According to Price Waterhouse and Coopers (PwC) and Urban Land Institute, Singapore is ranked second as a real estate investment market in Asia Pacific. This is mainly because of the demand rebound well as a boom in co-working and other flexible office space operators. Globally, the country is the second most expensive place to buy private property, and the 10th most expensive in terms of rentals.
The real estate industry has also been receiving a lot of attention from investors, with Mapletree planning up to 2 REIT listings (Real Estate Investment Trust) in the next five years. To stay relevant, here are some trends to bear in mind when navigating the rapidly changing tides of real estate.
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Seamless property transactions
According to the Industry Transformation Map (ITM), property transaction services is one of two focal areas in Singapore’s real estate industry. It refers to activities such as the marketing and sourcing of properties, valuation, financing, contracting and legal completion of transactions. Stakeholders can also include developers, property agents, banks, valuation companies and conveyancing companies.
With technological disruption, it is unsurprising to see consumers expecting convenient, transparent and reliable online services. As such, Singapore has a vision to achieve seamless and efficient property transaction services from a technology-enabled workforce. Two key initiatives in January 2018 are the launch of the Housing Development Board (HDB) resale portal, and a digitalised property transactions workgroup initiative to automate due diligence checks, such as property ownership and the validity of passes for foreign tenants, using government-verified data.
In addition, SMEs and other businesses can also tap on the Enterprise Development Grant and Productivity Solutions Grant to support IT solutions adoption. The launch of courses for the workforce to gain skills to handle digital processes from January 2018 also aided in transformation.
Efficient Facilities Management (FM)
Singapore aims to achieve an integrated and efficient execution of FM to ensure that buildings operate sustainably. There is prioritisation on advanced smart technologies such as real-time monitoring to reduce on-the-ground manpower and optimise building performance. To do so, the government has encouraged the use of smart solutions islandwide and the research and development of FM-related technology.
CapitaLand, for instance, employs iTrack to track FM jobs and the operational readiness of its malls, iTell to allow users to provide feedback for prompt resolution, and iClean to remotely monitor the usage of toilets through sensor data for manpower deployment.
More millennial homebuyers
With millennials entering the homebuying age, this 74 million people strong generation are likely to be hoarding the biggest market share in the next decade. Their ability to leverage on technology to search for information makes the need for transparency crucial in capturing the market.
In Singapore, OrangeTee is the first of its kind that allows consumers to review and rate property agents. Not only are consumers empowered to make informed choices, property agents are also pushed to deliver better quality services.
In addition, ohmyhome is a property agency that allows consumers to use their platform for Do-It-Yourself property transactions free of charge. The website features a chatbot, and it is the first in Singapore to offer a la carte documentation services in which users can choose from a series of full agent services.
Flexible working spaces becoming popular
Flexible workspaces are pushing demand for Grade A office space in Singapore upwards, accounting for 75 per cent of prime grade office absorption in Singapore in 2018. WeWork’s US47B valuation and I.P.O, as well as the rise of the gig economy, are a testament to the trend’s popularity.
As more flexible workspaces sprout up, it has also caused companies to relook at their real estate. Instead of using longer-term fixed leases, more and more companies are experimenting with flexible spaces to evolve quickly and attract younger talents who favour less traditional corporate offices. With such spaces providing cost efficacies as well as quality amenities, the trend is more than likely to stay.
Rent on the general rise
According to Colliers, Singapore is expecting an eight per cent rise in office rents and will remain attractive to occupiers. The prices for home prices, however, will likely see marginal growth in 2019. This translates into marginal increases in rent as well.
Elsewhere in China, the logistics sector is likely to expand, with e-commerce growth translating into higher demand for warehouse spaces, and low vacancy pushing tenants into tier two cities. Countries like Hong Kong will probably need to explore CBD fringe areas to allow tenants to enjoy lower rents and amenities.
In addition, the top flexible-space markets tend to command high office rents. While we are familiar with flexible-space offices such as Regus and WeWork, the market is not limited to offices but can also apply to medical labs, industrial facilities, and more.
Increase in supply of properties
Urban Redevelopment Authority (URA) stated that a total supply of 53,284 uncompleted private residential units and 3,519 Executive Condominiums (EC) were in the pipeline at the end of the first quarter in 2019. Launches also increased by 46 per cent to 8, 769. As such, the supply of properties is likely to keep going up.
Technology driving industry
Technology has become a chief driver of innovation for the real estate industry. showsuite, for one, is an app that showcases new property launches to home buyers. Users can view project models and unit floor plans in an interactive 3D environment. Interestingly, units of various configurations and storey views from specific units can also be seen from a portable Virtual Reality (VR) box. This allows time-strapped consumers to stay in a single physical space, as opposed to travelling to different locations when viewing homes.
Ascendas-Singbridge also embraces digitalisation to improve sustainability. The launch of their Ascendas-Singbridge App, or ASAP, allows tenants to report building faults and stay updated about promotions from shops in the building. In addition, Operations Centres have also been pushed out to better adopt data analytics to increase efficiency and predictive fault detection. Video analytics is present to help in security monitoring, and energy consumption of building equipment is tracked for optimisation. The company leverages on the Internet of Things (IoT) to provide real-time status updates on electricity, air-conditioning, lifts and water supply as well.
Advent of property-backed loans
With real estate evolving rapidly, it is unsurprising to see new means of relevant investments sprouting up, with property-backed loans being one of them. These loans are taken by companies who pledge a local property, either personal or corporate, as a form of collateral against the loan. The properties can be residential, commercial, or industrial. Funding Societies caters to such business loans of up to SGD3M.
At the end of the day, real estate trends are dependent on the sector. Offices, retail and hospitality sectors may be more susceptible to macro and microeconomic changes whereas the residential sectors may be more insulated from change due to government intervention.
SMEs can refer to ITMs, which were launched in 2016 by the Singapore government, to stay ahead of the curve. Budget 2019 has revealed that following the implementation of ITMs, productivity has increased by 3.6 per cent. By understanding the ITM, your firm can better tap on the available opportunities and grants.
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