Singapore Real Estate Report Q2 2009

Singapore Real Estate Report Q2 2009

This is the first edition in BMI’s new series of reports on Real Estate sectors around the world. We have
sought to incorporate data and insights from our reports on Infrastructure and Commercial Banking, as
well as our own forecasts for the economies of the various countries that we survey.
Key issues – Singapore
We suggest that the following are the key issues to monitor for the real estate sector in the coming year or
so:
?? The moderate to subdued level of construction activity and anticipated low growth over the
medium term.
?? The strong and stable bureaucracy and the legal system.
?? Continued decline in property prices and office rental prices.
?? The likelihood that the government’s fiscal stimulus package will have a positive impact.
These conclusions are based on our proprietary Real Estate/Construction Business Environment Rating
(RECBER), the component factors of which we discuss in detail. The conclusions are also set against
recent conditions in the commercial office market – for which we have used office rents in major cities as
a proxy – and in the residential real estate market – for which we have used housing prices as a proxy.
A major trend throughout all our real estate reports is that, mainly due to the global financial crisis, access
to funding will be more important than usual. Accordingly, we have incorporated overviews of conditions
in the Commercial Banking sector – both globally and in the region of each country. We have also looked
at the issues that will drive the fortunes of real estate investment trusts (REITs) over the coming months.

Executive Summary ......5
Key Features Of This Report..6
SWOT Analysis....7
Singapore Real Estate/Construction SWOT.... 7
Singapore Economic SWOT........ 8
Singapore Business Environment SWOT ........ 9
Key Projects.......10
Construction Overview ... 10
Residential Construction. 11
Commercial Construction......... 11
Major Projects Table ...12
Table: Major Infrastructure Project – Construction......... 12
Real Estate Investment Trusts, Q209.......14
Introduction 14
Table: Global REITs At A Glance, Mid-2008 ......... 15
A Note On Unlisted Real Estate Funds ......... 17
Table: European Unlisted Funds At A Glance, 2008 ........ 17
2008: A Disastrous Year For REITs ... 18
Table: Investment Total Returns (%, in EUR terms) ......... 18
Table: Gross Total Returns, 2008 (%, in EUR terms)....... 18
Table: Gross Total Returns, 2008 (%, in EUR terms)....... 19
Table: Gross Total Returns, 2008 (%, in EUR terms)....... 19
Table: Substantial Property Sales, 2008 (US$bn)... 20
Table: Capitalisation Rates And Spreads Versus Risk-Free Rates......... 22
Pointers For 2009-2010.. 23
Industry Finance Outlook.....25
International Financing.. 25
Table: Interbank Rates and Bond Yields....... 27
Table: Comparison of Total Assets, Client Loans And Client Deposits, 2007-2008 (US$bn) ........ 28
Domestic Financing........ 28
Table: Levels (SGDbn) ... 29
Monetary Policy.... 29
Table: Singapore – Monetary Policy .. 31
Industry Forecast Scenario ...32
Table: Housing prices at a glance – Asia Pacific ... 32
Table: Office Rents – Asia Pacific – CBRE... 35
Table: Singapore: Construction Industry Forecast. 37
Macroeconomic Outlook. 38
Table: Singapore – Economic Activity 41
Real Estate/Construction Business Environment Rating ....42
Real Estate/Construction Business Environment Ratings . 42
Singapore’s RECBER ..... 42
Table: Asia Real Estate/Construction Business Environment Ratings ... 44
Project Finance Ratings: Outlook For Asia Pacific 45
Table: Design And Construction Rating ....... 46
Table: Commissioning And Operating Rating ........ 47
Table: Overall Project Finance Rating......... 48
Singapore’s Business Environment..... 49
Company Monitor........55
BMI Forecast Modelling........66
How We Generate Our Industry Forecasts ... 66
Construction Industry ..... 67
Bank Lending........ 67
Real Estate/Construction Business Environment Rating... 68
Table: Weighting Of Indicators 69
Project Finance Ratings Indicators .... 71
Table: Design And Construction Phase ........ 71
Table: Commissioning And Operating Phase – Commercial Construction ..... 72
Table: Commissioning And Operating Phase – Energy And Utilities .... 73
Table: Commissioning And Operating Phase – Transport 75
Sources ....... 76