News Highlights Tuesday 30 April 2008

Year of uneven growth, price worries ahead
Domestic and regional support should prevent the Singapore economy from sliding into a sharp downturn in 2008, says the Monetary Authority of Singapore (MAS). The economic outlook in 2008 will vary from industry to industry. MAS remains optimistic about Singapore's growth outlook, as a good 30% of the economy - activities such as construction, marine transport and pharmaceuticals - are relatively insulated from the US. Another big core of activities, accounting for 37% of GDP, enjoy strong domestic and regional support. But the most vulnerable to a US and global downturn are 'sentiment-sensitive' financial services and the IT-related cluster. They account for about one-third of the economy. MAS expects inflation in Singapore to stay high in 2008. Consumer price inflation could average above 6% in the first half of 2008, and ease to about 4% in the second half, partly as the GST hike effect wears off.


- The Business Times, P1




Income, not interest, led to property boom
The recent climb enjoyed by equity and property prices was driven more by strong economic growth than by low interest rates, according to a study by the MAS. Private housing prices increased by 31.2% for 2007, and some market analysts felt that the central bank should raise interest rates to rein in property inflation. This was because while overseas investors were driving property prices up, the inflow of foreign funds continued to add to domestic liquidity and kept borrowing costs low. Domestic interest rates have dropped since September last year. The benchmark three- month domestic interbank rate fell by 144 basis points from August 2007 to 1.31% at the end of March 2008. As interbank rates fell, banks also started offering cheaper and more innovative mortgage packages.

- The Business Times, P3



Three S'pore residential plots up for sale in quiet market
The government is offering developers three new residential sites - two are 99-year leasehold suburban sites, and the other is an executive condominium site. The first - in Woodleigh Close - is seen as an attractive site by property consultants. Developers can build 260 to 290 apartments on the 1.08ha site, which has a maximum gross floor area of 30,167 sq m. Property consultants expect the site to attract bids of $300-370 psf of gross floor area. The apartments may then sell for between $800-880 psf. The second site in Upper Thomson Road, close to Bishan Park and Lower Peirce Reservoir Park, is on the reserve list. A developer could build 380-420 apartments on the 2.08ha Upper Thomson Road site, which can have a gross floor area of 43,758 sq m. Knight Frank said that the site could attract bids of $200-240 psf of gross floor area, and the apartments could sell for $650-700 psf. The third site, in Sengkang, is a 17,000 sq m executive condo site on the reserve list. This 99-year leasehold site is the third executive condo site the HDB has made available for sale in the first half of this year. The other two are in Jurong West and Yishun Avenue 11.

- The Straits Times, H18




Market Street Car Park set to stay - at least for now
CapitaCommercial Trust (CCT) has decided to defer its decision on the redevelopment of Market Street Car Park (MSCP) into an office building that could cost up to $1.5 billion. The main reasons are the significant size of the redevelopment, rising construction costs, present volatility in financial markets and the unknown development premium amount. CEO of CCT manager CapitaCommercial Trust Management Ltd said that they are not concerned about the new office supply after 2010 given that office demand for good-quality office space is still strong and that the lease pre-commitments for the new supply have reached a high level.

- The Business Times, P1




More flatted-factory leases terminated in Q1
Termination of leases of JTC flatted-factory space hit 37,000 sq m in the Q1 2008 – 22% higher year on year and 14% higher quarter on quarter. According to JTC's quarterly facilities report for Q1, gross allocation of flatted-factory space, at 63,100 sq m, was 9% down quarter on quarter but 122% up year on year. Termination of ready-built facilities, which include flatted factories, increased 13% year on year to 51,100 sq m. Overall occupancy increased 1.3 percentage points, raising the overall occupancy rate for ready-built facilities to a record 93.9%.

- The Business Times, P10




Dubai World investments slowed
Dubai World, the investment firm of the Dubai government, said yesterday it is holding on to US real estate assets. Dubai World, with a portfolio of over US$200 billion, is still seeking investments in transport and logistics, financial services and for opportunistic deals in a battered real estate market. Dubai World, which invests via subsidiaries Nakheel and Istithmar, has a portfolio that includes over US$20 billion in real estate outside Dubai.

- The Business Times, P21




CapitaLand unlikely to match last year's results
CapitaLand said its 2008 earnings were unlikely to match last year's $2.8 billion due to a lack of revaluation gains. For 2008, the firm is expected to post a net profit of $1.04 billion. CapitaLand's chief executive said that the firm will be able to weather the current economic uncertainties as it is well diversified geographically and can still raise funds amid tight credit markets.

- The Business Times, P4




MCL Land Q1 profit jumps to US$5m
MCL Land reported a first-quarter net profit of US$5 million, up from just US$1 million in the year-ago period. Revenue for the three months to March 31 was US$365,000 - compared with US$393,000 for the year-ago period. The firm said its Q1 revenue arose primarily from rental income from its investment properties. MCL said financial market uncertainties and the global economic slowdown could affect the residential property sector here in the short term. But favourable economic fundamentals should mean that the longer term prospects remain positive.

- The Business Times, P5




Work or fun
A survey of university students across Asean last year found Singapore as the number one place to be for work and play. More than half of the 2,170 undergraduates polled, or 54.3%, said they would most like to work in Singapore among the 10 Asean nations. Singapore is also the hottest pick for holidays. More than a third of the respondents, or 35%, listed Singapore as the Asean country they would most like to travel to. The scholars who conducted the survey noted that Asean students share a fairly strong consensus on which are the desirable countries to work and play in the region. And these destinations are rather different from those preferred by international tourists.

- The Straits Times, P6




Indian central bank hikes cash reserve ratio
India's central bank ordered lenders to set aside more reserves for the second time in two weeks to tame runaway inflation. The Reserve Bank of India (RBI) raised its cash reserve ratio to 8.25% from 8%. Higher borrowing costs may slow growth in Asia's third-largest economy to a four-year low, the RBI said. The RBI expects inflation, currently at 7.33%, to slow to 5.5% by March 31. Economic growth may ease to 8-8.5%. The central bank's repurchase rate, or the overnight lending rate, was held at a six-year high of 7.75% yesterday. The reverse repurchase rate was maintained at 6%.


- The Business Times, P18