The Committee on the Future Economy (CFE), tasked with charting Singapore’s next phase of growth, recently released its report recommending the following broad strategies:
- Deepen and diversify our international connections
- Acquire and utilise deep skills
- Strengthen enterprise capabilities to innovate and scale up
- Build strong digital capabilities
- Develop a vibrant and connected city of opportunity
- Develop and implement Industry Transformation Maps
- Partner each other to enable innovation and growth
Some of the salient points worth noting for the real estate industry are discussed below.
CFE’s broad focus is expected to enliven office landscape
First is the committee’s GDP growth target for Singapore of 2-3 per cent per annum. This is modest for a nation that has been enjoying an annual average growth rate of above 5 per cent for the last 15 years. Nonetheless, economic expansion, although moderate, will support growth in demand for office space.
Moreover, given the broad focus of the CFE’s agenda, demand for office space could come from a far more diverse range of occupiers than before, thereby livening the office landscape and enlarging the demand pool. Most, however, are not foreseen to be large space users. This will ensure the continued relevance of office developments with small floor-plates.
Manufacturing sector foreseen to boost demand for business parks
Second, the committee proposed the manufacturing sector remains one of Singapore’s twin pillars of growth alongside the services sector and recommended its contribution to GDP to be pegged at 20 per cent. Over the past four years, structural challenges and a cyclical downturn shrunk the manufacturing sector’s contribution to GDP to below 18 per cent at the end of 2016.
Given Singapore’s lack of competitive edge in terms of real estate and labour costs, the CFE’s proposal to grow and maintain the manufacturing sector’s share of GDP at 20 per cent is an uncompromising call for the sector to shift from low to high value-added and value-creation manufacturing. This bodes well for the business park sector, an asset class designated to house such activity based on current land-use guidelines.
Source: JLL Research/Department of Statistics, Singapore
A bold approach to city planning offers new real estate opportunities
The CFE also urges the adoption of a bold approach to and execution of city planning to facilitate growth and rejuvenation. Among others, it is calling for the acceleration of the development of a comprehensive underground master plan as well as the creation of an urban logistics system that will revolutionise supply chain processes. In the pipeline are also plans for greater flexibility and integration of land uses to cater to changing business needs and to enable greater synergy across developments.
Perhaps the most significant of all proposals is the call for the government to partner with the private sector as a master developer to develop, place-make and manage future sub-markets. In a city where town planning has always been top-down from the government, this presents new and exciting opportunities for investors and developers.
Punggol North and Kampong Bugis have been named as two districts where the flexible land use and master developer approach will be first tested out. Punggol North is designated as Singapore’s first “Enterprise District” and JTC has been appointed the master developer. Kampong Bugis is a 17-hectare new residential precinct, and the entire site will be tendered to a private developer to plan and develop in phases according to market demand.
Small as Singapore may be, new investment and development opportunities abound and await.
More on 'Office' in 'Singapore'
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- The renewed focus on Singapore’s office investment marketSeptember 4, 2023
- Opportunities in Singapore’s decentralised officesJune 5, 2023
- Singapore property market watch 2023March 1, 2023
