More buzz for hotels and investment market
SINGAPORE’S international visitor arrivals slipped to 1.31 million in August from the 1.42 million recorded in July. Analysts attributed the fall in visitor arrivals to seasonality.
Still, August’s visitor arrivals are up nearly 80 per cent year-on-year. For the first eight months, visitor arrivals exceeded nine million, up over 200 per cent from a year ago.
I argue in The Level Ground that the near and medium-term outlook for Singapore’s hotel sector appears strong. Key positives include Singapore’s growing reputation as a premier destination for hosting major events and wealth creation in South-east Asia and India.
Good times are rolling for hotel owners here. Versus pre-pandemic levels in July 2019, average room rate and revenue per available room in July jumped 32.8 per cent and 27.2 per cent, respectively.
Among groups benefiting from the rebound in the hospitality sector here is Far East Hospitality Trust. In a recent interview with BT, Gerald Lee, chief executive officer of the real estate investment trust’s manager, said he was bullish on the overall outlook for Singapore’s hospitality sector.
Looking further ahead, I wonder if hotels here will be a casualty of the fight against climate change. For example, imposing hefty taxes on air travel may cause visitor arrivals to Singapore to plummet.
Still, with the generally positive prospects for hotels as well as the resilience of office and retail properties here, the investment market may be seeing more buzz for office buildings, malls and hotels, writes my colleague Kalpana Rashiwala. The Seletar Mall is expected to be put up for sale at a guide price of about S$500 million, while a deal could be brewing for Hotel G Singapore.
Meanwhile, NTUC Enterprise unit Mercatus is said to have put a portfolio of 18 commercial properties in Housing and Development Board estates for sale at a total indicative price of around S$265 million.
Coming out of the Covid-19 pandemic, Singapore’s office landlords have done very well compared with counterparts in cities such as New York, London, and Hong Kong. However, some weakness may be creeping into prime office buildings here. Grade A office rents in Singapore’s Central Business District fell 0.3 per cent quarter-on-quarter in the third quarter, as demand for office space softened with economic uncertainty, according to a report by JLL Singapore. The consultancy noted that Q3’s performance ended nine straight quarters of growth, spurred by the post-pandemic return to office wave.
In the residential segment, private housing prices here fell slightly in Q2 for the first time since Q1 2020, according to data from the Urban Redevelopment Authority (URA). A recent UBS report noted that Singapore’s private residential property market is now “fairly valued”.
All eyes will be fixed on URA’s release of flash estimates of private home prices in Q3 next week for further indication of the strength of the housing market. This figure could affect buying sentiment as developers line up a slew of new condominium launches.
Taking a broader view, Singapore’s housing market looks to be in a fairly stable position. This contrasts with a housing shortage in Australia that is sending rents soaring. Another country facing a housing shortage is the United Kingdom, where a barrier to increased supply is the country’s planning system.
In the case of China, excess housing inventory remains a major problem. A well-known academic and commentator on China’s economy argues that the country’s property market could take as long as a year to recover. Another commentator wondered if China’s entire population is enough to fill all the empty homes littered across the country.
Meanwhile, the mainland unit of China Evergrande Group said it missed principal and interest payments totalling several billion yuan, adding further uncertainty to the fate of the giant developer at the centre of the country’s property crisis.
Chinese developers will hope the upcoming Golden Week holiday period starting on Sep 29 can spark a long-awaited revival in home sales, in the first key test of whether recent policy support is enough to arrest the slump.
Still, higher interest rates for a longer period amid persistently high inflation can be painful for many developers. Questions have surfaced over the leverage of Hong Kong’s New World Development, whose major shareholder is the billionaire Cheng family.
Could there be juicy deals in Singapore soon for those with deep pockets? Assets seized in Singapore’s biggest anti-money laundering blitz have swelled to S$2.4 billion, according to the Singapore Police Force. In the case involving 10 foreign nationals slapped with money laundering-related charges, prohibition of disposal orders have been issued against more than 110 properties and 62 vehicles, with a total estimated value of over S$1.24 billion.
My colleague Jessie Lim reported that associates of the 10 foreigners who were arrested bought several units on the same floor or stack at various luxury condominiums in Singapore, including 19 units at Canninghill Piers - an integrated development coming up on the former Liang Court site in River Valley.
As we enter the last quarter of the year, expect year-end festivities to bring cheer to hotel owners here. But will the cash tills ring strongly at new home launches?
