News Highlights Thursday 10 July 2008

Bay window loophole slammed shut by URA
Bay windows and planter boxes, which often make up around 5% of a condo's saleable area, had been exempted from GFA calculations. But in providing them to buyers, developers had been charging buyers for them. This exemption will no longer apply from Oct 7. A property industry player said that developers' profit margins will be reduced because they will no longer enjoy this benefit of not counting bay windows and planter boxes as part of their GFA and yet selling this space to home buyers. The new rules apply to all residential developments. Only formal development applications (which exclude outline applications) with a valid provisional permission issued before Oct 7 will continue to be evaluated under the old GFA guidelines.

- The Business Times, P1




Goldhill Centre up for tender
The collective sale of Goldhill Centre - a 3-storey building of shop and office units next to Goldhill Plaza and United Square in the Novena area - has been put up for tender. The asking price is $315 million, which works out to $1,496 psf of potential gross floor area. Jones Lang LaSalle, which is marketing the collective sale, says no development charge is payable for the 70,177 sq ft freehold site. The plot is zoned for commercial use with a 3.0 plot ratio. This means the site can be redeveloped into a new project with a maximum gross floor area of 210,531 sq ft. Goldhill Centre comprises three blocks of buildings with a total of 87 units. Based on the asking price, owners will receive about $3.4 million to $3.9 million per unit.

- The Business Times, P29




Investment sales fall in Q2 but foreign funds still looking
Property investment sales in Q2 2008 saw a decline due to increasing cautiousness from investors and tightening of credit. DTZ noted that in the quarter, total transactions fell 37% QOQ to about $5.2 billion. Total sales for H108 amounted to $13.5 billion, 33% of 2007's total sales and 54% of 2006's total sales. DTZ said that $13.5 billion is not low compared with sales in 2006 which was the second most active year in the last decade. The residential sector contributed 13% to total investment sales, mostly from government sale of sites. Transactions in the industrial and commercial sector amounted to $2.4 billion, 45% of total investment in the quarter. Investor interest especially from private equity funds remains strong as the property market is supported by economic growth and occupier market fundamentals, said DTZ. US investors are shifting asset allocation to Asia-Pacific while European pension funds are also waking up to the investment possibilities of the region. CBRE believes that Singapore's prospects as a financial hub and popular business destination will see Singapore attract investors' interest.

- The Business Times, P29




Prime rents poised to ease further
The surging rents in prime areas look to be easing, with some condos already registering falls of up to 12%. The declines are expected to intensify over the next three to six months. Jones Lang LaSalle (JLL) said increased supply from newly built condominiums and a weakening economy are behind the projected prime rent slide, although rents in other parts of Singapore should stay largely stable. Expats have been moving to fringe locations and nudging rents there up, said JLL. Rents in the East Coast area rose 1.4% in the first quarter but are tipped to grow at a slower pace or stay unchanged. At Cuscaden Residences in the Tanglin area, rentals have fallen 12%, from $6.20 psf a month in Q407 to $5.46 psf in Q108.

- The Straits Times, H20




Property demand strong in London's West End: report
Demand for space in the world's most expensive office location, London's West End, remained strong in Q208, even as take-up in the City financial district sank. Knight Frank said office take-up in the West End in the second quarter was broadly in line with year-ago levels and about 30% up on the Q108 at 1.4 million sqft. Rents are still in excess of 100 pounds psf and a robust level of take-up demonstrates the West End's resilience. Knight Frank said 5.1% of West End office space is currently vacant, up from 3.8% a year ago. The office vacancy rate in the City was 8.5%, compared with a low of 5.8% in the third quarter of 2007. Knight Frank said office take-up in the second quarter in the City market fell by 30% to 1.1 million sq ft, compared with the previous quarter, and was 60% down on the same period of 2007.

- The Business Times, P27




Chinese developers may win relief from falling prices: ING
Real estate developers in China may win relief from a shift in government policy towards stabilising property prices instead of depressing them, according to an analyst at ING. Home prices rose 9.2% in May, the slowest in eight months.

- The Business Times, P27



Dubai property prices may fall when projects are completed
There is a prospect of oversupply of Dubai property if current delivery plans are met, and the risk of being unable to stimulate demand in view of massive development projects in the pipeline, Fitch Ratings Ltd said. But there is also a high probability of late delivery, and even project cancellation, because of shortages of labour and building materials, which would mean a better match between supply and demand. The UAE is the largest construction market in the Gulf Cooperation Council, which forecasts US$2 trillion worth of projects by the end of the first quarter.

- The Business Times, P29



Chip giant to set up $95m plant in S'pore
Chip industry giant Applied Materials is investing US$70 million (S$95.4 million) in a new Asia operations centre in Singapore. The facility will be up and running by late next year, creating as many as 300 new jobs. The company already employs 400 people in its sales and service office in Singapore. Its new plant - its first in Asia - comes after South Korea's Samsung Electronics and Germany's Siltronic opened a US$1 billion semiconductor plant last month. It underlines Singapore's continuing attraction for global high-tech players.

- The Straits Times, H20



Taiwan's Lite-On opens regional HQ in S'pore
Lite-On Technology, one of the world's major suppliers of LED products, has established its regional headquarters in Singapore. It plans to invest around $20 million over five years here, and triple its headcount from around 30 to 90 within four years. Besides serving as a regional hub, Lite-On's Singapore operations is also expected to become a major R&D centre and a regional marketing centre. In February, Lite-On established an 11,000 sq ft facility at Woodlands Industrial Park.

- The Business Times, P26




China's economy to overtake US by 2035: study
China's economy will overtake that of the United States by 2035 and be twice its size by 2035, a study released by a US research organisation concluded. The report by economist Albert Keidel of the Carnegie Endowment for International Peace said that China's rapid growth is driven by domestic demand more than exports. Under current market-based estimates, China's gross domestic product (GDP) is about US$3 trillion compared to US$14 trillion for the US. China will catch up with the US as an economic power by 2035, with an equivalent GDP of US$18 trillion. By 2050, Chinese GDP is estimated at some US$82 trillion compared with US$44 trillion for the US.

- The Business Times, P2




Highest rise for won in 10 years on US$ sell-off
South Korea dumped more than US$3 billion on the foreign exchange market yesterday to prevent the sliding won from fuelling inflation, prompting the won to rise as much as 3.7% - the biggest rise in the currency in a decade. Dealers estimated that South Korean authorities have sold US$15 billion this year to prop up the currency, which fell 10.5% in the first half of 2008. Traders became more convinced that monetary authorities would use the currency as its main tool to rein in inflation, rather than interest rates.

- The Business Times, P11


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