Selective investing is key as real estate opportunities abound: market outlook forum

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Now might be a good time to put money into real estate — but only selectively and with discipline. Repricing has created attractive investment opportunities in various markets and property sectors, although the era of near-zero interest rates is unlikely to return.

“The cost of capital is no longer cheap, so when you’re buying property these days, be very conscious about interest rates,” said Keith Ong, CEO and co-founder of RealVantage, a co-investment platform for institutional-grade real estate across global markets.

He added that interest rate spikes in recent years had “caused a lot of distress” in markets including Hong Kong, UK and the US.

Read also: Singapore-based investors now the top non-local buyers of Hong Kong office assets

Speaking at an investment forum organised by RealVantage and EdgeProp Singapore, Ong noted that Singapore’s real estate market has been “remarkably resilient through this cycle”. This is even as investors may face limitations such as substantial ticket sizes, high transaction costs, and difficulty accessing certain sectors such as logistics and large-scale commercial assets.

Beyond Singapore, asset prices in some overseas markets have corrected by about 20% to 30% from their peaks. Banks are also becoming more willing to lend and transaction activity is picking up.

“That’s where things get interesting,” Ong said. “I’m not saying everything is cheap, but your entry point right now can be substantially better than three or four years ago.”

He reckoned investors will need to be “very selective” instead of simply seeking market exposure, and diversification also remains key.

“Different markets will give you exposure to different sectors, different return drivers and at different stages in the real estate cycle, and that in itself is an important form of diversification,” he said.

At the July 30 event, which drew more than 150 attendees, Ong was joined by other speakers: Suan Teck Kin, UOB’s group head of economics and market research, and executive director; Alan Cheong, executive director of research and consultancy at Savills; and Kylie Robb, CEO of MaxCap Group. Mark Ho, managing director, investment management at RealVantage, moderated the panel discussion.

Read also: Offices get pricier to rent and buy in 2Q2026, pipeline supply dwindles

The speakers shared their insights and views on Singapore’s macroeconomic outlook and monetary policy; the city-state’s residential, office and retail property markets; the growing role of private real estate credit in markets such as Australia and New Zealand; residential opportunities overseas, including in Japan; as well as implications of the AI boom.

Economic growth, rising household wealth in Singapore

Singapore’s economy has seen robust growth over the past five quarters. This was driven largely by strong manufacturing activity, particularly in the electronics and precision engineering clusters as they benefit from AI demand.

However, there is elevated volatility as tariffs, geopolitics and energy shocks could quickly change inflation trends, exchange-rate dynamics, and risk premia, UOB’s Suan noted.

The bank’s research team upgraded its growth forecast for the country’s 2026 gross domestic product (GDP) to 4.8%, from 4.0% previously. It projects a slightly more moderate 3.0% increase in 2027.

This comes as UOB expects AI-related tailwinds to be sustained through the third quarter of 2026.

Suan also touched on why interest rates in Singapore are likely to have bottomed, and the implications of a strong Singapore dollar when weighing overseas investments.

Against the resilient macroeconomic backdrop, he highlighted that rising income, household formation and solid household balance sheets will likely continue to support real estate demand in the city-state.

Read also: How cross-border real estate financing is evolving between Hong Kong and Singapore

In particular, household wealth will remain a key demand driver for the property market, as Singapore households tend to have low leverage and are highly liquid. Many are flush with cash and looking to deploy it for good returns, Suan said.

Outside of Singapore, UOB has a generally positive outlook for the next six to 12 months for selected markets such as the US, Australia, Japan and Hong Kong. For example, both Australia and Japan are likely to record moderate GDP growth, although Australia may see an easing labour force participation rate, while further rate hikes are expected in Japan.

Mixed outlook for Singapore residential, office and retail

Echoing Suan’s observations on household wealth in Singapore, Cheong from Savills highlighted the strong pool of domestic liquid assets in discussing the Republic’s residential property market.

The amount of liquid assets per household has been growing more quickly than private residential property prices since 2024.

Part of the demand for private homes has come from older generations helping younger family members enter the market. For example, parents are forking out the down payment for a purchase in the child’s name, Cheong said.

In particular, the “bulge bracket” with reserves are the Gen Xs and Baby Boomers, or the Merdeka Generation. For the past few years, the largesse of savings from these cohorts have been tapped to acquire private residential properties on behalf of Millennials and Gen Zs, he added.

However, from the medium term onwards, although individuals aged 65 and older comprise an increasing proportion of Singapore’s total population, the new entrants to this age group may not have the same level of savings as those that entered earlier.

This is because more of them may have suffered from structural unemployment in their 50s and thus lost out on the last mile of their maximum earning capacity and therefore savings as well.

Taken together, Cheong cautioned against extrapolating the private residential market’s past strong price gains into the future.

Given Singapore’s ageing population and growing concerns over job security, investors should “dampen” their expectations for residential price increases and also be more careful, as many assumptions that have supported the market may not necessarily hold going forward.

Savills forecasts capital values of private homes to rise by about 3% y-o-y this year.

In the office market, Cheong noted that the overall Grade A basket of buildings — comprising Grades A, AA and AAA — continues to benefit from limited new supply, tight vacancies of premium buildings, and occupiers’ ongoing flight to quality.

“As long as the weight of institutional money continues to pile on, you will see demand for Grade A offices,” he added.

Besides, with some older office buildings earmarked for redevelopment, their displaced tenants will be in the search for replacement spaces. That may help to boost the occupancies of other buildings.

Savills expects Grade A CBD office rents to remain buoyant, increasing by 5% in 2026, followed by a 5% to 7% increase in 2027.

As for the retail property market, challenging conditions have persisted over the past decade, although there have been gradual signs of recovery from 2021 and the vacancy rate started to stabilise in 2023.

Retail rents in both the Orchard and suburban areas have seen muted growth since 2021, according to Savills’ research.

Leasing demand in the Central Region softened in the first quarter of 2026, particularly in secondary locations and less prominent units.

On the other hand, the suburban retail market has shown relative resilience, despite ongoing headwinds from cautious consumer spending and rising operating costs.

Private credit gains ground in Australia, New Zealand

Besides direct property ownership and equity investments in real estate, investors are also finding opportunities higher up the capital stack through commercial real estate debt.

In Australia and New Zealand, a structural pullback by banks from commercial real estate lending has created a funding gap that private credit managers are increasingly stepping in to fill, said Robb from MaxCap, a Melbourne-based commercial real estate credit specialist.

She added that Australia and New Zealand are attractive commercial real estate debt markets as they offer access to high-quality assets, strong lender protections and compelling risk-adjusted returns.

The transparency in both markets also allow for reliable valuations, data and price discovery for exit.

Robb reckoned this is an attractive point in the cycle, as higher-for-longer rates strengthen the relative attractiveness of credit as compared to equity.

“It’s a floating-rate product, so gradual interest rate increases are actually to the benefit of investors because they will get a higher return in total,” she said. This is so long as rates are not climbing dramatically and borrowers are still able to service their debt.

Robb also distinguished commercial real estate private credit in Australia and New Zealand from parts of the US private credit market that have come under scrutiny lately.

Unlike the unsecured corporate lending associated with the recent US private credit turmoil, commercial real estate debt is backed by tangible assets, which offers investors an additional layer of downside protection.

“In Australia, private credit is predominantly real estate. There is a real asset underlying it,” Robb said.

AI boom still requires disciplined investing

While AI has become a major investment theme across sectors, Ong said RealVantage approaches data centres in much the same way as other real estate assets, starting with the fundamentals.

Earlier this year, the firm had invested in an existing data centre. Besides assessing the demand drivers and the tenant’s creditworthiness, RealVantage also examines factors such as the facility’s power requirements and capital expenditure needs.

“In any investment, we always go down to the fundamentals,” he remarked. “Can the tenant pay you rent? How long can he last? And, finally, is there somebody who will take the real estate off you?”

Investors need to bear in mind that data centres are relatively illiquid assets and might not be easy to sell as they are “very lumpy” assets commanding “huge” cheque sizes, Ong continued.

RealVantage's Ho likewise said investors should not get too caught up in the AI boom, but instead focus on the “nuts and bolts” of an investment and consider whether demand is sustainable.