The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 22nd February 2017

Top Story

Housing curbs may stay for some time: Lawrence Wong
Singapore’s residential property curbs are expected to stay for some time as the city-state’s economy remains stable and demand is still “very resilient”, National Development Minister Lawrence Wong said.  Singapore home prices fell 3 per cent in 2016, with prices declining for the 13th straight quarter in the last three months of the year for the longest streak since data was first published in 1975. Still, Singapore’s house sales last year topped 2015’s tally as a third straight year of price declines stoked pent-up demand from home buyers.

Singapore Economy

Signal goes out to struggling firms: Buck up – or be left behind
For struggling firms in Singapore, the writing is on the wall – or rather, in Budget 2017.  Finance Minister Heng Swee Keat on Monday promised short-term help to support companies hit by the cyclical downturn, but this help was limited to those in specific sectors.  For the rest which are trying to catch up with the economy’s restructuring, he had this to say: “Firms in sectors that are facing structural shifts will need to dig deep to change their business models to stay viable.”

Businesses unhappy with lack of urgent fixes
Small and medium enterprises (SMEs) and businesses, already feeling the pain from a tough business climate, are unhappy with the lack of short-term measures that they were hoping to see in Budget 2017.  Although there are targeted measures such as the hike in the cap for corporate income tax (CIT) rebate, many are lamenting that the measures do not help to solve their immediate problems.  Sentiment on the ground is especially strong. On one hand, businesses feel there is no quick fix to relieve their current woes; on the other hand, they see higher costs on the horizon from the increases in water tariff and changes in diesel tax.

Broadening tax base seen as likely revenue boost
The government’s need to collect more taxes is likely to fall on traditional sources such as personal income and property taxes, GST and possibly sin taxes such as betting.  The impact when they hit – such as GST or the goods & services tax going into double-digit territory – is not expected to last beyond a one-off temporary pullback in consumption, say observers. Higher personal income and property taxes could be neutral in impact as Singapore offers a safe and clean environment sought by many.

Singapore Real Estate

Resale flat prices ‘unlikely to rise’ despite higher CPF grants
With the announcement of enhanced resale flat grants comes the question on homebuyers’ minds: Will sellers raise prices?  The Central Provident Fund (CPF) housing grants, which are effective for resale flat applications from Monday, were raised by $10,000 to $20,000 for first-timer families, and $5,000 to $10,000 for first-timer singles, Finance Minister Heng Swee Keat announced in his Budget speech.  But some prospective buyers, like Ms M.L. Yong, 30, are concerned that sellers could jack up the price if they find out she is a first-timer applicant. For the past two years, she and her fiance have been looking for a Housing Board flat near his parents’ home in central Singapore.

BTO exercise: Families eyeing Fresh Start
The Fresh Start programme enabled four families to do just that, when they applied for a flat – again – in the latest Build-To-Order exercise, which closed on Monday.  This is the first exercise in the Fresh Start Housing Scheme, set up last December to help qualifying families own a Housing Board flat.  The four families were among 2,894 applicants who put down their names for 713 two-room flexi flats in Punggol – one of the most hotly contested flat types in the latest exercise.

Companies’ Brief

NTUC co-op tipped as front runner for Jurong Point
A new party has emerged in the race for Jurong Point mall.  The Business Times has learnt that Mercatus Co-operative – an NTUC social enterprise that owns and manages suburban malls – is now the front runner for Jurong Point.  Its bid is understood to be about S$2.2 billion, which would translate to S$3,343 per square foot based on the 658,000 square feet of commercial net lettable area owned by an equal joint venture between Lee Kim Tah Holdings and Guthrie GTS in Jurong Point.

IHC shares heavily traded after OUE’s ‘comfort letter’
Shares of International Healthway Corporation (IHC) jumped onto the list of actively traded stocks on Tuesday afternoon, an hour after the company requested trading to resume at 2pm. Close to 100 million shares changed hands for the day, against a three-month average of 18.5 million shares, with the stock rising to as much as 3.8 per cent to S$0.108 before settling at S$0.106, up 0.2 cent or 1.9 per cent.  In a boost to investors’ confidence, developer OUE, which has launched a mandatory unconditional cash offer for all the IHC shares it does not already own, at 10.6 cents apiece, said in a comfort letter to IHC shareholders that it intends to review IHC’s business and financial situation.

Far East Hospitality Trust’s Q4 DPS down on softer market
Far East Hospitality Trust on Wednesday morning reported that its fourth-quarter income available for distribution was 2.3 per cent lower year on year to S$20.2 million, due to lower revenue.  This represents distribution per stapled security (DPS) of 1.12 Singapore cents, down 4.3 per cent year on year.  Revenue for the three months as at end December 2016 dropped 4.6 per cent to S$27.5 million, due to reduced revenue contribution from hotels and serviced residences, as well as marginally softer performance of the retail and office spaces.

MVN Asset Management raises stake in Vard Holdings
London-based MVN Asset Management has acquired a further 806,000 shares of Vard Holdings at S$0.27, boosting its stake in the Singapore-listed yard group to 6.0119 per cent.  Vard on Wednesday said in a filing to the Singapore Exchange (SGX) that the purchase was made on Tuesday.  MVN first emerged as a significant shareholder in Vard on Jan 18 after buying over 1.19 million shares, lifting its stake then to 5.0188 per cent.

Mapletree Logistics Trust enters into option to divest property for S$14.25m
The trustee of Mapletree Logistics Trust, HSBC Institutional Trust Services (Singapore) Limited, has entered into an option to divest the trust’s property at 20 Old Toh Tuck Road for S$14.25 million.  The warehouse with a gross floor area of about 7,531 square metres has been vacant since March last year after a master lease expired. The property was acquired in 2006 for S$11.6 million, and valued at S$13 million as at March 31 last year.  Given its relatively small land area, there is limited potential for the redevelopment of the 18-year-old warehouse into a modern, ramp-up logistics facility, said the trust manager Mapletree Logistics Trust Management.

Pacific Star Development eyeing regional projects
Newly listed property developer Pacific Star Development is off to a solid start.  The firm is achieving a strong level of take-up for its flagship real estate project in the Iskandar region, while it prepares another project in Bangkok for launch next month.  The company made its debut on the Singapore Exchange’s Catalist board last Thursday, following a reverse takeover (RTO) by LH Group.  In an RTO, a listed acquirer often in need of a new business will issue shares to the target – usually a private firm looking to go public – which will in turn assume control of the merged entity.

Fragrance buys The Imperial Hotel Blackpool for S$22.6 million
Fragrance Group said on Tuesday (Feb 21) it has completed the acquisition of The Imperial Hotel, Blackpool in the United Kingdom for £12.8 million (S$22.6 million).  The purchase, through its Fragrance UK-Blackpool subsidiary, was financed with internal funds. Built in 1867, the four-star hotel has 180 rooms and 9 suites, sitting on total land area of about 9,388 square metres with a freehold tenure. Situated on North Promenade, it is a Blackpool landmark, and enjoys spectacular sea views and close proximity to all major attractions in the area, Fragrance said.

Views, Reviews & Forum

Positioning Singapore to be future ready
In 2013, during a press conference to announce Microsoft’s acquisition of Nokia’s mobile phone business, Nokia CEO Stephen Elop ended his speech saying: “We didn’t do anything wrong, but somehow we lost,” upon which he wept publicly. In Nokia’s case, the world changed too quickly. As technology evolved, the company failed to adapt to the changes, lagged behind and eventually got acquired.

Global Economy & Global Real Estate

Taxing luxury homes may be perfect solution to fixing America’s inner cities

Fed minutes may show inflation confidence, talks on balance sheet

US dollar rises, underpinned by higher Treasury yields

China said to be drafting rules to rein in asset management risks

Rural China’s farming potential could be unlocked by mortgages

Chinese cash losing its cachet as yuan controls choke off deals

Hong Kong Developers Advance Ahead of City’s Budget Speech

From China’s factories to your shopping cart, price hikes loom

Surprising salve for New York’s beleaguered cities – influx of refugees

Additional Articles of Interest – Local & Overseas Real Estate

Time to recalibrate policy measures
When markets run amok, government policies are expected to provide stability. This was indeed the case when the policy measures first kicked in, starting from September 2009 and culminating in the implementation of the total debt service ratio (TDSR) framework on June 29, 2013. The market then started to respond to these measures and began the long process of detoxification.  The slew of measures has altered the real estate investment landscape and effectively constrained overspending. Consequently, the private residential market is now behaving in ways that are different from the heydays of the past.

Local & Overseas Real Estate – Full Article

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