DAILY MARKET UPDATES 16th August 2008

Ghost Month sneaks up on slow market
According to URA, new home sales fell about 35% in July to 897 units on a year- on-year basis. However, on a month-on-month basis, the July volume increased 12%, largely attributed to the 1,322 new home units launched, about 20% higher compared to June. Knight Frank commented that the stock of unsold homes in the developers' inventory will gradually increase though the sales of 897 new homes sold should bode well for the market. They pointed out that healthy sales volume for July does suggest that there is underlying demand from owner-occupiers. This demand came for the Outside Central Region (OCR). Knight Frank notes that the 636 units launched in the OCR accounted for 48.1% of launches. The Core Central Region (CCR), in comparison, saw launches fall 40.7%. JLL believes that looking at the islandwide take-up may not be an accurate reflection of the market and said the Rest of Central Region (RCR) appeared stable, registering a marginal increase of 2% month-on-month in July to $560 psf. The major launches in OCR include Livia, which sold at a median price of $671 psf while Kovan Residences sold at a median price of $882 psf. In suburban areas such as Serangoon, Sengkang and Jurong, prices are observed to be holding at $800-$950 psf at The Florentine, Kovan Residences, Woodsville 28, $700-$800 psf at The Quartz, and $800-$900 psf at The Lakeshore (CBRE). 5 units in The Hamilton Scotts transacted at $3,000-$3,676 psf and 7 units in Nassim Park Residences were done at $2,600-$3,650 psf, indication that there are still buyers who are willing to pay a premium for projects in very good locations and/or with strong attributes.
- The Business Times, P1 (Also See The Straits Times, C19 – Home sales up, but pace slowing)
CBD-style office space coming up in suburbs
Soilbuild Group Holdings is creating CBD-style commercial space in the suburbs as an alternative to the increasingly pricey CBD. Soilbuild is slated to increase to it’s commercial space to 3,740,000 sqft. It has acquired four new projects related to leasing and selling space to companies, to be completed by 2010. Soilbuild's new commercial projects include Solaris in Ayer Rajah Avenue, a business park for MNCs in infocomms, science and engineering research and development industries. Tanjong Kling in the Jurong Industrial Estate, which supports the petrochemical and marine engineering industries, as well as SME- related business areas, Woodlands Industrial Park and Goodvine at Changi. Average rentals for CBP is about $3.70 psf, said Soilbuild. Firms such as Citibank are already shifting their back-end offices to suburban office areas, to cut costs.
- The Straits Times, C24
'Expect more layoffs this year'
The government expects retrenchment this year to be higher than last year's, but still below the average level of 10,000. MM Lee said layoffs were likely in industries exporting to the United States and Europe. Keen global competition is sited as a factor contributing to retrenchment. In his view, layoffs are inevitable and the solution is to retrain workers. Economists are divided on how bad the layoff figures will be for the rest of the year. Citigroup's sees a tougher job market as job growth is exceptionally volatile in an open economy like Singapore's and can turn sharply negative in a severe downturn.Standard Chartered say the slowdown may be a protracted one and its impact less severe than that of the Asian financial crisis. They expect the unemployment rate to rise from 2.3 per cent to 2.5 per cent by year end.
- The Straits Times, B1
Do a 'stress test', the Grantham wayLegendary bubble indentifier's method useful for property investors here
Jeremy Grantham, who correctly and bravely called the dot.com bubble and has been saying since 1999 that US equities are overvalued, blames the mess the world is in to the unwillingness of authorities and financial leadership to believe asset bubbles always revert to normal. The most recent bubble is the housing market in US and UK. He identified the bubble by plotting the ratio of median house price to median family income from 1977 in the US. According to his study, the bubble burst after 2003 when the ratio rose to two standard deviations above the mean. Since 2005, prices in the US has dropped by to reach "normal", Grantham projected a decline of another 17% and "we must worry about the normal tendency for bubbles to overrun on the downside." His UK study, prices could decline 50% and at that level would still be higher than in 1997. Based on Grantham's studies, the BT correspondent ploted three affordability chart on Singapore private properties - firstly based on median condo price/sqm/ave monthly wages; secondly median condo price/sqm/ave GDP per capita; and thirdly median condo price/sqm/ave household income from work. The first and second charts show that affordability has dropped slightly since 2005, and still well below the levels in 1995-96. The ratios for the two charts are similar - 0.3 of a standard deviation below the mean. For the third chart the ratio is 0.4 probably due to some missing data from 1994 to 1997. This result is reassuring compared to the data of US and UK. From Gratham's study, the mean US household prices at 3.8 times median family income equates to an extreme bubble, and in the UK at 3.5 times. For Singapore, the 2007 ratio forprivate homes is 12.3 times, HDB between 3.7 and 4.9 times. The author concluded that in the Singapore context, the higher ratios is not representative of a bubble probably because saving rate is high. (Note: In relation to the above article, it is worth recalling the MAS Report - Financial Stability Review 2007, which states that 60% of Singapore's population uses less than 15% of total income to finance housing loans)
- The Business Times, P6 by Teh Hooi Ling, BT correspondent(Please referred to attached chart “Big Bubble”)
Yudhoyono sees solid 2009 economic growth
Indonesia’s president said that growth in Indonesia economy should hold up at 6.2% in 2009 as he laid out his government's achievements tackling corruption and poverty. The govt. expects to grow 6-6.4% this year. Mr Yudhoyono vowed to maintain macroeconomic stability, despite the threat of rising fuel and commodity prices. Strategist at Bank of America in Singapore, said the economic forecasts appeared fair although the 2009 growth projection might be too optimistic. They are expecting GDP growth of 5.7% next year. - The Business Times, P12
No respite for battered Malaysia property stocks: analysts
Malaysian property stocks have fallen more than 30% this year due to domestic politics and inflation. The country's property sector has also underperformed peers across South-east Asia (SEA). Every central bank in SEA, with the exception of Malaysia, has hiked rates in recent months. Malaysia's inflation hit 7.7% in June and was expected to remain above 7% in July and August. Besides the turbulent months for Malaysian politics, higher steel and building material costs have forced developers to put new projects on hold. Even the relaxation of foreign ownership rules and a flood of money for upscale office and residential projects in the CBD in KL has failed to dispel the gloom. Malaysia's economy is officially projected to grow 5% this year. Malaysian property stocks have taken a beating and analysts warn of more pain for investors. IOI Properties, Malaysia's top property firm by market value, has fallen 30% this year and second-ranked SP Setia has dropped about 34%.
- The Business Times, P12
Jubilee Residence
- Freehold
- Foreigners eligible
- Immediate occupancy
- Over 50% sold
- 353 Pasir Panjang Road
- Expected TOP: 31 Aug 2008
- Developer: Choregeo
- Marketing agent: Savills
- The Straits Times, A6 - advertisement
Shelford Suites
- 77 freehold units
- Shelford Road
- Approved deferred payment scheme
- Expected TOP: 30 June 2011
- Developer: City Developments
- Marketing agents: Savills, CBRE
- The Straits Times, A10 - advertisement
Livia
- 99-years leasehold (from 7 Jan 2008)
- 3-BR apartments from $797,000 ($628 psf)
- Located just off Pasir Ris Drive 1
- 3-, 4-BR apartments and penthouses
- New stacks of 3-BR apartments released
- Expected TOP: 31 Dec 2011
- Developer: Hong Realty
- Marketing agents: ERA, Knight Frank
- The Straits Times, A20 – advertisement
The Florentine
- 68 Florence Road
- Extra-large pool
- Superior penthouse units available
- Close to Kovan MRT and Heartland Mall
- Tenure: 947 years Leasehold
- Priced from $786,000
- Expected TOP: 30 June 2014
- Developer: Roxy Homes
- Marketing agent: HSR
- The Straits Times, C4 - advertisement
37 Chancery Lane- New Launch, From $880 psf onwards- Deferred Payment Scheme available
- Freehold cluster bungalows with individual swimming pool- 4 ultra modern and exlusive 3-storey + basement cluster bungalows- private swimming pool- Spacious land area from 5103 sqft to 5867 sqft- finished from Bulthaup, Hansgrohe, Duravit and Miele- Exhibition at Hollandse Club @ 22 Camden Park- Developer : Chancery Land Pte Ltd- Marketing agent : CBRE- The Straits Times, C9 - advertisement

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