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From a record expansion of Gross Domestic Product (GDP) growth of 14.8% recorded in 2010, the Singapore economy paced itself and achieved an expansion of 4.9% in 2011. The economic growth was in line with the Ministry of Trade and Industry’s (MTI) growth forecast of around 5% for the year.

For the whole of 2011, the manufacturing sector expanded by 7.6%, down from 29.7% in 2010. The construction sector grew by a modest pace of 2.6% in 2011, down from 3.9% in 2010. Services producing industries grew by 4.4%, on a year-on-year basis, in 2011, compared to the 11.1% growth in the preceding year.

RESIDENTIAL
Singapore’s private residential market in 2011 continued to strengthen on the back of healthy demand amid a robust economy, positive job prospects and a low interest rate environment. According to the Urban Redevelopment Authority’s (URA) real estate statistics, developers sold 18,787 units (including executive condominiums) of new homes in 2011, an all-time high and 8.3% more than the 17,344 units sold in 2010. In 2011, prices of private residential properties increased by 5.9% as compared with 17.6% in 2010.

 

In 2011, prices of private apartments increased by 4% in the Core Central Region (CCR) while those in the Rest of Central Region (RCR) and Outside Central Region (OCR) increased by 4.5% and 7.7% respectively. CCR comprises the prime districts 9, 10, 11, Downtown Core and Sentosa Cove, while RCR refers to the area within the Central Region that is outside CCR.

Singapore’s residential market saw strong take-up response for several new private residential project launches in 2011. For example, H₂O Residences, a 521-unit project, sold 85% of the 300 units launched during its preview in March 2011. Similarly, The Palette, a 99- year condominium jointly developed by CDL, Hong Leong Holdings and Hong Realty (Private) Limited, met with enthusiastic response with over 80% of the 450 units snapped up during the launch in November 2011.

According to URA real estate statistics, rentals of private residential properties rose by 3.8% in 2011. In view of Government’s commitment to attract a vibrant and forward-looking workforce so as to maintain economic vitality and strengthen Singapore’s core, leasing activity is expected to remain steady in 2012.

In view of the robust demand for private housing and buoyant conditions in the property market, the Government announced the following measures in January 2011 – the holding period for imposition of Seller’s Stamp Duty (SSD) would be increased from three years to four years. The SSD rates were also raised to 16%, 12%, 8% and 4% of consideration for residential properties which are bought on or after 14 January 2011, and sold in the first, second, third and fourth year of purchase respectively. Simultaneously, Loan-to-value (LTV) limit for non-individuals was lowered to 50% and LTV limit for individuals with one or more outstanding housing loans at the time of new housing purchase was reduced to 60%.

To maintain a stable and sustainable property market, the government imposed an Additional Buyer’s Stamp Duty (ABSD) over and above the current Buyer’s Stamp Duty on certain categories of residential property purchases in December 2011. Foreigners have to pay an ABSD of 10% for any residential property while Permanent Residents and Singaporeans have to pay an ABSD of 3% for their second and third, respectively and subsequent residential properties.

The MTI anticipates that the growth forecast for the Singapore economy is at 1% to 3% for 2012. Singapore’s external demand is likely to be impacted by the deteriorating macroeconomic conditions stemming from the European debt crisis, partisan politics in the leadup to the US presidential elections and fiscal austerity measures.

With a more sustainable economic growth conditions, coupled with a low interest rate environment, as well as Singapore’s reputation as a world-class global city that remains attractive to professionals and high net worth individuals, demand fundamentals are expected to remain healthy for Singapore’s residential property market in 2012.

OFFICE
2011 was a year of contrasting halves for the Singapore office market as it expanded strongly in 1H 2011, and the demand for office space moderated in 2H 2011 due to the financial uncertainties in the global economy.

Overall, the Singapore office market rode on the high growth momentum from 2010 and turned in a positive performance in 2011, as shown by the market data. URA statistics showed that the rental index for office space in Central Area increased by 8% for the year of 2011, compared to 12.4% increase in rental for 2010. The islandwide price index for office space increased by 13.8% year-on-year in 2011, lower than the 18.9% increase in 2010. The island-wide occupancy rate of office space as at end of 2011 increased to 88.7% year-on-year, rising from 87.9% as compared to 2010. Total available office space as at end of 2011 remained stable at 77.8 million square feet. Against the backdrop of a steady economic growth, Grade A office space turned in a good performance in 2011. According to a CB Richard Ellis (CBRE) market report, Grade A office space rents in the Central Business District (CBD) posted an increase of 11.1% year-on-year to $11 per square per month in 2011.

According to URA statistics, about 9.7 million square feet of new supply of office space is expected between 2012 and 2016. However, there would be relief to supply as it will also come in the form of removal of stock from the market for redevelopment. There was about 1.8 million square feet completed in 2011, which represented a 2.5% increase in the total stock. The impending supply in the next 4 years would help to improve the overall quality of the office stock and this would attract international companies who are eyeing to start up operations in Asia. According to CBRE, certain global industries are viewing Singapore favourably for expansion give the prospect of tax increase and with political uncertainties in the West.

RETAIL
2011 was an eventful year where retailers and consumers experienced significant events such as the grand opening of Marina Bay, one of Singapore’s two Integrated Resorts (IRs), and the annual Great Singapore Sale and Formula One night races. Consumers enjoyed more shopping choices with several new and prominent retail malls completed in 2011, including Scotts Square, Changi City Point, ARC, Greenwich V and Rochester Mall.

The complete opening of the integrated developments at Marina Bay Sands and Resorts World Sentosa not only introduced many luxury and new-to-market labels, F&B offerings and entertainment concepts locally, but also enriched the local retail arena by providing a multifaceted retail experience and setting new benchmarks in shopping expectations.

According to figures compiled by the Singapore Department of Statistics, the retail sales index (excluding motor vehicles, at constant prices) – which indicates the health of the retail industry – increased in November 2011, rising 6.4% year-on-year.

According to URA statistics, the island-wide occupancy rate of shop space for 2011 increased to 94.7% year-on-year, rising from 94.2% as compared to 2010. The overall rentals for shop space had increased by 2.5% year-on-year, with median rental for retail space in Orchard Planning Area reaching $10.74 per square foot per month. A separate report by CBRE indicated that the average monthly gross rents for prime retail space in Orchard was about $31.60 per square foot at the end of 2011.

2012 is expected to be a good year for Singapore’s retail property market, as employment and wage levels are likely to remain high. Retailers are likely to continue to open new outlets and source for more business opportunities. The enhanced tourist traffic generated by the two IRs, the rejuvenation of Orchard Road and the expanded suite of retail offering have strengthened Singapore’s attractiveness as an investment destination for both new-to-market and established brands, some of which are also using Singapore as a springboard into the region. More fine dining establishments are also expected to open in 2012, such as Pollen (Gardens by the Bay) and Sushi Ichi (Scotts Square). According to a market report by CBRE, prime Orchard Road rents are expected to be stable with a combination of factors, such as healthy retail sales projections, increased tourist arrivals, limited prime stock and continued demand from various retail trades.

HOTEL
The Singapore tourism industry recorded a stellar performance in 2011, registering significant growth in both visitor arrivals and tourism receipts. According to Singapore Tourism Board (STB) statistics, visitor arrivals to Singapore in 2011 totalled 13.2 million, an increment of about 13.7% when compared to 2010. About 76% of total tourist arrivals last year came from Asia while roughly a third of all visitors were business travellers. Tourism receipts for 2011 are estimated at S$22.2 billion, rising 17% year-on-year. Tourist arrivals maintained at above 1 million for every month of 2011, except February reporting a lower monthly figure of 0.99 million. The tourist arrival for July 2011 of 1.27 million was the highest-ever recorded thus far for any single month.

STB’s hotel statistics showed that overall hotel average room rate in 2011 was about $245, registering an increment of about 13% when compared to 2010. The room rates for all hotel tiers have increased, with the Upscale tier posting the highest growth rate of 14%. Average occupancy rate reached 86% in 2011.

Attractions that opened recently include the Maritime Experiential Museum & Aquarium at Resorts World Sentosa. Looking ahead, tourism product offerings in the pipeline include the Wildlife Reserves Singapore’s River Safari, the Marine Life Park at Resorts World Sentosa, the Gardens by the Bay and the National Arts Gallery. These projects will augment Singapore’s exciting repertoire of attractions and leisure precincts, thereby drawing new and repeat visitors.