News Highlights Wednesday 2 April 2008

Home prices hold their own, but just barely
The Q12008 URA’s price index for private homes is 4.2% higher compared with the preceding quarter and up 30.4% against the same period last year. URA’s flash estimates also showed that regional sub-indices for non-landed private home prices posted smaller gains all-round in Q1 this year than in Q4 2007. The 4.8% increase in the Outside Central Region (OCR) in Q1 outpaced gains of 4.4% in the Core Central Region (CCR) and 3.9% in the Rest of Central Region (RCR). Jones Lang LaSalle said that prices are steady in the CCR, but may be peaking in the RCR, while demand continues to be strong in the OCR. Colliers International said that in a worst-case scenario, URA’s price index may rise 8-10% for the whole year, with possibly a decline in the forth quarter of not more than 4%. In the best-case scenario, the full-year increase in URA’s index could be 12-15%. Observers said that the price gains in the OCR may have come from the secondary market and from completed developments. The fact that a new launch in the Bedok area, Waterfront Waves, sold for an average price of about $800 psf could have encouraged the trend. In the western part of Singapore, units sold at the Lakeshore and Lakeholmz in the Boon Lay vicinity may also have helped the boost the sub-index for non-landed homes in the OCR.

- The Business Times, P1



Home prices growing, but less sharply
Government estimates showed that the prices of private and Housing Board homes continued to rise in the first 3 months of the year. Prices held stubbornly, backed by a still healthy economy, some new launches at benchmark prices and the reluctance of sellers to lower asking prices. However, the number of home sales plunged from last year, leading consultants to warn that yesterday’s price figures are based on fewer deals and may not be representative of the whole market. Buyers willing to take the plunge now are mostly genuine occupiers, with speculators having almost completely exited. Colliers International called the price growth “very encouraging”, given the few transactions. HDB resale flats also saw a smaller increase in prices: 3.4%, compared with 5.7% previously.

- The Straits Times, P1




Property market may stay quiet for up to a year
Consultants now expect home prices and sales to remain weak for up to a year from now, after official estimates yesterday confirmed that price growth was tapering off. New home sales were likely to have dropped in the first quarter to one of the lowest levels ever. In the secondary market, sales have fallen to 2005 levels, according to Savills. Mid-tier private properties on the city fringe are likely to be hardest hit by falling buyer demand because buyers in these areas are more sensitive to market sentiment. Phillips Securities Research aired concerns over the huge supply of homes due to be completed in the next 2 years. Supply is expected to exceed the demand and result in a slide in local property prices from 2010. There are 64,900 private homes in the pipeline, of which 90% will be completed by 2011, while 60% have yet to be sold. Most experts believe that confidence and demand will return by year-end as long as the Singapore economy stays robust.

- The Straits Times, H24




Brokers’ take: Singapore Property – DBS Group Research
Bravo Building Construction, a small property firm registered in 2002 but which snapped up over $800 million worth of en bloc sale deals last year, has delayed the completion of 2 deals due to funding issues and walked away from another. While these point to financing difficulties related to 1 small property firm, it is perhaps indicative of the caution displayed by lenders in providing financing to smaller property development companies. Bravo’s decision to walk away from Makeway View could also indicate lower confidence in the high-end market around Newton. The decision to lower the indicative price for the collective sale of Pinetree Condominium shows the lackluster activity in the en bloc market. The 20% decline in indicative price could mean that the high-end market may come under some price pressure in the short-term.

- The Business Times, P4




Less office space for release in H1
The Singapore Land Authority (SLA) expects to release 368,125 sq ft in gross floor area for office use in the first half of 2008. This is about 20% less than that offered in H12007. Cushman & Wakefield managing director noted that the general office rental market has begun to show signs of moderation of late with landlords reducing their rental expectations. As for prime office space, he notes that the financial sector also appears to have stabilized in terms of growth.

- The Business Times, P10




Flatted factory rents boosted by office space crunch too
Business park space is not the only industrial sector benefiting from the spillover effects of the office space crunch. According to a report by Colliers International, the light industrial factory segment is also beginning to experience some of this spillover effects. Monthly gross rents of prime conventional flatted factories in central Singapore for Q108 increased by 11.8% for ground floor space and 10.6% for upper floor space on a quarter-on-quarter (QoQ) basis to $2.36 psf and $1.77 psf respectively. The QoQ increase in rents were also higher than the increases in Q407 which saw ground floor space and upper floor space both increase by 6%.

- The Business Times, P10