Comments on Singapore’s supplementary budget measures for COVID-19

SINGAPORE, 26 March 2020 -- 

Tricia Song (宋明蔚), Head of Research for Singapore at Colliers International:

The Singapore government has announced a bold and decisive supplementary budget in Parliament on March 26, 2020 to tackle the deepening impact of the coronavirus (COVID-19) pandemic on its economy.

Known as the Resilience Package, this second stimulus package – valued at an eye-catching SGD48 billion – will see Singapore drawing on national reserves to fund the support measures.

The Resilience Package comprises new and enhanced measures aimed at helping to support businesses and households, protect livelihoods, as well as to strengthen social resilience, so as to emerge stronger from the crisis. Many of the measures are also laser-focused on helping sectors most affected by the COVID-19 outbreak - such as the aviation and tourism-related industries.

The extra stimulus will take the government’s COVID-19-related relief measures to about SGD55 billion, representing 11% of gross domestic product. 

We note that the Resilience Package did not offer measures that private housing developers had been hoping for – such as an extension of project completion timeline under the Additional Buyer’s Stamp Duty rules. That said, the stimulus package did provide other initiatives that will either directly or indirectly support the real estate sector, as outlined below:

Measures

Supplementary Budget on 26 March

Budget on 18 Feb

Positive for sector/ group

Property tax rebates for qualifying commercial properties including shops and restaurants

100%

15%

Retail malls

Property tax rebate for hotels, serviced apartments, tourist attractions, MICE venues

100%

30%

Hospitality

Property tax rebate for Integrated Resorts

60%

10%

Property tax rebate for non-residential properties

30%

None

Industrial, warehouse, office landlords

Rental waivers for non-residential tenants of state properties

Such as hawker centres, JTC, SLA, HDB, URA, BCA, NParks, and PA

0.5 to 3 months

0 to 1 month

Non-residential

Deferment of income tax payments for companies and self-employed persons

3 months

None

Industry-wide

Jobs Support Scheme

25% of monthly wages for every local worker in employment, capped at SGD4,600, for 9 months til end-2020

None

Industry-wide

Enhanced Jobs Support Scheme for Aviation, Tourism, Food Services, Land Transport, Arts & Culture sector

Up to 75% wage offset, capped at monthly wage of SGD4,600

None

Industry-wide

Cash payout and grocery vouchers to households

SGD300-900

SGD100-300

Industry-wide

Source: Colliers International, Ministry of Finance

 

In particular, the property tax rebates for retail malls have been significantly boosted from just 15% to 100%. Depending on how badly hit their tenants are, we believe these tax rebates are broadly sufficient to provide for at least three months of 50% tenant rental rebates.

The hospitality sector which has borne the brunt of travel curbs arising from the pandemic will also see property tax rebates go up from 30% to 100%. Notably, the integrated resorts will get a 60% property tax rebate, up from 10% in the previous budget package. Meanwhile, the office, industrial and warehouse landlords – who were non-beneficiaries in the Budget announced in February - could now enjoy 30% property tax rebates. 

These property tax rebates, alongside the deferment of income tax and various jobs support schemes will go some way to help improve companies’ cashflow and hopefully see them tide through this challenging time. Business viability is important in maintaining occupancy rates at commercial buildings. 

Meanwhile, the enhanced cash payout to Singaporeans aged 21 and above as well as grocery vouchers – and initiatives to save jobs - will help households with their finances and support consumption. 

Taken together, we believe the measures will help to buttress Singapore’s economy amid this mighty storm that is the COVID-19 pandemic.

 

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Media Contact:

Annabelle Taylor