The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 12th August 2016

Top Story

Rents for non-landed private homes dip in July: SRX Property
Rents for non-landed private homes in Singapore remained on a slide in July, marking a 0.4 per cent decline from a month ago and a 4.8 per cent fall from a year ago.  The main drag came from the suburban region or the Outside Central Region (OCR), where rents slipped 1.1 per cent month on month, followed by a 0.7 per cent decline in the Core Central Region (CCR).  Meanwhile, rents in the city fringe or Rest of Central Region (RCR) inched up 0.8 per cent during the month of July.  From the peak of January 2013, rents are down 16.9 per cent, based on SRX Property’s rental index.

Dimmer prospects in H2 as MTI shears 2016 growth forecast to 1-2%
With additional downside risks posed by Brexit and China’s corporate credit levels, Singapore’s growth is expected to slow in the second half of 2016 – prompting the government to shave its full-year growth forecast to 1-2 per cent from an earlier 1-3 per cent.  With H1 growth already at 2.1 per cent – after Q2 growth matched Q1’s 2.1 per cent – the new official projection implies dimmer prospects for H2. This means that at best, the government expects 2016’s GDP growth to be on a par with 2015’s; at worst, it foresees this year’s performance being the poorest since 2009.

Singapore Economy

Consumers now the force behind demand driver for S’pore economy
Investments in China were one of the largest external final demand drivers for Singapore’s economy in 2015.  But faced with the risk of debt defaults and a restructuring economy in China, Singapore officials on Thursday highlighted consumption-driven sectors in China for firms here to foray into.  And taken together with drivers from other economies, consumption is becoming a main external driving force for Singapore’s economy.

Trade fared better in Q2, but is still down
Singapore’s external trade in goods put on a better showing in the second quarter than in the first, though it was still largely in negative growth territory in year-on-year terms.  International Enterprise (IE) Singapore has thus lifted its 2016 growth forecasts for total trade and for non-oil domestic exports (NODX). Total trade, forecast earlier at between -8 and -6 per cent, is now expected to come in at -7 to -6 per cent.  NODX, previously forecast to register between -5 and -3 per cent, is now expected to be between -4 and -3 per cent.

Singapore Real Estate

Singapore property firms, trusts facing record debt maturities as home prices drop
Singapore’s real-estate firms are facing record debt maturities, just as home sales post their longest-ever losing streak, straining the finances of builders less prepared to weather the storm.  Singapore builders and trusts have an unprecedented S$1.8 billion of local currency bonds maturing this quarter, S$1.2 billion in the final quarter and another S$3.7 billion in 2017. Credit Suisse Private Banking said it doesn’t recommend smaller builders due to “relatively high” leverage. JPMorgan Chase & Co said these companies are “most exposed” to a further property market correction given their weakening financial profiles.

Real estate and banking weigh on services’ Q2 growth
Worrying performances from real estate and the banking sector dragged on services growth in Singapore in the second quarter, while the electronics and biomedical clusters boosted manufacturing, which posted its first year-on-year growth in more than seven quarters.  Singapore’s services sector, representing about three quarters of the economy and often viewed as more resilient than manufacturing, grew just 1.4 per cent year-on-year in the three months ended June 30, one of its slowest since the 2008 financial crisis. It grew 1.7 per cent in Q1.  This contrasted with manufacturing’s 1.1 per cent, a turnaround from Q1’s 0.5 per cent contraction and its first growth in more than a year. This sector represents about a fifth of the economy.

Clementi resale flat crosses $1m mark
A flat in Clementi has fetched more than $1 million on the resale market, setting a record for a five-room Housing Board flat outside the Pinnacle @ Duxton.  The $1,005,000 deal, closed earlier this month, was for a 116 sq m flat on the 18th storey.  Resale prices for HDB flats rarely reach $1 million. The exceptions are units at the iconic Pinnacle @ Duxton and rare types such as executive maisonettes or HDB terrace houses.

Instant hit: Singapore’s first vending machine cafe draws queues
It’s 7pm and Ms Abery Tay has been waiting in line for about 20 minutes for her dinner at VendCafe, the newly opened vending machine cafe at Block 320C Anchorvale Drive in Sengkang – and there are at least five people ahead of her in the queue.  Ms Tay, 25, headed there after work in the hope of trying its claypot chicken rice, one of the dishes on offer at the cafe, as she said it seemed unique.

Prime areas eyed for public flats, to make city ‘accessible to all’
The Government is looking into building public flats in prime areas, such as the planned Greater Southern Waterfront, to ensure that the city is “accessible” to all, said National Development Minister Lawrence Wong during a forum with National University of Singapore (NUS) students yesterday.  Such flats could have different requirements such as varying lease periods, said Mr Wong, as he responded to a question from a student on how to make public buildings and new economic icons available to all Singaporeans. The student had pointed out that although Marina Bay Sands, for example, is an icon of Singapore, “it is not really a place for all Singaporeans because of the high cost of enjoying such a place”.

Companies’ Brief

CDL plans luxe retirement-living project in Knightsbridge
City Developments (CDL) is planning to develop a luxury retirement living project with 34 two-bedroom apartments in London’s Knightsbridge.  The project, to be built on a freehold car park site which CDL acquired a few years ago, is near Harrods department store.  The apartments, to be sold on 999-year leases, will range from 1,250 sq ft to 2,110 sq ft.  With a potential gross development value of up to £200 million (about S$356 million), the project will offer assisted-living facilities such as a luxury spa, swimming pool, library, clinic and 24-hour concierge service, said CDL’s chief strategy officer and head of asset management Kwek Eik Sheng.

Leng Beng sees terrorism as bigger threat to CDL group than Brexit
City Developments Ltd (CDL) executive chairman Kwek Leng Beng sees a greater threat from terrorism than Brexit for the group’s hotel and property business in the UK.  In the long term, he reckons, things will work out fine for the UK post-Brexit, although the short-term implications of Brexit are unclear.  One of the immediate effects from the UK referendum in June,where a majority of the electorate voted to leave the European Union, is that the pound has taken a beating, which makes Britain a cheaper place to visit.

Keppel DC Reit buys data centre in Italy for S$57.3m
Keppel DC Reit said on Friday that it has bought a data centre in Milan, Italy, for EUR 37.3 million (S$57.3 million) as part of its Europe expansion.  The data centre comprises three interconnected four-storey buildings with a total lettable area of about 15,365 square metre (165,389 square feet). It is sited on 11,965 sqm (128,791 sq ft) of freehold land about eight kilometres away from the Milan city centre, which is easily accessible via the Milan Metro system. The facility was acquired from Riaz Valani, Sebastiano Rizzo and Faizul Lalji.

Fragrance’s Q2 net profit dives 75.9%
Along with fewer ongoing development projects, Fragrance Group reported a 75.9 per cent slump in net profit for the second quarter ended June 30 to S$3.65 million.  Revenue took a hit, slipping 66.9 per cent from a year ago to S$30.67 million, with the property development segment accounting for 85.5 per cent of group revenue.

Yanlord Q2 profit leaps 89% on strong pre-sales
High-end Chinese property developer Yanlord Land Group reported a 89 per cent jump in net profit for the second quarter ended June 30 to 323.95 million yuan (S$65.5 million).  Group revenue trebled to 7.4 billion yuan from 2.34 billion yuan, thanks to a significant increase in handover of homes by gross floor area (GFA) and higher average selling prices.

ZACD Group launches pop-up store in China
Investment firm ZACD Group announced on Thursday the launch of the WOW Singapore pop-up store, a market engagement media concept and platform that will be showcased in six of China’s fastest-growing cities.  Multiple 600 square foot storage containers will be transformed into a mobile gallery that will showcase key offerings that make Singapore the world-class city it is today, primarily in investment, healthcare, education and food & beverage (F&B).

Views, Reviews & Forum

The dangers of low interest rates
The Bank of England Monetary Policy Committee has announced a cut in interest rates of 0.25 per cent, together with £60 billion (S$104 billion) of gilt purchases and additional purchases of up to £10 billion of UK corporate bonds. The bank has cited the potential to do more of the same. Since it seems very unlikely that lower borrowing costs from current extreme levels will have any meaningful direct impact on consumer or corporate actions, the aim must be largely to boost confidence.

New SISV index provides an easy-to understand measure
I refer to the report “SISV comes up with own indices to track suburban condos” (The Business Times, Aug 4).  In it, it was mentioned that “consumers can be confused by the different results of the different price indices”.  The Institute is pleased with the interest generated by the newly-launched SISV Private Residential Resale Price Index for the mass market. It is inevitable that comparisons would be made with existing indices and that queries would arise on the differences between these indices.

Avoid Malaysian property, especially Iskandar
Singapore and Malaysia signed a Memorandum of Understanding on July 19 to build the High Speed Rail (HSR) linking Singapore and Kuala Lumpur, a long-awaited update on the project that also revealed a more reasonable completion target of 2026.  In my most recent book, Weathering a Property Downturn, I had hazarded a guess that the earliest date for the HSR to begin operations would be the year 2025. Inter-city and international railway projects are never simple and deadlines get postponed all the time. Acquiring land across four Malaysian states, resettling affected families and businesses and, most importantly, the raising of funds for the entire project, will require a few more years, especially if local issues and politics disrupt the timeline.

Global Economy & Global Real Estate

LA luxury apartment tower testing market with sky-high rents

Sydney Opera House to undergo A$200m upgrading

China’s richest man likely to gain support for Wanda delisting

Raffles close to clinching deal for London hotel

Singapore builders confronting maturity wall as home prices drop

More Chinese cities raise bar for home buyers to rein in prices

Evergrande signals bid for control of rival developer Langfang

Asean adopts haze-free road map

Additional Articles of Interest – Local & Overseas Real Estate

Local & Overseas Real Estate – Full Article

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