DAILY MARKET UPDATES 10th September 2008

HDB upgraders come out to play in quiet market
HDB upgraders' share of private home purchases rose to 34% in Q2 2008 from just 28% in Q1, according to DTZ's analysis of data from URA Realis system. No. of private homes bought by those with HDB addresses increased 35% quarter-on-quarter to 1,199. HDB upgraders picked up the most number of units (36) in The Verve in the Balestier area, followed by 32units at Stadia at Yio Chu Kang. The Quartz was the most popular with 86% of its buyers being upgraders. DTZ said that developers are targeting this segment with realistic prices and offering attractive mortgage schemes for buyers with banks. Buyers of 97 of the 169 primary market transactions of private apartments/condos below 1,000 sq ft and costing at most $1,000 psf in Q2 had HDB addresses. The subsale market increased 52% Q-on-Q to 152 deals in Q2 2008, with median price declining 8% to $871psf. Subsales for non-landed private homes rose 25% quarter-on-quarter to 493, making up about 17% share of transactions of non-landed private homes. DTZ commented that the subsale activity in Q2 seems to have been fuelled by those who'd bought units in the past few years unloading their investments as their units reach or near completion. The median subsale price fall by 5% to $1,052 psf in Q2 after sliding 8% in Q1 and 4% in Q4 2007. This was due to fewer high-end units being transacted in the subsale market as well as slight price corrections. Median subsale prices of Citylights was $1,100psf (down by 2%) and The Sail @ Marina Bay were $1,810 psf (down by 14%) from Q1.Meanwhile, the number of private homes acquired by foreigners (including PR) rose 3% to 913. Foreigners bought 26% of total private homes, down slightly from a 28% share in Q1. DTZ observed that when private property prices are high, there are more foreigners as they are attracted by the growth story. When private property prices are low, there are more buyers with HDB addresses as it's a good opportunity to upgrade at more affordable levels.
- The Business Times, P1 (See attached “10Sep_MovingUpTheLadder.jpg”)
Home prices have peaked ‘but won’t crash’
High-end home prices have dropped by about 15% to 20% and will 'stabilise at this level', said Wing Tai Holdings. Transactions here in the first half of the year have dropped by about 77% from the same period last year. He said that many developers have strong balance sheets and acquired properties before the property boom last year, so they are sitting on profits and 'will not be forced to sell below what they believe is the right price'. Property sales in Singapore will see a more 'normal pace', with decent-sized projects taking six months to a year to sell out. Home prices have 'peaked for now', but they will not crash as long as developers and home sellers hold on to their properties. Chinese developer Hang Lung Properties said China's real estate market had been affected more by domestic economic conditions than the US crisis. Gale International, a New York-based property developer, said the US sub-prime crisis was a banking crisis, 'not a real estate one'. He added that the office market, especially in the Central Business District, has held on very well.
- The Straits Times, B21
Hong Fok launches Concourse Skyline
Hong Fok Corporation launched the 1st phase of Concourse Skyline at Beach Road. Comprising two towers and a podium complex, the 99-year leasehold development will house 360 units when completed in 2013. Units consist of one to four-bedroom apartments and penthouses, with one-bedroom apartments making up some 40%. 90 units will be released in the 1st phase, average sale prices could range from $1,500 to $1,800 per sq ft (psf) for the apartments. One-bedroom units can go up to 893 sq ft. Sea-facing units will cost $300 psf more than those facing the city. The penthouses will not be released for now. DTZ and CB Richard Ellis are marketing the property. Depending on take-up for the first phase, Hong Fok could release another 30 units in the next phase. Hong Fok also announced that it is developing a 68-unit serviced apartment project in Hong Kong and through its subsidiary, Winfoong International. That is slated for completion in early 2010.
- The Business Times, P6 (Also see The Straits Times, B17)
Choice Tanah Merah condo site receives seven bids
99-year leasehold condo site next to Tanah Merah MRT station drew 7 bids. The top bid of $84 million or $282 per sq ft per plot ratio (psf ppr) came from TID - a joint venture between Singapore's Hong Leong Group and Japan's Mitsui Fudosan. The top bid was within the $250-300 psf ppr range predicted for the plot. But it is 11% shy of the $318.50 achieved for a neighbouring site - farther from the MRT station - in April 2006, when sentiment was more buoyant. That site is now being developed as the Casa Merah condo. CBRE estimates that based on TID's bid price, the breakeven cost for a new condo is likely to be $700-750 psf, translating to possible sale prices ranging from $800-850 psf. The 106,299 sq ft plot can be developed into a condo with 240-250 units averaging 1,200 sq ft. CBRE said the future project on the site will be attractive to HDB upgraders around the neighourhood and expats looking to rent homes along transport nodes.
- The Business Times, P12
S’pore moves up in world of global business hubs
According to the latest Worldwide Centres of Commerce Index published by MasterCard, Singapore has been ranked the 4th best centre of commerce worldwide, just behind Tokyo, It was also considered the best city for ease of doing business. London, New York, and Tokyo retained the top three spots respectively, but Singapore moved up two rungs, overtaking Chicago at No 5 and Hong Kong. Singapore ranked second only to Stockholm for its legal and political framework, and ahead of more established financial centres such as New York and London. The cities ranked top for economic stability were all in Western Europe - Vienna in first place, and Barcelona and Madrid tied in second place.
- The Business Times, P4 (Also see The Straits Times, A17)
Qatar bank opens full branch here
Qatar National Bank (QNB) has upgraded its Singapore operations from representative office to a branch offering a range of commercial banking services and products. QNB opened its representative office in April last year and has been keen to expand its operations here. The new branch will be a valuable asset to both economies as emerging opportunities will boost the business trade between Qatar, Singapore, and other Asian countries. QNB is Qatar's biggest bank with total assets of 95.4 billion Qatari riyals (S$37.5 billion) and is 50 per cent cent owned by the Qatar government.
- The Straits Times, B16
Singapore a model for Sony worldwide
Singapore has been a haven of strength for Sony, with its electronics operations here chalking up double digit growth over the past two years. Despite the global economy uncertainities, the pan-Asian region is doing very well for Sony, according to Sony. More broadly, Singapore has the right environment for a multi-dimensional organisation like Sony's to thrive. Lauding the wide range of talent here, Sony noted that this was ideal for them, which also owns major movie and music businesses.
- The Business Times, P13
Singapore wealth story continues
Wealth in Asia Pacific ex-Japan registered the fastest growth of 13.6% in 2007, according to the latest wealth report by the Boston Consulting Group. Singapore has emerged as the market with the greatest concentration of 'millionaire' households, 0.6% of households - with AUM of at least US$1 million. BCG says that wealthy households globally have been shifting their allocations from equities into more conservative instruments since early 2008. BCG expects the Asia Pacific ex-Japan region to expand at the fastest clip over the next five years, growing its share of global AUM from 12% in 2007 to 16% in 2012. In terms of asset allocation, the proportion invested in equities among Asia ex-Japan clients has risen from 26 to 35% between 2002 and 2007. Conservative products such as cash and deposits remain popular, although low interest rates have prompted a shift to other assets.
- The Business Times, P32
New banking hubs like S’pore on radar screen
Traditional offshore banking centres face a number of challenges as tighter tax codes and the emergence of new banking hubs like Singapore prompt the wealthy to re-think their banking arrangements. Singapore's offshore AUM is estimated at US$500 billion, and Hong Kong's at US$200 billion. BCG said some high net worth individuals may consider relocating to foreign offshore centres as 'a roundabout way of complying with domestic tax regulations'. They are more likely to relocate to places with a high quality of life and large business communities such as Switzerland and Singapore. Investors from China, Taiwan and Hong Kong are gravitating towards Singapore, said BCG.
- The Business Times, P32
UOB launches credit card with Japanese focus
UOB is wooing the Japanese in Singapore as well as Singaporeans who travel often to Japan with the launch of a credit card that offers over 1,000 dining, shopping, beauty and travel privileges at merchants in Singapore and Japan. UOB is working together with JCB International Co Ltd on this UOB JCB Platinum Card. In addition to exclusive privileges at Japanese restaurants and beauty brands, both UOB and JCBI have also partnered Japan Airlines (JAL) and popular Japanese shopping mall Liang Court. In Japan, card members get dining privileges at over 800 restaurants, cafes and nightspots from Hokkaido to Okinawa.
- The Business Times, P8

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