Credit Suisse: Research Weekly Asia Singapore property sector: Home demand supported by strong fundamentals

The real estate market in Singapore has recovered strongly after the 2008 financial crisis, as the strong economy and low interest rate environment are supportive of home demand. The country's population has risen at a CAGR of 4% over the past four years to 5 million, driven by the government's proimmigration policy. Despite the robust population growth, the unemployment rate remained a low 2.2% in Q2 2010 (source: Ministry of Manpower). Credit Suisse Private Banking forecasts GDP growth to reach 15.5% in FY 2010 and 8% in FY 2011, slightly above the guidance given by the government. In addition to its strategic geographical location and an open economy that has seen a return in demand for office space, efforts to inject momentum into the country with the two new integrated resorts are also paying dividends for the hospitality and retail real estate sectors.

Highlights
􀂃 Private home demand is expected to be supported by high population growth, low
unemployment rate and interest rates.
􀂃 The government is unlikely to introduce cooling measures in the near term, given
the moderation in home prices.
􀂃 The stronger economy is also supportive of commercial office demand, while record
tourist arrivals are positive for the retail and hospitality sector.
􀂃 S-REITs have the potential to remain market outperformers with their stable income stream and high yields.