Thursday, January 17, 2008

Wall St Loses Ground On Economic Fears

Source : The Straits Times, Jan 17, 2008

NEW YORK - US stocks endured fresh losses on Wednesday after a Federal Reserve report said economic growth had slowed and fresh data shone a spotlight on simmering inflationary pressures.

The reports fuelled fears the world's largest economy could be entering a potential recession.

In volatile trade, the blue chip Dow Jones Industrial Average closed down 34.95 points (0.28 per cent) at 12,466.16, after diving by over two per cent a day earlier.

The tech-laden Nasdaq composite lost a heftier 23.00 points (0.95 per cent) to 2,394.59 and the broad-market Standard & Poor's 500 index finished 7.75 points (0.56 per cent) lower at 1,373.20.

The Dow is down around six per cent for the year so far, while the Nasdaq has shed almost 10 per cent.

Stocks tumbled after the Federal Reserve's Beige Book survey said that US economic momentum had moderated during the end of 2007, in part due to 'subdued' retail sales.

'Reports from the 12 Federal Reserve districts suggest that economic activity increased modestly during the survey period of mid-November through December, but at a slower pace compared with the previous survey period,' the report said.

A separate government snapshot added to Wall Street's downbeat sentiment by revealing that US consumer prices rose a slightly stronger-than-expected 0.3 per cent in December, stoking inflation for the year to a 17-year high of 4.1 per cent.

'Headline inflation rates remain well in excess of desired comfort levels and there is no sign of that ending anytime soon,' observed Mr Stephen Gallagher, an economist with Societe Generale.

Investors are worried that a jump in inflationary pressures could deter the Federal Reserve from cutting interest rates. The Fed is widely expected to cut borrowing costs at a policy meeting later this month to help underpin economic momentum. -- AFP

US Subprime Losses Grow, Top Japan Bank Hit Too

Source : The Straits Times, Jan 17, 2008

NEW YORK - CREDIT losses tied to troubled subprime mortgages continued to mount at major United States financial institutions on Wednesday, while Japan's top bank also took a sizable hit.

JPMorgan Chase, the No. 3 US bank, reported fourth-quarter net fell 34 per cent as it recorded US$1.3 billion (S$1.9 billion) in markdowns on subprime positions and saw sharply higher credit costs.

JPMorgan's write-down sent its net income down to US$2.97 billion, or 86 cents a share, in the period from October to December, from US$4.53 billion, or US$1.26 a share, in the same period a year earlier.

'We remain extremely cautious as we enter 2008,' CEO Jamie Dimon, said in a statement as his bank quadrupled to US$1.1 billion the provision it needs to cover ongoing problems on home equity and high risk mortgage loans.

That said, JPMorgan provided comparative relief from the gloom cast by Tuesday's colossal US$18.1 billion write-down by Citigroup.

Also on Wednesday, bond insurer Ambac Financial Group said it expects a US$5.4 billion pretax write-down in the fourth quarter and will cut its quarterly dividend by two-thirds.

Ambac also announced plans to raise US$1 billion in equity and equity-linked securities and named an interim chief executive as it scrambled to maintain its prized triple-A credit ratings.

Its shares plunged nearly 40 per cent on the day.

If that weren't enough, Wells Fargo said its fourth-quarter profit fell 38 per cent, the first decline in more than six years, hurt by rising losses from home equity loans. But the decline at the San Francisco-based bank was smaller than expected.

'What we are starting to see is the flushing out of all these credit problems and an admission that there are losses,' said Mr Tom Atteberry, a partner at First Pacific Advisors, with assets under management of US$11 billion. 'This is a part of the healing process.' Damage was not contained to the United States.

Japan's largest bank, Mitsubishi UFJ Financial Group, may have lost as much as 50 billion yen (S$666 million) on subprime investments last year, up from the 4 billion yen it reported for the six months to September, according to executives with direct knowledge of the matter.

Shares in Japan's big banks, which have ridden the credit crisis relatively unscathed so far, fell sharply in response.

'Sentiment is bad because no one knows if there will be further losses,' said Mr Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

Merrill looms
Investors are already looking to results on Thursday from troubled Merrill Lynch, following the massive write-off by Citigroup, America's largest bank.

Wall Street analysts' scenarios range from US$10 billion to US$25 billion in write-downs for investment bank Merrill, which wrote off US$8.4 billion in the third quarter.

Banks, wrestling with huge losses stemming from US mortgages lent to people ill-equipped to repay them, have been actively seeking cash from abroad from sovereign wealth funds.

Merrill said on Tuesday it would raise US$6.6 billion from selling preferred shares to an investor group that included the Kuwait Investment Authority.

That is on top of the US$6.2 billion capital infusion announced last month in a deal with Singapore's Temasek Holdings and US-based Davis Selected Advisers.

Citigroup announced an overall fourth-quarter loss of US$9.83 billion - its first quarterly loss since its creation in 1998 - and said it was raising US$14.5 billion from offerings of convertible preferred securities.

Saudi Arabian Prince Alwaleed and the government of Singapore were among the investors. In November, Citigroup raised US$7.5 billion by selling a 4.9 per cent stake to Abu Dhabi.

The Government of Singapore Investment Corp, Singapore's biggest sovereign wealth fund, said on Wednesday its large investment in Citigroup and US$9.75 billion injection into credit-hit Swiss Bank UBS AG were unique at a time of financial turmoil and did not represent a strategy shift.

Many experts say ongoing losses at major banks means the crisis is far from over as crucial lending between commercial banks remains patchy at best.

With fears of a US recession growing, interest rate futures are pricing in an almost 1-in-2 chance of a hefty 75 basis points cut in US interest rates, when the Federal Reserve meets at the end of the month - or possibly even earlier. -- REUTERS

IMF Warns Subprime Crisis Losses 'May Be Higher'

Source : The Straits Times, Jan 17, 2008

WASHINGTON - THE United States subprime mortgage crisis will likely produce deeper problems than expected because not all market players have 'come out clean' about their losses, the International Monetary Fund said.

'Some analytical work modelled on conservative assumptions suggests that potential losses may be higher and further capital injections are likely,' Mr Manmohan Singh and Mr Mustafa Saiyid wrote in an IMF report.

'Most banks in the United States have not yet marked their assets to genuine transaction prices,' the report said on Wednesday.

Some market participants 'have come out clean such as a few US hedge funds that have written off the value of all junior notes issued by its structured vehicles,' the report said.

The global markets turmoil that erupted last year amid rising defaults on US subprime mortgages was in part due to a lack of appropriate measures to evaluate the risk of new financial products.

Subprime mortgages - home loans given to people with poor credit histories - were packaged into structured securities such as collateralised debt obligations, of CDOs.

Following the collapse of the US subprime market in mid-2007, market worries about the exposure of the structured securities to the subprime crisis caused a credit freeze that made many market players use valuation models that no longer worked in the meltdown, the report said.

Recent moves by financial institutions to bring off-balance-sheet structures like CDOs on the balance sheet are not at explicit 'transfer prices' and thus 'may not be a full reflection of potential losses'.

The IMF report suggested that market participants seek to regularly put a portion of their complex structured securities on the market to obtain a valid valuation.

Some market players 'increasingly relied on ratings as a measure of default risk and inappropriately compared them to those on plain vanilla corporate debt, which has different sensitivities to market conditions'. -- AFP


US banks seeing higher delinquencies on more than just mortgage payments

NEW YORK - THE bill for America's excessive borrowing during the housing boom has arrived, and more people are having trouble paying it.

JPMorgan Chase and Wells Fargo, two of the biggest United States banks, on Wednesday joined a growing chorus warning that the subprime mortgage mess is just the start of a sweeping lending crisis. And some fear that consumers falling behind on all kinds of loan payments could tip the economy's scale toward recession.

Strapped consumers are having a tough time making payments on credit cards, home-equity loans, and even for their cars. This has caused three of the top five US commercial banks that have already reported damaging fourth-quarter results to set aside some US$12.5 billion (S$17.9 billion) to cover future loan losses - and that number will likely grow as the year wears on.

Problems in the subprime mortgage market are rapidly spilling over into other areas of the economy. No matter what the experts call it - a recession, slowdown or even the makings of a depression - it's clear banks are under mounting pressure to be more cautious about lending.

'If consumption growth stagnates, the odds of a recession are incredibly high,' said Mr Andrew Bernard, director of the Center for International Business at the Tuck School of Business at Dartmouth.

'All the pieces of household financial health are starting to be shakier, especially at the low end.'

He and others are paying close attention to what top US banks say about their customers' payment habits. Many view this as an early indicator about where the overall economy is headed, but there are other signs that are troublesome.

The stock market has had its worst start to the year in three decades, with investors rattled by signs from the Labor Department that unemployment is on the rise and retail sales are on the decline.

Further, the Commerce Department reported on Wednesday that higher costs for energy and food in 2007 pushed inflation for the year up by the largest amount in 17 years.

There was no sign of a turnaround in the last few months of the year. The Federal Reserve reported that the economy grew at a slower pace in late November and December as credit problems intensified and consumers tightened their spending.

To some, it appears that the Fed came to its rate-cutting decision in August a bit too late. Others point to the falling dollar and surging oil prices, factors that usually prevent the central bank from easing its monetary policy.

While debate persists about the Fed's timing and the extent of the slowdown, bank executives - who have scrambled to prepare for another tumble in home prices and higher unemployment in 2008, feel academic definitions are beside the point.

'We're not predicting a recession - it's not our job - but we're prepared,' JPMorgan Chase CEO Jamie Dimon told analysts after the nation's third-largest bank wrote down US$1.3 billion and said profit dropped 34 per cent.

His financial institution did not do all that bad. Rival Citigroup fared the worst during the fourth quarter, losing US$9.83 billion after writing down the value of its portfolio of mortgage and mortgage-backed products by US$18.1 billion.

Wells Fargo, a more traditional bank that avoided last year's trading woes, saw its profit fall 38 per cent due to troubles with home equity loan and mortgage defaults.

JPMorgan is girding for home prices to decline further in 2008 by 5 per cent to 10 per cent; Citigroup's estimate of 7 per cent falls within that range, too.

'The banks are the infrastructure for everything, the heartbeat of the market,' said Mr Chris Johnson, president of Johnson Research Group. 'They need to be fixed before the market, and economy, can move forward with confidence. They need to get all their dirty laundry out there.'

Banks and card companies like American Express - which warned last week that it would add US$440 million to loan loss provisions - said in the regions where home prices are declining, card default rates are rising faster. The same goes for auto loans, subprime mortgages and home equity loans in these areas, which include Florida, Michigan and California.

A big reason for the rise in credit card default rates is that they are returning to more usual levels following a change in bankruptcy law that sent rates lower for a time. But the fact that more losses are being seen in the weaker parts of the country shows the increase is economically driven as well.

Analysts believe this means one thing: Consumers will be the ones paying for years of lax lending standards by US financial institutions. Many will become more restrictive about who gets credit in a bid to stem future losses - and that could curb consumer spending, which accounts for more than two-thirds of the economy.

'We've pushed the envelope,' Mr Johnson said. 'Along with the joy of a market that goes as high as ours is the agony of when it starts to correct itself.' -- AP

Sombre Fed Says US Economy Has Lost Momentum

Source : The Straits Times, Jan 17, 2008

WASHINGTON - RETAILERS, home builders and many manufacturers should brace for even more rough times ahead, a sombre Federal Reserve suggests amid growing fears that the United States might be sliding into recession.

The Fed's snapshot of business conditions showed a national economy losing momentum heading into the new year and a future riddled with uncertainty. The persistent housing slump and harder-to-get credit are making people and businesses ever more cautious, it said.

Separately on Wednesday, the Labor Department reported that US consumer prices rose in 2007 at the fastest pace in 17 years in 2007, by 4.1 per cent, as motorists paid a lot more for gasoline and grocery shoppers paid higher food bills.

Also, more big banks reported losses and said people were having trouble making payments for everything from credit cards to cars.

Stocks were mostly down on Wednesday, the Dow Jones industrial average declining 34.95 points, or 0.28 per cent.

The Fed report was the unwelcome icing on a recent batch of economic indicators - ranging from a plunge in retail sales to a big jump in unemployment - raising concern that the country is heading for its first recession since 2001.

At the beginning of last year, many economists put the chance of a recession at less than 1-in-3; now an increasing number say 50-50 or even worse. Goldman Sachs, the biggest investment bank on Wall Street, thinks a recession is inevitable this year.

The Fed report said the economy did grow during the survey period - from the middle of November through December - but more slowly than during the late fall. Credit problems intensified in December as did troubles in the housing market. That threw Wall Street into new turbulence.

The economy probably grew at a feeble pace of about 1.5 per cent or less in the final three months of last year and will stay weak in the first quarter of this year as consumers - major shapers of the nation's economic health - tighten their belts.

After retailers suffered their worst sales season in five years in 2007, 'the outlook for 2008 among retail merchants was cautious', the Fed said in its report. And the outlook for housing remains gloomy: 'weak during the first part of 2008'. Fallout from a meltdown in risky 'subprime' mortgages continued to sock financial institutions. JPMorgan Chase and Wells Fargo both reported on Wednesday that their earnings fell - raising fresh fears of a widespread lending crisis.

Federal Reserve Chairman Ben Bernanke, in a speech last week, pledged to aggressively cut a key interest rate as needed to try to prevent all these problems from plunging the economy into a major recession. That may well mean a bold half-point cut at the end of a two-day meeting on Jan 30. The Fed started cutting rates in September, but some critics on Wall Street and elsewhere say Mr Bernanke should have acted sooner and more forcefully.

'Clearly there is a high level of caution,' said Mr Ken Mayland, president of ClearView Economics. 'Everyone's guard is up to protect and insulate one's businesses from the high degree of sluggishness that is expected to prevail in the months ahead.'

With voters expressing angst over the economy, the White House and the Democrat-controlled Congress are exploring ways - including the possibility of temporary tax rebates - to get money quickly into the hands of consumers and help stimulate spending. Presidential contenders also are floating their own ideas for rescue packages.

The chairman of Congress' Joint Economic Committee said he had spoken on Monday with Mr Bernanke and found him 'generally supportive' of lawmakers and Mr Bush approving a stimulus bill.

Mr Bernanke, who has not supported any specific plan, testifies before the House Budget Committee on Thursday.

The recent leap in the nation's unemployment rate, from 4.7 per cent in November to 5 per cent in December, rang one of the loudest warning bells. It raised concerns that consumers would clamp down, sending the economy into a tailspin.

On Wednesday, the Fed observed that 'holiday sales were generally disappointing' and pointed to 'further weakness in auto sales'. A day earlier, the government reported that shoppers cut back on their spending by 0.4 per cent in December, wrapping up the weakest year for retailers since 2002.

Adding to worry about how consumers will hold up: Consumer confidence, as measured by the RBC Cash Index, fell in January to its lowest point in figures dating back to 2002.

The housing picture remains bleak - 'quite weak' in all Fed regions, the survey said. Sales continued to be sluggish, and inventories of unsold homes 'persisted at historically high levels'. Manufacturing activity varied around the country, but there was one common thread: Factories reported 'pronounced weakness' in housing-related industries as well as the automobile business. The Fed, in a separate report on Wednesday, said production by big industry was flat in December, fresh evidence of an economic slowdown. -- AP

HDB Launches 1,098 Surplus Flats From East To West

Source : The Straits Times, Jan 17, 2008

THE Housing and Development Board (HDB) is launching the sale of 1,098 flats in Bedok, Clementi, Queenstown and Jurong West under its regular balloting exercise.

Interested buyers can submit their applications from Thursday till Feb 6 - either online via HDB's InfoWeb service or by visiting the HDB Hub or any of its branch offices.

The surplus flats from the Selective En-bloc Redevelopment Scheme comprise 234 studio apartments in Queenstown and Jurong West, plus 164 three-room units, 516 four-room units, and 184 five-room units in Bedok, Clementi and Queenstown.

An exhibition will also be held at the Habitat Forum in HDB Hub, where marketing panels and 3D models will be displayed to give interested buyers more information on the flats.

After the computer ballot is done, those eligible will be informed in April if they have been shorlisted before they can be invited to select a unit that they qualify for.

Marina Bay Suites To Go On Sale This Month

Source : The Straits Times, Jan 17, 2008

PREVIEW sales of the posh Marina Bay Suites will start before the end of the month, even though sentiment in the property market remains weak and the stock market is very rocky.

About a year ago, apartments like this - in the new downtown and preferably with a bay view - were setting new price benchmarks.

PRIVACY FEATURES: The 66-storey Marina Bay Suites condo has 221 units, with just four units of 1,600 to 2,700 sq ft on each floor. -- PHOTO: MARINA BAY SUITES

For instance, Marina Bay Residences attracted large crowds and achieved a record price of $3,450 per sq ft (psf) in December 2006.

But since then, Orchard Road properties have emerged as some of Singapore's hottest properties, crossing $5,000 per sq ft (psf).

Also, the market has now slowed significantly, weighed down in part by fears of a United States recession.

Market sources said Marina Bay Suites could sell for $3,000 psf and above, so the units could go for $4 million to possibly more than $20 million for the penthouses. The condominium is being marketed around the globe.

'Marina Bay is a growth area,' said marketing agent DTZ's regional head (consulting and research), Mrs Ong Choon Fah. 'This is the next big thing.'

A series of previews for the 221-unit, 99-year leasehold Marina Bay Suites will be held late this month. To the project's head of residential marketing, Mr Kan Kum Wah, the time is right. 'As a joint venture, we believe that the market currently is strong enough,' he said.

The 66-storey condo, which together with two office blocks form phase two of the Marina Bay Financial Centre, is being developed by Cheung Kong (Holdings)/Hutchison Whampoa, Hongkong Land and Keppel Land.

Every unit comes with its own private lift lobby and there are just four units of 1,600 to 2,700 sq ft per floor.

Apart from three penthouses - which range from 4,700 sq ft to more than 8,100 sq ft, each with its own swimming pool - the rest are three- and four-bedders.

'It is one of the last sites in the bay area with bay views,' said Mr Joseph Tan, executive director (residential) at CB Richard Ellis, which is also marketing the project.

Elsewhere, Frasers Centrepoint will start staff previews for its freehold Martin Place Residences in Kim Yam Road today and its Waterfront Waves in Bedok Reservoir tomorrow.

But most other launches are expected to take place only after the Chinese New Year celebrations next month.

US Recession Fears Send Asian Markets Into A Tailspin

Source : The Straits Times, Jan 17, 2008

STI, Hang Seng suffer big drops; bank and tech stocks, energy and base metal prices also hit

STOCK markets across Asia plummeted yesterday amid fears that a gathering financial storm in the United States might tip the global economy into a recession.
Hong Kong was the worst hit as the Hang Seng Index plunged an eye-popping 5.4 per cent, reflecting mainland fears that US consumers will buy fewer China exports.

Yesterday's slide means Singapore and Hong Kong are now officially 'bear' markets, ending an unbroken five-year bull run, along with Tokyo, which went bearish on Jan 7. It means these markets are down 20 per cent or more from peaks in the last year.

In the US, the Dow Jones Industrial Index is down 12 per cent from its October highs.

When Asian markets opened yesterday, they were spooked by a double whammy of bad news from the US.

First, an US$18.1 billion (S$25.8 billion) write-down by financial giant Citigroup over the sub-prime mortgage crisis, then a 2.2 per cent slump in the Dow.

After an initial fall in the early hours of trading, the Dow Jones Industrial Average recovered and was up 48.29 points, or 0.39 per cent, to reach 12549.40 at press time. The Nasdaq Composite Index was down 16 points, or 0.66 per cent, at 2401.59.

Jumpy investors in Singapore epitomised deepening gloom around Asia as they sent the Straits Times Index (STI) tumbling about 3 per cent at the opening bell. The STI regained about half its losses - only to slide again as the dramatic scale of Hong Kong's losses became clear.

In its fifth straight day of losses, the STI ended down 96.09 points, or 3.05 per cent, at 3,058.49, its lowest level in 10 months.

The index is now down 20.1 per cent from its peak of 3,831 points on Oct 11. It is down 11.75 per cent for the year, its worst two-week year opening since 2000, after the bursting of the bubble.

Across Asia, bank stocks were badly hit over fears that other major US banks might unveil massive losses.

Technology stocks also skidded after US tech giant Intel posted disappointing quarterly sales and a cautious outlook for this year.

This suggests a possible slowdown in the key personal computer market, which accounts for major business among Asian manufacturers.

Worries over the health of the US economy also took their toll on the ailing greenback and accelerated its decline against regional currencies. It fell by 1.5 yen to a 32-month low of 106.09 yen.

Even energy and base metal prices took a direct hit from the prospects of a global economic slowdown.

Crude oil fell by US$2.30 to US$91.90 a barrel yesterday, while analysts said major steel producers were cutting back on production targets by as much as 30 per cent.

It all boiled down to a very grim trading session for investors.

'What is scary is the rapid pace in which investors' sentiment had soured in the past week,' said remisier Bernie Lee in Singapore.

In Singapore, banks such as DBS Group Holdings and United Overseas Bank each fell by about 3 per cent.

In Hong Kong, HSBC, which gets about one-third of its revenues from North America, plunged 4.5 per cent.

Investors are now clamouring for the US central bank to announce an emergency interest-rate cut ahead of its next meeting at the end of this month.

'The Fed is beyond the curve. We are not talking about sub-prime, but an increasing spate of loan and credit-card defaults in the US,' said Mr Kevin Scully, managing director of corporate finance house NRA Capital.

But for long-term investors, the sell-down presented a good opportunity to buy shares at attractive prices, noted Mr Elan Cohen, JP Morgan Private Bank's senior portfolio manager.

Nearly 3,500 Applications Received For City View@Boon Keng

Source : Channel NewsAsia, 16 January 2008

Singapore's second public housing apartments designed by a private developer – City View@Boon Keng – received some 3,500 applications.

That is four times the number of units available for sale.

Developed as part of the Housing and Development Board's Design, Build and Sell Scheme (DBSS), the 714 apartments are priced at S$520 per square foot.

City View's developer, Hoi Hup, said the applications will be put to a ballot and successful applicants will be notified next month.

The first project under the DBSS is in Tampines. It was launched four years ago and was oversubscribed by ten times. - CNA/so

比11月少近半 上月售出私宅仅328单位

《联合早报》Jan 16, 2008




莱坊(Knight Frank)咨询与研究部主管麦俊荣表示,12月佳节期间一般是房地产销售市场低潮时期,加上全球股市动荡不安造成市场存在许多不稳定因素,使得发展商选择静观其变,不推出新项目。

卓登国际(Chesterton International)研究部主管陈瑞谨则指出,美国的次贷问题进一步恶化,政府撤销延迟付款计划,以及收紧集体出售条例对潜在买家带来了心理上的影响,使得市场去年9月以来逐渐“退烧”。




12月份取得最高成交尺价的为丽嘉登居(Ritz-Carlton Residences)的一个单位,要价每平英尺5146元。位于罗弄安拔士的D'Lotus的售价最低,每平方英尺为571元。另外,由力宝集团发展的滨海精品(Marina Collection)项目以每平方英尺2734元的中数价位,创下升涛湾的最高尺价纪录。





今年第一季即将推出市场的项目包括Marina Bay Suites,Martin Place Residences, Waterfront Waves和碧山22街的一个公寓项目。


Sleepy December Takes The Shine Off Sparkling Year

Source : The Business Times, January 16, 2008

Record 14,826 private home sales in 2007, but only 305 in its last month.

A year that started with a bang ended with a whimper. Developers sold a record 14,826 private homes last year - a third more than the year before. But sales slowed to a trickle in December at only 305, or half the 593 in November. This reflected slower launches amid a cautious buying mood.

Private home purchases by individuals in December were actually much weaker, as almost 32 per cent of developers’ sales that month were accounted for by GuocoLand’s bulk sale of 97 units at Goodwood Residence to Kuwait Finance House.

CB Richard Ellis’s analysis of the Urban Redevelopment Authority’s data on developers’ December private home sales in 2007 shows 90 per cent were in the first nine months, before the market turned wary on factors such as global stockmarket volatility, US sub-prime mortgage problems, escalating oil prices and inflation.

Analysts say other factors that dented the home-buying mood in December were the withdrawal of the deferred payment scheme in October, triggering fears of more cooling measures, as well as a general holiday mood.

Knight Frank’s analysis shows the median price of private homes and executive condos (ECs), a hybrid of public and private housing, sold by developers fell 4.2 per cent to $1,063 psf in December from $1,110 psf in November. Again, market watchers point out that the median price for December would have been much weaker if not for GuocoLand’s sale of the 97 Goodwood Residence units at a median price of $3,200 psf.

Another reflection of the ‘dwindling value’ of units transacted was that developers sold only five in December at more than $4,000 psf, down from 17 in November, said Knight Frank’s director (consultancy and research) Nicholas Mak.

The highest-priced transaction in the primary market in December was $5,146 psf, achieved for The Ritz-Carlton Residences at Cairnhill Road. A check with developer Royce Properties, part of Hayden Properties, showed the price was for a four-bedroom unit on the 31st floor. December’s highest unit price was still shy of the record $5,600 psf set in October at The Orchard Residences.

The lowest transaction in the primary market last month was $571 psf for an apartment at D’Lotus in Lorong Ampas.

Jones Lang LaSalle said the average gap between the highest and lowest transacted prices has been narrowing across all three regions used by URA - the Core Central Region, Rest of Central Region and Outside Central Region - in the past few months. In December, the gap was narrowest in Outside Central Region at just 5 per cent, compared with 12 per cent in November. The gap was 8.2 per cent in Core Central Region and 9.8 per cent in Rest of Central Region last month, again smaller than November’s 11.4 and 25.7 per cent.

‘The more bullish and speculative buyers are, the bigger the gap tends to be, reflecting their willingness to pay higher prices and leading to a bigger disparity between lowest and highest prices in a development,’ said JLL’s head of research (South-east Asia) Chua Yang Liang. ‘When buyers turn cautious, the disparity reduces - which is what we are seeing now.’

Colliers International director Tay Huey Ying said that of the 492 private homes and ECs launched by developers in December, only 47 per cent were sold that same month. This was lower than November’s figure of 70 per cent. ‘With all the uncertainty on the direction of home prices, many potential buyers chose to stay on the sidelines, especially since it was also the holiday period,’ Ms Tay noted. ‘Hopefully, there will be clearer signs on the direction of the market after Chinese New Year.’

The official index for private home prices rose 31 per cent last year, going by an earlier flash estimate. CBRE, which is predicting 10-15 per cent appreciation in the index this year, expects most of this gain to come from the mass-market and mid-tier sectors. It expects developers to launch 12,000-15,000 private homes and to sell some 9,000-11,000.

‘Although the mood seen in Q4 2007 has persisted in January, it is likely that sales momentum will pick up as developers launch more projects to give more choice to potential buyers,’ CBRE said.

Yesterday’s data shows developers launched 492 private homes in December, down 17.7 per cent from November. However, the full-year tally of 14,049 private homes launched in 2007 was up 27 per cent from 2006.

Private Home Sales Shrink 46%

Source : TODAY, Wednesday, January 16, 2008

Lull normal during year-end holiday season: Analysts

The number of new private homes sold in December about halved from the month earlier, but analysts attribute the drop to the year-end holiday season and say it is not necessarily an indication that the property market has peaked.

According to data released by the Urban Redevelopment Authority yesterday, 328 new private residential units were sold in December, down sharply from 611 units in November, or 46 per cent. Developers launched 492 units last month, down from 598.

“This is because the festive period of December is usually a lull period in the property sale market,” said Mr Nicholas Mak, director of research and consultancy at Knight Frank. “Coupled with the market uncertainties due to the stock market turbulence, there were no launches of major developments as developers held back many of their projects.”

“Foreign buyers also don’t do their buying towards the end of the year as they go on holiday,” said Mr Donald Han, managing director of property consultancy Cushman and Wakefield, adding that sales will most likely pick up after Chinese New Year in February.

“The numbers of units sold in both the RCR (rest of central region) and OCR (outside central region) have fallen, with RCR recording the biggest drop, said Mr Mak.

Sales in the core central region increased 37 per cent to 175 units in December but this spike was due to a bulk purchase of 97 units in Goodwood Residence by Kuwait Finance House, according to Jones Lang LaSalle’s head of research in South-east Asia, Dr Chua Yang Liang.

Discounting the bulk purchase, the adjusted number of 78 units sold is more reflective of the overall market, he said.

Despite the smaller number of units sold, prices have remained firm.

“The Marina collection saw 25 units sold at the median price of $2,734 per sq ft, which is a new record for Sentosa Cove projects,” said Mr Li Hiaw Ho, executive director of CBRE Research.

For all of last year, a record number of 14,826 new homes were sold, said Mr Li.

“The bulk of the volume, 13,362 units, or about 90 per cent, were sold in the first nine months of the year, before the market turned cautious in view of various factors”, such as the volatility in global stock markets, the impact of the United States sub-prime problems and escalating oil prices, said Mr Li.

Notwithstanding these factors, Mr Li thinks the property market sentiment is still good. “Although the mood in the fourth quarter of 2007 has persisted in January, it is likely that sales momentum will pick up as developers launch more projects to give more choices to potential buyers,” he said.

Some of the new projects to be launched include Marina Bay Suites and Martin Place Residences.

Marina Bay Suites Priced Around $3,000 PSF

Source : The Business Times, January 17, 2008

Over 600 potential buyers, half foreigners, have registered interest to buy units in 221-unit project

AT around $3,000 psf, the next luxury development to go on sale - Marina Bay Suites - looks like it could actually be quite reasonably priced, especially as luxury home prices have trended towards the $4,000 psf range.

Revealing the estimated selling price at a press conference for the upcoming sales preview of Marina Bay Suites, slated to be before Chinese New Year, Marina Bay Financial Centre (MBFC) head of residential marketing Kan Kum Wah said: 'As a developer, we believe in leaving something behind for capital appreciation.'

Asked if this meant giving speculators more incentive to buy, Mr Kan said he doubts there will be speculative activity, but added that several investors have already expressed their interest in the development.

Marina Bay Suites is part of Marina Bay Financial Centre, being developed by joint venture (JV) partners Cheung Kong Holdings/Hutchinson Whampoa, Hongkong Land and Keppel Land.

So far, over 600 potential buyers (of whom half are foreigners) have registered their interest to buy into the 221-unit Marina Bay Suites. Mr Kan added that over 100 of these potential buyers already own a unit at the JV's earlier-launched development, Marina Bay Residences.

On the projected pricing, Mr Kan cited some sub-sale transactions for Marina Bay Residences at above $3,000.

Mr Kan also said that Marina Bay Suites will have only 218 three- and four-bedroom units ranging between 1,600 and 2,700 sq ft in size. This means units could cost in the range of $5 million to $8 million, putting them out of reach of the average property speculator. DTZ Debenham Tie Leung (DTZ) executive director Ong Choon Fah added: 'At this price range, it will attract the investors.'

These investors will be looking for capital appreciation.

Joseph Tan, executive director (residential) at CB Richard Ellis (CBRE), which is marketing the development together with DTZ, said that capital appreciation for developments in the vicinity has been between 35 and 75 per cent in the previous two years. 'Some have even seen 100 per cent gains,' he added.

But news of a possible US recession does seem to have affected market confidence.

According to caveats lodged, a unit at Marina Bay Residences (excluding penthouses) did cross the $3,000-level last August. However, sub-sale caveats lodged in December show transactions at between $2,400 and $2,700 psf.

Marina Bay Suites will be initially sold through private previews.

Singapore Power Building Sold For $1b

Source : The Business Times, January 17, 2008

Buyer said to be Pacific Star-linked fund; group also eyeing DBS Building

A property fund managed by Singapore's Pacific Star group, with monies invested by German and other European investors amongst others, is believed to have bought Singapore Power Building at Somerset Road.

The building, on Somerset Road, has scope for asset enhancement by creating ground level retail space.

The price is said to be in the region of $1 billion or around $1,820 per square foot of net lettable area.

The 17-storey building, once known as PUB Building, is on a site with a remaining lease of about 66 years. It has a total net lettable area of about 550,000 sq ft.

Although it does not have immediate redevelopment potential - as its current gross floor area surpasses the maximum allowed under the 2003 Master Plan - the 30-year-old property's new owners can look at rental upside as leases roll over. BT understands that there may also be some scope for asset enhancement works, perhaps by adding retail space at the ground level.

The property is being sold by Singapore Power and the Public Utilities Board. PUB moved out last year, while SingPower currently occupies about 200,000 sq ft, which it is likely to lease back at market rent for a few years, market watchers reckon.

SingPower Building was sold through an expression-of-interest exercise which closed in the fourth quarter of last year.

Pacific Star, started by former real estate investment banker Jeff Tay, is also said to be eyeing DBS Building Towers 1 and 2 at Shenton Way, which is being divested by Goldman Sachs. Market watchers suggest the potential buyer may take the form of a consortium involving Pacific Star-linked entities and possibly some of the group's past and present partners.

The Pacific Star group also spearheaded the $505 million securitisation of Capital Square near Raffles Place in 2002 in a deal that valued the prime office development at about $1,200 psf of strata area.

The market has been abuzz with office deals. A Goldman Sachs-linked fund recently bought the 999-year leasehold Hitachi Tower at Collyer Quay for $811 million or about $2,900 psf of net lettable area. Last year, Goldman Sachs also bought Chevron House for $2,780 psf. Formerly known as Caltex House, Chevron House had a remaining 81-year lease at the time of the deal in August 2007.

This week, the Singapore Land Authority launched an expression-of- interest exercise for The Atrium @ Orchard. CB Richard Ellis, the marketing agent, has indicated a price of above $2,700 psf for the property, which will be sold with a fresh 99-year lease.

Prime Grade A office rents in Singapore doubled last year because of the office space crunch. Investment interest in this sector remains strong, given that the supply shortage is expected to continue for the next couple of years.

Some occupiers are even leasing entire small- to mid-sized office developments to get a firmer handle on their occupation costs in the next few years. Among such buildings being eyed by single occupiers is 67 High Street, which will be completed by the end of this year or early next year.

The nine-storey building, which will have about 78,000 sq ft in net lettable area, is being developed on the former Satnam House site by an entity linked to the Royal Brothers group. The property is being marketed by Jones Lang LaSalle.

Singapore Is Asia's Switzerland; Opportunites For Citi, UBS, Others - Barron's

Eli Hoffmann
Seeking Alpha
Sunday, 13 January 13, 2008

Barron's says Singapore may soon surpass Switzerland as the world's number-one private-banking hub, thanks to Asia's burgeoning ranks of millionaires. Figures show private-banking assets in Singapore have sextupled to over $300 billion since 1998.

"China is creating 30,000 new millionaires every year, and India, Indonesia, Taiwan, Korea aren't too far behind," one private banker says. "We need an army of well-trained private bankers to help manage their wealth."

Presently, Singapore is home to 6% of global private-banking assets, vs. Switzerland's 18%. But with breathtaking growth that could hit 30% this year, compared to single-digit growth in Switzerland, the balance of power could shift swiftly. Advantages of Singapore private-banking are secrecy laws even stricter than Switzerland's; an opportunity to avoid Europe's mandated "forced heirship," which forbids disinheritance of family; and low taxes and tax free capital gains.

How to capture Singapore's swell?

Citigroup leads the Singaporean assault on Asian wealth, followed by UBS, Credit Suisse, HSBC and Merrill Lynch. "We're only just scratching the surface as far as tapping private-wealth in Asia is concerned," says Citigroup's Deepak Sharma. "With its excellent infrastructure, exceptional talent and one of most pro-active regulatory environment in the world, Singapore is a natural hub for private wealth management."

2008 Construction Deals Seen Hitting Record $27b

Source : The Business Times, January 16, 2008

The value of construction contracts awarded this year will reach $23-27 billion on the back of strong demand from the private sector, according to official estimates released yesterday.

Last year, the total value of construction contracts awarded hit $24.5 billion - also mainly due to strong private sector demand - according to the Building and Construction Authority (BCA).

The figure came in slightly above analysts' estimates of around $24 billion as well as BCA's previous estimate of $19-22 billion.

In terms of nominal value, last year's figure is higher than the peak demand of $24.4 billion seen in 1997. But if inflation is taken into account, last year's demand still fell about 9 per cent short of the total value of contracts awarded in 1997, BCA said.

Analysts said that the pace of contracts awarded in 2007 shows that growth is still to come.

'The $24.5 billion number is certainly impressive,' said Citigroup economist Kit Wei Zheng. 'Consider this. In the first 10 months of the year, we had $18.5 billion of construction contracts. This implies that $6 billion of contracts were awarded in November and December alone - roughly $3 billion a month. This is far higher than the $1.85 billion monthly average in the January to October period.'

Mr Kit said that the trend indicates that the pipeline of future contracts is likely to support construction GDP growth well into the second half of 2008 and 2009.

For this year, the private sector is again expected to account for the bulk of construction demand, mostly from residential and commercial developments. In 2007, some $18.8 billion worth of contracts came from the private sector.

However, the high construction demand is expected to continue to exert pressure on the construction industry's resources by driving costs up and leading to a capacity crunch.

In 2007, the price of ready-mixed concrete climbed 75 per cent to $130 per cubic metre, while the price of steel bars rose 34 per cent to $1,000 per tonne, BCA's data showed. Labour costs are also on the way up. Overall construction costs increased as much as 40 per cent last year, analysts said.

Many developers are also reporting that most contractors are fully booked for 2008.

Addressing this, the government said that it is 'taking proactive measures' to ease the pressure on construction resources.

Last November, it identified more than $2 billion worth of public sector projects that could be rescheduled to 2010 or beyond. 'All ministries are currently combing through their list of projects to identify more projects for rescheduling,' Parliamentary Secretary for the Ministry of National Development Mohamad Maliki bin Osman said yesterday.

BCA will also increase the number of overseas testing centres to 25 by mid-2009, up from 19 at present. This would allow more foreign workers to be employed.

The government is also encouraging the industry to use more recycled and alternative construction materials. A proposed licensing scheme for importers of materials like sand and granite is being finalised, said Dr Maliki.

He said that the assistance scheme that BCA implemented last year to share the risk of bringing in sand from distant sources will be ended, since it has been a year since Indonesia banned the export of concreting sand to Singapore. 'The move is based on feedback from the industry that the scheme is no longer necessary,' Dr Maliki said.

BCA also intends to continue to encourage the development of environmentally sustainable buildings. New guidelines on concrete usage will be introduced later this month, it said.

Marina Bay Suites Sees Strong Demand Despite Market Uncertainty

Source : Channel NewsAsia, 16 January 2008

Marina Bay Suites is seeing strong demand despite uncertainty in the market, according to its marketing agents.

Both CB Richard Ellis and DTZ Debenham Tie Leung say they've received significant numbers of enquiries from both local and foreign buyers.

What goes up may not necessarily come down, even in these uncertain times.

Demand for these luxury apartment units overlooking Marina Bay seems almost immune to external shocks.

Ong Choon Fah, Executive Director and Regional Head, Consulting and Research, DTZ Debenham Tie Leung (SEA), said: "The top end of the market is like your blue chip stocks. When the market recovers they're the ones that run first, the price recovery is the fastest. But when the market comes down, a lot of them don't need to sell, so activity may come down but we find there's very good price support."

Joseph Tan, Executive Director - Residential, CB Richard Ellis, said: "This is likely to be probably one of the last sites that has views of the Bay so in any property purchase situation, it's still location, location, location."

According to Raffles Quay Asset Management, the prevailing market rate for the Marina area is between S$3,000 and S$4,000 per square foot.

And it remains bullish about the capital appreciation from residential units there.

Kan Kum Wah, Marketing Head - Residential, Raffles Quay Asset Management, said: "You can see from the first phase of Marina Bay Residences, the price has moved between 25 percent and 75 percent as of today, and we believe that based on the current strong economy, we'll be growing in tandem or even outperform."

Each unit in Marina Bay Suites comes with its own private lift lobby and there are just four units per floor.

The apartments range from 1,600 to 2,700 square feet in area each.

The development also includes three penthouse units, ranging from 4,700 to over 8,100 square feet each.

Selected buyer previews for all 221 units will be held later this month. - CNA/ch

KepLand Appoints Bellingham To Design And Build Marinas

Source : Channel NewsAsia, 16 January 2008

Keppel Land has appointed Bellingham Marine Industries to design and build marinas on its waterfront properties in the region.

The first is Marina at Keppel Bay, located within the Keppel Bay precinct.

This will have floating berths that can accommodate 170 yachts of up to 250 feet.

The berths will be built over two phases. The first phase will cost S$9 million and will have 75 berths.

Keppel Land says waterfront living has become a growing lifestyle trend worldwide. - CNA/ch