DAILY MARKET UPDATES 30th July 2008

Rents falling at most condos
URA’s data analysed rents in developments with at least 100 units and that have 10 or more leases each in the first and second quarters this year. Of the 124 projects in this category, 80 - or about 64 % - saw rents drop between the two quarters. Rents are dipping in around the island, but particularly in East Coast and the central region. But URA also has a more comprehensive rental index that covers all rental transactions, including those at projects with fewer than 10 leases. This showed that rents across the country rose 2.5% overall in the 2Q, the smallest rise in three years. Rents are taking a hit largely because the stock of homes available for rental has risen, property consultants said. Colliers International said the 'peakish' rents could also be due to the current run of high inflation, pushing up living costs in general and making expats more resistant to any rental rises. Another source of rental demand, collective sale sellers, has also dwindled due to the delay in demolishing several en-bloc sale estates amid a slow property sales market. Colliers' own research showed that monthly rents of luxury apartments fell 3 per cent in the first six months of this year. But said luxury rents are unlikely to fall by more than another 10 per cent in the second half, as Singapore remains attractive to expats. Chesterton International agreed that the rental declines in the prime central districts will be 'more gradual than elsewhere as their central location means there will be no lack of demand' whereas it might not be the same for locations such as Changi and Pasir Ris.

- The Straits Times, P4 (See attached – “Taking a Hit”)





Nod for S'pore from 2 European investors
Singapore received the thumbs-up from two leading European investors as they officially opened industrial facilities here. German conglomerate Evonik Industries kicked off a 10 million euro (S$21.4 million) oil additives manufacturing plant that will serve as a regional headquarters for its unit RohMax. The new plant, on Jurong Island, is the first Asian plant for RohMax. It will employ 40 people and serve as RohMax's regional headquarters, and house research and development, marketing and customer service operations as well. Separately, Dutch express freight giant TNT moved from smaller premises to a new, larger distribution and customer contact centre that will cost $15 million in total. Over at Simei, TNT's new depot and contact centre will quadruple its floor space for these operations, previously run from a smaller location nearby, to 49,000 sq ft. It has leased three extra floors of a logistics centre in Changi South Lane.

- The Straits Times, H20




$5.5m campus for Nanyang Kindergarten
Nanyang Kindergarten, located on Coronation Road in Bukit Timah, is building an extension on its old school grounds along King's Road. The new campus will be able to take in more than 520 children (currently 400) aged between three and six. The expansion, set to finish next year, will cost $5.5 million. Nanyang is one of the most sought-after kindergartens in Singapore with past student such as PM Lee, his children and list of prominent lawyers, scientists and architects. Parents are also attracted to its emphasis on Chinese. They face up to a two-year wait to enrol their kids and there are 700 children on the waiting list. Future upgrading will also be done on the Coronation Road building and once that is done, the two campuses will be able to accommodate more than 660 pupils - about 65 per cent more than now. That would make it the largest kindergarten in Singapore. The kindergarten has managed to raise $1.1 million of the $5.5 million needed for the new campus through its alumni.

- The Straits Times, H8




JTC selling small factories to focus on bigger projects
JTC Corp aims to sell more of its small factories and other industrial space this financial year as it shifts its focus to bigger industrial developments. JTC is selling its ready- built assets in order to focus on strategic industrial developments that are too big and risky for the private sector. These include Jurong Island and Tuas Biomedical Park, which attracted about US$8.8 billion (S$12 billion) worth of investments from players such as ExxonMobil, Lonza and Novartis in the last financial year. JTC will still look at the possibility of privatising its subsidiaries Ascendas and Jurong International Holdings. JTC's performance this financial year is expected to be slower in line with the softening economic outlook. JTC has already reaped the results of Singapore's strong economic growth and a buoyant industrial space market in the past two years. Releasing its latest financial results, JTC said its total surplus reached $1.18 billion for the year ended March 31, up a hefty 50 per cent from the previous year.

- The Straits Times, H20




Majority of SMEs still optimistic
The majority of small businesses in Singapore expect the local economy to grow at the same or faster pace in the next six months, according to the HSBC Asia-Pacific Small Business Confidence Survey. 48% of local small businesses expect the country's current economic growth to be sustained, while an additional 14% expect faster growth. Small businesses across the Asia-Pacific region are similarly optimistic, with 44% expecting continued buoyancy and 26% expecting improvement. On capital investment plans, 68% are hoping to maintain their levels of investment and 21% hope to increase them. Regionally, respondents aiming to maintain or increase their level of capital investment were also in the majority, with businesses in Vietnam being the most confident. A majority of regional respondents say their trade with China will remain at current levels or grow. Responses for these criteria were largely the same among Singapore businesses. Small businesses in Singapore were also asked if they plan to expand overseas in the next 6 months. China topped the list of popular destinations at 30 per cent, followed by India (19 per cent) and the rest of Asia (14 per cent), indicating that local small businesses are in favour of expanding within Asia-Pacific.

- The Business Times, P11



More local SMEs expect downturn: Poll
37% of SMEs surveyed expect negative economic growth for the next six months, compared to 17% of respondents in the same survey conducted in the last quarter of last year. And while about half of the respondents felt that growth would be sustained over the next six months, the share of SMEs expecting faster growth plunged from 32% last year to 14% in the Global research house TNS survey. The survey, polled about 3,000 SMEs from Singapore, Bangladesh, China, Hong Kong, India, Indonesia, South Korea, Malaysia, Taiwan and Vietnam. India stood out as the most optimistic in Asia, with 59% of its SMEs expecting rapid growth. South Korea, with only 6% of SMEs expecting positive growth, was the least optimistic. Singapore companies fared better in their capital expenditure plans, with almost 90% of firms planning to maintain or increase their current levels of investment in new business opportunities. Almost all respondents in Singapore were not expecting to cut staff, while 18% planned to increase their headcounts by at least 20%. According to Spring Singapore, SMEs here employ 62% of the workforce and account for 48% of value-add to the local economy.

- The Straits Times, H19




Raffles City Bahrain receives good response
CapitaLand has reported strong demand for residential apartments within the first Raffles City-branded integrated development in the Gulf Co-operation Council (GCC) region. The property group launched private sales for the Tower 2 residential block in Raffles City Bahrain about a month ago. 80%, or 101 of a total of 124 apartments and penthouses, were booked within three weeks of the launch. Buyers include high net worth individuals from the Middle East and Europe. The units achieved an indicative average sale price of $6,330 per square metre (psm), exceeding the average price of $4,883 psm for other high quality residential apartments in Bahrain. According to CapitaLand, construction of Raffles City Bahrain is well underway and piling is more than 25 per cent complete. The public launch is targeted in October this year.

- The Business Times, P7




CDL opens its first E Asia resort hotel in Phuket
CDL has opened the 421-room Millennium Resort Patong Phuket after pumping in 4.3 billion baht (S$175 million) to create its first resort hotel and retail complex in East Asia. Two more hotels in China - Millennium Wuxi and Millennium Chengdu - will open around the end of the year, following those already opened in Beijing, Xiamen and Qingdao. A hotel in Chennai, India is expected to open in 2009.

– The Business Times, P9



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