DAILY NEWS

Daily News – 20, 21 & 22 February 2016

Singapore Economy

A big-bang Budget? Unlikely, say economists
It is not time yet for Finance Minister Heng Swee Keat to show his hand. Ahead of Budget 2016, expectations are running very high within the business community that the government – which won a stunning victory at the last General Election on the back of generous social policies – will now focus on businesses with a Budget full of economic goodies. That it will be Mr Heng’s first Budget as Finance Minister also adds to this perception.
http://www.businesstimes.com.sg/government-economy/singapore-budget-2016/a-big-bang-budget-unlikely-say-economists

Stock market a poor predictor of GDP: analysts
First, the bad news. If you believe that the stock market is an effective predictor of gross domestic product (GDP), then the Straits Times Index’s 8 per cent fall so far this year foretells more pain is coming. Now, the good news. The impact of the limping stock market on the real economy is nada, according to market watchers.
http://www.businesstimes.com.sg/companies-markets/stock-market-a-poor-predictor-of-gdp-analysts

People-centred growth in ascent to SG100
In thinking about Singapore’s economic future, the most important frame that the past two General Elections have provided us is the need for “inclusive growth”. What is deemed good for the economy must be judged on whether it is good for Singaporeans, right across the spectrum of the workforce.
http://www.straitstimes.com/opinion/people-centred-growth-in-ascent-to-sg100

Fighting paralysis in a market meltdown
Back during the dark days of the Asian financial crisis, the sell-down of the Straits Times Index (STI) and other regional bourses was relentless. Investors watched in horror as the value of their portfolios got smaller and smaller with each passing day. When the STI hit 800 points on Sept 4, 1998 – from 1,700 just six months earlier – a panic-stricken remisier went up to his head of equities research, and said: “Oh no! We have only eight days to go before we hit zero!”
http://www.straitstimes.com/business/fighting-paralysis-in-a-market-meltdown

Singapore Real Estate

Private housing resale market shines as buyers get off sidelines
After waiting more than one year for an opportune time to purchase a condominium to house his family of three, Mr Amrit took the plunge in early 2015 after coming across a resale unit in his choice location with a “reasonable” price tag. He had always intended to upgrade to a private home, and when prices for Housing and Development Board (HDB) flats started falling in 2013, he decided to cash out before the value of their four-room flat dipped further.
http://www.todayonline.com/business/property/private-housing-resale-market-shines-buyers-get-sidelines?singlepage=true

Wandervale EC draws over 400 e-applications
Wandervale, the first executive condominium (EC) to be launched this year, has received more than 400 e-applications as at Sunday, BT understands. This is about three-quarters of the total 534 units available. The project features 130 three-bedroom units, 322 three-bedroom premium units, and 82 four-bedroom units ranging from 958-1,249 square feet across nine residential blocks. Sources indicate that the most popular configurations are the three bedroom premium and four bedroom units.
http://www.businesstimes.com.sg/real-estate/wandervale-ec-draws-over-400-e-applications

Resale condos going for under $1m – and not all are shoebox units
Developers may be grumbling about the cooling measures, but for buyers they mean bargains can be found in the private home resale market – at $1 million or even less. For instance, the proportion of freehold or 999-year leasehold homes resold at this price point rose from just 6 per cent from 2010 to the end of 2013, to 17 per cent in the period from 2014 to this month.
http://www.straitstimes.com/business/property/resale-condos-going-for-under-1m-and-not-all-are-shoebox-units

CBD leasing market set for tough times
A person walking through the central business district (CBD) may soon see some largely dark office buildings as landlords face the spectre of a weak leasing market this year and the next. Guoco Tower, which is due to be completed this year, has found tenants for only about 10 per cent of its office space. It has a total office net lettable area (NLA) of 890,000 sq ft.
http://www.straitstimes.com/business/property/cbd-leasing-market-set-for-tough-times

At least four GCB deals sealed since start of the year
At least four properties in Good-Class Bungalow (GCB) areas have been transacted so far this year. Among the latest is a bungalow along Peirce Road that has changed hands for almost S$24 million. The price works out to S$1,479 per square foot (psf) based on the freehold land area of 16,224 square feet.
http://www.businesstimes.com.sg/real-estate/at-least-four-gcb-deals-sealed-since-start-of-the-year

Singapore property investments in Q4 climb 39.3%
The total value of property investments in Singapore surged in the fourth quarter of last year. Key drivers were public land sales of non-landed residential sites and acquisitions of office buildings by institutional investors. In a report out yesterday, consultancy Colliers International said investment sales came in at $5.96 billion for the October to December period, up 39.3 per cent from a year earlier. That brought the full-year figure to $20.32 billion, 3.8 per cent lower than in 2014.
http://www.straitstimes.com/business/property/singapore-property-investments-in-q4-climb-393

Manage the impact of interest rates
After nearly a decade of lingering at low levels, interest rates have been on the rise for the past year, and economists had forecast continuing increases. Over the past several weeks, however, rates have belied those expectations and flattened or even declined. Since interest rates have a large impact on almost everyone’s pocketbook, it is timely to look at how to manage the impact of those rate changes.
http://www.todayonline.com/business/rising-interest-rates-hit-your-wallet?singlepage=true

$2b extra cost if Cross Island Line skirts Central Catchment Nature Reserve
http://www.straitstimes.com/singapore/2b-extra-cost-if-cross-island-line-skirts-central-catchment-nature-reserve

Companies’ Brief

Role of brokerages heightened in market downturns: CBRE
The real estate market across all sectors in Singapore is in a correction phase, and “in a quirky way”, the job of brokerages has become more important during the transitions. This is the time when clients – whether they are in office, retail, or industrial – will require even more of the support and advice of brokerages, CBRE managing director, brokerage (Singapore) Moray Armstrong said.
http://www.businesstimes.com.sg/real-estate/role-of-brokerages-heightened-in-market-downturns-cbre

CBRE on lookout for brokerage talent amid industry consolidation
Consolidation among brokerages may follow as leasing continues to remain weak across real estate sectors in Singapore, CBRE managing director for its Singapore brokerage business Moray Armstrong believes. In such an environment, CBRE is keeping a keen eye open for talent acquisition for its own brokerage business, following its latest recruitment exercise last June. This will position it well to capitalise on the market rebound when it comes, he said.
http://www.businesstimes.com.sg/real-estate/cbre-on-lookout-for-brokerage-talent-amid-industry-consolidation

Most Reits’ DPU paid out of operations
A healthy 91 per cent of distributions from Singapore Reits (S-Reits) on average comes from operations, contrary to the belief that distributions are increasingly artificially supported by capital and other means. This is according to findings from a study done by Religare Institutional Research. In fact, only four Reits used capital – mostly comprising divestment proceeds – to prop up their dividend payout in FY14 and FY15. They are Cache Logistics Trust, Mapletree Logistics Trust, Keppel Reit and Suntec Reit.
http://www.businesstimes.com.sg/companies-markets/most-reits-dpu-paid-out-of-operations

UIC hit by sharp drop in fair value gains
United Industrial Corporation’s (UIC) full-year net profit fell 35 per cent to S$260.55 million on the back of a huge decrease in fair value gain on investment properties. Based on assessments by professional valuers as at Dec 31, 2015, on investment properties held by subsidiary companies, a fair value gain of S$18 million was booked in the income statement for the year ended Dec 31, 2015 – down from S$167.25 million for FY2014.
http://www.businesstimes.com.sg/companies-markets/uic-hit-by-sharp-drop-in-fair-value-gains
http://www.straitstimes.com/business/companies-markets/uic-full-year-net-profit-falls-35-to-261m

OUE’s 2015 profit falls 85.7% on lack of one-off gain
OUE’s net profit for the full year ended December 2015 fell 85.7 per cent, from S$1.09 billion to S$156.4 million, mainly attributable to the absence of non-recurring gain arising from the deconsolidation of OUE H-TRUST. Revenue for the full year inched up 3.6 per cent, from S$416.4 million to S$431.5 million. In FY 2014, OUE recognised a gain of S$1 billion on disposal of subsidiaries, pushing other gains for the year up to S$1.18 billion. In FY 2015, this came in at S$20.3 million.
http://www.businesstimes.com.sg/companies-markets/oues-2015-profit-falls-857-on-lack-of-one-off-gain
http://www.straitstimes.com/business/oues-full-year-profit-plunges-86-to-156m

Views, Reviews & Forum

Developers must find ways to deal with property curbs
The Real Estate Developers’ Association of Singapore (Redas) has persistently called for the Government to remove some of the measures that were intended to control runaway property prices (“Time to ease property curbs, say developers”; last Friday).
http://www.straitstimes.com/forum/letters-in-print/developers-must-find-ways-to-deal-with-property-curbs

Redas must take long-term view of market
The call by the Real Estate Developers’ Association of Singapore (Redas) to ease some of the property cooling measures is understandable, from the developers’ perspective (“Time to ease property curbs, say developers”; last Friday). However, while individual developers may take a short- or mid-term view in their business, Redas must take a longer-term view of Singapore’s property market and be a responsible national body to ensure the long-term sustainability of the real estate market, which, in turn, affects the lives of Singaporeans.
http://www.straitstimes.com/forum/letters-in-print/redas-must-take-long-term-view-of-market

Dismay over call to ease property curbs
I read with great dismay the call by Real Estate Developers’ Association of Singapore president Augustine Tan to relax cooling measures in the property market (“Time to ease property curbs, say developers”; yesterday). Mr Tan is absolutely right to point out the supply glut in the current property market.
http://www.straitstimes.com/forum/letters-in-print/dismay-over-call-to-ease-property-curbs