The Leading Professional and Representative Body for the Real Estate Industry

The Leading Professional and Representative Body for the Real Estate Industry



Daily News – 5th, 6th and 7th November 2016

Singapore Economy

‘Risks off’ as markets await outcome of US election
Markets are still betting on a Hillary Clinton victory in this week’s US presidential election, despite some nervousness caused by the resurgence of her email controversy. But investors are advised to stay on the sidelines until after a clear winner is announced, likely on Wednesday morning in Asia.  Hedges such as equity put options and gold are recommended. Consensus opinion is that markets could plummet if unpredictable businessman Donald Trump manages to get elected by winning in most swing states.

CPF interest rates ‘offer best risk/return tradeoff’
A review of the CPF Investment Scheme (CPFIS) is underway, but Central Provident Fund (CPF) members are likely better off staying within the safety of the CPF’s risk-free and guaranteed interest rates, said Ng Kok Song, former group chief investment officer of Singapore’s sovereign wealth fund GIC.  Speaking on the sidelines of the annual investment conference of the CFA Society Singapore last Friday, Mr Ng said the CPF’s guaranteed rates of up to 3.5 per cent on the Ordinary Account money and up to 6 per cent on retirement balances for those aged 55 and above are a means to participate in the returns generated by GIC.

Singapore to tighten energy monitoring and reporting for large industrial users
The Singapore government is planning to tighten energy monitoring and reporting requirements for large industrial players, as it looks into areas where carbon emissions can be further reduced, said Deputy Prime Minister Teo Chee Hean.  “We will be consulting these companies on ways to verify and check the data they have submitted, similar to what is practised in other advanced economies,” he said at the prize award ceremony of the National Climate Change Competition 2016 on Friday morning. “These will help our companies better monitor their energy efficiency performance.

Singapore Real Estate

Spike in extension fees paid by developers
Developers have been forking out far more in extension fees this year than last for failing to sell all the units at their residential projects within a stipulated timeframe.  As at Oct 27, the Government had collected about $58.2 million in fees this year, up from just $24.9 million collected in the whole of last year, said the Singapore Land Authority (SLA) in response to a query from The Straits Times.  The extension fees relate to Qualifying Certificate (QC) rules applying to foreign developers – including Singapore developers listed here but with foreign shareholders.  Mr Lee Liat Yeang, senior partner at Dentons Rodyk & Davidson, said: “There were more properties hit with QC extensions in recent years, mainly due to the en bloc fever that we saw around 2007, which included fairly large sites with many units.”

Queens Peak sells 250 units; Parc Riviera moves over 100 units
Location still trumps many factors when it comes to buying a property, going by the weekend launch of two massive 99-year-leasehold projects.  Thanks to its popular Queenstown location, Queens Peak at Dundee Road saw a take-up rate of 34 per cent as it sold 250 units of the available 736 units during its first launch weekend. Some 242 units were moved on the first day on Saturday, with one and two-bedders making up about 90 per cent of the sales, according to developer Hao Yuan Investment.

Li Ka Shing-linked ARA Asset Management lands buy-out bid
For a real-estate fund manager, access to capital is crucial and this may well explain why ARA Asset Management Ltd’s founder John Lim is tying up with American private-equity (PE) heavyweight Warburg Pincus to launch a takeover of the company – if the rumour holds true.  Mr Lim is leading a consortium of existing shareholders in the buyout plan, according to a Wall Street Journal report citing people familiar with the situation.  Collectively, Mr Lim, The Straits Trading Company and Cheung Kong Property Holdings own close to 47 per cent of ARA.

Singapore to remain major real estate investor on the world stage
Singapore is a wealthy country with an abundance of investment capital and a limited domestic investment universe. As a result, Singapore-based investors are one of the most active sources of outbound capital globally, targeting the world’s most liquid real estate markets.  Since the end of the Global Financial Crisis (GFC) in 2008, Singaporean investors have exported S$154.4 billion, according to data compiled by Real Capital Analytics (RCA). Although activity has slowed more recently, Singapore ranks as the fourth most active cross-border property investor globally over this period.

Amazon takes up 100,000 sq ft at Mapletree facility: sources
Amazon has signed a lease for nearly 100,000 square feet at Mapletree Logistics Hub – Toh Guan in the Jurong East area, sources have told BT.  This is expected to serve as a fulfilment centre for its e-commerce business as well as offices. Operations are expected to begin in two months.  Mapletree Logistics Trust (MLT), the owner of the six-storey ramp-up warehouse facility, declined to comment when contacted by The Business Times.

BlackRock ‘exploring sale of 2nd office tower’
BlackRock, the world’s largest asset manager, is exploring a sale of its second office tower in Singapore’s central business district, people with knowledge of the matter said.  BlackRock has started reaching out to potential buyers to gauge their interest in Asia Square Tower 2, according to the people, who asked not to be identified as the information is private. The development could fetch about $2 billion.  Asia Square Tower 2 sits on the site next to Tower 1, which the Qatari sovereign wealth fund agreed to buy in June from BlackRock for $3.4 billion in Singapore’s biggest office transaction.

Companies’ Brief

Keppel Land’s Vietnam homes enjoy brisk sales
Developer Keppel Land has achieved brisk new home sales at its two projects in Ho Chi Minh City, Vietnam, in recent months.  About 800 units were booked at two waterfront residential developments, Palm City and The View at Riviera Point, the company said on Friday.  Mr Linson Lim, president of Vietnam Keppel Land, said: “The positive take-up… reflects confidence in Keppel Land’s homes in Vietnam. The developments’ value propositions, such as prime location, wide array of amenities and thoughtful innovations, are strong draws to genuine home buyers.”

Genting Singapore rallies more than 12% on strong earnings and dividend payout
Genting Singapore saw its shares rally more than 12 per cent on Friday, a day after the casino operator reported a surge in its third-quarter net profit that trumped consensus and pleasantly rewarded shareholders with a first-ever interim dividend.  Genting Singapore shares hit an intraday high of S$0.855 each, before ending at S$0.850, up nine Singapore cents or 11.84 per cent. A staggering 129 million shares changed hands, making it the second-most actively traded stock after commodities group, Noble.

MBS Q3 earnings hold at US$391m
Marina Bay Sands (MBS) on Friday reported a 0.3 per cent increase in net profit to US$390.7 million for its third quarter ended Sept 30, 2016, while revenue rose 1.6 per cent to US$762.6 million.  In a press release, parent company Las Vegas Sands said: “Marina Bay Sands in Singapore continues to attract visitors from across the region to Singapore. Consistent mass win-per-day of US$4.8 million and strength in non-gaming revenues, including a 10.4 per cent increase in RevPAR (revenue per available room), and higher win percentage in the rolling gaming segment contributed to an adjusted property Ebitda (earnings before interest, taxes, depreciation and amortisation) performance of US$390.7 million.”

GIC to acquire P3 logistics parks in S$3.7b deal
Sovereign wealth fund GIC will be acquiring P3 Logistics Parks, a company that owns, develops and manages 163 warehouses in Europe, in a deal worth €2.4 billion (S$3.7 billion).   In a joint media release on Monday (Nov 7), it was announced that GIC has signed a definitive agreement to acquire P3 from TPG Real Estate and its partner Ivanhoé Cambridge.  “The transaction values the business at €2.4 billion and is the largest European real estate transaction this year,” the statement said.  TPG Real Estate and Ivanhoé Cambridge acquired P3 in 2013 and over the last three years, P3 has more than doubled the size of the portfolio, which now includes 163 high quality warehouses in 62 locations across nine countries.

John Little to close its last outlet by end December
Department store John Little will close its last remaining outlet at Plaza Singapura by the end of December this year, the Robinsons Group announced in a statement on Saturday (Nov 5).  The decision was made after evaluating the relevancy and sustainability of its brick-and-mortar business, said the Robinsons Group, adding that John Little will instead evolve as a brand into a pop-up format, which it will unveil next year.

GSH Corporation
Property developer GSH Corporation saw its third-quarter net profit plunge 98.4 per cent to $103,000 from $6.5 million a year ago, owing to a fair-value loss on financial derivatives.  The firm said it had entered into a loan and deposit arrangement with a bank, which has a foreign exchange exposure. This exposure was fully hedged with a financial derivative.  It noted in a stock exchange filing yesterday: “Consequently, the group recorded an unrealised exchange gain of $1 million from the loan and deposit arrangement and unrealised fair-value loss on financial derivative of $2 million in the third quarter of 2016.”

Views, Reviews & Forum

BCA takes steps to make building facades safer
The authorities are looking at ways to improve the safety of building facades, following a recent spate of incidents that saw building parts fall from Housing Board blocks.  Over the past two months, a sunshade, two ceilings and a chunk of cladding board were dislodged in four episodes. The last, which took place three weeks ago at a 51-year- old HDB block in Circuit Road, saw a piece of wall facade plummet more than 10 storeys, crashing into the driveway below.  While no one was injured, the incidents have raised concern among residents, MPs and engineers, who are calling for tighter checks, especially on older buildings.

Life in Singapore’s oldest HDB blocks in Stirling Road
On a quiet stretch of Stirling Road, three blocks of freshly painted flats stand unassumingly alongside a mosque, a swimming complex and a petrol station.  Pigeons perch peacefully on their window ledges, not perturbed by either the chatter of diners from a coffee shop below or the constant movement of lifts on every floor.  At first glance, it is easy to miss out the fact that Blocks 45, 48 and 49 are Singapore’s oldest blocks built by the HDB, which was formed in 1960.

Don’t treat housing as a speculative commodity
I applaud Opinion editor Chua Mui Hoong for a well-written and thoughtful piece on the housing market in Singapore (“Don’t count on making big bucks from your home”; Oct 23).  I have long been concerned about the treatment of housing (an essential good) as a speculative commodity.  After our home was sold during the collective sale fever of 2009, my family and I have seen home sizes shrink to the absurd shoebox apartments of today.

Many benefits in subletting HDB flats
I disagree with Mr Lee Yong Se (“Disallow subletting of HDB flats”; last Sunday).  Having a stream of rental income is very different from a one-off “lottery effect” of high capital gains from selling Housing Board flats in prime locations.  Subletting, in fact, increases the functional use of spare rooms or flats which might otherwise be left vacant.  With more renters, the estate would be more lively, especially in areas where grown-up children have moved out to newer estates.

His vision – a vibrant, sustainable Paya Lebar Quarter
To carve out a big chunk of Paya Lebar and transform it into a sustainable and modern urban space, while also respecting its deep historical and cultural ties, is quite the gargantuan task.  It is one that now rests on the shoulders of Mr Richard Paine, a 51-year-old Australian leading the Paya Lebar Quarter transformation project for developer Lendlease.  Three weeks ago, Lendlease released fresh details about the $3.2 billion mixed development right next to Paya Lebar MRT station.

Activist investors finding new playground in S’pore
Activist investors, having targeted companies in Japan and South Korea in recent years, have discovered a new playground in Asia.  In Singapore, where activist investing was virtually unheard of until now, two companies have found themselves in the crosshairs in the past month alone. Quarz Capital Management urged retailer Metro Holdings to return excess cash to investors and Dektos Investment Corp pushed Geo Energy Resources to change its debt structure, saying the coal miner’s shares are undervalued by as much as 60 per cent.

Let’s go shopping… on the Internet
Singaporeans are flocking to online shopping platforms thanks to lower overall costs, free shipping and safe payment methods, according to a new survey.  It found that online shoppers here spend $155 a month, or $1,860 a year, on purchases and travel bookings.  Those with monthly salaries of between $4,000 and $5,000 spend about $194 a month, 20 per cent more than those earning $5,000 to $6,000.  Fashion is the No. 1 spend category for shoppers with a monthly income of up to $6,000, but preferences change as income changes.

Global Economy & Global Real Estate

Japan, US feel TPP deal pressure amid US elections

UK businesses report stronger activity in three months to October

Wealthy European, Asian investors betting on Clinton victory

Developers see value in DC’s Metro stations

New York builders that got tax breaks must set aside units for homeless

The real cost of a mansion

China firm to build London’s tallest residential tower, Brexit or no

HK raises stamp duties to cool real estate sector

Additional Articles of Interest – Local & Overseas Real Estate

Local & Overseas Real Estate – Full Article

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