The prospects for the recovery of the Singapore property market are not optimistic
Kum Soek Ching, head of Southeast Asian research at Credit Suisse Group AG's private banking business, pointed out that the additional yield of Singapore government bonds relative to risk-free interest rates has fallen. Kum wrote in a report that this year, REITs may be 3.4 percentage points higher than the 10-year bond yield, which is lower than the historical average of 3.7 percentage points.
The total return of the Straits Times Real Estate Investment Trust Index last year was 28%, and the real estate outlook has become clearer because of the inflow of funds into Singapore. Analysts said that although the prospects are still good, as demand recovers and supply eases and rent levels improve, investors may want to wait for a more attractive time to enter the market.
Hong Kong-based Kum said: “The prospect of restoring rents and income distribution is a free ride for Singapore, and it promotes further re-rating of the industry.”
In addition, the Singapore Construction Authority predicted that Singapore’s construction industry contracts this year are expected to reach 26 billion to 31 billion yuan. The demand for construction in both the public and private sectors will rise, which is higher than the 24.5 billion yuan estimated for the entire year last year.
The positive economic outlook drives the housing market, coupled with increasing demand for construction in the public sector, this year's total construction contract value is expected to reach 31 billion yuan, 27% higher than last year's 24.5 billion, and it is expected to continue to increase in the next five years.
Singapore’s Minister of Social and Family Development and Second Minister of National Development, Li Zhisheng, revealed at the 2018 Building Environment and Real Estate Outlook Seminar yesterday (January 11) that according to the Singapore Construction Authority’s forecast, Singapore’s construction industry contracts this year are expected to reach 260 Billion to 31 billion yuan. The demand for construction in both the public and private sectors will rise, which is higher than the 24.5 billion yuan estimated for the entire year last year.
Li Zhisheng pointed out that Singapore’s overall GDP growth last year is expected to reach 3.5%, and good economic trends will help improve sentiment in the private real estate market.
However, while the demand for private housing construction is increasing, this year is expected to be the same as last year. The overall construction demand is mainly dominated by public sector projects, accounting for about 60%.
Li Zhisheng said: "The public sector will continue to dominate construction demand in the next few years. The Construction Bureau predicts that the total contract value of public projects this year will reach 16 billion to 19 billion yuan, more than 15.5 billion yuan last year."
The public domain projects that have issued construction contracts this year include the North-South Corridor of the Land Transportation Bureau, the second phase of the Deep Tunnel Sewer System (DTSS) of the Public Utilities Bureau, and the remaining works of the third runway of the Changi Airport Group. , Subway system and various medical facility projects. The demand for construction in the private sector is expected to increase from 9 billion yuan last year to between 10 billion and 12 billion yuan, of which construction contracts for private housing projects can reach 3.6 billion yuan.
After three years of steady development, the Construction Bureau is optimistic that the construction demand in the next five years will rise steadily, reaching 35 billion yuan in 2022. At that time, the construction demand is expected to mainly come from HDB flats, medical and educational facilities, various facilities at Changi Airport's Fifth Terminal, subway and high-speed rail projects. While the construction sector continues to develop, the authorities have not forgotten to call on the industry to pay attention to environmental protection.
In his speech at the seminar, Director of Construction Bureau Lin Youyang pointed out that this year was listed by Singapore as the "Singapore Climate Action Year", which means to take action to combat climate change. He encouraged all companies that want to green their buildings or assets to make good use of the financial subsidies provided by the Construction Bureau.