DAILY MARKET UPDATES 9th September 2008

Size up home supply again
Last year, the Government announced the huge number of new homes in the supply pipline, to help keep soaring home prices in check. However the property market now is not as feverish as it was last year. Developers have adjusted to the cooling market sentiment by putting off sales. The Government should also adapt its calculation of supply figures to reflect these new conditions. The massive supply figure is now acting as a drag on the negative sentiment. A more accurate reflection of impending supply is to focus on units that have already begun to be built, as opposed to those still on the drawing board. Given the construction crunch and delayed launches, that would more than halve the supply figure. According to URA in July, the total supply of homes in the pipeline has jumped to 67,569. But a closer look at the data shows that construction has started on only 31,176 of these units. Figures under construction tend to stay more stable from quarter to quarter, unlike the total supply number. Apart from this, URA should also divulge how many units have had their scheduled completion dates pushed back, and to which years. This would throw light on the extent of delays in project completions, something the overall supply figure alone cannot communicate. Another useful measure would be to break down expected supply by location, completion year and construction status. The URA only provides the number of unsold units in each of three broad districts: the core central region, city-fringe areas and suburban locations. CBRE has already flagged a possible glut in the prime districts and in the East Coast, which have turned into major building sites after developers snapped up land there in the last two years. The problem is that CBRE's supply figures do not gel with the URA's. But unless the Government releases more relevant information - and property developers cooperate to boost transparency - the question of supply overhang will continue to hang over the market for some time.
- The Straits Times, P2
30 units sold at Martin No. 38
All 30 private preview units at SC Global's Martin No. 38 have been sold at better-than-expected prices. The company had said it was expecting around $2,000psf for the project but sales came in at $1,881 psf to $2,494 psf, or an average of $2,130 psf. That would make the flats around $2 million to $3.8 million. The developer sold about a third of the total 91 units, with about 60% to overseas buyers. The developer says there is no need for an official launch as it has sold out its preview units and has yet to decide on the launch of the second phase. A market watcher said there has been little change in prices of some other developments in the area, with a few even falling. Deals in the Robertson Quay area have been done at $1,130 to $1,840 psf this year although some Rivergate units sold for over $2,000 psf last year. A market watcher noted that high pricing works in a bullish market but in the weak market prevailing now, sales are likely to slow after the first 20 or 30 per cent is sold.
- The Straits Times, B19
OG buys Orchard serviced apartments from Ascott
OG has bought a block of serviced residences (88 units) that form part of its Orchard Point store for $100 million in cash from The Ascott Group. Ascott will continue to manage the residences for 15 years, with an option to renew the contract for another 10 years. The deal yields Ascott a gross gain of $43 million and works out to a price of about $1,530psf for the property, which has about 74 years left on its lease. Generally, property experts viewed the purchase favourably for OG. Serviced apartments are zoned for residential use, not hotel use, which could make it easier to convert.
- The Straits Times, B19
New UWC campus in Tampines hit by delay
Only part of the new UWC campus at Tampines is slated to open in 2010 as contractors would not be able to complete them on time as there are too many projects on hand. So the plan to take in 1,150 students from K1 through to Grade 11 on its 5.5ha Tampines Street 73 campus by August 2010 has been shelved. The campus will open in phases. Only the infant school for pupils from K1 to Grade 1, where the demand is greatest, will open in August 2010. Until then, the school's week-old interim campus in Ang Mo Kio will continue operating. Despite offering over 500 more places in both its campuses this year, UWC's waiting list has grown by 300 students since last year to 2,300. Recognising the increase in demand for places in international schools, the Government has stepped in to offer more land sites for up to four schools.
- The Straits Times, A8
Still hiring, but with far more caution
According to latest poll by US-nased Manpower (employment services firm), Singapore's job market in the final three months of the year is tipped to soften somewhat as the outlook for the economy grows dimmer. But compared with 32 other countries, Singapore - along with India and Taiwan - still offers job seekers the best employment prospects. India polled the highest net employment outlook for Q4: 43%. Singapore has the second highest (25%), followed by Taiwan (23 per cent). With the exception of the transportation & utilities sector, all other sectors in Singapore expect to increase headcount in Q4.
- The Business Times, P2
Asia toasts Fannie Mae, Freddie Mac bailout
Stock markets around the world rallied yesterday, following the US government's weekend bailout of Fannie Mae and Freddie Mac. Across most of Asia, stocks surged at the start of trading. In Singapore, the Straits Times Index jumped 4.8% - the biggest percentage gain since Aug 20, 2007. Stocks outside the financial sector were also boasted, including major exporters. Investors speculated that the latest bailout would help the broader US economy, supporting demand for commodities and imports.
- The Business Times, P1 (Also see The Straits Times, P1, Also see attached “9Sep_On The Rebound.jpg”)
50% of retail space leased at Fusionpolis
More than 50% of retail space at Fusionpolis has been taken up. The upcoming research and development (R&D) hotspot, comprising two towers and a podium in phase one, has around 183,000 sq ft of retail space. Tenants included Cold Storage and Fitness First. Rents for the retail space range from $4.50 to $12 psf, depending on how the units are used. Larger units also enjoy a lower psf rent. Frasers Hospitality will also be launching its brand of serviced apartments in Fusionopolis, comprising 50 work loft units. Phases 2A and 2B of the Fusionopolis are likely to be completed by 2010.
- The Business Times, P30
Singapore office occupancy costs 7th highest worldwide : survey
Grade A office space in Singapore was the 7th most expensive in the world, according to study by Colliers International. The average annual Grade A office gross rent here was US$125.06 ( SGD$179.297). Cities that were dearer included Hong Kong (US$213.68), London's West End (US$207.42) and Moscow (US$167.29). Singapore was the third most expensive location in the Asia-Pacific region, after Hong Kong and Tokyo. In terms of vacancy rates, Singapore at 7.5% in June 2008 ranked 13th in the Asia-Pacific, below the likes of Perth (0.3 per cent), Seoul (0.7 per cent) and Brisbane (1.2 per cent). Office investment held up in the Asia-Pacific but was down in Europe and North America.
- The Business Times, P30
Ramp-up warehouses offer more in rental returns
According to Colliers International, ramp-up warehouse facilities offer better investment returns as rents in Penjuru and Changi go for $1.30-$1.50 and $1.70-$1.80 psf per month respectively. Multi-storey warehouse facilities with cargo lifts (upper floors) in the same vicinity go for $1.00-$1.20 and $1.40-$1.60 respectively. Direct vehicular access to every floor in a ramp-up warehouse development effectively makes every floor comparable to a ground floor level unit. In a conventional multi- storey warehouse, upper- floor units command lower rents than ground-floor units because users have to load and unload by cargo lift. The rent differential can range from $0.20 to $0.50 psf per month depending on location.
- The Business Times, B30
Surge in Japan real estate companies filing for bankruptcy
The number of Japanese real estate companies filing for bankruptcy protection surged 23.5% in August from last year as banks choke off loans to the industry. The number of developers filing for bankruptcy protection reached 42 last month. Liabilities at failed real estate companies more than doubled from July to 438.97 billion yen (S$5.8 billion). Banks cut lending as growth in Japan's property market slowed and the collapse of the sub-prime market in the US kept potential buyers from making acquisitions. Japanese developers are also being squeezed by higher prices for steel and other raw materials used in construction, and by the government's revisions to building-approval regulations last June.
- The Business Times, P30

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