Commercial property demand softens for fifth-straight quarter: study

Some investors are holding off investment plans due to the rising interest rates.

Singapore's occupancy demand softened for the fifth consecutive quarter in Q3, dropping to just +20% compared to the +28% reported in Q2, according to the RICS Q3 Global Commercial Property Monitor – Singapore. 

In addition, the Occupier Sentiment Index (OSI), fell to +4% from +24% last quarter and Investor Sentiment Index (ISI) fell to +9% from +28% previously.

Rising interest rates appear to be undermining sector confidence, the report noted. 

The office property subsector, however, saw an increase in demand recording a +31% up from +25% last quarter.

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Anecdotal commentary from local professionals noted that occupancy in prime properties have improved.

Despite this increase, experts say that the market is still in the “price discovery phase” as interest rates rise with some investors holding off investment plans, opting for a “wait and see” approach.

61% of respondents described Singapore's property market as being in a downturn phase.