News Highlights Monday 28 July 2008

Record 13,400 homes to be completed next year
A bumper crop of newly completed homes will make more apartments available for rent and push down rents. And with lower rents, private home prices may drop further, especially in the prime districts. A massive 13,399 new private homes will be ready for occupation next year - double the average in recent years, according to CBRE. Official supply numbers show 10,500 completions next year and 11,800 the year after, but CBRE's analysis reveals more completions next year. It expects this new supply to depress rents by 5-10% on average next year. In the prime areas, rents could slide up to 15% next year, predicted CBRE. Popular rental areas such as the East Coast and Orchard will be among the worst hit as keen demand for homes there in recent years led developers to build aggressively. 3,341 new homes will be completed in the East Coast next year, double the number this year, CBRE said. In the prime districts 9, 10 and 11, some 4,240 homes will be ready. Suburban areas will also see a large jump in finished homes next year. But this is unlikely to result in lower rents as most suburban home buyers intend to occupy their units. The supply situation is not likely to improve beyond 2010: apart from the 21,000 or so homes to be completed over the next two years, there are another 20,000 homes scheduled to be built in 2011. But Savills is still optimistic, expecting higher than average housing demand during the next few years of growth, and that after accounting for demolitions of collective sale estates, the net supply should be balanced by demand.

- The Sunday Times, P1 – 27th July



Older landed homes now within reach
Landed homes in suburban locations can be found for as little as $800,000. Price growth in landed homes is slowing in line with the general market. Suburban bungalows and terrace houses have registered a drop in prices, according to data from Savills Singapore. In the second quarter, prices of suburban terrace houses dropped 6.8% to an average price of $605 psf, compared with a 2.4% rise in the first quarter. Official data from the Urban Redevelopment Authority showed that landed home prices rose 0.6% in the second quarter, down from a rise of 3.9% in the first three months of the year. While the downward growth trend may continue, landed home prices are at least supported by a limited supply of such homes and a relatively illiquid market. Generally, though, landed homes below $800,000 are few in number, are likely to be very old and are often single-storey terrace houses. Buyers would likely need to spend money on renovation, said ERA. Median rents for suburban terrace units have remained stable this year at $1.84 psf - the same median rent level for semi-detached houses in the second quarter. Median rents for surburban bungalows have fallen to $2.40 psf in the second quarter, from $2.67 psf in general.

- The Sunday Times, P8 – 27th July




Fewer visitors in June due to global slowdown
Singapore’s booming tourism market has finally fallen prey to the worldwide economic slowdown, rising inflation and burgeoning oil prices. STB said 4.1% fewer visitors, or just 816,000 of them, came here last month, compared to the same month last year. Indonesia visitor fell from 180,000 to 153,000; while China visitor numbers declined from 77,000 to 70,000. Tourists also spent 0.2% less in the first six months of the year, compared to the same period last year. A total of 5.1 million people visited in the first half of this year, spending an estimated $6.5billion during their stay. STB said there was a general air of uncertainty, which has impacted consumer sentiments and discretionary spending in many tourism destinations, including Singapore and this may continue into the next few months.- The Straits Time, P3
Private equity real estate funds in Asia still booming
Private equity real estate funds - many holding Asian assets - raised 32% more cash in the first half than in the same period a year ago. Recent data suggests that the funds are sufficiently cashed up to keep investing in regional markets, including Singapore, and so help stave off a severe property slump, said some analysts. In the first five months of this year, 13 new Asia-focused private equity property funds were set up and raised a combined US$13 billion, said research firm Private Equity Intelligence (Prequin). For the full year, Prequin said 78 funds are looking to raise US$81 billion for Asian property investments. Oxley Capital said real estate private equity is still going pretty strong and that Singapore was a 'hot market last year' for private equity players, and certain funds may still allocate fresh funds here - albeit much less than last year.

- The Straits Time, H18




Paragon to convert 3 floors of offices to medical suites
Paragon Shopping Centre is converting three more floors of office space into medical suites due to the strong demand for medical suites. The mall already has 12 floors of medical suites. CBRE said that the capital values for medical suites are still holding firm despite the current market uncertainty. Medical suites are among the most expensive properties to purchase here on a per sq ft basis. A few transactions at Mount Elizabeth Medical Centre were recorded above $4,500 psf in the second half. At nearby Lucky Plaza (56 medical suites) has sold eight out of 13 put on sale since last April. The most recent deal was done in April at $3,200 psf.At Novena Medical Centre, suites have sold for more than $2,500 psf.Asking rents for medical suites are holding well in general, with Paragon commanding around $14 psf to $16 psf, up from $10 psf to $12 psf more than a year ago. CBRE Research believes rents will remain firm in the short to medium term and given the limited supply, values of medical suites will hold up well.

- The Straits Time, H18

NetApp to open innovation centre here
Storage and data management solutions provider NetApp will open its first regional innovation centre in Singapore. This innovation centre is estimated to be worth US$1.5 million. The NetApp Innovation Centre (NIC) will be a showcase for partners and customers from Asean to test, trial and examine business-critical applications on the next generation storage technology infrastructure. NetApp commented that it was only natural for company to set up the NIC here given Singapore’s excellent IT infrastructure and connectivity and support from the IDA, especially with the iLIUP programme.

- The Business Times, P32



China's growth seen rebounding in second half
China's economic growth will pick up slightly in the second half of the year due to strong domestic investment, reported by the Bank of Communications. They believe China's economic growth rate will rebound to a level around 11% in the fourth quarter. GDP is expected to rise 10.6% in 2008, from the annual 10.4% in the first half. Fixed-asset investment will gain steam in the second half of this year due to massive reconstruction needs. Over the next three years, at least one trillion yuan (S$199.5 billion) of investment would be needed for rebuilding purposes. Acording to the bank's report, China's full-year inflation would stabilise at 6.8 per cent. In terms of the yuan's exchange rate, it said the yuan would slow its appreciation against the US dollar in coming months and expect the yuan to rise 3 to 4% against the dollar in the second half, from about a 6.5% rise in the first half.

- The Business Times, P16



Bugis hawker centre to get $10m facelift
Albert Centre, the 30-year-old hawker centre in the Bugis area, will undergo a $10.4 million makeover over the next 16 months. Albert Centre is the latest hawker centre to be upgraded under the National Environment Agency's Hawker Centres Upgrading Programme, which began in 2001 and will take another two years to complete. Fourteen other centres are being renovated, and another 40 are up next.

- The Straits Time, H5

­ ST Index change 2,922.91 (+75.18)
SIBOR (3 mths): 1.18750 (S$)
SWAP (3 mths): 1.17513 (S$)