Industry Overview: ARCd 2014
Forging Ahead With New Developments
Development in advanced global economies was generally weaker in 2013 than was expected, with the US yet to solve its fiscal impasse and with the weak domestic demand in Europe. While recovery in advanced economies in Asia is likely to lift export demand, structural reforms in China and fiscal consolidation in some ASEAN economies are likely to moderate growth. In view of this, the Singapore economy is expected to show slow recovery of 3.5 to 4 per cent in 2013, with gradual growth of 2 to 4 per cent expected in 2014.
Singapore’s Construction Industry
The Singapore economy grew in the first two quarters of 2013 by 0.2 per cent and 4.4 per cent respectively. Preliminary estimates indicate that in the third quarter, the Singapore economy grew by 5.8 per cent on the year-on-year basis. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 1.3 per cent in the third quarter after expanding by 17.4 per cent in the previous quarter.
Domestically-oriented sectors such as construction and business services are expected to remain resilient for the rest of 2013. The tightness in labour market conditions, however, may weigh down these sectors in 2014. The construction sector grew by 5.2 per cent on a year-on-year basis, compared to 6.9 per cent in the preceding quarter. On a quarter-on-quarter basis, the sector contracted by 2.5 per cent, a reversal from the 20.3 per cent expansion in the second quarter of 2013. This was mainly due to weaker public sector construction activities, although partially offset by robust construction activities in the private sector. Regardless, the construction sector can be expected to better 2012’s GDP of S$14,231.2 million.
Real Estate Prices and Rentals
The government introduced an additional round of cooling measures in a bid to control prices of the residential market. The new measures took effect on 12 January 2013, and include:
- Raising Additional Buyer’s Stamp Duty (ABSD) rates by five to seven per cent across the board
- ABSD will also be imposed on Permanent Residents (PRs) purchasing their first residential property and on Singaporeans purchasing their second residential property
- Loan-to-Value limits on housing loans granted by financial institutions will be tightened for individuals who already have at least one outstanding loan, as well as to non-individuals such as companies
- The minimum cash down payment for individuals applying for a second or subsequent housing loan will also be raised from 10 per cent to 25 per cent
Prices of private residential properties rose marginally in the first three quarters of 2013, indicating that the additional cooling measures implemented by the government have met with moderate success. After a 0.6 per cent increase in the first quarter, prices of private residential properties rose by 1.0 per cent and 0.4 per cent respectively in the second and third quarters.
Rentals of private residential properties increased slightly in the first three quarters of 2013. They rose by 0.8 per cent in the first quarter, 0.3 per cent in the second quarter and 0.2 per cent in the third quarter.
Prices of office space were slightly more volatile than that of private residential properties. After a 2.1 per cent increase in the first quarter, prices further increased by 1.5 per cent in the second quarter and 1.0 per cent in the third quarter. Rentals, on the other hand, declined 0.2 per cent in the first quarter before rising marginally by 0.2 per cent and 0.8 per cent in the second and third quarters respectively. As at the end of the third quarter of 2013, there was a total supply of about 1.086 million square metres GFA of office space in the pipeline.
Prices for shop space saw steady increase in the first three quarters. After increasing 2.1 per cent and 1.7 per cent in the first and second quarters, the increase moderated to 0.4 per cent in the third quarter. Rentals declined by 0.6 per cent and 0.8 per cent in the first and second quarters before increasing 0.4 per cent in the third quarter. As at the end of third quarter of 2013, there was a total supply of 614,000 square metres GFA of shop space from projects in the pipeline.
Growth of prices of multiple-user factory space continued to grow, but slowed significantly compared to 2012. A 2.9 per cent growth was followed by 0.5 per cent and 0.9 per cent increases. Rentals of multiple-user factory space saw slightly better quarters of growth, coming in at 0.4 per cent, 0.1 per cent and 4.4 per cent. As at the end of third quarter of 2013, there was a total supply of 4.422 million sq m GFA of factory space from projects in the pipeline.
The green movement is gaining traction in Singapore’s construction industry, with government bodies supporting green technologies and practices. The Urban Redevelopment Authority (URA) released the Draft Master Plan 2013, which aims to balance the need for development with protecting green spaces. National Development Minister Khaw Boon Wan said the Draft Master Plan “will make Singapore an inclusive city for all ages, where people are also connected through green modes of transport and work closer to their homes”. One part of the plan is the building of 700km of cycling routes which will be integrated with the public transport network. The Draft Master Plan also aims to enable 90 per cent of Singapore households to live within 400m of parks.
It is not just public projects and residential buildings that have plans to go green. The Building and Construction Authority (BCA) and the Infocomm Development Authority of Singapore (IDA) have launched the BCA-IDA Green Mark for New Data Centres, an addition to BCA-IDA Green Mark Scheme, to encourage data centres to adopt more environmentally-friendly practices. The first award of its kind in Asia, the BCA-IDA Green Mark for New Data Centres encourages new data centres to adopt energy-efficient design, technologies and systems in the planning and design phase. Key criteria of assessment include energy efficiency, water efficiency, sustainable construction and management, indoor environment quality and other green features. As per other Green Mark awards, the data centres are rated according to Green Mark Platinum, GoldPlus, Gold or Certified ratings.
Abbott Laboratories Singapore is the first recipient of the BCA-IDA Green Mark Award for New Data Centres. The data centre was rated Green Mark Gold for its efforts to introduce efficient design strategies such as the use of modular design which optimises performance through addressing phases in usage demand, the selection of energy efficient IT equipment and the deployment of virtualisation technology. Abbott’s experience serves to underline how data centres can potentially realise significant cost savings by targeting energy efficiency in design. When fully operational, Abbott’s data centre is expected to achieve energy savings of more than one million kilowatt hours annually.
Readying Changi Airport for Future Growth
The groundbreaking ceremony of Terminal 4 (T4) of Changi Airport was conducted on 5 November 2013. T4 will be used as the test bed for the future mega Terminal 5. Some of the concepts that will be used in T4 are innovative terminal design and the usage of technology to raise efficiency levels. More self-service options will be introduced at T4, such as self-service check-ins, automated immigration clearance and automated boarding at departure gates. To connect T4 to the other three existing terminals, a shuttle bus will be used instead of the skytrain that currently connects the Terminals 1, 2 and 3 as the presence of existing structures make the construction of the skytrain tracks extremely challenging.
The current open-air car park site facing T1 will be developed into a new mixed-use complex currently codenamed Project Jewel. It is being designed by a consortium of designers led by renowned architect Moshe Safdie, who was also behind the iconic Marina Bay Sands. Project Jewel will offer aviation and travel-related facilities, a wide range of retail offerings, as well as unique leisure attractions. One of these will be a large-scale indoor garden with a waterfall. Project Jewel will also serve as a node linking the terminals, improving inter-terminal connectivity. When completed, Project Jewel, together with Terminal 4, will boost Changi Airport’s handling capacity to 85 million passenger movements a year.