A mixed-use development venture partners MCC Land and HY Realty at the sales gallery of One Bernam

In the post-pandemic era, even though there is a boost in economic growth however, the rise in inflation and the increase in rates of interest is a major concern due to the increased chance of being in a global recession. The bright side is that recessions are good investments According to Francis Tan, investment strategist at UOB Private Banking, at EdgeProp Singapore’s Mid-Year Property Market Outlook on May 21.

The Reserve Residences enbloc which includes 700 homes as well as 150 service apartments and 220,000 square meters in retail.

Singapore’s interest rates are increasing with the rises in US Federal Reserve rates, but at a slower rate, Tan notes. But Singapore’s inflation rate stands at the highest for 10 years. “In the current high inflation environment investors are seeking strategies to invest in assets that protect themselves against inflation” He says.

In Singapore the Singaporean household is in possession of $1.16 trillion in residential property assets on their balance sheet overallfar ahead of the deposits of other investment classes (see the chart below) “Singapore household balance sheet” (assets )”).

Despite the uncertainty in global markets as well as the rising interest rates and property cooling measures taken in December however, there was no cooling of the property market in December. Singapore property market is shown resilience according to Ismail Gafoor, CEO of PropNex. In the last eight quarters, starting from 1Q2020 until 1Q2022, the URA Private residential property price index (PPI) has increased by 14.1%.

In the 1Q2022 period, while the private price index for residential properties was in the upwards of 0.7% q-o-q, the land-based property value index was increasing 4.2%. In the non-landed section, suburban condos located in the Outside Central Region (OCR) nevertheless showed an increase of 2.2% increase q-o-q, and the city-fringe, (also known as Rest of Central Region (RCR) and prime condos (Core Central Region or CCR) decreased by 2.7% and 0.1% and 0.1% respectively.

Private property that is not landed property sale in CCR was recorded at 2,466 units in 2021the highest level for more than 8 years as per PropNex. For the initial four months in 2022 approximately 551 units of units in the CCR were sold, according to Gafoor. Singaporeans as well as permanent residents (PRs) constitute the largest buyer group in the CCR with 89.9% of buyers in 2021 in 2022, and 88.5% in the first four months of 2022. In 2011, a decade earlier, Singaporeans and PRs accounted for 61.1% of buyers in the CCR.

The latest wave of property cooling measures, which took effect on December 16, notably thirty% extra buyer’s stamp tax (ABSD) for foreign buyers may have dampened the demand, says Gafoor.

The rising rental rates, which have reached a record high of $4.45 per month per sq ft in the 1Q2022 quarter — the highest rate in more than a decade have also sparked interest from investors towards the CCR as Gafoor says.

The gap between prices for new homes that are not landed for the CCR and the average price of the RCR has also decreased in the last year. In the 1Q2022, prices in the CCR were up 3.4% y-o-y, while prices in the RCR and OCR increased by 7% or 9.2% respectively over the same time frame as he explains.