Monday, October 20, 2008

S'pore Economy To Weaken

Source : The Straits Times, Oct 20, 2008

Growth will slow for "several quarters", said MTI minister

SINGAPORE'S economy, already in a technical recession, is likely to see weak growth in the next few quarters due to the unfolding impact from the global financial crisis, said Trade and Industry Minister Lim Hng Kiang on Monday.

Trade Minister Lim Hng Kiang said while Singapore's inflation, which hit a 26-year high of 7.5 per cent in April, May and June, will continue to ease, it will take time for the decline in prices to be reflected in the consumer price index. -- ST PHOTO: JOYCE HUANG

'We must be prepared for weaker growth in the next few quarters, and possibly longer depending on when the global economy recovers,' he told Parliament when replying to questions from MPs on how singapore has been affected by the global turmoil.

'Singapore's economy is small, open and closely linked to the global economy, said Mr Lim.

'We cannot escape the impact of the global financial crisis and economic slowdown.'

Mr Lim said the slowing economy has already affected the labour market 'Employers are exercising more caution in their hiring, with most employers preferring to keep their headcount steady,' he said.

'Given that the economic weakness is expected to continue into 2009, moderation in employment growth is expected in the second-half of 2008 through to 2009,' he said.

For 2008, the unemployment rate is likely to exceed the 2.1 per cent recorded in 2007, said Mr Lim.

He said the number of retrenchments in Singapore has stayed at the same level as in previous quarters, but it may climb as the economy slows further.

'Moderation of employment growth is expected in the second half of 2008, and through to 2009,' said the minister.

Figures released earlier this month showed Singapore has entered into a technical recession, generally defined as two consecutive quarters of contraction in economic output.

The economy shrank by 6.3 per cent in the third quarter after contracting 5.7 perc ent in the previous quarter, preliminary data from the ministry of trade and industry released this month showed.

For 2008, the ministry has downgraded its 2008 growth targets to 3.0 per cent from 4.0-5.0 per cent, citing the global slowdown as the reason behind the revised forecast.

On inflation, which hit a 26-year high of 7.5 percent in April, May and June, Mr Lim said it will continue to ease, but it will take time for the decline in prices to be reflected in the consumer price index.

'I must caution that inflation will continue to be sticky for the next few months,' Mr Lim said, adding authorities were 'confident inflation will revert back to 2-3 percent' next year.

Singapore's central bank said on Oct 10 it expects inflation to remain within the 6-7 per cent target for 2008, and forecast inflation to ease to 2.5-3.5 per cent in 2009.

Mr Lim said Singapore's three local banks DBS , United Overseas Bank and Oversea-Chinese Banking Corp are well capitalised and their asset quality remains strong despite the problems in the United States.

'Banks and insurance companies in Singapore do not have large exposures to either US mortgage-related securities orto the institutions that have failed,' saidMr Lim, who is also deputy chairman of the city-state's central bank.

In a nod that slowing growth posed a greater risk to Singapore's economy than rising prices, Singapore's central bank eased monetary policy for the first time since 2003 in October. -- AFP, REUTERS

The Great Crash - Fire Sale : Owners Dump Condos

Source : The Electric New Paper, October 20, 2008

Agents: Some clients give as much as 20 per cent discount

FOR sale: Luxurious multi-million-dollar apartments, not quite for a steal, but with a hefty discount.

Stock market losses have forced some property owners to resort to 'fire sales' for a quick return to liquidity.

THE SALE: Buyers, seen in a file picture, at the launch of The Sail. Units which were going for $2,000 psf are now offered for $1,450 psf. TNP FILE PICTURE

And because the property market is almost flat, they have had to let go of their property at huge discounts.

Property agent Henry Neo receives one SMS a day from different clients asking him to sell their homes.

Mr Neo, who has been a property agent for close to 20 years, said: 'The Asian financial crisis of 1997 and this crisis are real challenges.

'It's a tsunami of the stock market.'

Two or three of the 50 clients he is servicing now are what he calls 'desperados' - people who had their fingers burnt so badly in the stock market they need to sell their houses.

The situation is worse for those who opted for deferred payment schemes, said Mr Neo, because some are no longer eligible for loans, and cannot meet payments once the developers issue the Temporary Occupation Permit (TOP).

'They have to get rid of their properties before TOP, so they would be giving even more discounts.'

Noting that the high-end property market seems to be hit the hardest, Mr Neo said: 'My colleagues who specialise in high-end properties are not doing well. They do not have any transactions at all.'

Mr David Cheang, senior vice-president of the Resale Division at HSR Property Group, noted that two out of every 10 clients are affected by the stock market crash, and are selling their property investments to 'get more liquidity'.

A property agent who declined to give his full name said one of his clients had made such losses on the stock market that he was selling his 27th floor freehold apartment at the Twin Regency for a mere $1.05 million, though its market price is $1.3 million.

Last year, he had sold another unit, on the 29th floor of the same condominium, for $1.4 million.

It is the same story for Mr Felix Young, 35, a property agent specialising in high-end condominiums. Some of his clients are prepared to go as low as 20 per cent below their offer price.

He had taken out an advertisement for five properties, all high-end condominium units in the city.

Apartments at The Sail at Marina Bay, which were going for $2,000 psf are now being offered for sale at $1,450 psf, said Mr Young.

But even such a huge discount is failing to entice buyers, who are asking for $1,100 psf. That is because even with such discounts, the two-room apartment costs about $1.3 million.

In the current climate, not many people would be able to shell out that kind of money because they could be sitting on huge paper losses in the stock market.

Mr Young said: 'Buyers have the sentiment that the property market will cool even more, and prices will drop further.'

And because of this, said Mr Young, there has been a significant drop in transactions - up to 70 per cent for high-end properties that people buy for investments.

Most buyers also know developers' launch price for the condominiums and are holding out until they can get a unit at that price.

He said: 'These days, when buyers call me, they ask me if I have any owners who are 'bleeding'.'

Bleeding is a term that is used to describe owners who over-committed themselves financially and need to sell their properties in a hurry.

Mr Young said: 'Many of my clients' bank loans are kicking in soon, so they need to release the properties quickly, before TOP.

'They are stuck because they can neither sell their property, nor rent it out to cover their mortgages, as the rental market has slowed down a lot.'

Over 2,000 Homes For Q4 Launch?

Source : The Business Times, October 18, 2008

Expect more high-end and mid-range launches before the year ends.

DEVELOPERS, looking to clear their stockpiles of unsold homes before the economy takes a turn for the worse, could launch more mid-range and high-end projects before the end of the year.

And for projects that have already been launched, anecdotal evidence shows that developers have already started to cut prices in order to move unsold inventories.

Data compiled by CBRE Research shows that some 34 properties with a total of 2,012 units may be launched before 2008 draws to a close. Of these, some 10 projects with a total of 1,104 units are in Singapore’s core central region (CCR), while another 13 projects with some 718 units are in the rest of central region (RCR). Developments priced mid-range and above are usually in the CCR and RCR.

The launches could go ahead even as appetite for higher priced homes remains weak. In September, developers put up 258 units for sale in the CCR. But just 70 homes were sold in the region - a take-up rate of 27 per cent. The RCR fared slightly better with a take-up rate of 61 per cent. Some 370 homes were launched and 224 were sold there.

Developers could have pushed out homes in the CCR - even with the current sluggish demand for high-priced homes - in order to move stocks before prices fall even further, analysts said.

"With the uncertain economic outlook, the increase in launches of higher-priced CCR properties is no indication of improving sentiment and it could be an attempt by developers to clear stocks in CCR in anticipation of further weakness in the property market," said OCBC Investment Research analyst Foo Sze Ming.

Some could also be selling to generate cash. "Take-up is poor but as long as the developers sell a few units, they will be able to generate cash-flow for interest rate expenses and also start construction," said Ku Swee Yong, director of marketing and business development at Savills Singapore.

Anecdotal evidence also shows that in order to sell, some developers are now accepting lower prices. Far East Organization’s listed unit Orchard Parade Holdings and Wing Tai sold eight units in Floridian in September, after registering no sales since February. But the sales came as the median transacted prices fell 16.8 per cent from $1,735 per square foot (psf) in January to $1,443 psf in September.

Similarly, some units at Madison Residences along Bukit Timah Road were sold at median prices of $1,801 psf - 10 per cent lower than a year ago. Viva in Thomson Road and Park Infinia in Wee Nam Road achieved $1,555 psf and $1,501 psf - about 5 per cent less than comparable projects early this year, CBRE noted. But even then, demand remained weak. Among the developments priced mid-range and above, there were only 10 projects that achieved sales of over five units for the month of September. A key driver of demand in the high-end and mid-range residential market has been growth in migrants due to strong job creation in Singapore. With this trend slowing, the demand for pricier homes is affected, analysts said.

The increase in new launches and weak take-up rate in September saw the number of launched but unsold properties increase by 10.1 per cent month-on-month to 3,903 units. "With properties in CCR and RCR contributing to the bulk of this increase, we do not foresee a pullback in unsold inventory level, especially with weaker sentiment towards higher-price properties," noted OCBC’s Mr Foo. "Coupled with the weak macro outlook and tighter credit condition, we think more developers are likely to follow suit with price-cutting."

But the fact that there are some sales at lower prices is encouraging, analysts said. "It shows that there are some potential buyers out there who are waiting for the right price to enter the market," said Nicholas Mak, director of research and consultancy at Knight Frank.

Looking ahead, the mass market is likely to get support from HDB upgraders since the HDB resale market is going strong, analysts said. But other potential buyers are expected to wait on the sidelines - which could prove to be bad news for sellers of high-end and mid-range properties.

One potential source of buyers is those with handsome gains from collective sales who have yet to find suitable long-term replacement homes, said Tay Huey Ying, Colliers’ director for research and advisory. "Some of them who have opted to reside in public flats are waiting for an opportune time to re-enter the private home market and are keeping a vigilant watch on private home price movements," she said.

Property Firms May Feel Squeeze As Banks Tturn Coy

Source : The Business Times, October 20, 2008

Gearing under scrutiny; but future proceeds, old ties could tip balance

As the financial turmoil wrings precious liquidity out of markets, talk of tighter credit affecting property developers here has been making the rounds.

Analysts have scrambled to redo their math, and as the earnings reporting season kicks in, property developers will be closely scrutinised for their debt levels and overall financial standing. Not only are the property sector's fortunes at stake, market watchers will also be on the lookout for any implications for banks, which have a significant exposure to real estate.

'(We) could see banks continue to reduce their exposure to the property sector,' said a recent OCBC Investment Research note. According to the outfit, the proportion of bank loans to the sector has already been reduced to 17.9 per cent in August, down from 18.1 per cent in June.

But just how leveraged are property developers and do numbers alone tell the whole story? While gearing ratios will shed some light, market watchers highlight other factors to watch in evaluating firms' resilience to scarcer credit.

According to financial data on over 30 developers from DMG & Partners Securities, net gearing levels range from a negative 0.1x to 3.2x. Expressing net debt as a proportion of shareholders' equity, the higher the net gearing ratio, the more debt a firm has comparatively.

Topping the list is Sim Lian Group, with a net gearing of 3.2x. SC Global Developments, Hiap Hoe, Sing Holdings and Soilbuild Group Holdings complete the top-five band.

'Gearing will determine how much future funding property developers can get,' an analyst told BT. 'Highly-geared companies may face more covenants from banks, or get charged higher interest rates.'

But the market should not judge developers based on net gearing alone, analysts say. Another critical indicator to watch is the size of short-term debt and the amount of cash available to cover it.

Some property developers have more breathing space when it comes to short-term loans. In fact, Sing Holdings has no such debt to service. While SC Global has $19.5 million repayable till June next year, it has cash and cash equivalents of $70.8 million to meet this need.

A third factor to look at is the amount of proceeds going to developers in the near future. As the OCBC report also noted, with strong property sales in 2007 and progressive recognition of profits from sold projects, 'developers are financially stronger to weather thestorm'.

Sim Lian, for instance, will receive temporary occupation permits for The Premiere @ Tampines and Carabelle over the next 12 months. It expects to collect about $255 million from sales, which exceeds short- term debt of $136.2 million as at June 30.

For Hiap Hoe, Cuscaden Royale and Oxford Suites are due for completion in December next year. Their outstanding sales proceeds amount to over $100 million - far more than the $12.2 million held as short- term debt as at end-June.

DMG & Partners' list also highlights a trend: smaller property developers are more likely to have higher net gearing ratios. This ratio is just around 0.5 for bigger players such as Keppel Land and City Developments. For CapitaLand, net gearing is 0.43x if capital from recent property divestments is included in the end-June results.

Some industry watchers attribute the trend to portfolio differences. Besides having development properties, larger firms tend to own other sites for rentals or capital gains. Such investment properties can be revalued to reflect higher fair values (though not all developers practise this). This boosts the equity base and shaves net gearing.

Smaller companies holding more development properties would hence benefit less from rising markets, because these sites can be reported only at the lower figure of cost or net realisable value.

But regardless of size, property developers across the board will find new loans costlier or harder to come by. 'Banks are definitely more cautious these days,' a banker told BT.

The softening property market provides little comfort. 'Developers with ongoing projects that have limited flexibility in deferment . . . may find themselves stretched for cash, as sales and rental income slow down,' warned a Credit Suisse report last month.

This is where developers' past performance and relationships with banks count. 'We take into account a host of factors which include the project's viability, the parties involved (their financial strength, background, track record and our experience with them), the project's cashflow and the market demand for the project,' said Samuel Tsien, global head of OCBC's global corporate bank.

'If these factors are deemed to be present, we are open to considering financing under the appropriate terms and conditions.'

An industry insider also said that some banks are prepared to extend loans to existing clients but could shy away from new ones.

'Soilbuild is well supported by financial institutions which have developed long-term relationships with us,' said the firm's executive director Low Soon Sim. To further strengthen its capital base, the developer is also raising funds through a rights-cum-warrants issue, supported by commitments from the founders and directors.

Parkway Centre Up For Sale

Source : The Straits Times, Oct 20, 20008

PARKWAY Centre, a commercial block next to the bustling Parkway Parade mall, has been put up for collective sale by tender.
It is one of the few developments put up for collective sale in recent months as sentiment has been hit by the financial crisis.

Sole marketing agent Jones Lang LaSalle said the owners of the 99-year leasehold block in Marine Parade expect a price of around $160 million.

This works out to $1,000 per sq ft per plot ratio, which represents a premium of 40 to 50 per cent over an individual sale.

Work on the collective sale began late last year. In August, foreign funds and foreign developers with existing projects in Singapore indicated interest in Parkway Centre, said Jones Lang LaSalle's associate director of investments, Mr David Batchelor.

He said the buyer could build an all-retail project or an office-cum-retail complex of 157,625 sq ft of gross floor area, subject to approval.

The 13-storey building, which has 72 years left on its lease, has 110 units, of which three are shops and the rest offices. There is a McDonald's on the ground floor.

A firm linked to Hong Kong-listed Far East Holdings International, which developed the former Tang Dynasty City in Jurong, owns 40 per cent of the building.

The sale tender closes on Nov 19.


Source :《联合早报》October 18, 2008

(上海香港中通电)伴随着美国旅游市场对华的开放,纽约房产“二十汇”(20 pine The collection)顶级公寓首次到中国推广。该顶级公寓是世界著名品牌阿玛尼(Armani)进军建筑设计的第一件作品,其高回报率、高升值潜力、低单价更是让人大跌眼镜。


据上海《青年报》报道,正在上海推销的该楼曾经是一座历史建筑,前身是由洛克非勒创办的曼哈顿银行。两年前,由于美国政策的改变,当初由洛克非勒创办的曼哈顿银行将“二十汇”该建筑转手卖给现在的美国开发商宝美格林公司(Leviev Boymelgreen),该开发商又请阿玛尼公司重新装潢设计,变成顶级的公寓。


开发商宝美格林(Boymelgreen Developers)是住宅、办公楼和商厦投资方面有突破性创新的地产巨头,是纽约最活跃的地产开发商之一,拥有超过80万平方米的已开发和未开发项目。