Banks doing a slow dance in a burning room
The global banking industry has settled into a “low-growth, low-profit” rut that will extend into 2017, with European banks in the firing line as interest rates continue to hum low, says a McKinsey & Company report released on Wednesday. And while banks in emerging markets are more profitable than their Western peers, looming bad debts could eat significantly into profits, especially if a hard landing in China comes to pass. “Global banking is delicately perched between profit and loss, and the next move seems likely to be downward with the main questions being around timing and how quickly the industry can adjust,” said the report from the consultancy firm.
Singapore economy to grow at subdued pace: Report
Dampening global trade is likely to hit Singapore next year amid increasing risks from a new wave of protectionism, according to a report out yesterday. The economy is expected to expand at a “subdued pace” next year, with gross domestic product growth at 2 per cent – up slightly on the 1.4 per cent forecast for this year, said the Institute of Chartered Accountants in England and Wales (ICAEW). But prospects remain optimistic, with growth tipped to accelerate to 3.5 per cent in 2018 as global trade gradually improves, noted the report, which was produced by ICAEW’s partner and economic forecaster Oxford Economics.
Delinquent debts down but SMEs feel cashflow squeeze
Deliquent debts have steadily declined in the last six months, as small and medium sized enterprises (SMEs) demand faster payment from customers when they agree to do business on credit. The proportion of debt unpaid stands at 46 per cent in the third quarter of the year, down from 48 per cent in Q2 and 49 per cent in Q1, according to research released on Wednesday by DP Information Group (DP Info), part of the Experian Group of companies. The sector with the highest proportion of delinquent debts was construction at 72 per cent, followed by hospitality/food & beverage at 71 per cent, and information & communications at 67 per cent.
Trump-linked uncertainty affecting Apac’s outlook: S&P
With many key US policies remaining undefined under President-elect Donald Trump, an unusual amount of uncertainty is hanging over the economic outlook for the Asia-Pacific, said S&P Global Ratings on Wednesday. In fact, it added, Trump-related unpredictability is the single biggest factor affecting the region’s future prospects. Paul Gruenwald, S&P Global Ratings’ Asia-Pacific chief economist, said: “A Trump administration’s impact on Asia-Pacific will likely appear in two main areas – one with a large downside and one with a moderate upside.
Singapore Real Estate
Mixed views over West Coast Vale residential site
The newly released residential site at West Coast Vale under the government land sales (GLS) programme may see warm interest from developers on the back of improved sentiment and a lack of available development sites, some property consultants say. There are also others who believe that the slow take-up at nearby Parc Riviera condominium project by EL Development, which was launched last month, may serve as a dampener. Released on Wednesday by the Urban Redevelopment Authority (URA) under the Confirmed List of the second-half 2016 GLS programme, the 1.64-ha site could potentially yield up to 520 residential units. Confirmed List sites are launched according to schedule, regardless of demand.
More properties could be up for auction if interest rates bite
The spectre of higher interest rates, weak growth and concerns over the job market could lead to more properties going up for auction next year, say analysts. Consultancy JLL noted that there have been 214 mortgagee listings so far this year – including 156 residential properties. “We foresee a 10 to 20 per cent increase in mortgagee sales for 2017 compared to this year,” said Ms Mok Sze Sze, head of auction and sales for Singapore at JLL.
Henderson holding Reits, avoiding banks
The growth outlook for both dividends and earnings in the overall Singapore stock market is dim but some Singapore real estate investment trusts (Reits) are still good sources of income, asset managers at Henderson Global Investors told a press briefing at its office on Wednesday afternoon. They added that they have recently largely avoided investing in Asian banks in general, citing relatively low demand for loans in the region along with the danger of non-performing loans. Sat Duhra, co-fund manager of Henderson’s Asia dividend income fund, said dividend growth in the overall Singapore market “doesn’t look very enticing” given economic factors such as doldrums in the manufacturing sector and a labour crunch.
Want a mortgage? No need for bank trip with new app
Real-estate software firm Streetsine has rolled out an app that allows for speedy mortgage applications without having to visit a bank. The Mortgage Connect app is downloaded by property agents, who can upload a customer’s qualification documents, allowing banks to approve the loan on the app. The bank will then come to the client for signatures, Streetsine said. Streetsine told The Straits Times that there have been about 2,000 downloads since the app was rolled on out Dec 1.
AccorHotels invests S$24m for 5% stake in Banyan Tree
Resort operator Banyan Tree Holdings said on Thursday hotel chain group AccorHotels has invested S$24 million for a 5 per cent stake in the company. AccorHotels, which has a portfolio of hotels that includes Singapore’s Raffles Hotel, has an option to invest another 5 per cent at a later time. Under this long-term partnership, both parties intend to collaborate to develop and manage Banyan Tree branded hotels around the world. Banyan Tree will also have access to AccorHotels’ global reservations and sales network, as well as its loyalty programme, Le Club AccorHotels.
JW Marriott upbeat about Asia-Pac’s luxury-travel segment
The Asia-Pacific luxury-travel market is growing robustly despite the uncertain economic climate, said Christy Donato, vice-president of global brand management at JW Marriott Hotels and Resorts. “We’ve looked quite closely at it and we know that the luxury-travel segment has grown by 50 per cent over the last five years – that’s twice as much of any other type of travel.” In Singapore for the soft opening of the JW Marriott Hotel Singapore South Beach, she said it was “very fortuitous timing” that JW Marriott has been able to ride on the growth in luxury travel.
Views, Reviews & Forum
Rezone some industrial, commercial land
In the Dec 3 report (“Grim Q3 for industrial property sector“), it was noted that “unless global trade is reinvigorated and the new economy, like e-commerce, expands aggressively here, in the near term, the industrial and warehouse market appears to be running on empty”. That being the case, land in Industrial/Commercial areas – such as Kallang Pudding Road, which is in a very central area, sandwiched between Geylang and MacPherson – should perhaps be redeveloped/rezoned for residential use.
Exercise due care in home refinancing moves
Borrowers here must be pondering the refinancing opportunities presented by the prospect of rising interest rates (“Yellen says Fed could raise interest rates ‘relatively soon’”: Nov 17, online). The expectation that rates will soon rise is not felt in Singapore alone. For instance, Australian lender RAMS, owned by Australia’s fourth-largest bank, Westpac, raised its fixed home loan interest rates recently.
Global Economy & Global Real Estate
US$ edges up against yen; traders await ECB cues
U.S. mortgage rates rise to highest levels in over two years: MBA
NY hotel project seeks to recapture shining moment in air travel
UK house price growth speeds up for 1st time since March
Barclays to save US$45m in office sublet to government
China pledges to increase openness with foreign investment rules
Hong Kong faces housing risks as Fed tightening looms: IMF
Top-tier Hong Kong developers cut loan costs by as much as 40%
A casino resort rises in Maryland, transforming sand to shimmer
No oversupply of homes in Iskandar: Johor Crown Prince
Australia economy in rare contraction as spending falls
Saudi Arabia to form housing refinancing company
Additional Articles of Interest – Local & Overseas Real Estate
Local & Overseas Real Estate – Full Article