General economic outlook of Singapore, Malaysia and China

 

  • On 22 February 2013, MTI announced that the Singapore economy grew by 1.3% in 2012 and maintained its 2013 GDP growth forecast for 2013 at 1% to 3%. In the same announcement, MTI observed that global macroeconomic conditions have stabilised in recent months against the backdrop of improved financial market conditions although global economic growth likely to remain subdued. In particular, growth in Asia is likely to be moderate, supported by resilient domestic demand and modest growth in external demand. MTI further observed that while downside risks have receded, concerns remain over the extent of the fiscal cutback in the US as well as the potential flare-up of the debt crisis in the Eurozone.

  • The Malaysian economy is expected to remain on a steady growth trajectory of 5% to 6% in 2013, with economic activity to be anchored by the continued resilience of domestic demand and supported by a gradual improvement in the external sector.

  • China’s growth is set to accelerate slightly to about 8% in 2013, reflecting continued robust domestic demand in both consumption and investment and renewed external demand.

 

 

Construction and industrial property market outlook (Singapore)

 

  • The BCA announced a projected construction demand for 2013 of S$26 billion to S$32 billion which will be anchored by public sector projects. The total construction output is projected to rise to between S$31 billion and S$33 billion in 2013, as the high levels of contracts awarded in 2011 along with sustained levels of demand in 2012 and 2013 translate into on-site construction activities.

  • In Singapore, the prices of industrial properties have doubled over the last 3 years. However, the continual increase in industrial property prices has prompted the Singapore Government to impose an SSD of 5% to 10% to be levied on industrial properties sold within 1 year to 3 years of purchase. This measure aims to discourage short-term speculative activity in the industrial property market and to rein in industrial property prices. Our Directors believe that end-users, who buy with a view of long term usage, are unlikely to be adversely affected by the SSD and will continue to support the industrial property market.

  • To meet potential demand for industrial land and to moderate industrial land prices, MTI launched the Industrial Government Land Sales Programme for the first half of 2013, with 13 sites in the Confirmed List and 9 sites on the Reserve List, comprising a total site area of 24.84 hectares. To cater to the needs of small and medium enterprises, successful bidders of selected sites will be required to build a minimum number of large factory units.

 

 

Construction and industrial property market outlook (Malaysia)

 

  • In Malaysia, the construction sector, led by the private sector, expanded by 27.2% in the last quarter of 2012, recording RM22.45 billion worth of work done, bringing the total for the whole year to RM80.93 billion.

  • The Construction Industry Development Board Malaysia projected that the sector is likely to secure projects worth some RM110 billion in 2013.

  • Under the Economic Transformation Programme and the Third Industrial Master Plan, many mega industrial projects are currently being implemented, including Pengerang Oil and Gas refinery and transmission hub, Malaysia-China Kuantan Industrial Park, Kerteh BioPolymer Park, Seaport World Wide Petrochemical Industrial Park and the implementation of the industrial clusters and industrial projects in the various Regional Economic Corridors such as the Iskandar Malaysia, the Northern Corridor Economic Region and the East Coast Economic Region is expected to stimulate demand for more industrial properties.

 

 

Construction and industrial property market outlook (China)

 

  • In China, the rapid growth of the e-commerce sector and third party logistics operators has led to an increase in demand for modern warehouse facilities that are well constructed and completed with loading docks and vehicle accessibility. As at the end of 2012, major modern logistics facilities accounted for only 2% of the total stock in China. This lack of supply has led to an increase in rentals.

  • The number of internet users in China is expected to increase from 500 million to 700 million by 2015, making it the largest online population in the world. In order to meet the expanding number of online consumers, it is expected that more warehouse facilities need to be built.

 

Prospects