Friday, December 5, 2008

Expats' Living Costs Rising Faster In HK Than S'pore

Source : The Straits Times, Dec 5, 2008

WHILE living costs for expatriates in Singapore are rising, they are going up even faster in regional rival Hong Kong.

It is now 15 per cent more expensive to live in Hong Kong than in Singapore, according to the latest Cost of Living Survey released by human resource data firm ECA International.

This is a bigger difference than last year, when the cost of living in Hong Kong was 12 per cent higher than here.

Globally, Singapore has shot up 35 spots from last year's survey to rank as the 95th most expensive city to live in this year. Hong Kong is at 33.

In Asia, Singapore is at No.12 while Hong Kong is ranked sixth.

The new figures show Beijing to be 15 per cent more expensive to live in than Singapore. The Chinese capital ranks as the fifth most expensive Asian city, and No. 31 overall.

ECA carries out its survey twice a year to help multinational companies calculate remuneration packages and living costs for expatriates.

The study compares a basket of 125 consumer goods and services commonly bought by expats in over 370 locations and measures these items against inflation, availability of goods and exchange rates.

That is why the Angolan capital Luanda is the most expensive location for foreigners for the second year running, as certain items typically purchased by expats are not readily available there.

ECA said the wild currency fluctuations caused by tumultuous global economic events this year contributed significantly to how a country ranked.

The strengthening of the yen meant Tokyo has reclaimed its position as Asia's most expensive city. It was second after Seoul last year.

It also meant that three other Japanese cities - Yokohama, Nagoya and Kobe - joined the ranks of the top 10 most expensive cities globally.

Meanwhile, Korean locations have seen the largest relative fall in cost of living due to the depreciation of the won, which fell more than 48 per cent against the US dollar between September last year and last month, said ECA.

Mr Lee Quane, general manager of ECA Asia, said research shows most companies pay expats in their home currency while they are on assignment, which could mean lower purchasing power in unfavourable exchange rate environments.

'Companies which split pay between the employee's home and host countries will be much better equipped to ride out the currency volatility,' he added.

Government Offers Fewer Land Sales Sites

Source : The Business Times, December 5, 2008

The move will help ease fears of a supply glut next year

NO NEW sites have been added to the Government's land sales programme for the first half of next year, an anticipated move designed to tame fears of a supply glut in an already weak market.

Only sites on the reserve list will be up for sale, and almost all of these are carried over from this year. The amount of commercial space will also be reduced.

'The global economic outlook is likely to remain weak in 2009 and this would have an impact on Singapore's economy, including the property market,' said the Ministry of National Development, which releases the sales programme in June and December every year.

Knight Frank's director of research and consultancy, Mr Nicholas Mak, said the programme announced yesterday reflects government efforts to give the market a chance to adjust to a new supply and demand equilibrium and to lessen the pressure of a glut.

Much of the announcement was flagged in a special statement made on Oct 31, when the Government said it will suspend outright land sales in the first half of next year, leaving only reserve list sites for sale.

It went further yesterday by limiting office space and ruling that no new plots of land will be made available as response to recent tenders was poor, said Mr Mak.

Also, no new supply of private residential units from other government agencies will be made available. It placed about 20 such units on the market in the second half of this year.

Developers prefer reserve list sites as the land goes up for tender only if a minimum bid acceptable to the Government is submitted.

There will be 38 such sites on offer next year, with 37 carried over from the reserve list for the second half of this year. The remaining one is the unsold executive condominium site in Punggol.

That site was from the confirmed list, which meant that it was for outright sale, but there was no demand when it went to market last month.

There are 18 residential sites, 10 for hotels, six commercial plots, three white sites and a commercial/residential site.

The property market has been hit by weak buying interest and a credit crunch. Private home sales are at a standstill as buyers await more price falls.

Developers have also been withholding launches, adding to the stockpile of potential houses, said Mr Mak, who expects 'very few' residential sites to attract buying interest next year.

However, Credo Real Estate managing director Karamjit Singh said supply is not much of a problem as there are still buyers around.

'The problem is buyers' lack of confidence. If the current low sales volume carries into the next year, there is the fear of a deep plunge in prices. The Government should do something soon to stimulate demand,' said Mr Singh.

The Government statement yesterday said that its reserve list system provides 'greater flexibility to the market' to adjust to the economic conditions.

As housing prices are expected to fall further next year, developers may be able to pick up the better-located sites - in Bishan Street 14 and Dakota Crescent - at attractive prices, said CBRE Research executive director Li Hiaw Ho.

'It is likely that most residential activity will be focused on the lower end of the market where prices will be more affordable,' he said, adding that likely launches in the first half of next year include leasehold condos in Boon Lay Way, Elias Road, Simei Street 4 and West Coast Crescent.

The supply of commercial space for the first half of next year has been cut from 143,000 sq m to 40,000 sq m. Transitional office sites have been reduced.

The new land sales programme also offers slightly fewer hotel rooms.

Adding Quality To Condo Life

Source : The Business Times, December 5, 2008

High-end properties are including lifestyle features such as art galleries, private dining rooms and party pads on their premises

OLYMPIC-SIZED pools tiled in the finest Italian marble and gyms filled with state-of-the-art equipment may yet be an unheard-of extravagance for some, but in the world of ultra-luxe condominiums they're no longer enough to lure discerning residents to their polished doorsteps.

Wine and dine: Orchard:Scotts has two private dining rooms (such as the one above) that are fully equipped with Western and Asian cooking equipment - a feature that has become common in other luxe new properties. It also has a wine cellar (next)

Given the current economic climate, high-end properties have been looking to add even more value to their spaces with the inclusion of other lifestyle features such as art galleries, private dining rooms and party pads on their premises. Indeed, it seems like these new developments are virtually trying to outdo each other in offering such added perks.

As one source puts it, 'Demand for high-end property is definitely slowing. But these added facilities, which were first introduced to add value to properties when prices were rising, don't cost very much in the grand scheme of things. So it's even more important at a time like this that they be included to offer value to buyers.'

Lifestyle needs

According to the executive director of property consultancy DTZ, Ong Choon Fah, the downturn has meant that most of the people who are buying for investment purposes 'are being very cautious'.

'Most of the people buying now are living in the apartments themselves. That's why it is very important that the complex suits their lifestyle needs,' she says.

Take JBE Properties' newly completed The Luxe on Handy Road, where an art gallery on the ground floor allows residents to browse the works of artists from all over the globe and purchase them if they wish.

In turn, Far East Organization's Orchard:Scotts development at Anthony Road and Orchard Turn Development's yet-to-be-completed The Orchard Residences both have wine and cigar rooms where residents can store their bottles and cigars in a temperature-controlled environment.

Orchard:Scotts also has two private dining rooms that are fully equipped with Western and Asian cooking equipment - a feature that has quickly become common in other luxe new properties such as Ferrell Residences (by hedge fund firm Ferrell), The Sea View (Wheelock Properties) and Nassim Park Residences (UOL Group). Not to be outdone, The Orchard Residences has taken it up another notch: it will offer a private party house on-site, the first for residential developments in Singapore.

A notch up: The Orchard Residences (left) will offer a private party house on-site, the first for residential developments in Singapore, while Farrell Residences (next) also features private dining areas

'This feature of The Orchard Residences will provide residents with a unique venue for their private parties and events,' says the chief executive officer of Orchard Turn Developments, Soon Su Lin. The party house, she adds, will have its own living room, dining room, kitchen, barbecue pit and a dedicated private swimming pool, 'so that residents have the exclusive privilege and comfort of entertaining in a 'second home'. Of the expanding range of luxury facilities being offered by luxury developments, Ms Soon explains: 'We want to ensure that our high net worth residents can enjoy city living without compromising on their quality lifestyle.'

Adds DTZ's Mrs Ong: 'As we live in a more globalised world, people are starting to appreciate the finer things in life much more. Now, buying a private property is certainly a lot more aspirational; you aren't just buying bricks and mortar, you are actually buying a lifestyle.'

Ferrell's executive director Jeanna Chan notes that offering these additional, exclusive entertainment options to residents 'provides more complete living through attention to detail, from quality finish to identifying a need for a private lifestyle'. They also serve to extend residents' living space - the dining area concept, for example, is 'growing in popularity and becoming essential in a prime district where city living is crowded', adds Ms Chan.

That factor is particularly appreciated by Orchard:Scotts resident Junny Lee. 'The dining area in my complex gives me much more flexibility,' says the property investment analyst, who lives in a two-bedroom apartment in the development. 'I can hold functions for more than 50 people if I want to. It makes your living space larger than it actually is.'

Facilities such as this have become 'essential' to him, he says, adding that while he initially chose the apartment because of the layout, he has found that these perks 'enhance your social life and your quality of life as a whole. Having space is priceless. It's good because it's personalised space, but the costs are shared'.

Waterfront facilities

Apart from adding features to their properties that are targeted specifically at the audience they hope to draw, property developers have also let the facilities they include be dictated by their locations.

The Sea View, for instance, has converted a neo-classical bungalow located on its site into a huge function room with a party lawn. 'Whenever an opportunity arises, we hope to create an enhanced living environment for the residents,' says director of Wheelock Properties Tan Bee Kim. 'The Sea View is a good example. We saw the potential of the bungalow located at the site and conserved it, turning it into a grand clubhouse for the development.'

Meanwhile, those who choose to live at Reflections at Keppel Bay will enjoy sailing lessons and boat charter services, among other things, apart from a view of the ocean.

'High-end developers are seeing merit in offering real value-add in terms of premium quality, facilities and finishings which would be appreciated by tenants and homebuyers,' says Augustine Tan, chief executive officer of Singapore Residential, Keppel Land. That's why folks living at Keppel Bay will get the full waterfront lifestyle experience, from marina playground to 'an exclusive twinning association with Nongsa Point Marina & Resort in Batam', he shares.

The broadened lifestyle-experience scope also helps to enhance the exclusivity of these complexes, which DTZ's Ms Ong believes adds to their desirability.

'Only a certain group will be eligible to make use of all these perks, and that is part of the attraction,' she says. 'The people living here will probably all be members at the same exclusive country clubs, but it will be nice for them to enjoy the same facilities in their own backyard.'

One property expert feels that these increasingly luxurious developments are essential to Singapore's progress towards becoming a truly global city.

'Talent gets attracted to a place where you can not only earn big bucks but also to a place where there is life outside of work,' she says. 'The quality of life represented by these properties goes beyond just bricks and mortar. To have a world-class city, that is exactly what you need.'

These sentiments are shared by Chia Boon Kuah, chief operating officer of property sales and executive director of Far East Organization. 'The fact that Orchard:Scotts' dining area is always fully booked underscores that we have been able to connect to our residents' lifestyle aspirations,' he says.

Right now, that lifestyle may seem to be slipping from the fingers of potential buyers - but for those still staying in the market, it's a lifestyle worth waiting for.

Dubai Rethinks Huge 'City Within City' Plan

Source : The Business Times, December 5, 2008

Developer cites change in investor demands as reason for the retreat

(DUBAI) A newly created Dubai developer that unveiled a US$95 billion real estate project just two months ago is reviewing its plans in the light of the economic downturn.

Project unveiling: The model of Jumeira Gardens on display at the Cityscape 2008 property expo in Dubai in October where Meraas Development announced the US$95 billion project

The retreat comes as a widely watched report showed property prices in the fast-growing Gulf city- state slowed considerably in the three months to September, ahead of an expected decline later this year.

In reassessing its development plans, Meraas Development said on Wednesday that it has 'seen that investor demands have changed' and that it must 'quickly respond to meet these market needs'.

The developer, launched by the government of Dubai in late September, said it is re-examining its business strategy and the rollout of its flagship Jumeira Gardens project slated for a central part of the city.

'In a worldwide economic downturn, any corporate must analyse the market and ensure its business strategy is aligned to make the most of new opportunities, as well as ensure risk-management strategies take account of the new financial landscape with a focus on new market and investor demands,' the company said.

Meraas announced the 350 billion dirham (S$124.7 billion) Jumeira Gardens at a property expo in October.

The company said at the time that work had already begun on the development, which was advertised as a 'city within a city' that would include one of the world's tallest buildings and take 12 years to complete.

Meraas said it expects to have more details on the project by the beginning of 2009.

The developer is a division of Meraas Holding, whose private equity division, Meraas Capital LLC, joined real estate investment trust Boston Properties Inc and other investors in acquiring the General Motors Building in New York City for about US$2.8 billion in June.

Separately on Wednesday, real estate consultancy Colliers International said its index of Dubai home prices grew 5 per cent year on year from July to September - down from 43 per cent in the first quarter and 16 per cent in the second quarter.

Ian Albert, regional director for consultancy services at Colliers, said he expects the next round of figures would show a decline in the last three months of the year in large part because of the liquidity squeeze caused by the global financial crisis.

'It is clear to us that the landscape has changed since the end of September,' Mr Albert said.

Last month, an HSBC Holdings plc report found home prices on Dubai's secondary market fell month to month for the first time since the emirate began allowing foreigners to buy property in 2002. -- AP

Shenzhen Pricier For Expats Than S'pore

Source : The Business Times, December 5, 2008

CHINESE cities such as Shenzhen and Guangzhou have surged past Singapore when it comes to expatriate living costs, a survey has shown.

Although Singapore has traditionally ranked as one of the more expensive Asian countries for expats, it dropped three notches this year to 12th place in a study by ECA International.

The strong yen made Tokyo the dearest city in Asia for expats, followed by three other Japanese cities - Yokohama, Nagoya and Kobe. 'Goods and services in Tokyo were 43 per cent more expensive than in Singapore in September 2007 and this gap has since widened to 68 per cent,' ECA said.

Traditional frontrunners such as Hong Kong, Beijing, Shanghai were again ahead of Singapore in this year's survey. And the appreciation of the yuan, coupled with soaring inflation in China, lifted Shenzhen and Guangzhou past Singapore for the first time.

'Beijing's movement has been driven by both the strength of the renminbi and persistent inflation, which we have also seen in other Chinese locations,' said Lee Quanne, ECA's general manager for Asia.

Globally, Singapore is the 95th most expensive city for expats, up 27 places from 2007 as the Sing dollar appreciated.

In contrast, Korean cities have become cheaper for expats due to the weakening won, which has dropped 48 per cent against the US dollar since September. Seoul topped ECA's Asian rankings in 2007 but dropped to 11th place this time round.

Human resource consultancy ECA conducts its cost-of-living survey every March and September by tracking 125 consumer goods and services commonly consumed by expatriates across 370 locations worldwide. These include food and clothing costs but do not cover big-ticket items such as housing, utilities and cars, as companies tend to allocate separate compensation for such spending, according to ECA. Multinational firms often use ECA's findings as a yardstick for calculating expatriate remuneration packages and allowances.

Angola's capital Luanda remains the world's most expensive city for expats.

US Economic Problems Deepen

Source : The Business Times, December 5, 2008

Consumers cutting back on spending, businesses trimming jobs, wages

(NEW YORK) The economic decline took a turn for the worse after the market shocks of October. Last month, the problems only deepened.

Only window shopping: Businesses are no longer raising sticker prices for consumer items as inflation has receded since the big drop in oil prices. In fact, many companies are now considering lowering their prices in the months to come

Cash-poor Americans, fearful for their jobs and victims of a steep decline in stock prices, pulled back on spending. Businesses laid off workers, cut wages and reduced hours. Real estate developers and owners suffered.

That bleak portrait - effectively a confirmation of the conventional wisdom of the last few weeks - was released on Wednesday by the Federal Reserve in the latest edition of its Beige Book, a regular snapshot of economic conditions across the country.

The Fed survey came just hours after equally grim news emerged about the American services sector, which makes up the bulk of the nation's economic output.

November was the worst month for service industries in at least 11 years, according to a widely watched index from the Institute for Supply Management, which fell to a record low last month.

Economists were also bracing for a report on the job market due today from the Labor Department.

A deep round of layoffs appeared to hit a broad range of businesses last month, and the Beige Book cited widespread job cuts and hiring freezes.

Manufacturing was hit hard in Dallas, and businesses in Boston, Chicago, and Richmond, Virginia, said that demand for temporary workers rose last month.

Some analysts now think that the economy may have lost 300,000 to 400,000 jobs last month alone, a decline that would make it the worst month yet in the current recession. The economy has shed 1.2 million jobs since the beginning of the year.

At the root of the problems is a significant slowdown in spending, as Americans retreat from large-scale purchases and try to save money amid the worst downturn in a generation.

Retail sales fell in most major cities while cars sales 'deteriorated', particularly sales of more expensive cars such as sport utility vehicles.

Compiled through surveys of businesses in 12 major metropolitan regions, the report concluded that overall economic activity weakened from the beginning of October to last week, when the survey period ended.

'Discount stores reported stronger sales volumes than department stores,' the Beige Book said, and sales were lower for furniture, household appliances, electronics and luxury items.

Many retailers are bracing for a painful holiday shopping season that could squeeze their margins further.

Manufacturing activity slowed last month in all 12 districts included in the Beige Book. Both residential and commercial real estate companies reported problems. Vacancy rates were higher in Boston, New York, Richmond, Chicago, Kansas City and San Francisco.

Lending by banks slowed as well, although Philadelphia banks said that they issued more loans last month and Cleveland saw an uptick in loans for businesses.

Inflation, however, has receded since the big drop in oil prices.

Businesses, accordingly, are no longer raising sticker prices for consumer items. In fact, many companies are now considering lowering their prices in the months to come. -- NYT

Eyes On Demand As Govt Keeps Land Supply In Check

Source : The Business Times, December 5, 2008

Analysts hope for measures to boost buying, such as stamp duty rebates

The government yesterday kept the lid on the supply of state land for development. All eyes in the market now are on what measures the state will come up with to stimulate property demand.

The Ministry of National Development (MND) has decided not to add any new sites to the Government Land Sales (GLS) Programme for first-half 2009.

The slate for the first six months of next year - comprising entirely reserve list sites, as previously announced - consists of a total 38 sites. These comprise 37 plots that are being carried over from the H2 2008 reserve list and the unsold executive condo site in Punggol that had been tendered out under the confirmed list of H2 2008.

These 38 land parcels can potentially yield about 7,920 private homes, 512,000 sq metres gross floor area (GFA) of commercial space and 5,160 hotel rooms.

In formulating its policy, the ministry took into account the current economic uncertainties and noted that the global economic outlook is likely to remain weak in 2009 and this would have an impact on Singapore's economy, including the property market.

Giving an update on land supply in January-June 2009 from government agencies, outside the GLS Programme, MND said there will be no new supply of private homes and a reduced supply of commercial space (this will only entail projects meant to achieve strategic economic or development goals).

The H1 2009 supply from this source will comprise about 40,000 sq metres GFA of commercial space and 240 hotel rooms - smaller than the land supply for 20 private homes, 143,000 sq m of commercial space and 240 hotel rooms outside the GLS Programme for H2 2008.

Welcoming the latest announcement from MND, a spokesman for the Real Estate Developers Association of Singapore said: 'This further confirms to the market the authorities are mindful of market conditions at the moment and (we) do not need to add further uncertainties.'

Knight Frank director Nicholas Mak says yesterday's announcement gives the market an opportunity to adjust to a new supply-demand equilibrium.

DTZ executive director Ong Choon Fah notes that most of the residential sites in the reserve list are in locations suitable for private housing developments catering to HDB upgraders. 'If developers' sales in these segments pick up, they have the choice of applying for such sites to be released from the reserve list for tender.'

Agreeing, CB Richard Ellis executive director Li Hiaw Ho said: 'As home prices are expected to decline further in 2009, developers may be able to pick up the better-located sites in the reserve list - such as the ones at Bishan Street 14 and Dakota Crescent - at attractive prices. It is likely that most residential activity will be focused on the lower-end of the market, where prices will be more affordable.'

However, analysts are more keen on some demand-side announcements from government.

JP Morgan analyst Chris Gee said: 'It's less of a supply side situation right now. The issue is what can be done to help stimulate demand. All eyes are turning to the Budget statement in January.' He reckons temporary exemptions on stamp duty and property taxes could be possible measures.

Credo Real Estate managing director Karamjit Singh too argues that 'the issues at hand relate to investment sentiments and fear of further downward slide in prices, which is why (home) buyers have been holding back and prices have declined'.

'It would help immensely if buyers could be incentivised to purchase, through measures such as a temporary suspension of stamp duty and the reintroduction of the deferred payment scheme, for example,' Mr Singh added.

Shadow Office Space Grabs The Spotlight

Source : The Business Times, December 5, 2008

Companies trying to sub-let excess space as they streamline operations

As banks and other organisations look at scaling back their operations, some are trying to sub-let office space that they no longer need.

Some 200,000 sq ft of such space may already be on the market, although part of it may be available only next year. The phenomenon - which some call shadow space - started to emerge in October, industry players say.

Knight Frank director of business space (office) Agnes Tay forecasts that about 400,000 to 500,000 sq ft of shadow office space may be introduced between Q4 2008 and end-2009, or an average of 80,000 sq ft to 100,000 sq ft per quarter.

However, another office leasing veteran said: 'It may be far easier to assess the situation in about half a year. By then, the right-sizing, job attrition and the office cycle would be far more advanced.'

Shadow space also emerged during the last office slump. According to CB Richard Ellis research reports, it amounted to more than one million sq ft as at the end of 2002.

Another consultant, Jones Lang LaSalle's regional director and head of markets Chris Archibold, says that while subleasing has 'negative connotations in the short term, it's a good strategy in the medium to long term, as it builds flexibility into office space management, allowing businesses to expand fast when the current slowdown turns around'.

'Given that Singapore is positioned as a regional hub, our view is that Singapore will be less impacted than other cities in Asia. However, we do expect to see some subleasing activity over the next few quarters, but it is impossible to pinpoint exactly how much space will be released,' he added.

HL Bank, Citibank and DBS are among the tenants known in the market to be looking to sublet excess space. Their ranks are expected to grow in the coming quarters as restructuring efforts at banks take effect.

Citibank is said to be considering subletting at least 60,000 sq ft of office space. More than half of this is understood to be at Tampines Plaza and the rest in the Central Business District, including Millenia and Centennial towers in the Marina area.

DBS is said to be looking for tenants for space occupied by its HR department at PWC Building and apparently has smaller pockets of space available at Equity Plaza, Raffles City, 6 Raffles Quay and Haw Par Centre.

The attraction to potential sub-tenants keen on taking over such shadow space is that they may be able to secure space at attractive rentals below current market rates from tenants who inked headleases with the building owners last year or earlier at rents below current values. The space may also come pre-fitted, saving the subtenant such costs.

Of course, the shadow space situation is not following any fixed template. HL Bank, for instance, is believed to be keen to sublet two floors at UIC Building at a discount. The bank is said to have inked its lease with the Shenton Way property's landlord, United Industrial Corporation (UIC), for about 20,000 sq ft earlier this year, when it had planned to move out of Tung Centre at Collyer Quay.

Industry watchers reckon HL Bank could be prepared to shave off around $2 psf in the monthly rentals of $8 psf and $10 psf it is paying UIC for its two floors.

Besides tenants wanting to sublet excess space, another reason shadow space emerges is when companies try to pre-terminate their leases with landlords, perhaps because they are shutting down or moving their operations to cheaper locations. Because such tenants are still liable to pay the agreed rental for the remaining duration of their leases, they sometimes try to sublet their space.

Property agents say subletting deals are best done with the knowledge and support of the building's owner. 'Sometimes the residual lease on the excess space a tenant is willing to sublet may be pretty short, say a year or even less; so the new tenant will want to negotiate a fresh follow-up lease with the landlord to dovetail with the expiry of the residual lease on the shadow space,' a property consultant said.w

PM Lee Says Global Depression 'Not On The Cards'

Source : The Business Times, December 5, 2008

A global depression is unlikely to happen because governments have learned lessons from the world economic meltdown in the 1930s, Singapore Prime Minister Lee Hsien Loong said on Friday.

Mr Lee, speaking at a forum with foreign correspondents, repeated predictions that the city-state's current recession would last a year, followed by several years of slow growth.

'I think a global depression is not on the cards,' he said Lee.

'The governments have learned lessons from the 1930s and they will not repeat the same mistakes, so this is not the end of the world.'

Singapore went into recession in October following two successive quarters of negative gross domestic product growth. The official growth forecast for 2008 has been slashed to 2.5 per cent, from 7.5 per cent in 2007.

'I think that the recession, in the best of the experts' judgement, may last a year, maybe if we're lucky, three quarters,' Mr Lee said.

'But the recovery from the recession is likely to be weaker than from previous recessions and we must be prepared for several years of low growth,' he said. -- AFP

No Global Depression: PM

Source : The Straits Times, Dec 5, 2008

A FINANCIAL storm may be sweeping across the globe, but Prime Minister Lee Hsien Loong does not see it as a precursor to a next great depression as happened in the 1930s.

'Singapore must be prepared for several years of slow growth,' said Prime Minister Lee Hsien Loong. -- PHOTO: ZAOBAO

'I think that global depression is not on the cards. Governments have learnt the lesson of the 1930s and they will not repeat the same mistakes,' he said in comments to members of the Foreign Correspondents' Association at a lunch talk today.

'So this is not the end of the world.'

He was responding to a question on how long the current recession will last.

'The recession, to the best of the experts' judgment, may last a year, maybe if we're lucky, three-quarters (of a year),' he noted.

'But the recovery from the recession is likely to be weaker than from previous recessions and we must be prepared for several years of slow growth.'

Mr Lee, however, pointed out that experts have been wrong many times in the last few months and they could be wrong again.

Earlier, in his opening remarks at the lunch talk, Mr Lee noted that governments had been improvising, 'making policy on the fly, venturing into uncharted territory, throwing every possible measure into the mix to try and restore confidence, restore stability, maintain employment and get growth going again'.

He said that while the financial markets appear to have stabilised for now, they are far from being back to normal.

'The real economies have been affected by the turmoil and they are now going into severe recession, and the real economies' problems are just (beginning). In a globalised world none of us can be immune.' he said.

The biggest impact on the world economy would be how the situation develops in the United States. China and India were also important.

China has had a 4-trillion yuan (S$886 billion) package of fiscal measures and keeping its economy going 'will be a plus for the rest of the world'.

'But the impact of China and India on the world economy are orders of magnitude smaller than the impact of the US economy on the world economy,' he said.

'The Chinese package, for example, is about US$500 billion. And there was one estimate that of this, its impact on the rest of the world is something like US$50 billion - helpful but it's not going to make a difference.'

In Washington, US President-elect Barak Obama has acted and was 'ready to hit the ground running'.

'He's assembled the strongest possible economic dream team. He's got Paul Volcker, he's Larry Summers, he's got Tim Geithner. They will do their utmost to moderate the downturn, restore confidence and put the country on the road to recovery.

'And for good measure, also strengthen and stabilise the growth of the financial system.'

Still, Mr Lee said that even with the best team and the best policies, it is not possible to turn things round overnight. A plausible scenario is the recession lasting up to a year, followed by several years of slow growth.

'And there's some reason to argue for this because it's not just crystal ball gazing but based on the argument that we can't continue to have the world growing, sustained by Americans consuming and borrowing, and by Asia producing and lending.

'So this global macro-economic balance between savings and consumption has to be rebalanced. The Americans have to save more, consume less, probably invest more in infrastructure.

'Asian countries are continuing to save, will have to invest more or will have to consume more so that the global imbalances will be reduced and Asia can take up the slack of what the Americans are not consuming.'

These are not adjustments which can take place overnight. Which is why he thinks that it will be some time before the world goes back to sustained growth again, he said.

9000亿元投资保障性住房 中国房产从“香港模式”向“新加坡模式”转变?

Source :《联合早报》December 5, 2008