DAILY MARKET UPDATES 23rd September 2008

WPP Leases all of Scotts Road Project
International advertising, communications and marketing giant WPP has leased an entire office development to be built on a transitional site at Scotts and Anthony roads, BT understands. The four-storey structure, next to Newton MRT Station, will have about 130,000 square feet of offices and 135 parking spaces. It is slated for completion in about a year. Under the WPP banner - Bates, JWT, Y&R, Burson Marsteller, Hill & Knowlton and Enfatico - will be consolidated under one roof. WPP is said to have signed a 14-year lease on the Scotts Road building, which is going up on a 15-year leasehold site sold this year by the Urban Redevelopment Authority. BT understands that WPP will pay gross monthly rent of about $8 per sq ft (psf). The project is being developed by Sun Venture (S) Investments, a subsidiary of interior design and building company DB&B (Singapore) Developments, which paid $226 psf per plot ratio for the 97,284 sq ft site in a state tender that closed in late April this year.
- The Business Times, P32
Fullerton Ties up with Major China Fund Player
Singapore-based Fullerton and Bosera, one of China's biggest asset managers, have pledged to work together to source, structure and manage funds under China's QDII and QFII schemes for domestic investors seeking to diversify abroad and foreign investors eager to invest in Chinese securities. Fullerton will offer advice on investments in Asia outside China for Bosera's mainland Chinese clients who want to invest overseas, while Bosera will do the same for Fullerton's clients who want to invest in Chinese stocks. With Fullerton as its partner, Bosera could launch its first fund - focused on investments in Asia-Pacific - under the QDII scheme in the next 3-6 months, when financial market conditions improve, Fullerton chief executive Gerard Lee told BT in an interview in Singapore. Fullerton is also in talks with potential partners in the US and Australia - two markets it has yet to enter, he said.
- The Business Times, P4
Economic Growth may Dip below 4%
Trade Minister Lim Hng Kiang said yesterday that Singapore companies and the economy will face more difficult export markets later this year and going into next year. He expects economic growth to be closer to 4 per cent, maybe even a bit below 4 per cent, depending on how the financial crisis pans out over the next few weeks and months. He said Singapore is well-prepared for these difficulties because of a well-diversified economy. We have our domestic economy to hold us up and we are also looking for other growth opportunities in Asia, Latin America and the Middle East. He dismissed the notion that Singapore would slide into a technical recession - two consecutive quarters of negative growth. He also said that Singapore’s steady pipeline of investments and different projects will keep generating jobs. It was also fortunate for Singapore that China, India and the rest of South-east Asia are still holding up reasonably well. And in Latin America, they are having fairly good growth at more than 5 per cent.
- The Straits Times, A1
Old Bay Window Rules Valid for more than 3 Months
The URA will extend by three months the deadline for submission of provisional permission (PP) applications for new developments based on existing bay window and planter box guidelines. On July 7, URA announced that developers would have to include bay windows and planter boxes in total gross floor area (GFA) calculations. Previously they were exempt. URA says bay windows are increasingly treated as internal floor space and few home owners use planter boxes for plants. The deadline has been extended to Dec 31. The change in the guidelines is not expected to have a big impact on on-going projects. URA said that since the announcement there has been no 'spike' in PP submissions. Developers who priced in the GFA incentive when they bid for sites will now have more time to make submissions so their breakeven costs stay on track. For a consortium led by Hoi Hup Realty, which won the tender for a HDB Design, Build and Sell Scheme site at Lorong 1A Toa Payoh in August, submitting a PP application before the deadline could mean slightly lower prices for buyers. Hoi Hup said launch prices could be 5-10 per cent lower than they would be without the GFA incentive.
- The Business Times, P33 (also see The Straits Times, B18 “Bay window, planter box rule change to kick in later”)
Brokers TakeProperty stocks were among the worst hit in the recent meltdown that saw the Straits Times Index and global indices touching new lows. On a month-on-month performance, the FTSE Real Estate and Development Index eased 12.6 per cent, hot on the heels of top losers Oil and Gas Index (-19 per cent) and S-chips (-16 per cent). After the battering, Allgreen, Ho Bee and Singapore Land are now trading at 0.5-0.6 times P/B value. Recent worries about the ailing global economic outlook over the next 6-12 months have brought property stocks closer to their trough valuation. We see buying opportunities for stocks trading at/below down-cycle troughs and at a steep discount to its BV. Based on the above and current valuations, top picks are Allgreen, Ho Bee and Keppel Land. All three have substantial upside to our recently revised TPs and are also trading at below or close to our trough valuations. Brokers also like City Developments, which is a key proxy for the Singapore residential market and will be a prime beneficiary when the market sentiment recovers. City Dev has resilient core earnings as well as cheap landbank across all the market segments.
- The Business Times, P8
SWF seen Raising Property Investment
Sovereign wealth funds may increase investment in commercial properties to a net US$725 billion by 2015 as they diversify their holdings from stocks and bonds, according to CB Richard Ellis Group Inc. The funds will probably raise the proportion of money they invest in real estate to 7 per cent from 4 per cent in the next seven years, the world's largest commercial-property broker said in a report published yesterday. Abu Dhabi, Norway, Saudi Arabia, Singapore and China have the largest funds, CB Richard Ellis said. As much as half of the property-related investments made by sovereign wealth funds will be on acquisitions of buildings and as much as 30 per cent will be put into private-equity funds and private real-estate investment trusts, the CB Richard Ellis report said. As much as 25 per cent will be invested in real-estate debt. Until now, the funds have mainly purchased properties in the US and Middle East. In future, they will probably spend more in countries with currencies that aren't held in the funds' foreign reserves, the report said.
- The Business Times, P33
Private Jet Company takes off at Seletar
A new private jet company operating partially out of Seletar Airport is off to a promising start. Bjets is predominantly owned by India's Tata Group, and has done over 100 flying hours since take-off last month, shuttling mainly business tycoons and top executives within the region. The firm, which operates out of Singapore and India, has four jets and 35 pilots and does flights anywhere around Asia for up to five hours. By the end of the year, fleet size will have doubled and by the end of next year, it will have 21 planes in the air. The company expects to have about 100 members by the end of next year. In five years, the plan is for 50 jets and 250 pilots. Like Bjets, MillionaireAsia, a media group with a network of 100,000 millionaires in 10 countries, including Monaco, Russia, India and Singapore, is also betting that business aviation will boom. It is organizing a showing of private jets for more than 200 tycoons from around the world later this week.
- The Straits Times, B16
SIA says Premium-Class travel Relatively Strong
SINGAPORE Airlines, which gets 40 per cent of revenue from business passengers, said the credit crisis in the US has not hurt demand for premium-class travel. Demand from business travellers in the US remains 'relatively strong', spokesman Stephen Forshaw said in an e-mail reply to Bloomberg queries. Leisure traffic has declined recently for Asia's most profitable carrier and the airline may alter its route network in response, he said.
- The Business Times, P33
UK Housing Market ‘On Its Knees’, says Rightmove
UK house prices fell for a fourth month in September as the global credit crisis intensified, locking out homebuyers and forcing the sale of the country's biggest mortgage lender, a report by Rightmove plc showed. The average asking price for a home fell one per cent from last month to £227,438 (S$595,559), Britain's most-used property website said yesterday. From a year earlier, prices fell 3.3 per cent. Prices dropped the most in the East Midlands, where they fell 5.3 per cent this month, and values declined 3.9 per cent in the south-west, Rightmove said. In London, house prices rose 4 per cent this month after a 5.3 per cent drop last month.
- The Business Times, P33
Chinese Consumer Confidence Slides
24.5 per cent of those questioned expect their incomes to increase in the coming three months, sharply down from 35.2 per cent in January's survey. As for inflation, they expect improvement, with 42.8 per cent of Chin's urban residents believing that inflation will continue to rise, down from 50.6 per cent in the previous survey. An index produced from the survey that measures loan demand remained high at 67.4 per cent compared with 68.8 per cent three months ago. The index for domestic orders fell 3.7 percentage points in the last three months to 9.7 per cent, the biggest fall in the index in the last decade.
- The Business Times, P16

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