Friday, September 19, 2008

Most Rich Nations Stagnant Or Near Recession: IMF

Source : The Business Times, September 19, 2008

WASHINGTON - Most of the world's developed countries are at an economic standstill or on the brink of recession and policy-makers need to take aggressive action to avert a deep global downturn, a top IMF official said on Thursday.

Mr Lipsky said more financial institutions will fail, while he stressed that a systemic failure must be avoided

'Nearing the end of the year's third quarter, most advanced economies are either virtually stagnant or on the verge of recession, while underlying inflation risks are becoming increasingly well-contained,' John Lipsky, first deputy managing director of the International Monetary Fund (IMF), said in a speech to the Centre for Strategic and International Studies.

A 'damaging global recession' could still be avoided, he said, but any recovery would likely be gradual and public funds may be necessary to safeguard the financial system.

'A more systematic approach may be needed to deal with such basic issues as the disposition of distressed assets, the degree of protection offered to depositors, and the scale and scope of liquidity support that is offered to institutions and markets,' he said.

Mr Lipsky said more financial institutions will fail, while he stressed that a systemic failure must be avoided.

'This is probably a moment in which we should take a step back and think broadly about what kinds of intervention might be needed to justify an attempt to look at this in a more coherent, more proactive way,' Mr Lipsky said, adding that events over the past several weeks have required quick judgements.

'It is also very clear this needs to be done in an internationally coherent and decisive way,' he said.

While US and European banks hurt by the year-long credit crisis have raised capital, 'these infusions are still some US$150 billion less than the write-downs, and further capital raising will become much more expensive, if not impossible', he said.

The slowdown in developed countries should help contain inflation and the IMF believed monetary policy was broadly appropriate across most advanced economies, but there was scope for both the European Central Bank and the Bank of England to lower interest rates, Mr Lipsky said.

In emerging economies, most countries could take a 'wait-and-see' approach on interest rates, although some were still grappling with serious inflation risks and their monetary policy should have a tightening bias.

Mr Lipsky said so far emerging markets have been relatively insulated from the financial turmoil, in part because many have been capital exporters and have managed current account surpluses.

But he warned that these economies could face large reversals of capital flows, with serious implications for economies' activity and their financial institutions.

He said the IMF was closely watching access by these countries to international markets, especially for emerging markets that depend on large-scale capital inflows to finance current account deficits. -- REUTERS

Asia's Investors Pulling Out Of US

Source : The Straits Times, Sep 19, 2008

Wall St tremors stoking panic as many rush to bring money home

HONG KONG: Asia's savings have bankrolled American spending for decades to the tune of trillions of dollars.

Now, tremors from Wall Street are rattling Asian investors - from central banks to industrial corporations to hedge funds to individuals queueing up to withdraw their money from American International Group (AIG) - and making them question the very wisdom of being invested in the United States.

Asia's loss of confidence in American financial institutions and assets could have dire consequences for both the US government and American taxpayers.

Asian investors were starting to show hesitation even before the financial earthquake of the last week. Now, a wariness towards the US is setting in that is unprecedented in recent memory.

The non-stop deluge of bad publicity for American investments seems to be stoking panic among some of the rich and middle-class across Asia who are rushing to bring their money home.

'I do not believe in US financial institutions anymore; I don't think any US bank is safe anymore,' said Hong Kong homemaker Wang Xiaoning. Even after the Federal Reserve had taken control of AIG, she waited in line with dozens of other anxious policyholders for the chance to close her investment account.

The asset management operations of American banks have steered many Asian investors into American securities for years.

But Mr Thomas Lam, senior treasury economist at United Overseas Bank in Singapore, said many of these investors had not fully understood what they were buying. They became more curious and more concerned when, for example, mortgage finance giants Fannie Mae and Freddie Mac were placed in conservatorship.

'All these top executives, Indonesians and others started asking, 'What do they really do?'' Mr Lam said. 'They bought because the next company did.'

Some experts say that with Asia's phenomenal economic growth, savings are piling up so quickly that those funds will inevitably start flowing again to the US at a fast clip once the present crisis is over.

'The interest for the moment is depressed, but the trend is, we have a lot of savings in Asia and this is a bargain time' for assets in the US, said Mr Paul Tang, chief economist at the Bank of East Asia in Hong Kong.

Meanwhile, Asian investment in the US has been faltering.

Data released by the Treasury Department on Tuesday showed that the sharp change in international capital movements began in July. Private investors pulled a net US$92.9 billion (S$133.4 billion) out of the US, after putting US$46.8 billion into American securities in June.

Central banks, mainly Asian, did continue buying American securities in July. But they did so at a slower pace than usual. They made net purchases of US$18.2billion, compared with an average monthly purchase of US$22.3 billion in the first half of this year.

The central banks also changed the allocation of their purchases.

They bought short-term Treasury bills while slowing their purchases of longer- term Treasury bonds and American corporate bonds.

Foreign cash coming into the US to buy American assets helps the country hold down interest rates by making plenty of money available for the federal government to borrow to cover its budget deficit. It also provides cash for consumers to borrow so that they can afford imported cars, DVD players and other goods.

The US has relied heavily on this money to fund its spending. US Commerce Department data released on Wednesday showed that the nation's current-account deficit, the broadest measure of trade in goods and services, had a deficit of US$183.1 billion in the second quarter.

Also worrying is how much all of Washington's measures to prevent a financial meltdown could cost the nation in the long run.

Said Mr David Walker, former US comptroller general: 'The real question is, Will Washington wake up and realise that the federal government's finances are not in good shape and that we need to start getting our nation's fiscal house in order? If not, some may start asking, 'Who will bail out America?'' - NEW YORK TIMES, WASHINGTON POST

Mrs Night Buzz Revs Up Evening Economy

Source : The Straits Times, Sep 19, 2008

Lively nights will add extra oomph to our lifestyle and economy. But there's more to nightlife than pubbing and clubbing. Think romantic Parisienne lights, families enjoying a night out and festivals, says URA's chief executive Cheong Koon Hean. It's all happening here, she tells Insight ahead of the F1 night race.

AS SINGAPOREAN homebodies sleep, an evening economy has started to spring up around them.

Just ask Mrs Night Buzz.

Few know this but Mrs Cheong Koon Hean, 51, has for two years led a panel of policymakers to multiply round-the-clock leisure choices and nurture a new evening economy.

This will rev up the city's hip factor in the global race for mobile talent.

It also creates memories and rootedness for residents.

'If you have a great nightlife, it is really a differentiating factor for Singapore,' she tells Insight ahead of the world's first Formula One night race next week - surely the mother of all night events.

Calling nightlife a 'comparative advantage', she adds: 'Cities compete against one another and lifestyle is a very, very major consideration when people make choices of where to live or to work.'

Almost evangelical, Mrs Cheong, the zestful chief executive of the Urban Redevelopment Authority (URA), highlights the value of the evening economy.

To grow this, it needs a deft interplay of government resources and the imagination of the private sector.

The best outcome? In her eyes, it will bring about a richer quality of life for all, a distinctive Singapore lifestyle and city, and national wealth too.

Plug and play

NIGHT buzz will be focused on the Singapore River, Marina Bay, the Bras Basah/Bugis enclave and Orchard Road.

'It is not realistic to expect buzz everywhere. Not everybody wants that,' Mrs Cheong reasons.

'You must have some places that are more passive for variety and contrast.'

For the four chosen zones, the complex building blocks of a lively nightscene involve 'hardware' (elegant lighting to engender a City of Lights, for instance) and more importantly, 'software' (bright ideas for a night culture).

First, the hardware: 'If you want a nightscape that is conducive for activities, you need the right infrastructure.'

This means adding public spaces and promenades for public events, and preparing a ready electrical supply.

'Organisers can just plug and play in future,' she says. 'The electricity comes out from the ground. It's very, very unobtrusive.' The days of noisy generators are fading.

A floating stage on the Singapore River is another example she cites. It can be rented for performances, and can move up and down the river.

Bridges over the historic river will also glow with new ambient lighting, in time for the F1 season next weekend.

Where neon lights beckon

THE night skyline is a big star of the planned infrastructure.

The URA formed a lighting masterplan for the city centre in 2006. It gives incentives to building owners to light up facades in Marina Bay and the Central Business District.

A total of 23 proposals have been received from owners of buildings that include Maybank, the OUB Centre and the Marina Bay Sands integrated resort.

'You can give buildings a lot of character with night lighting. It can inspire you. There's a certain appeal that is different from daytime,' Mrs Cheong says. 'Look at Paris, the romantic City of Lights.'

The key is to light up 'tastefully and elegantly' like the European cities. She feels that Asian cities tend to be overlit.

That rules out neon lights? 'Neon has its role in the entertainment districts,' she replies. So New York's 42nd Street, with its pulsating advertising signs, is ablaze with neon.

'We also want that but only for the very busy areas.

'We want to introduce that more into Bugis because it has entertainment,' says the architect-planner who became CEO of URA in April 2004 and has a hand in Singapore's urban transformation, including Marina Bay.

As for software, this means a culture of more night events. For this, the Government is joining forces with private enterprises.

'Many global cities have these 'must-sees' that create very great vibrancy and will draw people from all over the world. Some of these can happen at night,' she says.

She remembers that as a student at University College in London, she braved the cold to attend concerts in Hyde Park.

And New York has its New Year countdown in the middle of winter. Multitudes turn up to see the ball drop in Times Square while millions watch it on TV.

Singapore, too, can create such events and memories. The thousands of lit-up 'wishing spheres' that float on Marina Bay during the New Year countdown can be one new tradition, she suggests.

The private sector is key to the evening economy, she stresses. The Government plays the role of enabler by raising the right infrastructure, she says.

It will also regulate with a light touch and organise mega events on a national scale.

Old pool, new idea

SO THERE is an interplay.

'We want to work with the private sector and use its enterprising spirit to have a multiplier effect,' says Mrs Cheong.

In fact, the private sector has been busy spinning events, notably over the past eight years or so, she says. Among these are Ballet Under The Stars, now in its 12th year.

The recent SingFest - an outdoor musical festival - featured world-famous acts like Alicia Keys and also local bands in August.

And Chivas, the purveyor of scotch whisky, is using the old River Valley Swimming Pool to host a stylish party and dance act during the inaugural Singapore River Festival, which starts today.

So, entrepreneurs and food-and-beverage outlets can easily 'latch' onto such mega events organised by the Government, she points out.

Already, outsiders have taken note of Singapore's night buzz.

The island was ranked fifth globally in nightlife last year. It was No. 2 in the nightlife quotient in 2006.

These rankings, known as the Country Brand Index, have been compiled annually by global brand consultancy FutureBrand since 2005.

Mrs Cheong is not losing sleep over Singapore's slip in ranking, saying: 'If you're among the top 10 or 15 cities, you're not bad. You're on the radar screen.'

Visitors are impressed with the nightlife here. 'In our own surveys, the tourists actually give us a higher rating on our nightlife than the locals,' she says. 'Surprising, isn't it?

'Maybe visitors and foreigners make a point to find out where they can go. Maybe we need to tell Singaporeans about the places they can go to.'

She is certainly keen to show Singaporeans how possible it is to stretch each day into the cool tropical night.

'Nightlife is not only about shopping, clubbing and pubbing,' she asserts. 'It's really to encourage people to have a great night out.'

That includes families. People rarely link children and old folk with nightlife but, eyes sparkling, Mrs Cheong virtually sings out the ideas:

'A night out under the stars, night out for a romantic stroll along the waterfront or Fort Canning, night out for a barbecue, night out for a concert, night out for biking, night out for a great party!'

She adds: 'I always say a night out can be anything. It can be for people who prefer the more quiet life to the really more busy and buzzy activities.'

Night-loving families

PERSONALLY, she includes elderly family members when she takes evening walks on the Southern Ridges, a series of hill trails linking Mount Faber, Telok Blangah Hill and the Kent Ridge parks.

Here, the bridges and forest walk nature trail are fully lit. The elderly in wheelchairs show up too, she says.

'If you can wheel your disabled family member or bring your elderly parents to the Southern Ridges, my goodness, you can certainly go to the Bras Basah night festival,' she argues cheerfully.

The inaugural festival in July involved fun such as street performances, and free museum visits till 2am.

Also enjoyable for her: fishing at Changi Point or Pasir Ris ponds, where it is possible to dangle rods all night because of 'our beautiful cool weather'.

Indeed, Singapore's weather and safety are ideal conditions for an evening economy, she says.

For a sense of the potential of this evening economy, she pulls a parallel from tourist expenditure figures.

Malls taking part in the Singapore Tourism Board's late-night shopping scheme enjoyed an average rise of 15 per cent in sales, compared to non-late nights. This is for the one-year period between September 2007 and August 2008.

On Saturdays, shopping hours stretch till 11pm for participating malls.

Overall, tourists spent $8.42 billion in 2006. They lavished 56 per cent of this sum on shopping (44 per cent) plus food and beverage (12 per cent).

This is relevant, she feels, as much shopping and dining occur in the evening.

So night buzz makes sense - and makes money too. It is as much an economic component of cities as a measure of lifestyle quality.

Scanning the globe, she singles out the Spaniards, who are still out on the streets at midnight after a late dinner, as a people with a night-loving culture.

Closer home, Seoul's Daehongno University Street brims with energy by day and night. Mini-theatres abound, and also shops and food outlets. Young people play sports and perform music. There is a whiff of this in the Bras Basah/Bugis zone.

Even as the Singapore evening economy fires up over time, she could not resist this parting shot: 'Have a great night out!'

A New Night Glow

Source : The Straits Times, Sep 19, 2008

23 buildings in Marina Bay, CBD submit lighting proposals to the Govt

A NEW city skyline will arise over the next couple of years when 23 buildings turn on the lights at night.

Maybank, The Sail condo and the Marina Bay Sands integrated resort are among the buildings that have sent lighting proposals to the Government. The plans include how they will illuminate their roofs or accentuate their facades.

The existing skyline of the CBD will be illuminated with new lights. -- GRAPHIC: URA PHOTO: URA

This light-up is part of Singapore's plan to create a night buzz for a distinctive city, said Mrs Cheong Hoon Kean, chief executive officer of the Urban Redevelopment Authority (URA).

Speaking to The Straits Times ahead of the Formula One night race next week, she said: 'We can look forward to a signature night skyline in the next couple of years, when the buildings in Marina Bay and Central Business District (CBD) are completed and external lighting is installed.' Beautiful lighting will create 'a captivating night scene that enhances our city's appeal', she added.

An artist's rendering of the reborn skyline was completed yesterday, piecing together the 23 lighting proposals.

The buildings appear subtly illuminated, not flooded with light.

Good lighting, Mrs Cheong said, is not about being the brightest or flashiest. Asian cities tend to be over-lit, she added, but this is not Singapore's ethos.

The underlying principle is to stay 'elegant and tasteful, and sensitive to a building's architecture', she said. 'Look at Paris, the romantic City of Lights.'

According to URA officials, elegant lighting should bring out the architectural design elements of a building. So, the emphasis includes illumination of the roof or crown of the building, and lighting walkways on the first storey to create spaces ideal for outdoor activities.

Lights can also be programmable. Day-to-day lighting can be 'a little bit more calm', Mrs Cheong said. The look can be 'celebratory' for festive seasons.

Building owners are hiring lighting experts like Mr Bo Steiber to give their properties a glow at night. The founder of Bo Steiber Lighting Design is lighting up the new tower of OUB Centre at 1, Raffles Place.

His earlier work includes illuminating Shanghai's Xintiandi lifestyle and nightlife district, and the Esplanade's Theatres on the Bay.

The Swede, a Singapore permanent resident, said his energy-efficient lighting of OUB Centre will 'accentuate the tower's angular, linear, diamond features'. He lauded the URA's 'good initiative' to beautify the skyline.

The URA's Lighting Masterplan was introduced in 2006. To encourage more buildings in Marina Bay and the CBD to light up, incentives were rolled out. New developments and buildings being revamped can get as much as 2 per cent additional gross floor area if they light up.

Cash incentives from a $10 million fund to offset the capital costs of new lighting are also granted, particularly for existing structures.

The URA also had a night lighting plan in 1995 for the civic district, the cultural and historical heart of the city. Some 90 per cent of the buildings, bridges and public spaces there were lit.

City's Image Will Be The Big F1 Winner

Source : The Straits Times, Sep 19, 2008

But don't expect night race to immediately boost the economy, caution experts

OVER the next week or so, the hype over the world's first Formula One night race will build to a crescendo, but what, exactly does the event do for Singapore?

Plenty, say the experts.

But, they caution, those who are expecting the tills to ring or for the slowing economy to get a jab in the arm are setting themselves up for disappointment.

View of the F1 race circuit from the 65th level of Swissotel The Stamford. The iconic race will put the Republic in the global spotlight and boost its efforts to be Asia's events hub. -- PHOTO: TERENCE TAN

The Singapore F1 race costs about $150 million to put together, and is expected to attract 40,000 tourists, generate $100 million and attract a global TV audience of 500 million.

But, as CIMB-GK economist Song Seng Wun put it, 'a weekend of some fancy pharmaceutical output from Tuas may have a bigger impact on economic growth than an F1 weekend'.

'I doubt a weekend of 'happening' beautiful people in Zouk, St James or 100 per cent hotel occupancy will do anything more than contribute, at best, two decimal places to Singapore GDP (gross domestic product) growth this year.'

He is not alone.

Several economists and analysts are not too optimistic over F1's immediate value to the Singapore economy.

Standard Chartered Bank economist Alvin Liew feels the initial estimates are likely to be pared lower now, due to the 'depressing' global economic outlook.

HSBC economist Robert Prior-Wandesforde added: 'The macroeconomic impact is generally much smaller than most people expect.'

They are to quick to add, however, that though the dollars and cents impact of F1 is limited, its intangible benefits are priceless. Just as last month's Beijing Olympics was hailed as China's coming-out party, media consultants and industry experts say F1 will boost Singapore's image as Asia's world-class events capital.

'This race should be the catalyst in changing Singapore's efficient but dull image, in a grander and more appealing way than lifting the ban on bar-top dancing did,' said Ms Goh Shu Fen, principal of advertising industry consulting firm R3.

Added Singapore Tourism Board (STB) communications director Muhamad Rostam Umar: 'This iconic event will help to put us firmly in the global spotlight...the buzz will boost Singapore's efforts to be the entertainment and events capital of Asia.'

Media experts estimate the public relations value of the F1 race to Singapore, including the two to three hours of live TV air-time, could be worth as much as US$300 million (S$430 million).

Having the country squarely in the media spotlight will add a whole lot more.

The race coverage will 'place the city in the consciousness of millions of international TV viewers', explained media consultant Pieter Aquilia.

She added: 'Footage will be featured on news and sports programmes and Singapore will be seen by, heard of, and read about by an even larger audience.'

This will help to draw in more tourists, conferences, and sporting and business activities in the long haul, analysts note.

It could also make Singapore the Monaco of Asia - a second home for the rich and famous. Economists say some among the super-wealthy set who will be here for the race might wind up liking what they see of Singapore and set up a second home here.

The huge publicity blitz the event generates may also get the attention of foreign talent and spark a move here.

Though these intangibles are the key benefits of F1, it does not mean businesses do not stand to gain anything over the next few days. The Melbourne Grand Prix, for example, has brought in over A$1 billion (S$1.1 billion) in economic benefits for Victoria since 1996.

And while the US city of Indianapolis staged an F1 race for just a few short years from 2000 to last year, the event's economic impact has been measured at close to US$1 billion by the Indianapolis Convention & Visitors Association.

Operators of food and beverage (F&B) outlets and tourist attractions, especially those located within or near the circuit, are licking their lips in anticipation of bigger takings.

Singapore Flyer general manager Steven Yeo said: 'We expect 30 per cent more tourists than usual during F1 weekend. F&B spending should go up significantly for our tenants, as we foresee a higher spending crowd coming in.'

Over at Central, next to the Singapore River, the hope is that STB's projection of 60,000 visitors - 20 per cent more than usual - to the area during the period will come to pass.

Some bars and restaurants are expecting up a boost of up to 50 per cent more business on Grand Prix weekend.

Mr Michael Ma, owner of the IndoChine Group of nightlife establishments, said: 'There'll certainly be a jump in business, of at least 30 per cent, in the period leading up to F1 race and on race days.'

St James Power Station's chief executive Dennis Foo estimated that F1 fever will generate an 'eight-figure sum' worth of business for the local nightlife industry for the week.

He added: 'The amount of activities in store is unprecedented for any one period outside of the Christmas and New year season.'

Other businesses will also gain.

Said StanChart's Mr Liew: 'The trickle-down impact on supporting industries (such as horticulture, logistics and transport, for example) would provide welcome relief in the present time of slowing activity.'

It is not all rosy, however. Some fear that the disruptions caused by road closures and such could exact a high price.

With the memory of the business bust during the International Monetary Fund/World Bank meetings seared into their consciousness - road closures and tight security limited access to the Marina Square area, and Singaporeans and visitors stayed away in droves - some retailers are more than a little worried.

Said one, who declined to be named: 'Some of us are secretly preparing for the worst.'

Many others, however, are more optimistic, and they are rolling out all means to attract shoppers.

Discounts, shuttle buses, even go-kart races are part of their battle plan.

Whether these will work remains to be seen.

One thing is clear, however, say analysts. Singapore's image will be the hands-down winner once the dust has settled. Said CIMB-GK's Mr Song: 'The $150 million's a small price to pay to put Singapore in the global spotlight for a weekend.'

Slide In Property Investment Deals Continues In Q3

Source : The Business Times, September 19, 2008

Global financial instability, stock market volatility hit sentiment: CBRE

PROPERTY investment sales continue to soften in Q3 2008 and global financial instability could keep investors out of the market, said a CB Richard Ellis (CBRE) report.

According to latest figures from CBRE Research, property investment transactions in Q3 (up to Sept 18) reached $3.17 billion. This is a 35 per cent drop from $4.86 billion in Q2 and a 65 per cent slide from $9.09 billion in Q1 this year. On a quarterly basis, property investment sales last peaked in Q3 2007 at $16.51 billion.

'The lingering worldwide impact of the US-spawned credit crisis has compounded financial instability in most global economies, compelling many regional investors to adopt a cautionary attitude,' said CBRE's report.

Many are holding back on major investment decisions as credit conditions tighten, and stock market volatility has also hit investor sentiments, it said.

Driving property investment sales in Q3 was the industrial sector, which accounted for 61 per cent or $1.92 billion of transaction value. However, most of the sector's contribution came from a single $1.71 billion deal, in which JTC Corporation divested its industrial property portfolio to Mapletree Industrial Trust.

The residential sector was the next largest contributor, registering 26 per cent or $807.79 million of property investment sales in Q3. There was only one successful collective-sale deal in the period, where an unnamed developer bought Ruby Apartments for $11 million.

'Developers' ability to acquire sites was dampened by rising construction costs, rising interest rates and tighter lending measures,' said the report. Investment activity in the retail and office sectors was also quiet in Q3, with transaction values of $215.04 million and $142.84 million respectively.

While the hospitality sector accounted for just $100 million of property investment sales, CBRE noted that the limited supply of hotel rooms today would attract greater investor interest in the medium term.

Property investment sales chalked up in the year to date stood at $17.12 billion, with 65 per cent coming from the residential and office sectors. While this is some distance from the $54.02 billion achieved for the whole of 2007, it has already exceeded the $14.66 billion in 2005.

'Looking ahead, investors are expected to stay on the sidelines in view of the cautious market conditions that are likely to prevail until the end of the year,' said the CBRE report. Nevertheless, it noted that demand for quality assets as a hedge against inflation may provide some support for investment activity the rest of the year.

Sales Of Investment Property Stagnating

Source : The Straits Times, Sep 19, 2008

SALES of investment property are in the doldrums with the global financial mayhem and credit crisis slowing buying interest so far this quarter.

Nearly all sectors have been ‘relatively quiet’ apart from the hospitality industry, which has ‘remained healthy’, said a CB Richard Ellis (CBRE) report yesterday.

CBRE said a total of $3.17 billion worth of investment transactions have been recorded so far this quarter - the period actually runs until Sept 30 - down from $4.86 billion in the April-June quarter.

The figure is also a fraction of the $16.51 billion recorded in the third quarter last year, and likely to mark the fourth consecutive quarter that investment transactions have dropped.

Total investment sales for 2008 so far have totalled $17.12 billion.

CBRE’s director of investment properties, Mr Jeremy Lake, said this year will likely round up at about $18 billion, a third of 2007’s bumper $54.02 billion.

‘If you look at the freak year of 2007, yes, it is a huge drop. But if you look back to 2004, it’s still the third highest result of the last five years,’ said Mr Lake.

The second highest total for investment sales occurred in 2006 when transactions hit $28.38 billion.

CBRE’s report said the latest results are because tighter credit measures have brought about a temporary halt to major investment decisions as investors take stock of the local property market.

Mr Lake also said the spectacular failure of two large US banks this week will ‘compound the slowdown that is evident in the statistics’ and ‘exacerbate the uncertain outlook’.

CBRE defines investment sales as real estate sales with a value of at least $5 million. It includes private and government sales, buildings and land, strata and en bloc, as well as the change of ownership of real estate via share sales.

The report said the industrial sector has accounted for 61 per cent of sales so far in this quarter. Retail investment sales contributed the least, just $215.04 million, or 7 per cent, of sales.

CBRE blamed rising construction costs, higher interest rates and tighter lending measures for the inactivity.

It added that investors are expected to ’stay on the sidelines’ in view of the cautious market conditions.

New CPF Rule For Home Sellers

Source : The Straits Times, Sep 19, 2008

It will address shortfalls in their Minimum Sum to build up retirement funds

A LITTLE-KNOWN rule change will kick in next year regarding how much money property owners must return to their Central Provident Fund (CPF) accounts when they sell their homes.

The new rule, which will address shortfalls in an individual's Minimum Sum, is aimed at helping CPF members build up their retirement funds.

Currently, home owners aged 55 and above do not have to refund their CPF accounts when they sell their properties, unless they have pledged their homes to meet their Minimum Sum requirement. In that case, they will pay back to the CPF the amount they have pledged their home for - with interest.

But from Jan 1, all home sellers over 55 who use CPF funds to pay for their properties will have to pay back this money - plus interest - up to their Minimum Sum requirement.

If they have withdrawn less CPF money than the shortfall in their Minimum Sum, they will need to refund only what they have withdrawn, including interest, currently at 2.5 per cent a year. They do not need to make up for the rest of the shortfall in cash.

Home sellers who do not receive enough from the property sale to refund the Minimum Sum deficiency will not be required to top up the shortfall, as long as the property is sold at market value.

To see how the rule change works, consider the case of Mr Tan, a 58-year-old home owner whose Minimum Sum requirement is $90,000.

He has only $30,000 in his retirement account, so his shortfall is $60,000. To help make up for this difference, he has pledged his property for $45,000.

If Mr Tan sells his property this year, he will pay back to the CPF what he has pledged the property for, plus interest, which works out to, say, $51,000.

But if he sells his property next year under the new rule, he will have to pay back the amount he has withdrawn, capped at his Minimum Sum deficiency - that is, $60,000.

This rule change, which was first announced during the Budget debate last year, will not affect those under the age of 55, or who turned 55 before July 1, 1995.

While home sellers under 55 have to refund any CPF money used to buy their properties, this rule has not been enforced uniformly for those above 55, said Manpower Minister Ng Eng Hen last year.

'Specifically, we have only recovered the property pledge from them and not the shortfalls for the cash portion of the Minimum Sum,' said Dr Ng when he introduced the rule change in March last year.

The Minimum Sum that applies to any individual CPF member depends on the year he or she turns 55. Those turning 55 between July 1 this year and June 30 next year will have a Minimum Sum of $106,000, for instance.

Generally, the impact of this rule change is likely to be small, said Mr Christopher Tan, chief executive of independent private wealth firm Providend.

'To begin with, most people would have pledged their house as part of the Minimum Sum because they want to take out more money at 55,' he said.

'When they sell their house, they would have to put back that money anyway. With the new rule, you refund your CPF account only up to the Minimum Sum, which is, in all likelihood, less than what you withdrew from the CPF to pay for it.'


With the new rule, you only refund your CPF account up to the Minimum Sum, which is, in all likelihood, less than what you withdrew from the CPF to pay for it.'

Mr Christopher Tan, chief executive of independent private wealth firm Providend, saying the impact of the rule is likely to be small