The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 29th, 30th and 31st October 2016

Singapore Economy

Ng Chee Meng and Ong Ye Kung promoted to full ministers
They will continue in their current portfolios at the Education Ministry, the Prime Minister’s Office (PMO) said on Friday. The PMO described their promotions as part of the leadership renewal process.  Mr Ng will be promoted to Minister for Education (Schools). The 48-year-old will also move up the ranks to Second Minister at the Transport Ministry, where he is now a Senior Minister of State.  A former chief of defence force before entering politics at the last general election, Mr Ng is a Member of Parliament (MP) in the Pasir Ris-Punggol group representation constituency (GRC).

Singapore dollar perpetuals soar amid global hunt for yield
Prices of Singdollar (SGD) perpetuals have risen sharply and investors who kept faith earlier, when poor sentiment gripped the bond market as oil and gas issues collapsed, have been amply rewarded.  The top performer is AusNet Services 5.5 per cent S$200 million bonds whose price has soared – last week, it hit 108.1, giving a return of 8.1 per cent since its March sale. At current levels, the yield has fallen to 3.7 per cent.  Bonds are sold at 100 par; bond yields fall when prices rise and vice versa. Perpetuals are hybrid bonds with no fixed maturity though they typically have a call date when the issuer has the option to redeem the bond.

Shedding light on slowing growth: What ails Singapore’s economy?
Singapore’s small, trade-dependent economy is under the weather – and likely to remain so for some time.
While the country has not yet sunk into a full-blown recession, its fortunes are tied closely to those of the world economy and the outlook there is far from cheery.  Advance estimates tip Singapore’s growth to come in at just 0.6 per cent in the July to September period, compared with the same quarter a year ago, the weakest rate since 2009.  Economists expect this to be revised upwards slightly when final numbers are released next month, but have warned that the slowdown will persist.

Singapore Real Estate

Property market in the grip of economic gloom
No matter where you look – from office and mall vacancies to private home prices and rents – the property market took a hit in the third quarter as the economic gloom tightened its grip.  There were generally no large price drops or surges in vacancies, but the negative bent to the numbers underscored trends that have been evident for many months.  “Worries over a weaker economy, news of job cuts and fears of a coming recession seem to have an adverse impact on the property market,” said Mr Nicholas Mak, executive director of SLP International Property Consultants.  Rents and prices of offices and malls fell at a slower pace in the third quarter, but vacancy rates climbed to their highest levels in recent years.

Steeper fall in private home prices puts earlier signs of bottoming out more in doubt
The price decline – the steepest since 2013 – has made it even more uncertain if earlier signs of a bottoming-out in prices can continue amid mounting concerns over the state of the economy and employment.  Christine Li, research director at Cushman & Wakefield, said: “The recent uptick in the take-up rates in the developers’ new home sales has given some hope that the prices are bottoming out soon, but the sustainability of the recovery in take-ups and prices is still in question on the back of a poorer economic outlook.”

Net office demand contracts in Q3, vacancy crosses 10%
The amount of occupied office space islandwide contracted 5,000 square metres (sq m) in the third quarter of this year, contrasting with an increase of 30,000 sq m in Q2 this year, according to official statistics. This takes the net increase in office demand in the first nine months to 26,000 sq m – lower than the 72,000 sq m in the year-ago period, based on Urban Redevelopment Authority’s data released on Friday.  Market watchers attribute the weaker demand to the sluggish economy and anaemic employment numbers.

Singapore Q3 retail vacancies rise to 5-year high of 8.4%
The decline in both retail property rents and prices was slower in the third quarter than in the second, but vacancies shot to fresh highs.  The latest data from the Urban Redevelopment Authority (URA) indicates that the vacancy rate island-wide rose to 8.4 per cent at the end of Q3 – the highest level since Q1 2011, when the URA started collating retail property market stats in its current form.  The vacancy rate at the close of Q2 was 7.8 per cent.

Complaints over rentals jump as home sharing takes hold
The year is not yet over and more complaints on unauthorised short-term rentals of homes by property owners or their tenants have already been made, even as the home-sharing phenomenon looks like it is here to stay.  The number of complaints over such rentals of private homes hit 469 in the first nine months of this year, a jump from the 231 cases for the whole of 2013.  The Urban Redevelopment Authority said it had taken action against 63 of those cases from January to September.

Hiap Hoe to offload unsold units of Cavenagh Road condo
Property and hotel group Hiap Hoe has agreed to offload a company that owns the unsold units of WaterScape@Cavenagh to its controlling shareholder Hiap Hoe Holdings to avoid having to cough up increasingly hefty penalty payments to the authorities.  Hiap Hoe Holdings – which is substantially owned by the mainboard- listed company’s executive chairman and chief executive Teo Ho Beng and managing director Roland Teo Ho Kang – will pay $31.1 million for Cavenagh Properties, which owns the unsold units.

Companies’ Brief

Private again, OSIM gets down to business
Freed from the weighty obligations of a listed company, recently delisted OSIM International will now be able to focus on its next phase of growth, says founder, chairman and chief executive Ron Sim.  The effort will see OSIM strengthen its corporate structures, while building up the brands in its portfolio, Mr Sim told The Business Times in his first media interview since it became a private company again.

CDL Hospitality Trusts’ Q3 DPS up 3.4% at 2.44 S’pore cents
CDL Hospitality Trusts’ (CDLHT) distribution per stapled security (DPSS) rose 3.4 per cent to 2.44 Singapore cents for the third quarter to Sept 30, 2016, as net property income was bolstered by its hotels in the United Kingdom and New Zealand.  Gross revenue rose 10.5 per cent to S$45.4 million, thanks to a revenue boost of S$6 million from Hilton Cambridge City Centre in the UK which was acquired on Oct 1, 2015. This was partially offset by weaker trading performance from the group’s Singapore and Maldives properties, which saw a collective decline in revenue by S$2.5 million. Its properties in Australia and Japan also reported revenue rises.

Frasers Hospitality Trust DPS falls 9.4% for Q4 to 1.19 cents
Hotels and serviced residences owner Frasers Hospitality Trust on Friday posted a 9.4 per cent fall in distributable per stapled security (DPS) to 1.19 Singapore cents for the fourth quarter ended Sept 30, down from 1.31 cents a year ago.  This took into account the effect of a S$266.3 million rights issue to strengthen its balance sheet that was announced in September, which saw the number of stapled securities rise 27.4 per cent to 1.84 billion. Without the effects of the rights issue, DPS would be 1.57 Singapore cents for the quarter – 5.4 per cent lower than last year’s 1.66 cents.

Asset renovations hit Starhill’s Q1
Asset enhancements and tenant transitions at Starhill Global Reit’s Australian and Chinese shopping malls affected its first-quarter performance slightly, although its Singapore assets continued to do well.  The retail trust on Friday posted a 0.8 per cent dip in distribution per unit (DPU) to 1.3 Singapore cents for its first quarter ended Sept 30, 2016, down 0.01 cent from a year ago.

UIC’s Q3 profit hurt by lower revenues from JV projects
United Industrial Corporation (UIC) reported a slight dip in earnings for the third quarter as the contribution from its joint venture property projects took a hit during the period.  The property development and investment company reported a 2 per cent drop in net profit attributable to shareholders for the quarter ended Sept 30, 2016.

Roxy-Pacific Holdings
Roxy-Pacific Holdings said its third-quarter net profit fell 39 per cent to $8.1 million.  This was despite revenue rising 4 per cent to $90.9 million for the three months to Sept 30, mainly due to an increase in revenue from the property development business.  Revenue from this business segment increased 5 per cent to $76.2 million, largely attributable to higher revenue recognition from Trilive, LIV on Sophia and LIV on Wilkie projects, but partially offset by lower revenue recognition from the Jade Residences and Whitehaven developments.

Views, Reviews & Forum

Disallow subletting of HDB flats
In her commentary (“Don’t count on making big bucks from your home”; last Sunday), Opinion editor Chua Mui Hoong talked about the leftward shift in social policies, of which a property should be an instrument for social good rather than as an investment tool.  In the light of this, and given recent comments by National Development Minister Lawrence Wong about mitigating the “lottery effect” of new downtown flats to make public housing more equitable, it is time for the Government to review the policy of allowing owners of HDB flats to sublet their units.

Growth Reit large?
Real estate investment trusts (Reits) continue to occupy a sweet spot in the portfolios of retail investors who are hungry for yields and grateful for stable dividends.  Since the first Reit – CapitaLand Mall Trust – was listed here in 2002, the Singapore Reit (S-Reit) market has grown rapidly.  In all, 38 Reits and property trusts are listed on the Singapore Exchange (SGX), with a combined market capitalisation of about $72 billion. Three of the mainboard’s six initial public offerings this year have been Reits – as well as one new Reit ETF listing.

Build flats for the elderly nearer medical facilities
We should not see caring for the elderly as a burden but a challenge and responsibility (“Need to rethink care of elderly as population ages rapidly, says Gan”; Oct 21).  Creative and productive ideas can create a better environment for us and for the elderly to enjoy their old age.  The elderly who need home care could be grouped together so that healthcare nurses do not need to travel to many different locations. This can save a lot of manpower, travelling costs and time.  Flats can be built next to hospitals, with subsidised day-care facilities nearby.  The hospital can share some of its services, such as providing healthier meals to the elderly at affordable rates.

Tips for securing a BTO flat
Q How can I increase my chances of getting a Build-to-Order (BTO) flat?
A Buyers can enjoy a much higher chance of success if they apply for BTO flats in non-mature estates, which are generally well-developed today with good transport networks and easy access to amenities.
In fact, most first-timer applicants are able to secure a flat within two tries, and almost certainly on their third attempt. These flats are also more affordable and give applicants eligibility for more grants.

US election weighs on Asian markets
Singapore shares fell, in line with most Asian markets yesterday, ending the week on a subdued note after a sell-off on Wall Street on Thursday.  The benchmark Straits Times Index dropped 12.68 points, or 0.45 per cent, to 2,816.26. The decline pushed the index into negative territory for the whole week – it finished the five trading days 0.52 per cent lower than last Friday.  Most Asian bourses also fell, with Hong Kong down 0.77 per cent, Shanghai slipping 0.26 per cent, Seoul sliding 0.23 per cent and Sydney edging down 0.22 per cent.

Tech disruption comes to real estate sector: Should property agents be worried?
When she wanted to sell her flat along Hougang Avenue 4 earlier this year, Ms Lee and her husband engaged a property agent and at the same time, decided to have a go at creating their own listing on a few online property portals.  “Our friends told us about these DIY (do-it-yourself) platforms and we thought: ‘Why not? There’s no harm trying’,” said the 39-year-old who declined to reveal her full name. “It was quite easy. We took some photos of our house, wrote a description and posted them online.”

Global Economy & Global Real Estate

China puts its stamp on Georgia’s economy

Exports boost Q3 growth rate to its fastest in 2 years

L Catterton bets on growth in China outlet malls

Asset manager Brookfield in talks to buy £600m London office tower: sources

Residential land prices in China’s first-tier cities soar 19.02% in Q3

Rebirth of Bronx housing project aims to cut crime

Genting bets big on lucrative China cruise business

Impact of interest rate hikes

Consumer prices fall for 7th straight month in Japan

US economy grows at fastest pace in two years

Taiwan economy grows 2.1% in Q3, fastest in over a year

Hong Kong parking space fetches record $863k

You Can Buy 1980s Singer Richard Marx’s $12 Million Mansion

Additional Articles of Interest – Local & Overseas Real Estate

Local & Overseas Real Estate – Full Article

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