Asia Pacific 2016 Round-up and 2017 outlook for real estate: Part 2
As the year draws to a close, Knight Frank has put together a four part round up which looks how residential property markets have fared across the Asia Pacific region in 2016 and the outlook for 2017.
3 minutes to read
Part two looks at Singapore, Malaysia and Indonesia.
SINGAPORE
Alice Tan, Head of Consultancy & Research, Knight Frank Singapore
It has been a year of twists and turns with unprecedented global events unfolding in 2016 – namely the Brexit referendum, Trump’s victory and slowing Chinese economy – impacting Singapore’s economic growth and business sentiment. As economic restructuring and moderating employment prospects set in, almost all segments of the property market – residential, commercial and industrial – have experienced weaker performance in price and rentals, hitting new lows in Q3 2016 since their previous peaks. Despite speculation that the market will continue to bottom out for the private homes sector, there has been recovery for high-end home prices in H1 2016, and encouraging sales performances in a number of new launches. Yet, these projects that are better-received mainly stems from either their attractive location or pricing. Developers cognizant of high price sensitivity from buyers have also offered reasonable price levels to spur sales.
Looking into 2017, should market conditions weaken further and more units be released into the market as developers strive to meet project deadlines, there could be further price adjustments expected. Secondary sales could contribute slightly higher proportion of total private home sales transactions in 2017, as the market shows greater interest for larger-sized and reasonably-priced private homes, coupled with potential onstream supply from home owners affected by possible interest rate hikes.
Overall private residential sales transactions could range between 14,000 to 16,000 units in 2017. For the commercial and industrial markets, the looming supply overhang, prospects of muted economic outlook and rising tenants’ market situation could weigh on prices and rentals, with at least -5% year-on-year rental corrections by end 2017.
MALAYSIA
Sarkunan Subramaniam, Managing Director, Knight Frank Malaysia
This year has been a subdued year and we expect the same in 2017. Developers will face lower demand whilst implementing strategies to attract and improve sales to counteract the lower consumer demand due to the current state of the economy.
On the investment front, vendors have more realistic expectations and purchasers are looking for bargains, therefore we expect to see more sales activity. We anticipate transactions in commercial properties and investment properties to be priced 10% to 20% below perceived market value with realistic and increased yields.
INDONESIA
Hasan Pamudji, Senior Associate Director, Professional Consultancy, Knight Frank Indonesia
The Indonesian property market has entered into a mature or consolidation phase due to global and domestic economic conditions. As such, 2016 saw an overall slowdown.
Recovery is expected in 2017 as long-term confidence in fundamentals, such as growing population, rising middle-income earners and stable political situation, increases. We will see both opportunities and challenges arising from economic and political developments in the new year.
The new infrastructure budget and actions to accelerate major infrastructure, such as toll roads, seaports, airports, high-speed and light-rail trains, are expected to boost consumer confidence and optimism in the next few years. Investors and buyers waiting on the side lines are expected to enter the property market again in H2 2017 after the local elections are completed in February 2017.
The third entry of this series will focus on Greater China and Taiwan.