Singapore is leveraging on Southeast Asia’s growth as a manufacturing hub, urbanisation and its rising consumer demand. The city state is also investing in start-ups and nurturing innovation. The ASEAN Economic Community (AEC) allows businesses to trade in the region bearing almost zero customs duties.

Over the next five years the Singapore government has a target of growing employment by 25,000-40,000 jobs annually. These jobs focused on healthcare, infocomm technology and media, wholesale trade, financial services and professional services to serve wider Southeast Asia. This should boost employment by 3.5-4.5% for these sectors.

As Singapore targets to double employment growth to 25,000-40,000 per year, JLL thinks the population could grow by 1.5-1.8% p.a. in 2017-25. In the last 18 months, employment pass holders increased by 7%, compared to just 2% over 2012-14.

Singapore office & retail assets

With higher demand for office space in Singapore, JLL sees the supply to remain low in the next decade, as the government focusses on sites closer to people’s homes outside of the CBD. Annual employment should grow by 3.5-4.5% in technology, business services and financial sectors. Retail sales and wages are showing growth.

Office assets at a glance:

• Prime office rents have declined by 27% over the last 2.5 years
• Rents rose for the first time in ten quarters in 2Q17
• JLL’s forecast for 2017-2021 shows a rise in office rents

Retail assets at a glance:

• Singapore nominal retail sales rose by 3.2% yoy in 2Q17 after three years of decline
• Retail sales to grow 1-3% annually over the next five years
• Inflation recovers to 1% pa
• Wage growth to continues at 3-5% annually
• New retail malls supply to be low for the next five years

Singapore and Southeast Asia growth recovering from 2017

Singapore’s economy has been closely tied to Southeast Asia’s recovery. Global companies are seeking to base their regional headquarters in Singapore, which offers excellent fiscal and monetary policy, a large current account surplus and high foreign reserves. Singapore consistently ranks 1st in the World Bank’s Ease of Doing Business survey, due to low taxes, an absence of corruption, and minimal red tape.

At a glance:

• Singapore had strong growth in 2000-2010 with annual GDP expanded by 5.8%
• Annual growth slowed to 4% in 2010-2016
• Singapore’s growth lagged Southeast Asia’s
• In 1Q17, Southeast Asia GDP grew 4.8%, up from 4.5% in 2016 due to global export
• Exports in USD terms grew 12% yoy in 1H17 
• Southeast Asia’s exports expected to grow 7% annually over the next five years
• Singapore’s economy expanded by 2.7% yoy in 1H17
• Economists expect Singapore’s GDP to grow by 2.9% annually in next three to five years

Investing in start-ups and nurturing innovation

The Ministry of Trade and Industry estimates a S$1 billion increase in manufacturing value-add will generate about S$300 million of value-add and 2,400 jobs in the rest of the economy. Singapore has seen a six-fold increase of start-ups raising series A over the last three years, and in the last year, venture capital doubled to USD1.7 billion.

Singapore’s S$4.5billion industry transformation programme in 2016 sees:

• S$450 million over 2016-18 to drive development of robotics technology
• S$3.25 billion for advanced manufacturing and engineering capabilities research
• Deployment of research scientists and engineers to small and medium enterprises
• Increase of S$200 million for Industry Alignment Fund to catalyse more public-private research collaborations

Southeast Asia’s e-commerce potential

Google-Temasek Holdings say Southeast Asia is expected to be the world’s fastest growing internet market with the number of users expected to grow by 14% CAGR in 2015-20, faster than India or China. The e-commerce market is expected to grow 32% CAGR till 2025 to USD88 billion. Southeast Asia has over 300 million Facebook users, higher than any other continent.

Download the full report JLL Singapore-gateway to Southeast Asia 

For more information, email Regina Lim, JLL Head of Capital Markets Research, Southeast Asia via the link below.

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