With A Rental Downturn, Is Now The Time To Invest In The Singapore Property Market?

According to consultancy firm DTZ, real estate investment sales fell a whopping 74 per cent to S$1.75 billion in the first three months of the year from S$6.7 billion in the final quarter of 2015. What’s more, the number of investment deals in Q1 2016 was the lowest since the third quarter of 2009, which is when the global economy was gripped by financial crisis.

In parallel, the rental market is just as bleak. Singapore remains the world’s most expensive city in the world to live, while the job market continues to go through a slump. Therefore, fewer and fewer people are looking for somewhere to live, with some property owners even offering short-term rentals on holiday lettings site Airbnb.

So, it seems as though now is not the time to invest in the Singapore property market. Although some will argue that it has never been more affordable to buy property in Singapore, some may prefer other investment approaches like stock market algorithmic trading.

Singapore’s property market woes

The current slump in property investment sales is being blamed on uncertainty in the global economy, mixed signals from China’s ongoing slowdown, Great Britain’s potential exit from the EU, and volatile oil prices.

“The release of a series of disappointing economic data in Singapore since January 2016 further weakened investors’ sentiments, widening the price gap between cautious buyers and forward-looking sellers,” said DTZ. “The cooling measures continue to discourage investment sales of residential properties in private market, while the huge supply of office space slated to come on-board in 2016 and 2017 further slowed down sales in the commercial market.”

Even if buyers do decide to invest in property, they may struggle to find tenants. Recently, Singapore has witnessed a relatively low stream of expatriates moving to the country, creating a fluctuation in demand and supply. Not only does this mean fewer potential tenants, it is also pushing the price of rent down.

The potential upside of Singapore’s property market 

Despite the apparent negativity surrounding Singapore’s property market, some believe there are reasons to be optimistic. First of all, it could be argued that the current state of play is temporary and as soon as the global outlook improves, prosperity will return to Singapore’s property market. Therefore, it is better to act now while prices are competitive.

Secondly, as various entrepreneurs have discovered, revenue can be maintained by thinking outside of the box with Airbnb rentals, as visitors are paying around $150 per night for a condo on the city outskirts. Even so, it is important to note that the practice of renting out a private home for less than six months remains illegal.

However, several property investors can’t afford to take such a risk. This is why stock market algorithmic trading, which allows you to back-test strategies against past data, time trades according to a specific price or trigger, and reduce the risk of human error, is so appealing. Until the storm clears, stick to the stocks.