News Highlights Tuesday 8 April_2008

Bank savings earn less interest as key rate plunges
The Singapore Interbank Offered Rate (Sibor) hit a 12-month low of 1.25% last month, falling from 2.88% a year ago. Citibank, Maybank and Standard Chartered Bank have trimmed rates for their high interest saving accounts given the fall in the rates banks pay each other to borrow cash. DBS Group Holdings, United Overseas Bank and OCBC Bank have also adjusted some of their fixed deposit rates downwards. The leaner interest rates have prompted some consumers to shop around for the best offers. Economists believe saving rates could head lower in the near term, partly because of interest rate cuts in the US and a strengthening Singapore dollar.

- The Straits Times, H20, 7th April



S’pore home prices make 2nd highest jump globally
The average price of private housing in Singapore surged 31.3% between Q4 2006 and Q4 2007 – the second biggest jump in a world index topped by Bulgaria at 33.7%. Knight Frank tracks average prices worldwide via its Global House Index, which is based on an assessment of price changes in the mainstream housing markets of countries covered. Price growth across the markets covered in the index fell year on year in the final quarter of 2007. Prices in Singapore rose steadily for all types of property, especially apartments.

- The Business Times, P37



Home leases stagnant for 2 years, still looking soft
According to an analysis of URA data by Savills Singapore, transactions were about 15% lower at 28,928 in 2006 and 28,893 in 2007. figures for the first 2 months of this year indicate that residential leasing is not likely to pick up. Savills’ analysis reveals only 3,495 transactions. Rents have been increasing rapidly. Based on Savills’ basket of properties, rents for high-end homes increased about 30% year on year in Q4 2007. For high-end properties, Savills says the quarterly average rent is now $6.68 psf a month. January saw a particularly low number of new leases, with just 1,474 transactions. A shrinking pool of leasing properties due to collective sales could have exacerbated the drop in numbers. Savills believes that foreigners could be simply switching from leasing to buying property, helped by the attractive low cost of mortgages in Singapore and the favourable tax advantages foreigners from certain countries enjoy from owning properties in Singapore.

- The Business Times, P1



Simei site for condo-like HDB flats
HDB yesterday released a 181,108 sq ft site in Simei Road for tender – the fifth under its Design, Build and Sell Scheme (DBSS), which is open to private developers. The 99-year site has a gross floor area of about 380,327 sq ft – enough for 360 homes. Knight Frank projected offers ranging from $130 to $200 psf ppr. A further two DBSS sites – Toa Payoh and Bedok – are expected to be released soon. These, combined with the Simei site and flats earmarked for the four sites already released – Tampines, Boon Keng, Ang Mo Kio and Bishan – could mean up to 4,000 new public condo-like flats coming on to the market.

- The Straits Times, H2



Royalville back with lower en bloc price tag
Royalville in Bukit Timah, off Sixth Avenue, has been relaunched – this time with a 10-15% lower asking price than in October last year. However, the property is still being launched based on last year’s collective sale agreement signed under the old rules and the reserve price is believed to be the same. This time, the 174,176 sq ft freehold Royalville site is being packaged with an 8,420 sq ft adjoining drainage reserve being sold by the Official Receiver. The two properties, which are being marketed by Credo Real Estate, have a combined asking price of about $305 million. This reflects a unit land price of $1,106 psf ppr, inclusive of $6 million DC for the two sites. The site can be developed into a new condominium with about 140 units of an average size of 2,000 sq ft each. Based on a land price of $1,106 psf ppr, the breakeven cost for a new condo on the site should be about $1,700 psf, making the price of Floridian attractive.

- The Business Times, P37




Tulip Garden en bloc may be called off
Most of the owners of Tulip Garden have taken the view to rescind the $516 million collective sale to an associate company of Bravo Building Construction – if the second 5% instalment due to them is not paid by the deadline of midnight yesterday. The owners could not accede to the Bravo unit’s request for another extension to pay up the second 5% instalment to June 7, as well as to extend the completion date of the transaction from May 28 to Aug 7. If the sale is rescinded, Tulip Garden owners will keep the $25.8 million or 5% of the purchase price they had been paid. The $516 million deal for the property worked out to a unit land price of $1,018 psf ppr.

- The Business Times, P2



Office rents moderate in first quarter of this year
Office rentals did appreciate in the first quarter but at a slower pace than in the four quarters last year, said CBRE. Prime office rents were up 6.7% at an average of $16 psf per month in the first quarter, while Grade A office space climbed 8.7% to average $18.65 psf. By comparison, quarterly rises for Grade A space last year ranged from 13.7 to 23.6% and 10.3 to 25.6% for prime office rents. Supply remains tight with occupancy levels at 97.6% in the core CBD and 97% in decentralized areas. Grade A vacancy increased slightly from 0.2% in the forth quarter of last year, to 0.6% in the first quarter of this year. CBRE estimated that about 10.3 million sq ft of office space could be completed by 2012, with the bulk coming in 2010 and 2011. CBRE also said that given the significant supply to come in the next few years, some landlords would be expected to moderate rental expectations.

- The Business Times, P18



S’pore Grade A office rents continue to rise in Q1
According to Jones Lang LaSalle, the CBD core Grade A gross effective office rent now stands at $17.35 psf per month – an increase of 8.4% from $16 psf per month in Q4 2007. Demand for CBD core office space continues to be driven by the banks and financial institutions. CBD core Grade B office rents rose by 11.2% to $13.80 psf per month in Q1 2008 from Q4 2007. CBRE said that there is currently an excess of demand over available space and landlords will still be able to achieve high rents on rent and lease renewals due to the absence of alternatives for occupiers.

- The Business Times, P35