DAILY MARKET UPDATES 12th August 2008

MTI expects a lingering slowdown, sluggish rebound
Ministry of Trade and Industry (MTI) official yesterday described the Singapore economy - which grew just 2.1 per cent in Q2 - as being in a 'stretched-U' slowdown, with sluggish growth and probably no pickup for a while. The global economic dynamics will remain fluid over the next 12-18 months, with recovery hinging on the state of global credit and asset markets. Q2 slowdown is due largely to a sharp fall in biomedical manufacturing. If pharma output were excluded, GDP growth in Q2, instead of 2.1%, would possibly have been almost twice as high. DBS Bank economist estimated it at 3.6%. Manufacturing sector contracted 5.2% in Q2. MTI expects the electronics industry to remain soft in 2H. Wholesale trade and the services are 'likely' to remain robust and help shore up economic growth. MIT added that GDP growth in the 2H should be 'broadly similar' to the first half. Full-year growth will likely come in within the lower half of the revised forecast. Most economists here have largely 'priced in' the poor outlook in their forecasts, though a few - such as the UOB - cut their GDP growth forecasts yesterday following the Q2 release. Even more bearish, Standard Chartered Bank's economists believe a technical recession here is on the cards, and see the Singapore economy growing only 3.5% in 2008. They also expect the MAS to start shifting - from its appreciation stance over the past 10 months - to a neutral bias on the Sing dollar.

-The Business Times, P1 (Also see attached “Second Quarter Swing, Sectoral Snapshot”)



Growth in hotels sector slows as room lettings fall
The growth of hotels and restaurants here is slowing as room lettings fall, but hotels are still enjoying double-digit growth in room rates. (MIT) The hotels and restaurants sector grew 2.1% year-on-year in the Q2. Comparatively, it grew 2.9% in Q1 2008 and 4.4% in 2007. The slower Q2 growth was largely due to the hotels segment of the sector. The catering index continued to register strong growth. Still, hotels are seeing double-digit growth in revenue per available room (RevPAR) across all segments. In H1 2008, the average room rate (ARR) rose 30%, which led to RevPAR growing 25%. All types of hotels - luxury, upscale, mid-tier and economy - saw strong RevPAR growth. The average occupancy rate (AOR) of hotels declined 3.4 percentage points in H1 to 83%. Looking ahead, the outlook for the hotel industry remains positive. The hotel industry will also benefit from major events such as the Formula One Grand Prix, the opening of the two integrated resorts and the Youth Olympic Games.

– The Business Times, P4



Russell to double Asia property investments
US-based Russell Investments, which manages over US$211 billion in assets, wants to boost its exposure to Asian real estate as it sees growing markets in China and India withstanding a global downturn. It expects to more than double its investments in Asia properties over the next 3 years, from about US$300 million currently. An increasing number of financial and property firms have set up funds to invest in Asia property in the past year, including the property investment units of Jones Lang LaSalle and Prudential, and Singapore developers such as CapitaLand and Keppel Land.

– The Business Times, P32



Changi campus for S'pore's 4th university
Singapore's new publicly funded university will make its home at the vacant 22.6-hectare site (now-defunct UNSW Asia Campus) along Upper Changi Road, with the first buildings set to be ready by 2013, said MOE. Overseeing the establishment of the new university is Far East Organization's CEO Philip Ng. The university is considering a ‘garden’ concept with its own character and identity, with good quality accommodation, easy access to public transport, and look at possible synergies with the surrounding industries such as banking and IT. The government is building this latest varsity to increase the number of university places to 30% of each year's cohort by 2015, up from 25 per cent currently. The new university will be able to take in a steady stream of up to 2,500 students a year and offer three main disciplines - business, design and engineering.

- The Business Times, P9



M'sian developer SDB launches first project here; more to come
M’sian property developer Selangor Dredging Berhad (SDB) is making a foray into Singapore. SDB, which is listed on Bursa Malaysia, has started marketing one high-end residential project on Wilkie Road here and hopes to launch another project by the end of the year.The company started marketing its Wilkie Road development, called Jia, about a month ago in both Singapore and Malaysia through private previews. SDB bought the site for $21mil - $22mil in Dec 2006. 30% of the 22-unit development has been sold at prices of around $1,600 psf - mostly in M’sia. The project has two and three-bedroom apartments, as well as three penthouses. Next up is SDB's 66-unit development on Gilstead Road in Newton. The company bought Gilstead View in a collective sale in May last year for $96.5 million - or $1,070 psf of potential gross floor area. The new development on the site will be launched in end-08 or Q1 09. SDB also owns a commercial property in Balestier. Other markets SDB is looking at include Thailand, Vietnam and Australia.

– The Business Times, P32



Ex-Changi military camp now available for hotel use
Part of the famous Changi military camp has been put up for tender as a hotel - the latest move to transform the sleepy coastal haven into a leisure and lifestyle hot spot. Two of the six camp buildings in Hendon Road can be leased at a guide rent of $28,500 a month (SLA). The two three-storey buildings and a covered shed sit on 9,666 sq m of land, slightly larger than a football field. The buildings have a gross floor area of 5,097 sq m. The lease is for an initial term of three years and is renewable up to 2018. A hotel is appropriate for the site given Changi's charm and proximity to the sea, but whoever secures the land must offer a unique concept to differentiate it from nearby competitors, said Knight Frank.

– The Straits Times, B23 (See attached map “12Aug_ChangiSite.pdf”)



Ho Bee's Q2 profit falls 70% to $37m
Ho Bee Group has announced a net profit of $36.96 million for Q2 2008, a 70.4% fall from $125.1 million a year earlier. Revenue was $116.8 million, a 27% slide. Ho Bee said this was mainly due to lower recognition of revenue from property development projects. Property development revenue shrank 29% in Q2 2008 to $110.4 million. Turnover in this segment accounted for 94.5 per cent of group turnover. Ho Bee cited its policy of deferring recognition of income at various stages of completion for residential units sold under on deferred payment terms until TOPs for developments are obtained. Revenue from property investment increased 42% year on year in Q2.

– The Business Times, P8



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