Singapore hotels and offices hamstrung in 2012

HSBC predicts slower hotel growth and up to 15% declines in office capital values.

The expected decline of tourist arrivals to the island nation and an oversupply of office space will drag down both physical property sub-sectors.

Here's more from HSBC:

Our outlook for the physical property market in 2012 remains unchanged relative to 2011 for most sectors (retail, residential and industrial). For hotels, we expect a slower pace of growth and for offices we expect capital value declines of 10-15%.

With our economists forecasting the 2012 Singapore GDP growth at 5.1%, we expect slower-than-average absorption for the office market. This, coupled with an above-average supply in the pipeline, is negative for the office sector. We expect capital value declines of 10-15% on the back of rental declines.

Tourist arrivals have grown at 16% y-o-y (JanuaryAugust 2011), but we expect this to moderate to 5.5% in 2012. Occupancies are expected to remain stable at >85%, resulting in an average room revenue and revenue per available room growth of 8% pa (vs. 17% y-o-y for JanuaryAugust 2011)

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