News Highlights Thursday 26 June 2008

Citi sees no oversupply of homes in next two years
Official figures show that around 30,000 homes will be completed in the next two years, but Citi reckons only around 60% will be ready. This could mean that downward pressure on prices will not be as great as expected. It estimated that there will be 8,200 units completed next year and 10,200 in 2010, assuming no further collective sales are done. These numbers are below market expectations of 12,500 units next year and 17,500 units in 2010. Knight Frank said the direct impact of supply on prices is limited because most of these homes would already have been sold. Savills Singapore also believes the supply figures released by the URA are too high as completion delays in collective sales and delayed launches have not been factored in. Prices of mid- to high-end properties will fall but not to the extent of the 30-40% drop predicted by some analysts. Citi also said a long downturn is unlikely because resale volumes are still at above average levels, reflecting strong genuine demand. There is no sign of overbuilding or a housing shortage. Mass market homes remain highly affordable and are supported by high rental yields of more than 5%.

- The Straits Times, H22




Millionaires’ ranks grow by 6%
The number of people around the globe with at least $1 million in assets rose by 6% last year to 10.1 million, according to the 12th annual World Wealth Report by Merrill Lynch and Capgemini Group. That means an additional 600,000 people became millionaires despite the problems tied to the US credit crisis. The combined wealth of the millionaires’ club grew 9.4% to $40.7 trillion. Their average wealth, not including primary homes, surpassed $4 million for the first time. The superrich – those with at least $30 million – grew by 8.8% in population, while their accumulated wealth grew by 14.5%. The 10.1 million figure represents just 0.15% of the world’s population of 6.7 billion but the 6% growth in the number of wealth individuals is nevertheless significant. India, China and Brazil saw the biggest growth rates in the number of wealthy individuals. The US, Japan and Germany had the highest number of wealthy individuals. The wealth of the world’s richest is projected to reach $59.1 trillion by 2012, growing at a 7.7% rate.

- The Wall Street Journal, P29, 25 June



Asia-Pac's rich bracket outpaces the rest
Asia and the emerging markets captured the top 10 rankings in terms of the fastest growing wealthy population in 2007, with Singapore in 7th place. Merrill Lynch and Capgemini's wealth report finds that the number of Singaporean wealthy individuals rose 15.3% (about 10,000 people) to about 77,000. The average wealth per individual is estimated to have risen from US$4 million previously to US$4.9 million - higher than the global average wealth per high net worth individual (HNWI) of about US$4.04 million. Merrill Lynch said the Asia-Pacific wealth market is projected to grow at 7.9% annually over the next five years to US$13.9 trillion in 2012. In terms of asset allocation, Asia's wealthy reduced their real estate weighting from 29% to 20%.

- The Business Times, P1




Gillman en bloc sale to proceed
The High Court has dismissed an appeal by minority owners of Gillman Heights Condominium to stop its en bloc sale. This means that the $548 million sale of the 607-unit, 99-year leasehold development to CapitaLand, Hotel Properties and two private funds is set to go through. Gillman Heights owners will get between $870,000 and $950,000 per unit in the en-bloc sale.

- The Business Times, P29




YTL's Sentosa villas to start from $12m each
Malaysia's YTL Corp will launch later this year 18 luxury waterfront villas at Sandy Island on Sentosa Cove and prices are expected to start from $12 million for a villa or at least $2,000 psf of land area. Each two-storey waterfront villa will have a basement and a terrace floor, and feature a double-volume living room facing a private berth. The villas will be built on 99-year leasehold land plots ranging from about 6,000 sq ft to 10,000 sq ft each and will have four or five bedrooms with en-suite bathrooms, a pool and timber patio set within a waterfront garden. YTL inked a deal in November last year to buy the 62,179-sq-ft freehold Westwood Apartments for $435 million, which worked out to $2,525 psf of potential gross floor area.

- The Business Times, P28




Q2 investment sales of properties slide, but money waiting in the wings
Total investment sales of Singapore real estate have dipped to $3.7 billion so far this quarter (up to June 20), or 58% lower than the Q1 2008 figure of $8.9 billion, according to CBRE. The total investment sales in the first-half so far is around $12.6 billion. CBRE continues to see the sale of office, retail and industrial income-producing assets and possibly hotels during H2 2008 but the volume will be lower (than H1) because of a price mismatch between sellers and buyers. Public-sector land sales accounted for 34% or $4.3 billion of total investment sales so far this year. The office sector contributed about $5.2 billion or 41% of year-to-date investment sales. Investment activity in the office sector will continue to be healthy, albeit at a slower pace. The $4.2 billion of deals in the residential sector in H1 2008 (up to June 20) is 13% of the $33.3 billion achieved for full-year 2007. The industrial property market chalked up $943 million of investment sales deals between Jan 1 and June 20 this year.

- The Business Times, P4




Brokers’ Take – Singapore Property – Citi Investment Research (June 24)
Citi believes the high-end residential segment is likely to face a 20-30% price decline at most and the mass market should remain fairly firm. The mid-tier is likely to decline by 10-20%. But Citi believes there is still an overall housing shortage in Singapore and remains optimistic that demand will return once prices have corrected. They do not expect a long drawn-out downturn. Slowing demand and decentralisation are likely to start putting downward pressure on both rental and capital values. Citi expects capital values to decline some 15-20% over the next 2-3 years, although rental rates could fall 30-35% from current levels.

- The Business Times, P8




Major Indian player to launch S'pore commo exchange: source
India's leading commodity exchange, the Multi Commodity Exchange of India (MCX), is starting a new commodity exchange in Singapore and has begun hiring people. The new exchange, the Singapore Mercantile Exchange (SMX), will go live next month. If successful, the new exchange will be a tremendous boost to Singapore's attempts to become a comprehensive commodities hub.

- The Business Times, P1



S'pore economy holding up despite global downturn
Singapore’s economy is healthy despite slowing global output, inflation and a strong local currency said the Trade and Industry Minister. Overall feedback from companies is that they are still managing with the stronger currency. He was also optimistic that Singapore would be able to bring inflation under control by the end of the year.

- The Straits Times, H20



­ ST Index change 2,986.62 (+24.46)
SIBOR (3 mths): 1.25000 (S$)
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