New Business market report from Business Monitor International: "Singapore Real Estate Report Q1 2014"
Boston, MA -- (SBWIRE) -- 01/09/2014 -- We believe that the Singaporean commercial real estate sector will continue to show solid growth, boosted by the country's strong fundamentals, including its stable business environment and status as a global financial hub. We highlight growth in tourism as driving the retail real estate sector, as well as the importance of the developed REITs market to the overall commercial real estate sector.
We believe that the real estate cooling measures enacted in 2013, in an effort to keep a lid on rocketing property prices, will not have much of an impact on the sector in the short term. Rather, we believe, it will be interest rates that prove to be the eventual cause of a market correction. We are forecasting interest rates to begin rising from 2015, but will remain low by historical standards.
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We are forecasting an improvement in GDP growth in 2014, boosting the real estate sector. We expect GDP growth of 3.2% in 2014, and see this remaining roughly stable over our forecast period, which should lend stability to the real estate sector.
We believe that real estate investment trust (REIT) activity will continue to drive the market. REITs are active in all three sub-sectors we cover, retail, office and industrial, as well as residential, hospitality and notably healthcare, showing the developed nature of the market. Singapore-listed REITs are also active elsewhere in Asia, notably China. In early November 2013 38 REITs were listed on the Singapore Stock Exchange, with a further listing due that month.
We give Singapore a score of 65.2 out of 100 in our Real Estate Risk/Reward Ratings for Q114. This score is unchanged from last quarter, a fact that denotes the essential stability in the market. We note that office space in Singapore's central business district is among the most expensive in the world. Given the country's central role in Asian financial markets and stable and predictable business environment, we are not forecasting this to change for the forseeable future Indeed, we are forecasting prime office rents to rise in 2014, along with a reduction in vacancy rates. However, we do note that there is some oversupply in the office market as a whole.
Although we predict flat short-term growth retail rents, over the longer term we are more optimistic, seeing low unemployment, which boosts consumer spending, and tourism as key growth drivers of retail real estate, offsetting the country's small consumer base. There is significant demand for high quality modern etail facilities, but we do highlight that as these facilities come online, rental rates for older, less sought-after developments could suffer.
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