• 717274caecff6640d2aa574984bcb542_0_0 Perspective: Optimistic Outlook for Singapore Property Sector 717274caecff6640d2aa574984bcb542_0_0 Perspective: Optimistic Outlook for Singapore Property Sector

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Perspective: Optimistic Outlook for Singapore Property Sector

29 Jan 2018

Singapore economy expected to benefit from stronger global economy

Singapore is likely to benefit from the stronger global economy. According to a survey by PricewaterhouseCoopers, more than half of the CEOs interviewed indicated that economic growth will improve over the next 12 months. Companies in Singapore will be able to ride on the stronger growth, especially following the agreement of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, TPP-11, and Singapore signing a Free-Trade Agreement with Sri Lanka.  Additionally, Singapore is expected to play a key role in China’s ‘One Belt, One Road’ initiative by being a financial hub.  Despite improved prospects, geopolitical risks and interest rate hikes weighed as the greatest risks to the global economy, according to Investment Management Association of Singapore.

With the economy more integrated, companies are planning their business operations based on market catchment or cheaper and better factors of production. Singapore’s key competitive advantage has been on its human resources, and its stable socio-political environment. However, this advantage has been eroding, with other regions catching up. Good technicians with strong skillset in analytics and AI can be found in other emerging economies at a fraction of the cost of Singaporean technicians.

Mr Ravi Menon, managing director of MAS, rightly pointed out that a certain rate of net migration is needed to augment its resident population to rejuvenate and expand Singapore’s talent base. Without the continued growth of our talent base in a sustainable manner, companies in Singapore may face constraints when they expand.

Separately, Singapore’s service sector is also expected to evolve, as the Singapore Government rolled out its transformation roadmap for professional services. The roadmap aims to create 5,500 new jobs annually and equip workers with skills such as data science, analytics and artificial intelligence. However, the challenge lies in retraining existing staff with these skills. The needs for the future workforce is likely to change in response to the transformation.

The recovery of Singapore Property market

The outlook for Singapore’s property market continues to show promise, with the release of statistics from URA and JTC. The decline in industrial prices and rents were moderated, as the improvement in manufacturing sector is slowly reflected in the market due to the time-lag between manufacturing sector performance and the industrial market. Notwithstanding, there are concerns that the strong manufacturing sector performance may not be sustainable in the long run. 

The residential market recovered in 2017. As shown in the URA’s Q4 2017 data, the private residential market recovered with a 1.1% increase in home prices and a 16 % increase in transactions in 2016. The office market rents also rose in Q4 2017, partly offsetting the decline in  rents in the beginning of 2017. (See Edmund Tie & Company Press Release in the Appendix).

Foreign Markets: How they have been performing

Based on the markets reported in the last week, the property market in China and the US remained hot, while the United Kingdom market was subdued due to the uncertainty.

Market Country Trend Cause
Residential Market United Kingdom UK home sales fall to 13-month low in Dec 2017 The stamp duty cut may not have taken effect, although the impact is expected to be limited. The slowing of housing market was due to inflation, uncertainty from Brexit and tax changes affecting land lords and tenants.
Office Market Manhatten, US Stronger leasing activity in 2017 The improvement is partly due to the tax cuts, which boosted employment, wages and business investments
Residential Market US Home sales fell in Dec 2017 There was a lack of inventory of homes for sale.
Residential Market San Francisco, US Market remains hot Home prices driven by the growing technology sector and continued housing shortage.
Residential Market Mainland China Government to develop the rental market. Encourage the securitisation of rental income, co-living projects and strong growth in proptech that enhance tenants’ search experience.

Source: Straits Times, Business Times

Financial Results: A quick look of results released in the week

Most of the REITs announced stronger performance in the release of their Q4 results. Those that recorded a fall in earnings are due to divestments, and movements in the exchange rates.


Gross Revenue

(y-o-y change)
Net Property Income (y-o-y change) Available Distribution Per Unit (y-o-y change) Comments
Ascendas REIT Q3 FY 2017/2018





3.97 cents

DPU improved due to a one-off property tax refund in 2017. The increase in revenue was on the back of newly acquired properties.
Ascott Residence Trust Q4 FY2017



2.04 cents

DPU is flat due in part to a rights issue in 2017. Revenue for Q4 was boosted by acquisitions made last year.

CDL Hospitality Trust Q4 FY 2017





2.83 cents

Gross revenue lifted by contributions from the Lowry Hotel in Manchester, UK and Pullman Hotel in Munich, Germany.
CapitaLand Mall Trust Q4 FY 17





2.90 cents

Higher occupancy at Bugis Junction and The Atrium@Orchard helped to improve revenue for Q4. For the whole year, the revenue is affected by the closure of Funan mall, and lower rental rates and occupancy at Bedok Mall.
CapitaLand Commercial Trust Q4 2017





2.08 cents

The fall in revenue was partly due to sales of CCT stakes in One George Street and Wilkie Edge. Higher income from CapitaGreen and contributions from the newly acquired Asia Square Tower 2 cushioned the impact of divestment.
Frasers Centrepoint Trust Q1 FY 18





3 cents

Increased rental revenue and higher occupancy at Northpoint City helped improve earnings.
Frasers Commercial Trust Q1 FY18





2.40 cents

Gross revenue declined due to lower occupancy rates at Alexandra Technopark, China Central Square, 55 Market Street and Perth’s Central Park.
Frasers Hospitality Trust Q1 FY2018





1.31 cents

Increase in income at the back of improved performances except UK. Weakness in the UK market is expected to persist.
Frasers Logistics and Industrial Trust Q1 FY2018


A$33.4m (+8.9%)

A1.70 cents

The DPU was lower due to the movements in Exchange Rates. The contributions from four completed properties acquired in August 2017 helped boost income.
Keppel DC REIT Q4 2017


$125.1m (+37.6%) 7.12 cents (+16%) Improvement in gross income due to acquisitions of data centres, and a stronger Australian dollar, Bristish pound and Euro.  Flagged risks such as currency exposure in Australia, Europe and Malaysia.
Keppel Infrastructure Trust Q4 FY 2017





3.72 cents

Profit was driven by higher contributions from Basslink and CityGas, and partially offset by abortive expenses in connection with a potential acquisition, professional fees incurred for the Basslink outage and lower contribution from CityNet.
Keppel REIT Q4 2018





5.7 cents

Lower rental support and divestment of 77 King Street in Sydney affected distribution. Gross income was supported by higher income from Bugis Junction Towers and Ocean Financial Centre.
Keppel T&T Q4 FY 17





1.74 cents

The improvement was mainly due to fair value gains from reclassification of an associated company to other investments and the disposal of an associated company.
Mapletree Commercial Trust Q3 FY 18





2.30 cents

Higher revenue due to contributions from Vivocity and Mapletree Business City 1.

Mapletree Logistics Trust

Q3 FY17/18
$98.2m (+2.8%)


1.907 cents (+2%) Improvement from contributions from accretive acquisitions, but offset by the contribution of three properties divested and one undergoing redevelopment
Mapletree Greater China Commercial Trust Q3 FY 17/18





1.868 cents

Net property income was flat. Although the rents at all three assets was higher and the accrued revenue from Gateway Plaza in 2016 was lower, the higher maintenance costs, marketing and promotion costs at Festival walk and the weaker HK dollar offset the increase.
Parkway Life REIT Q4 2017






The increase in DPU was due to the divestment gain from sale of 4 Japanese properties.

Suntec REIT

Q4 FY 2017





2.604 cents

The fall in revenue was due to the decline from office revenue, as some of the leases committed in Q4 2017 will only begin in 2018.

Source: Business Times, Straits Times, in SGD unless specified

Collective Sales: What’s launched and sold?

The market for collective sales was active as more developments are at various stages of going en bloc. In the past week, there were 4 developments launched and two developments sold. It was reported that some developments were undergoing private negotiations after their tender has closed.

In the process (reported)

Existing Development Type Tenure Location
Golden Mile Complex Commercial Leasehold Beach Road
Golden Wall Centre Commercial Leasehold Rochor Canal
Shenton House Commercial Leasehold Shenton Way
Far Horizon Gardens Residential Leasehold Ang Mo Kio
Mandarin Gardens Residential Leasehold East Coast Park

 Source: Business Times, Straits Times


Existing Development Tenure Location Maximum Gross Floor Area (sq ft) Asking Price Estimated DC Payable Land Rate (Including DC, excluding Balcony Bonus)

ICB Shopping Centre

(Commercial and Residential Use)
Freehold Upper Serangoon Road 167,347 $60m None $1401 per sq ft per plot ratio
Makeway View Freehold Newton 116,430 $168m $17m $1,589 per sq ft per plot ratio
Goodluck Garden Freehold Toh Tuck Road 504,182 $550m $63.2m $1,216 per sq ft per plot ratio
Site at Holland Road Freehold Holland Road - $110m - -

Source: Business Times, Straits Times


Existing Development Tenure Location Buyer Maximum Gross Floor Area (sq ft) Transacted Price Estimated DC Payable Land Rate (Including DC, excluding Balcony Bonus)
9 Single storey shophouses Freehold Telok Kurau




(5-storey height constraint
$35.5m $5.9m $733.8 per sq ft per plot ratio
The Wilshire Freehold Farrer-Holland Roxy Pacfic and Tong Eng Group MD 64,310 $98.8m $4.1m $1,536 per sq ft per plot ratio

Source: Business Times, Straits Times

Investment Sales: What’s cooking in the market?

There are two developments in the market. 12onShan was a private residential development, but got written permission to operate as serviced apartments in Nov 2017. Separately, Rail Mall is advertised for sale. The development has only 28 years of remaining lease and investors are likely to acquire the development for rental income.

For Sale

Development Tenure Location Type Asking Other specs
12onShan Freehold Novena Serviced Apartments $107m 16-storey with 78 Serviced Apartments
Rail Mall 28 years remaining Upper Bukit Timah Road Retail - NLA: 49,766 sq ft


By Dr Lee Nai Jia
Head of Research
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Disclaimer: This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, Edmund Tie and Company can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to Edmund Tie and Company.

© Edmund Tie & Company 2018

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