The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 26th October 2016

Singapore Economy

MAS: Singapore economy to remain sluggish in 2017
Singapore’s small, trade-dependent economy is going through a protracted cyclical downturn and is not expected to pick up significantly next year, the country’s central bank said.  The global economy is likely to expand at a “steady but mediocre pace” in 2017 and, on the back of this, demand remains uneven across Singapore’s key export markets.  This means trade-related sectors will continue to struggle, the Monetary Authority of Singapore (MAS) said in its twice-yearly macroeconomic review released yesterday.  This has been further compounded by Singapore’s exposure to some of the hardest-hit sectors, such as oil and gas, semiconductors and transport services.  The weak trade outlook means that growth in 2017 will depend largely on its domestically-oriented industries and the services sector, the MAS added.

MAS flags risk of ’emerging slack’ in Singapore labour market
Singapore’s current labour market is invoking memories of the financial crisis years of 2008-09.  The tightness indicator for the market turned negative in the first half of this year – the first time this had happened since 2009. The mismatch between job seekers and job openings in 2015 also approached the level last seen in 2009, according to the Monetary Authority of Singapore (MAS) in its latest biannual review.  In the review published on Tuesday, MAS said there is an “emerging slack” in the labour market.  For the first half of 2016, the labour market pressure indicator – a summary statistic which captures the extent of labour market tightness using 31 indicators – turned negative for the first time since 2009.  This is a result of weak turnover in the market, said MAS. “The seasonally adjusted resignation rate reached its lowest level since Q2 2009, with the recruitment rate trending down as well,” said the report.

Singapore Real Estate

Jurong Point put on market with over S$2b price tag
Singapore’s biggest suburban shopping centre, Jurong Point, has been put up for sale with a price tag exceeding S$2 billion.  This works out to more than S$3,000 per square foot based on the commercial net lettable area of about 658,000 sq ft that is being offered for sale by an equal joint venture between Guthrie GTS and Lee Kim Tah Holdings, both of which have been delisted.  At over S$2 billion, the price tag translates to a sub-4 per cent net yield, Michael Leong, director of sole marketing agent Array Realty, told The Business Times.

Companies’ Brief

Weak yuan hits CRCT’s Q3 DPU
Dragged by a weaker yuan in which it clocked its revenue, CapitaLand Retail China Trust (CRCT) reported a 10.6 per cent fall in distribution per unit (DPU) from a year ago to 2.36 Singapore cents.  Its gross revenue of 248.79 million yuan was 1.2 per cent lower than a year ago, largely attributable to two malls, CapitaMall Minzhongleyuan in Wuhan and CapitaMall Wuhu, which continued to be affected by road closure and tenant mix adjustments respectively.  CRCT’s net property income (NPI) grew 0.6 per cent to 161.28 million yuan, a slower pace of growth than in preceding quarters due to the impact of higher property tax provision of 11.2 million yuan made for the Beijing malls due to a change in local property tax with effect from July 1.

CapitaLand sets up US$1.5b China fund
In what is the largest private capital-raising that CapitaLand Limited has undertaken, the property group has set up a third private fund of US$1.5 billion to invest in prime integrated developments in gateway cities in China.  Known as Raffles City China Investment Partners III (RCCIP III), the fund has a life of eight years.  CapitaLand will subscribe for a 41.7 per cent sponsor stake in RCCIP III, while the remaining interests will be held by investors from Asia, North America and the Middle East, including new and existing investors.

Ascott Residence Trust offers untapped potential
Softer corporate demand and an uncertain economic climate are plaguing the hospitality sector, but some analysts still spy promise in Ascott Residence Trust (ART).  Eight analysts have a “buy” call on the counter, while four have issued a “hold” call, according to Bloomberg data. The 12-month consensus target price stands at S$1.27, above Tuesday’s closing price of S$1.145.  Factors underpinning the bullish outlook include ART’s diversified portfolio, contributions from recent expansion efforts as well as its asset enhancement initiatives.

Higher rents boost Mapletree Ind’s Q2 DPU
Higher rental rates across its property segments as well as higher occupancies achieved in its high-tech buildings lent a boost to Mapletree Industrial Trust’s (MIT) second-quarter performance.  On Tuesday, it reported a 1.4 per cent increase in distribution per unit (DPU) to 2.83 Singapore cents for the second quarter ended Sept 30, 2016.  Gross revenue rose 1.8 per cent to S$84.2 million, while net property income rose 4.3 per cent to S$63.6 million. Distributable income rose 3.4 per cent to S$50.6 million.

Frasers Property Australia secures site for A$440m project
Frasers Property Australia has secured a 115 ha site in Wyndham Vale, Melbourne, Australia, for a A$440 million (S$467.9 million) mixed-used community project.  The site – at 974 Black Forest Road – is adjacent to a proposed rail station. The residential component covers 69.4 ha and will yield around 1,200 lots, with 8.3 ha allocated to education/community use, a further 8.3 ha for retail and 14.8 ha dedicated to mixed-use commercial/employment.

Cambridge Industrial Trust posts 18% drop in Q3 DPU
Cambridge Industrial Trust (CIT) reported a 18 per cent drop in distribution per unit (DPU) to 0.987 cents for the third quarter ended Sept 30.  Its net property income fell 8.3 per cent to S$19.9 million mainly due to higher operating expenses of properties converted from single-tenanted property to multi-tenancy, which is offset by revenue contribution from leasing and rental escalations of several properties.

First Sponsor marks 13.1% growth in Q3 profit
First Sponsor achieved a 13.1 per cent growth in net profit to S$19.33 million for the third quarter ended Sept 30 on the back of higher development income.  Revenue during the quarter grew 11.5 per cent to S$80.35 million due mainly to higher revenue from sale of properties of S$16.8 million, which was partially offset by a decrease in revenue from property financing of S$8.6 million.  The increase in revenue from sale of properties during the quarter from a year ago mainly resulted from the higher number of units in the Millennium Waterfront project handed over in the current quarter.

JTC launches two small industrial sites for sale
The government is continuing with its launch of smallish, short-tenure, industrialist-friendly sites.  On Tuesday, state industrial landlord JTC said that it has launched a confirmed list site at Tuas South Link 3 (Plot 22) and a reserve list site also at Tuas South Link 3 (Plot 15) under the H2 2016 Industrial Government Land Sales (IGLS) Programme.  Confirmed list sites are launched according to schedule regardless of demand, whereas under the reserve list system, a land parcel is released for sale only if it receives an offer of a minimum price that is acceptable to the government or when there is sufficient market interest for the site.

Civec secures A$30m worth of construction projects in Australia
Mainboard-listed construction company Civec on Tuesday said that it has secured contracts for major projects on the east coast of Australia worth some A$30 million (S$31.9 million).

Global Economy & Global Real Estate

US dollar near highest since March as Fed rate-increase wagers rise

US housing price gains steady in August

U.S. August home prices rise 5.1 percent from year ago; consumer confidence slips in October

China regulator asked to curb property firms’ fundraising: Caixin

China Can Resist a Crash But Can’t Prevent One

Lotte revives hotel IPO plan as group seeks to regain confidence

India’s Nagpur city set to benefit from tax reform

Australia inflation edges up, market nixes rate cut

Additional Articles of Interest – Local & Overseas Real Estate

Best defensive assets are city-fringe condos near MRT stations
Based on URA’s flash estimates for 3Q2016, prices for private homes in Singapore have fallen 11% from the recent peak in 3Q2013 to 3Q2016. The pace of decline has accelerated in 3Q2016 as evidenced by the 1.5% fall in prices compared with the 0.4% dip in 2Q2016. All three market segments saw price declines in 3Q2016, with a 1.8% fall in Core Central Region (CCR) versus a 0.3% increase in 2Q2016; a 1.3% fall in Rest of Central Region (RCR) versus a 0.2% uptick in the previous quarter; and a 1.2% decline in Outside Central Region (OCR) versus a 0.5% dip in 2Q2016.

Local & Overseas Real Estate – Full Article

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