DAILY MARKET UPDATES 16th October 2008

YTL launches Sandy Island villas on Sentosa Cove
Ultra-high net worth individuals with at least $13.9 million to spare will now have a new piece of luxury to own - a Sandy Island villa on Sentosa Cove - after Malaysia's YTL Group launched its 18 waterfront villas here yesterday. Three villas have been sold, and the highest price registered stands at $2,100 psf. The 99-year leasehold properties have built-up areas ranging from 7,500 to 9,200 sq ft. According to Savills, there remain cash-rich individuals who have not been affected by the financial turmoil. Apart from locals, overseas individuals have also shown interest in the villas. The financial turmoil has caused some investors to feel more secure parking their wealth in properties instead of banks. YTL said that Singapore is an address that cannot be ignored and the Chinese, Indians and Southeast Asians would love to invest in a place like Singapore.
- The Business Times, P30
YTL launches posh villas in Sentosa Cove
YTL Corp is launching the sale of its 18 posh houses in Sentosa Cove. The Sandy Island villas all have five bedrooms and boast master suites that occupy the entire second floor as well as a swimming pool, private berth for a 12-metre boat, basement garages big enough for two luxury cars and passenger lifts. They are designed by Italian architect Claudio Silvestrin, acclaimed for such commissions as the 26 Giorgio Armani flagship stores. Prices start at $13.9 million and go up to $26 million. This works out at $2,000 to $2,600 per square foot. It has already sold three of the 18 houses at prices ranging from $13.9 million to $18 million to a good mix of local and foreign buyers.
- The Straits Times, B19
Banks sound, system working well: Tharman
Finance Minister Tharman Shanmugaratnam said that the Government has been vigilant in making sure that Singapore's financial system continues to work well. As long as it continues to function in an orderly manner, the economy can go through the crisis 'without too much damage'. Banks here are sound because they have not faced the two big problems hitting others worldwide: a lack of capital and a lack of liquidity stemming from frozen wholesale funding markets, said Mr Tharman. Banks in Singapore tend to lend money from the deposits they collect instead of relying on borrowings from other institutions, or wholesale funds, which could leave the banks in a liquidity crisis.
- The Straits Times, A1
70% of Danga Island Villas snapped up
Nearly 70 per cent of the luxury waterfront villas on Danga Island, located within Iskandar Malaysia, have been taken up by buyers from all over the world even though the project will only be launched in November. The Danga Island Villas managed to secure RM230 million (S$105 million) sales at the Cityscape international property show in Dubai last week. The 152 villas, which come complete with private berths for yachts, are priced between RM4 million and RM15 million each. Of the 70 per cent Danga Island Villas units sold to date, Mr Lim said 27 per cent of the buyers were Johoreans, 28 per cent from those living in Kuala Lumpur and Penang and 6 per cent from Sabah and Sarawak. Buyers from Middle East countries, India, Pakistan, Canada and Spain accounted for 38 per cent, 5 per cent from Singapore and 2 per cent from Hong Kong.
- The Business Times, P30
Parkway Centre for sale for about $1,000 psf ppr
Parkway Centre, which is controlled by Hong Kong-listed Far East Holdings International, has been put up for sale with an indicative price of about $160 million. This works out to about $1,000 per square foot per plot ratio, around 15 per cent higher than the $865 psf ppr for Katong Mall, which was sold in July. Jones Lang LaSalle (JLL) is marketing the site. The 99-year leasehold Parkway Centre has three retail shop units and 107 office units. JLL said that the retail rental is $25-30 psf per month and the office rental, $4-5 psf per month. The 18,665 sq ft site is zoned for commercial use and has a gross plot ratio of up to 3.2. Based on the Written Permission dated Nov 21, 1985, it has the potential to be redeveloped into an office-cum-retail development with a gross floor area of up to 157,625 sq ft.
- The Business Times, P31
Flood of new homes but Sept sales up just 18%
Developers quadrupled the number of new homes for sale last month, but units sold rose only 18 per cent from August. The number of units sold recovered slightly to 376 last month from 320 in August. A total of 767 new units were put up for sale - including 258 in the core central region (CCR) where sentiment is weakest. The region accounted for 34 per cent of units launched last month but only 19 per cent of sales. Last month also saw prices ease slightly in areas such as Bukit Timah and Newton. CBRE said that some units at Madison Residences and Floridian along Bukit Timah Road were sold at median prices of $1,801 psf and $1,443 psf - 10 per cent lower than a year ago. Viva in Thomson Road and Park Infinia in Wee Nam Road achieved $1,555 psf and $1,501 psf - about 5 per cent less than comparable projects early this year, CBRE noted. But many developers are holding prices firm. There is still no broad-based decline in home prices based on the September sales, said CBRE. Sales volume last month was driven mostly by new launches such as Concourse Skyline (68 units sold), The Peak At Balmeg (47), Traselveo (41), Viva (19) and Mulberry Tree (13). Most of the units launched and sold were in the rest of central region (RCR). Analysts said that buyers are looking at mid-range private properties and mass-market homes. The RCR, where most mid-tier private homes are located, accounted for 48 per cent of launches and 60 per cent of sales last month. Colliers expects prices of high-end and luxury homes to slide by up to 5 per cent in Q4, prices of mid-tier homes to fall up to 3 per cent and prices of mass-market homes to hold firm or weaken less than 2 per cent in Q4.
- The Business Times, P3
Private home sales set to stay subdued
Developers sold 376 private homes last month, up from 325 in August but down from 902 in July, according to URA. This puts private home sales in the first three quarters at 3,890 units, compared with 14,811 units for last year. CBRE expects a further fall in overall home prices of 2-4 per cent in the last quarter. Colliers said supply will weigh on prices as the stock of unsold units is accumulating as sales fail to keep pace with launches. There was a take-up rate of 31 per cent last month with an estimated 234 out of 767 launched units sold. There were no sales above $4,000 psf, compared with three in the previous quarter. Mid-tier projects saw the most sales last month. Out of the 100 launched units, 68 units at the 360-unit Concourse Skyline were sold at prices ranging from $1,272 psf to $1,871 psf. Buyers picked up 47 out of 90 launched units at the 180-unit The Peak @ Balmeg, paying between $854 psf to $1,147 psf for the project. At Tresalveo, buyers bought 41 out of 60 launched units of the 176-unit development near Jalan Pemimpin for $902 psf - $1,045 psf. Other new releases include Far East's 99-year leasehold condo in Marine Parade called Silversea, where 11 units were sold at a median price of $1,400 psf. Support from HDB upgraders will still be evident since the HDB resale market is going strong, said CBRE. Other potential buyers would prefer to wait.
- The Straits Times, B19
UK fund house sets up shop here
British fund house Threadneedle has opened an office in Singapore and registered 40 funds here. The financial market maelstrom has not deterred the London-based fund manager, which handles over US$110 billion (S$162 billion) of assets, from its expansion drive in Asia, where many of its clients are based. Threadneedle, one of Europe's largest asset managers, currently manages US$6 billion of assets from Asian clients, and is looking to use the region's two private banking hubs - Singapore and Hong Kong - to expand its distribution of funds. Threadneedle has not been hit by many investor redemptions as the majority of its investors are institutions that are better able to sit out the roller-coaster ride in stock markets. Private banking clients are also starting to look at emerging markets funds, noted Threadneedle.
- The Straits Times, B17
S-E Asia to set up multi-billion dollar fund
South-east Asian nations, backed by Japan, South Korea, China and the World Bank, joined in the global financial rescue effort yesterday, agreeing to create a multi-billion-dollar fund to buy bad debt and help banks. The South-east Asian fund plan, due to be set up with a US$10 billion World Bank backing, suggested the region's officials did not want to take any chances.
- The Business Times, P2
US$2.4 billion project hits funding snag
A planned US$2.4 billion petrochemical investment on Jurong Island - Jurong Aromatics Corporation (JAC) - had earlier indicated that it would start construction of its aromatics complex by year-end. But given the current economic and financial climate across the world, some delays are expected for the conclusion of the project financing. JAC's latest financing hitch means that construction of the aromatics complex will now have been delayed by a year at least. Construction here of two other giant petrochemical complexes of Shell (US$3 billion) and ExxonMobil (US$5 billion-plus) remains on track but sources said there are minor hitches to other projects there. The announced mega oil/ chemicals projects here - including the $700 billion first phase of Jurong Rock Cavern for underground oil storage - have not been adversely hit by the global downturn so far.
- The Business Times, P1
Global slump fears begin to take hold
A global recession, perhaps the deepest one in decades, may be unavoidable. Those fears were fanned when a top US central banker said that the United States 'appears to be in a recession'. There are also growing fears that Japan and much of Europe are heading for a spell of economic stagnation or recession. Only a handful of countries, including New Zealand, Ireland and Singapore, have so far officially slipped into recession. Singapore stocks fell 3.24 per cent, Seoul slid 2.0 per cent and London closed down 7.2 per cent.
- The Straits Times, P1
Exuberance over, markets retreat to red
After two days of cheering government measures to pump liquidity into credit markets, the reality of a global recession is now setting in. The most obvious evidence is the slashing of earnings expectations for companies as slower growth looms. No industry seems immune from the downturn. On Wall Street, the Dow Jones Industrial Average retreated by 0.8 per cent after Monday's record gains while the Nasdaq Composite Index, which tracks technology stocks, fell by 3.5 per cent. Locally, blue chips buckled under profit-taking, driving down the benchmark Straits Times Index (STI) by 68.92 points or 3.24 per cent to close at 2,059.39.
- The Straits Times, B17
UK housing prices may decline further
UK house prices may fall another 15 per cent by the end of 2009 as values slide back to 2003 levels. The slump will leave five million properties, or 24 per cent of the private-housing market, with a lower value than the purchase price, Knight Frank LLP said. Average prices won't recover to last year's peak until 2015. Lenders approved 32,000 loans for house purchases in August, the least since comparable data began nine years ago, the Bank of England said. The revival in prices will be led by luxury properties in central London, where values may get back to last year's peak by 2012. Development land values may slump 15 per cent next year after plunging 33 per cent from their peak already, said Knight Frank.
- The Business Times, P29
UK commercial property returns fall
Commercial property returns in the UK fell in the 12 months to Sept 30 at the fastest rate in at least 21 years as price declines accelerated. The annualised loss on investments in offices, shops and warehouses was 18 per cent. September's 2.4 per cent loss was the worst monthly return this year. Rents and capital values dropped after banks granted fewer loans to investors as the subprime mortgages market collapsed. Demand for commercial real estate was also crimped by job cuts in the financial-services industry.
- The Business Times, P29
Sands may spin Macau retail into property fund
Las Vegas Sands Corp might spin off billions of dollars of Macau retail assets into a property fund. The company, which runs the giant Venetian Macao casino and is building more hotels and casinos in the territory, floated the idea of selling its shops into a listed property trust a couple of years ago. But with stock markets tanking in the last year, hitting real estate investment trusts (Reits) hard, Las Vegas Sands is now considering packaging the property into a fund for institutional investors.
- The Business Times, P29
Retail sales hold up in Aug, but is expected to slow
Singapore’s retail sales continued to hold up in August, but is expected to ease due to the economic slowdown and tightening credit conditions. Nominal retail sales went up 4.2 per cent in August, largely due to higher prices. Excluding the price effect, the volume of retail sales remained unchanged. The only two categories that saw contraction in sales were motor vehicles and recreational goods.
- The Business Times, P10
(also see The Straits Times, B20, “Retail spending down for 3rd straight quarter”)
Employers reducing hiring in Q4; but few retrenching: survey
The financial crisis may be forcing many employers to scale back on recruitment plans, but only a handful of them plan to lay off staff in the forth quarter. Among 800 top employment decision makers polled here by leading executive recruitment firm Hudson, 37 per cent in key business sectors forecast increased hiring in Q4 2008, down from 43 per cent in Q3 and 57 per cent year-on-year. The majority - 59 per cent - said that hiring will remain steady, while just 4 per cent expect headcount to be cut. But the survey was conducted before the latest events in global financial markets, which may have affected the results. Manufacturing was the only sector to record a rise in hiring expectations overall. In the banking and financial services sector, 34 per cent of respondents plan to increase hiring, down from 43 per cent in Q3. 64 per cent of respondents expect their company's performance to be 'good' next year. Singapore has the second-highest proportion of respondents reporting higher stress levels.
- The Business Times, P9
RBI reduces cash reserve ratio, will provide funds for banks
India cut the amount of deposits lenders need to set aside as reserves and said that it will provide funds for banks to tackle a global credit crunch that threatens to plunge the world into a recession. The Reserve Bank of India (RBI) reduced its cash reserve ratio to 6.5 per cent from 7.5 per cent, the second cut in a week. The move will add 400 billion rupees (S$12.2 billion) into the financial system.
- The Business Times, P13
Seoul says economy slowing; won takes a beating
South Korea's finance minister offered a grim assessment of the economy yesterday, saying it would struggle to grow 4 per cent this year in the face of the global financial crisis. The currency fell 2.4 per cent against the US dollar yesterday.
- The Business Times, P11