BMI View: Singapore witnessed a contraction in growth over H1 2015 as the slowing China economy and uneven global market recovery weigh down on investment activity and regional demand. However, the position of Singapore as a global financial hub, coupled with strong economic fundamentals, indicates great potential for the commercial real estate sector in the long-term.
Singapore constitutes an appealing location for investment activity, owing to its thriving services sector and robust financial industry that means the nation can withstand the external pressures exerted by the current global economic woes. We attribute the recent contractions in growth to the trade-orientated sectors, which have been affected by headwinds arising from moderations in regional growth and demand. Access to capital in the nation has been a benefit for investors in prior years, however lending activity is continuing to suffer from governmental restrictions, aimed to gain control of the price appreciations that are staving off potential investments. The implemented restrictions will limit the ability for some firms to enter the market, and could even result in rising vacancies across the real estate sector as corporates look to establish under more cost-effective operating costs overseas.
The office real estate sector will benefit from good demand and moderate supply, with growing interest into the Singapore market coming from China and Hong Kong investors looking for premium and Grade A property. However, there remain some issues with rental policy introduced by new leaseholders, such as obliging clients to sign for longer leases in order to protect investments. This has seen a number of tenants moving to 'fringe' districts, or secondary markets, in order to benefit from cheaper occupancy costs, and we expect this trend to continue over the rest of 2015 and into 2016.
Retail is benefitting from the returning numbers of Chinese tourists, a crucial demographic for the industry thought to contribute to around 40% of sales during peak season, and rising consumer confidence. Currently, there are a number of larger retailers seeking to redistribute to suburban mall developments, again we view this as an attempt to avoid the rising operating costs in prime estates that are rendering business unprofitable for some firms. Nevertheless, the growing interest from international retailers and high-income levels provide good fundamentals for potential growth in the market. As a result, we anticipate stable rentals in the market for the coming forecast period.
Looking ahead, there is an optimistic outlook for the ASEAN nation, as the gradual improvement in the advanced economies should provide support to the lagging trade industry, and therefore lift up the commercial real estate sector as a whole. But there are still pertinent risks to the commercial environment from possible US dollar appreciation, China real estate market corrections and softening global demand. We therefore opine that the long-term will provide the opportunities for real estate players.
The Singapore Real Estate Report features BMI Research's market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.
BMI's Singapore Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Singapore.
- Benchmark BMI's independent real estate industry forecasts for Singapore to test other views - a key input for successful budgeting and strategic business planning in the Singaporean real estate market.
- Target business opportunities and risks in Singapore through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
- Assess the activities, strategy and market position of your competitors, partners and clients via our company profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.
Industry Forecasts Outlook
Historic data series (2010-2013) and forecasts to end-2019 for the domestic real estate industry and for the local and global finance industry.
- Real Estate: Office, retail and industrial real estate yields for all major cities (%); short term forecasts on minimum and maximum real estate rental prices by sub-sector (USD per square metre and local currency per square metre).
- Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
- economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).
BMI’s Real Estate Risk Reward Index
BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.
Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors
Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.