Singapore In 23rd Place, Negligible Drop Of 0.3%
Savills World Research reveals that prime residential property in world city locations remained resilient over the first half of 2024, recording an average growth of 0.8% and outperforming the 0.6% growth predicted for 2024 as a whole.
60% of the thirty cities analysed in the Savills Prime Residential World Cities index have seen positive capital growth reflecting a level of relative confidence in the asset class. While seven cities reported price falls of less than -1%, the strong fundamentals of these local prime residential markets may support the possibility for capital value appreciation in the second half of the year for these locations. However, wider levels of caution remain among some buyers as they await clarity on interest rates.
Year to date, cities in Southern Europe and the Middle East have seen the strongest capital value growth over the first six months of 2024; Lisbon leads with a rise of 4.2% for the first half of the year. Amsterdam, Madrid, and Athens have each seen capital value increases above 3% and Dubai rounds out the top five with growth of 2.9% for the first six months of the year.
Singapore came in the 23rd place, however, the decline is negligible as prices have remained largely unchanged. Other Asia Pacific markets have seen a more varied performance, creating a tale of two (groups of) cities. Bangkok, Sydney, and Mumbai have each seen growth of more than 2.5% in the first six months of 2024; due to high levels of demand coupled with limited supply. Tokyo has also reported price growth of 1.6%.
Chinese prime residential markets are continuing to see the impact of government measures to support the housing markets, but overall this has done little to move the dial on buyer confidence. Transactions across the five markets remained down during the first half of the year, with only Shanghai seeing positive capital value growth of 0.1% over the period. In Hong Kong, the withdrawal of cooling measures boosted mainstream sales, but prime sales remain depressed given high interest rates, which are linked to US Federal Reserve interest rates, and lower numbers of mainland Chinese buyers. As a result, prime capital values fell by -1.1% over the first half of the year.
“Looking ahead, we predict an average capital value growth of 0.5% for the second half of the year, which would bring total 2024 growth to 1.3%”, comments Kelcie Sellers, Associate Director, Savills World Research. “The ongoing supply-demand mismatch for high end residential product is projected to fuel price growth in European cities such as Amsterdam, Lisbon, and Barcelona, where 2% to 3.9% is forecast in the second half of 2024.”
Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore comments, “Presently, prices of high end private residential properties have a downside bias because there have been few new launches, which in the past, would set benchmark prices which in turn lift all boats. Also, the heavy Additional Buyers Stamp Duty (ABSD) is deterring non-permanent resident foreigners from the market.
“However, in Q2/2024, we are seeing more foreign participation in the market. Although the worst may be behind us, it may still take some quarters for the increasing foreign content to make a significant positive influence on the market. The sub-segment of foreign demand to watch is the Permanent Residency (PR) class. Although PRs pay ABSD, it is only 5% and significantly lower than the 60% levied on non-PRs. Therefore, we expect more PRs committing to buying private residential properties in the coming quarters.”
George Tan, Managing Director, Livethere Residential, Savills Singapore says, “With supply ramping up in the second half of the year, we can expect to see sales picking up. Interest rates may also drop. With that, prices may moderate and we can anticipate some growth in the market.”
