Singapore Real Estate

Other than such fairs and events to lure huge crowds, the Singapore Flyer, which is the largest observation wheel in the world and opened to the public in March 2008, is also envisaged to maintain Singapore´s position as a key tourist spot in Asia.

Singapore´s tourism sector expanded strongly in 2007 and is  expected to enjoy further growth in the coming years. On the back of record visitor arrivals and tourism receipts in 2007, the Singapore Tourism Board (STB) announced a target of 10.8 million visitor arrivals and S$15.5 billion in tourism receipts for 2008.

The year set off on a laudable start with more record numbers of tourists. In March 2008 for instance, Singapore welcomed 908,000 foreign visitors, the highest ever visitor arrivals for the month, representing a 5.7 per cent yoy growth.

More benchmark figures for visitor arrivals are expected to be achieved with eagerly anticipated leisure and business events lined up for the next few months, including the Singapore Arts Festival, Great Singapore Sale, inaugural Formula One night race, SITEX 2008, ITB Asia, and trade shows
for the Asian travel market and Biomedical Asia.

For example, the Singapore Airshow held at the Changi Exhibition Centre in February 2008 captivated an avid crowd of 90,000, with a huge exhibition and an airshow featuring the Black Knights of the Republic of Singapore Air Force (RSAF), international fighter planes and the Airbus A380.

The six-day event eventually sealed S$18.9 billion worth of deals. These events are anticipated to attract more tourist dollars to the retail sector. Boosting Singapores cruise industry, a mega cruise terminal at Marina South capable of hosting premium ocean liners, such as Royal Caribbean Cruises
Rhapsody of the Seas, will be operational by 2010 and double the capacity of Singapore´s international cruise infrastructure.

The current Singapore Cruise Centre at HarbourFront welcomed 943,000 cruise passenger throughput in 2007, a 10 per cent growth compared to 2006. STB targets to achieve 1.6 million cruise passenger throughput by 2015.

STABLE DEMAND AND LIVELY SUPPLY

Demand for retail space remained relatively stable in 4Q 2007 despite an increase in the occupancy rate. Islandwide stock decreased by about 170,000 square feet (sq ft), more than half of which was contributed by the revamp of some developments along the Singapore River.

The fall in islandwide stock coupled with a slight increase in demand led to the islandwide occupancy rate for retail space rising by half a percentage point from 92.3 per cent in 3Q 2007 to reach 92.8 per cent in 4Q 2007. The islandwide occupancy level improved further in 1Q 2008 to an estimated 93.6 per cent as more retail space undergoes asset enhancement works.

For those who relish shopping, 2008 will be a year to rejoice with several retail and entertainment destinations in Singapore to flock to by the end of the year.

The former Big Splash at East Coast Parkway, renowned for its water slides, was reopened as Playground@Big Splash in 1Q 2008 after it had closed for renovations in 2006.

In place of the iconic water theme park, the newly opened park now consists of more food and beverage outlets, along with family-friendly offerings and recreational facilities.

Further to the east, a leisure and entertainment complex at Downtown East named E!hub, with about 200,000 sq ft of net lettable area, is expected to enthrall both young and old from 2Q 2008 onwards with its 25-metre high indoor ferris wheel and Singapore´s largest indoor family park named eXplorerkid. Within the Central Region, ION Orchard and Orchard Central are due to be completed between end 2008 and early 2009, thereby injecting more buzz into the Orchard Road shopping belt.

Still within the Central Region, Iluma, a 10-storey entertainment mall, would also imbue the Bugis area with greater vibrancy by end 2008.

Adding to the list, malls that will be completing their asset enhancement works by this year include Jurong Point, Northpoint and Sembawang Shopping Centre.

Shop clusters such as Choa Chu Kang Xchange are also mushrooming in various MRT stations with high passenger traffic. Similar retail outlets at Tanjong Pagar and Boon Lay MRT stations are targeted to be ready for business in the next two quarters.

IMPACT OF POTENTIAL SUPPLY

A significant 5 million sq ft of potential retail space may enter the market by the end of 2009, with 4.2 million sq ft of retail space currently under construction while the rest have obtained planning permission.

Close to 60 per cent of this potential supply will be located in the Central Region with shopping malls like ION Orchard, Orchard Central, Iluma and a development by Lend Lease Retail Investments at Somerset Central constituting the bulk.

Despite the anticipated larger supply of retail space in the pipeline for the next couple of years, retailers need not be overly troubled, as population growth had preceded the increase in retail supply over the past five years to provide the critical mass required to support a higher amount of retail
space in Singapore.

Since 2004, the ratio of available retail stock to Singapore´s total population had decreased by 7.2 per cent to reach 7.40 sq ft per capita in 2007 vis-a-vis 7.97 sq ft per capita in 2004 due to the rapidly growing population.

In essence, there is approximately 7.40 sq ft of available retail space per person as at end 2007. Compared to Hong Kongs ratio of about 16.2 sq ft per capita, Singapore has room to expand its retail stock further based on its current population.

HOT PROPERTY - MEDICAL SUITES

The demand for medical suites has increased substantially since 2004, partly attributable to the growing demand for medical specialist services from locals and the rising number of medical tourists coming to Singapore.

Singapore´s reputation as a medical hub within the region has slowly climbed in stature since its inception in 2003 by the Economic Development Board. Since 2002, more than 300,000 medical tourists have arrived in Singapore to seek medical treatment yearly.

An increase of 20 per cent annually is projected till 2012, when a target of one million medical tourists is envisaged. According to STB, medical expenditure by tourists accounted for S$763.3 million or approximately 9 per cent of total tourist expenditure in 2006 and this figure is expected to hit S$2.6 billion by the end of 2012.

Due to the imbalance of supply and demand, prices for medical suites have increased substantially over the last two years.

For instance, prices for medical suites at Gleneagles rose by approximately 64 per cent from 2004 to nearly S$4,400 psf in 4Q 2007, while those at Mount Elizabeth Medical Centre soared by more than 138 per cent during the same period to achieve a record S$5,000 psf.

Similarly, rentals for medical suites have escalated considerably since 2006. Medical suite rentals at Mount Elizabeth Medical Centre grew by almost 45 per cent from 2006 to reach about S$16.00 psf per month (pm) in 1Q 2008, while Paragon medical suite rentals rose in similar fashion to
approximately S$14.00 psf pm.

RISING RETAIL RENTALS

Retail rentals continued to scale upwards within the Orchard Road shopping belt, with malls located along the fringe of the prime shopping belt recording the highest increase for the first quarter of the year, while rentals for the rest of the island remained unchanged.

Malls along the central Orchard Road shopping belt saw retail rentals in 1Q 2008 rising 5.3 per cent
quarter-on-quarter (qoq) to reach S$47.85 psf pm, while rentals of malls located at the fringe rose 7.0 per cent qoq to achieve S$23.90 psf pm.

The continuing increase in retail rentals witnessed along the Orchard Road shopping belt over the past three quarters is largely attributable to the strong demand by both local and foreign retailers who seek choice retail space.

Government initiatives to promote tourism and to improve the retail scene further entice retailers to establish their presence in Singapores prime retail area and to tap on prominent upcoming events in the next few quarters.

With limited supply of retail space along the Orchard Road shopping belt till 4Q 2008, rentals for this prime shopping vicinity are likely to rise further in the subsequent two quarters.

Retailers recently expressed concerns over rising retail rentals increasing their operating costs and squeezing their profit margins.

Comparatively though, Singapore´s prime retail rentals were lower than those in other popular retail destinations around the globe. A comparison of seven cities, namely Bangkok, Hong Kong, Kuala Lumpur, New York, London, Sydney and Singapore, showed that local prime retail rentals as at end 2007 were less than those in the matured retail markets of Hong Kong, London,Sydney and New York, which had achieved S$142.80 psf pm.

Although such prime retail rentals are commonly associated with street shops while enclosed shopping malls usually yield lower rentals in these countries, they do provide an indication
that growth in Singapore´s prime retail rentals is currently still sustainable and bearable.

Source: www.property-report.com