China’s multi-year property downturn is now eroding the China-facing earnings base of Singapore’s real estate majors, as declining rents, rising vacancy, and falling asset values across office and residential portfolios extend the stress that began with Beijing’s 2020 “three red lines” leverage curbs. What started as a targeted deleveraging effort has evolved into a multi-year correction marked by weaker leasing conditions, subdued transaction activity, and valuation pressure across major mainland markets where Singapore groups hold sizable exposures.
China’s prolonged property slump is squeezing Singapore landlords’ mainland earnings, with softer rents, higher vacancies, and valuation pressure deepening since 2020.
Singapore investors have been among the largest foreign asset buyers in China, purchasing 34.65 billion yuan of assets in 2018, and sustaining a presence dating back to China’s opening to global capital in the 1970s. Over decades, firms from the city-state accumulated heavy allocations to commercial and residential property, a strategy that benefited from earlier urbanization and income growth, but now leaves earnings more sensitive to rent resets, occupancy slippage, and cap-rate driven revaluations. With residential property making up about 70% of assets for urban households, the negative wealth effect from falling home prices has also reinforced a more cautious spending and leasing backdrop.
The downturn’s macro drag has been material, with estimates indicating it reduced annual real GDP growth by 2 percentage points in 2024-2025, while property historically accounted for 20-25% of fixed-asset investment. Demand indicators remain weak, with new housing sales measured by floor area at 814.5 million square meters in 2024, down 14.1% year on year, constraining cash generation for developers and reinforcing price and liquidity stress across the value chain. Singapore’s own real estate investment volumes, by contrast, increased by 28% year on year to S$28.62 billion in 2024, underscoring how divergent the two markets have become.
Highly leveraged mainland developers have been hardest hit as tightened lending to higher-risk firms amplified defaults, with China Evergrande ordered liquidated in 2024 and China Vanke facing crushing debt despite earlier resilience. Falling sales and restricted cash flow have transmitted pressure to landlords and developers alike, weighing on Singapore players’ China portfolios as emptier buildings and softer rents filter into reported results.
Policy support has broadened, including eased mortgage requirements, lower interest rates, relaxed or lifted purchase restrictions in some cities, encouragement of bank financing for qualified developers, and promotion of urban renewal and affordable housing, with minimum mortgage down payments lowered in May 2024. Even so, the outlook is framed as a gradual bottoming-out rather than a sharp rebound, with new housing demand projected to average around 800 million square meters annually from 2024 to 2040, and Singapore firms expected to remain active but more selective, alongside capital pivoting toward technology innovation, manufacturing, and the green shift, amid assessments of low systemic financial risk. Analysts expect investors to stay engaged given Beijing’s recent policy support.
