Monday, August 18, 2008

LTA To Review ERP Rates For Gantries Around Singapore River

Source : Channel NewsAsia, 18 August 2008

The Land Transport Authority (LTA) will review the rates for the five Electronic Road Pricing (ERP) gantries around the Singapore River in October – a month ahead of its usual quarterly review.

The move came in response to recent feedback that businesses in nearby Chinatown have seen a slump in sales since the ERP charges were introduced in July.

The LTA met with the Chinatown Business Association on Monday as part of its ongoing engagement with stakeholders affected by ERP implementation. The authority said it will adjust the ERP rates from early October if traffic conditions warrant it.

Senior Minister of State for Transport, Mrs Lim Hwee Hwa, said that the new gantries are meant to ensure that businesses benefit from smooth-flowing traffic in the long term.

She cautioned that reducing ERP charges will not be able to address any underlying weaknesses in consumer demand or economic conditions.

Mrs Lim said: "What we hope to do is to make sure that the ERP rates are pegged at the appropriate level that will ensure that patrons and users of the area will not be prevented from coming in simply because of congestion.

"There are also some issues with regard to public education. A lot of people, including the operators themselves, thought that the ERP hours are operational on Saturdays as well, which is not the case.

"That is something which LTA can look into to see how it can publicise this more widely so as to help the businesses in the area." - CNA/so

PM Lee Says Singapore's Economic Growth To Slow Next Year

Source : Channel NewsAsia, 18 August 2008

Prime Minister Lee Hsien Loong said in his National Day Rally speech on Sunday that Singapore's economic growth will be slow next year as it feels the impact of a weakening world economy. However, the country is not expected to slip into a crisis.

"This year, I think we can get 4 to 5 percent growth. It's not bad. Next year, we expect slow growth and more uncertainties. I'm not predicting a crisis. We're competitive. Investors still want to come to Singapore," he said.

As Singapore is heavily dependent on trade, it is affected by the economic slowdown of its biggest export markets in Europe and the United States.

Data released on Monday showed that Singapore's non-oil exports unexpectedly fell by 5.7 per cent in July from a year earlier, providing new evidence that the global economic slowdown is hitting Asia's exporters. - CNA/so

Concerns Over Health Of Japan's Property, Banking Sectors

Source : The Business Times, August 18, 2008

Urban's collapse exposes links to US sub-prime crisis

THE failure last week of mid-size Japanese property developer Urban Corporation - the latest in a series of such collapses - was more than just another in a growing list of corporate bankruptcies in Japan.

Poor show: The property sector index of the Tokyo Stock Exchange has been the worst-performing of all sectors in the past year

It has stirred fears among investors and regulators that serious problems could be brewing again in Japan's property and banking sectors which were at the heart of the bubble economy collapse in the early 1990s.

Urban Corp's collapse has also revealed unexpected links between the US sub-prime mortgage crisis and asset classes in other countries that have so far escaped relatively unscathed from the financial turmoil in the world's major markets, analysts say.

Urban was the fifth publicly traded Japanese property company to file for court protection in the past month.

The Hiroshima-based developer collapsed suddenly, after Japanese banks withdrew support in what marked an accelerating retreat by financial institutions from financing property development in Japan as the nation's economy falters and sales of many properties slump.

Urban's bond ratings were also downgraded sharply recently, leaving it at the mercy of bank financing.

But a little-publicised aspect of Urban's failure - which marked the biggest bankruptcy in six years by a listed Japanese company - was that it was also a victim of the drying up of foreign investment funds in the wake of the sub-prime crisis. The company had renovated commercial properties for sale to international funds that were hungry for real-estate investments until recently.

Other property firms in Japan and in other Asian countries could find themselves in similar difficulties as international real estate funds draw in their horns, analysts say.

The Tokyo Stock Exchange's property sector index has been the worst-performing of all sectors in the past year and the exchange's Reit (real estate investment trust) index has halved from its 2007 peak, they point out.

Around one-third of all Japanese corporate bankruptcies in July occurred in the property sector, according to Tokyo Shoko Research. The number of such failures more than doubled from their level a year previously to reach 60, the company said.

Several Japanese regional banks have announced that they expect to be unable to recover loans to Urban Corp, which filed last Thursday for protection from creditors with debts totalling 256 billion yen (S$3.28 billion) in Japan's biggest corporate bankruptcy so far this year.

Two other mid-size Japanese property development firms - Suruga Corporation and Zephyr Company - also failed recently.

These failures have stirred concerns not only over the health of the property sector, which had shown a sharp recovery in major Japanese cities in recent years after more than a decade of slumping values, but also about the soundness of Japanese regional banks. Urban's main lender, Hiroshima Bank, has suffered heavy loan writedowns in the wake of the collapse.

This may be only the tip of an iceberg, according to banking analysts. Losses related to bad loans jumped by nearly two-thirds at large Japanese banks during the second quarter of this year, Japan's Minister for Financial Services Toshimitsu Motegi revealed last week.

Non-performing loans at the top 11 banks jumped by 62 per cent to 234 billion yen in the second quarter of this year compared to the corresponding period of 2007.

Meanwhile losses among 110 regional banks leapt by nearly 80 per cent to 149 billion yen.

'We will closely follow the impact of the economic environment on financial firms,' Mr Motegi said.

Japanese banks are expected to increase loan-loss reserves, in anticipation of more corporate bankruptcies amid the economic slowdown.

But if they restrict lending, a number of companies in the real estate and other sectors could face funding difficulties, and this may worsen the overall economic situation, analysts say.

Because of the deteriorating economic and credit situation, Japan's Financial Services Agency is considering holding talks with regional banks to ask them to ensure stable supply of funds to smaller local companies.

CapitaLand's Stake In Australand Now At 64.9%

Source : The Business Times, August 18, 2008

This was the result after CapitaLand's indirect wholly-owned subsidiaries, Ausprop Holdings and Austvale Holdings, were allotted a total of 502.8 million new stapled securities in Australand under the institutional entitlement offer of a one-for-one rights issue in Australand at the issue price of A$0.60 per new stapled security.

The total subscription price of about A$302 million (S$392 million) was paid in cash, CapitaLand said in a filing to the Singapore Exchange.

The final retail entitlement offer of the rights issue is expected to complete on September 9, upon which CapitaLand will then make the appropriate announcement on its final interest in Australand and the financial impact of the rights issue on the CapitaLand group, the company said.

CapitaLand shares closed lost 23 Singapore cents - or 4.7 per cent - to close at S$4.71 on Monday.

Regional Commercial Property Sales Value Down 10% From Q1

Source : The Business Times, August 18, 2008

Transaction value of commercial real estate across Asia Pacific in the second quarter of this year decreased by over US$2 billion or 10 per cent from the Q1 2008 level, according to an investment brief from property consulting group DTZ issued on Monday

'Transactional values are significantly down from the levels seen during 2007, with almost a US$15 billion or 43 per cent decline from the peak in Q3 2007.

'Despite these declines in transactional values, activity is still well above the long-term average for the region. It is expected to remain so through 2008 as investors remain committed to increasing their exposure to Asia Pacific,' the report said.

As the global economic outlook remains uncertain, DTZ expects transactional activity to remain subdued. 'However, we are unlikely to see the significant decline in activity or values that have been seen in other markets around the world most particularly in the US and UK, although there could be isolated incidents within Asia Pacific,' DTZ added.

SLA Receives Strong Interest On 8 Residential Sites

Source : AsiaOne, Mon, Aug 18, 2008

Since the launch of 8 infill sites for residential use on 26 Jun 08, the Singapore Land Authority (SLA) has received close to 100 enquiries.

According to the SLA, there has been especially strong interest in the good class bungalow site at Ridout Road and sites in the eastern region of Upper East Coast Road and Tanah Merah Kechil Road. Interested parties include individuals, niche developers, architects and contractors.

Over 30 auction packets were sold for these sites with quite a number downloaded from SLA's website.

This is the 2nd time that SLA is offering such sites for sale through public auction. In Nov 2007, 6 infill sites were sold for over $30 million.

The auction for the 8 sites will be held on Thursday, 21 Aug 08 at M Hotel at 3 pm.

Early Review Of S'pore River Line's ERP Rates

Source : AsiaOne, Mon, Aug 18, 2008

ERP rates at gantries along the Singapore River Line could be adjusted from early October onwards, following discussions today between the Land Transport Authority (LTA) and the Chinatown Business Association.

The review was originally supposed to take place in November 2008 to coincide with the usual quarterly review of all ERP rates.

However, LTA has said in a news release that three months (from the ERP implementation date in July 2008) would be sufficient for monitoring purposes and for motorists' driving patterns to stabilise.

LTA will announce the review results in the later part of September and adjust the ERP rates from early October onwards, if necessary.

Chinatown Business Association representatives had earlier raised concerns over the affected consumer purchases in the area. This was mainly due to public misconception that users would be charged for entering Chinatown on Saturdays. Businessmen are thus worried it might be difficult to woo patrons back into Chinatown once they have found alternatives.

However, LTA clarifies that the Saturday charging does not affect Chinatown at all. This is because the speed for roads within the Chinatown area are within optimum levels on Saturdays.

The Bugis-Marina Centre Cordon, which which operates only on Saturdays from 12.30pm to 8pm, consists of only the gantries at Eu Tong Sen Street and Fullerton Road (towards Suntec City), and the existing CBD gantries north of the Singapore River Line. This Cordon serves to manage traffic congestion in the Bugis and Marina Centre area, which had travel speeds that were not optimum before implementation in July.

According to the LTA, the gantries along the Singapore River are intended to discourage excessive through traffic within the city area for outbound trips in the evening. This would help to ensure goods and people can get to their destinations efficiently, and help businesses to remain accessible and competitive.

However, it will take into account the fact that ERP charges may have some short term impacts on businesses in its ongoing review.

KL's Warning On Pedra Branca

Source : The Straits Times, August 18, 2008

KUALA LUMPUR - MALAYSIA said on Monday it has issued an official warning to Singapore over its territorial claims surrounding a disputed rocky outcrop, in the latest quarrel between the neighbours.

'Singapore's actions in conveniently declaring the maritime zone as well as the EEZ at Batu Puteh... is very regrettable,' said Malaysian Foreign Minister Rais Yatim (left). -- PHOTO: AP

After a two-decade wrangle, the International Court of Justice in May confirmed Singapore's ownership of Pedra Branca, while handing the nearby Middle Rocks outcrop to Malaysia.

Last month, a Singapore minister said its maritime territory around Pedra Branca extended for up to 12 nautical miles, and claimed an exclusive economic zone (EEZ) around the island - which is half the size of a football field.

That would mean Malaysia would have limited access to the waters around the Middle Rocks, which falls within the zone.

'The Singaporean foreign ministry has been warned through a protest note that what it is doing is against the spirit of Asean and the legal structure,' Foreign Minister Rais Yatim said, according to official news agency Bernama.

He reportedly told parliament that Malaysia issued the note to fellow Asean member Singapore on the sidelines of a recent Association of Southeast Asian Nations (Asean) meeting.

'Whatever the circumstance, Singapore's claims of up to 12 nautical miles of their maritime borders and an EEZ for Batu Puteh is unacceptable and unreasonable and contradicts the principles of international law,' Dr Rais said.

'Singapore's actions in conveniently declaring the maritime zone as well as the EEZ at Batu Puteh... is very regrettable,' he added.

Dr Rais later told reporters that the cabinet had decided last week to show its sovereignty over the Middle Rocks and on the South ledge outcrop, whose sovereignty has yet to be determined.

'This means that we should fly the Jalur Gemilang (Malaysian flag) in both the rocks. The discussions between the technical committee of both Singapore and Malaysia will continue,' he said.

Pedra Branca's sovereignty is one of many bilateral issues that have tested relations between the neighbours, which have been tense since Singapore left the Malaysian Federation in 1965.

Malaysia has said it will continue to look for further evidence on the Pedra Branca case, which could be used to review the ICJ judgement. -- AFP

What Singapore said
LAST month, Singapore said that it would announce 'at an appropriate time' the precise coordinates of the territorial sea and exclusive economic zone that it is claiming around Pedra Branca.

The move was announced by Senior Minister of State for Foreign Affairs Balaji Sadasivan in Parliament on July 21.

Should the coordinates overlap with the claims of Singapore's neighbours,'Singapore will negotiate with these countries with a view to arriving at agreed delimitations in accordance with international law', he said.

Following his comments, Singapore's Ministry of Foreign Affairs later issued a statement on Pedra Branca in response to media queries:

'Singapore did not take a new position in Parliament on 21 July, 2008 when Senior Minister of State for Foreign Affairs Balaji Sadasivan responded to MPs' questions about Pedra Branca.

Singapore first stated its claim to a territorial sea limit that extends up to a maximum of 12 nautical miles and an Exclusive Economic Zone in a MFA press statement on Sept 15, 1980.

This was reiterated in another MFA press statement on May 23, 2008 following the International Court of Justice (ICJ) judgment on sovereignty over Pedra Branca and Middle Rocks.

As stated in both press statements, should the limits of our territorial sea or Exclusive Economic Zone overlap with the claims of neighbouring countries, Singapore will negotiate with those countries with a view to arriving at agreed delimitations in accordance with international law.

Singapore Property Set For A Fall

Source : The Financial Times Limited 2008, August 17 2008

Singapore has taken on the appearance of a vast building site. Old apartment blocks are being torn down to make way for futuristic condominiums, including one in the shape of a huge sail. A new financial district in central Singapore is rising next to the city-state’s first casino resort complex, to be operated by Las Vegas Sands.

The boom in construction, which rose 17 per cent between April and June, reflects a recent surge in property prices, including a 70 per cent increase in homes since 2005. Residential and office rents also jumped nearly 70 per cent last year. Prime office rentals are now the highest in Asia, beating traditional leaders Tokyo and Hong Kong, according to Colliers International.

But, having reached stratospheric heights, the property market looks set to hit some turbulence that could produce an equally significant fall.

There are increasing signs that property prices have peaked. New home sales have slowed significantly, with residential prices rising only 0.17 per cent in the second quarter. Increases in office rents are tapering off at a similar rate.

Developers are reporting lower profits for the second quarter as the property market cools. City Developments, Singapore’s biggest private property group, last Thursday reported a 15 per cent drop in earnings. CapitaLand and Keppel Land, the two big state-owned developers, have announced profit falls of 43.5 per cent and 16 per cent respectively. Meanwhile, Singapore’s FTSE property share index has fallen 35.2 per cent from its peak last October.

Liew Mun Leong, CapitaLand’s chief executive, partly blamed the earnings fall on “the moderation in the price increase for the Singapore property market,” adding that the outlook for the high-end market would “probably be very flat”.

Singapore has suffered similar boom-bust property cycles before owing to the peculiarities of the market. With nearly 90 per cent of Singaporeans living in state-subsidised apartments, the fate of the private residential sector has rested on a rather small customer base of well-off local and foreign investors.

Just a few years ago, Singapore had one of the most anaemic property markets in the world. In an effort to boost the sluggish construction sector, the government in 2005 eased lending rules to encourage developers to replace old apartment blocks with new ones. The resulting destruction of housing stock created an artificial shortage that drove up rents and triggered a wave of property speculation.

Office rents also climbed owing to a shortage of space as Singapore’s ambitions to attract private banks and asset management firms proved successful. Predictions that more foreigners would move to Singapore added to the optimism about the market’s future.

But the global credit crunch and rising construction costs are now taking their toll, with a slowing economy and falling share prices undermining confidence.

But demand is drying up. Many are struggling to meet mortgage payments as rents begin to fall as a result of the increased supply of new apartments. Citigroup estimates luxury property prices could fall 20-30 per cent from their peak as speculators unload properties. Office rents are also due for a correction. Companies are relocating from the expensive central business district to more affordable areas.

Chua Yang Liang, Singapore research head for Jones Lang LaSalle, the property consultancy, believes the city-state will probably avoid the property market collapse that occurred in 1997 with the Asian financial crisis. He expects Singapore will suffer a moderate downturn similar to that in 2003 when the outbreak of the Sars disease depressed demand.

“Developers are better able to stabilise the market than previously, since the big ones now have the financial capacity to delay new [residential] launches to prevent supply excess while low interest rates are expected to support demand,” he says, predicting a recovery from 2010.