Property investors shun Singapore as economic growth stalls

Office properties are particularly unattractive.

Institutional investors are shying away from Singapore’s property market due to slowing economic growth and fears of a supply glut, according to the latest Emerging Trends in Real Estate Asia Pacific.

The study, conducted by PwC and the Urban Land Institute, showed that transactional activity in Singapore is painfully muted as investors choose to stay in the sidelines.

“Volume has been thin over the last six months,” said one broker interviewed for the study. “Sellers have not been eager to divest, so they’re trying to maintain pricing—at the moment we’re still trading at the 3 to 4 percent level.”

Investors are also unimpressed by Singapore’s relatively weak economy, which is exacerbated by a large amount of both residential and commercial space supply.

“The offshore financial services industry there is growing, but at nothing like the pace it was. The wealth management sector is the same. So you’ve got an absorption problem, but with much less of a domestic scale to support it. I think Singapore looks as though it might become low-hanging fruit, with a more obvious trade over the course of the next 18 months,” said one fund manager interviewed for the study.