News Highlights Tuesday 24 June 2008

Subsales carve out bigger slice of home deals
A new study by Jones Lang LaSalle (JLL) shows that in most parts of Singapore, subsales actually rose as a percentage of total private apartment and condo sales in the first five months compared with last year. JLL expects the percentage of subsales to continue to increase till end-2008. In the prime districts 9, 10 and 11, subsales made up 23% of non-landed private home sales in 5M 2008, up from 17% in H1 2007. In the east coast (districts 15 and 16), the proportion of subsales rose from 8% in H1 2007 to 11% in 5M 2008. In mass-market areas, the subsale share went up from 9% to 14% over the same period. But in the central districts 1 to 4, the subsale percentage dipped from 35% in H1 2007 to 33% in 5M 2008. JLL said that the rising proportion of subsales is not a bad phenomenon as it may suggest a transfer of ownership from speculators to potentially long-term occupiers or investors with stronger investment stamina.

- The Business Times, P1




Healthy weekend home sales as attractive pricing draws buyers
Robust sales at some mid-market projects show that homebuyers can be attracted if prices are attractive. Buyers will bite if developments are below recently launched or yet-to-be completed projects nearby and about 10-15% above older properties in the vicinity, said Savills. Suites 123 at Rangoon Road was sold out yesterday. The 37 residential units went for $940-1,277 psf. In Mount Sophia, buyers snapped up all 50 flats released at Parc Sophia over the weekend. Prices ranged from $1,500 psf to around $1,650 psf. More than 80 units of the 99-year leasehold Dakota Residences have been sold since Saturday morning. Sim Lian has also started sales at the The Amery in Telok Kurau at the weekend. It sold 16 out of 39 launched units at an average of $860 psf, or between $1.16 million and almost $2 million.

- The Straits Times, H17





Office rents to rise 10%: RREEF
Office rents here are expected to rise a further 10% or more this year. According to a report by Deutsche Bank's property arm RREEF, rental growth is expected to fade by 2009 as new supply comes onstream. From 2010 to 2012 - when the market adds 570,000 sq m of new Grade A office space - Grade A stock is expected to increase 25%. While the office sector is still in the growth stage, a post-growth stage is expected in 2009, followed by two years of contraction, and finally recovery in 2012. RREEF sees the industrial property market booming. It projects growth until 2010, when a post- growth stage will kick in until at least 2012. Rents should continue to rise at double-digit levels this year.

- The Business Times, P30





Singapore property market approaching peak: report
Singapore is still a safe haven for property investments but a market peak is approaching, Pacific Star says. For the office sector, the current demand-supply imbalance is expected to support rents till 2009. In the residential segment, Pacific Star believes prices and transaction volumes will continue to soften for the rest of the year. But the initial catalysts for recovery are expected in 2009, when Singapore's economic growth is expected to exceed that of 2008, according to Pacific Star. OCBC said that interest in mass market properties should come back. Given that only 5 projects with 1,139 units are expected to be launched in the outside central region between Q2 and Q3 2008, this should ease concerns of oversupply and drive the take-up rate higher over the next few quarters.

- The Business Times, P30




Alternative investments present opportunities: RREEF
Alternative investments have been relatively resilient through the financial crisis, and opportunities are emerging in real estate, infrastructure and private equity, says RREEF Alternative Investments chief economist and strategist. In real estate, transaction volumes and the issue of commercial mortgage-backed securities have dwindled but fundamentals are generally strong and prospects for real estate are healthy, according to RREEF. Rental growth is positive and spread broadly across different markets and sectors.

- The Business Times, P9




New-concept JTC factory aims to save cost and space
To optimise land use and help businesses save on rentals, JTC has come up with a new concept for a 'small footprint high plot ratio' standard factory to cater to small and medium-size enterprises. With a total floor area of 1,200 sq m, the standalone facility would have a plot ratio of 1.3. Land rentals will be lower than that of the existing standard factory due to its smaller footprint and smaller land take-up.

- The Business Times, P2




Lippo to invest US$10b in Asia over 5 yrs
Lippo Group said it remains bullish on Asian property and plans to invest US$10 billion on projects and acquisitions over the next five years. The group is targeting retail, residential, hospital and hotel projects, and also distressed property firms. It will allocate two- thirds of the funds to emerging markets and the remainder in developed markets such as Singapore.

- The Business Times, P30




May inflation stays unchanged at 7.5%
Consumer price rises stopped accelerating for the first time in nine months. Prices rose 7.5% from May last year, matching April's rate. Last month's pause, however, is not seen by most economists as a turning point. Analysts said inflation this month is set to hit a new high, possibly around 8%.

- The Straits Times, H20




CapitaLand, CITIC set up yuan fund
CapitaLand and CITIC Trust will jointly establish the first yuan-denominated real estate private equity fund in China - the CITIC CapitaLand Business Park Fund (CCBPF), which will invest in prime assets in the high-growth business park sector in China. The fund was successfully closed on June 6 after raising 500 million yuan (S$99.5 million). CapitaLand has a 50% sponsor stake.

- The Business Times, P7




China may start Reit next year: industry group
China could kick-start a property trust market next year, which could lead to the listing of as much as US$60 billion worth of buildings in the form of real estate investment trusts (Reits) over the next five years. China is pushing ahead with Reits because insurers and pension funds are desperate for the stable returns that they offer to match long-term liabilities.

- The Business Times, P29




Europe commercial property dips
Commercial property prices in Europe are adjusting downwards but are unlikely to fall by as much as in the UK, CBRE said. British commercial property values are down an average 18% since last summer, according to Investment Property Databank. Five-year sterling interest rate swaps - a benchmark for property borrowing costs - are currently trading at around 6.1%.

- The Business Times, P29




S'pore to host first Asian Youth Games next year
Singapore will welcome about 1,000 young athletes from 44 countries next year from July 2 to July 10 for the first Asian Youth Games. The multi-sport event is for athletes aged between 14 and 18. The event is seen as practice ahead of the Youth Olympic Games (YOG) in 2010.

- The Straits Times, P1



¯ ST Index change 2,979.15 (-22.66)
SIBOR (3 mths): 1.25000 (S$)
SWAP (3 mths): 1.24155 (S$)