Recent property cooling measures may have reduced market sentiment towards the end of 2018, but this year will see a slew of project launches as many en bloc properties sold in the last one year are expected to be launched for sale in the coming months. Developers are expected to value their projects more affordably in light of the current sentiment, which will benefit home buyers looking for good deals. However, it remains to be seen if buyers will choose to wait on the sidelines or enter the market. Over 50 project launches, unleashing 20,000 units, are expected in 2019. In this article, we have pointed out 5 things you need to know about how the Singapore property market could develop in 2019.

1) New launches in the residential market

In the pipeline for launch in 2019 are about 60 projects. Several developers have already lined up showings in January, ahead of Chinese New Year on February 5. Many of these projects are freehold, and are located near the Orchard Road shopping street and top international schools.

2) Interest rates are climbing

Home loan interest rates in Singapore are historically around 3.7 to 4 per cent. However, they have been below two per cent for almost a decade now, largely thanks to the American Federal Reserve setting its interest rate to zero. Two rate hikes are planned for 2019, and interest rates in Singapore are already higher. The Singapore Interbank Offered Rate (SIBOR) is more than double what it was in 2017. The rising interest rate makes mortgages more expensive. For borrowers who are already struggling such as those who exceed your limit before cooling measures and loan curbs, 2019 could be the year that breaks them.

3) Mortgagee sales are expected to rise

Singapore landlords have a lot of holding power, so mortgagee sales are not common. Mortgagee sales are expected to rise in 2019, as more owners are choosing to list their properties on the auction market. Including re-listings, the number of properties put up for sale at auctions totaled 1,087 last year as at November 30, 2018. This was 35.4% higher compared to the figure in 2017.

4) Larger plots and higher prices for Good Class Bungalows (GCBs)

GCBs are restricted properties and coveted by foreigners. Some of the recent purchases were by newly minted Singapore citizens from China, Taiwan and India as well as selected permanent residents who have obtained approval to purchase from the Land Dealings Approval Unit of the Singapore Land Authority. The typical profile of GCB buyers tends to be UHNW families involved in the real estate, fashion, F&B, engineering and construction businesses.

5) Increased demand for shophouses

The property cooling measures in July 2018 have influenced the super-rich to switch from luxury homes to an alternative asset class namely conservation shophouses. With prices having risen, the profile has widened to include local and overseas high-net-worth investors, family offices and boutique real estate funds. The property cooling measures in July 2018 have influenced the super-rich to switch from luxury homes to an alternative asset class: conservation shophouses, which are in limited supply, especially those zoned for commercial use in the prime districts.

Previously, shophouse buyers were a mix of investors and owner-occupiers. But with prices going up, the buyer profile has expanded to include local and overseas high-net-worth investors, family offices and boutique real estate funds. They see conservation shophouses as good long-term investments.

6) Tenants have the upper hand

Rental rates gone up over the past year. However, landlords are not out of the woods yet. There is a lot of supply incoming for 2019 and 2020. According to the government, supply in the pipeline stands at about 45,000. Therefore, we believe it remains a tenant’s market, and rents will swing back into mild growth throughout 2019 despite the slight uptick in rental rates.

7) Commercial property: Growth to continue
We assume office rents to post a second year of double-digit growth in 2019, as vacancies tighten within a tight supply outlook and healthy demand. We expect annual additions to Singapore office stock to halve to one million square feet in 2019 and 2020, from two million in the preceding three years. Demand on the other hand appears to be well supported by the expansion plans of tech companies, as well as co-working operators that offer flexible workspaces. In total, the amount of space taken up by flexible offices could rise 20 per cent in 2019 or around 600,000 square feet, according to Colliers.