DAILY MARKET UPDATES 19th August 2008

Atrium, Crosby sales among top 5 Asia-Pac deals in Q2
Investment sales of property in Singapore slowed in the second quarter but the sales of The Atrium @ Orchard for US$617 million and 71 Robinson Road for US$547 million made it to the top 5 commercial real estate deals in Asia-Pacific in Q208, according to DTZ. Atrium is the 4th biggest transaction, while 71 Robinson Road is 5th. Total transaction value of commercial real estate across Asia-Pac was US$19.6 billion in Q2, a decrease of over US$2 billion or 10% from Q1. But with many investors looking to Asia as the engine of growth, capital should continue to flow into the region. DTZ noted that despite declines in transaction values in the Asia-Pac region, activity is still well above the long-term average for the region. For Singapore, the value of commercial real estate transactions fell 24% from $5.9 billion in Q108 to $4.5 billion in Q2. CBRE said that investment sales in the Singapore commercial property sector (office and retail) for the second half of this year will be less than the level in H1. Buyers of Singapore offices are more cautious due to concerns over an increased supply (with major office are completed from 2010) and uncertainty over whether companies will continue to expand at the same pace.
- The Business Times, P32
SLA sees good interest for infill sites ahead of auction
The Singapore Land Authority 9SLA) received about 100 enquiries for the 8 infill sites it launched for residential use on June 26. The sites will be auctioned off on Aug 21. There has been especially strong interest in the good class bungalow site at Ridout Road and sites in the eastern region of Upper East Coast Road and Tanah Merah Kechil Road. Other sites include bungalow plots in Namly Avenue, Braddel Road and Glasgow Road.
- The Business Times, P9
Frasers targets 'road warriors'
Frasers Hospitality is cashing in on a newly emerging class of business traveller, with the launch of a new, lower-tiered brand of serviced apartments early next year. The new apartments, to be branded Modena, will cater to business travellers who are on the road so often that high-end accommodation is unrealistic. The first Modena apartments will be in China. The firm sees a market in China, India, Europe and South-east Asia. Modena can also be sited in areas just outside the central business district and rooms will be smaller than the Fraser brand properties. Frasers will launch its third serviced apartment property in Singapore later this year at Fusionopolis in one-north. Called Fraser Place Fusionopolis, it will be launched in October and opened in November. It will be a fairly small property with 50 loft units based on the 'work, live and play' concept promoted at one-north. Frasers Hospitality will manage the property - owned by JTC Corp - under a 10-year contract. Bookings for Frasers apartments boast a three-month waiting list in Singapore.
- The Straits Times, B21
UK sees biggest fall in home prices since 2002
UK houses prices posted the biggest annual decline since 2002 as banks choked off mortgage lending, deepening London’s property slump. The average asking price for a home fell 4.8% in August from a year earlier to S$606,350. The stock of unsold property per real estate agent rose for a seventh month to 78, from 77 in July. UK mortgage approvals fell to the lowest since at least 1999 in June. Britain’s gross domestic product will either stagnate or contract in the next 2 or 3 quarters, meaning an economic recession, said the British Chambers of Commerce. Confidence on business prospects fell to the lowest level in at least 6 years, according to a survey of more than 200 companies released by Lloyds TSB Group. The index of sentiment on the next 12 months fell to 22 in July, the lowest since 2002, from 32 in June. The central bank kept its benchmark interest rate at 5% on Aug 7.
- The Business Times, P31
China property sector slowing down
Property investment has slowed in China since mid-year, amid tighter credit and buyers' uncertainty. The National Bureau of Statistics said that between January and July, investment in real estate development totalled 1.588 trillion yuan (S$326.7 billion), up 30.9% year-on-year. But the rate of increase was 2.6 percentage points less than the rate in the first half. Spending on residential projects was 1.15 trillion yuan, up 33.7% but 2.8 percentage points lower than in the first half. The central bank had reported that first-half lending to real estate developers and home buyers was 398.84 billion yuan, down 170.66 billion yuan from a year earlier. Since the end of last September, when China tightened credit for those buying more than one apartment, demand has ebbed. Developers sold about 260 million sq m of housing in the first six months with a value of one trillion yuan, representing decreases of 7.2% and 3% year-on-year, respectively. The National Bureau of Statistics also said that between January and July, 129 million sq m of commercial property was vacant, up 6.1%.
- The Business Times, P32
Fear of technical recession looms as July exports fall
Continuing their downward trend, Singapore's non-oil domestic exports (NODX) shrank by 5.7% in July as the shipment of electronic goods continued to fall. This followed a 10.5% fall in May and an 11% tumble in June, and some economists are predicting a technical recession after the economy grew 2.1% in Q2. The fall (in non-oil domestic exports) will translate into weaker manufacturing activity, at least for the third quarter, raising the likelihood of a technical recession in 2008, said Standard Chartered. Non-electronic exports posted a slight improvement of 0.3% - reversing its drop of 7.9% drop in the previous month.
- The Business Times, P2
Bank of Japan seen holding rates steady
The Bank of Japan (BOJ) has kept its low interest rates unchanged at 0.5% since February last year. Japan’s core inflation rate hit a decade-high of 1.9% in June. Japan’s economy contracted 0.6% in Q2. With interest rates already very low, the BOJ does not have much room for further cuts.
- The Business Times, P15

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