Page 88 - ar2012

1. Macroeconomic Trends

Singapore’s Gross Domestic Product (“GDP”) grew by 4.9%

year-on-year (“YoY”) in 2011, a signifcant slowdown from

an unprecedented expansion of 14.8% YoY in 2010. Over the

same period, manufacturing output, manufacturing fxed asset

investments (“FAI”) and transport and storage output increased

by 7.6%, 13.0% and 4.7%, respectively.

Singapore’s economy registered a modest growth of 1.6% YoY

in 1Q 2012 or 9.9% on a seasonally-adjusted annualised quarter-

on-quarter (“QoQ”) basis. The improved growth momentum

was largely lifted by a sequential upturn in the manufacturing

sector. However, compared to 1Q 2011, overall manufacturing

output contracted 2.0% YoY in 1Q 2012.

Continued global economic uncertainties as well as challenges

on the domestic front including weaker business conditions,

rising business costs and a tightening of the labour market are

expected to weigh on Singapore’s trade-dependent economy.

Singapore’s GDP is forecast by the Ministry of Trade & Industry

to grow at a modest rate of 1% to 3% in 2012.

2. Business And Science Parks

2.1 Supply And Demand

The islandwide stock of business park space in Singapore

amounted to 1.4 million sq m as of 4Q 2011, accounting for just

3.7% of the total islandwide industrial stock. This is after the

addition of some 16,000 sq m of net new business park space

to the stock in 2011. The islandwide occupancy rate increased

to 82.8% as of 4Q 2011 from 75.5% a year earlier, as a pick-up in

net new absorption of business park space to 116,000 sq m in

2011 outstripped net new supply in the year.

An estimated 505,000 sq m

1

(net foor area) of new business

park space is expected to be completed from 2012 to 2015.

This refects an annual average supply of 126,000 sq m during

the four years, which is 44.8% higher than the annual average

supply of 87,000 sq m for the period from 2003 to 2011 and

65.8% above the annual net new demand of 76,000 sq m during

the same period. Nevertheless, as at 4Q 2011, an estimated

60% of the upcoming supply has already been pre-committed

ahead of building completions.

The majority 71.1% of the total upcoming supply will be located

in the central region, constituting 58.6% from one-north and

12.5% from the Singapore Science Park. Another 24.8% of the

new supply is expected to materialise from the Changi Business

Park located in the eastern region and the remaining 4.1% will

come from the Cleantech Park situated in the western region.

Demand for business park space totalled 116,000 sq m in 2011,

up 36.5% YoY. With net new demand outpacing the net new

supply of just 18,000 sq m during the year, the islandwide

occupancy rate increased to 82.8% as of 4Q 2011 but remained

11 percentage points below the 4Q 2008 peak of 93.8%.

2.2 Rents of Business Park Space

With the return of business confdence amid a buoyant

economy on the domestic front and a recovering economy

on the broader global front, demand for business park space

frmed in 2010, helping rents to recover by 8.1% YoY to end the

year at S$3.60 per sq ft (S$38.75 per sq m) per month.

Rents continued to trend upwards in 2011 as demand outpaced

supply. As of 4Q 2011, the median rent for business park space

stood at S$3.90 per sq ft (S$41.98 per sq m) per month, up 8.3%

from 4Q 2010.

INDEPENDENT MARKET STUDY (SINGAPORE)

0

50

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012F

2013F

2014F

2015F

100

150

200

250

Net Floor Area (‘000 sq m)

Completed

Upcoming

Net New and Potential Supply of Business Park Space (as of 4Q 2011)

Note: F denoted forecast

Source: URA/Colliers International Singapore Research

160

140

120

100

80

60

40

20

0

-20

-40

Source: URA/Colliers International Singapore Research

BY COLLIERS INTERNATIONAL

Net New Demand and Average Occupancy Rate of Business Park Space

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Average Occupancy Rate