DAILY MARKET UPDATES 24th September 2008

S’pore Govt Land Sales in 2007 double to S$12.4b
The government sold some $12.4 billion worth of land in the financial year ended March 31, 2008 - double the sales of $6.2 billion achieved in the previous year. The numbers mark a steady increase for 10 straight years now, ever since the property slump in 1997-98. But the $12.4 billion value is still around $2 billion shy of the record achieved in total state land sales during the property boom in the 1997 financial year - netting about $14 billion. Top deals included the purchase of a land parcel at Irrawaddy Road by Parkway Holdings for $1.25 billion in February 2008, and the sale of the iconic South Beach site, which was snapped up by a consortium comprising City Developments and overseas partners Istithmar (part of the Dubai World Group) and United States-based Elad Group for some $1.69 billion in September 2007. The public sector accounted for the remaining $2 billion of land sales. The year was marked by 'urgent strong demand' for land for office, hostel, international schools and other commercial uses, SLA said. SLA also managed some four million sq m in total estimated gross floor area of state properties as at March 31, 2008, a new high. This translated into an occupancy rate of 87 per cent.
- The Business Times, P4 (See also Straits Times, B22 “SLA’s Land Sales Double to $12 Billion”)
Lower Top Bids expected for Mountbatten site
A 15-YEAR leasehold transitional office site in Mountbatten Road, launched yesterday, is expected to fetch top bids that are 15-40 per cent lower than a nearby site sold in January this year, according to some property consultants. UBS Investment Research report dated yesterday says that a 1.5-6 per cent cut in the number of jobs in Singapore's financial industry could lower UBS's forecast of monthly prime office rents from $16.20 per square foot (psf) currently to $8.60-9.50 psf in 2012 - a 41-47 per cent slide. This is more pessimistic than an earlier UBS forecast of a 34 per cent fall to $10.50 psf by 2012.
- The Business Times, P14
Flats near City Cost up to 50% more
Prices for resale flats in estates near the city such as Central, Bukit Merah and Queenstown has widened by up to 50%. In 1996, a four-room flat in Bukit Batok sold for an average of $252 per sq ft (psf), while a similar one in Queenstown was sold for $280 psf. HDB's latest second-quarter data shows that the Bukit Batok flat would now sell for about $303 psf while the Queenstown flat commands $458 psf. While private home prices lost steam and inched up just 0.17 per cent in the last quarter, HDB resale prices rose 4.5 per cent.
- The Straits Times, B24
August CPI’s 6.4% Hike a sign of Inflation
INFLATION continues to show signs of moderating, with August's consumer price index (CPI) up 6.4 per cent year on year. This is down slightly from 6.5 per cent in July and much lower than the 7.5 per cent in April, May and June. 6.4 per cent increase in August's CPI was largely due to more expensive housing and food. Housing costs grew 12.8 per cent as a result of higher accommodation costs and electricity tariffs. Food prices advanced 8.4 per cent. The softer economic outlook could lead MAS to adopt a neutral policy stance in October, and a downward re-centring of the Singapore-dollar exchange rate band cannot be ruled out, said Citi.
- The Business Times, P14 (See also The Straits Times, B23 “Inflation eases for 2nd month”)
S'pore still least corrupt in Asia
JUST like last year, Singapore has been ranked the fourth least corrupt country in a global corruption survey. It also retains its status as Asia's least corrupt country on the Corruption Perceptions Index, released yesterday by Transparency International (TI). Conducted annually by the Berlin-based non-governmental corruption watchdog, the index studies the level of public sector corruption in 180 countries and ranks them according to scores. A score of 10 indicates highly clean and 0 means highly corrupt. Singapore scores 9.2, behind joint-leaders Denmark, Sweden and New Zealand, all of which obtained a 9.3 score. Factors contributing to Singapore's ranking included a strong commitment from political leaders; education, which has bred a culture of integrity among citizens; a sound and comprehensive legal framework; and an effective anti-corruption agency. A good ranking helps attract investments as it makes doing business here more predictable and cheaper.
- The Straits Times, B7
Global Banks to Stay Invested in the Region
Global financial firms hit by the financial meltdown on Wall Street have sought to assure investors here that it is business as usual in Singapore and the rest of Asia. They have identified Asia as a growth area and want to stay invested for the long haul. JPMorgan recently added floor space at its Capital Towers office as it anticipates business growth here. Citi has committed $220 million to integrate its back-office operations at Changi Business Park. Data compiled by Bloomberg shows that as at Sept 10, banks worldwide had suffered more than US$510 billion of writedowns and losses since the credit crisis started.
- The Business Times, P4 (See also Straits Times, A6, “GIC sees Good Citi, UBS returns in the Long Run”)
Global recession risks 'not insignificant'
Global economic growth is expected to slow from 4.7 per cent in 2007 to 3.8 per cent in 2008. The deleveraging of the US financial system will limit lending and liquidity. Emerging markets are expected to demonstrate resilience despite the headwinds from the developed world, due to continued high domestic demand and strong competitiveness. The switch from inflation to recession fears due to the changed fundamental outlook is led by a banking crisis and wide-spread deleveraging. This has affected almost all asset classes - elevated interbank borrowing costs, widening credit spreads, falling government bond yields and commodity prices. However, the risks of global recession are not insignificant and we believe the market has not yet fully priced in the possibility of such a scenario. Patience, discipline and risk management will be the most important ingredients for a successful investment strategy.
- Chief investment officer Asia, Deutsche Bank Private Wealth Management
- The Business Times, P32
CitySpring seeks Assets worth S$1b
CitySpring wants to buy assets such as toll roads, ports, and power firms in countries including China, India and in South-east Asia, and with two-thirds of the opportunities reviewed worth under $1 billion and a third worth over $1 billion. CitySpring, in which Temasek has a 28-per cent stake, currently owns a town gas producer and water desalination plant in Singapore, and an undersea electricity cable linking two states in Australia. It is also interested in the third and final power generation firm PowerSeraya, being divested by Temasek, but has not yet decided whether to bid.
- The Business Times, P13
CapitaLand JV awards US$500 Million Contract
CAPITALA, a CapitaLand joint venture with Abu Dhabi-based Mubadala, has awarded the main construction contract for Rihan Heights, the first phase of its US$5-6 billion flagship project Arzanah in Abu Dhabi. The contract, valued at AED 1.9 billion (about US$500 million) has been awarded to a joint venture between Malaysia's Sunway Construction and Abu Dhabi-based Silver Coast Construction & Boring Est. The 25-month main construction contract for Rihan heights covers all other construction activity and associated mechanical, electrical and plumbing works.
- The Business Times, P13
Only 3 of 11 Trackside Hotels Fully Booked
The Conrad Centennial and Ritz-Carlton Millenia were the first to fill their rooms for the F1 race weekend several months ago. The Fullerton Hotel will also be running a full house. Other hotels such as The Raffles Hotel and the Pan Pacific - both declined to comment on occupancy rates - still have rooms available this weekend, as does the Marina Mandarin. The Swissotel and The Fairmont are currently running occupancies of over 90 per cent, with bookings slightly stronger for the former. Raffles City Convention Centre has eight function rooms which have either partial or full views of the track - 6 of which have been snapped up as hospitality suites so far. The Mandarin Oriental is about 80 per cent full and has remained so in recent weeks. The hotel has not lowered its rates ($1,750-$2,250) since it first launched them.
- The Business Times, P8
Visitors in 2008 will fall Short of 10.8b target: STB
6.86 million tourists visited Singapore in the first eight months of the year. 133,000 visitors travelled from top market Indonesia last month, down 16 per cent from August 2007. Second-largest market China contributed 91,000 visitors, a 21 per cent slump. The number of tourists from Japan - another key market - fell 9 per cent to 53,000 visitors. Australia rose 5 per cent to 65,000 and India edged up 3 per cent to 58,000. Singapore hotels were estimated to have brought in $165 million in room revenue in August, up 3.6 per cent from a year earlier. The average room rate was estimated to be $232, a 14.9 per cent increase, while revenue per available room grew 2.8 per cent to hit $187. Mid-tier hotels accounted for the biggest increases in both cases, up 11.7 per cent and 0.9 per cent respectively, compared with other tiers such as luxury, upscale and economy. The average hotel occupancy rate was 81 per cent in August, a 9.5 percentage point fall from a year earlier.
- The Business Times, P14 (See also Straits Times, B8, “Tourist Figures Slip for 3rd Month”)
Firms can now Borrow more from Abroad(New Delhi) Firms working to improve dilapidated roads, gas, ports and other sectors have found it much harder to raise funds at home as the central bank has aggressively tightened monetary policy to battle inflation at 13-year highs. The finance ministry said that it was changing its external commercial borrowing policy 'to keep it in tune with the evolving macroeconomic situation', a reference to the difficult borrowing environment. Under its five-year economic plan to 2012, the government is aiming to draw US$500 billion in infrastructure investments to attain average growth of 9 per cent annually. An inflow of funds could also help boost the rupee, which is riding at two-year lows against the US dollar as risk-averse foreign investors dump Indian shares amid economic turmoil sweeping the globe, analysts say.
- The Business Times, P18

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