Confidence in a broad-based economic recovery this year is becoming infectious. Spurred on by the global inoculation drive and fiscal stimuli, atrophying property markets worldwide have been energised by the prospect of a return to normalcy.
In Singapore, an explosion of pent-up demand has sent residential values to pre-pandemic rates. In the first quarter of 2021, prices of private homes in the city-state soared by 3.3%, the steepest quarterly rise since 2018, data from the Urban Redevelopment Authority (URA) shows. Singapore residents have raised their station during the pandemic. Excluding foreign domestic workers, the first quarter of 2021 saw employment figures arrest four consecutive quarters of decline. Last year, the country staved off doom by releasing S$100bn ($74bn) in stimulus, equivalent to 20% of its GDP.
“In a way, the economic stimulus package preserved the income-generating capabilities of most households despite the recession in 2020,” says Leonard Tay, head of research at Knight Frank Singapore.
After a historic contraction in 2020, Southeast Asia’s only developed economy will likely grow by 4% to 6% this year. “If it continues, then it’s quite likely that you will see people being more comfortable to buy bigger homes or commit to a purchase,” says Christine Sun, senior vice president of research firm OrangeTee & Tie.
Adding fuel to fire, credit will likely remain easy in the foreseeable future. The Federal Reserve, which influences the Singapore Interbank Offered Rate (SIBOR), has vowed to keep interest rates near zero until 2023.
“Many people may see that the window of opportunity to buy is actually closing soon,” says Sun. “The probability of property prices rising is actually higher than for it to fall this year or even next year.”
One of the world’s most visited cities, Singapore suffered great losses in tourism during the pandemic. To remedy the damage, the city-state is establishing bilateral travel corridors this year with countries that exhibit low infection rates.
But restoring the average 15 million people that visit the city annually will be tricky, with Keith Tan, chief executive of the Singapore Tourism Board (STB), acknowledging that mass international travel is “unlikely to resume in a major way” this year. The city has also encountered delays and hiccups in its proposed travel bubbles with the likes of Australia, Hong Kong and New Zealand.
Hospitality properties, as well as workspaces across the city, have found ways to create new streams of revenues. Hotels have been repurposed as government quarantine facilities, swab isolation facilities and stay-home notice dedicated facilities (SDFs).
“We have seen hotels becoming very creative, diversifying their revenue streams beyond just staycations,” says Kristin Thorsteins, head of partnerships for Southeast Asia at IWG plc. “Hotel rooms and meeting areas are being sold as office space; hotels are hosting perfume-making ateliers and offering home delivery of high-tea. It’s not going to be an easy transition, but this is something that we foresee we’ll see more and more of.”
While the resumption of leisure travel is inevitable, Thorsteins expressed her concern over the pandemic’s legacy to business travel. “Now that people have been accustomed to using video conferencing, there’s a certain level of business travel that might never return.”
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