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Tight labour policies here have negatively affected the demand for commercial properties and slowed down overall economic growth in the past five years, according to a report from JLL.
After the authorities reduced foreign worker quotas by up to a third and raised foreign worker levies by around 90 percent since 2011, the consultancy said the growth of office space demand, retail sales, food and beverage receipts have declined consistently.
In 2015, the city-state gross domestic product edged up by merely two percent, the slowest pace since the 2008 Global Financial Crisis.
While this could be partially attributed to the weaker regional and global economy, the limited supply of workers have played a part in the less rosy situation for businesses, the property consultancy said.
For instance, total food and beverage (F&B) receipt dipped by 3 percent last year, a far cry from the 10 percent increase in 2012. This is due to the lower spending by locals as tourist spending for meals and drinks only account for 25 percent to 30 percent of total receipts. Despite an average wage growth of around 5 percent in 2015, spending by Singaporeans fell 2 percent versus the 14 percent rise four years ago.
“While the proactive steps taken by the government in the last five years to tighten foreign labour growth have successfully raised productivity and wages, the growth of office space demand, retail sales and F&B receipts have declined sharply,” said Regina Lim, JLL’s National Director of Advisory & Research for capital markets.
“In the upcoming budget [to be announced] on 24 March, we hope the government can look into the supply-side constraints that are impacting overall economic growth and demand for real estate in Singapore, and consider tweaking the foreign labour growth policies to address the changing education and skills profile of Singaporeans,” she added.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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