Office Property Q2 2021
Overview
The office property sector continued to stabilise in
Q2 2021, amid Singapore’s economic recovery and
improving trade outlook which has restored
business confidence and job market prospects.
According to advance GDP estimates, the
Singapore economy grew by 14.3% YOY in Q2 2021
– with growth across all sectors. The economy is
expected to grow by 4% to 6% this year.
The office property market remained resilient in Q2
2021 despite the tightening of safe management
restrictions in May and June that led to working
from home remaining the default mode. While
office sales have eased from last quarter’s stellar
performance, leasing activity has risen to
pre-pandemic levels seen in 2019.
Singapore’s roadmap towards further reopening
of the economy and the progressive rollout of its
national vaccination programme have generally
provided more certainty to businesses and
investors. However, as Singapore re-enters the
Phase 2 Heightened Alert (P2HA) from 22 July to 18
August, it may delay the recovery in the office
property market for the time-being, as occupiers
continue to assess their space needs.

Market Outlook
The recent rise in COVID-19 community cases and
emergence of large clusters have resulted in
Singapore re-entering P2HA. The re-introduction
of restrictions may rein in the office property
market’s recovery, as telecommuting remains the
default working mode, delaying the return of
workers to the workplace.
The vacancy rate could rise in the coming quarters
as occupiers look at reviewing their current leases.
Tenants with larger offices might potentially
negotiate with landlords on downsizing or exiting
their leases, as they rationalise their space needs.
It is likely that some occupiers may adopt a
watch-and-wait approach to their commercial
real estate strategy, given the uncertainty around
the pandemic situation.
Looking ahead, the office property market is
projected to bottom by the end of 2021 and the
tight supply of new office space in the CBD – in
2021 and 2022 – may lend some support to rents.

Shophouse Property Report Q2 2021
Overview
Despite the rise in COVID-19 community cases and
tightening of safe management restrictions from
16 May to 13 June, the shophouse property market
pushed on in Q2 2021 – continuing the strong
recovery seen in recent quarters. The volume and
value of sales transactions in Q2 2021 have
exceeded levels seen pre-pandemic, indicating a
sustained growth in the shophouse market.

Demand Drivers and Market Outlook
Market observations suggest that the demand for
shophouses will remain robust as investors continue
to search for value-adding assets that will drive
capital growth and preservation. Shophouses in
Singapore – being extremely limited in supply and
tightly held – will continue to be popular among
investors.
With Singapore re-entering the P2HA from 22 July to
18 August, the stricter measures (including no
dine-in, and work from home as a default) will
impact the services sector, especially F&B and retail
businesses. As such, tenants that are operating from
shophouses may see some short-term uncertainty.
However, shophouses as an asset class remain
defensive and are expected to do well in 2021, amid
the economic recovery and hopes of further
opening up of business and travel as the national
vaccination rate rises in the months ahead.