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August 19, 2016

While Singapore’s economic success, particularly in banking and finance, remains undisputed, the same cannot be said about its sporting prowess.

Despite the island-nation’s historic first Olympic gold medal, its role in the Formula 1 Grand Prix circuit and the completion of a 55,000-seat national stadium, most remain skeptical about the country’s ability to win share in a booming market that is expected to generate global revenues of USS90.9billion in 2017, an increase of $15 billion from 2013.

The Singaporean government has taken a number of steps to promote a sporting culture in the nation since 2014, and major private economic investment is expected to follow suit. Traditionally, efforts have been centered around sub regional events such as the South East Asian games, but the latest success on the world stage could open up potential opportunities beyond Asia Pacific.

So what does this untapped potential mean for the real estate industry? Will Joseph Schooling’s unprecedented success give Singapore the push it needs to develop the right kind of real estate for training and developing sports athletes and hosting more top-tier events?

“Any major economic investments would typically have a ripple effect on surrounding assets,” explains Dr. Yang Liang Chua, Head of Research, Singapore and Southeast Asia for JLL.

“Similar to retail businesses, sports facilities help bring foot traffic to a neighborhood which, in turn, have strong bearing on demand for supporting amenities such as food and beverage as well as other types of retail outlets, especially during sporting seasons.”

According to JLL’s latest quarterly Asia Pacific Capital Markets in Focus report for Singapore, asset prices have come off from peak levels and are starting to look compelling when compared to other global hubs. However, the growth trajectory forecast is dependent on several other key factors to provide enough momentum to sustain long-term real estate investment and expansion in sports, including fighting off increased competition from other cities in the region such as Jakarta, Manila, and Kuala Lumpur.

“Until the sporting culture becomes as deeply engrained in the psyche of the local population as it is in the West, the opportunity for private sector remains limited to corporate sponsorship,” says Dr. Chua. “Nonetheless, existing and future infrastructure projects should be evaluated in their entirety to include social benefits and not just economic returns.”

Although Singapore may be some way off competing for global sporting dollars – both on and off the field – there is good reason for real estate investors to look for ways to better improve and grow their assets that will prepare them for this potential growth opportunity in the medium term.

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Dr Chua Yang Liang

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