I N D E P E N D E N T M A R K E T S T U D Y ( S I N G A P O R E )
By DTZ Debenham Tie Leung (SEA) Pte Ltd
1.0 ECONOMIC OVERVIEW
Economic Review
Singapore’s economy grew more moderately in 2014 (2.9%)
compared with 2013 (4.4%), amid the uneven pace of recovery
across the global economies. Although the US economy
improved steadily in 2014, growth in the Eurozone was
lacklustre. Singapore’s growth was also impacted by the ongoing
labour market pressures and weak productivity. Growth in the
services producing industries eased to 3.2% YoY compared with
6.1% in 2013, due to weaker growth in the wholesale & retail
trade, finance & insurance and business services sectors. On the
other hand, growth in the manufacturing sector improved from
1.7% in 2013 to 2.6% in 2014, supported by the biomedical
manufacturing and chemical clusters. Meanwhile, inflation eased
from 2.4% in 2013 to 1.0% in 2014, below the average annual
inflation rate over the past decade (2.8%).
Outlook
The global economic outlook for 2015 is uncertain and externally-
oriented sectors such as manufacturing and wholesale trade
are likely to be impacted. Along with expectations that labour-
intensive sectors will continue to be weighed down by labour
constraints, the Ministry of Trade and Industry (“MTI”) projected
modest economic growth of 2.0% to 4.0% in 2015 for Singapore.
Meanwhile, the Monetary Authority of Singapore (“MAS”)
projected inflation to be at -0.5% to 0.5% in 2015.
2.0 INDUSTRIAL PROPERTY MARKET HIGHLIGHTS
Budget 2015
Budget 2015 focused on building Singapore as an economy with
firms driven by innovation and higher incomes coming from deep
skills and expertise in every job. Five growth clusters of the future
were identified, namely: Advanced Manufacturing, Applied
Health Sciences, Smart and Sustainable Urban Solutions, Logistics
and Aerospace and Asian and Global Financial Services.
Key measures for businesses focused on giving businesses more
time to adjust to rising costs e.g., recalibrating the pace of
tightening measures for foreign worker levies to allow companies
to adapt to the tighter labour market. In addition, income tax
concessions for Real Estate Investment Trusts (“REITs”) were
extended for five more years till March 2020 to promote the listing
of REITs in Singapore and strengthen its position as a REIT hub in
Asia. Meanwhile, stamp duty concessions for REITs were allowed
to lapse after 31 March 2015. These stamp duty concessions were
intended to better enable the REIT industry to acquire a critical mass
of local assets, as a base from which REITs can expand overseas.
Government Measures and Policies
Following the policies and measures implemented in the industrial
property market in 2013, the government continued to be active
in ensuring Singapore’s manufacturing competitiveness and
managing industrialists’ real estate needs in 2014 (Table 2.1).
Table 2.1: Major Government Measures and Policies
Measure/Policy Highlights
Adequate supply
of industrial land
through the IGLS
Programme
• 14.08 ha of industrial land (14 sites)
were made available in the H1 2015
Industrial Government Land Sales
(“IGLS”) programme. However, this
was lower than the 20.42 ha and
18.87 ha in the H1 and H2 2014
programmes respectively
• Sites offered mainly have tenures of
20 to 30 years and majority were
small parcels (0.5 to 0.8 ha) for end-
users to build their own facilities
Revisions to JTC’s
Subletting Policy
• JTC Corporation (“JTC”) adjusted
the maximum allowable sublet
quantum for end-user lessees
1
and
third-party facility providers
2
from
50% to 30% of Gross Floor Area
(“GFA”) with effect from 1 October
2014. Meanwhile, JTC tenants are no
longer allowed to sublet their spaces.
A grace period until 31 December
2017 is provided to existing lessees
and tenants for compliance
• The revised subletting policy allows
end-user lessees and third-party
facility providers to sublet 50% of
GFA to non-related companies and
non-anchor subtenants respectively
within five years after obtaining
Temporary Occupation Permit
(“TOP”), and up to 30% thereafter.
This is to allow new lessees time to
ramp up their production at their
newly developed facilities
• For third-party facility providers, there
is a minimum occupation period of
three years for subsequent anchor
subtenants to ensure the subtenants
make meaningful and sustained
productive use of their spaces
1 Applies to the subletting to non-related companies.
2 Applies to the subletting to non-anchor subtenants. An anchor subtenant is defined by JTC as a company that satisfies JTC’s assessment on value-added, remuneration
per worker and employee profile and occupies at least 1,500 sq m (16,146 sq ft) of GFA and non-anchor subtenants are not required to fulfil these requirements.
ASCENDAS REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2014/15
