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 July 2016

Singapore Economy

STI drifts to weaker close
The Straits Times Index drifted within a narrow band for most of Thursday’s session before finishing with a 5.26-point loss at 2,940.48. Turnover amounted to 966 million units worth S$1.05 billion, which was lower than the S$1.2 billion on Wednesday. Excluding warrants, there were 215 rises versus 209 falls throughout the market.  Market observers said the index, having jumped more than 7 per cent since the UK voted to leave the European Union on June 23, was now at a crossroads of sorts and was likely to “consolidate”, given that bond yields are at all-time lows, versus US stocks at all-time highs.

SMRT shares close 6.5% up after Temasek buyout offer
Shares of SMRT Corp leapt 6.5 per cent to close at S$1.645 on Thursday in the wake of Temasek Holdings’ proposed S$1.2 billion buyout offer, which a number of analysts dubbed as a reasonable one.  The counter opened at S$1.66 and hit a high of S$1.67 before closing 10 cents above its last traded price of S$1.545 last Friday. Some 31.57 million shares changed hands during trading on Thursday.  The takeover offer by Temasek’s wholly owned Belford Investments, which came a day after details of the New Rail Financing Framework (NRFF) were unveiled, is for S$1.68 per share. The offer price is final.

Retail spending: big data is the name of the game
In thinking through the power of big data in retail, the oft-cited example is that from US department store Target, which a few years ago famously alerted a teen mother to discounts on baby products – before her dad knew she was pregnant.  And as Singapore trudges through a malaise in the retail market, a fresh partnership between Singapore’s largest retail landlord CapitaLand and American Express (Amex) bears big-data potential. Success in this big-data aspect rests largely on Amex being able to expand its network of merchants to provide more rigorous data to CapitaLand.

Singapore Real Estate

Khaw: Govt mulling direct MRT link from airport to city and to high-speed rail terminus
Direct MRT connections from Changi Airport to Singapore’s city centre and to the future Singapore terminus of the Kuala Lumpur-Singapore High-Speed Rail might be in the works.  Currently, train commuters from the airport have to switch trains at Tanah Merah station on the East-West Line to head to the city.  That may change.  Transport Minister Khaw Boon Wan said on Thursday that the government is studying the feasibility of extending the Thomson-East Coast Line (TEL) beyond its planned five stages of construction, which are scheduled to open between 2019 and 2024.

Singapore commercial space prices, rentals fall further in Q2
Prices and rentals of commercial space in Singapore fell further in the second quarter of this year, statistics from the Urban Redevelopment Authority on Friday showed.  Prices of office space decreased by 1.5 per cent in Q2, compared to a 0.3 per cent decline in the previous quarter.  Rentals of office space fell by 3.5 per cent in the second quarter, compared to a decline of 2.1 per cent in the previous quarter.

‘Pervasive’ lapses found in WP town council
Auditors of the Workers’ Party-run Aljunied-Hougang Town Council (AHTC) had harsh words for the way it was managed, saying they found “pervasive” control failures in its accounts and work processes over the past five years.  These weaknesses cover key areas of governance, financial control, financial reporting, procurement and records management, KPMG said in a report on Wednesday.  In all, KPMG flagged six areas where AHTC’s control environment had failed to set the foundation for discipline and structure for its internal workings. These include the lack of communication and enforcement of integrity and ethical values. For instance, “highly irregular” methods were used to process over $60 million worth of payments, and temporary accounts used for more than one million transactions were not cleared swiftly.

Prime property market warming up
More activity is afoot in the prime residential market after a recent rise in sales amid competitive pricing and various purchase schemes giving buyers more options.  Developer CapitaLand is testing the strength of the high-end market segment with Victoria Park Villas, at the junction of Coronation and Victoria Park Roads, which goes on VIP preview from today.  The 99-year leasehold project consists of 106 semi-detached houses and three bungalows. Floor areas for the former are from 4,155 sq ft while prices are from $4.3 million.

Singapore private home prices weaken for 11th straight quarter, vacancy rate hits 16-year high
Private home prices and rents fell for an 11th straight quarter in the second quarter of this year, although this was at a slower pace than previously.  But vacancy rates of private residential units jumped 1.4 percentage points in the quarter to 8.9 per cent, the highest highest since 9.1 per cent in the second quarter of 2000.  A total of 30,310 private residential units were vacant in the second quarter, a rise of 5,391 units from the first quarter.

HDB resale prices remain unchanged in Q2, transactions on up
Resale prices of Housing and Development Board (HDB) flats remained unchanged in the second quarter of the year compared to the previous quarter, despite an increase in the number of resale transactions, according to figures released by HDB on Friday (Jul 22).  Resale transactions increased by 31.2 per cent, from 4,449 cases in the first quarter to 5,838 cases in the second quarter, while the Resale Price Index (RPI) for the second quarter remains at 134.7, the HDB said.

Funan mall redevelopment will cost S$560m, be completed by Q4 2019
The redevelopment of Funan DigitaLife Mall, the shopping centre best known for computers and other electronics, will cost an estimated S$560 million and is slated to be completed in the fourth quarter of 2019, said CapitaLand Mall Trust Management in a press release on Friday (July 22).  Work is expected to begin in the third quarter of this year. The mall has been shut since July 1.

Companies’ Brief

Suntec Reit’s Q2 DPU flat at 2.5 cents
Suntec Reit has reported distribution per unit (DPU) of 2.501 Singapore cents for the second quarter ended June 30, almost unchanged from 2.5 cents a year ago. Its distributable income was buoyed by proceeds from the disposal of Park Mall.
Gross revenue slipped 3.1 per cent to S$78.94 million while net property income fell 7.5 per cent to S$52.67 million. The declines were due to the divestment of Park Mall, which was mitigated by the increase in revenue from the opening of Suntec City mall (Phase 3) following the completion of the asset enhancement works.

Keppel’s Q2 profit falls 48.1% to S$205.8m
The winter in the oil & marine (O&M) sector may be harsh but it will not last forever, Keppel Corporation said on Thursday as it posted a 48.1 per cent fall in net profit to S$205.8 million for the second quarter.  The three months ended June 30 have been tough, said Keppel, but the group’s multi-business strategy continues to support its performance amid the challenging environment.

New acquisitions boost A-Reit’s Q1 distribution
Ascendas Reit on Thursday posted a distribution per unit (DPU) of 3.996 Singapore cents for its first quarter ended June 30, 2016.  This was 4 per cent higher than the 3.841 cents it paid out in the corresponding quarter a year ago.  Distribution was boosted mainly by the Australia portfolio and One@Changi City, which the Reit acquired in the second half of the previous fiscal year. Lower utilities expenses for the quarter also helped.

CapitaLand Mall Trust posts 1.1% rise in Q2 DPU on higher property income
CapitaLand Mall Trust (CMT) reported on Friday (July 22) a 1.1 per cent increase in distribution per unit (DPU) to 2.74 Singapore cents for the second quarter ended June 30, from 2.71 cents for the year-ago period.  Distributable income rose 3.3 per cent for the quarter to S$97.1 million from S$94.0 million for the same period last year.  This came on the back of a 6 per cent increase in net property income to S$116.1 million from S$109.5 million a year ago.

Views, Reviews & Forum

Private-equity deals slow in Q1: report
Private-equity deals were off to a slow start in the first quarter of this year – both in value and volume terms – but the fundamentals for PE transaction activity remain strong. An Ernst & Young report titled “EY private equity briefing: South-east Asia (June 2016)” said that the overall value of private equity deals in South-east Asia completed in Q1 2016 was US$852 million, down 20 per from Q1 2015.  As PE firms were taking their time to close deals amid the regional volatility, the total number of deals completed also saw a sharp 43 per cent fall. This was mainly due to the drop in early-stage technology deals.

Global Economy & Global Real Estate

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