DAILY MARKET UPDATES 14th August 2008

BHP Billiton to lease office space at MBFC
Mining and resources giant BHP Billiton of Australia is leasing about 150,000 sq ft at Marina Bay Financial Centre. The space will be in MBFC's 50-storey Tower 2, under the project's first phase, which is slated for completion in second quarter 2010. BHP Billiton's Singapore operations are currently located at Capital Tower and Springleaf Tower. The 150,000 sq ft or so it will be leasing at MBFC is said to be more than twice the group's existing space in Singapore, suggesting expansion plans in Singapore. Including the latest leasing deal with BHP Billiton, MBFC's 2.9 million sq ft total net lettable area of offices is about 60% pre-committed. Monthly rents in the development are in the region of $16psf, said Keppel Land. Earlier tenants clinched at MBFC include Standard Chartered, which is taking 508,298 sq ft at the 33-storey Tower 1. Barclays and American Express have signed up for Tower 2. The second phase of the project, expected to be completed in 2012, will include Tower 3, with about 1.3 million sq ft of offices, of which about 700,000 sq ft have been leased by DBS.
- The Business Times, P31
POSB mortgage plan leads market: DBS
DBS bank says it has captured more than half of the market for loans to Singaporeans who are not eligible to take up a Housing Board concessionary loan. The HDB currently provides loans for 60% of flat resale transactions, with banks in Singapore offering the remaining 40%. Of this latter group, one in two Singaporeans currently has a POSB Home Ideal mortgage, which offers transparent interest rates. POSB Home Ideal product has interest rates pegged to the CPF Ordinary Account rate. POSB saw a 22% rise in the number of new mortgage accounts in Q2, compared to the preceding three months. During Q2, the total number of resale transactions increased 22% to hit 7,760, compared with Q1. The best price in the market is the current 2.6% annual rate for those who qualify for an HDB concessionary loan. The POSB Ideal package's average annual interest rate over three years is 3.1%. This compares with 3.5% for the variable-rate loans offered by UOB and OCBC, and an average of 3.18% over three years for a Hong Leong Finance variable-rate loan.
- The Straits Times, B21
CPF keeps OA interest rate at 2.5%
The Central Provident Fund Board (CPF) will continue to pay 2.5% interest per annum for members' savings in their Ordinary Account (OA) from Oct 1 to Dec 31. The Housing and Development Board has announced that the concessionary interest rate for HDB mortgage loans, pegged at 0.1 of a percentage point above the CPF interest rate for the OA, will remain unchanged at 2.6% per annum from Oct 1 to Dec 31.
- The Business Times, P9
Building projects bursting budgets
Some building projects in Singapore are facing cost blowouts of 30-50% above their original budget as higher construction costs bite hard. Projects that have been hit by higher building costs include the Khoo Teck Puat Hospital in Yishun, Singapore Island Country Club’s clubhouse, Safra's Jurong clubhouse and Ren Ci’s new hospital at Irrawaddy Road. The Building and Construction Authority reported that construction costs rose 20-30% last year. Costs were estimated to have increased by another 10-15% by mid-2008.
- The Straits Times, B22
SC Global's Q2 net rises 117% to $11.47m
SC Global Developments has reported a net profit of $11.47 million for Q2 2008, up 117% from the $5.28 million in the year-ago period. The group saw revenue recognition from residential units sold in its Singapore development projects, namely, The Marq on Paterson Hill and Hilltops.
- The Business Times, P8
Blackstone eyes four Shanghai buildings
Global buyout funds and property investors including Blackstone Group are vying to buy up to four commercial buildings in Shanghai. The four buildings to be sold by Super Ocean include the Bank of Shanghai Tower in the Lujiazui area of Shanghai's Pudong financial district; and Southern Securities Mansion, located on Nanjing Road. Super Ocean aims to sell the four buildings together but potential bidders have the option to purchase three of the four. They put the price tag for the deal at 5 billion yuan (S$1 billion) to 7 billion yuan. Besides Blackstone, other potential buyers include Ireland's Treasury Holdings. Negotiations between Treasury Holdings and Super Ocean stalled over price issues. In June, Blackstone agreed to pay 1.1 billion yuan for a commercial building in central Shanghai.
- The Business Times, P31
Look north for growth opportunities in China
The Bohai Rim, covering Beijing, Tianjin, Hebei, Liaoning and Shandong, is believed to become the next economic engine for China, says International Enterprise Singapore. The municipalities and provinces in this area have been growing rapidly, holding great potential for investors. Singapore companies have already spotted the increased opportunities in north-east China, as companies such as SC Global are showing more interest in the region's real estate developments. The Singapore-Liaoning Economic & Trade Council was set up to push for greater economic cooperation between Singapore and the Liaoning province.
- The Business Times, P10
Business councils help promote economic ties
IE Singapore is secretariat of six Singapore-China business councils, of which three are in North and North-east China. They are Singapore-Liaoning Economic & Trade Council, Singapore-Shandong Business Council and Singapore-Tianjin Economic and Trade Council.
- The Business Times, P10
China a key contributor to Keppel Land's profits
Overseas operations account for about half of Keppel Land's profits - and China is the main contributor. In China, it has focused on developing premier residential properties, townships and waterfront lifestyle projects. Evergo, Keppel's China-focused subsidiary, has a land bank of 4.5 million sq m in Chinese second-tier cities. Keppel’s current focus is on the key regional economies of China, Vietnam, India and Indonesia. Keppel will continue to explore new opportunities in north China, especially in key cities and growth zones in the Huan Bohai region.
- The Business Times, P11
In slow times, rezoning appeals to developers
Some developers say that rezoning property, with hopes of developing or selling the property once the market improved, is one way to help turn a profit. When the real estate market comes to a halt, many developers cannot get development financing on favourable terms. An attractive option is to wait out the torpid market while trying to add value to their property with a rezoning. But getting a change in zoning can be time consuming.
- The Business Times, P
Japan's Q2 slump hoists red flag for analysts
Japan’s economy shrank at its fastest rate in seven years during the second quarter of 2008. The contraction of 0.6-2.4% at an annual rate - in real gross domestic product (GDP) during the second quarter compared with Q1 - was within market expectations. Private consumption which accounts for more than half of the country's GDP fell by 0.5% in the second quarter as Japanese consumers cut back on spending. Public and private capital investment were also weak. Japan's economics minister suggested that the sharp economic slowdown in the second quarter was partly a reaction to high growth in the preceding quarter when GDP expanded by 0.8% and would not last long.
- The Business Times, P2
Japan's Urban fails with debt of 255b yen
Japanese property developer Urban Corp yesterday failed with debt of 255.8 billion yen (S$3.3 billion), caught by the global credit crunch. The apartment and shopping mall developer was the latest in a string of Japanese real estate firms to fold as banks rein in lending to small and medium-sized developers seen at risk. Japanese property shares have crunched lower this year as fears of bankruptcy spread, although the biggest developers have used the tough times as an opportunity to go bargain hunting. Developers have also been caught by soaring energy and raw material costs. Urban's collapse will turn even more investors off the Japan property sector.
- The Business Times, P30
India sees lower growth in FY2009
India's economy is expected to grow 7.7% in the year to March-end, cooling from the year before and below a recent forecast from the central bank. Tight monetary policy triggered by high oil and commodity prices, and global market turmoil would combine to moderate growth. The Reserve Bank of India has raised its benchmark lending rate by 50 basis points to 9%, its highest in seven years and the third increase in two months, as it battles annual inflation close to 12%.It is also increasing the proportion of funds banks must keep on deposit to 9% to absorb surplus cash in the banking system.
- The Business Times, P16

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