The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 27th January 2017

Top Story

S’pore manufacturing springs to life, hope blooms for GDP growth
Spring is coming.  This analogy couldn’t come at a more appropriate time for Singapore’s manufacturing sector – and the larger economy – as the city-state prepares to wind down for the Spring Festival starting on Friday.  Though uncertainties still loom on the sector’s horizon, December’s factory output data released on Thursday surprised economists like never before in recent years.  The print comes at a time when Singapore is expected to grapple with the slowest year since the 2009 financial crisis.

URA private home price index slips 0.5% q-o-q in Q4 2016; rental index also slides
The Urban Redevelopment Authority’s price index for private homes fell 0.5 per cent in the fourth quarter of 2016 over the previous quarter. This was a smaller decline compared with the 1.5 per cent quarter-on-quarter drop in Q3 2016.  For the whole of 2016, prices fell 3.1 per cent, also a smaller drop compared with the 3.7 per cent decline in 2015.  For full-year 2016, prices of landed properties decreased by 4.5 per cent while prices of non-landed properties fell by 2.6 per cent.

Augustine Tan re-elected as Redas president
Augustine Tan was on Thursday named president of the Real Estate Developers’ Association of Singapore (Redas) management committee for the term 2017/2018.  Mr Tan, 58, executive director, property sales & corporate affairs of Far East Organization, was re-elected to the position at the Redas’ 57th annual general meeting.  Mr Tan is flanked by Redas management committee vice-presidents, UOL Group’s deputy group chief executive officer Liam Wee Sin and City Developments group general manager Chia Ngiang Hong.

Singapore Economy

Restructuring a hard slog, but it’s only way to move ahead: PM
For the second time in a week, Prime Minister Lee Hsien Loong has spoken at length about the challenges facing the Singapore economy in the coming years, and what it needs to do to thrive.  Addressing the nation on Friday in his annual Chinese New Year Message, he stressed the need for the economy to undergo renewal at a time when the world is entering uncharted waters.  “In Singapore, we have always grown by renewing ourselves, taking our economy in fresh directions, (and) opening new markets and fields of business,” he said.

2016 jobs market clocks lowest growth since 2003
Seasonal hirings for the year-end festivities helped to grow jobs in the final quarter of 2016, but by not much, as layoffs and the jobless rate rose.  Total employment grew by an estimated 1,900 in the quarter, after a drop of 2,700 in the previous quarter. The growth, however, was lower than a year ago, when employment was up 16,100.  Higher job creation in the services sector more than offset the sharper drops in manufacturing and construction, going by preliminary figures released by the Ministry of Manpower (MOM) on Thursday.

Singapore Real Estate

Industrial prices, rents in 7th straight quarterly fall
Industrial prices and rentals continued their decline for a seventh consecutive quarter in the last three months of 2016. Prices fell a further three per cent in the fourth quarter, and rentals by 0.5 per cent, said JTC on Thursday.  For the year, industrial prices retreated 9.1 per cent, and rentals, 6.8 per cent. This was steeper than the 1.7 per cent decline in prices and the 2.1 per cent in rentals in 2015.  But occupancy levels bucked the trend and rose 0.4 percentage point to 89.5 per cent in the quarter; compared to a year ago, they were still down 1.1 percentage point.

Commercial rent, price slide worsens in 2016
Rents and prices of commercial space in Singapore fell at a faster clip last year compared to 2015, with office vacancies rising to a near five-year high since Q1 2012 after some large projects were completed.  Latest data from the Urban Redevelopment Authority (URA) released on Thursday showed that rents of office and retail space have fallen more than 8 per cent in 2016, steeper than the 6.5 per cent drop for office rents and 4.1 per cent fall in retail rents in 2015.  The downward pressures are unlikely to go away just yet, given the impending supply and soft demand as the economy stays subdued, analysts say.

Demand for HDB resale flats expected to remain strong this year
The number of resale transactions for public housing flats rose 7.8 per cent to 20,813 cases last year from 19,306 cases in 2015. The latest figure is also the highest in four years.  One factor that boosted the resale volume of Housing & Development Board (HDB) flats last year is that more homebuyers sensed that prices in this segment had stabilised and may not fall significantly if they continued to wait, suggested SLP International executive director Nicholas Mak.

Savvy buyers zoomed in on CCR last year, URA data shows
Amid the overall soft property market conditions, savvy private home buyers looking for attractive deals zoomed in on the Core Central Region (CCR) last year. Government data released on Thursday showed the region was 2016’s outperformer in terms of percentage increase in transaction volumes, which in turn provided some ballast for prices in the region.  The total number of private homes sold in CCR through both primary and secondary markets surged 48.7 per cent to 2,764 units in 2016 over the preceding year, shows JLL’s analysis of the Urban Redevelopment Authority’s (URA) latest data.

Take-up rate of 3Gen flats surpasses analysts’ expectations
When teacher Tan Chow Hua, 49, found out that an upcoming Build-To-Order project in Jurong was offering larger flats for multiple-generation families, it did not take much to convince his wife, two teenage daughters and mother to apply for it.  After all, they had been on the lookout for such a flat, so they could keep a closer eye on Mr Tan’s 86-year-old mother, whose health began to deteriorate in the past six years.

PropNex fined $10,000 for data breach
Singapore’s privacy watchdog has fined PropNex Realty $10,000 after it inadvertently caused the personal data of 1,765 people to be leaked online. It is the second time the real estate industry has been in the news in the last three years over data privacy issues.  The Personal Data Protection Commission had fined an agent from Huttons Asia $27,000 in 2014 for sending text messages to numbers listed on the Do Not Call registry, which is covered under the Personal Data Protection Act.  The commission started probing PropNex in December 2015 following a complaint from an unnamed woman that her name and mobile number were in an unsecured PDF document freely available online.

Companies’ Brief

Property powers Keppel Corp as offshore & marine wanes
Keppel Corporation has turned to other growth engines as its offshore and marine (O&M) division rides out a multi-year downturn.  The property division emerged the top contributor to full-year net profit with a 79 per cent share; infrastructure trailed at a distant second with 13 per cent, followed by O&M and investments each with 4 per cent.

Perennial, partners sell majority stake in TripleOne Somerset for S$350m
Perennial Real Estate Holdings has led a consortium of vendors to sell a 70 per cent stake in TripleOne Somerset to Hong Kong-listed Shun Tak Holdings for S$350 million.  The deal will allow four Singapore-listed companies to recognise about S$86 million of gains.  Perennial, which will receive about S$101 million for the 20.2 per cent interest that it is selling, will retain a 30 per cent share in the office and retail development. The real estate developer said it will use its share of the proceeds to fund existing or future investments.

MBS parent stands to reap up to US$3.5b by selling stake in mall
The parent company of Marina Bay Sands (MBS) expects it could potentially reap US$3 billion to US$3.5 billion from the sale of a 49 per cent stake in the integrated resort’s shopping mall.  “That could make it the most expensive mall ever sold in the world,” its management said in a conference call following the release of its financial results.  The company is restricted from divesting any part of the mall until a moratorium linked to the casino development licence expires in March 2017. However, any sale will still require approval from the Singapore Government.  For the fourth quarter ended Dec 31, 2016, MBS turned in a net profit of US$366 million, up 8 per cent, boosted by stronger contributions from its casino, hotel and the mall.

CDLHT raises Q4 DPS by 3.3%, but warns of headwinds in hospitality sector
CDL Hospitality Trusts’ (CDLHT) distribution per stapled security (DPS) rose 3.3 per cent year on year to 3.11 Singapore cents for the fourth quarter ended 31 Dec, 2016, but it cautioned of ongoing challenges in the hospitality market.  Gross revenue fell 3.6 per cent to S$48.33 million, weighed down by a weaker performance from the group’s Singapore and Maldives properties.

Sabana Reit manager strikes conciliatory tone
The manager for Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana Reit) struck a conciliatory tone on Thursday as it addressed complaints by angry investors looking to throw it out over its lacklustre performance.  Conceding that the Reit has performed poorly compared to its peers in the past three years, Sabana Real Estate Investment Management said it is now working to stabilise the Reit’s distribution per unit (DPU) by cutting costs and selling underperforming assets.

Viva’s Q4 DPS up on resilient business park portfolio
A resilient business park portfolio has enabled Viva Industrial Trust (VIT) to achieve a 7.7 per cent year-on-year growth in distribution per stapled security (DPS) to 1.760 Singapore cents for its fourth quarter, the trust said on Thursday.  The DPS growth came on the back of a steady rise in distributable income, which rose 27.9 per cent to reach S$15.9 million for the three months ended Dec 31, 2016.  Gross revenue went up 29.8 per cent to S$25.57 million for the quarter, while net property income rose 31.7 per cent to S$18.08 million.

Ascendas Hospitality Trust posts 13% growth in Q3 DPS
Ascendas Hospitality Trust (A-H Trust) on Thursday posted a 13.1 per cent jump in distribution per stapled security (DPS) to 1.64 Singapore cents for the third quarter from 1.45 Singapore cents a year ago, on the back of better performance of its portfolio of hotels in all markets except for Singapore.  This was after deducting income retained for working capital purposes.  Stronger Australian dollar and Japanese yen helped boost gross revenue and net property income for the quarter.

CRCT slashes rents at Beijing mall for two ‘lifestyle’ concepts
A weaker Chinese yuan and a higher property tax led to China retail mall play CapitaLand Retail China Trust (CRCT) reporting dimmer results for its fourth quarter and full year ended Dec 31, 2016.  But what caught the attention of analysts at CRCT’s results briefing on Thursday was a 19.7 per cent drop in rents for new leases signed at CapitaMall Xizhimen during the last three months of 2016. The Beijing mall is closely watched as it is CRCT’s largest contributor by gross revenue and net property income.

Starhill Reit Q2 DPU drops
The soft office market and lacklustre retail landscape in Singapore have hit retail landlord Starhill Global Real Estate Investment Trust (Reit) where it hurts.  With six months left to go in its financial year 2017, the Reit has managed to get commitments for only about a third, as at end-2016, of its office leases by gross rent that are due for expiry this FY, it said in a Singapore Exchange filing on Thursday as it released weaker results for its second quarter.

Frasers Hospitality Trust’s DPS down on enlarged stapled security base
Even as Frasers Hospitality Trust’s (FHT) distribution income grew in the first quarter of FY2017, it posted a fall in distribution per stapled security (DPS) due to an enlarged stapled security base following recent rights issue.  DPS in the three months as at end December 2016 was down 18.9 per cent year-on-year to 1.3258 Singapore cents, after the number of stapled securities in FHT rose to 1,841.2 million.

Kwek Leng Beng to retire from Hong Leong Asia due to other commitments
Singapore property tycoon Kwek Leng Beng is retiring from Hong Leong Asia (HLA), the trade and industrial arm of Hong Leong Group, due to other commitments.  Mr Kwek, 75, has been a director of HLA since 1981, and non-executive chairman since 1995. His cousin Kwek Leng Peck, currently an executive director, will succeed him as executive chairman of HLA following the company’s annual general meeting in April.

OUE C-Reit’s Q4 DPU down 13.2% at 1.18 cents
OUE Commercial Reit (OUE C-Reit) on Thursday posted a distribution per unit (DPU) of 1.18 Singapore cents for the fourth quarter ended Dec 31, 2016, down 13.2 per cent from 1.36 cents a year ago.  Amount available for distribution to unitholders went down 12.5 per cent year on year to S$15.43 million in Q4.  OUE C-Reit said the steeper decline was due to a one-off distribution of capital return of S$1.3 million, excluding which DPU for Q4 2015 would be 1.26 cents.

MGCCT’s Q3 DPU falls to 1.778 cents
The manager of Mapletree Greater China Commercial Trust (MGCCT) on Thursday announced that its distribution per unit (DPU) for the third quarter of financial year 2017 is at 1.778 Singapore cents. This is 0.076 cents lower than a year ago.  Overall performance for the three months ended Dec 31, 2016, was affected by the inclusion of value added tax and incremental property tax payable for Gateway Plaza in Beijing, the manager said.  Gross revenue was thus lower by 0.5 per cent at S$87.83 million.

Views, Reviews & Forum

Building uncertainty, flexibility into infrastructure megaprojects
Build it and they will come . . . Or will they?  Across Asia and around the world, billions of dollars are being pumped into infrastructure. Megaprojects such as giant new ports, bridges, tunnels, highways, rail lines, airports or even entire cities are being debated, designed or are already in the process of being built.  Large scale infrastructure often attracts prominent headlines and hype, but to be viable it demands careful planning and evaluation. Bad decisions can have costly implications.

Global Economy & Global Real Estate

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Saudi builder Khodari says delayed projects at 312.7m riyals end-2016

Japan says CPI falls 0.3% in 2016, first fall in 4 years

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