The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 18th, 19th and 20th February 2017

Singapore Economy

MAS policy stance within ‘planning parameters’; next move seen as tightening
Singapore’s central bank is finding itself in a suitably comfortable position, and changes to its monetary policy approach seem unlikely for now. But should the Monetary Authority of Singapore (MAS) choose to move again later this year, it would be a tightening of monetary conditions, said economists.  MAS deputy managing director Jacqueline Loh said on Friday that the growth forecast for Singapore’s economy in 2017 is within expectations for its policy stance since late last year.  The Ministry of Trade and Industry (MTI) on Friday said that growth will be at a modest pace of one to 3 per cent this year, unchanged from an assessment made in November last year.

S’pore 2016 growth surprises but path forward remains clouded
A Manufacturing-led uptick in the final months of 2016 may have steadied Singapore’s economic keel, but the trade-dependent economy is also realising that it is sailing into choppier political waters.  So although 2016 fourth-quarter and full-year gross domestic product (GDP) data surprised many, Singapore is not  wavering from its previous growth forecast for this year.  In fact, the government expects Singapore’s road ahead to be similar to what the city-state went through last year – a year notable for its downbeat sentiment.

Manufacturing produces stellar showing
The stunning 39.8 per cent surge in manufacturing growth in the fourth quarter of 2016 is in sharp contrast to the 5 per cent decline in the third quarter, helped largely by a recovery in demand for semiconductor worldwide, even as business costs dropped.  Year-on-year, the sector grew 11.5 per cent in Q4 2016, outpacing 1.8 per cent growth in the previous quarter, also helped by a robust biomedical manufacturing cluster. Overall, the sector – which contributes 19.6 per cent to the nation’s nominal gross domestic product (GDP) – expanded 3.6 per cent in 2016, a reversal from the 5.1 per cent contraction in 2015, said the Ministry of Trade and Industry.

Infrastructure demand and consumerism will boost Asean’s investment appeal: IE Singapore
The bustling South-east Asian market and its heavy demand for infrastructure and consumerism will likely ensure the region remains appealing to Singapore firms that want to invest abroad, said a senior director at International Enterprise (IE) Singapore.  There has been mounting concern in the business community of late over the rise of protectionist measures in the West and fears of a trade war between the US and China, the world’s two largest economies.  The Trump administration is barely a month into its new four-year term and already there are efforts to re-shore American companies and tighten trade policies.

Singapore Real Estate

GCB in Jalan Kampong Chantek sold for S$27.6m
In what could be the first transaction in a Good Class Bungalow (GCB) Area this year, a bungalow along Jalan Kampong Chantek off Dunearn Road is changing hands for S$27.59 million.  This works out to about S$1,003 per square foot (psf) based on the freehold land area of 27,504 sq ft.  Perched on an upward-sloping site is an old vacant house with around 11,000 sq ft built-up area spanning two storeys and an attic level. It has a seven bedrooms and a swimming pool.

10,000 people turn up at Tanah Merah condo show-flat
There was a buzz in Tanah Merah over the weekend as potential buyers thronged the show-flat of Grandeur Park Residences.  The project, which was launched on Saturday, is property developer CEL Development’s latest offering.  About 10,000 people attended the launch event over two days.  The 720-unit condominium is a five-minute walk from Tanah Merah MRT station, which proved to be a key draw for potential buyers.

Companies’ Brief

Sabana Reit manager responds to questions on valuation of acquisition
In another turn of the drama unfolding in Singapore’s real estate investment trust (Reit) space, the manager for Sabana Shari’ah Compliant Industrial Reit (Sabana Reit) said the book value of a property the Reit is acquiring from its sponsor, Vibrant Group, is not relevant for the current acquisition.  The property at 47 Changi South Ave 2 was acquired by Vibrant Group in Mar 2011 for S$10.9 million and will be acquired by the Reit at S$23 million.  The latter figure had been arrived at by three valuation houses: Colliers, Knight Frank and Savills. A unitholder, Jerry Low had, in early February, filed a complaint to the Commercial Affairs Department (CAD) on his misgivings over the objectivity and independence of the valuation, BT earlier reported.

CapitaLand acquires 4 commercial properties in Japan for 49.7b yen
CapitaLand Limited is acquiring three income-producing office buildings and one shopping mall in Greater Tokyo for 49.7 billion yen (S$620.1 million), in a move that beefs up its Japan portfolio from S$1.8 billion to S$2.5 billion.  “This latest acquisition will deepen the group’s presence in Greater Tokyo through assets with stable yields and recurring cash flow,” said Jason Leow, CEO of CapitaLand Mall Asia and group coordinating CEO for Asia.  “With a sizeable amount of assets under management, this enlarged portfolio in Greater Tokyo will also advance a long-term business strategy for the group’s operations in Japan,” he said.

UIC’s net profit rises 10% to S$286m for 2016
United Industrial Corp’s (UIC) net profit rose 10 per cent to S$286 million for 2016 as it recorded higher sales from its residential projects.  For the 12 months ended Dec 31, earnings per share was 17.6 Singapore cents excluding fair value gains on investment properties, and 20.2 Singapore cents when those gains were included.  UIC, a property developer and investment company, is declaring a first and final dividend of 3.0 Singapore cents per share. Its stock closed at S$2.98 on Friday.

Twin Peaks sales, divestment prop up OUE results
Brisk condominium sales and a hotel divestment propelled property developer OUE Limited to a net profit of S$144.4 million for its financial year ended Dec 31, 2016.  However, net profit was 7.7 per cent lower than the S$156.4 million recorded in 2015, due to higher finance costs and net fair value losses on investment properties.  Revenue had more than doubled to S$884.2 million from S$431.5 million a year ago. This was in part due to nearly S$200 million recorded from the sale of the OUE Twin Peaks condominium in Orchard.

Parkway Life Reit acquires five Japan properties
Parkway Life Real Estate Investment Trust (PLife Reit) has acquired four nursing homes and one dementia group nursing home in Japan from Marubeni Corporation, UBI Kabushiki Kaisha and UBI Capital Kabushiki Kaisha for 4.76 billion yen (about S$59.5 million) as part of an asset recycling exercise to rebalance and strengthen the Reit’s Japan portfolio.

Millennium & Copthorne Hotels posts Q4 profit of £19m
Millennium & Copthorne Hotels (M&C), the London-listed hotel arm of Singapore’s City Developments Limited, posted a net profit of £19 million (S$33.5 million) for the fourth quarter of 2016, up from £5 million a year ago.  Total revenue went up 12.5 per cent year on year to £261 million in Q4 2016.  The revenue per available room (RevPAR), a key industry measure, fell marginally by £0.01 to £84.79 in constant currency.

OUE profit down 7.7% despite hefty turnover
Earnings took a hit at hotel group and developer OUE last year, owing to higher expenses and fair value losses on investment property.  Net profit came in at $144.4 million for the 12 months to Dec 31, down by 7.7 per cent on 2015, although revenue more than doubled to $884.2 million on stronger contributions from the property investment and development divisions.  Property investment turnover rose by 36.9 per cent to $264.7 million, from a year earlier – owing mainly to the full-year consolidation of sales from One Raffles Place, following the acquisition of an additional interest in OUB Centre in October 2015. OUB Centre was previously equity-accounted.

Liak Teng Lit to join Perennial Real Estate as COO
Days after he resigned as the group CEO of Alexandra Health, Liak Teng Lit has joined Perennial Real Estate Holdings as its group chief operating officer (COO).  He will take over on March 6 from Goh Soon Yong, who will be stepping down on the same day to “devote more time for his personal pursuits”.  As group COO, Mr Liak will be helping Perennial’s CEO Pua Seck Guan oversee and manage its general business.  At the same time, Mr Liak will be heading the company’s healthcare arm as its chief executive officer. Announcing this in a filing with the Singapore Exchange (SGX) on Friday, Perennial said that this was a newly created position at Perennial Healthcare.

UOB’s Q4 profit falls 6%, beating forecast
United Overseas Bank (UOB) beat expectations in the fourth quarter, thanks to its capacity to limit damage from souring loans to the beleaguered oil and gas sector.  Net profit for the three months to Dec 31 was down 6.2 per cent from a year earlier to $739 million, as revenue eased 2.5 per cent to $2.03 billion in that period. The results were better than the 7.4 per cent profit drop forecast in a Reuters poll.  Net interest income was down 0.1 per cent year on year to $1.28 billion, with net interest margin dropping from 1.79 per cent last year to 1.69 per cent. Non-interest income fell 6.3 per cent to $753 million.

Views, Reviews & Forum

Should property cooling measures be relaxed?
It has been seven years since the government first introduced cooling measures for the property market.  The latest property market data for Q4 2016 shows 13 straight quarters of decline. From the peak in Q3 2013, prices have fallen over 11 per cent (down 3 per cent in 2016 and 3.7 per cent for 2015).  Some property industry insiders and analysts are now calling for the government to relax the cooling measures.

Annual reviews of condo managing agents may be dropped
The stage is set for a showdown between managing agents and residents at strata-titled properties such as condominiums over a proposed legislative amendment.  The tweak would allow condo managing agents to do away with a mandatory annual review of their appointment.  The Ministry of National Development and the Building Construction Authority (BCA) are inviting public feedback until tomorrow on 33 proposed amendments to the Building Maintenance and Strata Management Act, which governs buildings such as condominiums.

Master developer? Not a big leap for Singapore players
A “master developer” model for new districts would be a boon for the real estate sector here, analysts said.

Large players with overseas experience in project development would be well suited to taking part.  Recommending such a private-public partnership model, the Committee on the Future Economy has said that greater flexibility in land use should also be allowed.  This could see developers taking charge of much larger sites and having a freer hand in land zoning, which would allow them to take a big-picture, more integrated approach to developing districts.  Consultancy Chesterton Singapore managing director Donald Han said: “In selecting the master developer, I think the Government will consider if the party has a long-term vision, financial credibility, ability to perform and experience in integrated development.”

Growth, rising share prices stoke optimism
Animal spirits are roaring their way back to stock markets in 2017 as signs become clearer that the world is experiencing a broad-based cyclical upswing.  With prices rising, fund managers are recommending that clients go on the offensive in growth-related assets such as bank stocks and high-yield bonds, as well as commodities.  Phil Wagstaff, Henderson Global Investors global head of distribution, said that the fund house has started promoting commodities and energy-related funds which can protect consumers against sustained price rises. “People don’t realise that if you get 3 per cent inflation for five years, and you’re in cash, that’s going to wipe out 20 per cent of your buying power.”

S&C fees to rise
Housing Board residents in all 15 People’s Action Party town councils will pay higher service and conservancy charges from June 1.  The reasons include higher expenses for cleaning and pest control, as well as for lift maintenance and replacement. The increase will be in two phases, with the second to be implemented on June 1 next year. This year’s hike will range from 50 cents to $9 a month for HDB one-room to executive flats.

Retail investors more cautious about overseas property deals
Two recent charges against local real estate firms promoting overseas residential investments have put the spotlight back on such risky purchases.  A complaint was filed against property agency Square Yards Singapore last month for failing to provide a written note to an investor telling him about the risks involved in a foreign purchase, according to a media release by the Centre for Estate Agents (CEA) filed on Jan 19. The company was fined S$7,500 and will not be able to sell or promote any overseas property for six months from March of this year.  Just in the month prior, CEA announced that a local agent from SQFT Global Properties Singapore was given a S$6,000 penalty when she misrepresented one of the ventures in Auckland, New Zealand. SQFT also had to pay S$10,000 in damages.

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Local & Overseas Real Estate – Full Article

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