Comments on the URA Q1 2020 Real Estate Statistics

SINGAPORE, 24 April 2020 --

Tricia Song (宋明蔚), Head of Research for Singapore at Colliers International:




Private residential property prices in Singapore fell in Q1 2020, after rising for three straight quarters, due to the coronavirus (COVID-19) impact on the economy. Final statistics from the Urban Redevelopment Authority of Singapore (URA) on Friday, 24 April, showed that private residential property prices fell by 1.0% quarter-on-quarter (QOQ) in Q1 2020, slightly better than the flash estimates of a 1.2% decline. This also compares to a 0.5% gain in the previous quarter and a 2.7% gain in full year 2019.

Looking at the breakdown, the difference between the actual figures and flash estimates were due to a lower decline achieved in the landed segment. While the non-landed segment’s price index was unchanged from the flash estimates of -1.0%, core central region (CCR) prices fell at a faster rate of 2.2% in the actual data vs.a 1.5% decline in the flash estimates, while outside central region (OCR) prices fell 0.4% vs a 1.0% fall in the flash estimates. Flash estimates tracked transactions in the first 10 weeks of the quarter.

The private residential price index is now 1.6% above the most recent peak in Q3 2018 and 1.6% below the all-time peak in Q3 2013.


Developers sold 2,149 new homes -- excluding executive condominiums (ECs) -- in Q1 2020, down by 12.0% quarter-on-quarter (QOQ) (2,443 in Q4 2019) but up 16.9% year-on-year (YOY) (1,838 in Q1 2019).

Meanwhile, secondary (resale and subsale) transactions stood at 2,120 units in Q1, a 12.9% decline from the 2,435 units in Q4 2019 but 11.3% higher YOY (from 1,905 in Q1 2019).

We believe the take-up has yet to reflect the full impact of COVID-19 as the circuit breaker measures kicked in after the quarter-end, at 7 April, and most of the transactions had occurred in January and February.

Core Central Region (CCR)

According to URA’s data, prices in the CCR declined 2.2% (vs -1.5% in flash) from the previous quarter, after declining 2.8% QOQ in Q4 2019. This brought CCR home prices to 4.9% below the recent peak in Q3 2018 and 7.2% below the all-time peak in Q1 2013.

A closer look at the transactions during the quarter suggests that the decrease in Q1 non-landed CCR prices could be due to selected launches sold at perceived discounts:

  • The M, newly launched in February and the best-selling project in Q1 2020, sold 381 units in Q1 at a median price of S$2,439 psf, compared to nearby Midtown Bay which sold 38 units at a median price of S$2,934 psf in Q4 2019 and sold 10 units at a median price of S$2,899 psf in Q1 2020.
  • The Enclave at Holland, a 26-unit project launched since July 2018, sold 14 units in Q1 at a median price of S$1,851 psf, compared to earlier units sold at S$2,500 - S$2,600 psf.
Rest of Central Region (RCR)

Home values in RCR were fairly stable, falling 0.5% QOQ in Q1 (unchanged from flash estimates), after declining 1.3% in Q4. This brought RCR home prices to 1.9% below the peak of 155.6 seen in Q2 2013.

Due to the lack of new project launches in RCR, new sales were mainly from earlier launches projects which were substantially sold, such as Parc Esta, Stirling Residences and Jadescape.

Outside Central Region (OCR)

Non-landed home values in OCR fell 0.4% (vs -1.0% in flash) QOQ in Q1, following the 2.8% increase in Q4 2019. We believe the decline in OCR prices was mainly due to the high base in Q4 2019, on the good reception of Sengkang Grand Residences, which sold 226 units at a median price of S$1,742psf.

Meanwhile, some earlier launches such as Treasure at Tampines and Florence Residences continued their progressive takeup.

Supply pipeline, vacancy, unsold inventory

In Q1 2020, 1,528 private homes (excluding ECs) obtained Temporary Occupation Permit (TOP), down from the 2,298 private homes completed in Q4 2019.

Together with 4,506 private homes to be completed for the rest of the year, we expect 2020 completions to come in at 6,034 units, with potential delays in construction due to the circuit breaker and supply chain disruptions. The number of completions in 2020 will be significantly below the 10-year historical average of 12,948 units.

In 2021, completions will likely rise to 10,816 private homes, and further to 15,160 units in 2022, and 16,464 units in 2023, due to the bumper en bloc transactions from 2016 to mid-2018.

For the non-landed segment, as demand outstrips available completed supply, the vacancy rate declined a further 0.1 ppt to 5.6% in Q1, from 5.7% in Q4. The peak vacancy was 10.4% in Q2 2016.

Unsold inventory eased to 29,149 units by end-March 2020, compared to 30,162 units in Q4 2019. Assuming the take-up of 8,000 - 10,000 units a year, it will take three to three and a half years to clear.


The overall private residential rental index rose 1.1% in Q1 2020 after falling 1.0% QOQ in Q4 2019. Overall rents are still 10.7% below the peak in Q3 2013.

We now expect rents to stabilise in 2020, from an expected 5% increase previously, given the economic fallout from the COVID-19 pandemic.

While expat demand may decline due to loss of jobs and pay reductions, rents are unlikely to crash as completions in 2020 will be significantly below the 10-year historical annual average of 12,948 units, with potential delays, and vacancy remains tight below the historical average of 8%.


Based on advance estimates from the Ministry of Trade and Industry (MTI), Singapore’s Q1 GDP contracted by 2.2% YOY and 10.6% QOQ (seasonally adjusted annualised), the worst decline since the Global Financial Crisis (GFC).

Oxford Economics, as of 21 April 2020, has downgraded Singapore’s 2020 GDP forecast to −5.1% as the global COVID-19 pandemic and subsequently, the “circuit breaker” measures, are expected to drag Singapore’s economy into its first recession in almost two decades.

MAS has warned of job losses and slower wage growth, as recession looms. Unemployment rate is thus expected to rise.

Job security is one of the key drivers for home purchases. With home prices highly correlated to household income and the economy, we expect private residential prices could decline 3-5% in 2020, in line with the economic contraction.

The projected decline in 2020 will be the first year of decline since 2016 (-3.1%). We do not think prices will fall as much as the 25% over Q2 2008 to Q2 2009 due to the GFC, as there were rampant speculations and loose credit prior to the GFC.

The nine rounds of property cooling measures in 2009-2018 have also reined in speculation, and price increases over the past three years were more sustainable, in our opinion. This time round, the government and banks have extended measures and assistance quickly to help save jobs and alleviate cashflow woes, including deferring home loan payments til end of the year. These should help reduce distress and fire sales in the property market in the near term.

We also believe there is room for the government to ease or unwind earlier measures, which should lend some support to prices. That said, much depends on the length and extent of the COVID-19 pandemic.

As of 22 April 2020, with the circuit breaker extended to 1 June, we expect an impasse in April and May for developer sales. We now expect developers’ sales may fall to 8,000 units for the full 2020, compared to the 9,912 units in 2019, assuming some rebound due to pent-up demand before the year-end.

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While rents and prices are showing a decline, we believe Q1 2020 has not fully captured the effects of COVID-19 as the circuit breaker measures only started on 7 April 2020. It is expected that Q2 2020 will present a clearer picture on the depth of the COVID-19 impact.

In Q1 2020, URA’s Office Rental Index for the Central Region declined 0.8% QOQ, dragged by the Fringe Area which reported a 1.3% QOQ decline. Meanwhile, rental growth at Central Area showed an improvement of 0.3% QOQ, bucking the preceding quarter’s trend of -3.5% QOQ. Currently, URA’s Office Rental Index for the Central Region is 11.6% below the most recent peak in Q1 2015.

Declines in prices were more pronounced. URA’s Office Price Index for the Central Region declined 4.0% QOQ in Q1 2020, as prices contracted 3.7% QOQ in the Central Area and 5.6% QOQ in the Fringe Area. Despite that, we believe the data has not fully reflected current ground sentiments as many of these transactions could have been pre-committed before COVID-19.

Island-wide vacancy of office properties tracked by the URA rose 0.5ppt sequentially to 11.0% in Q1 2020. Net absorption contracted given more supply completions. There were 113,200 sqm of office space granted Temporary Occupation Permit (TOP) during the quarter, led by the completion of additions/alterations to Oxley @Raffles and Woods Square.


Based on Colliers’ research, the effects of COVID-19 on rents was not apparent in Q1 2020, as Central Business District (CBD) Grade A rents remained flat QOQ at S$ 10.09 psf per month.

We expect the impact on office rents to be more evident in Q2 2020. In the 2003 SARS episode, the effect was noticeable after a one-quarter lag. While the COVID-19 pandemic could last longer than SARS, we observe that the current office market has lower vacancy and near term supply pipeline than it did in 2003. Rents are also not at bubbly levels as seen in the run-up to the Global Financial Crisis (GFC) in 2008. That said, a likely recession this year (GDP growth of -5.1% YOY based on Oxford Economics forecast) pose downside risk to demand and rents. We expect a 4% rent decline in 2021 in view of slower demand and high forward supply.

In 2020, we expect the demand driver to be the technology sector, which is still growing, while flexible workspace operators could consolidate after building up a significant presence in the past three years. Trade sectors such as consumer, manufacturing, oil and gas and tourism-related services could likely see some pressures and contraction in office demand.

Meanwhile, Grade A and Premium CBD office vacancy of 3.1% based on Colliers Research is expected to continue to rise over the next few quarters with incoming supply, but remain below the 10-year historical average of 6.2% in 2020-2021 as the new supply is quite limited – 3% of stock per annum over 2020–2021 versus 6% for the last ten years.

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Retail rents and prices showed a similar trend to that of the office sector. Again, with the start of the circuit breaker on 7 April 2020, we believe Q2 2020 will show a worse reading that reflects the effects of COVID-19 more accurately.

URA’s Retail Rental Index for the Central Region declined 2.3% QOQ in Q1 2020, after two quarters of improvements. Both Central Area and Fringe area rents contracted, by 1.5% QOQ and 5.1% QOQ respectively. Cumulatively, rents are now 16.6% below the last peak in Q4 2014, but the gap is likely to expand further as we expect more significant rental deterioration in Q2 2020.

Prices of retail properties in the Central Region was down 3.1% QOQ, as prices declined 5.1% QOQ in the Central Area and 3.1% QOQ in the Fringe Area. Again, we believe some of these transactions might have been pre-committed before COVID-19, and current ground sentiments are likely to pose a drag to investors interest.

Meanwhile, island-wide retail vacancy rose 0.5ppt sequentially to 8.0% from 7.5% as net demand shrank significantly despite negative net supply. There were only 18,100 sqm of retail space granted Temporary Occupation Permit (TOP) during the quarter, made up of several small projects.


The retail industry is one of the hardest hit sectors by the COVID-19 pandemic. Retail sales (ex-Motor Vehicles) declined 10.2% YOY in February 2020 and should be worse in the next few months with the circuit breaker lasting at least two months.

Retail rental declines may yet be obvious in Q1 2020, as retail comes to a standstill and tenants are seeking rent rebates or waivers. During SARS, retail rents fell 2.6% in H1 2003 and 3.4% for the full year in 2003. We believe the impact of COVID-19 could be more detrimental and forecast a 5% decline in average retail rents in 2020.

That said, we applaud the government and landlords’ efforts in helping retailers tide over the crisis. So far, rental relief have been provided to retailers including using security deposits to offset rental obligations, the pass-through of government’s property tax rebate savings, restructuring and deferrals of rental payments, and full rental rebates to ease retailers’ cash flow.

We find some reprieve in that new supply will ease significantly from 2019, staying tight in 2020 (0.3% of total stock versus 10-year historical average of 1.4%) and throughout 2020-2024 (0.4% of total stock). In addition, the new supply is mostly concentrated in suburban and fringe areas, where there is a well-defined population catchment.

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