Singapore’s economic outlook for 2002 will depend on external developments, especially the US economy, the global electronics industry and the war against terrorism. Singapore may be on the road to recovery as early as the second half of 2002. The current downturn faced by Singapore is not just a cyclical phenomenon, but also structural in nature. With competition from China following its entry into the WTO, Singapore’s economy will have to undertake structural changes to ensure long-term economic growth. The Government has thus set up the Economic Review Committee to "remake" Singapore by identifying new engines of growth for the economy.

For the Singapore office market, the limited new supply will help support prime office rentals when the market recovers in tandem with the anticipated economic rebound in the second half of 2002. Stronger-than-expected demand for private residential properties, in the wake of price cuts and the deferred payment scheme suggests that the residential market is on the road to recovery.

Buoyed by its relatively strong economy, China’s property markets are expected to remain strong in 2002. In Shanghai, future residential land will be released through public tender or auction. Continuing urban renewal will support demand for new housing. For the Shanghai office market, supply is estimated to be 2.1 million sm in 2001-2005 but absorption is forecast to be 2.78 million sm.

In other Asian cities, the recovery of the property market will be closely tied to economic rebound. The forecast turnaround of the US economy in the second half of 2002 should fuel the recovery of Asian property markets.

Shanghai’s residential and office sectors continue to show strong growth.