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Singapore Real Estate Report Q1 2011
Business Monitor International, Nov 2010, Pages: 68
The Singapore Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Singapore's Real Estate industry.
Singapore’s economy is recovering strongly from the global downturn, driven largely by a resurgent manufacturing sector, a sharp pick-up in export demand and the spill-over effects into trade-related services industries. Singapore – as an export-oriented economy was hit early and fairly hard by the economic downturn. Now, it is recovering strongly once more and looks set to be Asia's top economic performer in 2010 by our projections. Indeed, we have upgraded Singapore's real GDP growth forecast from 7.0% to 12.9% in 2010. That said, with our expectation of a dip in external demand in H210 and 2011, we expect the economy to register a sequential contraction over the next two quarters and are sticking to our conservative 3.3% real GDP forecast for 2011.
Our in-country sources, whom we interviewed in early February 2010 and again in July, indicate that the various sub-sectors have already adjusted to the global financial crisis. Rents and yields have fallen sharply in the office sub-sector. Conversely, rents (and yields) have already started to rise quite strongly in the retail sub-sector. In the industrial sub-sector, there was a sharp lift in yields from very low levels in 2008 and 2009.
In short, the overall pace of recovery is such that demand for space is picking up quite sharply, notwithstanding that vacancy rates remain quite high. Our in-country sources suggest that there should be a rise in rental rates of 3-5% in 2011, in all sub-sectors. Though, this may be overly conservative. Over the medium term, we expect that yields will adjust to the ‘normal’ levels that were prevailing prior to the global financial crisis in 2008-09. This implies that office yields will fall slowly over the 2010- 2015 forecast period, while retail and industrial yields should rise.
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