Bookmark & Share
The measures announced should benefit the retail property sector in the near-term and industrial properties over the longer term, says one expert.
Colliers International has described the recently unveiled Budget 2020 as a “generous” one that is “fit for the times”, and largely within their expectation.
“We expect the measures announced should benefit the retail property sector in the near-term and industrial properties over the longer term,” said Tricia Song, Head of Research for Singapore at Colliers International.
She noted that the 15% property tax rebate for qualified commercial properties would alleviate some concerns of retail mall operators arising from the coronavirus outbreak, like falling tenant sales and footfall.
Qualified commercial properties include shops, such as retail and food and beverage outlets including those located in hotel buildings, serviced apartment buildings and meetings, incentives, conventions and exhibitions (MICE) venues. However, it does not apply to premises or a part of any premises that are used for residential, agricultural or industrial purpose, or as an office, a petrol station or a business or science park.
With this, retail landlords are advised to pass on the savings in the form of direct temporary rent rebates for tenants or fit-out incentives during downtime; increased spending on mall cleanliness and hygiene; and/or free parking and increased marketing campaigns like cashback.
Song also expects the delay in GST hike to support retail sales as it encourages more domestic spending at least into next year.
“The Research, Innovation and Enterprise 2020 Plan, which outlines the government’s investment into artificial intelligence, industrial robotics, urban sustainability and biomedical sciences should benefit the industrial property sector,” she said.
“The additional $300 million set aside under the Startup SG Equity should lend more support to deep-tech start-ups, such as those in pharmbio and medtech, advanced manufacturing, and agri-food tech.”
Song believes the government’s push on electric vehicles (EVs) will have “a positive spillover effect on the manufacturing sector, pushing up demand for EVs production and other cleaner technologies in the long run”.
Govinda Singh, executive director of valuation and advisory services at Colliers International, said the measures unveiled to help the tourism sector with operating costs and cash flow are “timely and good short-term initiatives”.
The temporary bridging loans and property tax rebates will surely help businesses with fixed costs and working capital. In fact, the Jobs Support Scheme and enhanced Wage Credit Scheme will also help them better manage labour cost.
“Depending on how protracted the COVID-19 outbreak is going to be, we expect the tourism sector will likely take a significant hit,” he said.
If the outbreak lasts between three and six months, room occupancies are expected to drop by at least 10 to 15 percentage points to around 65% occupancy rate, putting pressure on room rates.
As such, hoteliers are cautioned against “discounting the average daily rate (ADR) too deeply, as this is unlikely to drive demand given the travel curbs that are currently in place, and it could also take much longer to recover these discounts once offered”.
He added the MICE industry will unlikely recover this year, given the large number of events cancelled or postponed.
“While some events have been rescheduled to April and beyond, we note that given the fixed capacity of MICE venues in Singapore – which have already been booked for events in the second half of 2020 – it is not feasible to move all the existing events to the latter part of the year,” he explained.
Nonetheless, the government – which is monitoring the situation – has assured that it “can and are prepared” to do more if needed.
“Should the COVID-19 outbreak or indeed other external shocks lead to a severe and prolonged downturn in the tourism sector, we think other measures such as further wage support (for example, a certain percentage contribution/offset for employer’s CPF contribution) to defray labour costs for the hospitality industry would go a long way to protecting jobs,” said Singh.
“The government could perhaps also explore a temporary cut in GST rate for the travel and tourism trade as well to help businesses manage cost.”
Looking for a property in Singapore? Visit PropertyGuru’s Listings, Project Reviews and Guides.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg`