Inflexion Point Singapore's Property Market Outlook - DBS Bank
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SECTOR BRIEFING
number
DBS Asian Insights
DBS Group Research • October 2013
Inflexion Point
Singapore’s Property
Market Outlook
DBS Asian Insights
SECTOR BRIEFING 03
02
04 Residential Sub-sector
Why Is There No Bubble?
The Affordability Issue
Government Intervention
Bumper Crop and Price Inflexion
Rising Vacancies to Pressure Prices
Impact and Implications –
Who’s Most Affected?
• Owner-occupiers
• Property investors – Double whammy for upgraders and investors
23
• Developers – Land costs likely to soften
Retail Sub-sector
High Street Still Strong
Cost Headwinds
29
New Supply Has Been Well Absorbed
Office Sub-sector
A Temporary Mismatch
33
Supply Backloaded
Investment Strategy
Singapore Property Stocks:
A Focus on Fundamentals
• UOL Group
• CapitaMalls Asia
• Keppel Land
DBS Asian Insights
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Inflexion Point
Singapore’s Property Market Outlook
Executive Summary
P
Analyst roperty prices in Singapore are currently at record highs, but the market could
Lock Mun Yee reach a turning point this year following the government’s four-year campaign to
munyee@dbsvickers.com
curb a property bubble from developing in Asia’s second-most expensive housing
market.
Forward-thinking cooling measures such as increased supply and slower immigration
03
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policies are helping to stabilize home prices.
number
DBS Asian Insights
While household debt and exposure to mortgage loans have risen, Singapore’s housing
DBS Group Research • October 2013
Inflexion Point
Singapore’s Property
Market Outlook
sector is not in frothy territory as affordability has remained consistent. However, prices
and the volume of sales are expected to fall from the second half of this year until the
supply peaks in 2016/2017.
We expect a 5% contraction in private home prices annually over the next two-to-three
years as vacancies rise to a projected 8%-to-9%. Primary demand could also contract by
20%-to-30% this year to 17,000-19,000. Meanwhile, prospects of rising positive real
mortgage rates in the medium term are also likely to keep investment demand in check.
Edited and produced by Within the retail real estate segment, low unemployment, sustainable domestic
the Asian Insights Office
DBS Group Research
consumption and decelerating inflation provide a stable outlook.
We expect lackluster performance in the office space with spot rents reaching a near-
term trough with a marginal 5% downside. Furthermore, 83% of new completions are
skewed in the second half of 2013 and tenant movements are likely to drag on rents at
older office buildings.
From this standpoint, diversified companies and those with strong cashflow generating
capabilities are better positioned to ride out the bumps. These include UOL Group,
CapitaMalls Asia, and Keppel Land.DBS Asian Insights
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Residential Sub-sector
R
Introduction esidential property prices have climbed to record highs in Asia with mounting
mortgage and household debt raising red flags. Persistent policy tightening
moves have been unable to deter buyers amid an environment of cheap and
ample liquidity.
In Indonesia and Malaysia, house prices have appreciated 23% and 37%, respectively,
since early 2009 and in Singapore, prices have risen by 60%. In fact, home prices in
Singapore rose the fastest among Asean markets.
On a house price to income basis, the cheapest country in our universe is Malaysia with
prices at 4.1-times income and Thailand at 4.7-times. Singapore, both private and public
resale, is at 9.3-times and 5.4-times, respectively. Consequently, mortgage debt has risen
in recent years as households focused on property purchases.
Singapore resident households are now leveraged at 77%, with mortgage making up
45 percentage points of this. Although leverage is not as high as the 93% seen early
last decade, households are holding back their consumption in other areas as they focus
resources on asset purchases.
So does the current situation in Singapore qualify as an asset bubble? Despite buyers
feeling the pinch, Singapore residential property prices, on average, are nowhere near
bubble territory by any conventional measurements.
It currently ranks behind Hong Kong in terms of multiples of income while affordability
of low end private homes, based on mortgage service ratio remains at 41% of average
monthly income.
While household and mortgage debts as a percentage of GDP have recorded new highs,
they are still below those levels in the US and other developed economies. That said, there
are also clearly pockets of stress that have caused unhappiness among Singaporeans,
particularly in the lower income segment as income growth lagged asset inflation.
Fundamental undersupply of affordable products in recent years coupled with liberal
immigration policies in a cheap credit environment has led to the price spike. Looking
ahead, we see this market tightness coming to a peak from this year, with the anticipated
influx of about 237,199 new private and public housing units until 2017.
We anticipate some degree of indigestion as supply comes on-stream. Together with the
prospect of rising short rates in the medium term, this is likely to result in a moderate
price and rental yield correction, of about minus 5% a year over the next two-to-three
years. Together with the financing caps and transaction penalties put in place, we seeDBS Asian Insights
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investment demand being the most adversely affected.
From the perspective of the listed developers, slower volume demand and capped upside
in product prices would likely result in margin erosion and lower land prices as developers
become more selective about product offerings. Under this environment, we believe
developers who adopt a quick asset turn strategy would weather this environment better.
1 Comparison of home price trends
Source: CEIC
Why Is There No Bubble?
Asset bubbles are usually never recognized as bubbles until they burst. Nonetheless, there
are usually signs preceding this event signaling euphoria and mass exuberance.
In the following section, we assess whether there is an asset bubble in Singapore and at
which stage the market is at compared with previous bubble conditions in the US.
Healthy household The resilience of the sector is dependent on the health of household balance sheet. Any
debt ratios weakness in asset values could cause an implosion of debt stress and inability to service
monthly mortgage installments.
Looking across the region and other developed markets, Singapore’s household debt to
GDP may seem high at 77% but it is fairly close to Thailand’s 73% and lower than the
81% and 95% in the US and UK, respectively. Mortgage debt as a percentage of GDP in
Singapore at 46% is comparable to Hong Kong, which has seen a bigger jump in house
prices. In Thailand, households appear to have focused their attention on other activities
and have not invested as much in properties as the household debt ratio of 73% is
significantly higher than mortgage debt to GDP ratio of below 20%.DBS Asian Insights
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Household debt to GDP in the US is still a high 85%, down from 100% in the most recent
peak while mortgage debt to GDP is at 57%. In the UK, mortgages makes up 81% of
GDP while total household debt is at 95% of GDP.
Singapore’s data are healthier than those in the US and UK, indicating that households are
still much less leveraged than their developed counterparts while wealth creation through
GDP expansion also held overleveraging at bay.
2 Singapore household and mortgage debt as a % of GDP
Source: Singstat, CEIC, DBS Vickers
On a house price to income basis, Singapore, both private and public resale, is at 9.3-times
and 5.4-times, respectively and still ranks behind Hong Kong. The cheapest country in our
universe is Malaysia with prices at 4.1-times income and Thailand at 4.7-times. The US,
as a whole, at 5.4-times is cheaper, although if we consider Singapore as a city-state and
taking Manhattan as a proxy, the latter is still higher at 12.5-times.
3 Regional house price to income
Source: URA, Singstat, Demographia, Bank of Thailand, BNMDBS Asian Insights
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4 Singapore household net worth at a high
Source: Singstat
Exposure to And while the Singaporean household exposure to property as a percentage of total
property in context household assets is greater than it is in the US, this reflects the active promotion and policy
of home ownership as a store of wealth and the usage of its local version of public pension
scheme, the Central Provident Fund (CPF), to fund property purchases. Consequently, home
ownership is high in the country with close to 90% of households owning their properties.
Singapore households’ net worth is also at a high, growing in tandem with income creation.
Household exposure to residential property as a percentage of total assets in Singapore is at
49%, which is below the 54% seen in 2000 and lower than the 62% seen in 1996.
No negative equity In order to further assess the risk in the sector, we also look at the prospect of negative equity.
Negative equity occurs when the value of the asset is less than the outstanding loan balance,
when loan quantums rise above asset value or if asset values depreciate causing the loan-to-
value (LTV) ratio to rise.
Singapore resident households’ loan to asset ratio is at 16% as at the March quarter of 2013,
and had hit a high of 21% previously in 2001-2002. The current level is similar to that of the
US. Insofar as real estate is concerned, mortgage loan to residential asset value is a higher
24%, which is well below the peak of 32% back in 2005. However, if we look at just the
private residential segment alone, this works out to be 39%, at the highest level since 1995
and similar to the level during the depths of the financial crisis in 2009.
Interestingly, the LTV for public housing declined sharply post 2009 despite the rapid price
increase in this market segment. We believe this could also be due in part to buyers seeking
loans from financial institutions rather than the Housing & Development Board (HDB) for
public housing purchase as the interest rates were more competitive or taking a lower LTV for
their purchases.
The prospect of negative equity in the residential sector as a whole is quite remote at this
point, with a 76% drop required in overall asset value, before reaching negative equity, or aDBS Asian Insights
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61% depreciation in private property value to wipe out equity. Hence, Singapore’s household
balance sheet remains relatively robust at this point.
5 Mortgages as % of asset value
Source: Singstat
Exuberant, but Another metric that we look at is the growth of credit versus income as rampant credit
not irrational expansion ahead of income growth would indicate signs of euphoria and potential asset
bubble creation.
6 Singapore mortgage loan vs household income growth
Source: Singstat, URA
Since 2000, annual mortgage loan growth in Singapore averaged 6% compared with a
5% annual income expansion, indicating that income growth had generally kept pace
with credit expansion and that euphoria toward asset ownership could be supported by
rising incomes. While the pace of credit expansion was a more rapid 11%-to-13% annual
rise in 2010-2012 versus income growth of 6%-to-10% during this period, this was not
excessive given that incomes have grown more rapidly in the early and mid part of the
last decade.DBS Asian Insights
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Conversely, looking at the US, periods where credit growth exceeded income growth by
a wide margin tend to precede a period of asset value correction, especially when credit
is tightened. This was particularly the case during the early 1980s (10%-to-17% annual
loan growth versus 5%-to-11% annual income growth) and the mid-2000s (11%-to-
15% loan growth against a 4%-to-7% income growth).
These comparisons clearly show signs of an asset bubble do not in exist in Singapore.
The Affordability Issue
However, this should not gloss over nuances and sensitivities in each of the property
segments as well as households’ exposure to property. And while affordability of private
home prices has been creatively maintained by downsizing units and upper middle class
income growth, those earning less find themselves squeezed as their incomes failed to
keep pace with rising home prices.
We look at both the private and public housing affordability using various income deciles
since 2000 and applied it to actual transacted average absolute home prices to derive a
home price to income ratio.
Affordability is measured by the percentage of household income (before employers’ CPF)
that goes to service monthly mortgage installments, assuming an 80% LTV, 25-year loan
on the 15-year finance companies mortgage rates.
Based on our numbers, monthly mortgage installments for a mass private housing unit of
close to $1 million would take up 41% of an average household income while a $472,000
four-room and $561,000 five-room HDB resale unit would take up 21% and 25% of
monthly income, respectively. Segregating income by deciles shows that a household
would need to be in at least the sixth income decile before it can afford a private home.
Unit sizes Prices for lower end private homes have a multiple of 9.3-times to average household
income. This is close to the lowest since 1995, with the peaks being 11.9-times in 2007
and 15.9-times in 1996, despite the higher current prices on a per square foot (psf) basis.
Private homes have also been physically shrinking, leaving them affordable on an absolute
basis. Developers tailor their private residential products by building more smaller sized
units even as they continue to raise prices. The average size of a low end private home
unit transacted in the primary market is 30% lower than before, at around 960sf/unit.
Hence, this improved affordability at the expense of size. If average home sizes were
maintained, the house price to income ratio would be a high 12.1-times in today’s prices.DBS Asian Insights
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7 Affordability for mass market private and public housing by
average household income
Source: Singstat, MAS, URA, DBS Vickers
8 Average selling price vs unit size of non-landed private property
Source: URA, DBS Vickers
Household income The quicker pace of increase in price to income ratios for HDB flats is not lost on those
earning less, had they been considering purchase of a resale apartment, as income growth
had lagged asset inflation.
Our study shows that the lower income group, from the second to third decile segments
would have lost out the most in the past 12 years given that their nominal income growth
has not caught up with rising asset inflation. In 2000, a household in the first decile
income decline would need to earn 16-times its annual income to purchase a home while
it would take the same household 24-times its annual earnings in 2012. It would also take
a household within at least the fourth income decile to comfortably fund a four-room
resale flat. For five-room resale HDB apartments, it would take households within at least
the fifth decile to comfortably afford to buy the property.
In contrast, mass private homes appear to be more affordable now than they were at
any point in the past 12 years as household incomes of those in top half have kept pace
with asset inflation and developers have been downsizing their product sizes to maintain
absolute affordability.DBS Asian Insights
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Government Intervention
As such, we anticipate that policy focus will continue to be directed toward affordable
ownership for consumption rather than investment and maintaining household balance
sheet health.
9 Price differential of new and resale HDB flats
Three-room Four-room Five-room
2012
Ave mthly HH inc ($) 4,374 6,375 9,818
Ave selling price of new 174,000 280,417 353,500
flat ($)
Ave selling price of 490,774 574,895 626,030
resale flat ($)
New flat to inc (x) 3.3 3.7 3.1
Resale flat to inc (x) 9.4 7.5 5.3
New flat to inc (after 2.6 3.3 2.7
2009 hsing grant) (x)
##New flat to inc (after 2.2 3.2 2.7
latest hsing grant chgs)
(x)
2008
Ave mthly HH inc ($) 3,503 5,114 8,117
Ave selling price of new 128,750 198,250 225,000
flat ($)
Ave selling price of 341,870 419,990 443,675
resale flat ($)
New flat to inc (x) 3.1 3.2 2.3
Resale flat to inc (x) 8.1 6.8 4.6
New flat to inc (after 2.3 2.7 2.0
hsing grant) (x)
2005
Ave mthly HH inc ($) 2,865 4,116 6,466
Ave selling price of new 104,750 152,625 204,000
flat ($)
Ave selling price of 169,205 249,494 323,653
resale flat ($)
New flat to inc (x) 3.0 3.1 2.6
Resale flat to inc (x) 4.9 5.1 4.2
New flat to inc (after 2.2 2.3 2.2
hsing grant) (x)
*Note: Prices are before Housing Grants, 2012 average monthly HH income estimated using
growth in past few years, ## Post the latest special housing grants announced in Aug 2013
Source: HDB, DBS VickersDBS Asian Insights
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To this end, the ramp up of sale and construction of build-to-order (BTO) HDB flats since
2010, which should start completing from this year, offers homeowners an affordable
option. Although pent up demand resulted in fierce competition for these units, this
situation is starting to ease.
The recent announcement of more special housing grants to promote home ownership
among the lower income group has improved house price to income by 3%-to-15%
without destabilizing the entire residential market.
10 House price to average income ratio of private mass market home
Source: Singstat, URA, HDB, DBS Vickers
11 Affordability ratio for mass market private housing
by income decile
Source: URA, MAS, Singstat, HDB, DBS VickersDBS Asian Insights
SECTOR BRIEFING 03
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Bumper Crop and Price Inflexion
Supply Upward pressure on property prices has been sustained by the under-supply of housing units.
There are currently about 4.38 persons per housing unit in 2012, a rise from a low of 3.76
persons in 2004. The number of people living on the island has also grown from the low in
2004 to a high in 2012, creating an estimated backlog of demand at 100,000-110,000 homes.
Over the next three-to-four years, stock of newly completed inventory is expected to surge as the
government’s efforts to address the undersupplied public housing market bear fruit. An average
pace of 38,429 new units per annum is expected to be gradually completed between 2010
and 2017. We believe that as pent up demand is satisfied, price momentum should decelerate.
We assess demand by looking at population per total housing unit as well as from organic
perspectives through household formation and external prospects through immigration
targets. To ascertain the downside in home prices, potential pent up demand from the previous
undersupply situation is taken into consideration in the amount of new take up from population
growth over the next couple of years.
12 Population per housing stock vs annual supply
8000 0 5
7000 0
4.6
6000 0
5000 0 4.2
4000 0
3000 0 3.8
2000 0
3.4
1000 0
0 3
199 01 993 1996 1999 2002 2005 2008 2011 2014 201 7
Annual Supply Adj Pop /unit (+1.3% pa)
Source: HDB, URA, DBS Vickers
13 Population per housing stock vs URA property price index
5 250
4.8 230
4.6 210
4.4 190
4.2 170
4 150
3.8 130
3.6 110
3.4 90
3.2 70
3 50
Adj (+1.3% pa) URA PPI
Source: HDB, URA, DBS VickersDBS Asian Insights
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Pent up demand The resident population has grown from 3.4 million in 2004 to 3.82 million in 2012, however,
housing supply has not kept pace, resulting in more residents living under one roof. Household
size grew from 3.4 to 3.53 over the same period, indicating in effect potential demand for
about another 40,000 homes. At the same time, non-resident population grew from 750,000
to 1.49 million from 2004-2012. Based on the estimated housing completions occupied by
non-residents, we reckon that non-resident household sizes have grown more dramatically
from 5.5 to 7.7 persons. Similarly, if non-resident households comprise 5.5 persons, there could
be demand for an additional 60,000-70,000 housing units. Hence, in our estimation there is
existing pent up demand in the market for another 100,000 to 110,000 units.
Given the projected 237,199 units – 61% from HDB and executive condominiums (EC) – that
would be completed and occupied over the next five years, this leaves a balance of 127,000-
137,000 new homes to cater to the projected population growth between now and 2017. Based
on the government’s long term growth projection of having a 4 million-to-4.1 million resident
population by 2020 and 1.8 million-to-1.9 million non-residents over the same period (average
1.3% growth per year), we anticipate the total population to expand from the present 5.31
million to 5.67 million. Using the average of 3.8 to 4 persons per household, this translates to
9,000-10,000 of new households from non-organic population growth over the next five years.
Adding an estimated annual 15,000-20,000 new households formed through marriages from
its existing population base, this translates to new demand of 85,000-110,000 through till 2017.
Based on these assumptions, we reckon that the surplus in supply of 27,000-to-42,000 homes
(assuming all new HDB supply will be occupied) would increase vacancy of private homes by
two-to-three percentage points from the present 5.6% to 8%-to-9%.
Urban redevelopment The government has continued to provide a high and visible supply stream of residential housing
through its land sale program. For the second half of 2013, it made available 5,960 units on the
confirmed list and 8,960 units through the reserve list, bringing the potential supply to 14,155
units in addition to 955 hotel rooms and 2.9 million square feet (msf) of commercial space. The
overall supply is maintained at similar levels as in the last six bi-annual sale programs.
14 Residential supply under the government land sales program (GLS)
Source: URA, MNDDBS Asian Insights
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In the longer term, under the new Master Plan, due later this year, new localities such as Paya
Lebar AirBase and Southern Waterfront City, have been identified for future developments
to house Singapore’s long term population target of 6.8 million people by 2030.
The Paya Lebar Airbase will be relocated to Changi and will free up 800 hectares of land
in the city fringe area. The site is twice the size of Jurong Lake District and larger than
Bishan and Ang Mo Kio townships. In keeping with its proximity to the city center and
the planned Paya Lebar Central hub, the area could house residential, commercial and
industrial components, to be redeveloped over the next 20-to-30 years.
Redevelopment plans for the Southern Corridor were reiterated in recent official
announcements. The Tanjong Pagar area where container port land is located will be freed
up for the Southern Waterfront City. This will cover 1,000 hectares of land from Shenton
Way to Pasir Panjang and would likely include a proposed new waterfront city at the
existing port site at Tanjong Pagar and Pulau Brani (300 hectares) as well as redeveloping
the former Keretapi Tanah Melayu (KTM) railway station land. This would likely happen
when the Pasir Panjang Terminals are relocated to Tuas from 2027 onwards.
15 Location of new development areas
Sembawang
S bbawang
Woodlands
Woodland
dl d S t r
Seletar
Punggol
P ng
gg
ggo
Tampines
p Chang
Changi
g
h
Bishan Serangoon
eran
Jurong Toa P
T Pa
Payoh
y h
yoh
po
Expo
P
Pa
Paya
aya
y Lebar
ya LLeb
e
eb
ebar
b r
Kallang
K g
N v
Novena
Buona
a Vista
uona
ona V t M ri P
Marine r d
Parade
C tral Area
Central Ar
Alexandra
A
Alexandr
d
Pasir Panjang
Commercial centers by 2030
Tanjong
T ong g Pagar
Longer-term employment areas
Possible future reclaimation
0 10
Kilometers
Source: DTZDBS Asian Insights
SECTOR BRIEFING 03
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Rising Vacancies to Pressure Prices
As the supply-demand dynamics shift, we believe that property prices are on the cusp of an
inflexion point with an extended downward bias over the next few years, dragged by lower
primary private transaction volumes and rising vacancy rates. We estimate prices could ease
by 5% per year over the next two-to-three years.
Within the HDB resale market, as supply of public housing is intended for owner occupiers,
we expect the additional new supply to take some pressure off the HDB resale market. In
addition, recent measures to cap resale demand from permanent residents with a waiting
period of three years and limiting mortgage loan tenure to a maximum of 30 years would
also impact immediate demand.
In the private homes market, transaction volumes have declined since the imposition of
the 60% total debt service ratio (TDSR) ceiling at end June 2013 and we expect primary
transaction volumes to decline by 20%-to-30% this year to 17,000-19,000 units. Up till
August this year, we have 11,382 transactions, excluding ECs, down 27% on-year.
Notably, primary private home transactions in July and August 2013 contracted significantly
post the imposition of the total debt service ratio in June. Not surprisingly, in August, EC
sales made up a sizable 54% of total primary private home sales, as existing HDB mortgages
are not included with the new EC mortgage as part of the calculation of debt service ceiling
as buyers have to sell their HDB flats within six months of receiving the keys to the ECs.
16 Monthly private home sales
Source: URA
Historically, vacancies of more than 8% in the private housing sector have dragged on rentals.
This, in addition to the prospect of higher mortgage rates, would erode rental yields, leading to
even more pressure on capital values.DBS Asian Insights
SECTOR BRIEFING 03
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17 Vacancy rate vs URA property price index
Source: URA
Impact and Implications – Who’s Most Affected?
Having considered and reviewed the key underlying factors shaping property prices,
we now turn to evaluating the risks to each segment of property consumers – owner
occupiers, investors and developers. Risks in the sector have increased particularly with
the latest imposition of the total debt service ratio ceiling by the government, in tandem
with the prospect of rising interest rates.
The government recently implemented a 60% total debt servicing ratio to prevent
households from overleveraging. In our estimation, we reckon that on average, Singapore
resident households have a relatively healthy balance sheet – the total debt service ratio
of a Singapore resident household is closer to the 50% mark and below the 60% ceiling
put in place by the government.
Owner-occupiers
We see the recent move to cap total debt servicing ratio at 60% as having a more drastic
impact on investment demand due to a double whammy from higher cash downpayment
and affordability erosion to keep within the 60% limit. For owner occupiers, both new
buyers and buyers looking to refinance their existing mortgages would also be impacted,
but to a lesser extent.
From a refinancing perspective, the cap on the monthly debt service ratio may make it
difficult for a portion of mortgage holders to seek refinancing for their existing loans,
but this remains a minority. According to the Monetary Authority of Singapore (MAS),
while on average bank mortgage principal has risen by 4% over a five-year period, about
5%-to-10% of borrowers now have a monthly debt service ratio of more than 60% of
income. A three percentage point hike in interest rates would push another 10%-to-15%
of borrowers to exceed this ceiling.DBS Asian Insights
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Based on statistics released by Credit Bureau of Singapore, borrowers with at least two
mortgages and other loans have risen 78% between 2008 and 2013 to 48,782 while the
number of mortgage holders with at least one other debt had grown 81% to 362,340 over
the same period.
Nonetheless, we estimate that a new household earning an average income in Singapore
today, with little other financial commitments and committing to a mass market housing unit
and car would see a deterioration of affordability of close to 10%, assuming all things being
equal, in order to meet the 60% total debt service ratio ceiling. Otherwise household income
would have to increase by a similar quantum to preserve the limit and capital value would
have to stay relatively stagnant from here on. Hence, the reduction in affordability is likely to
impact demand and hence drag on prices in the longer run.
However, the main dampener may come from interest rates. Historically, home prices have
demonstrated a stronger correlation to interest rate movements than they have to other
factors such as GDP growth and unemployment. A comparison of the Urban Redevelopment
Authority (URA) Property Price Index since 1984 versus real mortgage rates reveals a 63%
inverse correlation coefficient between the two. With the MAS’s expectation that inflation in
Singapore will moderate to 2.5% this year, real mortgage rates are likely rise.
Our analysis shows that for every one percentage point hike in the mortgage rate,
affordability will be eroded by two basis points. This would likely push the total debt service
toward the 60% mark.
Property investors – Double whammy for upgraders and investors
From a property investor’s perspective, including both upgrader and investment appetite, apart
from the slew of penalties and duties introduced over the past two years (see list of cooling
measures), a potential rise in interest rates make the investment proposition less attractive
in terms of potential returns from both the yield spread and capital upside while the double
whammy of higher 25% cash downpayment required on a second mortgage and imposition
of the 60% total debt servicing ratio ceiling will erode affordability.
In the scenario shown in table 18, for investment buyers, to keep within the 60% total debt
servicing ratio ceiling, prices will have to drop by at least 8%, apart from the much heftier cash
downpayment required due to lower loan quantums. In addition, potential rental yield spread
erosion for higher real mortgage rates could pose another obstacle for investment demand.
The exception to the rule is for buyers who intend to upgrade from one form of public housing
to another, for example, from HDB to EC. Under the current ruling, existing HDB home loans
are taken into account as part of the total debt servicing ratio calculation if the buyer purchasesDBS Asian Insights
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18 Analysis of monthly TDSR for new home buyer vs investment buyers and upgraders
New home buyer Investment buyers and upgraders
Pre-TDSR Post-TDSR Pre-TDSR Post-TDSR
Ave HH inc ($) 9,515 9,515 9,515 9,515
House price ($) 1,000,000 1,000,000 1,000,000 1,000,000
LTV 80% 80% 80% 50%
Downpayment ($) 20% (Cash/CPF) 25% (Cash),
25% (Cash/CPF)
Car value ($) 100,000 100,000 100,000 100,000
Mortgage rate 1.25% 3.5%
House installment ($) 3,125 4,005
Existing HDB home loan 1,300 1,300
installment ($)
New house purchase 3,125 2,500
installment ($)
Motor loan installment ($) 1,094 1,094 1,094 1,094
Other loan commitments ($) 1,000 1,000 1,000 1,000
Total ($) 5,219 6,099 6519 5894
Monthly TDSR 55% 64% 69% 62%
Source: DBS Vickers
a private property, but it is not included in the calculation if the buyer purchases an EC as the
HDB apartment has to be sold within six months once the EC is completed and handed over.
Positive rental carry over mortgage rates tends to move in tandem with property price
movements. The current yield carry is a 0.2-to-1 percentage point carry over cost of funding,
and this is still supportive of prices. Hence, we believe a key inflexion factor is when rental
carry turns negative, either from falling rents due to higher vacancies when supply kicks in or
rising interest rates. Thus, this would weaken the case for investment demand.
19 Comparison of rental yield carry and property prices
Source: URA, MAS, DBS VickersDBS Asian Insights
SECTOR BRIEFING 03
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Anecdotal evidence in previous cycles shows that rents are adversely impacted when vacancy
rates in the private housing segments hit 8%. We are currently at 5.6%. And as mentioned
above the anticipated surplus in supply of 27,000 to 42,000 homes could easily increase
vacancy of private homes from the present 5.6% to 8%-to-9%, leading to even more pressure
on capital values.
Developers – Land costs likely to soften
As price momentum decelerates, developers’ margins would be eroded.
Key factors to watch out for would be the carrying cost of developers’ landbank and latest
land acquisition prices and breakeven costs. A decline in average selling prices would erode
margins and may result in writedowns. Rising interest rates would also raise the landbank
holding cost for developers. However, we believe this is more of a medium term risk, with the
steep spread between short term and long term interest rates signaling that a rise in interest
rates in the short term is not imminent.
Based on developers’ latest landbank purchases, margins for new projects are likely to
compress, particularly if upside in average selling prices are capped. As such, any weakening
of prices could have an adverse impact on not just revalued net asset values (RNAVs) but also
balance sheets if cuts have to be taken.
Based on the most recent land parcels won by listed and non-listed developers, we believe
listed developers have sufficient buffer in their margins to weather a 5%-to-20% drop in
selling prices in the next 12 months.
However, this will not be the case for some non-listed developers. A recent EC bid in Jurong
was done at record pricing (above $400psf), which should translate to an estimated breakeven
cost of close to $800psf. This is on the high end of the current pricing range of ECs.
Given that ECs can only tap households with monthly incomes of up to $12,000, this would
imply an affordability ratio of close to 30%, calculated based on an 80% LTV and 25-year loan
tenure at 3.5%, which is at the peak of the limit set by the government in a recent ruling.
As the price momentum decelerates, we believe developers will begin to adjust their landbank
acquisition strategy to reflect lower land prices in order to preserve margins.DBS Asian Insights
SECTOR BRIEFING 03
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20 Summary of policy measures
Date Policy measures
14-Sep-09 Removal of Interest Absorption Scheme and Interest Only Housing Loans for private residential
projects
Resumption of GLS Confirmed List sales
Non-extension of property measures from Budget 2009
20-Feb-10 Introduce Sellers Stamp Duty (SSD) of 1% for the first S$180,000, 2% for the next S$180,000
and 3% for the balance for property and land bought and sold within one year, not applicable
to HDB flats
Lowering LTV from 90% to 80% for private property, ECs, HUDC, HDB and DBSS flats. Loans
granted by HDB for HDB flats remain at 90%
5-Mar-10 Minimum Occupation Period (MOP) for non-subsidized HDB flats extended to three years from
two and a half years for flats with HDB concessionary loans and one year for flats with non-HDB
concessionary loans
Introduction of non-Malaysian PR quota in HDB estates
Restructuring of non-Singaporean HDB housing subsidy
30-Aug-10 Increase the holding period for SSD from one year to three years with graduated stamp duty
over this period
Buyers with more than one housing loan at the time of new housing purchase will have to
increase in minimum cash payment from 5% to 10% of valuation limit
Lower LTV for multiple mortgage holders from 80% to 70%
For HDB dwellers, households with S$8,000-10,000 monthly income are allowed to buy DBSS
with a S$30,000 grant
Increase supply of BTO flats to 22,000 units
Shorten completion of BTO flats to two and a half years
Increase MOP for non-subsidized HDB flats from three years to five years
Disallow concurrent ownership of HDB flats and private property within MOP
14-Jan-11 Increase SSD period from three years to four years, raise SSD rate to 16%, 12%, 8% and 4%
Lower LTV for non-individual purchasers to 50%
Lower LTV for housing loans for individual buyers from 70% to 60%, first-time mortgage
holders still enjoy LTV at 80%
15-Aug-11 Increase supply of BTO flats to 25,000 in 2012, in addition to 25,000 in 2010
Raise monthly household income ceiling to $10,000 from S$8,000 for BTO buyers and from
s$10,000 to S$12,000 for EC buyers
Increase supply of rental housing to low income households
8-Dec-11 Introduction of Additional Buyers Stamp Duty (ABSD) of 10% for foreigners and non-individual
buyers, 3% for PRs buying second and subsequent properties and 3% for Singaporeans buying
third and subsequent properties
5-Sep-12 URA issued new guidelines on houses smaller than 50sm/unit. The maximum number of
units that can be built on a development site for non-landed private residential developments
(including ECs) in suburban areas will be capped based on a ratio of maximum allowable gross
floor area over the minimum average of 70sm/unit. For developments located in areas that face
more severe infrastructure conditions, the maximum number of dwelling units is calculated
based on an average 100sm/unitDBS Asian Insights
SECTOR BRIEFING 03
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Date Policy measures
6-Oct-12 Tighter residential mortgage loan tenures capped at 35 years for individual and non-individual
buyers
LTV for non-individual buyers lowered to 40%
For borrowers of second and subsequent mortgages, LTV lowered to 40% for loans >30 years or
extended beyond retirement age of 65 years, 60% for first-time borrowers beyond retirement age
21-Nov-12 HDB increases supply of BTO flats to 27,084 units in 2012, plans to release another 20,000
units in 2013
27-Dec-12 Introduction of the Silver Housing Bonus (SHB) and Enhanced Lease Buyback Scheme (LBS) by
HDB. These measures are designed to help older home-owners sell their HDB units for smaller
dwellings
12-Jan-13 ABSD increased for Singaporeans buying their second or subsequent homes and for
Singapore PRs, foreigners and non-individuals buying their first or sub first and subsequent
purchases
Maximum loan-to-value ratios for private residential property lowered for buyers’ first and
subsequent loans, on a decreasing scale
For private residential property, required cash downpayments raised on an increasing scale for
buyers’ first and subsequent loans
For public housing, mortgage service ratio for housing loans granted by financial institutions
to be capped at a percentage of borrowers’ gross monthly income. Permanent residents
who own an HDB flat cannot sublet the whole flat, PRs who own a HDB unit must sell their
flat within six months of completion of private residential property from previous concurrent
ownership of minimum occupation of fulfilled, from July 1, 2013
For ECs, the maximum strata floor area of new EC units will be capped at 160sm, sales of
new dual-key ECs will be restricted to multi-generational families, developers of future EC
sites under the GLS will be allowed to launch units for sale 15 months from the date of award
or after physical completion, whichever is earlier, private enclosed space and roof terraces will
be included in gross floor area
Introduction of Sellers Stamp Duty of 15%, 10% and 5% for properties and industrial land
sold within three years from date of purchase
29-Jun-13 MAS introduces new total debt servicing ratio limit of 60%, which takes into account monthly
repayment for the property loan as well as monthly repayments of other debts
MAS requires financial institutions to apply a specified medium interest rate of 3.5% for housing
(4.5% for non-housing) loans or prevailing market interest rate when calculating TDSR
Financial institutions are to apply a haircut of 30% to all variable and rental income and
amortize the value of eligible financial assets taken into account when computing TDSR
MAS requires borrowers’ names on a property to be the mortgagors of the residential
property for which the loan is taken
28-Aug-13 HDB housing affordability measures extended to middle income households with the Special
Housing Grant (SHG) of up to $20,000 for four-room or smaller flats extended to households
earnings up to $6,500 while the income ceiling for this grant for singles is raised to $3,250.
New and larger three generation flats to be piloted. Durations for HDB loans and bank loans for
HDBs are reduced
Source: MAS, MND, HDBDBS Asian Insights
SECTOR BRIEFING 03
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Retail Sub-sector
S
Introduction ingapore’s retail property sector has remained in good shape. Low unemployment,
increasing tourist arrivals and moderating inflation have supported the market but
rising costs as a result of a tightening labor market could derail expansion plans by
retailers in the medium term. Because of this, we see slower annual rental growth
of around 2% as retailers manage their major operating cost components, including
labor and rental cost. We expect retail landlords that can undertake asset enhancement
initiatives to boost property returns to weather this slowdown better. Current pre-
commitments are high, thus allaying fears of oversupply in the near term. In the longer
run, with some 10% of total retail stock being developed and completed until 2017, we
see a slower rental and capital value trajectory.
Retail sales growth had continued to move in positive territory with June retail sales
(excluding motor vehicles) rising 3% on-year. This was supported by higher F&B,
supermarket, watches and jewelry as well as wearing apparel and footwear trades, which
helped to offset the slower telecoms and furniture and household equipment segments.
21 Monthly year-on-year retail sales growth (seasonally adjusted)
Source: CEIC
High Street Still Strong
The retail scene in Singapore remains vibrant with several new-to-market brands entering
the field while traditional high street brands are also exploring the suburban scene to tap
a larger market segment.
Fast fashion and the F&B industries continue to drive leasing demand. H&M opened three
new outlets at VivoCity, Jem as well as a 20,000sf outlet at Suntec City. Meanwhile, high
end bag brand Lana Marks opened its first shop at Marina Bay Sands, and Wisma Atria
attracted brands Etam, i.t. Hongkong boutique and Italian label Lui.Jo to the market.
The Dining Edition at Marina Square also attracted eight new-to-Singapore names suchDBS Asian Insights
SECTOR BRIEFING 03
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as Lady M Confections, Menzo Butao ramen outlet as well as Supreme Tastes Jiang Nan
Cuisine. According to Jones Lang Lasalle, it is also in talks to help another 20 new brands
establish their presence here.
Meanwhile, retailers are also looking to increase market share by venturing into suburban
locations. At Jem, which opened in Jurong East in June, 59 of its tenants are new to the
suburban market. These include Robinsons, H&M, Victoria’s Secret, Paris Baguette as well
as Books Kinokuniya, which opened its first new outlet in 14 years in Singapore. Hillv2
in Seletar will also house a Market Place supermarket and a Dean & Deluca café when it
commences operations.
Domestic consumption continues to be one of the mainstays of Singapore’s retail industry
given that tourism receipts from shopping and F&B, as proxy to tourist retail expenditure
of $7.1 billion, make up only 18% of total retail sales in 2012.
22 Breakdown of tourism receipts 2012 23 Monthly tourist arrivals
Source: STB Source: CEIC
With the unemployment level still remaining at a low 2.1% and the inflation outlook
moderating, we believe shoppers’ purchasing power could be improved and this should
translate to positive, although moderated, retail sales growth.
Cost Headwinds
While low unemployment and moderating inflation will help the retail sector to continue
to hold up, rising costs as a result of labor crunch remain a key concern and this could
derail expansion plans by retailers and dampen demand for retail space in the medium
term. Singapore is currently undergoing an economic restructuring process that involves
improving productivity and reducing reliance on foreign labor. Hence, operating costs
across the entire production value chain has risen on the back of a labor crunch. AccordingDBS Asian Insights
SECTOR BRIEFING 03
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to Singapore Retailers Association, the retail industry could face a labor shortage of up
to 40,000 by next year, while a number of retailers are already reported to be currently
facing a labor crunch of 10%-to-20% of their headcount.
According to a study done in 2012 by the Economic Survey of Singapore, the largest main
business costs are cost of goods and remuneration. Within the wholesale and retail trade,
cost of goods is the largest cost component while remuneration has the largest impact
on costs for the accommodation and food services, infocomm, business services and
recreation, community and personal services sectors.
As the economic restructuring process intensifies, we believe business operators are likely
to try to offset rising wage costs by passing it on to end-consumers or by trimming other
cost components such as rent. Hence, we believe rent growth is likely to remain positive
but modest in the coming years.
Rental costs Given the more competitive operating environment, we believe that overall retail rents
are likely to remain fairly stable, growing to the tune of around 2% annually over the
next 12 months. That said, we believe retail sales growth would continue to be supported
by domestic consumption as well as a higher influx of tourists. Retail rents over the
next 12 months are likely to be underpinned by high pre-commitment levels for new
incoming retail space in 2013. Hence, retail landlords would have to seek performance
alpha through undertaking asset enhancement initiatives that would boost shoppers’
experience to improve footfalls and tenant sales.
In terms of demand, there was a net take up of 108,000sf in the first half of this year
with 334,000sf of new supply, leading to a higher vacancy rate of 5.8% compared with
5.2% at the end of last year. Anecdotally, retail leasing enquiries have softened slightly,
with pockets of demand, as both retailers and landlords weigh the larger economic issues
against a backdrop of rising incoming supply. Historically, the annual take up of retail
space has averaged 300,000msf annually since 2000. We expect net absorption for the
rest of 2013 and 2014 to remain fairly robust given the current high pre-leasing levels.
Bedok Mall and Westgate, which will open toward the end of this year, are almost fully
taken up so far.DBS Asian Insights
SECTOR BRIEFING 03
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24 Retail space annual demand, supply and occupancy
Source: URA, DBS Vickers
In terms of rents, according to URA, retail rents dipped 1.4% in the first half of this year
from the end of last year. This was accompanied by a slight retracement in occupancy to
94.2% island-wide. Meanwhile, retail capital values rose 3.9% in the first half of this year
with a stronger 5.1% uptick for central area properties and 1.8% at fringe locations.
Taking another measure of the retail market, we look at retail sales psf to give us an
indication of the sustainability of rental levels given the current level of sales. Retail sales
currently average $85psf per month island-wide. Despite the incoming supply, we reckon
retail sales psf would still hover between $85-to-$88psf over 2013-2017, assuming a 2%
annual growth in retail sales. If retail sales remain constant, the range would be between
$80-to-$85psf over the same period.
25 Island-wide retail sales psf
Source: Singstat, DBS Vickers
Historically, the rental trend has correlated fairly closely with retail sales given that rent is one
of the major costs for retailers, and occupancy costs are closely monitored. Given our outlook
for a modest improvement in the sector, we believe rental hike would also be modest.DBS Asian Insights
SECTOR BRIEFING 03
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26 Retail sales vs retail rents
Source: Singstat, URA, DBS Vickers
Upgrades In order to generate higher-than-industry returns on their properties, retail S-REITs undertake
asset enhancement (AEI) programs to increase the attractiveness of their retail offerings,
thereby boosting shopper traffic and tenant sales. Major AEI works currently underway
include the remaking of Suntec City, which is expected to generate a return on investment
in the mid-teens, while CapitaMall Trust continues to enhance IMM Building into an outlet
mall. Previous successful AEIs include FCT’s transformation of Causeway Point, which has
boosted rents from $11psf per month to $13psf per month.
New Supply Has Been Well Absorbed
There has been much talk about the impending supply of retail space over the next few
years. We expect about 3.5msf-to-4msf of new retail space (or about 10% of existing stock
currently under development or at the planning stage) to be completed over the next four-
to-five years. The bulk of supply is located outside the central region, such as Jurong and
Sengkang/ Punggol.
27 Breakdown of retail supply by region
Outside central region
Rest of central region
Core central region
Source URA, DBS VickersDBS Asian Insights
SECTOR BRIEFING 03
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We reckon there is unlikely to be any oversupply situation in the North East of Singapore as
it is highly undersupplied at the moment and is expected to see a huge influx of residents
when new developments are completed.
In the near term, with most of the new inventory having been pre-leased at robust rents,
we believe the retail rental outlook will remain firm. Although a small portion of new
supply in 2014 will come from strata sales developments such as Paya Lebar Square, this is
unlikely to cause significant volatility in the market. Moreover, the average selling price of
the development was at $1,700psf.
The current spot rental yield is estimated at 4.8% for the central area and 5.3% for fringe
locations. This has compressed from 5.5%-to-6% in 2009 as rental and income growth
supported higher capital values. Most listed retail real estate invetment trusts (REITs)
capitalization rates are also within this range. While yield on cost for strata sales units is
lower than this range, yield on cost for land transactions also hovers in this territory. As
such, we believe retail capitalization rates are sustainable and will continue to be supported
by a stable income outlook.
At present, the retail yield spread is around 2.2% while the long term spread is about 250
basis points. With the prospect of rising interest rates in the medium term, we believe
retail capitalization rates are unlikely to compress further.DBS Asian Insights
SECTOR BRIEFING 03
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Office Sub-sector
A Temporary Mismatch
S
ingapore’s office sector has held up better than we expected so far this year with
first half rents remaining flat since late 2012. We had previously projected declines
of 5%-to-10% this year but average office rents moved up 0.2% sequentially in
the second quarter, the first uptick in 14 quarters. Meanwhile, capital values rose
a further 3.6% in the first half, bringing the total appreciation to 44% since the third
quarter of 2009. Fringe office values did better in the second quarter than they did in the
central area, with capital values improving 6.3% in the first half compared with a 3.9%
rise for centrally located assets. The underlying fundamental trends supporting Singapore’s
office sector also remain intact. Business formation turned positive after a negative fourth
quarter and a quiet February this year. And there is also a strong correlation between
office space demand and GDP growth, which is expected to improve this year and next.
Occupancy rates However, we think occupancy rates will fall below 90%. The current signs of strength
are due to a temporary mismatch between office demand and supply. The improvement
in rents was achieved through both an increased net appetite for space (204,500sf was
absorbed in the quarter) and the demolition of older inventory (160,400sf) to make way for
redevelopment. This squeezed occupancy up a tad to 91.2% island-wide.
With at least 83% of 2013’s office coming on-stream in the second half of the year, we
expect tenant relocations to newer outfits to cause frictional vacancy that could drag on
rents for older buildings. We expect rents to end the year relatively unchanged, between a
5% contraction to 0% (compared with falls of 8%-to-5% previously). Occupancy is likely
to hover around the 89%-to-90% mark. Capital values are likely to remain flat as cap rates
have compressed back to pre-crisis levels. Demand is expected to remain positive but with
the US economic recovery in its infancy and China’s economy decelerating, transactions will
likely be for smaller bite-size lots of about 10,000sf while annual demand will run below the
long-term average of 1.2msf-to-1.3msf.
28 URA office price index
Source: URA, DBS VickersDBS Asian Insights
SECTOR BRIEFING 03
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29 URA office rental index
Source: URA, DBS Vickers
Suburban offices Structurally, the presence of cheaper alternatives in new city fringe properties may also divert
demand from a central business district (CBD) concentration. The rising risk-free rate has
sparked fears of cap rate expansion, and hence capital value depreciation. However, with short-
term rates remaining relatively low, property owners have holding power and are unlikely to
offload their assets.
Supply Backloaded
We believe new office inventory, which is heavily skewed to the second half of this year,
will likely moderate rental growth, with our projection for rental now revised to a 0%-to-
5% decline for the year. Based on an estimate of a 1.2msf net absorption (with 500,000sf
in the first half), occupancy could trickle down to just below 89.6% from the present
91.2%. Historically, landlords enjoy improved pricing power when occupancies are above
90%, and with the dip below the 90% mark by year end, we see a lackluster trend for
rents in the coming quarters. With the completion of new buildings and tenant relocation
activities, we expect frictional vacancies from these older buildings to put pressure on
overall rents.
30 Office vacancy rate
Source: URA, DBS VickersDBS Asian Insights
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Vacancies dipped in the first half of this year to 8.8% from 9.4% in December 2012. This
was due to a net absorption of 470,000sf in the office sector and 22,000sf of net office
stock being taken out of circulation in the first half. The entire Robinsons Tower and
Annex Building, IFS Building, Corporate Office, Cecil House and some floors of DBS Tower
1 have been vacated for redevelopment.
Ample cheap liquidity has kept the focus on investment demand rather than consumption.
For example, strata sales at Samsung Hub of $3,500psf are the highest achieved in that
building while the price paid for Robinson Point implies close to a net yield of below 3%.
The vibrant investment market has supported capital values with a few office en-bloc and
strata transactions.
31 Value of office space transactions
Source: URA
Land releases In managing business cost competitiveness, the government continues to offer ample
supply of commercial land through its land sale program. In the second half of this year,
it has made available three land parcels which can add 2.7msf of office gross floor area
once developed and completed.
Within the office component, 63% of 2013‘s new inventory has been absorbed through a
combination of new take-up from the insurance, commodities, business services and legal
sectors, as well as expansion and relocation demand from existing tenants. Annualizing
net absorption in the first half, we derive an annual demand of around 1msf for the
year. Based on this assumption, we believe island-wide office occupancy is likely to trend
down. The completion of Asia Square 2 in September is expected to bring about tenant
relocation and depress occupancy of older buildings, thus stressing rents in the latter.
Over the next few years, there is a potential supply of close to 9.7msf of new offices
and 6.7msf of quasi office space (business parks) from 2013-2017. A large proportion
of supply would be coming from business parks and office space in the one-north area.
Twenty three percent of the new supply will come from decentralized areas such as PayaDBS Asian Insights
SECTOR BRIEFING 03
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Lebar and Jurong. Within the downtown core localities, there are three new buildings,
namely Asia Square, CapitaGreen and Marina One.
Based on the current indicated pre-commitment levels, an estimated 34% of the overall
supply is already pre-committed with 68% of the 2013 and 28% of the 2014 supply
taken up. This is largely coming from the business parks and fringe office space.
32 Estimated pre-commitment of office and business parks space
Source: URA, CBRE, A-REIT, DBS Vickers
Our strategy for landlords over the next 12 months is to prefer office landlords with
exposure to the CBD or central areas given that a large part of the fringe office and
business park supply has already been pre-committed and leasing activity would remain
focused on centrally located properties. We are more cautious on older office buildings
that experience frictional vacancy from tenant relocations.
33 Office demand, supply and occupancy
Source: URA, DBS VickersDBS Asian Insights
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Investment Strategy
T
his year has turned out to be a challenging one for property investors. Fears of
liquidity flows out of Asia arising from potential Federal Reserve policy action
dominated market sentiment for much of 2013. More specific concerns have
focused on rising leverage as a proportion of GDP in both Singapore and the
wider region following the multi-year boom in asset markets. This is despite evidence that
Asia’s reserves are at all-time highs and external debt at all time lows. The market also
expects asset deflation, rising interest rates and higher risk premiums.
Given the strength of the country’s and household balance sheets, we think that at this
point in the cycle, Singapore property stocks should not be trading at valuations seen in
either the Asian financial or global financial crises.
34 Relative performance of property indices vs broader market
Source: Bloomberg, DBS Vickers
That said, we acknowledge that investors are likely to remain risk averse until the
uncertainties surrounding cyclical outflows of Fed tapering have been ascertained and
clearer structural inflows into Asian economies are seen. However, any depreciation in
residential value could be offset by a more stable commercial and retail segment.
For private residential properties, despite higher household and mortgage debt, we
believe there is no irrational exuberance depicting an asset bubble with the financing
caps and transaction penalties put in place. However, this year would form the inflexion
point for home prices as we move closer to the incoming wave of supply and feel the
adverse knock-on impact on occupancy and rental yields. The Singapore government’s
long awaited Master Plan, expected to be announced this year, is likely to highlight new
townships which should provide even longer visibility on supply.
In the office segment, while we expect rental movements to trough with a 0%-to-5%
decline for this year, upside remains capped. Capital values are likely to remain firm with
landlords retaining holding power as short term interest rates remain low.You can also read
