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Personal Opinions: The residential market will hold up for the time being. This is because many individuals who own second properties are on loan repayments of 70% to their income. So this is not too bad. The only time massive foreclosures will happen in our country is when individuals lose their jobs. From the 08/09 recession, it is observed the government is possibly aware of the linkage of work income to mortgage repayment. Attempts were made to ensure workers by introducing the jobs credit scheme in 2009. I will not be surprised if this scheme is reactivated when our economy experiences another recession. This will prevent the domino effects of no income-foreclosure of homes.
Office space- This area is of greater concern to me. With 1.1B sq metre of office space coming out by 2018, similar demand has to be met. Current demand for office space is 6.8B sq m. This means a 16% increase in demand has to be achieved in 3 yrs time. Is this possible? I seriously doubt EDB's capability to do so. Do note in Straits Time today, the money section mentioned the increase is 3.2B sq m by 2018. I do not which figure is true so I stuck to the URA's statistics.
Therefore with this scenario, it is likely office rentals will plummet in 2018. My own estimation is office rentals will be 10% lower than current. If there is a recession, it will be a lot worse. Secondly, some office complexes are held by REITs. Therefore, expect lower yields and possibility of share placements since valuations will fall. There are no "job credit schemes" to save office owners unless the government is creative; maybe pay 20% of their interest payments to banks?
Retail- is less of a concern since the strawberry generation is coming of age. I believe this generation spends more of their income in consumption than the 1965s generation and before. So yup retail demand will meet the retail supply of approx 16%. Retail vacancy rate may increase slightly but this will not be much of an issue.
Office space- This area is of greater concern to me. With 1.1B sq metre of office space coming out by 2018, similar demand has to be met. Current demand for office space is 6.8B sq m. This means a 16% increase in demand has to be achieved in 3 yrs time. Is this possible? I seriously doubt EDB's capability to do so. Do note in Straits Time today, the money section mentioned the increase is 3.2B sq m by 2018. I do not which figure is true so I stuck to the URA's statistics.
Therefore with this scenario, it is likely office rentals will plummet in 2018. My own estimation is office rentals will be 10% lower than current. If there is a recession, it will be a lot worse. Secondly, some office complexes are held by REITs. Therefore, expect lower yields and possibility of share placements since valuations will fall. There are no "job credit schemes" to save office owners unless the government is creative; maybe pay 20% of their interest payments to banks?
Retail- is less of a concern since the strawberry generation is coming of age. I believe this generation spends more of their income in consumption than the 1965s generation and before. So yup retail demand will meet the retail supply of approx 16%. Retail vacancy rate may increase slightly but this will not be much of an issue.