Singapore’s GDP growth rate appears to have structurally slowed down since the post-GFC rebound period in 2010, the year in which its GDP growth rate peaked at 15%. Its GDP enjoyed a 10-year (2008-2017) average annual growth rate of 4.4% but it is expected to grow notably below that trend from 2018 onwards. Contagion from a deepening Global Trade War would certainly further dampen this outlook. Singapore’s CPI fell into negative territory in 2015 and 2016 but increased in 2017 at 0.6% YoY and is forecast to pick up further. Consensus Economics (October 2018) forecasts a 1.3% CPI in 2019. The Monetary Authority of Singapore has been tightening policy.
Data points through end of October 2018. Change represents month-over-month change.
Due in no small part to the emergence and rise of e-commerce players in Singapore, recent growth in retail sector rents has been limited. This coincides with strong recent supply – with more to come. Prime rents were flat in Q2 2018 at SGD 65/sqf/month since Q1 2017, down from a peak of SGD 71.45/sqf/month in Q3 2008. However, there are some positive signs as vacancy rates slightly dropped in Q2 2018 to 7.3% compared to 8.1% one year prior. On the bright side, the total return for retail real estate in Singapore has performed the best of the main property types with a 7.7% unlevered, 3-year average annual from 2015 to 2017, compared to office at 5.5%, industrial at 3.2% and hotels at 4.1%.
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