The chain reaction sparked off by the sub-prime crisis in the United States in mid-2007 resulted in a deepening of the credit crunch problem worldwide and leading to a global economic crisis in 2008. The Singapore economy was not left unscathed and entered into its first technical recession since 2002, when real gross domestic product (GDP) contracted by 0.2% and 3.7% in third and fourth quarters of 2008 respectively. For the year 2008 as a whole, the Ministry of Trade and Industry (MTI) reported the growth of the Singapore economy as 1.1%, a stark contrast to 2007’s 7.7% growth.

2008 was similarly a challenging year for the private residential market, which experienced downward pressure on both sales activity and transacted prices after 2007’s blistering performance. Data released by the Urban Redevelopment Authority’s (URA) showed a modest take-up of 4,264 private residential units in 2008, a decline of approximately 71% year-on-year. In 2008, prices of private residential properties fell by 4.7%, compared with the 31.2% increase in 2007.

Contrary to improved capital values in 2007, prices of private apartments in 2008 dropped by 5.6% in Core Central Region (CCR), 4.7% in Rest of Central Region (RCR) and 2.9% in Outside Central Region (OCR). CCR comprises the prime districts (9, 10, 11, Downtown Core and Sentosa Cove), while RCR refers to the area within the Central Region that is outside CCR.

Notwithstanding the moderated overall performance, several new private residential project launches in 2008 were well received. Livia, a mass market private residential project jointly developed by CDL, Hong Realty (Private) Limited and Hong Leong Holdings Limited attracted more than 3,000 visitors to its show suite during the soft launch weekend, and buyers snapped up 80% of the 200 units released during Phase 1.

In 2009, the residential property market is expected to be challenging in light of the economic growth forecast of -5.0% to -2.0%. Recognising the weak economic outlook for 2009, the Government has taken steps to curb the supply of land for private homes by not adding new sites under the Government Land Sales Programme for the first half of 2009. Singapore is expected to ride through the financial storm, buoyed by the momentum from significant projects such as the recent FORMULA 1TM Singapore Grand Prix and the upcoming Integrated Resorts; along with the country’s sound financial system, and competitive and well-diversified economy. Given the transparency and stability of Singapore’s political and legal systems, high standards in corporate governance, low interest rate environment as well as continuous efforts by the Government in remaking Singapore’s economy with new and sustainable growth engines to attract foreign investment, Singapore’s residential property market is well-positioned to recover quickly.

Rental growth in 2008 was 2.0% and leasing activity in 2009 is expected to be supported by renewals and relocation to better, newer or cheaper premises amidst softening of rents.

Soaring high at 245 metres tall, the newly-completed The Sail @ Marina Bay has dramatically transformed Singapore’s skyline.


Despite rental growth rates beginning to show signs of weakening, the office market enjoyed high occupancy rates in the first three quarters of 2008. However, with the dramatic turn of events in the global financial markets which witnessed the collapse of Lehman Brothers in September 2008 followed by a series of worldwide government bail-out announcements in fourth quarter of 2008, many firms began to shelve their business expansion plans or downsize their workforce and workspace. As a result, the office market rental came under downward pressure in the last quarter of 2008.

URA data showed that prices of office space fell by 7% while rentals increased by 5.8% in 2008, with island-wide vacancy rate of 8.8% in Q4 2008 and Grade A office vacancy hovering at 0.9%. According to a CB Richard Ellis market report, Grade A office space rents fell 12.5% year-on-year to average $15.00 per square foot per month in Q4 2008. In a swift response to the global credit crunch and financial crisis, the Singapore Government has undertaken several measures to build confidence, including the guarantee on deposits as well as offering numerous government financing schemes with lower and fixed interest rates to businesses through SPRING Singapore. These measures are aimed at reducing the risk of depositors shifting deposits out of Singapore banks, ensuring financial institutions in Singapore remain competitive, and access to credit is available for financing of economic activities, as well as lowering costs of businesses. Incidentally, such measures will help support demand for office space as financial institutions and other businesses can continue to sustain or expand their operations in Singapore viably.

According to a Cushman & Wakefield Research report, new supply for office space from 2009 to 2013 will average 2.1 million square feet per annum. With the current economic conditions, landlords of new office buildings are likely to face more competition in securing committed leases, and robust lease negotiations are expected to take place in 2009. In the Central Business District (CBD) alone, four new office developments are slated for completion in 2009: MapleTree Anson, 20 Anson Road, 71 Robinson Road and Straits Trading Building.


It was a mixed year for the retail industry in 2008. Retailers and landlords were generally upbeat about the outlook for retail sector in the first half of the year, given the higher tourism figures projected, a booming economy then as well as a series of initiatives and events such as the revamping of Orchard Road, Great Singapore Sale and the inaugural 2008 FORMULA 1TM Singapore Grand Prix. However, the escalation of the global financial crisis in second half of 2008 led to a turnabout of events, with consumers tightening their belts in anticipation of more challenging times ahead.

The year 2008 saw the completion of 854,466 square feet of retail floor space with the introduction of new retail malls including the Jurong Point Shopping Centre extension at Jurong West Central, West Coast Plaza at West Coast Road and Northpoint 2 in Yishun.

According to URA statistics, vacancy rate islandwide was at 6.2% as at end of fourth quarter 2008 and overall rentals for shop space have declined by 1.9% year-on-year, with median rental for retail space in Orchard Planning Area reaching $10.90 per square foot per month. A separate report by Colliers International, indicated that the average monthly gross rents for prime retail space in Orchard was about $42.63 per square foot by end of 2008.

Come 2009, shoppers can look forward to many new and exciting concept stores, flagship stores and new entrants to the retail market as approximately 3 million square feet of retail space including ION Orchard (663,000 square feet), Orchard Central at Somerset (250,000 square feet), 313@Somerset (294,000 square feet), CDL’s City Square Mall at Kitchener Road (450,000 sqaure feet), and Marina Bay Shoppes in the upcoming Marina Bay Sands Integrated Resort (800,000 square feet) are scheduled for completion. Demand will continue to be underpinned by long term sustainable economic growth where retailers will continue to invest in new outlets if the right location comes along and if rents are affordable.

City Square Mall, CDL’s flagship retail complex and Singapore’s first Eco-Mall, will add 450,000 square feet of retail space when it opens in late 2009. With a gross floor area of 700,000 square feet, the Mall will be amongst Singapore’s largest.


Despite the impact of the global economic slowdown in the second half of 2008, a record performance was announced by the Singapore Tourism Board (STB) as a new high of $14.8 billion in tourism receipts were generated by the Singapore tourism sector in 2008, representing a growth of 5% over 2007. In terms of visitor arrivals, Singapore welcomed 10.1 million visitors in 2008, a decline of 2% against 2007.

2008 saw the success of inaugural milestones events such as Singapore Airshow, Singapore International Water Week and the 2008 FORMULA 1TM Singapore Grand Prix. On the back of buoyant demand, STB statistics reflected an all-time record high of $248 (23.5% increase over 2007) for the average daily room rate, despite the average occupancy rate falling 5.7% to reach 82% in 2008.

The outlook for the hotel industry in 2009 remains difficult. A projection by the World Tourism Organisation (UNWTO) indicates that global tourism growth would be flat or marginal in 2009, with travelers becoming more cost-conscious and preferring short-haul, value-for-money destinations that offer favourable exchange rates. Despite this, the mid- to long-term potential for hotel and tourism industry in Asian economies, including Singapore, remains bright. Upcoming events such as 2009 FORMULA 1TM Singapore Grand Prix, completion of upgrading works for Orchard Road, the planned opening of new shopping malls and opening of Marina Bay Sands, the first of Singapore’s two integrated resorts, will help Singapore remain an exciting destination.

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