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Singapore Real Estate Report Q1 2013

Singapore Real Estate Report Q1 2013

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Additional Information

Price	$1,175.00
Publisher	Business Monitor International
Date of Report	Dec 26, 2012

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Quick Overview

The Singapore Real Estate report examines the commercial office, retail, industrial and construction
segments in the context of a volatile macroeconomic landscape, which is underscoring the increasingly
cautious sentiment in Singapore's historically stable commercial real estate market.
With a focus on the commercial side of the real estate market, the report covers the city-state's rental
market performance in terms of rates and yields, and examines how best to maximise returns in the
commercial real estate market while minimising investment risk and exploring the impact of the
government-led cooling on a market particularly susceptible to global dynamics. The key potential
growth areas - driven by increasing activity on the part of international investors - and the potential of
the domestic market are also explored, with corporate growth strategies looking to geographical
diversification for expansionary opportunities.
While reports of a decrease in market volume and activity characterise the news flow of 2012, the
underlying attractiveness of the real estate market persists, with sound fundamentals and investor demand
anchoring performance. Our recently collected data covering the first six months of 2012 did not reveal
any unpredictable, tangible effects of increasing market pessimism.
Key Points
Construction activity continues to surprise on the upside. Real growth for the construction
industry beat government estimates to reach 6.9% year-on-year in Q112, driven by a surge in
residential building activity. With residential activity expected to remain robust over the rest of
the year we have revised up our forecasts, with real growth for the construction sector predicted
at 5.1% in 2012 (previously 3.8%). However, barring a global economic meltdown, we expect
construction activity in Singapore to slow to a more sustainable level, with real growth forecast
to reach 3.5% in 2013 (from a previous forecast of 3.2%).
We believe that non-residential building activity will remain decent in 2013 but will not reach
the highs seen in previous years. Although commercial building activity should remain robust
due to the signing of several large-scale commercial construction agreements in 2011, industrial
building activity - which is mainly financed by Singapore's export-oriented businesses - should
remain weak due to poor global economic activity. Institutional buildings activity, which is
typically financed by the government, should remain robust as the government plans to award
contracts to expand the National University of Singapore and to develop two hospitals in Jurong
East in 2012.
We believe that private residential building activity is mostly likely to decline in 2013. Although
the Singapore government is boosting public housing and keeping interest rates low, it is
also moving resolutely towards curbing speculation in its real estate market. Two key moves are
the introduction of a 10% stamp duty on property purchases by foreigners and corporate entities,
and the removal of the Financial Investor Scheme, which allows foreigners to buy Singapore
properties to expedite their application for permanent residency.

Table of Contents

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ............................................................................................................................................... 7
Singapore Real Estate/Construction SWOT .......................................................................................................................................................... 7
Singapore Political SWOT .................................................................................................................................................................................... 8
Singapore Economic SWOT .................................................................................................................................................................................. 9
Singapore Business Environment SWOT ............................................................................................................................................................. 10
Market Overview ........................................................................................................................................... 11
Market Analysis – Office ............................................................................................................................... 15
Supply And Demand ............................................................................................................................................................................................ 15
Rents And Yields ................................................................................................................................................................................................. 17
Table: Historic Rents – 2011-H112 (SGD per m2/month) ................................................................................................................................... 17
Table: Net Yield, 2011-2013 (%) ........................................................................................................................................................................ 17
Table: Terms Of Rental Contract/Lease – H112 ................................................................................................................................................. 17
Industry Forecast Scenario ...................................................................................................................................................................................... 18
Table: Forecast Rents (SGD per m2/month) ........................................................................................................................................................ 18
Table: Forecast Net Yield, 2010-2017 (%) ......................................................................................................................................................... 18
Market Analysis – Retail............................................................................................................................... 19
Supply And Demand ............................................................................................................................................................................................ 19
Rents And Yields ................................................................................................................................................................................................. 20
Table: Historic Rents – 2011-H112 (SGD per m2/month) ................................................................................................................................... 20
Table: Net Yield, 2011-2013 (%) ........................................................................................................................................................................ 20
Table: Terms Of Rental Contract/Lease – H112 ................................................................................................................................................. 21
Industry Forecast Scenario ...................................................................................................................................................................................... 21
Table: Forecast Rents (SGD per m2/month) ........................................................................................................................................................ 21
Table: Forecast Net Yield, 2008-2017 (%) ......................................................................................................................................................... 21
Table: Singapore’s Retail Sales Indicators, 2009-2016 ...................................................................................................................................... 22
Market Analysis – Industrial ......................................................................................................................... 23
Supply And Demand ............................................................................................................................................................................................ 23
Rents And Yields ................................................................................................................................................................................................. 23
Table: Historic Rents – 2011-H112 (SGD per m2/month) ................................................................................................................................... 23
Table: Net Yield, 2011-2013 (%) ........................................................................................................................................................................ 24
Table: Terms Of Rental Contract/Lease – H112 ................................................................................................................................................. 24
Industry Forecast Scenario ...................................................................................................................................................................................... 24
Table: Forecast Rents (SGD per m2/month) ........................................................................................................................................................ 24
Table: Forecast Net Yield, 2008-2017 (%) ......................................................................................................................................................... 24
Industry Forecast Scenario .......................................................................................................................... 25
Construction And Infrastructure Outlook ................................................................................................................................................................. 25
Table: Singapore Construction And Infrastructure Industry Data, 2008-2016 .................................................................................................... 25
Table: Singapore Construction And Infrastructure Industry Long-Term Forecast, 2013-2021 ........................................................................... 26
Macroeconomic Outlook .......................................................................................................................................................................................... 34
Table: Singapore – Economic Activity, 2011-2016 ............................................................................................................................................. 36
Singapore Real Estate Report Q1 2013
© Business Monitor International Ltd Page 4
Real Estate Risk Reward Ratings ................................................................................................................ 37
Real Estate/Construction Risk/Reward Ratings ....................................................................................................................................................... 37
Table: Asia Pacific Real Estate Risk/Reward Ratings ......................................................................................................................................... 37
Singapore’s Business Environment .......................................................................................................................................................................... 37
Table: BMI Business And Operation Risk Ratings .............................................................................................................................................. 38
Institutions .......................................................................................................................................................................................................... 38
Table: BMI Legal Framework Rating ................................................................................................................................................................. 41
Infrastructure ...................................................................................................................................................................................................... 41
Table: Labour Force Quality .............................................................................................................................................................................. 44
Market Orientation ............................................................................................................................................................................................. 44
Table: Asia, Annual FDI Inflows ........................................................................................................................................................................ 46
Table: Trade And Investment Ratings ................................................................................................................................................................. 47
Operational Risk ................................................................................................................................................................................................. 49
Competitive Landscape ............................................................................................................................... 50
Company Monitor ......................................................................................................................................... 52
CapitaLand ......................................................................................................................................................................................................... 52
City Developments Limited (CDL) ...................................................................................................................................................................... 54
Dragages Singapore ........................................................................................................................................................................................... 55
Keppel Land ........................................................................................................................................................................................................ 56
Singapore Land (SingLand) ................................................................................................................................................................................ 57
UOL Group ......................................................................................................................................................................................................... 58
Demographic Data ........................................................................................................................................ 59
Table: Singapore's Population By Age Group, 1990-2020 ('000) ........................................................................................................................ 60
Table: Singapore's Population By Age Group, 1990-2020 (% of total) ............................................................................................................... 61
Table: Singapore's Key Population Ratios, 1990-2020 ....................................................................................................................................... 62
Table: Singapore's Rural And Urban Population, 1990-2020 ............................................................................................................................. 62
BMI Methodology .......................................................................................................................................... 63
How We Generate Our Industry Forecasts .............................................................................................................................................................. 63
Construction Industry .............................................................................................................................................................................................. 64
Bank Lending ........................................................................................................................................................................................................... 65
Real Estate/Construction Business Environment Rating .......................................................................................................................................... 65
Table: Weighting Of Indicators........................................................................................................................................................................... 66
Sources..................................................................................................................................................................................................................... 68