Private Home Prices May Have Peaked

Source : The Straits Times, July 2, 2008

URA estimates show mere 0.4% rise between April and June, the lowest growth in 4 years

GROWTH in private home prices ground to a halt in the second quarter, dragged down by dismal market sentiment and a poor showing in the luxury segment.

But things were cheerier among cheaper homes, with prices of suburban condominiums and HDB resale flats continuing to climb.

Private home prices inched up 0.4 per cent between April and last month, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.

This is the smallest rise in about four years and a stark drop from the 3.7 per cent rise recorded in the first three months of the year.

On the supply side, there were 67,700 private residential units as at the first quarter, of which 56,500 are expected to be completed between this year and 2011. Some 42,700 units, or 63 per cent, in the pipeline are unsold.

Experts were divided on whether the market has peaked. While home sales have been in the doldrums since late last year, recent launches - at lowered prices - have been encouraging.

Some consultancies, like DTZ Debenham Tie Leung, predicted that private home prices are 'set for further corrections' with bigger developers likely to follow in the footsteps of smaller ones and cut prices to move sales.

Prices will come under pressure from two other factors - speculators dumping units and more homes coming on the market as construction ends, DTZ added.

Its analysis of selected projects showed that prime freehold flats actually fell in price by 4.7 per cent in the second quarter while values of suburban and landed homes were unchanged.

Ms Chua Chor Hoon, DTZ's senior director of research, said: 'This is just the beginning of a decline. Prime properties have started to come down and while the mass market is still holding, we're no longer seeing increases.'

URA data showed that condos in the prime central region led the slowdown in the second quarter, with prices creeping up just 0.2 per cent. City-fringe home prices rose 0.7 per cent while those of suburban condos increased by 1.3 per cent.

The star performer was the HDB resale market, where prices climbed 4.4 per cent - more than the 3.7 per cent growth in the first quarter.

Mr Colin Tan, head of research and consultancy at Chesterton International, said the demand for HDB flats was likely boosted by too-high prices of private homes.

But the private home market 'has probably peaked and prices will come down, if not in the next month, then in the following months', he added.

Mr Nicholas Mak, Knight Frank's director of research and consultancy, added: 'If sales volumes don't pick up much and if the United States posts very weak economic growth, we could see a price decline by December.'

But other consultants painted a brighter picture.

CBRE Research executive director Li Hiaw Ho noted that 1,200 to 1,400 new homes were sold between April and last month, almost double the 762 sold between January and March.

Most of the projects that sold well were mid-tier or mass market condos, with average prices between $775 per sq ft (psf) and $1,225 psf, he said.

'Despite prices softening a little, volume has improved in the last four weeks and this might encourage more developers to launch products.' This could boost transactions in the next two quarters, which may lead to a strengthening of prices, Mr Li added.

Dr Chua Yang Liang, Jones Lang LaSalle's head of South-east Asia research, was more cautious. 'Demand remains favourable in the suburbs, thanks to strong economic growth and a rise in average wages in the first quarter,' he said. But the market is expected to 'continue to swing from month to month till we see a clear stability in either volume or price level'.

More Questions Than Answers In F&N's Management Revamp

Source : The Straits Times, July 2, 2008

Move has not resolved debate about its business direction; instead, issue of possible break-up of conglomerate highlighted again

FRASER & Neave's (F&N's) decision to give up its search for a new group chief executive (CEO) has again turned the spotlight on a possible break-up of the conglomerate.

EYEBROWS RAISED: Traders ask if it is wise to move Mr Koh (left) out of the brewery to be F&N's food and beverage chief, and put Heineken manager Roland Pirmez (below)at APB's helm instead of its own man. -- PHOTOS: ASIA PACIFIC BREWERIES

One reason the company has given for calling off the CEO search was the difficulty in recruiting a person who 'possesses all the necessary combined skill sets to realise the full potential' of its food-and-beverage and properties businesses.

Rather than having one overarching head honcho, F&N has appointed three division chiefs to report to the board through a newly created chairman's office, with former SingTel chief Lee Hsien Yang staying on in his role as chairman.

If F&N thinks this move will end a long-running debate over its future business direction, it is mistaken. Such a move has only raised more questions.

As Singapore's 24th largest firm by market value, the company runs businesses that are not exactly small beer.

It jointly owns Asia Pacific Breweries (APB), brewer of Tiger Beer, with Dutch brewery giant Heineken International, and has 30 breweries in 12 countries.

F&N is also a major property developer, with luxurious condominium projects in Singapore, as well as in Britain and China.

So, it is not surprising to find traders already questioning the wisdom of its proposed management revamp.

Is it wise, for instance, to move Mr Koh Poh Tiong, a 23-year veteran in the brewery business, from APB, where he is currently the CEO to become F&N's food and beverage chief?

In his new role, Mr Koh will represent F&N's interests in APB and look after a division that includes well-known brands such as Magnolia and NutriSoy.

Eyebrows, however, were raised when APB said Mr Koh would be replaced by Mr Roland Pirmez, a manager from Heineken.

Granted that F&N's partnership with Heineken in APB goes back 76 years. Its effective interest of 39.7 per cent in APB, however, is smaller than Heineken's 41.9 per cent effective stake.

Surely, it would want its own man at APB's helm to look after a cash cow that produces annual revenues of $1.8 billion.

Some have argued that Mr Pirmez's appointment will not alter the status quo at APB, since he has to report to a board whose composition is determined by F&N and whose chairman, Mr Simon Israel, comes from Temasek Holdings, F&N's No. 2 shareholder.

Others, though, are not so sure.

They pointed out that Heineken had made no bones about its ambitions to expand in Asia, one of the world's fastest-

growing brewery markets, but was constrained from doing so directly by a 1931 agreement with F&N that required any expansion to be made through APB.

Things came to a head two years ago, when the two companies were embroiled in a legal spat over appointing a regional director for APB's China operations.

At one stage, the two firms were even competing on the open market to mop up as many APB shares as they could.

Observers said the tussle resulted in various defensive moves by F&N to fend off Heineken's postures. These included an invitation to Temasek to take up a 14.9 per cent stake in December 2006.

Surely, in the light of such developments, Mr Pirmez's APB appointment should be viewed as either both parties coming to an agreement on future cooperation or a prelude to F&N getting out of APB altogether.

Some have also argued that by having separate CEOs to run its various divisions, F&N will also be able to establish a track record for investors to value each business separately - and ascertain if the group is worth more if it is broken up.

Around the world, there are already plenty of examples of companies tearing themselves up and rewarding shareholders as a result. Old United States conglomerates such as AT&T and ITT Industries are just a few examples.

F&N's management revamp may well herald a further corporate action by the group.

Mapletree, Arcapita In Real Estate JV

Source : The Business Times, July 2, 2008

Fund to hold $1.7b portfolio of industrial properties

MAPLETREE Investments has entered a joint venture with Arcapita Bank to form a private real estate fund called Mapletree Industrial Trust (MIT). The fund will hold the $1.71 billion portfolio of high-rise, ready-built industrial properties acquired from JTC Corporation.

Sealing the partnership: Hiew Yoon Khong, CEO of Mapletree Investments (left) and Martin Tan, executive director, co-global head of real estate, Arcapita Bank, at the Toa Payoh North industrial estate

Mapletree will hold a 25.1 per cent stake in MIT, while Arcapita will hold 56.5 per cent. Mapletree Industrial Fund, a pan-Asian private real estate industrial fund sponsored by Mapletree, will own the rest.

'We will explore the possibility of listing this portfolio as a Reit in due course, possibly in combination with other Mapletree industrial assets,' Mapletree's CEO Hiew Yoon Khong said yesterday.

MIT took official control of the industrial properties yesterday. The portfolio comprises 39 blocks of flatted factories, 12 amenity centres, six stack-up buildings, one ramp-up building, three multi-tenanted business park buildings and one warehouse building. Mapletree's wholly owned subsidiary Mapletree Industrial Fund Management will manage the properties.

Mr Hiew said Arcapita's involvement as a joint-venture partner in MIT supports 'our view that this is a high quality portfolio of real estate'.

Headquartered in Bahrain, Arcapita provides syariah-compliant alternative investments and counts high net worth individuals and institutions among its investors. The bank opened its Singapore office in January.

'The properties in the portfolio are attractive and well-diversified in terms of tenancy, location and asset type, and are well placed to continue to perform strongly,' Mapletree and Arcapita said in a joint statement yesterday.

The partnership marks Arcapita's first major investment in South-east Asia and its first venture with Mapletree. 'The acquisition of this JTC portfolio, given its scale and quality, is an excellent start for Arcapita's Singapore office as we seek to increase our investments and presence across Asia,' said Arcapita CEO Atif Abdulmalik.

Tampines Site To Anchor H2 Industrial Land Sales

Source : The Business Times, July 2, 2008

Reserve sites comprise new plot in Jurong, six sites rolled over from H1

The Ministry of Trade and Industry (MTI) yesterday unveiled an industrial land sales programme for the second half of 2008 that could yield a total supply quantum that is a tad above that of the first half.

The latest slate has just one site on the confirmed list, at Tampines Industrial Avenue 4 (opposite the wafer fab park and near the Giant, Courts and Ikea outlets) and seven plots on the reserve list, of which only one is new - a plot in Jurong at Pioneer Road North/Soon Lee Road. The other six reserve list plots are being rolled over from H1 2008.

Both new sites at Tampines and in Jurong are being offered on 30-year leasehold tenures and zoned Business 2, which means they can be developed for a wide range of uses such as clean/light industry, general industry and warehouse.

The 5ha Tampines plot on the confirmed list will have minimum floor-plate size and product-type stipulations. 'The objective of such conditions is to address demand for industrial space for single-users which need larger floor plates,' MTI said.

Colliers International director (industrial) Tan Boon Leong envisages the plot to be developed into a low-rise industrial facility of at most two and a half storeys (with mezzanine offices) as the site has just a 0.8 plot ratio (ratio of maximum potential gross floor area, or GFA, to land area).

'Industrialists like low-rise premises so this site should be well sought after by both industrialists and developers,' Mr Tan reckons. He estimates the site will fetch bids of at least $40-$50 per square foot per plot ratio (psf ppr), or $17.2 million to $21.5 million in absolute terms. The plot, which can have a maximum GFA of about 430,000 sq ft, is slated for launch in November.

Mr Tan expects the Pioneer Road North reserve-list site to fetch around $35-$45 psf ppr. The site will be made available for application in October.

The government releases a site on the reserve list only upon successful application by a developer that undertakes to bid at a minimum price acceptable to the state.

Confirmed list plots on the other hand are launched according to a pre-stated schedule, regardless of demand.

The other six reserve-list plots for H2 2008 that are being rolled over from the H1 list are located at Yishun Avenue 6 (two parcels), Toh Tuck Avenue, Ubi Avenue 4, Kallang Pudding Road and Serangoon North Avenue 4. All six plots are zoned for Business 1 use, meaning they can be developed for clean and light industrial, and warehouse use.

The Toh Tuck plot has 30-year leasehold tenure while the other five are being offered on 60-year leases.

MTI's H2 2008 sole confirmed list site can potentially generate about 40,000 sq metres GFA, similar to the 42,000 sq m from the only confirmed plot in H1 2008 located at Woodlands Industrial Park E5.

The seven reserve plots in H2 may be developed into some 188,570 sq m GFA, or 8 per cent higher than the 174,570 sq m from the seven plots in the H1 slate.

'MTI probably wants to keep the status quo in the industrial property market, which has been pretty stable this year,' Colliers' Mr Tan suggested.

Three-Headed F&N May Look At Split: Analysts

Source : The Business Times, July 2, 2008

Optimism on group's prospects, musings over chairman's role

The new organisational structure at Fraser and Neave (F&N) could set the stage for a split in the conglomerate's core businesses, some market watchers say.

F&N announced on Monday that it will not appoint a group CEO, following months of search. Instead, the three CEOs of its food and beverage (F&B), property, and printing and publishing (P&P) businesses will report to the board through the Chairman's Office.

Reassuring: Currently CEO of Asia Pacific Breweries, Mr Koh will take over the group's F&B business on Oct 1

The group also said that it has initiated a strategic review of its P&P business.

DBS Vickers believes that F&N's businesses are unlikely to split up in the short term, but does not rule out this possibility in the medium term.

This is because 'management would need to take a step at a time to (i) restructure and spin off P&P; (ii) build up F&B to a more substantial level (in terms of profit contribution . . . ) before any possible restructuring of the F&B and property businesses', it said in its report yesterday.

DBS Vickers is also optimistic on F&N's prospects as CEO of Asia Pacific Breweries, Koh Poh Tiong, moves over as CEO of the group's F&B business on Oct 1.

A second research house, Kim Eng, said in a report yesterday that 'by separating the divisional responsibilities, we believe the stage is being set for the group to shift the goal posts.

'Ultimately, it would be more ideal, both for shareholders and divisional management, for F&N to separate the F&B and property businesses,' the report noted.

There is possibly another market reading: a break- up of F&N's businesses may be easier without a group CEO who may be reluctant to divest his powers.

F&N's decision to not have a group CEO came on the back of a review, which recognised the difficulty of recruiting someone with all the necessary skills to realise the full potential of its businesses.

The organisational structure may not be ideal, but it could be a pragmatic solution given the lack of suitable candidates, says Mak Yuen Teen, co-director of the Corporate Governance and Financial Reporting Centre.

F&N's new arrangement, which was partly driven by the distinct characteristics of its businesses, would also raise questions about whether the segments should be run as separate entities, he notes.

Mr Mak also points out that F&N's chairman, Lee Hsien Yang, may have to become more involved in the group's operations. 'The board probably won't be involved that much on a day-to-day basis,' he says. 'Somebody has to coordinate the different businesses and have the different CEOs report to him.'

Both DBS Vickers and Kim Eng issued 'buy' calls on F&N, but that did not stop a fall in the counter by nine cents or 2 per cent to $4.44 yesterday.

Mass Market Stays Buoyant As Buyers Find Price Is Right

Source : The Business Times, July 2, 2008

Flash estimates for Q2 show overall private home prices flattening; steady HDB resales keep mass market more active

Flash estimates for property price indices are in with numbers suggesting that price-sensitive buyers are bargain hunting or scaling down their expectations altogether.

The Urban Redevelopment Authority (URA) released estimates for the Q2 2008 price index for private residential property yesterday with prices rising just 0.4 per cent - a mere crawl compared to the 3.7 per cent increase in the previous quarter.


















While this represents the slowest growth in four years, Jones Lang LaSalle's local director and head of research (South East Asia) Chua Yang Liang also notes that it is the, 'steepest' quarterly rate of change since Q3 2000.

Much of the activity was in the mid and mass-market as reflected by URA's index for three geographical regions. Prices of non-landed private residential properties increased by just 0.2 per cent in Core Central Region (CCR) and 0.7 per cent in Rest of Central Region (RCR), but climbed a more robust 1.3 per cent in Outside Central Region (OCR).

Dr Chua added that demand remained favourable in the OCR supported by average nominal wage increases in the Q1 2008 and 'dislodged residents of collective sale sites'.

Also robust was the Housing and Development Board's (HDB) resale market with estimates for the quarter revealing that the HDB Resale Price Index increased by 4.4 per cent over the previous quarter, and higher than the 3.7 per cent increase in Q1 2008.

Knight Frank director (research and consultancy) Nicholas Mak said that the mass market is 'influenced' by HDB's resale market and added that, 'the resale market has been steady'.

Indeed, while HDB resale volume did fall to 6,360 units in Q1 2008, a 6 per cent drop compared to Q4 2007, it actually increased by one per cent on a year-on-year (y-o-y) basis.

By comparison, secondary market private property transactions of 2,304 units in Q1 2008 was a fall of about 40 per cent, quarter-on-quarter (q-o-q) and a fall of 57 per cent, y-o-y, while primary market transactions of about 762 units was a fall of about 48 per cent in Q1 2008 q-o-q, and a fall of 84 per cent y-o-y.

ERA Realty Network assistant vice-president Eugene Lim also believes that a buoyant HDB resale market could boost HDB upgrader sentiment, but he pointed out that the strength of the HDB resale market can be attributed to 'upgraders, downgraders and permanent residents'. On the last group, Mr Lim estimates that based on in-house data, permanent residents account for about 20 per cent of the buyers in the HDB resale market.

And attention is likely to continue to be diverted away from high-end products.

'The market is not short of buyers and many astute investors have been shopping around, looking to scoop up value buys,' added Mr Lim.

CBRE Research executive director Li Hiaw Ho noted that in the private property market, most of the transactions were mid and mass-market projects with the majority of transactions in the $750-$1,000 psf price bracket.

As such, Mr Li expects sales volume of new launches to rise to between 1,200-1,400 units in Q2 2008, compared to just 762 units in Q1 2008.

Property consultants have so far been careful to not use the 'F' word to describe home prices. Most believe prices have 'plateaued' or 'softened', but not 'fallen'.

Colliers International director (research and advisory) Tay Huey Ying even believes that home prices have, 'remained stubbornly resilient to the extent that they continue to post a y-o-y increase of 20.4 per cent'.

Ms Tay also added that for the first six months of the year, home prices rose by 4.2 per cent. '(Developer's) current pricing strategy can be described as competitive, that is either similar to current market prices or marginally lower than competitors,' she added.

Ms Tay believes that home prices will continue to resist 'downward pressure' and expects prices to hold steady or decline marginally by not more than 3 per cent in Q3 2008.

Saying that mass-market prices have generally not been 'chased up' or preyed upon by the 'speculative element', Ms Tay believes this sector could be the best performing for the rest of the year.

This however needs to be put in context.

Knight Frank's Mr Mak does point out that prime property prices have increased by 52.4 per cent over the last two years. 'On this basis, it is not surprising that this market segment will lead the slowdown in price growth,' he added.

Banyan's Laguna Buys Land To Expand Phuket Resort

Source : The Business Times, July 2, 2008

Laguna Resorts & Hotels Public Company Limited, the Thai unit of Banyan Tree Holdings Ltd, said it has agreed to buy a 38-hectare land parcel adjacent to Laguna Phuket from Cherng Talay Development Company Limited.

The land will be developed for residential, hotel and commercial use.

As part of this agreement, two land plots amounting to 8.8 hectares were purchased at the end of last week at about 380 million baht (US$11.37 million).

Laguna Lakes Limited, through which the purchase was made, has, at its own discretion, the right to buy the remaining plots over a period of up to 10 years. -- BT Newsroom

Slowdown In Private Market Spells End Of En Bloc Fever

Source : TODAY, Wednesday, July 2, 2008

Brake on home prices

IT ROSE to fever pitch just 12 months ago, but as the latest property market figures roll in, the en bloc charge could be all but over for property owners and developers alike.

Price growth in the private residential market slowed for the third straight quarter to 0.4 per cent, even as Housing Development Board resale prices grew strongly by 4.4 per cent between April and last month.

This petering off in the private home market comes after 6.8-per-cent growth in the last quarter of 2007 moderated to3.7 per cent in January to March, as the sub-prime crisis and global uncertainties took their toll, and developers lowered prices.

For would-be en bloc sellers, this spells weakened bargaining powers. One Pacific Mansion owner said residents of the River Valley condominium are trying to revive the en bloc process “at a much lower reserve price” than that set by the sales committee last year — then a record price of between $3.3 million and$3.5 million per unit at about $2,400 psf.

Cushman and Wakefield managing director Donald Han said that in such a weak market, it would be futile for sellers to wait for their right price. “In some cases, you are better off making a decision to sell your unit directly on the open market.”

At the height of the en bloc frenzy in mid-2007, Koh Brothers bought freehold Lincoln Lodge in Newton with Heeton Holdings, KSH Holdings and Lian Beng Group for a record $1,449.30 psf per plot ratio.

Mr Nicholas Mak, Knight Frank director of research and consultancy, said some developers who bought during the high face the challenge of waiting out weak market sentiment — although different developers will have different holding strength.

Mr Han said: “A small developer who is over-geared and has to sell may have to take a cut in pricing. But one that sold more than50 per cent of its projects last year would be quite comfortable holding on to whatever it has left until the market returns to normal.”

The worst-case scenario – where a developer has to sell at less than cost, resulting in a write-off on the balance sheet – will only happen in a recessionary scenario, such as during the Asian Financial Crisis or Sars period, said Mr Mak.

For now, some are temporarily leasing their acquired en bloc properties – such is the case with Lincoln Lodge, as well as Guocoland-acquired Sophia Court at Adis Road and Leedon Heights off Holland Road.

But even as developers have clearly lowered prices in recently-launched new properties, analysts are mixed on whether the mass market will bite.

For example, although prices for 122 units of the 348-unit Dakota Residences released recently averaged around $970 psf – lower than the $1,100 psf a year ago – research head of Chesterton International, Mr Colin Tan, thinks prices are still too high for the genuine HDB upgrader and owner-occupier.

“The addresses of most buyers for Dakota Residences are still private addresses, suggesting they are investors,” said Mr Tan.

But Mr Han thinks it boils down to clever strategy – “developers combining a package of pricing together with banks offering favourable mortgage rates” might succeed in luring buyes.

The slowing property prices should also bring good news on the rental front, especially to expatriates for whom this forms a large part of living expenses.

Already, rentals appear to have moderated, having risen just 10 per cent since the beginning of this year. Over the course of last year, private rental rates grew almost 40 per cent.

Mr Han attributed this moderation to recent completed projects “and some developers leasing out en bloc sites instead of tearing down – effectively not taking stock out of equation but putting it back”.

Spring S'pore Bt Merah Building Up For Sale

Source : The Business Times, July 2, 2008

COMMERCIAL development Spring Singapore at 2 Bukit Merah Central will be put up for sale today, with market watchers expecting it to fetch $150 million to $180 million.

The development comprises a 22-storey tower block and a six-storey podium block and stands on an 88,295-sq-ft site with a remaining lease of 75 years.

The Urban Redevelopment Authority has slated the site for commercial use.

Currently close to full occupancy, the development has a total gross floor area (GFA) of 355,153 sq ft and a lettable area of around 198,744 sq ft.

Enterprise development agency Spring Singapore owns the building and occupies about 50 per cent of office space, said a Spring spokesperson. The remaining space is rented out to private sector firms such as training companies.

Spring Singapore will lease back about 50 per cent of the building's office space after the sale.

Property consultant Colliers International is launching the sale via an expression of interest exercise.

Its executive director of investment sales Ho Eng Joo said: 'The property is currently yielding a net lettable area of close to 60 per cent of the GFA. The successful buyer could reconfigure the existing floor layout to maximise lettable area.'

The buyer could convert the podium block to retail use to maximise investment return, he added.

'The existing office supply crunch - coupled with an upward spiral in office rents - has resulted in an increasing number of tenants seeking alternative commercial space in fringe CBD areas . . . We expect to see keen interest for the subject property.'

Cushman & Wakefield's managing director Donald Han also noted that investors are capitalising on spillover demand for office space in suburban areas.

According to Colliers International's Mr Ho, average rents in the Spring Singapore building range from $3 to $3.50 per sq ft (psf) per month, and could increase to $4 to $5 psf per month upon lease renewal.

But Chesterton International's head of research and consultancy Colin Tan believes market sentiment has cooled and office rents could contract significantly in 2008 and 2009.

He believes that the selling price for the Spring Singapore building could be at the lower end of $150 million-$180 million, but will depend on what leaseback rental arrangements are.

Savills Singapore's director of marketing and business development Ku Swee Yong notes that the development may fetch around $160 million.

Interested parties have until July 29 to submit offers to Colliers International.

Prime Property Districts' Prices Show 1st Fall In 4 Years: DTZ

Source : The Business Times, July 2, 2008

Downward pressure may increase as speculators dispose of units, it says

Property prices in the prime districts of District 9, 10 and 11 have registered their first fall in four years and DTZ Debenham Tie Leung believes that this downturn in sentiment could spill over to the non-prime districts.

In an analysis of resale prices based on its own basket of properties, DTZ found that prices of private residential properties in Q2 this year reflected the first correction in the past four years, led by non-landed residential units in the prime districts.

DTZ's basket of properties for prime freehold non-landed resale residential homes include Cairnhill Crest, The Pier at Robertson and Botanic on Lloyd and capital values averaged $1,410 per square foot (psf) in Q2 2008, reflecting a 4.7 per cent quarter-on-quarter (qoq) decline. Capital values had remained at $1,480 psf for the two previous quarters.

While it should be pointed out that luxury home prices have reached new heights in recent years, DTZ said that it also tracks a separate basket of luxury properties which includes premier developments like Ardmore Park.

Outside the prime districts, capital values of freehold and leasehold non-landed resale residential units remained unchanged, averaging $750 psf and $610 psf respectively, holding steady at this level for three consecutive quarters after both sectors registered 7 per cent increases in Q4 last year.

And the outlook for rest of the year is likely to be challenging.

DTZ said that with high inflation compounding the expected economic slowdown globally, prices of private residential properties are set for further corrections.

'Besides smaller developers, some of the bigger developers are also likely to reduce selling prices to move sales especially for developments that have been on the market for some time.'

'In addition, the sub-sale market is expected to be active with speculators disposing their units, especially those who have purchased multiple units on Deferred Payment Schemes and are most likely to dispose some or all units to avoid stretching their financial limits,' it added.

While some speculators may feel that renting remains an option for them, DTZ said that as rentals come under pressure in 2009-2011 due to the surge in new home completions, it is unlikely that speculators will want to hold on to their units for rental income.

DTZ does believe that there was significant wealth creation in the run-up to the recent 'economic boom' of 2006 and last year, and there is 'pent-up demand' from many who have been waiting for an opportune time to buy. 'Take-up will eventually pick up when the market senses that prices have bottomed,' it added.

On the pick-up in sales towards the end of Q2 2008 for 'attractively located and reasonably-priced projects', DTZ's executive director (Residential) Margaret Thean said: 'At the end of the second quarter, we began to witness the return of market confidence and an improved buying sentiment. Some residential projects are enjoying sell-out status while others are being are well-received. This is clearly indicated by the sell-out status of projects such as Suites 123 while Nassim Park, Parc Sophia, Dakota Residences and Clover by the Park received encouraging response.'

PRs Help Drive Flat Resale Prices

Source : TODAY, Wednesday, July 2, 2008

HDB upgraders’ demand for condos outside central region could also rise

AS SOARING rental rates add to their cost burden, more Permanent Residents (PRs) are snapping up Housing and Development Board (HDB) resale flats.

“Two years ago, you would pay less than $1,000 a month in rent for a four-room flat but now, you would be paying almost $2,000,” said PropNex chief executive Mohamed Ismail.

“If you are going to be here in the long run, it doesn’t make sense to rent when you can use the same money to buy a flat. One of my colleagues sells just three-room flats, and seven out of 10 units she sells are to PRs.”

The strong immigrant market is just one factor behind the strong 4.4 per cent growth in HDB resale prices between April and last month, even as the private property market is cooling. PRs cannot buy flats direct from the HDB unless they are married to a Singapore citizen.

ERA Singapore, which corners 40 per cent of the HDB resale market, has seen a four-fold increase in their PR clientele — from just 5 per cent in 2004, to some 20 per cent now.

Also fuelling the “pent-up demand” :— as Chesterton International’s consultancy and research head Colin Tan put it :— are HDB upgraders who cannot afford private housing and downgraders from the private housing segment.

With private homes still priced out of reach of the mass market for now, analysts believe the HDB resale market will remain bustling for some time.

This upbeat outlook echoed what National Development Minister Mah Bow Tan had said last month of this sector: “It’s a real demand, a real market for people to buy a flat to live in, unlike the privatemarket where some people buy to live, some to invest, some for speculation.”

“So long as there are new families being formed and new immigrants coming in, the HDB market will remain a very active one.”

Private homes within reach of HDB upgraders?

While this is good news for the flat values of home-owners, young couples and new families have been concerned about a limited supply of new HDB flats to choose from, and about affording the Cash-Over-Valuation of resale flats.

With the housing board announcing a steady stream of upcoming projects this year, these first-timers’ needs areaddressed.

But those who cannot wait to have a roof over their heads :— given that new flats will go up on a built-to-order basis, and the reduction of balloting exercises for excess flats to just two a year :— and those who cannot buy direct from the HDB continue to fuel resale demand.

Looking ahead, with HDB resale prices continuing strong as private home prices taper off, would more HDB upgraders be able to move to private property?

Recent launches of condominiums outside the central region such as Dakota Residences have gone for less than $1,000 per sq ft on average. Clover By The Park at Bishan is going at an average price of $750 psf.

Compared to the average $550 psf for executive condominiums now, the price may just be right for some to go private.

“We could see anything from $600 to $1,000 psf in upcoming launches for condominiums outside the central region,” said Cushman and Wakefield Singapore managing director Donald Han. “Developers will be targeting the HDB upgraders.”

Spring’s Bt Merah HQ For Sale

Source : TODAY, Wednesday, July 2, 2008

SPRING Singapore is putting its headquarters up for sale ahead of a possible move to the second phase of Fusionopolis at One North.

The Government’s enterprise development agency hopes to then lease half of the building’s units back for the next two years for its roughly 300 employees while its new headquarters is being built.

While no deal has been signed for Fusionopolis, it is understood that Spring Singapore will be located alongside other Government agencies at Fusionopolis such as the Economic Development Board and A*Star.

International property consultancy Colliers International has been hired to help find a buyer for the 22-storey Spring Singapore building at Bukit Merah Central (picture). The building has a gross floor area of 198,744 sq ft and is almost fully occupied. James Cook University is another big tenant.

The Urban Redevelopment Authority will allow the new buyer to use the building for commercial purposes. “The successful buyer could reconfigure the existing floor layout to maximise the lettable area,” said Colliers executive director Ho Eng Joo. “To achieve maximum returns, investors can also potentially convert the podium block to retail use.”

Is The Sub-Prime Crisis Really Over?

Source : The Business Times, Jun 30, 2008

ONE of the most striking things about the past couple of months is how quickly the phrases 'sub-prime crisis' and 'credit crunch' have disappeared from mainstream consciousness, both replaced by 'inflationary worries' and 'oil crisis' as the stock market's main bogeymen.

In its 'Third Quarter Strategy Outlook' dated June 27 for instance, BCA Research said the outlook will be greatly influenced by how oil prices behave: 'The sustained advance in oil is choking off growth in the G-7 universe and could send equities to new lows. A reprieve in the oil crisis is needed for global equities to regain traction but there is no guarantee that such a reprieve will come anytime soon.'

As a result, the research outfit recommended going defensive and that 'portfolio managers should further reduce their equity weightings below benchmark'.

There was virtually no discussion as to whether there could be more sub-prime shocks to come or whether the financial system has really recovered from the huge losses caused by a still-collapsing US housing market.

Similarly, most other outlook reports and stock market updates have assumed that the Bear Stearns bailout and the Fed's actions in March/April have been sufficient to ensure that the sub-prime crisis is a thing of the past.

Readers would do well to ask themselves this question: how likely is it that a credit bubble that was about six years in the making (when the US Federal Reserve started an aggressive rate cutting campaign after the Internet bubble burst) can be so quickly and gently deflated in the space of two to three months?

Although most of the headlines over the past few weeks have focused on oil's relentless climb and the inflationary-cum-growth implications, it is the complacency surrounding the sub-prime crisis that could well be the main problem equities will face over the next few months.

In fact, Wall Street may well be now waking up to this possibility - Bloomberg on Friday reported that it was sharp drops in financial stocks AIG and Merrill Lynch that dragged the S&P 500 to its five-year low and that the reason for the selling was mounting realisation that there are more sub-prime losses to come.

Bloomberg also reported that Lehman Brothers analyst Roger Freeman increased his second-quarter loss estimate for Merrill on expectations that sub-prime-related writedowns will be more than twice as big as previously projected.

The concerns over oil, inflation and growth are of course justified. BCA's 'Emerging Markets Strategy' dated June 27 said these economies will witness a period of slower growth in the months ahead as inflationary pressures rise.

Although a major slump is unlikely, BCA said near-term risks are high and recommended investors 'stay on the sidelines'.

Interestingly, US newspaper Barron's June 23 issue reports (in the 'Up & Down Wall St' column) that fund manager Dewey Kessler from SDK Capital believes that the sub-prime crisis is now moving into its second phase, a phase that will see emerging markets transformed into 'submerging markets'.

The process is said to have only just begun, starting with China, which although it is 50 per cent off its all-time highs, has still a long way to go.

Here, investors may derive some consolation from the relative resilience the Straits Times Index displayed last week, largely thanks to strong support for the banks (OCBC and UOB actually rose over the five days while DBS only lost 2 cents).

However, it is possible that this support came via window-dressing activities ahead of the end of the first half and if so, the start of the second half could see this support withdrawn.

Moreover, US financial stocks are now being sold off as the realisation grows that the sub-prime credit crunch has not yet run its course. If the same realisation and selling spreads to the local banks, the STI will not be able to display the resilience it did last week.

All told, it looks like the worst is still not over yet. Forecasts earlier this year that the second half will be better than the first may well have to be revised.

S'pore, HK Tax Systems Seen As Most Fair

Source : The Business Times, Jun 30, 2008

Singapore and Hong Kong have the fairest and most transparent tax systems, out of six major developed countries, says an international study of finance professionals.

Australia, the United Kingdom and the United States fared less well - being ranked as having complex tax systems with their volume of laws, directives and regulations.

The study, by the Association of Chartered Certified Accountants (ACCA) surveyed members in Australia, Canada, Hong Kong, Singapore, the UK and the US - a spread of different types of economies with varying levels of complexity in their tax systems.


Respondents ranked the various tax regimes according to how 'fair' they were, relative to one another, looking at the 'simplicity', 'transparency' and 'burden' of each regime.

For the purposes of the survey, ACCA defined 'simplicity' as the ease by which one could calculate one's tax liability, the number of tax rates and allowances and the number of loopholes in the system. 'Transparency' referred to the extent to which the tax system is designed to be easily understood and accessed. And 'burden' referred to the extent to which certain groups, such as businesses and families, may pay disproportionately more tax.

Respondents in Singapore and Hong Kong had an overall positive view of the fairness of their tax regimes.

They ranked the two regimes tops, in terms of simplicity and transparency - agreeing that compliance requirements in their jurisdictions were clearly communicated.

That's as compared to the view from respondents in the UK, Australia and Canada, who felt their regimes were less fair and somewhat complex. Respondents in the US felt the tax regime there was complex, but not necessarily unfair.

The results showed an overwhelming belief from all countries that it is the volume of directives, laws and regulations that has the greatest effect on tax complexity. 'The message from our research is for governments to reduce the volume of laws, directives and regulations that contributes most to complexity,' observed Professor Francis Chittenden, ACCA Professor of Small Business Finance at Manchester Business School, who wrote the survey report with colleague Hilary Foster.

'There is a fundamental issue for governments around the world to decide the purpose and structure of tax systems, and importantly to communicate the rationale behind these decisions.'

Focus group discussions conducted by ACCA with members from the six countries also threw up interesting findings.

UK participants felt taxes in their country are unfair, too complex and lack transparency. They also said there is inadequate communication from the tax authorities - which is leading to a breakdown of trust in the system.

The US group felt the tax system was complicated and burdensome, but not necessarily unfair. The overall view of the Australian group was that their tax system is complex, with fairly high taxes and compliance costs.

The Hong Kong group believed that their tax rules are simple but that the way in which the tax authorities interpret them has created uncertainty and led to unfairness. They said commercial transactions are becoming more complicated and their tax system needs to keep up to stay equitable.

The Singapore group said that 'compassion' or 'empathy' should be included as a characteristic of a fair tax system. They thought that the Singapore tax system was more 'compassionate' compared to other systems in the region.

They said it was less aggressive towards taxpayers and was generally seen to be sympathetic towards the man on the street and empathetic with local culture and practices.

The report concludes that trust is crucial for a tax system to work in any country, that is, governments should create an environment in which citizens believe they have played a part in setting the system and that the system treats them with respect. More taxpayers will feel inclined to comply, reducing evasion and associated administrative costs.

ACCA also believes governments should explore the creation of flexibility in their tax structures to allow for a swift response to changing economic conditions.

More Questions Than Answers In F&N's Management Revamp

Source : The Straits Times, July 02, 2008

FRASER & Neave's (F&N's) decision to give up its search for a new group chief executive (CEO) has again turned the spotlight on a possible break-up of the conglomerate.

One reason the company has given for calling off the CEO search was the difficulty in recruiting a person who 'possesses all the necessary combined skill sets to realise the full potential' of its food-and-beverage and properties businesses.

Rather than having one overarching head honcho, F&N has appointed three division chiefs to report to the board through a newly created chairman's office, with former SingTel chief Lee Hsien Yang staying on in his role as chairman.

If F&N thinks this move will end a long-running debate over its future business direction, it is mistaken. Such a move has only raised more questions.

As Singapore's 24th largest firm by market value, the company runs businesses that are not exactly small beer.

It jointly owns Asia Pacific Breweries (APB), brewer of Tiger Beer, with Dutch brewery giant Heineken International, and has 30 breweries in 12 countries.

F&N is also a major property developer, with luxurious condominium projects in Singapore, as well as in Britain and China.

So, it is not surprising to find traders already questioning the wisdom of its proposed management revamp.

Is it wise, for instance, to move Mr Koh Poh Tiong, a 23-year veteran in the brewery business, from APB, where he is currently the CEO to become F&N's food and beverage chief?

In his new role, Mr Koh will represent F&N's interests in APB and look after a division that includes well-known brands such as Magnolia and NutriSoy.

Eyebrows, however, were raised when APB said Mr Koh would be replaced by Mr Roland Pirmez, a manager from Heineken.

Granted that F&N's partnership with Heineken in APB goes back 76 years. Its effective interest of 39.7 per cent in APB, however, is smaller than Heineken's 41.9 per cent effective stake.

Surely, it would want its own man at APB's helm to look after a cash cow that produces annual revenues of $1.8 billion.

Some have argued that Mr Pirmez's appointment will not alter the status quo at APB, since he has to report to a board whose composition is determined by F&N and whose chairman, Mr Simon Israel, comes from Temasek Holdings, F&N's No. 2 shareholder.

Others, though, are not so sure.

They pointed out that Heineken had made no bones about its ambitions to expand in Asia, one of the world's fastest-

growing brewery markets, but was constrained from doing so directly by a 1931 agreement with F&N that required any expansion to be made through APB.

Things came to a head two years ago, when the two companies were embroiled in a legal spat over appointing a regional director for APB's China operations.

At one stage, the two firms were even competing on the open market to mop up as many APB shares as they could.

Observers said the tussle resulted in various defensive moves by F&N to fend off Heineken's postures. These included an invitation to Temasek to take up a 14.9 per cent stake in December 2006.

Surely, in the light of such developments, Mr Pirmez's APB appointment should be viewed as either both parties coming to an agreement on future cooperation or a prelude to F&N getting out of APB altogether.

Some have also argued that by having separate CEOs to run its various divisions, F&N will also be able to establish a track record for investors to value each business separately - and ascertain if the group is worth more if it is broken up.

Around the world, there are already plenty of examples of companies tearing themselves up and rewarding shareholders as a result. Old United States conglomerates such as AT&T and ITT Industries are just a few examples.

F&N's management revamp may well herald a further corporate action by the group.

Kuwait Fund Buys Just 36 Goodwood Residence Units

Source : The Straits Times, July 02, 2008

It is not taking 97 units as it originally agreed to in Dec, and is also paying less

KUWAIT Finance House (KFH) has ended up buying only 36 units in the posh Goodwood Residence, not the 97 it had wanted initially - and it is paying a lower price.

The Islamic banking group has paid $2,800 per sq ft (psf) for the apartments near Newton Circus - $400 psf below the price it agreed to in December when the property market was in full bloom.

The price at the time was a record for the area. The sale of the 97 units would have cost KFH about $818 million, which would have been the single largest purchase of residential units under construction in Singapore.

The sale also reflected the zest of foreign institutional funds to pump money into the then-dazzling property sector, a trend that has since slowed.

But the record-setting deal collapsed in March when developer GuocoLand said KFH had not exercised its option.

GuocoLand also said that it was in talks with the group over the grant of a fresh option for units in the 210-unit project being built at the former Casa Rosita site in Bukit Timah Road.

News of the option lapse hurt market sentiment, which was already weakening. GuocoLand itself said in a March statement that the private residential market in Singapore appeared cautious.

Market watchers speculated then that KFH had pulled out because it realised it had paid too much for the units and figured that reselling them quickly at a profit could be a difficult task.

Analyst estimates as to what a fair price for the apartments might be ranged from as low as $2,000 psf to nearly $2,900 psf.

KFH has bought two- and four-bedroom apartments and one penthouse unit, according to market sources. Its initial deal was for only four-bedroom units.

The sale price of $2,800 psf is still a benchmark for the Newton Circus area, said Savills Singapore's director of marketing and business development, Mr Ku Swee Yong. The transaction also reflects KFH's continued confidence in Singapore, he added.

Cushman & Wakefield managing director Donald Han added: 'It is a reasonable price, given today's market and considering the high quality specifications of the project.'

GuocoLand declined to comment on the transaction. It has yet to launch Goodwood Residence, something originally planned for the first quarter this year.

Guocoland's stock rose one cent to $2.19 yesterday with 737,000 shares changing hands.

The shares have fallen 61 per cent this year.

Kitchen On Show

Source : The Straits Times, June 28 2008

Entertaining at home has moved from the living room to the kitchen, so owners are pulling out all stops to create a showpiece dry kitchen

WHEN it comes to what's cooking in kitchen designs these days, having just one kitchen doesn't cut it any more.

Home owners Lorena Chan and her civil servant husband Anthony Tan are typical of many Singaporeans nowadays. When they were redesigning their semi-detached home in MacPherson two years ago, they wanted both a wet kitchen and a dry one.

'Entertaining has moved from the living area to the kitchen, so the dry kitchen now becomes the central attraction' Mr Lim Wee Li, managing director of Kitchen Culture, an upmarket kitchen system and appliances retailer -- ST PHOTOS: SAMUEL HE

A 'wet' kitchen is a trendy way of describing the serious place where all the heavy cooking and washing is done. A 'dry' kitchen is more like a bar counter, for light cooking, and where guests can sit and chat with the chef.

Ms Chan, 35, an avid cook who whips up stir-fry dishes on weekends, says with two separate kitchens, 'cooking fumes no longer fill the living area when I cook, unlike before'.

Previously, they had just one, small kitchen.

Interior designers say the trend of having both a wet and a dry kitchen has emerged over the past five years as more Singaporeans entertain at home.

Mr Lim Wee Li, managing director of Kitchen Culture, an upmarket kitchen systems and appliances retailer, says: 'Entertaining has moved from the living area to the kitchen, so the dry kitchen now becomes the central attraction.'

Designers say that as a result, customers demand that the dry kitchen must look good as it is a showpiece where visitors gather.

Riding the trend, even property developers are now incorporating wet and dry kitchens into their projects.

City Developments Limited (CDL) group general manager Chia Ngiang Hong adds that with changing lifestyle needs, separate kitchens are increasingly commonplace in new residential developments.

CDL has incorporated such kitchens into its luxury developments including St Regis Residences, Cliveden at Grange and The Oceanfront@Sentosa Cove.

Kitchen Culture's Mr Lim says home owners opt for 'state-of-the-art cooking appliances, granite worktops and cabinets with veneer or gloss finishes instead of the usual lacquer finish'.

Just the dry kitchen alone can cost at least an extra $5,000 to $10,000 depending on the choice of materials, excluding appliances.

Ms Chan, a vice-president at a financial services company, and her husband forked out $30,000 for their dual kitchens, excluding appliances.

Their wet kitchen has a sink, a stove, an oven, a fridge and cupboards, and is separated from the dry kitchen by a glass door.

The latter, which is just by the dining area, is built on an island counter and comes with an induction cooker, a small sink for washing cups, a second fridge, a coffee-maker and two bar stools. There is also a computer there so Ms Chan can surf the Internet for recipes.

To hide the second fridge, which is visible from the living area, there is a sliding wooden panel which, when shut, becomes a feature wall.

Her husband's family has been living in the old house for 20 years. The family, including her elderly parents-in-law, sister-in-law and two young children, moved into their newly built two-storey plus attic home in March.

The new kitchen set-up was designed by Ms Sarah Tham of interior design firm Cube Associate Design.

Ms Tham says that as a dry kitchen is near the dining area, it should blend in with the rest of the home.

She says all her clients nowadays 'want a wet and dry kitchen'.

She notes that home owners are also spending more money doing up their dry kitchens rather than the wet areas. 'They spend more time in the dry kitchen so they are more willing to spend more money on it.'

For wet kitchens, practicality is the main factor in design. Wider sinks are expected for washing of big pots and pans, along with kitchen hoods that are able to quickly suck away cooking fumes.

Although wooden doors can be used to separate the two areas, interior designer Annie Tan of The Interach Design encourages the use of glass doors, saying 'you can keep the fumes enclosed, and still allow some natural light to fall in'.

Wet and dry kitchens have been incorporated into the designs of UOL's new condominium development, Breeze by the East in Upper East Coast Road, for its 40 three-bedroom units as well as 16 four-bedroom units and 18 penthouses.

It also has 14 two-bedroom units, but these have just one kitchen.

UOL's chief operating officer Liam Wee Sin says the dry kitchen is an extension of the living and dining space, noting: 'Home buyers enjoy a much larger area plus the convenience of a kitchen that is 'closer' to them.'

But while a wet and dry kitchen is on most home owners' wishlists, not everyone can have one. Ms Tan says the home must have at least 200 sq ft of kitchen space before it can be separated into two areas.

One home owner with space to spare is housewife Ruth Loh, 65. She has wet and dry kitchens in her five-room HDB flat on the 16th floor at Bedok, which she moved into in March.

She cooks mostly stir-fry dishes on weekdays for her husband, Peter, and herself in her wet kitchen. 'A smaller wet kitchen means less cleaning after cooking,' she says.

Her dry kitchen is for preparing breakfast and cutting fruit, and is her preferred part of the kitchen.

Standing at the counter, sited like her very own personal command centre, she says: 'I can stand here and look into the living area and even out to the sea.'

Prices Of HDB Resale Flats Still Climbing

Source : The Straits Times, July 2, 2008

4.4% jump in second quarter, given strong demand, tight supply and higher valuations

THERE is a buzz in the property market and it is in the heartland.
HDB homes are continuing their bull run - even as private home prices stagnate - with prices rising 4.4 per cent in the second quarter.

Housing Board homes continue to draw buyers as prices rose 4.4 per cent in the second quarter. -- ST PHOTO: STEVEN LEE CT

This is according to flash estimates released by the Housing Board yesterday.

The latest jump is higher than the 3.7 per cent first-quarter rise in HDB flat prices.

Housing experts point to an underlying healthy level of demand for resale flats, tight supply and higher valuations as key reasons for the rise.

The onward march of HDB flat prices comes after prices rose 17.4 per cent last year.

In contrast, private home prices inched up only 0.4 per cent this quarter, compared to 3.7 per cent in the previous quarter, flash figures from the Urban Redevelopment Authority showed.

Last year, private home prices soared 31 per cent.

One reason public flats are outperforming private homes now is that HDB price rises are still lagging behind those of private homes which shot up in the housing boom, say market watchers.

Knight Frank director of research and consultancy Nicholas Mak said HDB prices still have room to rise as they were slow to take off at the start of the recent property boom.

Higher valuations of resale flats are also likely to have contributed to the price rises, said PropNex chief executive Mohamed Ismail.

He expects public-housing prices to continue their rise, by another 5 per cent, for the rest of this year. That would mean a full-year jump of about 13 per cent.

Both men agreed that the tight supply of HDB flats is another factor keeping the market buoyant, with demand from upgraders, downgraders and permanent residents.

'With Singapore's economic fundamentals still intact, the buzz in the HDB resale market is expected to continue in 2008,' said ERA Realty's assistant vice-president Eugene Lim.

'A buoyant HDB resale market is good news for developers of mass-market condominium projects as HDB upgraders are their primary target market,' he added.

However, with the stream of new flats coming into the market, some demand will move away from the resale market to new flats, he said.

During the first half of this year, HDB launched 4,524 new flats.

Subject to demand, HDB said in a statement that it plans to offer about 3,900 new flats under the Build-to-Order system over the next six months, in towns such as Punggol, Sengkang and Bukit Panjang.

The full data for the second quarter will be released at the end of the month.

More Instability Expected In REIT Market Before It Picks Up

Source : Channel NewsAsia, 01 July 2008

UBS said more instability is expected in the relatively cool real estate investment trust (REIT) market before it picks up, and this turnaround could happen as early as the last quarter this year.

Although REITs have been under pressure in the current volatile market, some other market-watchers said they expect to see new REITs being launched within the next six to 12 months.

Retail and healthcare REITs, along with the lowly geared and plain vanilla ones, will be among the first to pick up, before the others do.

Mark Ebbinghaus, MD, Head of Real Estate, Lodging & Leisure, UBS, said: "The market will look increasingly for strong sponsorship. Independents will find it tougher, whereas a large, well-sponsored vehicle with a sound management will probably come out first."

UBS foresees it will take at least another six months before things get better.

Mr Ebbinghaus said: "In terms of the broader global market where we're a little of two-thirds of the way down, there's still some instability to come through. It may take another six months.

"It's still very uncertain that we would be gearing up for more significant activity in 2009, but that could be brought back a quarter to the last quarter of this year."

Other market-watchers noted that the general easing of liquidity once the sub-prime issue works its way through the system will also give REITs a boost.

Justin Chiu, Executive Director of Cheung Kong Holdings, said: "Right now, because of higher liquidity problems, REIT operators do have problems with borrowing. REIT unit prices have dropped quite a bit, so expected yield is higher for investors.

"But as (the) market consolidates, yield will compress once more, making it easier to make further acquisitions. I expect new REITs will come into the Singapore market in the next six to 12 months."

REITs have enjoyed a honeymoon period in Asia since the first one was launched in 2001. But they have dropped more than 15 percent in value since last year.

Still, most market-watchers are positive that fundamentals continue to be relatively good for most real estate companies around the world. - CNA/so

Singapore Expected To Hold Up Despite Gloomy Global Outlook

Source : Channel NewsAsia, 01 July 2008

According to economists, the Singapore economy is expected to meet the government's growth targets for the full year, despite a gloomy global outlook.

However, they warned that higher oil prices will drag down growth for the next two quarters.

Oil prices have been on the upsurge and are now holding above US$140 a barrel. The uptick is expected to continue, with crude futures pushing past the US$150 threshold within the next few months.

David Cohen, Director of Asian Economic Forecasting, Action Economics, said: "Singapore's economic growth should manage something a little over 5 per cent, which would be slightly above the mid-point of the government's official projection from 4 to 6 per cent.

"That would be respectable by any standards, even if it's slowing from last year's 7.7 per cent growth."

A recent survey by the Monetary Authority of Singapore (MAS) showed that private sector economists are expecting full-year GDP to come in at 5.5 per cent as oil-related sectors continue to boom.

Moreover, domestic demand is expected to provide some support to the service industry, including retail, hotels, restaurants and construction services. Some are also hopeful of a rebound in the biomedical sector.

Robert Prior-Wandesforde, Senior Asian Economist at HSBC, said: "Pharmaceuticals, which was growing for a month or two at a hundred per cent, is now contracting by 50 per cent. That's really swinging this economy around and I think that is why the second quarter could see a negative.

"(But) I would expect that to bounce back, and I think that would be the key reason why the third quarter would be positive. I think Singapore will do okay... I'm still looking for quite an ambitious and quite a positive 6 per cent growth number for 2008."

But the outlook for the manufacturing sector, specifically electronics, is uncertain as inflation is at its highest in 26 years.

Mr Prior-Wandesforde said: "I think inflation will start to come down in the second half of this year in Singapore, but perhaps not as quickly as the central bank would like.

"Therefore, I expect the Monetary Authority of Singapore (MAS) to keep the exchange rate strong here, towards the top of the band as a means of keeping downward pressure on inflation."

Inflation is now at 7.5 per cent, but that is expected to ease in the second half of the year. Nonetheless, to rein in rising costs, economists expect the MAS to keep to its strong Sing dollar policy. - CNA/so

SPRING Singapore Building Put Up For Sale

Source : Channel NewsAsia, 01 July 2008

The SPRING Singapore building at No. 2, Bukit Merah Central has been put up for sale by expression of interest.

The property comprises a 22-storey tower block and a six-storey podium block.

SPRING Singapore sits on an area of 88,295 square feet and the building has a total gross floor area of 355,153 square feet.

The property has a lettable area of 198,744 square feet and is almost fully occupied.

The Urban Redevelopment Authority has given permission for the property to be used for commercial purposes until its lease expires in 2083.

When the deal is completed, SPRING Singapore would lease back about 50 per cent of the building.

Property consultants Colliers International is marketing the commercial development. - CNA/ir

Mapletree And Arcapita Form JV To Hold JTC Industrial Portfolio

Source : Channel NewsAsia, 01 July 2008

Mapletree Investments has formed a joint venture with Arcapita Bank of Bahrain to hold a portfolio of industrial properties bought from JTC Corp.

The assets are worth a combined 1.7 billion Singapore dollars.

Arcapita will hold a 56.5 per cent stake in the joint venture called Mapletree Industrial Trust (MIT).

Mapletree will own 25.1 per cent, while the rest will be held by Mapletree Industrial Fund, a pan-Asian private real estate industrial fund sponsored by Mapletree.

In a statement, Mapletree said the acquisition of JTC's industrial property portfolio, which was announced in April, has been completed.

The properties include 39 blocks of flatted factories, 12 amenity centres, three multi-tenanted business park buildings and one warehouse building.

The assets have been officially transferred to MIT on July 1. Mapletree Industrial Fund Management will manage the properties. - CNA/vm

URA Flash Estimates Show Private Home Prices Up 0.4% In Q2

Source : Channel NewsAsia, 01 July 2008

Private residential property prices rose 0.4 per cent in the second quarter of this year, according to flash estimates released by the Urban Redevelopment Authority (URA) on Tuesday.

The rise followed a 3.7 per cent increase in the first quarter.

Prices of non-landed private residential properties increased by 0.2 per cent in the Core Central Region, 0.7 per cent in the Rest of Central Region and 1.3 per cent Outside Central Region in the second quarter of the year.

In comparison, for the first quarter of 2008, prices of non-landed private residential properties increased by 3.8 per cent in the Core Central Region, 3.3 per cent in the Rest of Central Region and 3.8 per cent Outside Central Region.

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Analysts noted that the softening prices contributed to a pick up in sales towards the end of the second quarter in some attractively located and reasonably-priced projects launched.

Ms Margaret Thean, DTZ's Executive Director for Residential, said: "This is clearly indicated by the sell-out status of projects such as Suites 123, while Nassim Park, Parc Sophia, Dakota Residences and Clover by the Park received encouraging response."

However, with the uncertain economic outlook and high inflation, developers are holding off on launches, while homebuyers look for bigger discounts.

DTZ expects further price corrections in private residential properties going forward. Domestically, property-watchers said the speculation that caused previous highs has died down.

On the supply side, as at first quarter of 2008, there were about 67,700 private residential units in the pipeline, of which about 56,500 new private housing units are expected to be completed between 2008 and 2011.

About 42,700 units of the supply in the pipeline (or 63 per cent) have not been sold by developers yet.

In public housing, the prices of HDB resale flats rose 4.4 percent in the three months to June, over the previous quarter. This is slightly higher than the 3.7 percent increase in the first quarter.

URA's flash estimate is based on data for the first 10 weeks of the quarter. The price index for the full quarter will be issued later this month. - CNA/yb

HDB Resale Flat Prices Up An Estimated 4.4% In Q2

Source : Channel NewsAsia, 01 July 2008

Prices of HDB resale flats rose 4.4 per cent in the three months to June over the previous quarter, according to the Housing and Development Board's flash estimate.

Straits Vista @ Marsiling

This was slightly higher than the 3.7 per cent increase in the first quarter.

In the first half of the year, HDB has launched a total of 4,524 new flats.

Subject to demand, HDB plans to offer about 3,900 new flats under the Build-To-Order (BTO) system over the next 6 months in various towns.

The total planned BTO supply of 8,400 new flats this year will surpass the BTO supply in 2007.

This will be in addition to flats offered under the Balloting Exercise for surplus replacement flats under the Selective En bloc Redevelopment Scheme, and the other exercises for sale of balance flats from previous offers. - CNA/yb