mr funny
20-01-09, 14:08
http://www.todayonline.com/articles/297762.asp
Tuesday, January 20, 2009
SOFTENING THE HARD HIT
COLIN TAN
IT IS unfortunate that even while the economy was already showing signs of slowing in the second quarter of last year, property markets were still rising for at least another quarter, especially the industrial sector which peaked only in the fourth quarter.
Unfortunate in the sense that tenants were committing to rents at or close to their highest point. Unfortunate also because there was massive supply in all the markets just around the corner.
This was not only due to the fact that there was genuine scarcity at the point of renewal, but also because landlords worked jointly to put up a united front — which was why rents were still rising even as vacancy levels rose.
Secondly, the high rents resulted in relocation and dislocation costs. Besides renovation costs, tenants had to put up with space efficiencies as some firms needed to downsize while others grappled with the inconvenience of a less appropriate location.
There will be huge economic waste as, going forward, a lot of the better office space will be left vacant for many months because of the sheer supply coming onstream over the next few quarters — something that Singapore can do without as it grapples with the sharp economic downturn.
Meanwhile tenants, especially small and medium enterprises, grapple with the realities of sharply reduced business volumes as the threat of a deflationary spiral becomes increasingly possible by the week.
Accommodation and labour costs are the two most significant costs for most businesses.
To cut down on labour costs, most MNCs will benefit from the Skills Programme for Upgrading and Resilience initiatives. Most bosses of SMEs, however, may not be able to take advantage of the scheme, as most run a tight ship.
That leaves accommodation cost. Many SMEs are hoping for some kind of relief from property tax, but it may not happen as the Government is not sure it will be passed down to tenants.
However, some kind of relief is sorely needed, as there is now ample anecdotal evidence of many firms, especially SMEs across all sectors, closing shop.
Finally, as our professionals, managers and executives are hit much harder this time around, some form of property rebate for all owner-occupied homes will be much appreciated, instead of fixed handouts according to the class of property.
Let’s drop the discrimination, as these are owner-occupied homes. Why should the owners be penalised just because the values of their homes have risen?
The need for relief is urgent. To our Government economic planners, I repeat what I have been taught many times in my early childhood years: Where there is a will, there is a way.
The writer is the director of research and consultancy at Chesterton Suntec International. The opinions expressed here are his own.
Tuesday, January 20, 2009
SOFTENING THE HARD HIT
COLIN TAN
IT IS unfortunate that even while the economy was already showing signs of slowing in the second quarter of last year, property markets were still rising for at least another quarter, especially the industrial sector which peaked only in the fourth quarter.
Unfortunate in the sense that tenants were committing to rents at or close to their highest point. Unfortunate also because there was massive supply in all the markets just around the corner.
This was not only due to the fact that there was genuine scarcity at the point of renewal, but also because landlords worked jointly to put up a united front — which was why rents were still rising even as vacancy levels rose.
Secondly, the high rents resulted in relocation and dislocation costs. Besides renovation costs, tenants had to put up with space efficiencies as some firms needed to downsize while others grappled with the inconvenience of a less appropriate location.
There will be huge economic waste as, going forward, a lot of the better office space will be left vacant for many months because of the sheer supply coming onstream over the next few quarters — something that Singapore can do without as it grapples with the sharp economic downturn.
Meanwhile tenants, especially small and medium enterprises, grapple with the realities of sharply reduced business volumes as the threat of a deflationary spiral becomes increasingly possible by the week.
Accommodation and labour costs are the two most significant costs for most businesses.
To cut down on labour costs, most MNCs will benefit from the Skills Programme for Upgrading and Resilience initiatives. Most bosses of SMEs, however, may not be able to take advantage of the scheme, as most run a tight ship.
That leaves accommodation cost. Many SMEs are hoping for some kind of relief from property tax, but it may not happen as the Government is not sure it will be passed down to tenants.
However, some kind of relief is sorely needed, as there is now ample anecdotal evidence of many firms, especially SMEs across all sectors, closing shop.
Finally, as our professionals, managers and executives are hit much harder this time around, some form of property rebate for all owner-occupied homes will be much appreciated, instead of fixed handouts according to the class of property.
Let’s drop the discrimination, as these are owner-occupied homes. Why should the owners be penalised just because the values of their homes have risen?
The need for relief is urgent. To our Government economic planners, I repeat what I have been taught many times in my early childhood years: Where there is a will, there is a way.
The writer is the director of research and consultancy at Chesterton Suntec International. The opinions expressed here are his own.