News Highlights Wednesday 2 July 2008

Mass market stays buoyant as buyers find price is right
The URA released estimates for the Q2 2008 price index for private residential property with prices rising 0.4%, compared to 3.7% increase in Q1. Prices of non-landed private residential properties increased by 0.2% in Core Central Region (CCR) and 0.7% in Rest of Central Region (RCR), and climbed a more robust 1.3% in Outside Central Region (OCR). Jones Lang LaSalle said that demand remained favourable in the OCR. Also robust was the HDB resale market with estimates for the quarter revealing that the HDB Resale Price Index increased by 4.4% over the previous quarter, higher than the 3.7% increase in Q1 2008. Secondary market private property transactions of 2,304 units in Q1 2008 was a fall of about 40%, quarter-on-quarter (q-o-q), while primary market transactions of about 762 units was a fall of about 48% in Q1 2008 q-o-q. Colliers believes that home prices have remained resilient as they continue to post a y-o-y increase of 20.4% and a 4.2% increase for the first six months of the year. Colliers also believes that home prices will continue to resist downward pressure and expects prices to hold steady or decline marginally by not more than 3% in Q3 2008.

- The Business Times, P1




Private home prices may have peaked
There were 67,700 private residential units as at the first quarter, of which 56,500 are expected to be completed between this year and 2011. Some 42,700 units, or 63%, in the pipeline are unsold. Experts were divided on whether the market has peaked. While home sales have dipped since late last year, recent launches have been encouraging. Prices will come under pressure from two factors - speculators dumping units and more homes coming on the market as construction ends, DTZ said. CBRE noted that 1,200 to 1,400 new homes were sold between April and last month, almost double the 762 sold between January and March. Most of the projects that sold well were mid-tier or mass market condos, with average prices between $775 psf and $1,225 psf.

- The Straits Times, H20




Kuwait fund buys just 36 Goodwood Residence units
Kuwait Finance House (KFH) bought only 36 units in Goodwood Residence, not the 97 it wanted initially, and it is paying a lower price. The Islamic banking group has paid $2,800 psf for the apartments near Newton Circus - $400 psf below the price it agreed to in December. Market watchers speculated then that KFH had pulled out because it realised it had paid too much for the units. Analyst estimates a fair price for the apartments might be ranged from $2,000 psf to $2,900 psf. KFH has bought two- and four-bedroom apartments and one penthouse unit, according to market sources. Savills said that the sale price of $2,800 psf is still a benchmark for the Newton Circus area and the transaction also reflects KFH's continued confidence in Singapore.

- The Straits Times, H20




Strategies for inflationary times
One of the asset classes that are able to yield attractive returns in the current inflation environment is real estate. In most sectors (retail and office properties) lease contracts characteristically are automatically inflation-adjusted.
- Deputy head of investment strategy group, Deutsche Bank Private Wealth Management

- The Business Times, P31




Prime property districts' prices show 1st fall in 4 years: DTZ
In an analysis of resale prices based on its own basket of properties, DTZ found that prices of private residential properties in Q2 reflected the first correction in the past four years, led by non-landed residential units in the prime districts. Capital values averaged $1,410 psf in Q2 2008, reflecting a 4.7% qoq decline. Outside the prime districts, capital values of freehold and leasehold non-landed resale residential units remained unchanged, averaging $750 psf and $610 psf respectively. The sub-sale market is expected to be active with speculators disposing their units. DTZ believes that there is pent-up demand from many who have been waiting for an opportune time to buy. At the end of the second quarter, there is a return of market confidence and an improved buying sentiment.

- The Business Times, P4




Mapletree, Arcapita in real estate JV
Mapletree Investments has entered a joint venture with Arcapita Bank to form a private real estate fund called Mapletree Industrial Trust (MIT). The fund will hold the $1.71 billion portfolio of high-rise, ready-built industrial properties acquired from JTC Corporation. The portfolio comprises 39 blocks of flatted factories, 12 amenity centres, six stack-up buildings, one ramp-up building, three multi-tenanted business park buildings and one warehouse building.

- The Business Times, P8




Spring S'pore Bt Merah building up for sale
Commercial development Spring Singapore at 2 Bukit Merah Central will be put up for sale today, with market watchers expecting it to fetch $150 million to $180 million. The development comprises a 22-storey tower block and a 6-storey podium block and stands on an 88,295-sq-ft site with a remaining lease of 75 years. The development has a total gross floor area (GFA) of 355,153 sq ft and a lettable area of around 198,744 sq ft. Average rents in the building range from $3 to $3.50 psf per month, and could increase to $4 to $5 psf per month upon lease renewal.

- The Business Times, P9




Tampines site to anchor H2 industrial land sales
The Ministry of Trade and Industry (MTI) yesterday unveiled an industrial land sales programme for the second half of 2008. The latest slate has just one site on the confirmed list, at Tampines Industrial Avenue 4 and seven plots on the reserve list, of which only one is new - a plot in Jurong. The H2 2008 sole confirmed list site can potentially generate about 40,000 sq m GFA and the seven reserve plots may be developed into some 188,570 sq m GFA.

- The Business Times, P4




Record inflation in South Korea, Thailand, Indonesia
Inflation rate in South Korea jumped in June to the highest in almost a decade. Indonesia had annual inflation rising to a 21-month high of 11.03% in June as the full impact of a fuel price increase kicked in, putting pressure on the central bank to raise interest rates again. The rise in the CPI compared with the 12.7% increase forecasted by analysts and a 10.38% gain in May.

- The Business Times, P12




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