WHAT MAKES SINGAPORE ATTRACTIVE TO FOREIGN DEVELOPERS AND INVESTORS?

WHAT MAKES SINGAPORE ATTRACTIVE TO FOREIGN DEVELOPERS AND INVESTORS?

Singapore, an epicentre for financial and business in Asia, is a magnet for foreign investment and talent. Developers, sovereign wealth funds and private equity firms have all snapped up prime real estate and trophy assets in Singapore in recent years. Indeed, investment sales in the city-state rose markedly in 2017, coming in at an estimated SGD40.3 billion – up by 55% from 2016.

Widely regarded as a global business hub, Singapore with a population of 5.6 million people has regularly been rated as among the top three economies in the Ease of Doing Business ranking for over a decade. It was ranked second out of 190 economies – behind New Zealand - in the recent Ease of Doing Business survey in the World Bank’s annual “Doing Business” 2018 report.

In a turbulent world roiled by uncertainties, Singapore is often seen as a safer investment destination, given its transparent laws, good infrastructure and political stability, as well as the strength of the Singapore dollar. The recovery in the private residential market as well as the office space segment in the past year also encouraged many investors to continue to seek value and park their funds here. The appetite for real estate investment among foreign investors is expected to remain robust this year, as a stream of tightly-held properties go on the market.

HIGHLIGHTS OF INVESTMENTS IN SINGAPORE REAL ESTATE

Based on Colliers International’s preliminary data, the residential segment accounted for a lion’s share of investment sales last year, with 54% of the total value. This was driven by bullish bids for development sites – both via Government land tenders and the collective sale market. Foreign players who had staked their claim on sites included Hong Kong-listed Logan Property Holdings and Chinese developer Nanshan Group who secured the plot in Stirling Road for SGD1 billion, and Kingsford Huray Development paid SGD830.1 million for Normanton Park via collective sale. Foreign investors’ confidence in Singapore was similarly reflected by landmark deals in the commercial property sector in the past couple of years.

In 2016, Indonesia tycoon Tahir bought the Straits Trading Building in Raffles Place for SGD560 million, Malaysia’s IOI Property Group clinched the Central Boulevard white site for a cool SGD2.57 billion, while sovereign wealth fund Qatar Investment Authority forked out a whopping SGD3.38 billion for Asia Square Tower 1 in Marina Bay.

TOP SIX PULL FACTORS

There are many of reasons why investors are attracted to Singapore. Here are some of the key “pull factors”:

1. Bright economic prospects

Singapore’s economy expanded 3.6 per cent last year - faster than initial estimates. Looking ahead, the services sector is poised to deliver the lion's share of Singapore's real GDP growth in 2018, and this should cascade down into demand for prime office space. Coupled with muted supply pipelines in the next two years, this should pave the way for double-digit CBD prime rental growth over 2018-19.

2. Strong fundamentals

Singapore is an important gateway to Asia, with strong foundation – including capital, connectivity, wide trade network, highly skilled workforce and vibrant entrepreneurial community - for further growth.

3. Property market upturn

Barring any unexpected external shocks or policy changes, the property market in Singapore is undergoing a multi-year upturn, largely driven by the residential and commercial sectors. This upturn will be underpinned by a more positive economic growth outlook amid the Government’s efforts to transform industries and drive innovation.

4. Transparent and efficient regulatory framework

The country has one of the most efficient judicial system in Asia, including the enforcement of anti-corruption laws to allow firms and investors to conduct business fairly. Singapore has also over the years established itself as one of the dispute resolution centres, owing to its reputation for impartiality and integrity.

5. Political stability

Singapore has a stable political structure with parliamentary democracy. The Government’s pro-business policies have also boosted Singapore’s allure as an investment destination.

6. Impeccable and reliable infrastructure

The urban infrastructure in Singapore, be it buildings, roads and transportation system or telecommunication network, is well-developed and highly reliable. It has embarked on its Smart Nation initiative to harness opportunities from technology and innovation. A report by the World Economic Forum in 2015 ranked Singapore as the world’s top network-ready country.

Investor confidence is on the rise and this optimism, coupled with underlying strength in the real estate sector, will continue to establish Singapore as one of the most attractive investment destinations in Asia.

Source: Colliers Review, Published on March 2, 2018