News Highlights Friday 18 April 2008

Different strokes for different segments if developers cut prices
In cutting prices by 3-5% at three projects and achieving encouraging sales, property giant Far East Organization may have set the cat among the pigeons. Other developers must now ask themselves whether to embrace this strategy. The bigger ones can afford to hold back launches and sales and don't need to chop prices to entice buyers in the face of weaker market sentiment. But there are opportunity costs in letting projects linger on the market and in holding on to sites - especially ones with a 99-year leasehold. The margins also dictate the extent to which developers can afford to cut prices and factors to consider include the price at which they bought the land and if they have locked in construction costs. In the current market, it makes more sense to trim prices of mass market projects as buyers are more likely to be owner-occupiers than investors. And because these buyers are more price sensitive, even a modest price-cut of up to 5% - like what Far East did - can speed up the buying decision. Another group of people may hold the key to price chops in the high-end segment: specuvestors. Those who bought multiple units in high-end projects on deferred payment schemes may be willing to let go of their units at below current market prices before the projects receive Temporary Occupation Permit, when they have to pay the bulk of their purchase price to the developer. If sufficient numbers of these units are transacted at prices below current values, it would set lower price benchmarks for the surrounding areas. And that would increase pressure on developers to lower their prices.

- The Business Times, P1




HDB supply of completed new flats hits all-time low
Supply of completed new flats had dipped to an all-time low of 1,300. The HDB said that with the 'progressive clearance' of its unsold stock, there will be fewer completed units offered for sale in future. The HDB is urging buyers to consider its build-to-order (BTO) flats where there will be 'ample supply and regular project launches'. BTO flats will be the main source of new flats in future. These flats are built only when there is sufficient demand, and usually take about three years to build. The next two BTO sales will be launched at the end of the month, for flats in Punggol and Sengkang. These new flats and others in towns such as Woodlands and Bukit Panjang will make up the 5,000 new flats the HDB plans to offer in the period until September. The HDB's latest sale of completed flats of 490 four-room or bigger flats in towns such as Bukit Batok, Choa Chu Kang and Jurong East had received 5,700 applications. The take-up rate is high because flats offered have been completed or are nearing completion.

- The Straits Times, H2




Many in S'pore expect pain if recession comes
If there is a recession, business here is more likely to be hit than that elsewhere in Asia. Not everyone in Singapore is anticipating a downturn. 26% of 733 executives in key business sectors polled see a recession coming in the next six months. Among executives expecting a recession, almost four out of five (79%) expect business to be affected - more than in any other Asian country covered in the poll by Hudson, a leading recruiting executive recruitment firm. Analysts are not surprised, pointing to the fact that the Singapore economy is more open and thus more vulnerable than others to a global recession.

- The Business Times, P2




Brokers' Take - Singapore Property Sector (DBS Group Research)
The sharp turnaround in property stock valuations, from 1.1 times price/revised net asset value (RNAV) at the peak in mid-2007 to 0.73 times, has scaled valuations back to early 2005 when property prices were 36% below what they are today. At this point, stock performances have preceded the anticipated downturn in private home prices. Value and buying opportunities are emerging as stocks approach trough valuations. Pace of new sales may decelerate further into Q2 2008 as developers and buyers adopt a wait-and-see approach and property prices may weaken further. On the flipside, developers' balance sheets are at their strongest in the past five years and they are likely to weather this quiet period fairly well.

- The Business Times, P4




Evergro rebounds into the black with Q1 profit of $0.1m
Evergro Properties, a member of Keppel Group, has posted a net profit of $101,000 for the first quarter compared with a loss of $930,000 a year ago. Turnover for the three months ended March 31 was $9.45 million, up from $629,000 for Q1 2007. This was partly from the sales of homes in Changzhou Fushi of $4.6 million and Tianjin Fushi of $1.4 million. Evergro said that the property sector in China softened in the first quarter following credit tightening in the country. Traditionally, first quarter property sales have always not been as good as for the other three quarters. However, the first quarter has been different due to some developers' lowering of prices, said Evergro.

- The Business Times, P6




Inflation falls from 3-yr peaks
Indian inflation fell from three-year peaks in early April, but many analysts expect it to hold up above 7% in coming weeks, and persisting pressures could prompt the central bank to tighten cash conditions. The wholesale price index rose 7.14 per cent in the 12 months to April 5, falling from the previous week's 7.41 per cent. The data showed prices of food articles and metals rising most strongly.

- The Business Times, P12




Abu Dhabi starts WSJ rival
Abu Dhabi is promising a newspaper comparable to the Wall Street Journal with the emirate's new English-language daily that hit the streets yesterday. The National, owned by state-run Abu Dhabi Media Co, will have a print-run of 80,000 copies, making it the second-largest newspaper in the UAE behind Gulf News. It will be sold mainly in the UAE, with limited distribution in the rest of the Gulf and world capitals, including Washington. The 80-page National is the first English-language daily in oil-rich Abu Dhabi. The UAE already has four other English dailies - Gulf News, Khaleej Times, Emirates Business 24 and 7Days.

- The Business Times, P13