How will Singapore's relaxed restrictions affect the property sector?

The workplace-related changes will boost demand for conference halls, convention centres as well as CBD/Orchard Road retail.

According to a recent report from Jefferies, the Singapore government is exploring issuing business travel passes for senior executives who are frequent travellers. In addition, and notwithstanding the fact that WFH remains the default mode, more employees will be allowed to return to the workplace from next week. Further, large work-related gatherings and social events will be allowed from next month.

Here’s more from Jefferies:

What's new - Authorities are exploring issuing a limited number of business travel passes to senior executives based in Singapore who need to travel regularly for official purposes under a pilot programme. While details are being worked out, the pass is expected to allow the person to go to a wide range of countries and will not be country-specific.

Upon returning to the city-state, such travellers can opt for a Covid-19 test instead of serving the mandatory 14-day Stay-Home Notice. That said, travellers will have to comply with national or bilaterally-agreed travel restrictions that are in place in the visited country. Further, starting from next week, more employees will be allowed to return to the workplace, provided they spend at least half their working time at home and work places are only at half the capacity at all times.

Work-related events within the workplace - such as conferences, seminars, corporate retreats and annual general meetings - will be allowed to resume, but employers are not allowed to organise large-scale social gatherings, including team-bonding activities. From Oct 3, the maximum capacity at marriage solemnisations, wedding receptions and worship services will be raised to 100 (from 50). Most cinemas will be able to increase allowed seatings to 50 percent of capacity from Oct 1.

More fuel for re-opening trade; Buy SUN, MCT, CCT - We expect the workplace-related changes and larger social gatherings to boost demand for conference halls, convention centres as well as CBD/Orchard Road retail. Increased seatings for movie halls should be a boost for sub-urban retail malls, especially as Google mobility stats suggest that visitations to retail and recreation were stuck at 20% below baseline level as of last month.

Within coverage, we expect SUN and CCT to be key beneficiaries. MCT's VivoCity should see spill-over effect from more employees in the business parks as well as weekend movie-goers. Issuance of business travel passes is a step to improve travel demand after the initial green-lane arrangements. To the extent that they generate demand for business travellers into Singapore, the measure should be positive for hotels.

More headquarters and diminishing WFH positive for office? Authorities have reminded that work-from-home remains the default mode. It is still not evident that corporates will consider WFH as a one-off event and hence there should be no change to office demand.

Meanwhile, recent news flow suggests Bytedance, Tencent, and Amazon are considering expanding in Singapore; in addition, asset managers/family offices such as Citadel are settling in to take advantage of VCC regulations. While incrementally positive, the extent of net adds remains to be seen. Prior news flow was about job losses (Grab, Deliveroo, Zilingo) and more recent new flow suggests that large financial institutions may also re-examine headcount.

In addition, the setting up of HQs is not new and EDB's article "Can Singapore become a second home for Chinese tech?, 26 Nov 2019" (https://www.edb.gov.sg/en/news-and-events/insights/headquarters/can-singapore-become-a-second-home-for-chinese-tech.html) provides historical detail and perspective. At a broader level, it still is a jobless recovery; there are less than 50K openings for more than 100K retrenchments. We maintain Hold on Keppel REIT.