Source : The Straits Times, Mar 18, 2008
Wrong moves made in bid to calm markets; ploy of cutting rates simply not working
THE desperate measures taken by the United States central bank to restore calm amid a growing storm in global financial markets are beginning to resemble wagers it keeps losing in a giant poker game.
As any serious poker player will tell you, never show emotion, be it jubilation or panic. That way, a weak hand might still come up trumps if no one calls your bluff.
Yet to seasoned gamblers, US Fed chairman Ben Bernanke seems to have made all the classic mistakes of a poker novice since this crisis erupted last August.
Take yesterday. Before Asian markets opened, the Fed announced an emergency cut of 0.25 percentage point in its discount rate - the rate it charges US banks for loans.
It also announced that it would lend directly to Wall Street firms in a move to ease the growing credit crunch that brought investment bank Bear Stearns to its knees last Friday.
The measures were aimed at sending a strong message, that the Fed stood ready to do whatever was needed to stop a meltdown in the global financial system.
Instead, the moves merely fuelled fears that there might be other US investment banks in danger of failing. Regional bourses hit the panic button and started selling, spooked by fears that US-based hedge funds, which may deal with these banks, would also go belly-up.
This is all a stark contrast from late August last year when Mr Bernanke seemed to hold all the trump cards, when he could calm markets by merely holding out hopes of an interest cut.
Yet even then, many experts were sceptical that flooding the economy with cheap money - as Mr Alan Greenspan had done regularly during his tenure as Fed chairman - would solve the problem.
They pointed to the problems that cutting interest rates could trigger - higher inflation, a collapsing dollar and the rapid unravelling in the massive debt taken out in yen that would accompany it.
Some even warned that a share market recovery would be a false dawn unless radical measures were taken to inject confidence into the bond market, where banks had stopped accepting mortgage securities as collateral.
These warnings went unheeded last year as Wall Street and the rest of the world resumed partying and sent shares to record highs in October, all on a misguided belief that a fresh era of easy money was about to be unleashed.
Seven months down the road, those observations now look uncannily prescient as the Fed grapples with a financial crisis of epic proportions and Wall Street digests the demise of a giant bank that had survived the Great Depression and several other recessions.
For many traders, the Fed's ploy of cutting interest rates is simply not working. One likens it to leading a dying horse to water and finding it too sick to drink.
And Bear Stearns may simply be the first of many Wall Street firms to keel over.
So rather than try to put out each fire in a contagion that now threatens to engulf the global financial system, the Fed should throw up firewalls and draw a line between what could be saved and what should be left to go under.
One reason why the credit crisis is so bad is that the bonds have to be 'marked to market'. As there is no trading at all in the bonds market, banks have to write billions of dollars worth of bonds to zero - even though the underlying loan repayments are still healthy.
The US$200 billion (S$277 billion) gamble the Fed made to jump-start frozen credit markets by allowing banks to swop top-quality mortgage-backed securities for treasury bonds for a 28-day period makes a good starting point.
More such measures will relieve the Fed of the accusation that it is creating a moral hazard by bailing out specific investment banks that deserve to be punished for creating the mess in the first place.
Local investors, meanwhile, can draw some relief from the fact that Singapore banks will be spared most of the systemic risks that come with the collapse of a major US investment bank.
Local institutions draw the bulk of their earnings from ultra-safe businesses such as home loans in Singapore, and their well-capitalised balance sheets and cash-rich deposits mean they could benefit from the new global financial order that will surely emerge from this upheaval.
If JPMorgan can pay a mere US$236 million for Bear Stearns, which used to be worth US$20 billion, imagine the other excellent investment opportunities likely to be thrown up as the US mortgage crisis snowballs.
By keeping plenty of hard cash on hand, Singapore banks stand a chance to transform themselves into regional or global banking giants if they play their cards right.
Tuesday, March 18, 2008
Are Markets Headed For BIGGER TROUBLE?
Source : The Electric New Paper, 18 March 2008
Major crisis averted by US Fed last Friday but...
What is happening to the world's financial markets?
US shares dropped like a rock on Friday. Today, Asian markets are expected to follow.
The story began last Tuesday when the US central bank (the Fed) said it would help commercial banks by loaning them money.
Large withdrawals by depositors could have been a disaster. It was a relief that problem was resolved.
Then, on Friday, the Fed said it would do the same for investment banks like Goldman Sachs, Merrill Lynch, Lehman Brothers and Bear Stearns.
Wow. The Fed hasn't used such drastic medicine since the 1960s. The time before that was in the great depression of the 1930s. Are things really so serious?
LEVERAGE CAN BACKFIRE
Investment banks make riskier deals than commercial banks. They sell re-packaged home loans. They also set up funds to trade stocks and bonds, mostly with borrowed money.
Borrowing is called 'leverage'. It boosts risks as well as returns. Indeclining markets, like now, the losses get magnified.
Some funds and investment banks may have taken on too much risk. There are reports of 30 and 40 times leverage. It means they used $1 of investors' money to borrow $40 from banks and invest it.
True, leverage can earn a fortune. But it can also turn around and bite you.
Consider this: If a $40 investment declines by one per cent, the loss is 40 cents.
But that small decline of 40 cents translates into a 40 per cent loss of the initial $1 investment.
When it happens, the bank which loaned the $40 would make a 'margin call'.
It would say, 'We are very sorry but the $1 you invested is no longer sufficient.
'Markets are falling and your $1 will be wiped out soon. You have 24 hours to put up more money. If you don't, we will sell off your investments at a loss.'
The fifth largest investment bank, Bear Stearns, owned funds which ran into this kind of problem. That was the root of its cash crisis.
Last week, Bear Stearns said it had US$17 billion ($23.4b) in cash so no one should worry.
It didn't work. Traders reasoned if Bear Stearns declared bankruptcy, their money would be stuck for months, as legal proceeding dragged on. They withdrew billions of dollars on Wednesday and Thursday.
On Friday, Bear Stearns had insufficient cash to meet further redemptions. So, it called the US Central Bank (Fed) and said, 'We are sorry but withdrawals are so heavy that if we open for business, we will run out of money. So, we will not open tomorrow.'
BIG TROUBLE
It was a shock. The Fed knew it had to do something. Selling of Bear Stearns' assets would have decreased the value of securities across the board. Losses could be enormous.
So, the Fed arranged to loan the firm all the money it needed. The irony is the Fed offered the same credit facility to commercial banks on Tuesday. Then, markets celebrated, thinking the credit crisis had been solved. The US Dow index rose 416 points.
On Friday, when the identical deal was extended to investment banks, the Dow index fell 195 points. Shares of Bear Stearns dropped 50 per cent.
This time, markets feared that financial institutions were failing. An unending series of bailouts might be needed.
Should we expect a downward spiral of collapse, rescue, collapse, and rescue? We haven't seen that since the great depression in the 1930s.
Everyone says such a possibility is unlikely.
True, but one year ago, everyone considered it impossible.
--------------------------------------------------------------------------------
When will it end?
THE futures market indicates a 90 per cent chance of a 1 per cent cut in US interest rates when the Central Bank meets tomorrow.
Will it be enough to turn the US economy around?
Who knows? Our best predictor is the stock market, and it is a far from perfect.
Major crisis averted by US Fed last Friday but...
What is happening to the world's financial markets?
US shares dropped like a rock on Friday. Today, Asian markets are expected to follow.
The story began last Tuesday when the US central bank (the Fed) said it would help commercial banks by loaning them money.
Large withdrawals by depositors could have been a disaster. It was a relief that problem was resolved.
Then, on Friday, the Fed said it would do the same for investment banks like Goldman Sachs, Merrill Lynch, Lehman Brothers and Bear Stearns.
Wow. The Fed hasn't used such drastic medicine since the 1960s. The time before that was in the great depression of the 1930s. Are things really so serious?
LEVERAGE CAN BACKFIRE
Investment banks make riskier deals than commercial banks. They sell re-packaged home loans. They also set up funds to trade stocks and bonds, mostly with borrowed money.
Borrowing is called 'leverage'. It boosts risks as well as returns. Indeclining markets, like now, the losses get magnified.
Some funds and investment banks may have taken on too much risk. There are reports of 30 and 40 times leverage. It means they used $1 of investors' money to borrow $40 from banks and invest it.
True, leverage can earn a fortune. But it can also turn around and bite you.
Consider this: If a $40 investment declines by one per cent, the loss is 40 cents.
But that small decline of 40 cents translates into a 40 per cent loss of the initial $1 investment.
When it happens, the bank which loaned the $40 would make a 'margin call'.
It would say, 'We are very sorry but the $1 you invested is no longer sufficient.
'Markets are falling and your $1 will be wiped out soon. You have 24 hours to put up more money. If you don't, we will sell off your investments at a loss.'
The fifth largest investment bank, Bear Stearns, owned funds which ran into this kind of problem. That was the root of its cash crisis.
Last week, Bear Stearns said it had US$17 billion ($23.4b) in cash so no one should worry.
It didn't work. Traders reasoned if Bear Stearns declared bankruptcy, their money would be stuck for months, as legal proceeding dragged on. They withdrew billions of dollars on Wednesday and Thursday.
On Friday, Bear Stearns had insufficient cash to meet further redemptions. So, it called the US Central Bank (Fed) and said, 'We are sorry but withdrawals are so heavy that if we open for business, we will run out of money. So, we will not open tomorrow.'
BIG TROUBLE
It was a shock. The Fed knew it had to do something. Selling of Bear Stearns' assets would have decreased the value of securities across the board. Losses could be enormous.
So, the Fed arranged to loan the firm all the money it needed. The irony is the Fed offered the same credit facility to commercial banks on Tuesday. Then, markets celebrated, thinking the credit crisis had been solved. The US Dow index rose 416 points.
On Friday, when the identical deal was extended to investment banks, the Dow index fell 195 points. Shares of Bear Stearns dropped 50 per cent.
This time, markets feared that financial institutions were failing. An unending series of bailouts might be needed.
Should we expect a downward spiral of collapse, rescue, collapse, and rescue? We haven't seen that since the great depression in the 1930s.
Everyone says such a possibility is unlikely.
True, but one year ago, everyone considered it impossible.
--------------------------------------------------------------------------------
When will it end?
THE futures market indicates a 90 per cent chance of a 1 per cent cut in US interest rates when the Central Bank meets tomorrow.
Will it be enough to turn the US economy around?
Who knows? Our best predictor is the stock market, and it is a far from perfect.
New Home Sales Nosedive In Feb
Source : The Straits Times, Mar 18, 2008
Only 185 out of 343 units sold, down from 328 in January, but prices are holding steady.
SALES of new homes slowed almost to a standstill last month, delivering another blow to the already-weak housing market here.
Property developers yesterday said they sold only 185 new units in February, about half of the 343 they launched in the month and well down from the 328 sold in January.
This anaemic performance, coupled with the continuing quietness of the market this month, prompted some experts to predict that new home sales this quarter could hit one of the lowest levels ever seen here.
‘The current weak market sentiment is likely to stay, which means that the total number of new homes sold in the quarter may be 700 to 800 units,’ said Mr Li Hiaw Ho, executive director of CB Richard Ellis Research.
He said this could be worse than during the Asian financial crisis, when just 894 new units were sold in 1997’s last quarter. Only Sars in 2003 saw fewer new homes sold: 427.
In contrast, developers sold 14,811 new homes in the exuberant boom last year, or an average of 3,700 homes each quarter.
Property consultants say they were not surprised by last month’s feeble numbers, given the Chinese New Year holiday and the snowballing global financial crisis originating from the United States.
But even as some admitted the contraction was ‘worse than expected’, they stressed the silver lining: home prices are still holding steady.
At Hong Leong Holdings’ Aalto in Jalan Kechil, two units were sold for a median price of $2,619 per sq ft (psf), up from the median $2,078 psf fetched by three units in January.
‘There are strong fundamentals to support home prices,’ said Mr Chua Yang Liang, Jones Lang LaSalle’s head of South-east Asia research.
‘En bloc sellers have to look for housing and they are cash-rich. We still believe in the ‘remaking Singapore’ story and with more foreigners coming in, property prices are likely to hold in the coming months.’
But market confidence will ‘remain shaky’ until the extent of the US recession can be measured, said Ms Tay Huey Ying, director of research and consultancy at Colliers International. She expects market activity to remain lacklustre until June.
At some projects, prices have started to dip slightly. At Ritz-Carlton Residences in Cairnhill, only one unit was sold last month at $4,140 psf. None was sold in January, but five were taken up in December for between $5,053 and $5,146 psf.
The best performer last month was the Cosmo condominium in Guillemard Crescent, where 41 out of 45 units were sold, mostly within the first week of its launch, for between $1,048 psf and $1,152 psf.
Only 185 out of 343 units sold, down from 328 in January, but prices are holding steady.
SALES of new homes slowed almost to a standstill last month, delivering another blow to the already-weak housing market here.
Property developers yesterday said they sold only 185 new units in February, about half of the 343 they launched in the month and well down from the 328 sold in January.
This anaemic performance, coupled with the continuing quietness of the market this month, prompted some experts to predict that new home sales this quarter could hit one of the lowest levels ever seen here.
‘The current weak market sentiment is likely to stay, which means that the total number of new homes sold in the quarter may be 700 to 800 units,’ said Mr Li Hiaw Ho, executive director of CB Richard Ellis Research.
He said this could be worse than during the Asian financial crisis, when just 894 new units were sold in 1997’s last quarter. Only Sars in 2003 saw fewer new homes sold: 427.
In contrast, developers sold 14,811 new homes in the exuberant boom last year, or an average of 3,700 homes each quarter.
Property consultants say they were not surprised by last month’s feeble numbers, given the Chinese New Year holiday and the snowballing global financial crisis originating from the United States.
But even as some admitted the contraction was ‘worse than expected’, they stressed the silver lining: home prices are still holding steady.
At Hong Leong Holdings’ Aalto in Jalan Kechil, two units were sold for a median price of $2,619 per sq ft (psf), up from the median $2,078 psf fetched by three units in January.
‘There are strong fundamentals to support home prices,’ said Mr Chua Yang Liang, Jones Lang LaSalle’s head of South-east Asia research.
‘En bloc sellers have to look for housing and they are cash-rich. We still believe in the ‘remaking Singapore’ story and with more foreigners coming in, property prices are likely to hold in the coming months.’
But market confidence will ‘remain shaky’ until the extent of the US recession can be measured, said Ms Tay Huey Ying, director of research and consultancy at Colliers International. She expects market activity to remain lacklustre until June.
At some projects, prices have started to dip slightly. At Ritz-Carlton Residences in Cairnhill, only one unit was sold last month at $4,140 psf. None was sold in January, but five were taken up in December for between $5,053 and $5,146 psf.
The best performer last month was the Cosmo condominium in Guillemard Crescent, where 41 out of 45 units were sold, mostly within the first week of its launch, for between $1,048 psf and $1,152 psf.
Commercial Units, Residential Site Up For Sale
Source : The Business Times, March 18, 2008
SEVEN adjoining commercial units in Singapore Shopping Centre and a residential development in District 11 were put up for sale yesterday.
Colliers International will auction the commercial units on the third storey of the shopping centre in Clemenceau Avenue.
The seven units will be offered together and the asking price is in the region of $1,300-$1,500 per square foot (psf) - which works out to some $5.1-$5.9 million in all.
The units are offered with vacant possession and 99-year leasehold tenure with effect from May 1, 1948. The total floor area is 3,916 sq ft, with individual sizes ranging from 409 sq ft to 828 sq ft.
‘The successful bidder could choose to lease the units, which are suited for commercial schools or backroom office operations,’ said Grace Ng, Colliers International’s auctioneer. ‘We foresee these units commanding a potential yield of about $7.50-$8 psf.’
Alternatively, the buyer could sell the units individually at a later stage as they have separate titles, Ms Ng said.
‘Given the tight supply situation in the office sector, this is a rare opportunity for investors and owner- occupiers to acquire a sizeable commercial space in a well-located development,’ she added.
The auction is scheduled for March 26 at The Amara Hotel
Separately, Newman & Goh said yesterday that Pastoral View, a freehold residential site in District 11, is up for collective sale with an indicative price of $95 million - which works out to $996 psf per plot ratio (ppr), including an estimated development charge of about $400,000.
Located at the junction of Bassein Road and Akyab Road, the site covers 34,193 sq ft and has a 2.8 plot ratio, giving it a maximum gross floor area of 95,739 sq ft.
The site can be redeveloped up to 36 storeys from its current 10 storeys.
‘This ideal site is at the heart of the Novena lifestyle hub, yet nestled in an exclusive private enclave,’ said Jeffrey Goh, head of investment sales at Newman & Goh. ‘It will reap extraordinary benefits from the future growth cluster around Novena MRT station, making it a vibrant and desirable location for local and foreign home buyers - especially surgeons and medical executives working in the vicinity.’
The collective sale tender is expected to close at 3pm on April 16.
SEVEN adjoining commercial units in Singapore Shopping Centre and a residential development in District 11 were put up for sale yesterday.
Colliers International will auction the commercial units on the third storey of the shopping centre in Clemenceau Avenue.
The seven units will be offered together and the asking price is in the region of $1,300-$1,500 per square foot (psf) - which works out to some $5.1-$5.9 million in all.
The units are offered with vacant possession and 99-year leasehold tenure with effect from May 1, 1948. The total floor area is 3,916 sq ft, with individual sizes ranging from 409 sq ft to 828 sq ft.
‘The successful bidder could choose to lease the units, which are suited for commercial schools or backroom office operations,’ said Grace Ng, Colliers International’s auctioneer. ‘We foresee these units commanding a potential yield of about $7.50-$8 psf.’
Alternatively, the buyer could sell the units individually at a later stage as they have separate titles, Ms Ng said.
‘Given the tight supply situation in the office sector, this is a rare opportunity for investors and owner- occupiers to acquire a sizeable commercial space in a well-located development,’ she added.
The auction is scheduled for March 26 at The Amara Hotel
Separately, Newman & Goh said yesterday that Pastoral View, a freehold residential site in District 11, is up for collective sale with an indicative price of $95 million - which works out to $996 psf per plot ratio (ppr), including an estimated development charge of about $400,000.
Located at the junction of Bassein Road and Akyab Road, the site covers 34,193 sq ft and has a 2.8 plot ratio, giving it a maximum gross floor area of 95,739 sq ft.
The site can be redeveloped up to 36 storeys from its current 10 storeys.
‘This ideal site is at the heart of the Novena lifestyle hub, yet nestled in an exclusive private enclave,’ said Jeffrey Goh, head of investment sales at Newman & Goh. ‘It will reap extraordinary benefits from the future growth cluster around Novena MRT station, making it a vibrant and desirable location for local and foreign home buyers - especially surgeons and medical executives working in the vicinity.’
The collective sale tender is expected to close at 3pm on April 16.
URA Mulls Over Monthly Index On Private Home Prices
Source : The Business Times, March 18, 2008
The Urban Redevelopment Authority (URA) is mulling over the possibility of releasing the price index for private homes, at least for non- landed properties , on a monthly basis instead of just on a quarterly basis as it does currently, BT understands.
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When contacted, a URA spokeswoman said: ‘We are studying the possibility. We will let you know when a decision has been made.’
In the meantime, URA will issue the flash estimate for the Q1 2008 private home price index on April 1, as usual, the URA spokeswoman added.
Market watchers gave mixed reactions to the idea of URA releasing its private home price index every month. Some say this would complement the monthly developer sales data, while others suggest that the idea may not be such a good thing in today’s quiet market.
‘There may not be enough launches and property transactions to compute an index monthly in a quiet market,’ said a seasoned property consultant. ‘If the market turns, it may not be a good idea to keep reminding people every month that the index is going down or the volume of transactions is falling. That may accelerate the decline. It’s psychological.’
But some players argued that this move could complement URA’s monthly release of developers’ sales data.
‘The developer sales data shows a median price, which may not be reflective of the market since it depends on the type of units (including how they face and whether they have private enclosed spaces/ roof terraces) sold in a development in a particular month. Whereas the formula for a price index is more rigorous than a simple median price and provides a more accurate picture of actual price trends in the market,’ says Colliers International’s director of research and consultancy Tay Huey Ying.
She reckons that because an overall price index will be based on both primary and secondary market transactions, the volume of transactions should be enough for a monthly computation.
Currently URA publishes developers’ private home sales data for each month in the middle of the following month on its website. However, if the authority decides to go ahead with issuing the price index for private homes on a monthly basis, it is likely that both information releases will be at the same time to avoid confusing the public, market watchers suggest.
They also say that if URA decides to go monthly with its price index, they would not be surprised if the Housing & Development Board also broadcasts its resale flat price index on a monthly basis.
The Urban Redevelopment Authority (URA) is mulling over the possibility of releasing the price index for private homes, at least for non- landed properties , on a monthly basis instead of just on a quarterly basis as it does currently, BT understands.
+Logo.gif)
When contacted, a URA spokeswoman said: ‘We are studying the possibility. We will let you know when a decision has been made.’ In the meantime, URA will issue the flash estimate for the Q1 2008 private home price index on April 1, as usual, the URA spokeswoman added.
Market watchers gave mixed reactions to the idea of URA releasing its private home price index every month. Some say this would complement the monthly developer sales data, while others suggest that the idea may not be such a good thing in today’s quiet market.
‘There may not be enough launches and property transactions to compute an index monthly in a quiet market,’ said a seasoned property consultant. ‘If the market turns, it may not be a good idea to keep reminding people every month that the index is going down or the volume of transactions is falling. That may accelerate the decline. It’s psychological.’
But some players argued that this move could complement URA’s monthly release of developers’ sales data.
‘The developer sales data shows a median price, which may not be reflective of the market since it depends on the type of units (including how they face and whether they have private enclosed spaces/ roof terraces) sold in a development in a particular month. Whereas the formula for a price index is more rigorous than a simple median price and provides a more accurate picture of actual price trends in the market,’ says Colliers International’s director of research and consultancy Tay Huey Ying.
She reckons that because an overall price index will be based on both primary and secondary market transactions, the volume of transactions should be enough for a monthly computation.
Currently URA publishes developers’ private home sales data for each month in the middle of the following month on its website. However, if the authority decides to go ahead with issuing the price index for private homes on a monthly basis, it is likely that both information releases will be at the same time to avoid confusing the public, market watchers suggest.
They also say that if URA decides to go monthly with its price index, they would not be surprised if the Housing & Development Board also broadcasts its resale flat price index on a monthly basis.
MGPA Says S’pore Office Demand Underestimated
Source : The Business Times, March 18, 2008
Republic on new curve and will take capital market share from Tokyo, HK.
MACQUARIE Global Property Advisors (MGPA), which has invested about $4.5 billion in Singapore real estate in the past 18 months, is optimistic about market prospects and reckons demand for office space is underestimated.
‘Singapore is a primary market and we like it,’ chief executive (Asia investments) Simon Treacy told BT in a recent interview. ‘We’re looking to invest in all sectors - residential, office, retail.’
Mr Treacy does not share the concern in some quarters that Singapore may face an over-supply of office space post-2010 because of the completion of several major projects.
‘You can’t look at the future of Singapore by looking at the rear-vision mirror,’ he says. ‘Singapore has moved into a different gear. It’s got a more robust economic platform and there are new demand drivers that this market hasn’t seen before.
‘Wealth creation is one of those sectors that will continue to flourish very quickly. Even if Singapore picks up 10 per cent of Switzerland’s wealth industry, there will be very significant growth in the size of the sector in Singapore.’
Another reason the office market will continue to experience strong take-up is that ‘Singapore’s capital markets will grow more than what could be expected by looking at previous trend lines’, Mr Treacy says.
‘It’s now on a new curve. I think Singapore is going to take market share (in the capital markets) from Tokyo, Hong Kong.
‘I see Singapore as being almost the jewel in the Asian crown at the moment. We like the corporate governance, the shifting of gear over the past couple of years to really make Singapore operate at a very different level.’
MGPA-managed funds were the biggest real estate investors in Singapore last year. Their acquisitions here to date include two land parcels at Marina View bought at Urban Redevelopment Authority land sales, 8 Shenton Way (formerly known as Temasek Tower), 12 floors of Springleaf Tower, which MGPA has since sold for a handsome gain, units at 8 Napier condo near the Botanic Gardens, and the Cascadia development in Bukit Timah.
Mr Treacy notes that prime-grade Singapore office rents are expected to appreciate between 10 and 25 per cent this year after last year’s 80-90 per cent hike.
‘I think businesses this year will be more careful over their decisions, but over the medium term, the average rent and take-up will be stronger and there will be ongoing rental growth in this market,’ he says.
‘It’s important to point out that the sectors that are growing in Singapore are those that require international-grade office space and environments to attract the quality people, particularly expatriates, who are going to be required to fuel the growth in this economy.’
On prospects for the Singapore residential sector, he says: ‘It’s going through an interesting growth phase because there’s a strong influx of expatriates. We’ve also got a lot of Singaporeans returning to live and work in the country. And you’ve got a generally positive workforce that’s wanting to get ahead and move upstream. Affordability still seems to be in check. So fundamentally, the outlook is still quite solid.’
As for MGPA’s likely target investments in the housing sector, Mr Treacy says: ‘We target sweet spots. That might change over time, but we certainly see good demand for top-end, best-of-class residential. We also see demand at the top end of the mass market like Cascadia. Again, it’s all about location, location, location.’
He acknowledges the current sub-prime jitters but views these as ‘disruptions that will bring opportunities’, saying: ‘We think the economies that are well thought-through, and with good governance, will be the ones that will float through to the top quickest.’
Viewing Asia as the world’s economic growth engine, MGPA particularly likes Singapore and Hong Kong for their transparency, maturity and growing capital markets.
MGPA is a private equity real estate fund management company that is 49 per cent owned by Macquarie Bank of Australia and 51 per cent owned by MGPA senior management including Mr Treacy. It has more than US$10 billion of assets under management and operations in Asia and Europe.
Overall, MGPA’s leverage on a regional basis is ‘quite conservative’ at about 60 per cent.
On Marina View land parcels A & B in Singapore, Mr Treacy says there are no current plans to team up with joint-venture partners to develop them. Both plots have minimum stipulated office components and plot B also has a minimum hotel component.
‘We’ve closed the purchase of the sites with debt from banks, including major Singaporean banks,’ he says.
8 Shenton Way is being spruced up in phases to create more retail space and a new drop-off area, as well as upgrades to the lobby and entrance to Tanjong Pagar MRT Station.
‘It’s a long-term investment,’ Mr Treacy says when asked if MGPA plans to sell the asset.
Asked whether MGPA has reached its allocation limit for Singapore real estate, he says: ‘We have lots of allocation for the right investments’.
Republic on new curve and will take capital market share from Tokyo, HK.
MACQUARIE Global Property Advisors (MGPA), which has invested about $4.5 billion in Singapore real estate in the past 18 months, is optimistic about market prospects and reckons demand for office space is underestimated.
‘Singapore is a primary market and we like it,’ chief executive (Asia investments) Simon Treacy told BT in a recent interview. ‘We’re looking to invest in all sectors - residential, office, retail.’ Mr Treacy does not share the concern in some quarters that Singapore may face an over-supply of office space post-2010 because of the completion of several major projects.
‘You can’t look at the future of Singapore by looking at the rear-vision mirror,’ he says. ‘Singapore has moved into a different gear. It’s got a more robust economic platform and there are new demand drivers that this market hasn’t seen before.
‘Wealth creation is one of those sectors that will continue to flourish very quickly. Even if Singapore picks up 10 per cent of Switzerland’s wealth industry, there will be very significant growth in the size of the sector in Singapore.’
Another reason the office market will continue to experience strong take-up is that ‘Singapore’s capital markets will grow more than what could be expected by looking at previous trend lines’, Mr Treacy says.
‘It’s now on a new curve. I think Singapore is going to take market share (in the capital markets) from Tokyo, Hong Kong.
‘I see Singapore as being almost the jewel in the Asian crown at the moment. We like the corporate governance, the shifting of gear over the past couple of years to really make Singapore operate at a very different level.’
MGPA-managed funds were the biggest real estate investors in Singapore last year. Their acquisitions here to date include two land parcels at Marina View bought at Urban Redevelopment Authority land sales, 8 Shenton Way (formerly known as Temasek Tower), 12 floors of Springleaf Tower, which MGPA has since sold for a handsome gain, units at 8 Napier condo near the Botanic Gardens, and the Cascadia development in Bukit Timah.
Mr Treacy notes that prime-grade Singapore office rents are expected to appreciate between 10 and 25 per cent this year after last year’s 80-90 per cent hike.
‘I think businesses this year will be more careful over their decisions, but over the medium term, the average rent and take-up will be stronger and there will be ongoing rental growth in this market,’ he says.
‘It’s important to point out that the sectors that are growing in Singapore are those that require international-grade office space and environments to attract the quality people, particularly expatriates, who are going to be required to fuel the growth in this economy.’
On prospects for the Singapore residential sector, he says: ‘It’s going through an interesting growth phase because there’s a strong influx of expatriates. We’ve also got a lot of Singaporeans returning to live and work in the country. And you’ve got a generally positive workforce that’s wanting to get ahead and move upstream. Affordability still seems to be in check. So fundamentally, the outlook is still quite solid.’
As for MGPA’s likely target investments in the housing sector, Mr Treacy says: ‘We target sweet spots. That might change over time, but we certainly see good demand for top-end, best-of-class residential. We also see demand at the top end of the mass market like Cascadia. Again, it’s all about location, location, location.’
He acknowledges the current sub-prime jitters but views these as ‘disruptions that will bring opportunities’, saying: ‘We think the economies that are well thought-through, and with good governance, will be the ones that will float through to the top quickest.’
Viewing Asia as the world’s economic growth engine, MGPA particularly likes Singapore and Hong Kong for their transparency, maturity and growing capital markets.
MGPA is a private equity real estate fund management company that is 49 per cent owned by Macquarie Bank of Australia and 51 per cent owned by MGPA senior management including Mr Treacy. It has more than US$10 billion of assets under management and operations in Asia and Europe.
Overall, MGPA’s leverage on a regional basis is ‘quite conservative’ at about 60 per cent.
On Marina View land parcels A & B in Singapore, Mr Treacy says there are no current plans to team up with joint-venture partners to develop them. Both plots have minimum stipulated office components and plot B also has a minimum hotel component.
‘We’ve closed the purchase of the sites with debt from banks, including major Singaporean banks,’ he says.
8 Shenton Way is being spruced up in phases to create more retail space and a new drop-off area, as well as upgrades to the lobby and entrance to Tanjong Pagar MRT Station.
‘It’s a long-term investment,’ Mr Treacy says when asked if MGPA plans to sell the asset.
Asked whether MGPA has reached its allocation limit for Singapore real estate, he says: ‘We have lots of allocation for the right investments’.
New Home Sales Slump To 9-Month Low In Feb
Source : The Business Times, March 18, 2008
URA sees slowest sale of 170 units since start of its data releases in June ‘07.
The number of new homes sold by developers dropped to just 170 units in February - the lowest since the Urban Redevelopment Authority (URA) began releasing monthly sales data in June 2007.
And CB Richard Ellis executive director Li Hiaw Ho estimates that new home sales could be just 700-800 units for the first quarter of 2008 - even lower than the 894 units sold in the fourth quarter during the Asian financial crisis in 1997.
In an analysis of the data released yesterday, Jones Lang aaLaSalle (JLL) said, however, that prices were comparatively stable.
The firm’s head of research (South-east Asia) Chua Yang Liang said that using the ‘lowest median prices’ category of the URA data, median prices declined 0.7 per cent for units sold in the Core Central Region (CCR) and 5 per cent in the Outside Central Region (OCR) on a month-on-month basis.
For units sold in the Rest of Central Region (RCR), the lowest median price increased 14.2 per cent from $765 psf in January to $874 psf in February.
Colliers International said 107 units were launched in the RCR and 64 were taken up. In the CCR, 31 units were launched and 35 were sold, while in the OCR, 205 were launched and 71 were sold.
Colliers International director of research and consultancy Tay Huey Ying pointed out that although the units launched in the RCR accounted for 60 per cent of all new units launched in February, the number of units sold in the OCR accounted for a much smaller 42 per cent of all purchases.
On the other hand, while the number of new units launched in the CCR accounted for only 9 per cent of all units, sales accounted for a much larger 21 per cent of all units sold.
‘On a deeper analysis, it is estimated that the sales take-up of new units launched in the month of February was strongest for CCR and weakest for OCR,’ Ms Tay said.
She also noted that sales of new units launched in the CCR improved from an estimated 53 per cent in January to 58 per cent in February, while sales in the OCR are estimated to have declined significantly from 49 per cent in January to just 22 per cent in February.
‘This could indicate the resilience of demand for high-end and luxury properties even in the wake of global economic and financial sector uncertainty,’ she said.
Another concern could be the increasing number of new homes ready for sale that have not been launched. At end-December 2007 there were 4,000 such units. But the number has since swelled to more than 6,500 units from 92 unlaunched projects.
Ms Tay said that assuming the US recession is ‘mild and short-lived’, market activity could pick up towards the end of 2008 or early 2009. ‘Based on this scenario, developers may launch a total of some 6,500 to 7,500 units in 2008,’ she said.
However, if the US falls into a prolonged recession, she reckons 5,000 to 5,500 units could be launched, with the mass-market likely to continue to dominate new launches.
With developer sales falling, the secondary market appears to be taking up some of the slack.
According to a DTZ Debenham Tie Leung report, the volume of developer sales of non-landed freehold and leasehold homes fell a sharp 60 and 74 per cent respectively in Q4 2007 quarter-on-quarter. However, secondary market freehold and leasehold transactions fell 47 and 43 per cent respectively for the same period.
Foreigners bolstered sales figures. URA said that they accounted for 31 per cent of all non-landed secondary market transactions in 2007.
URA sees slowest sale of 170 units since start of its data releases in June ‘07.
The number of new homes sold by developers dropped to just 170 units in February - the lowest since the Urban Redevelopment Authority (URA) began releasing monthly sales data in June 2007.
And CB Richard Ellis executive director Li Hiaw Ho estimates that new home sales could be just 700-800 units for the first quarter of 2008 - even lower than the 894 units sold in the fourth quarter during the Asian financial crisis in 1997.
In an analysis of the data released yesterday, Jones Lang aaLaSalle (JLL) said, however, that prices were comparatively stable.
The firm’s head of research (South-east Asia) Chua Yang Liang said that using the ‘lowest median prices’ category of the URA data, median prices declined 0.7 per cent for units sold in the Core Central Region (CCR) and 5 per cent in the Outside Central Region (OCR) on a month-on-month basis.
For units sold in the Rest of Central Region (RCR), the lowest median price increased 14.2 per cent from $765 psf in January to $874 psf in February.
Colliers International said 107 units were launched in the RCR and 64 were taken up. In the CCR, 31 units were launched and 35 were sold, while in the OCR, 205 were launched and 71 were sold.
Colliers International director of research and consultancy Tay Huey Ying pointed out that although the units launched in the RCR accounted for 60 per cent of all new units launched in February, the number of units sold in the OCR accounted for a much smaller 42 per cent of all purchases.
On the other hand, while the number of new units launched in the CCR accounted for only 9 per cent of all units, sales accounted for a much larger 21 per cent of all units sold.
‘On a deeper analysis, it is estimated that the sales take-up of new units launched in the month of February was strongest for CCR and weakest for OCR,’ Ms Tay said.
She also noted that sales of new units launched in the CCR improved from an estimated 53 per cent in January to 58 per cent in February, while sales in the OCR are estimated to have declined significantly from 49 per cent in January to just 22 per cent in February.
‘This could indicate the resilience of demand for high-end and luxury properties even in the wake of global economic and financial sector uncertainty,’ she said.
Another concern could be the increasing number of new homes ready for sale that have not been launched. At end-December 2007 there were 4,000 such units. But the number has since swelled to more than 6,500 units from 92 unlaunched projects.
Ms Tay said that assuming the US recession is ‘mild and short-lived’, market activity could pick up towards the end of 2008 or early 2009. ‘Based on this scenario, developers may launch a total of some 6,500 to 7,500 units in 2008,’ she said.
However, if the US falls into a prolonged recession, she reckons 5,000 to 5,500 units could be launched, with the mass-market likely to continue to dominate new launches.
With developer sales falling, the secondary market appears to be taking up some of the slack.
According to a DTZ Debenham Tie Leung report, the volume of developer sales of non-landed freehold and leasehold homes fell a sharp 60 and 74 per cent respectively in Q4 2007 quarter-on-quarter. However, secondary market freehold and leasehold transactions fell 47 and 43 per cent respectively for the same period.
Foreigners bolstered sales figures. URA said that they accounted for 31 per cent of all non-landed secondary market transactions in 2007.
Only One Collective Sale Done So Far This Year
Source : The Straits Times, Mar 18, 2008
This is a marked fall from about 25 done in the same period last year.
SOME residential estates are still pushing for a collective sale but they face a tough market in which such transactions have almost completely dried up.
Just one small deal has been sealed so far this year, dramatically down from about 25 in the same period last year, property consultants said.
GOING EN BLOC: Pastoral View got 80 per cent owner approval before last October's rule change but had waited for One Akyab to join the sale so as to offer a bigger site. -- PHOTO: NEWMAN & GOH
The sole deal was Link (THM) Holdings buying freehold Ban Guan Park in Holland Road for $31.1 million earlier this year, with plans to build landed homes.
The escalating United States sub-prime mortgage crisis and a jittery stock market have caused many property players to scurry to the sidelines.
In the months ahead, there will be very few, if any, collective sale launches and deals, said property consultants.
They are in no hurry to launch, given that developers have built up ample land banks for now and sales are slow.
CB Richard Ellis' (CBRE's) executive director of investment properties, Mr Jeremy Lake, said the firm is working on two to three projects but has nothing planned for the collective sale market in the first half.
After that, it will 'play it by ear', he said. 'To a large extent, the market has ground to a halt.' He added that the firm has declined to take on some very large collective sale sites.
Credo Real Estate managing director Karamjit Singh said the firm has plans to relaunch one or two collective sale sites at lower prices in the second quarter. If owners are not prepared to lower their prices, the firm is advising them to wait for the market to recover.
Some estates continue to work towards a sale, with the intention of going to market towards the end of the year, property consultants said.
Chiltern Park's sale committee is asking owners to each contribute $200 towards a fund to facilitate a collective sale.
Some others just want to go to market when they are ready.
'A lot of owners fail to understand the market has turned severely,' said an industry source. 'When your estate is not in the price range developers are excited about, it defeats the purpose of marketing it.'
Yesterday, Pastoral View near Novena MRT Station was put up for collective sale at a guide price of $95 million - slightly under $1,000 per sq ft.
The 52-unit freehold development obtained the minimum 80 per cent approval from owners before rules were amended last October. They had waited, unsuccessfully, for the 18-unit One Akyab next door to join the sale, so that they could offer a bigger site.
'The market is slow but two overseas developers have expressed interest in the site,' said the head of investment sales at marketing agent Newman & Goh, Mr Jeffrey Goh.
In a report yesterday, CBRE said Singapore's investment property sales market was 'surprisingly active' so far this year, with $5.91 billion deals registered, despite the uncertain global economy. Public land sales, such as the $1.25 billion sale of a hospital site in Novena, made up the bulk of investment sales to date.
Investment activity in the residential sector slowed considerably in the first quarter this year, contributing $2.23 billion to date in transacted value. This includes good-class bungalow sales and forms 38 per cent of total investment sales.
'Developers are no longer as keen to acquire more sites compared to last year, as most of them have built a relatively strong inventory of freehold residential sites from the robust collective sales market in 2007,' said the CBRE report.
The release of more affordable 99-year leasehold sites by the Government may sway some buying interest away from private prime freehold residential sites, it added. 'The investment sales market is likely to see a challenging year in 2008.'
SLOWING DOWN
QUIET OUTLOOK
THE escalating United States sub-prime mortgage crisis and a jittery stock market have caused many property players to scurry to the sidelines.
In the months ahead, there will be very few, if any, collective sale launches and deals, say property consultants.
They are in no hurry to launch, given that developers have built up ample land banks for now and sales are slow.
SOLE DEAL
Just one deal has been sealed so far this year: Link (THM) Holdings bought freehold Ban Guan Park in Holland Road for $31.1 million earlier this year, with plans to build landed homes.
UP FOR GRABS
Yesterday, the 52-unit freehold Pastoral View near Novena MRT Station was put up for collective sale at a guide price of $95 million - slightly less than $1,000 per sq ft.
This is a marked fall from about 25 done in the same period last year.
SOME residential estates are still pushing for a collective sale but they face a tough market in which such transactions have almost completely dried up.
Just one small deal has been sealed so far this year, dramatically down from about 25 in the same period last year, property consultants said.
GOING EN BLOC: Pastoral View got 80 per cent owner approval before last October's rule change but had waited for One Akyab to join the sale so as to offer a bigger site. -- PHOTO: NEWMAN & GOHThe sole deal was Link (THM) Holdings buying freehold Ban Guan Park in Holland Road for $31.1 million earlier this year, with plans to build landed homes.
The escalating United States sub-prime mortgage crisis and a jittery stock market have caused many property players to scurry to the sidelines.
In the months ahead, there will be very few, if any, collective sale launches and deals, said property consultants.
They are in no hurry to launch, given that developers have built up ample land banks for now and sales are slow.
CB Richard Ellis' (CBRE's) executive director of investment properties, Mr Jeremy Lake, said the firm is working on two to three projects but has nothing planned for the collective sale market in the first half.
After that, it will 'play it by ear', he said. 'To a large extent, the market has ground to a halt.' He added that the firm has declined to take on some very large collective sale sites.
Credo Real Estate managing director Karamjit Singh said the firm has plans to relaunch one or two collective sale sites at lower prices in the second quarter. If owners are not prepared to lower their prices, the firm is advising them to wait for the market to recover.
Some estates continue to work towards a sale, with the intention of going to market towards the end of the year, property consultants said.
Chiltern Park's sale committee is asking owners to each contribute $200 towards a fund to facilitate a collective sale.
Some others just want to go to market when they are ready.
'A lot of owners fail to understand the market has turned severely,' said an industry source. 'When your estate is not in the price range developers are excited about, it defeats the purpose of marketing it.'
Yesterday, Pastoral View near Novena MRT Station was put up for collective sale at a guide price of $95 million - slightly under $1,000 per sq ft.
The 52-unit freehold development obtained the minimum 80 per cent approval from owners before rules were amended last October. They had waited, unsuccessfully, for the 18-unit One Akyab next door to join the sale, so that they could offer a bigger site.
'The market is slow but two overseas developers have expressed interest in the site,' said the head of investment sales at marketing agent Newman & Goh, Mr Jeffrey Goh.
In a report yesterday, CBRE said Singapore's investment property sales market was 'surprisingly active' so far this year, with $5.91 billion deals registered, despite the uncertain global economy. Public land sales, such as the $1.25 billion sale of a hospital site in Novena, made up the bulk of investment sales to date.
Investment activity in the residential sector slowed considerably in the first quarter this year, contributing $2.23 billion to date in transacted value. This includes good-class bungalow sales and forms 38 per cent of total investment sales.
'Developers are no longer as keen to acquire more sites compared to last year, as most of them have built a relatively strong inventory of freehold residential sites from the robust collective sales market in 2007,' said the CBRE report.
The release of more affordable 99-year leasehold sites by the Government may sway some buying interest away from private prime freehold residential sites, it added. 'The investment sales market is likely to see a challenging year in 2008.'
SLOWING DOWN
QUIET OUTLOOK
THE escalating United States sub-prime mortgage crisis and a jittery stock market have caused many property players to scurry to the sidelines.
In the months ahead, there will be very few, if any, collective sale launches and deals, say property consultants.
They are in no hurry to launch, given that developers have built up ample land banks for now and sales are slow.
SOLE DEAL
Just one deal has been sealed so far this year: Link (THM) Holdings bought freehold Ban Guan Park in Holland Road for $31.1 million earlier this year, with plans to build landed homes.
UP FOR GRABS
Yesterday, the 52-unit freehold Pastoral View near Novena MRT Station was put up for collective sale at a guide price of $95 million - slightly less than $1,000 per sq ft.
US Economy 'Perhaps Entering Recession': EU Economist
Source : AFP, Tuesday, Mar 18, 2008
PARIS - THE US economy is slowing and may be entering a recession, the European Commission's top economics official said on Monday at an OECD conference here.
'We are no longer enjoying the buoyant economic climate of the last two years. We are no more in economic 'good times',' EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.
'The US economy is clearly slowing, perhaps even entering a recession,' he added.
Mr Almunia addressed delegates at an Organisation of Economic Cooperation and Development conference with a speech mostly dedicated to the need for structural economic reform in Europe.
He stressed that Europe was 'far from the risk of recession' despite the danger of contagion from the United States, which is struggling with a housing and credit crisis.
Mr Almunia's comments about the US economy echo forecasts from private sector economists. After a string of weak economic data and surveys in the US, most now believe the world's biggest economy is contracting.
At the end of February, the European Commission cut sharply its 2008 growth estimate for the 15 countries in the eurozone and the 27-member European Union.
Growth in the eurozone this year was forecast to be 1.8 per cent from 2.2 per cent previously, while the EU would grow by 2.0 per cent rather than 2.4 per cent as predicted in November.
'Last month we have had to revise our growth forecasts down slightly and the EU is now predicted to grow below potential this year,' he said.
'But 2.0 per cent is clearly far from the risk of recession.' -AFP
PARIS - THE US economy is slowing and may be entering a recession, the European Commission's top economics official said on Monday at an OECD conference here.
'We are no longer enjoying the buoyant economic climate of the last two years. We are no more in economic 'good times',' EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.'The US economy is clearly slowing, perhaps even entering a recession,' he added.
Mr Almunia addressed delegates at an Organisation of Economic Cooperation and Development conference with a speech mostly dedicated to the need for structural economic reform in Europe.
He stressed that Europe was 'far from the risk of recession' despite the danger of contagion from the United States, which is struggling with a housing and credit crisis.
Mr Almunia's comments about the US economy echo forecasts from private sector economists. After a string of weak economic data and surveys in the US, most now believe the world's biggest economy is contracting.
At the end of February, the European Commission cut sharply its 2008 growth estimate for the 15 countries in the eurozone and the 27-member European Union.
Growth in the eurozone this year was forecast to be 1.8 per cent from 2.2 per cent previously, while the EU would grow by 2.0 per cent rather than 2.4 per cent as predicted in November.
'Last month we have had to revise our growth forecasts down slightly and the EU is now predicted to grow below potential this year,' he said.
'But 2.0 per cent is clearly far from the risk of recession.' -AFP
S'pore Hedge Funds Have Little Sub-Prime Risk: MAS
Source : The Straits Times, Mar 17, 2008
Singapore-based hedge funds have little exposure to risky sub-prime assets and most have not had difficulty responding to the credit crunch, the city-state's central bank said on Monday.
'Based on our latest review in end 2007, hedge fund managers in Singapore have minimal exposures to the sub-prime market,' the Monetary Authority of Singapore (MAS) said in response to a Reuters query.
'Most players have not experienced problems, such as inability to meet redemption requests or margin calls, or problems with valuation, arising from the recent credit crunch,' the central bank added.
Singapore has been promoting the hedge fund industry and currently serves as the base for more than 200 funds.
MAS also said that the republic's banks have enough cash, and that the lenders are expected to be prudent and manage risks.
'The current liquidity positions of our banks are sound,' a MAS spokesperson said.
Western banks such as Bear Stearns have been hit by a lack of cash due to credit turmoil. -- REUTERS
Singapore-based hedge funds have little exposure to risky sub-prime assets and most have not had difficulty responding to the credit crunch, the city-state's central bank said on Monday.
'Based on our latest review in end 2007, hedge fund managers in Singapore have minimal exposures to the sub-prime market,' the Monetary Authority of Singapore (MAS) said in response to a Reuters query.
'Most players have not experienced problems, such as inability to meet redemption requests or margin calls, or problems with valuation, arising from the recent credit crunch,' the central bank added.
Singapore has been promoting the hedge fund industry and currently serves as the base for more than 200 funds.
MAS also said that the republic's banks have enough cash, and that the lenders are expected to be prudent and manage risks.
'The current liquidity positions of our banks are sound,' a MAS spokesperson said.
Western banks such as Bear Stearns have been hit by a lack of cash due to credit turmoil. -- REUTERS
Singapore Home Sales Seen Slumping To 5-Year Lows
Source : 
Reuters, Tuesday, March 18
Singapore homes sales in February almost halved from the previous month, and could slump this quarter to the lowest since the SARS epidemic in 2003 as surging inflation and global economic fears keep buyers at bay.
The government on Monday said 170 private homes were sold in February, less than a tenth of the homes sold last August when Singapore was still in the midst of a two-year property upswing.
The abrupt slowdown this year is hitting shares for property developers but could take some pressure off inflation that is at the highest level in 25 years.
Top property firm CapitaLand fell 3.7 percent on Monday to take losses for the year to 11 percent, while rivals' shares have fared even worse.
City Developments lost 3.9 percent for 30 percent losses this year and Keppel Land slid 4.8 percent to take its drop since December to 31 percent.
After January saw 316 homes sold, property analysts are predicting that total sales for the first three months of this year will be between 700-800 units, the weakest in five years.
"The only two other periods when the Singapore residential market experienced such low sales volume were during the SARS period in the first quarter of 2003 when 427 new homes were sold, and during the Asian financial crisis in the fourth quarter of 1997 when 894 units were sold," said Li Hiaw Ho, research director of property consultancy CB Richard Ellis.
So far the jury is out on how much the drop in demand has hit home prices. Private home prices in Singapore surged 31 percent last year to their highest in over ten years and near the peak of mid-1996 just before the Asian financial crisis.
High-end homes, typically those priced at above S$1,800 per square foot, saw the greatest jump, while the increase was more moderate for homes in the mass market segment.
But the price increase slowed in the fourth quarter as steps taken by the authorities to curb real estate market speculation took effect, including a move in October to bar developers from selling uncompleted homes on a deferred payment scheme.
"The sales figures for February were stunningly low... Buyers are becoming very conservative, although prices seem to have held up," said Jones Lang LaSalle research head Chua Yang Liang.
LAUNCH DELAYS
Reflecting the cautious mood, some developers have delayed their property launches, evident in the 343 units put up for sale in February, against 410 units in January and 445 in December.
KepLand, which is building the 221-unit Marina Bay Suites luxury apartments with Hong Kong Land and Cheung Kong , said in January that it would delay the project until the end of the Lunar New Year holiday in mid-February.
"We're still waiting for instructions to launch," said Margaret Thean, executive director of property agency DTZ, which has been appointed to market the project.
There have also been newspaper reports of property speculators who bought units last year with hopes of a speedy sale for a quick profit, but who are now being forced to sell at steep discounts due to the drop in demand.
But it may not to be time to go bargain hunting just yet.
"While anecdotal evidence of lower transacted prices from desperate speculators looking to liquidate their positions have yet to be fully recognised by the entire market, the risk of a downward spiral effect in residential prices remains," Morgan Stanley analyst Melissa Bon said in a report this month.
"In addition, the bottoming out of private rental vacancies and likely peaking of rentals may put downward pressure on residential prices," she said.
The U.S. brokerage has downgraded CityDev to "underweight" for its exposure to the Singapore home market, and expects prices in the mid to high-end sectors to drop 15 percent this year, compared to its previous expectations for a 15 percent rise.
ABN AMRO analyst Fera Wirawan said homes catering to the mass market could still rise at least 5 percent as prices in this segment had not run up as much.
"It's all about sentiments now. Buyers are holding off in anticipation of a price cut. Even if developers refuse to decrease the price, especially in the high end, they can't hold out for long if the volumes stagnant like this," she said.
Reuters, Tuesday, March 18Singapore homes sales in February almost halved from the previous month, and could slump this quarter to the lowest since the SARS epidemic in 2003 as surging inflation and global economic fears keep buyers at bay.
The government on Monday said 170 private homes were sold in February, less than a tenth of the homes sold last August when Singapore was still in the midst of a two-year property upswing.
The abrupt slowdown this year is hitting shares for property developers but could take some pressure off inflation that is at the highest level in 25 years.
Top property firm CapitaLand fell 3.7 percent on Monday to take losses for the year to 11 percent, while rivals' shares have fared even worse.
City Developments lost 3.9 percent for 30 percent losses this year and Keppel Land slid 4.8 percent to take its drop since December to 31 percent.
After January saw 316 homes sold, property analysts are predicting that total sales for the first three months of this year will be between 700-800 units, the weakest in five years.
"The only two other periods when the Singapore residential market experienced such low sales volume were during the SARS period in the first quarter of 2003 when 427 new homes were sold, and during the Asian financial crisis in the fourth quarter of 1997 when 894 units were sold," said Li Hiaw Ho, research director of property consultancy CB Richard Ellis.
So far the jury is out on how much the drop in demand has hit home prices. Private home prices in Singapore surged 31 percent last year to their highest in over ten years and near the peak of mid-1996 just before the Asian financial crisis.
High-end homes, typically those priced at above S$1,800 per square foot, saw the greatest jump, while the increase was more moderate for homes in the mass market segment.
But the price increase slowed in the fourth quarter as steps taken by the authorities to curb real estate market speculation took effect, including a move in October to bar developers from selling uncompleted homes on a deferred payment scheme.
"The sales figures for February were stunningly low... Buyers are becoming very conservative, although prices seem to have held up," said Jones Lang LaSalle research head Chua Yang Liang.
LAUNCH DELAYS
Reflecting the cautious mood, some developers have delayed their property launches, evident in the 343 units put up for sale in February, against 410 units in January and 445 in December.
KepLand, which is building the 221-unit Marina Bay Suites luxury apartments with Hong Kong Land and Cheung Kong , said in January that it would delay the project until the end of the Lunar New Year holiday in mid-February.
"We're still waiting for instructions to launch," said Margaret Thean, executive director of property agency DTZ, which has been appointed to market the project.
There have also been newspaper reports of property speculators who bought units last year with hopes of a speedy sale for a quick profit, but who are now being forced to sell at steep discounts due to the drop in demand.
But it may not to be time to go bargain hunting just yet.
"While anecdotal evidence of lower transacted prices from desperate speculators looking to liquidate their positions have yet to be fully recognised by the entire market, the risk of a downward spiral effect in residential prices remains," Morgan Stanley analyst Melissa Bon said in a report this month.
"In addition, the bottoming out of private rental vacancies and likely peaking of rentals may put downward pressure on residential prices," she said.
The U.S. brokerage has downgraded CityDev to "underweight" for its exposure to the Singapore home market, and expects prices in the mid to high-end sectors to drop 15 percent this year, compared to its previous expectations for a 15 percent rise.
ABN AMRO analyst Fera Wirawan said homes catering to the mass market could still rise at least 5 percent as prices in this segment had not run up as much.
"It's all about sentiments now. Buyers are holding off in anticipation of a price cut. Even if developers refuse to decrease the price, especially in the high end, they can't hold out for long if the volumes stagnant like this," she said.
Property Market Remains Sluggish - Only Half Of New Units Sold In Feb
Source : The Straits Times, Mar 17, 2008
THE lethargy in the housing market continued last month, with only half of the new units launched snapped up by buyers.
Property developers launched 343 new homes in February but sold only 185, down from the 328 that they sold in January.
Among the best performers were Cosmo at Guillemard Crescent and Waterfront Waves at Bedok Reservoir.
Cosmo, which was almost sold out within a week of its launch, sold 41 of its 45 units at a median price of $1,098 per sq ft (psf). Waterfront Waves saw 26 units sold at a median $808 psf.
Generally, home prices still held steady, even rising in some cases. Where they fell, the dips were marginal.
At Hong Leong Holdings' Aalto in Jalan Kechil, three units were sold in January for a medain $2,078 psf.
Last month, two units were sold at higher prices: one at $2,336 psf and the other at $2,902 psf.
But prices dropped slightly at Mount Sophia Suites in Sophia Road. Twelve units were sold there at a median $1,719 psf in January, but only five were sold last month at a lower median price of $1,709 psf.
THE lethargy in the housing market continued last month, with only half of the new units launched snapped up by buyers.
Property developers launched 343 new homes in February but sold only 185, down from the 328 that they sold in January.
Among the best performers were Cosmo at Guillemard Crescent and Waterfront Waves at Bedok Reservoir.
Cosmo, which was almost sold out within a week of its launch, sold 41 of its 45 units at a median price of $1,098 per sq ft (psf). Waterfront Waves saw 26 units sold at a median $808 psf.
Generally, home prices still held steady, even rising in some cases. Where they fell, the dips were marginal.
At Hong Leong Holdings' Aalto in Jalan Kechil, three units were sold in January for a medain $2,078 psf.
Last month, two units were sold at higher prices: one at $2,336 psf and the other at $2,902 psf.
But prices dropped slightly at Mount Sophia Suites in Sophia Road. Twelve units were sold there at a median $1,719 psf in January, but only five were sold last month at a lower median price of $1,709 psf.
Sky-High Parking
Source : The Straits Times, Mar 17, 2008
PARKING the car is set to reach a whole new level - with a high-rise condominium where every apartment comes with its own private garage in the sky.
The Hamilton, coming up at 37 Scotts Road on the former site of Hotel Asia, will make this fantasy come true.
VROOM WITH A VIEW: The Hamilton, to be located on Scotts Road, will become the first residential high-rise in Singapore, and the third in the world after New York and Dubai, to have a private car porch for each apartment. -- PHOTO: HAYDEN PROPERTIES
Residents of the 30-storey tower will be able to drive their vehicle into a special glass elevator that will lift the vehicle from the ground floor to their 'porch' on the same level as their living rooms.
The 56-unit development has not been launched yet. But when built, it will become the first residential high-rise in Singapore, and only the third in the world after developments in New York and Dubai, to have this vroom-with-a-view parking feature.
Ms Leny Suparman, director of developer Hayden Properties, said the feature offers 'a unique way of living in a condominium yet with the advantages of a landed property'.
Motorists here have already become familiar with high-tech 'stack' parking, though it is not quite the seamless elevator ride The Hamilton promises.
At the Chinatown nightlife hub Club Street, the first fully mechanised public carpark was launched last month.
And MacDonald House in Orchard Road has had an elevator take vehicles to its carpark on the second and third levels after its refurbishment in June 2005.
Owning a unit at The Hamilton, complete with its own private parking bay, will not come cheap.
Hayden Properties is unable to give any price indication for its units - averaging 3,000 sq ft in size.
But according to the Urban Redevelopment Authority's website, apartments in the vicinity have been going for around $4,000 per sq ft.
At The Hamilton, that could work out to about $12 million a unit.
In land-scarce Singapore, mechanised parking systems may seem the way to go, taking up less space than conventional parking lots.
A spokesman for the Land Transport Authority (LTA), which owns the M-Park@Club Street, said the mechanised carpark occupies 900 sq m and provides 142 parking lots.
A conventional multi-storey carpark would need a 2,000 sq m site to provide space for the same number of vehicles.
Hayden is a joint venture between local financial consultancy company KOP Capital and Emirates Tarian, a subsidiary investment company of the Emirates Investment Group.
While its car-porch-in-the-sky is a ritzy feature, not all motorists are sure they will like their cars riding up and down elevators.
'What if the lift breaks down?' asked regional foreign exchange manager David Hong, 44, who prefers to keep his wheels on the ground.
PARKING the car is set to reach a whole new level - with a high-rise condominium where every apartment comes with its own private garage in the sky.
The Hamilton, coming up at 37 Scotts Road on the former site of Hotel Asia, will make this fantasy come true.
VROOM WITH A VIEW: The Hamilton, to be located on Scotts Road, will become the first residential high-rise in Singapore, and the third in the world after New York and Dubai, to have a private car porch for each apartment. -- PHOTO: HAYDEN PROPERTIESResidents of the 30-storey tower will be able to drive their vehicle into a special glass elevator that will lift the vehicle from the ground floor to their 'porch' on the same level as their living rooms.
The 56-unit development has not been launched yet. But when built, it will become the first residential high-rise in Singapore, and only the third in the world after developments in New York and Dubai, to have this vroom-with-a-view parking feature.
Ms Leny Suparman, director of developer Hayden Properties, said the feature offers 'a unique way of living in a condominium yet with the advantages of a landed property'.
Motorists here have already become familiar with high-tech 'stack' parking, though it is not quite the seamless elevator ride The Hamilton promises.
At the Chinatown nightlife hub Club Street, the first fully mechanised public carpark was launched last month.
And MacDonald House in Orchard Road has had an elevator take vehicles to its carpark on the second and third levels after its refurbishment in June 2005.
Owning a unit at The Hamilton, complete with its own private parking bay, will not come cheap.
Hayden Properties is unable to give any price indication for its units - averaging 3,000 sq ft in size.
But according to the Urban Redevelopment Authority's website, apartments in the vicinity have been going for around $4,000 per sq ft.
At The Hamilton, that could work out to about $12 million a unit.
In land-scarce Singapore, mechanised parking systems may seem the way to go, taking up less space than conventional parking lots.
A spokesman for the Land Transport Authority (LTA), which owns the M-Park@Club Street, said the mechanised carpark occupies 900 sq m and provides 142 parking lots.
A conventional multi-storey carpark would need a 2,000 sq m site to provide space for the same number of vehicles.
Hayden is a joint venture between local financial consultancy company KOP Capital and Emirates Tarian, a subsidiary investment company of the Emirates Investment Group.
While its car-porch-in-the-sky is a ritzy feature, not all motorists are sure they will like their cars riding up and down elevators.
'What if the lift breaks down?' asked regional foreign exchange manager David Hong, 44, who prefers to keep his wheels on the ground.
Property Investment Market Robust But Outlook Ahead Challenging
Source : Channel NewsAsia, 17 March 2008
Singapore's property investment market remained robust in the first two-and-a-half months of this year, with investment sales totalling S$5.9 billion in that period, according to a survey by consultant CB Richard Ellis.
It said strong economic fundamentals and the positive long-term outlook in Singapore underpinned property investment activity. This is despite uncertain global economic conditions and a slowdown in the US economy.
The private sector led the property sales, raking in S$3.27 billion and accounting for more than half of the total investments here. Public land sales contributed the remaining 45 percent or S$2.6 billion.
The office sector performed well in the first quarter of 2008, with about a third of total investment sales, or S$2 billion, so far.
Investment activity in the residential sector slowed considerably in the first quarter. It contributed 38 percent of total investment sales, or S$2.23 billion, to date.
CBRE noted that developers are no longer as keen to acquire more sites for redevelopment compared with last year.
Investment in the industrial sector amounted to some S$333 million so far in the first quarter, driven largely by purchases by real estate investment trusts.
For the rest of the year, CBRE said it expects conditions for investment sales to be challenging. It believes that investors are likely to take a longer time to assess the market before making any deals.
Going forward, CBRE said a healthy level of investment activity in the Singapore property market is expected to continue amidst strong growth in Asia and Singapore's position as a financial services hub. - CNA/ms
Singapore's property investment market remained robust in the first two-and-a-half months of this year, with investment sales totalling S$5.9 billion in that period, according to a survey by consultant CB Richard Ellis.
It said strong economic fundamentals and the positive long-term outlook in Singapore underpinned property investment activity. This is despite uncertain global economic conditions and a slowdown in the US economy. The private sector led the property sales, raking in S$3.27 billion and accounting for more than half of the total investments here. Public land sales contributed the remaining 45 percent or S$2.6 billion.
The office sector performed well in the first quarter of 2008, with about a third of total investment sales, or S$2 billion, so far.
Investment activity in the residential sector slowed considerably in the first quarter. It contributed 38 percent of total investment sales, or S$2.23 billion, to date.
CBRE noted that developers are no longer as keen to acquire more sites for redevelopment compared with last year.
Investment in the industrial sector amounted to some S$333 million so far in the first quarter, driven largely by purchases by real estate investment trusts.
For the rest of the year, CBRE said it expects conditions for investment sales to be challenging. It believes that investors are likely to take a longer time to assess the market before making any deals.
Going forward, CBRE said a healthy level of investment activity in the Singapore property market is expected to continue amidst strong growth in Asia and Singapore's position as a financial services hub. - CNA/ms
Sales Of Private Residential Homes Fell By 46% In February
Source : Channel NewsAsia, 17 March 2008
Sales of new private residential homes in February fell 46 per cent compared with the previous months.
This is according to figures released by the Urban Redevelopment Authority.
And industry watchers said this is the slowest sales since last August when the URA first released the data.
About 170 new private apartments were sold in February, compared with 316 units in January.
Donald Han, Managing Director of Cushman & Wakefield, said: "The market has gone through a period of slumber because of the current global economic turmoil. The stock market hasn't been performing too well in the last 3 to 4 months.
“But that said, I think there's still a lot of cash liquidity out there in the market place waiting for the right time to jump in and to do the purchase."
While buyers hold back their purchases, developers too are waiting.
The data also showed supply falling 13 per cent on month in February, with a total of 343 units launched.
But more projects are expected in the next two quarters.
While sales volumes have dropped, prices don't seem to have followed suit.
Dr Chua Yang Liang, Head of Research & Consultancy, Jones Lang LaSalle, said: “If you are looking purely at the low median that we've recorded of transactions in the various districts, prices have contracted between 0.7 and 5 per cent - that's marginal contraction.
“While the sub-prime debacle has affected demand, price has remained stable, I think there is a strong underlying demand and that's coming from occupiers, en bloc residents seeking alternative homes as well as foreigners who are now looking at buying instead of renting. "
Meantime, CB Richard Ellis expects the total number of new homes sold this quarter to be around 700 to 800 units.
It added that the only other times when the local residential market experienced such low sales volume were during the SARS period in 2003 and the Asian Financial Crisis around 1998.
Analysts said Singapore hasn't been hit badly by the US sub-prime crisis, but it has somewhat affected buying confidence and credit availability.
For now, they are not overly concerned about the contraction in the property market, but they said that it's crucial to monitor the impact of the sub-prime crisis in the next three to six months. - CNA/vm
Sales of new private residential homes in February fell 46 per cent compared with the previous months.
This is according to figures released by the Urban Redevelopment Authority.
And industry watchers said this is the slowest sales since last August when the URA first released the data. About 170 new private apartments were sold in February, compared with 316 units in January.
Donald Han, Managing Director of Cushman & Wakefield, said: "The market has gone through a period of slumber because of the current global economic turmoil. The stock market hasn't been performing too well in the last 3 to 4 months.
“But that said, I think there's still a lot of cash liquidity out there in the market place waiting for the right time to jump in and to do the purchase."
While buyers hold back their purchases, developers too are waiting.
The data also showed supply falling 13 per cent on month in February, with a total of 343 units launched.
But more projects are expected in the next two quarters.
While sales volumes have dropped, prices don't seem to have followed suit.
Dr Chua Yang Liang, Head of Research & Consultancy, Jones Lang LaSalle, said: “If you are looking purely at the low median that we've recorded of transactions in the various districts, prices have contracted between 0.7 and 5 per cent - that's marginal contraction.
“While the sub-prime debacle has affected demand, price has remained stable, I think there is a strong underlying demand and that's coming from occupiers, en bloc residents seeking alternative homes as well as foreigners who are now looking at buying instead of renting. "
Meantime, CB Richard Ellis expects the total number of new homes sold this quarter to be around 700 to 800 units.
It added that the only other times when the local residential market experienced such low sales volume were during the SARS period in 2003 and the Asian Financial Crisis around 1998.
Analysts said Singapore hasn't been hit badly by the US sub-prime crisis, but it has somewhat affected buying confidence and credit availability.
For now, they are not overly concerned about the contraction in the property market, but they said that it's crucial to monitor the impact of the sub-prime crisis in the next three to six months. - CNA/vm
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