The economic impact from the coronavirus is expected to be short-lived, based on the current situation.

The Singapore government has succeeded in putting in place multiple lines of defence to prevent the spread of the virus.

As of Wednesday, there were 91 confirmed cases of the coronavirus in the city-state.

The fatality rate of 2.1 per cent appears rather mild compared with 9.6 per cent for Sars, which happened between November 2002 and July 2003, with 8,096 cases and a death toll of 774 in about 30 regions.

In Singapore, 238 people were infected and 33 died.

Any disruption to market activity is expected to be short-lived – bolstered by the country’s sound economic fundamentals.

The impact will be mostly felt by the hospitality, retail, food and beverage sectors, with limited impact on the office and industrial sectors, as these are non-tourism related.

Corporates may delay decision-making in the first quarter as they focus on tactical issues around operations in China for the moment.

This is expected to impact activity in the first quarter in an office-leasing market, which has been grappling with a slowdown arising from the Sino-US trade war.

The impact on the hospitality sector is more immediate.

With millions in China under an effective lockdown and a ban on Chinese tour groups and travellers who have recently been to the country, tourist arrivals, especially from there, are expected to slow in the first half of the year.

Given that Chinese tourists make up about 20 per cent of Singapore’s international arrivals with about 3.6 million visitors last year, overall hotel revenue per available room is expected to see some downward pressure in the first half.

The slowdown in tourist arrivals will result in a decline in shopping expenditure by Chinese tourists, particularly in the retail trades and tourist destinations that cater to Chinese tourists.

Chinese tourists were the top spenders in the first half of last year, outlaying close to $2 billion on shopping, accommodation, food and beverage and other items, with 51 per cent on shopping alone.

Therefore, some of the more touristy shopping destinations, mainly in Marina Bay Sands and the Orchard Road area, could be affected if the travel ban and outbreak persist.

However, landlords of major shopping centres are not under pressure to lower rents, especially if the overall situation improves in the next couple of weeks.

Typically, the well-managed shopping complexes also have enough tenants waiting to take up any available vacancy. So long as the virus remains at bay with no community spread, the temporary decline in footfalls at malls should recover soon.

Liquidity is still aplenty and investors continue to search for yield in the real estate sector.

Well-managed and well-located office and industrial assets will remain sought after by investors and occupiers who typically take a medium to long-term view when they purchase or lease these properties.

After this episode is over, the mid-term outlook for the hospitality market is favourable, given the low hotel supply pipeline over the next few years and healthy visitor arrival estimates.

A slew of new tourist initiatives and developments are expected to raise the attractiveness of Singapore as a regional destination in Southeast Asia over the long term.

This includes continued investment in Singapore’s aviation infrastructure (Changi Airport Terminal 5), and tourism developments such as the Mandai eco-tourism hub, Jurong Lake district, Sentosa redevelopment and asset enhancement works at the two integrated resorts.

In the residential sector, there could be a slight impact on launches as developers are likely to hold back new sales in view of the weaker sentiment.

High-end luxury properties with more Chinese buyers could face slower take-up rates, as viewing slows down in the middle of the outbreak.

The impact should still be contained as Singapore continues to be seen as a safe-haven location amid heightened global uncertainties.

THE STRAITS TIMES (SINGAPORE)/ASIA NEWS NETWORK