expected to emerge in the commercial and overseas markets. We asked several industry leaders to give their forecasts for 2016.
SINGAPORE
1. LEWIS NG Managing Director, PropertyGuru Singapore
This will be a year of mixed minds. Everyone was confident that the introduction of the Total Debt Servicing Ratio (TDSR) framework and further changes to the Additional Buyers Stamp Duty (ABSD) in 2013 would lead to a slowdown in the property market. What everyone did not predict was that the price revisions would only be four percent in 2014 and 3.2 percent last year, proving the resilience of the market and reminding us that these declines are artificial.
Many people have been hoping and waiting for the government to tweak the cooling measures. But it is becoming increasingly evident that despite the pleas of consumers, property agencies and developers, the measures will stay for now. This year, genuine buyers will be tempted to take the plunge. Savvy investors will see some opportunities, particularly in the resale market, where prices seem reasonable. The market will likely regain momentum in late 2016 and into 2017.
2.FRANCIS TAN Chief Investment Officer, Scotia Real Estate Group
There has been widespread anticipation of the government relaxing some of the property cooling measures. However, the official line has always been unwaveringly clear that it is not the time to do so yet. My take is that whenever the government talks about the lack of a meaningful price correction, they are referring to the HDB resale market.
It is clear that both the public and private housing markets are driven by sentiments. Any relaxation of the measures will send a clear signal that the market has reached bottom and we may be looking at another round of premature rebound, which we are all trying to avoid.
As such, any tweaking of the curbs will only take place after the HDB market has cooled sufficiently. Watching the private market in anticipation of the cooling measures is akin to looking for a needle in the wrong haystack!
3. ONG TECK HUI National Director, Research & Consultancy, JLL Singapore
The three main factors that will weigh on the residential market in 2016 are the prolonged cooling measures, rising interest rates and the economic slowdown.
The more certain factors are the cooling measures, which are likely to remain in place in 2016. As for interest rates, a gradual increase is expected. Of the three factors, the impact of the economic slowdown is the most uncertain. A milder slowdown may not affect sentiments too badly, so we could see stable transaction volume and prices coming off gently. However, a more serious slowdown would dampen sentiments significantly, sparkingcaution and leading to a higher magnitude of softening in transactions and prices.
Therefore, prices could fall between four percent and eight percent this year, depending on the severity of the economic slowdown.
4. CHRISTINE LI Director, Research, Cushman & Wakefield
Total Grade A net absorption in the central business district (CBD) for 2015 was a respectable 308,000 sq ft. While macroeconomic uncertainties and the supply overhang pose challenges to the office leasing market in the short term, opportunities abound for both landlords and tenants. Landlords are better able to retain existing occupiers as cost-conscious tenants are finding it more favourable to renew their leases and save on fit-out costs.
For tenants with the budget to relocate, the record 3.6 million square feet of Grade A CBD space entering the market in 2016 is a one-off opportunity for them to secure space in one of the upcoming premium developments which will help to drive their business forward for the second half of the decade. Singapore continues to remain an attractive investment destination, particularly for foreign capital. As such, well-conceived and managed prime office developments in the city-state could possibly boast the highest occupancies and rents, and therefore command premiums, should they be available on the market.
5. DUNCAN WHITE Director of Office Services, Colliers International
As we enter 2016, the Singapore office market will see tenants continuing the flight-to-quality moves, as rents for Premium Grade A buildings in the Raffles Place and New Downtown market dropped an additional 3.2 percent in Q4 2015. We can expect to see rents continue on a downward trend throughout the year, potentially moving off eight to 10 percent across the market for the year.
Occupiers still view the market with caution and landlords build on an attract-and-retain approach by developing incentives and attractive rates.
"This presents a good opportunity to enter into lease discussions. The market will see approximately 3.5 million sq ft of 5 office space coming online in H2 2016, the majority of which still remains available. However, we would anticipate more pre-lease activities to take place only after Chinese New Year.
MALAYSIA
6. ERIC CHAN Deputy Managing Director, E&O Berhad
The general consensus is that the property market will maintain a cautious outlook, with the cyclical nature of the sector requiring a longer-term perspective to be taken. In time, given the strong fundamentals of the Malaysian property market and its proven resilience evidenced from it rising above past crises the market should consolidate, with confidence gradually returning.
In the meantime, developers with a good track record and who are prudent and alert in responding to market changes will be able to take advantage of opportunities arising during this slow period.
Despite the current subdued property market conditions, E&O continues to draw in sales for its properties in Penang, Kuala Lumpur and Medini Iskandar. Demand remains in the niche locations and for projects by developers offering strong concepts, branding and delivery.
VIETNAM
7. MARC TOWNSEND Managing Director, CBRE Vietnam
2016 will be another promising year for Vietnams residential market, with a new stimulus package from the governmentfor mid-end purchasers and the strengthening of familiar local developers, such as Dat Xanh Group, Nam Long Group and Khang Dien Group.
As the market continues developing towards a more open and internationalised environment, while overall pricing is still attractive as compared to other mature markets, more foreign buyers will look into the Vietnamese market as more guiding laws are issued to foster investment activity.
However, both home buyers and developers need to prepare for a market with an overwhelming supply at higher prices, and evolving regulations, which might impact the absorption and purchase pattern eventually.
AUSTRALIA
8. IWAN SUNITO CEO, Crown Group
The residential market in Sydney will continue to see rising demand and higher prices due to the undersupply of new apartments, which will still be a problem as banks tighten their lending requirements to property developers.
The Australian dollar will remain low as the government looks to maintain interest rates to encourage economic growth. The weakness of the Aussie dollar versus the stronger US dollar will encourage more Asian students to study in Australia.
The falling currency will also raise the price for imports and therefore increase building costs, which will push house prices up.
With A$60 billion in government infrastructure development currently in the works in Sydneys central business district, the city is set to become more vibrant in the next few years, which will strengthen its position as the top economic, tourism and education destination in Australia.
UNITED KINGDOM
9. JAMES WYATT Partner of prime Surrey estate agency, Barton Wyatt
The extra three percent on purchases for buy-to-let investors will be a real stab in the back for those investing for their retirement. Watch very strong sales of up to 300,000 in Q1, then listen to the tumbleweed.
The potential interest rate hike in Q3 or Q4 2016 is also likely to have a big impact, spooking just about everyone with a mortgage. With the US rate having moved in December 2015, it feels like a UK rise is now inevitable. Brexist is an issue that will also impact the pound sterling and the UK property sector.
On the plus side, 10 percent deposit mortgages are back, so we will see a strong first-time buyer market. Major towns and cities outside London may see prices increase by 10 percent, while London will probably be nursing a property hangover for the whole of 2016!
UNITED STATES
10. Danielle Grossenbacher World President, International Real Estate Federation (FIABCI)
I anticipate that the US housing market will remain stable this year. Major cities are experiencing limited inventories, due in part to low construction activity in the past few years. Interest rates remain low, the US economy is strong, unemployment remains at around five percent and there is no real inflation. Economists are forecasting an increase in wages in 2016. If so, demand could progressively go up.
Considering the ups and downs of the stock markets around the world, and the decline of commodity prices, I am convinced that the acquisition of properties in the United States will remain an attractive and rewarding option for local and international investors alike.
In New York City, for instance, hundreds of new condominium units are scheduled to come on the market this year, many of them offering spectacular views which should interest savvy investors.
 | |||
 | This article was first published in the print version The PropertyGuru News & Views.Download PDF | ||
More from PropertyGuru:
Property Market Retrospective 2015
Housing Highlights
Colours of Fortune
Berlin: Europes new darling
Eye on Siglap: Singapore's coolest neighbourhood
