Mr. Jim Quille,
CEO for MGPA,

Mr. Matthew Banks,
Co-Head for Macquarie Real Estate Capital,

Distinguished guests,

Ladies and Gentlemen,

Good morning

1. Welcome to Singapore! We meet today against a much more rosy and optimistic regional backdrop. The 1997 Asian financial crisis was a difficult time for Asia. Many financial institutions and investors with exposure to Asia scaled down their operations. Some even pulled out of the region. But 10 years on today, Asian economies have recovered and are enjoying healthy economic growth, spurred by the strong growth in China and India. Many economists have highlighted that the Asian financial crisis has in fact made the region leaner and stronger. Singapore, in particular, had taken painful steps to restructure its economy and improve the governance of financial institutions, making them more resilient and robust. As a result, we have had five consecutive years of sustained growth, and our economy is well on track to meet the 7-8% growth forecast for the whole of 2007.

Strong Growth in Singapore’s Property Market

2. Riding on the strong economic growth, Singapore’s property market has done well over the past two to three years with strong growth across all sectors – office, retail, residential and hotel. Annual demand for office space rose to a six-year high of 290,000 sq m in 2006, bolstered by Singapore’s increasing appeal as an international financial centre. Demand for retail space grew by 127,000 sq m in 2006, an increase of almost 200% from the previous year. Singapore received more than 7.5 million tourists in the first nine months of 2007, and hotels in Singapore enjoy the third highest occupancy rate in the Pacific Rim last year. This growth in the tourism industry has spurred interest in hotel developments. Investors bought 12 hotel sites under the Government Land Sales Programme between 2006 and September this year. Prior to 2006, we sold only 1 hotel site in the last five years. For the private residential sector, the take-up demand of about 12,800 new homes sold by developers in the first nine months of 2007 was already 20% higher than the total of 10,400 new homes sold for the whole of 2006.

3. The real estate market in Singapore is abound with opportunities. The Urban Land Institute and Pricewaterhouse Coopers has ranked Singapore as the city with one of the best real estate investment prospects in Asia-Pacific for 2008, second only to Shanghai. And their assessment seems to be shared by global investors. Driven by the confidence in Singapore’s economic fundamentals and positive sentiments, more foreign investors are participating in government land tenders or buying existing properties. Macquarie and MGPA are two such foreign investors. Together, they have invested some US$4.3 billion in Singapore over the last 10 months, including the purchase of Temasek Towers and a stake in Springleaf Towers, as well as its latest landmark investment for a Marina Bay prime office site with a successful bid of US$1.35 billion.

4. Singapore is attracting foreign investors from many countries including the US, Hong Kong, China, South Korea, Australia, Europe, Japan, the Middle East, Malaysia and Indonesia. The profile of these investors and the type of investment vehicles are also becoming very diverse. They range from private equity funds (e.g. Morgan Stanley and Lehman Brothers) to developers (e.g. Lippo Group, Lend Lease, Hongkong Land, Cheung Kong and Sun Hung Kai), to REITS (e.g. Macquarie MEAG Prime REIT) and pension funds, as well as hedge funds. In addition, Singapore has become an attractive destination for high net-worth individuals who have bought homes in Singapore not only because of good economic prospects but also because we are one of the most liveable cities in the world.

Singapore As A Leading Financial Hub

5. Going forward, a key challenge – and this is a happy challenge – is how we can continue to meet the strong demand within the property market. Today, I would like to focus on the office space needs of businesses, especially of the financial and business services sector, and what are the government’s plans in this area.

6. Let me say upfront that the Government remains committed to support the growth of the financial and business services sector and to build Singapore into a premier financial hub. Over the years, Singapore has strengthened our position as a financial and wealth management hub in Asia, in part due to our pro-business and transparent policies and regulatory framework. Many private banks have chosen Singapore as their launch pad for their Asia expansion. UBS has set up a Wealth Management Campus for research and innovation in wealth management. In May this year, Standard Chartered Bank chose to base its global private banking HQ in Singapore. To house the increased headcounts, Standard Chartered Bank has already pre-committed to lease almost 50,000 sq m of space at MBFC Tower 1, the largest office leasing transaction in Singapore. This pre-commitment was also done 3 years ahead of the scheduled completion of the project.

7. With robust growth in the financial and business services sectors in the last few years, we are currently experiencing strong demand for prime office space. However, as with all property cycles the supply of office space often lags demand in periods of strong growth. As such, Singapore is currently experiencing a shortage of office space for the next 2 to 3 years. I believe this is not unique to Singapore but is common to other major cities like Hong Kong, Tokyo and Dubai. Despite the recent surge in demand, Singapore’s office rentals remain very competitive compared to major cities like London, Tokyo and Hong Kong,

8. Nevertheless, the government is taking action to address this short term office space shortage, even as I speak. We have released transitional office sites as well as vacant State-owned buildings for office use. Apart from the two transitional office sites released to date, a number of other potential transitional office sites in various locations have already been identified for release in the next few months, if the response is good. In total, these transitional office sites and State-owned properties can generate up to 210,000 sq m of office space within the next 2 to 3 years. Apart from office space, about 500,000 sq m of space at Business Parks, such as Changi Business Park and Alexandra Distripark, are being developed to cater to the demand of high technology businesses and backroom operations of financial institutions and SMEs.

9. The tightness in office supply is expected to ease in 2010, when major projects such as Phase 1 of the MBFC are completed. The total amount of office space, from Government and private land sources, that can potentially be realised between now and 2012 is about 1.4 million sq m, of which about 80% are from projects in the Central Area. This supply will be able to comfortably accommodate the expected demand for office space.

10. Going forward, I would like to reiterate that our aspirations for anchoring Singapore as a premier financial centre will not be constrained by space availability. The Government takes a long-term and comprehensive approach in planning to ensure that we have enough land for sustained growth. We are committed to opening up new development opportunities and in providing good infrastructure in a timely manner to support and sustain the growth in the financial and business services sector. A prime example of this is the Marina Bay area. Land was reclaimed more than 30 years ago to serve the future growth of the city centre. Today, this huge land bank adjacent to the current CBD gives us a unique opportunity to expand the city centre to build our new city centre.

11. In the next few years, there will be even more development and investment opportunities in Marina Bay. Many exciting developments in Marina Bay are now taking shape. We are in the midst of planning for the next phase of development and infrastructure building. In particular, more sites will be identified for office and other commercial development that will meet the growing Grade A office space demands for front office needs of the financial sector. Marina Bay will be one of the most vibrant and ideal locations for financial institutions to consider, given its seamless connection with the existing CBD, its iconic skyline, the 24-7 “live, work, play” mix of uses to be co-located at Marina Bay, a 100 hectares world-class Gardens and the comprehensive transport system and network of walkway linkages that are being planned at the Bay.

12. In addition to Marina Bay, we will open up new areas for development at the Regional Centres, which can meet the growing demand for back office space needs by the financial sector. As part of our strategy to decentralize commercial activities to areas outside the city centre, we have successfully developed Tampines Regional Centre into a vibrant office and retail cum entertainment hub. In the next few years, we will build another Regional Centre in Jurong. This will mainly be through the sale of sites to the private sector. The Jurong Regional Centre will provide an alternative location for businesses and serve the western part of Singapore. We will also build up Paya Lebar into a Sub-Regional Centre to serve the eastern part of Singapore, mainly through the sale of sites for private development. This will fill the gap between the city and Tampines Regional Centre.

Working Together as Partners in Development

13. The release of land to support office space demand will be calibrated and measured, with a view to meet needs on a sustained basis. It will be at a pace that can meet business needs and at the same time enable the real estate sector to grow in a sustained and healthy manner. Land will also continue to be released in a transparent manner so that investors and developers can make informed business decisions.

14. We look forward to working with investors like you as partners in development. The government’s role is to formulate and articulate the vision and plans for development, to give investors clarity and directions. But, we rely on private sector expertise and resources to undertake many of these developments to transform our plans to reality. There will be numerous exciting opportunities ahead for us to develop the Marina Bay and Jurong and Paya Lebar Regional Centres into vibrant financial and business hubs that will support Singapore’s next stage of growth.

15. The time is now. There is no better time for investors to consider real estate development and investment opportunities in Singapore given the robust outlook and comprehensive development plans we have in place. This forum is a wonderful opportunity for market players and investors interested in leveraging on Asia’s growth to exchange views and ideas. I wish you a fruitful discussion and for those of you visiting Singapore, I hope you’ll enjoy what Singapore has to offer.

Thank you.

>>back to top