Singapore's FY2021 Budget may indirectly impact the real estate and properties industry.
Although the FY2021 budget focuses on extending packages and grants to heavily hit businesses and providing jobs and skills improvement, the real estate sector may only indirectly benefit from the budget due to lack of new incentive for the industry, real estate leaders said.
On 16 February, Deputy Prime Minister Heng Swee Keat presented Singapore’s Emerging Stronger Together Budget 2021, highlighting support for heavily affected sectors and promoting innovative shifts in businesses.
A total of $11b has been allocated for the COVID-19 Resilience Package. This covers three main prongs: public health and safe reopening, support for workers and businesses, and support for sectors still under stress.
Like in the previous year, Heng stated that Singapore will continue to provide the Jobs Support Scheme (JSS), which will cost $700m. This will be targeted towards hard-hit sectors such as that of aviation, tourism, and land transportation.
Specific schemes within the SGUnited Jobs & Skills Package will be extended, which includes the Jobs Growth Incentive and opportunities for traineeship, attachment, and training, in order to support workers who will be taking jobs in growth areas.
Funds will likewise be allocated to the COVID-19 Recovery Grant in order to give aid to workers who have lost their jobs or had significant income loss.
Heng said that under the Emerging Stronger Together Budget, $24b will be allocated to firms and workers over the next three years in order to further them.
For this financial year, focus is on growing a vibrant business community, catalysing a wider range of capital, and creating opportunities and redesigning jobs.
The pandemic has seen a decrease in physical connectivity among people and in using properties, quickly replaced by the rise of virtual and knowledge-based facilities.
Heng said the plan is to have Singapore restore its physical connectivity whilst expanding its digital connectivity. He laid out numerous projects that will aid in launching and aiding businesses in transitioning to this new model.
A Corporate Venture Launchpad will be available for larger businesses that may want to build new ventures. The goal is to have these businesses explore and rekindle having a startup mindset.
A suite of capital tools will also be offered to co-fund transformation of businesses. For high-growth enterprises, which includes startups, the Enterprise Financing Scheme – Venture Dept programme will be available wherein the cap on loans will be increased from $5m to $8m.
Whilst mature enterprises are invited to invest in new and emerging technologies, the Productivity Solutions Grant – Job Redesign will now have a government co-funding ratio of 80% until end of March 2022.
There will likewise be a strengthening of the Household Support Package, where $900m will be extended for support of families.
Lastly, emphasis was made on climate change and how the Green Financing may aid in not just combatting the adverse effects of the pandemic but also in preparing a future-ready Singapore for the next generation.
Through this, Heng said, local businesses may seize opportunities for growth through the increasing demand for green products and technologies.
Real estate leaders see positive outlook
Although no new tax incentives or grants have been included or extended directly towards the real estate and property sector, industry leaders said the industry may still see growth in 2021.
“This is in the right direction and will indirectly help to sustain demand for real estate space in Singapore by ensuring our economy continues to thrive in the rapidly changing global business and operating landscape,” said Tay Huey Ying, head of research and consultancy at Jones Lang LaSalle Incorporated (JLL).
“In light that the COVID-19 pandemic is far from over, and travel restrictions and safe-distancing measures remain in place, the non-extension of property tax rebates and the absence of fresh rental waivers could come as a disappointment for some,” she added.
Tay acknowledged the efforts of Singapore to extend help during this time of economic recovery and noted that demand for real estate and property spaces may increase due to these job incentives and programmes.
“Nonetheless, the SGD 11 billion COVID-19 Resilience Package that extends reliefs to sectors and businesses that remain adversely impacted should help to prevent a sharp spike in business attritions and unemployment rate,” she said.
“Coupled with the expected economic recovery, this could still help support occupier demand for real estate in Singapore, and pave the way for most sectors of Singapore’s property market to bottom in 2021 and potentially recover in 2022,” she added.
Wong Xian Yang, Cushman & Wakefield's associate director of research for Singapore and Southeast Asia, commented that the budget has shifted away from helping businesses to survive and instead has focused on continued growth.
He adds that whilst it is commendable that the wage support under the JSS was extended to the retail sector, the impact may only be minimal due to the continued adoption of remote work and restrictions on travel.
“The extension of JSS for the retail sector provides some breathing space for retailers who have seen lower footfalls. Nonetheless, this support may not be adequate for retailers in the CBD and tourist belts, such as Orchard Road, which have seen a significant drop in footfalls due to higher adoption of remote work and travel restrictions,” Wong explained.
Wong likewise supports the incentive extended through the Household Support Package as this will mobilize and encourage spending in retail spaces.
“This support for household expenditure will reduce some financial burden of families and workers, while encouraging their retail spending. In synergy with the extension of the Jobs Support Scheme, the package will further benefit retailers, particularly those in the suburban areas,” he added.
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