2021 Property Outlook Research - Staying Invested
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This report from Colliers International provides an outlook on the 2021 Singapore property market. It finds that the manufacturing, technology, and hospitality sectors are expected to be the most resilient and see strong rebounds. Residential, industrial, and office sectors have been relatively stable in terms of rental performance compared to retail and hotel sectors which have declined sharply. The report also notes that sustainability and ESG factors will be important considerations for investors in 2021. Finally, it points out that flexibility and redevelopment will be key themes as properties adapt to changing needs.
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2021 Property Outlook Research - Staying Invested
- 1. COLLIERS INTERNATIONAL | PRIVATE & CONFIDENTIAL RESEARCH 2021 PROPERTY OUTLOOK – STAYING INVESTED Tricia Song Head of Research
- 2. COLLIERS INTERNATIONAL | PRIVATE & CONFIDENTIAL Source: Colliers International Singapore Research Report “RESILIENCE AND REBOUND RANKING” dated 29 May 2020 1. Manufacturing - V-shaped recovery in Electronics, Precision Engineering and Biomedicals; state- led “Industry 4.0” 2. Technology - Fastest earnings growth over the next three years - Tech giants setting base in Singapore - Accelerated E-commerce drives logistics warehouses 3. Hospitality - Large impact today with sharp rebound forecast - Attractive opportunities RESEARCH TOP “RESILIENT AND REBOUND” SECTORS
- 3. COLLIERS INTERNATIONAL | PRIVATE & CONFIDENTIAL RENTAL PERFORMANCE BY SECTORS Residential, Industrial, Office have been relatively more resilient Source: URA Non-landed Residential Rental Index in Core Central Region, JTC All-industrial Rental Index, JTC Warehouse Rental Index, URA Office Rental Index in Central Region, URA Retail Rental index in Central Region, Singapore Tourism Board Hotels’ Standard Average Room Rates in September 2020. -1.2% -1.6% -1.5% -5.2% -10.0% -48.9% -60.0% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% Residential Industrial Warehouse Office Retail Hotel Year-to-September 2020 Average Rental Change (%) RESEARCH
- 4. COLLIERS INTERNATIONAL | PRIVATE & CONFIDENTIAL 1. Recovery/Reflation With a sharp rebound in global economy and low interest rates, real estate should benefit, but will the worst hit sectors recover? 14.5% 0.6% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% -10% -5% 0% 5% 10% 15% 20% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (F) 2021 (F) 2022 (F) 2023 (F) 2024 (F) 2025 (F) Real GDP growth 3M SIBOR (RHS) Source: Colliers International Singapore Research, URA, MTI, Oxford Economics forecasts as of 18 December 2020 RESEARCH
- 5. COLLIERS INTERNATIONAL | PRIVATE & CONFIDENTIAL Environmental Conservation of the natural world Social Consideration of people & relationships Governance Standards for running a company • Climate change and carbon emissions • Air and water pollution • Biodiversity • Deforestation • Energy efficiency • Waste management • Water scarcity • Customer satisfaction • Data protection and privacy • Gender and diversity • Employee engagement • Community relations • Human rights • Labour standards • Board composition • Audit committee structure • Bribery and corruption • Executive compensation • Lobbying • Political contributions • Whistleblower schemes 2. Sustainability and ESG Our global investor survey shows most investors believe ESG will be a strong factor in their investment decisions in 2021. What does it mean for owners, occupiers and investors? Source: CFA Institute RESEARCH
- 6. COLLIERS INTERNATIONAL | PRIVATE & CONFIDENTIAL Outram Road Shophouse Shaw Towers Orchard Hills Leedon Green (former Tulip Garden) 3. Flexibility and Redevelopment RESEARCH
Editor's Notes
- We want to throw back to last May our Sink and Swim webinar, and our proprietary “resilient and rebound” ranking, we identified Manufacturing and technology as the top 2 sectors with the best sector GDP growth, stock returns and future earnings growth.
- Fast forward to end of 2020, how have these sectors fare? Residential has been resilient, as everyone works from home; Industrial, warehouse did well from ecommerce and manufacturing; as we predicted; Retail and Hotels have done the worst. So what will 2021 bring?
- We see 3 key themes for this year: first, a global and domestic macroeconomic recovery and low interest rates will lead to real estate reflation. However, not all sectors have been hit equally, so will the worst hit sectors – Hotels and Retail recover? And how fast will that be?
- The 2nd theme in 2021 is sustainability or ESG. The US under Biden and China will have ambitious goals for carbon neutrality, as do Japan and other APAC nations. Our global investor survey shows most investors believe ESG will be a strong factor in their investment decisions in 2021. But who is bearing the cost of sustainability and what are the real "returns" for sustainability? Colliers experts will debate this.
- The pandemic has taught us the importance of Flexibility: businesses have to pivot; assets can be flexible too! Shophouses have been popular as it has flexible uses. Building codes are still rigid. Land is scarce. We think this year should also see more redevelopments in the CBD office as well as residential collective sales. But these are not without challenges.