This media feature first appeared on Money FM 89.3 – The Afternoon Update with Lynlee Foo (1pm – 4pm) on 1 April 2025.
Listen to the full interview here.
Description:
With geopolitical tensions, a changing U.S. administration, and the upcoming URA Master Plan 2025, how will the non-residential property market be affected? Which asset classes are the most promising this year, and why? According to Edith Tay, Executive Director of real estate agency PropertyBank, there was a 35.4% jump in non-residential property purchases from 2023 to 2024, driven by institutional buyers. Edith shares more insights into the latest trends in Singapore’s commercial and industrial real estate.
Transcript:
Opening: Money FM 89.3, the best of the afternoon update.
Lynlee: Money FM 89.3. Some new data released by the Urban Redevelopment Authority today – URA’s flash estimates showing private residential prices rising more slowly in the first quarter of this year, increasing 0.6% over the previous three months. This follows a 2.3% jump in Q4 last year, and a 3.9% rise for the whole of 2024. Sales volume fell 15% in the first quarter to over 6,000 from 7,433 in the previous quarter. And prices of non-landed private residential properties rose by a marginal 0.6% quarter on quarter, after rising 3% in the prior quarter.
Well, not surprising, I think. We have been seeing reports recently saying that expectations of slowing economic growth in 2025 could be a bad thing for property demand despite rising inflation and interest rates, adding to that the ongoing geopolitical tensions, the new U.S. administration with its various new policies, and the soon-to-be-released URA Master Plan 2025. So are there opportunities remaining in the real estate market? And if there are, where can we find them?
Welcome to Industry Insights, where we dive into the latest trends shaping industries and businesses. I’m your host, Lynlee, and today we are going to talk about Singapore’s non-residential real estate market, where it’s headed, what’s driving demand, and what you should look out for.
I’m so pleased to introduce my guest. She is Edith Tay, Executive Director of PropertyBank, which is a real estate agency specialising in commercial and industrial properties. Edith, welcome to the show.
Edith: Thank you for having me, Lynlee. Yeah, I’m always excited to talk about this segment, which is the non-residential property market.
Lynlee: Pleasure is all mine, Edith. Let’s start with an overview. Quite recently, industry experts said the Asia-Pacific commercial real estate market or non-residential market is poised for steady growth this year, driven by a resilient regional economy and downward interest rate cycle. But how would you describe Singapore’s non-residential real estate market at the moment? How is it performing right now?
Edith: Starting off just this quarter only, which we are just barely into April, which is three months has passed, I think generally we welcomed basically a purchase by a church which is on Orchard Towers, 54.5 million purchase, of 19,000 over square feet of retail space.
And just weeks ago, we have one of the freehold food factory at Pemimpin being sold just in two days. And of course, you know, the shophouse market itself, even though the caveats have actually kind of tickled down a little bit post the money laundry cases, it’s still kind of stood stable at 84 caveats.
And I think all in all, if I look back, you know, whatever that’s happened right now, it’s kind of like going to take us like a year ago, which is like starting from, you know, looking at 2023 to 2024, we are seeing actually a jump of 35.4%, which then we hit 26.61 billion. That’s because I think the institutions are already in 2024, kind of like, you know, chasing up purchases for the non-residential properties.
Lynlee: Edith, what about office spaces? What types of office spaces are in high demand, and which areas in Singapore are seeing the most activity?
Edith: Okay, so when you talk about office, I’d like to dissect into two parts. One is the leasing market. So leasing market-wise, we have the new kid in town, which is IOI Central Boulevard Towers, which has just completed last year. And that has actually shifted a lot of leasing from the CBD to this place. And new completion, which is Keppel South Central, that just completed in February. We’re seeing that taking shape for the space for the leasing market. As for the sale market itself, we actually see a desire from some of the traditional companies converting from rental to purchase. And freehold properties are definitely taking shape. And other than that, hot favourite like Suntec remains to be seen with single-floor buyers who are actually usually the family offices as well.
Lynlee: Interesting. Now with AI automation and e-commerce booming, how has demand for industrial properties evolved?
Edith: Well, again, one topic that I really enjoyed, because 2011 was my very first data centre deal. And I think that didn’t stop till, you know, as we have seen AI, I will call it more, we don’t talk about whatever we see for AI, right? We are just seeing like empty space in the air, but actually companies could extract the value to applications such as software companies. So with the whole big thing about AI, we in fact see that software application companies, IT companies, inside it is a whole downstream of companies that has HQ in Singapore. And on top of that, beyond, we are also seeing the physical infrastructure such as the data centre, the semiconductor industry, basically taking up shape, and some of the new completions for industrial actually are expansion for some of the semiconductor industry. So this is like a whole ecosystem itself.
Lynlee: That’s a fascinating shift. Are landlords and developers adapting quickly to these changes?
Edith: They are. And in fact, in terms of infrastructure, you will realise that it is kind of lagging behind, especially those that is wanting to take the demand of AI. They usually, if it is developing a piece of land and then building the facility, that takes time. So I think that’s a little bit lagging behind because they do have a very stringent checklist. However, for the industrial market itself, I was fortunate to have done a deal which is an IOT company that’s actually out of Singapore, settled in Singapore. And what they want is really the state of the art space in Singapore for the next gen AI and what I would call like the future of workspaces. So that has kind of also taken shifts for industrial to look more sexy, good specs like floor to ceiling height with glass. So it’s kind of very campus-like kind of building. And some of the landlords are already benefiting from this, for example, Tai Seng Exchange and also surrounding buildings, which is in MRT-located buildings. Those are industrial, but they are very well-specced industrial buildings.
Lynlee: Okay. Edith, coming back to office spaces, I meant to ask you about this. I understand that there is a growing shift towards flexible workspaces. So are businesses moving away from traditional office spaces or is there still demand?
Edith: What I would say is that office space didn’t really die. And in fact, office become ever important because with the hybrid work, staff can perform their work, which is like if they are left alone to work or back to office where there’s collaborative work. And we do see a shift in offices being more beautiful than ever, offices having that warmth. I hope down the road, like you guys, your studio, you know that collaborative kind of space, bring people back and they can brainstorm and I think that’s been the shift.
Lynlee: Well, that sounds nice. I mean, co-working spaces are perhaps meant to be more inviting so that people can engage and communicate better and add value to our work as well, right?
Edith: Right, right. So gone are the days where you go in office and just get your work done. These days you go back to office to mingle, to have lunch and I’ve seen also a shift from the banks. Instead of banking halls, In fact, one of the cases that I’ve studied for Look True is one of the major local banks that has a embracing, instead of a banking hall, they actually invite their customers and also partners to a space that is (an) office, but kind of inviting for guests and holding up events. So I do see this shift as being very positive and I’m almost enjoying many of these spaces that we walk through from their space to where they are featured in a very inviting manner.
Lynlee: Talking about inviting, what about sustainability? I’m thinking of plants and greenery and stuff like that in the office space. Are landlords and developers keeping up with ESG trends perhaps?
Edith: Okay, from the landlord side, it’s more like the hardware, the hardcore things, getting the building certified, making sure they are having the energy efficient systems, especially for the aircon, and opening up spaces like lobby to make sure that it is no longer restrictive and having just aircon. So we do see some of these changes with some of the major landlords like CapitaLand, for example, having retrofitted some of the really old buildings, but they make it very inviting. And back to your question about sustainability. So it works both ends, from the developer, the landlord side, it’s certified buildings, it’s having energy saving lights, the materials that they use for the building itself, and down to saying even the most minimal, having recycling bins around.
So that’s the landlord developer side. Whereas for the tenants, I think tenants play a major part because after all, like what you said, with the plants and all that, it’s their own home, for their people, their workplace. So we see this thing like, for example, the EUI, which is energy use intensity. MNCs are using them to measure for industry benchmarking. And they also make sure that with the contractors, they have very high standards of the renovation materials being used.
Lynlee: Okay, very interesting and very good to know. But let’s get down to business, Edith. What are the biggest opportunities right now in Singapore’s non-residential real estate market? I’m sure all our listeners want to know that.
Edith: Yes, so I think what we discussed just now about the trends and the changes for the corporations, I think that kind of filtered down to individual investors, for example, from buying residential then subsequently, hey, what else can I do with ABSD, which is very hefty if I continue to buy more homes, assuming I have a lot more money. So I think for PropertyBank we have actually done some webinar sharing and a lot of YouTube content, so the opportunities I would say is ample it’s just that there is very low awareness of individuals trying to buy non-residential, and I think I was even asked questions of can I buy because I’m not a company. The interesting fact is that you have two major sectors of the market, one being the larger tenants, they have (the) choice to go to the major buildings from landlords, developers, they also have a choice to go to institutional buyers who buy like single floors or even a whole small building.
But for you and I, or basically the mass majority, beyond just investing in residential there is definitely opportunities in non-residential. Singapore’s land is scarce, Singapore is pro-business, and we have both local and overseas investors. Remember when I started saying about the hype about all these investors already starting to invest a lot more in 2024, this trend will continue and for the so-called “man on the street”, then I think depends on how much of cash you have, there is a possibility to group together to buy a small commercial, retail or industrial unit. This is another way to look at things, so I think this one will call for another session. In fact we’re organising some webinars down the road because it’s our 15th year anniversary, to share this part of the road that we have been helping bigger companies and now to look into the unawareness of non-residential (for investors). So, the pot of gold is there.
Lynlee: I see. Edith, we’ve run out of time, unfortunately, but where can our listeners find out more if they want to know about this?
Edith: Drop us a message at 8333 1338 or just drop us an email at ask@propertybank.com.sg. And if they say “MoneyFM”, we are going to give a special gift for all these people.
Lynlee: Wow. Thank you so much for that and for sharing your insights with me and our listeners about the landscape for non-residential property in Singapore at the moment. Edith Tay, Executive Director of PropertyBank. Thank you.
Edith: Thank you so much, Lynlee. Thank you for having me.
