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Singapore’s commercial and industrial markets are expected to witness “at least -5 percent year-on-year rental corrections by end 2017” as prospects of muted economic outlook, looming supply overhang and rising tenants’ market situation weigh on prices and rentals, revealed a Knight Frank report.
Alice Tan, Head of Consultancy & Research at Knight Frank Singapore, revealed that all segments of the city-state’s property market registered weaker performance in price and rentals, which hit new lows in Q3 2016 since their previous peak.
This comes as global events, such as the Brexit, US election results and slowing Chinese economy affected Singapore’s economic growth and business sentiment.
Notably, 2016 saw the Asia-Pacific commercial property markets face various challenges and headwinds, with a strong link to the wider economic landscape.
“One of the bright spots continues to be new sources of growth in the technology and creative industries, driving office markets in places like Shanghai, Bengaluru, Seoul and Sydney,” said Nicholas Holt, Head of Research, Knight Frank Asia-Pacific.
However, cities that are struggling to find these new sources of growth tended to register weaker commercial property performance.
In fact, markets that are reliant on commodities, oil & gas, banking & finance and shipping all experienced knock-on impacts on their commercial property markets. Some of the markets that saw weaker demand for commercial over the past 12 months include Kuala Lumpur, Perth and Singapore.
Looking into 2017, Knight Frank reckons events outside of Asia-Pacific will be paramount, with events unfolding in Europe and the full impact of Trump’s election victory to have a significant impact on occupier sentiment.
“Countries less reliant on trade will be better insulated from any increase in protectionism and the demise of the TPP, while those which are actively seeing new sources of demand will be best positioned to experience a dynamic market in 2017,” said Holt.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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