DBS: The average price per square foot of private residences in Singapore may exceed SGD 4,000 by 2040 | Lianhe Zaobao

The stable economy of Singapore and the continuously increasing population will drive future demand and prices in the real estate market. DBS stock analysts predict that in 15 years, the average price of private residential properties in Singapore may exceed SGD 4,000 per square foot, which is about double the current average price per square foot.

The latest report published by Chen Wei Xiang and Fu Yu Tian, heads of the real estate research department at DBS, indicates that the Singapore property market is expected to maintain robust and sustainable growth over the next 15 years, supported by factors including prudent government governance, a solid population base, and a thriving economy.

The report states that in recent years, approximately 97% of housing has been purchased by citizens, ensuring stable demand in the property market, unaffected by external factors and speculative cycles. The government also encourages permanent residents to integrate, with housing being one of the main conditions for their long-term settlement.

Additionally, the Urban Redevelopment Authority's "2025 Master Plan" indicates that 130,000 new housing units will be added over the next 10 to 15 years. DBS research predicts that by 2040, nearly 200,000 to 300,000 housing units may need to be constructed.

Along with the government's introduction of various measures to revitalize the Orchard Road and Marina Bay areas, as well as decentralization initiatives and large-scale infrastructure construction projects, numerous business opportunities are emerging for the real estate industry.

Chen Wei Xiang and Fu Yu Tian predict that by 2040, private residential prices will grow at a long-term compound annual growth rate (CAGR) of 2% to 3%.

"Based on existing housing policies, the future housing area is expected to remain stable. If so, the overall average price per square foot for private residential properties will reach SGD 3,500 to SGD 4,050."

Average price per square foot in the first three quarters of this year is SGD 2,139

Realion (OrangeTee & ETC) research data shows that the median price per square foot for overall non-landed private residential properties in the first three quarters of this year is SGD 2,139.

By category, the median prices for new private residential properties, resale private residential properties, and resale of uncompleted private residential properties are SGD 2,490, SGD 1,741, and SGD 2,092, respectively.

However, market conditions can change at any time. Chen Wei Xiang and Fu Yu Tian point out that the three main factors driving the property market are population growth, economic growth, and stable governance. If any one of these weakens, it will affect the property market outlook and lead to a price correction.

Further Reading

September resale transactions for private residential properties increased by 1.6% month-on-month to 1,109 units Local third-quarter private residential price growth slows while rental growth accelerates

"We believe that a stable and policy-implementing government is the most important pillar supporting the property market, as historically, Singapore's property market is closely linked to policies, government planning, and regulation. A sudden or unexpected change in government could trigger significant concerns in the market about the sustainability of these frameworks."

The average price per square foot for private residential properties may exceed SGD 4,000 after 15 years, which is not impossible according to Chen Qiuyi, a research analyst at FSMOne Singapore's research and portfolio management department.

In an interview with Lianhe Zaobao, she stated that Singapore's current population has reached 6.11 million. Although the population is aging rapidly, the continuous influx of foreign talent is sufficient to support the property market. Coupled with a steady increase in median household income, people can still afford homes even as prices rise.

Private Residential Market Booming, Government Closely Monitoring Prices

Chen Qiuyi also noted that the private residential market remains vibrant, and the government is closely monitoring price trends and intervening as necessary to ensure market stability. For these reasons, she believes that property prices will continue to rise in the future.

"Given the variables such as macroeconomic cycles, policy changes, global shocks from macro factors, and structural demographic changes, long-term forecasts over a period of more than 10 years are actually quite difficult to determine."

The long-term outlook for the real estate market is positive, and developers and construction companies are expected to see growth in their businesses. Chen Weixiang and Fu Yutian stated that Singapore Real Estate Investment Trusts (S-REITs) and real estate investors can also benefit from the long-term growth potential of the property market.

However, rising construction costs will suppress the upward trend in property prices, and industry players also face pressure to complete construction projects within deadlines. Additionally, changes in the macro and domestic economy may affect investor confidence and market conditions.

They recommend investing in developer stocks such as UOL, City Developments Limited (CDL), and GuocoLand.

As for construction companies, investors may consider Hong Leong Asia and Pan United. Additionally, they may look into employee dormitory operators Centurion Corporation and Wee Hur Holdings