Real Estate Outlook – Spotlight on Singapore

Can patient investors still access pockets of real estate opportunities in Singapore?

08 Apr 2020

Outlook for Singapore property

Can patient investors still access pockets of real estate opportunities in Singapore?

As the city state enters middle age, there is a keen awareness that the coming years will not prove as easy to navigate. Transforming the economy will take a concerted effort from both government and businesses, with the next few years key in gauging progress. Patient investors can still access pockets of real estate opportunities.

Transformation calls for patience

It was not too long ago that the city-state marked its 50th year of independence, with much to celebrate amid the economic progress made within half a century.  As Singapore enters middle age, what is next for the nation?

Signposts we are watching out for in Singapore property

We are focused on the government's multi-sectoral, multi-year plan to restructure the economy, in a bid to ensure it remains ready and able to tackle the challenges of increased volatility.

Here are 3 signposts to watch for in Singapore property investing:

  • Industry Transformation Programme progress
  • General Elections by April 2021
  • Completion of infrastructure projects 

Figure 1: GDP forecast

(Real, annual, %)

Source: Oxford Economics (as at 24 February 2020), UBS Asset Management, Real Estate & Private Markets (REPM), February 2020 Note: Data for the period 2020-2025 are forecasts.

Opportunities in Singapore property in the next 5 years

Despite the challenges, we think that pockets of strength exist amidst a vastly disparate industrial landscape – in particular, business parks and high-tech industrial buildings. Business park space designed with flexible layouts, ancillary amenities, and good connectivity are still well-occupied and demand remains resilient. Singapore has also primed itself well to be in a strong position to serve high-value added manufacturing including the bio-medical, pharmaceuticals, aerospace and transport engineering sectors, and growth in these industries is expected to support demand for good quality factory space. Investors might find themselves keen to play these themes, but the challenge is finding good quality assets which also have a long-enough land tenure at a reasonable enough price.

3 opportunities in Singapore property

  1. Business parks and selected industrial segments
  2. Hotel sector to break out (after COVID-19 blip)
  3. Decentralization will create new options 

Despite the near-term threat posed by COVID-19, we think that the long-term structural picture is still supportive of the hotel sector in Singapore. Investors with a higher risk appetite might benefit from the upside of a favorable demand-supply situation. Tourist arrivals in Singapore have put on a strong showing over the past 10 years, and while there are ebbs and flows as is expected in the hospitality sector, the trend is undeniably upward.

And how can investors benefit from the government's decentralization plans? Will areas outside of the CBD eventually become established enough to draw commercial occupiers away?

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