Commercial sector resilience to lead market rebound strategy

Colliers REview Singapore blog - CM commercial sector resilience to lead market rebound

It is important for investors to look at sector specific performance and their rebound potential, as some remain more attractive than others.


With fewer investible assets and price mismatch, coupled with the slowdown in office rental growth and the impact of the coronavirus (COVID-19) outbreak, we saw Singapore's commercial investment sales slump 46.9% QOQ and 35.4% YOY to S$758 million.

Nevertheless, with the upcoming materialisation of the CapitaLand Malls Trust (CMT) - CapitaLand Commercial Trust (CCT) merger in Q2, 2020 real estate activities should still match 2019’s level.

 

Understanding the now to prepare for the next

As investors are still trying to understand the economic and financial impacts of the crisis, it is safe to say that it will take a year or so for Singapore investment activity to return to normal. Despite a forecasted 24% drop YOY, our research still projects that Singapore real estate investment sales volume could grow on average by 5% per annum over 2019-2024.

Singapore's strong policy response to COVID-19 has instilled confidence in travelers and investors alike, reinforcing its safe haven status. The previous 29% increase in investment sales over 2003, despite the SARS outbreak in H1, illustrates the rebound potential from COVID-19 in H2 2020. There will then be real estate opportunities, as businesses affected by COVID-19 will have to reassess their options.

 

"The longer-term fundamentals of the Singapore real estate market remain strong and intact, and we can expect the market to recover as the successful control measures are lifted and industries re-gain full momentum."

 

It is important for investors to look at sector specific performance and their rebound potential, as some remain more attractive than others.

As Singapore will continue to attract talent and occupiers given its safe environment and appeal to both employers and staff, the commercial sector is the front runner as short-term disruption could give way to long-term opportunities.

Related content: Opportunities in a Changed Environment | Investment Sales Q1 2020 report

 

Sectors to lead investor approach

As mentioned in a previous article, the longer-term fundamentals of the Singapore real estate market remain strong and intact, and we can expect the market to recover as the successful control measures are lifted and industries re-gain full momentum.

 

"The commercial sector is the front runner, as short-term disruption could give way to long-term opportunities."

 

In the meantime, we encourage investors to reassess investment strategies based on the resilience and rebound of interested sectors.

We recommend investors to review their portfolios and focus on opportunities that have emerged for properties with long term growth, such as prime commercial, city fringe business space and hotels.

Reach out to Colliers' real estate investment experts to explore emerging opportunities in the current climate. 

 

You may also like:

 

 

---

Article enquiries

Contact our Colliers Editorial team here.