DAILY MARKET UPDATES 20th October 2008

Parkway Centre up for sale
Parkway Centre, one of the few developments up for collective sale in recent months amidst the financial crisis. Sole marketing agent JLL said the owners of the 99-year leasehold block in Marine Parade expect a price of around $160 million - $1,000 per sq ft per plot ratio, representing a premium of 40 to 50 per cent over an individual sale. The buyer could build an all-retail project or an office-cum-retail complex of 157,625 sq ft of gross floor area, subject to approval. The 13-storey building, with 72 years left on its lease, has 110 units, of which three are shops and the rest offices. A firm linked to Hong Kong-listed Far East Holdings International, which developed the former Tang Dynasty City in Jurong, owns 40 per cent of the building. The sale tender closes Nov 19 08.
- The Straits Times, B17
Earnings spotlight on Reits, Keppel
Reits, make up nearly one-third of the 16 companies that are set to release their results for third quarter reporting with office trust K-Reit Asia’s results due out later today, followed by CapitaMall Trust tomorrow, Ascott Residence Trust and Mapletree Logistics Trust on Wednesday and CapitaCommercial Trust on Thursday. In the last few weeks, they have regained the lost favour with market watchers pointing to their falling prices and rising yields as the key selling point. Against growing economic uncertainty, analysts say that Reits have an advantage over property developers as they are still expected to derive stable, visible and recurring income. However, falling rentals, will take some shine off the sector. Meanwhile, debt refinancing remains a key issue with nearly $4 billion worth of Singapore Reit debt expiring next year.
- The Business Times, P5
Property firms may feel squeeze as banks turn coy
According to the OCBC, the proportion of bank loans to the sector has been reduced to 17.9 per cent in August, down from 18.1 per cent in June. Financial data on over 30 developers from DMG & Partners Securities shows net gearing levels from a range of negative 0.1x to 3.2x. Expressing net debt as a proportion of shareholders' equity, the higher the net gearing ratio, the more debt a firm has comparatively. Highly-geared companies may face more covenants from banks, or get charged higher interest rates. Another critical indicator is the size of short-term debt and the amount of cash available to cover it. Some property developers have more breathing space when it comes to short-term loans. A third factor to look at is the amount of proceeds going to developers in the near future. The OCBC report also noted, with strong property sales in 2007 and progressive recognition of profits from sold projects, 'developers are financially stronger to weather the storm'. DMG & Partners' list also highlights a trend: smaller property developers are more likely to have higher net gearing ratios. This ratio is just around 0.5 for bigger players such as Keppel Land and City Developments. For CapitaLand, net gearing is 0.43x if capital from recent property divestments is included in the end-June results. Smaller companies holding more development properties would hence benefit less from rising markets, because these sites can be reported only at the lower figure of cost or net realisable value.
- The Business Times, P2
(See attached, “Developer Ratios”)
Finding your dream condo online with Virtualhomes
House hunting has become easier with the launch of Virtualhomes, a new search engine for local condominium developments. Jointly developed by ST701 and Knight Frank, it plays host to information on more than 2,500 properties and even includes analytical functions to allow users to get information on surrounding amenities such as schools, shopping malls and transport networks. Surfers can also get virtual walkthroughs of the units before they make an actual visit. For more information – www.virtualhomes.sg
- The Business Times, P31
Elderly, retrenched, jobless? Marina IR wants you
The integrated resort started hiring of rank-and-file operations staff such as housekeepers, security guards, waiters, technicians and cleaners. With the resort opening at the end of next year with 10,000 workers of all levels on its payroll, this round of recruitment of operations staff alone represents the first time an employer here has hired on this scale. To prepare them for jobs in the field, Marina Bay Sands is partnering the WDA and the NTUC Employment and Employability Institute (e2i). WDA and e2i will run outreach programmes with briefings on the jobs available to the target audience. Even those who eventually do not make the cut for a job at Marina Bay Sands will be helped in hunting for jobs elsewhere in other tourism or service companies. The aim, said Mr Zee, is to train as many Singaporeans as possible to take advantage of the 60,000 job openings that are expected in the tourism sector. To this end, e2i and WDA will tap the $360 million kitty under the Tourism Talent (TOTAL) Plan launched a year ago to prepare Singaporeans to meet job requirements.
- The Straits Times, A1
S'pore companies in top value creating firms list
Singapore Exchange-listed companies have shown up on the radar as among top value creators in South-east Asia. Twenty-one of them made the league table of the top 50 South-east Asian companies for total shareholder return (TSR) over the past five years, driven by capital gains and cashflow yields. The Boston Consulting Group ranked 184 companies listed on the primary exchanges of Singapore, Indonesia, Malaysia and Thailand. Sixty-one such companies are listed in Singapore, 55 in Malaysia, 35 in Indonesia and 33 in Thailand. On average, a Singapore-listed company had a TSR of 36 per cent over the past five years, versus the global average of 17 per cent for the top 650 companies in the world and the South-east Asian average of 32 per cent. Blue chips like Singapore Exchange (SGX), Singapore Petroleum Co (SPC), SembCorp Industries, Keppel Corporation, Jardine Cycle and Carriage and CapitaLand earned spots in the top 50.
- The Business Times, P8
World summit to fix financial system
British Prime Minister is proposing radical changes to the global capitalist system, including a cross-border mechanism to monitor the world's 30 biggest financial institutions. Mr Bush said that any plan to rethink financial mechanisms should 'preserve the foundations of democratic capitalism' and include 'a commitment to free markets, free enterprise and free trade'. President Sarkozy, said hedge funds and tax havens cannot continue to operate as they have in the past; financial institutions cannot continue without supervisory control. South Korea joined worldwide efforts to shore up banks and markets, pledging US$130 billion. In the Middle East, the United Arab Emirates was reported to be planning to inject 70 billion dirhams (S$28 billion) into long-term bank deposits. In Britain, Finance Minister said the government would have to borrow more to fund public spending to generate growth and employment. Dutch financial group ING is in talks with the Dutch government about a state-backed cash injection estimated to be worth up to ¥9 billion (S$17.9 billion). Governments around the world have so far pledged about US$3.2 trillion in schemes that guarantee bank deposits, bank-to-bank lending, and taking stakes in banks to shore up their capital.
- The Straits Times, B17
China budget hotels: The inn thing?
The U-Inn Hotels chain, is opening its first budget hotel here before the end of the year. Some 30 more are coming up. Operators are already registering higher than usual fourth-quarter bookings and are aggressively opening more rooms across the country. GreenTree Inns, a major player in the sector with 113 hotels operational, plans to add 40 more by the end of the year. And even when they do, the inns - typically charging about 180 yuan (S$39) per night - are looking to profit from it, picking up bargain properties for development and welcoming weary business travellers on tighter budgets. 92 per cent of budget hotel guests here are Chinese and the bulk of them are lower to middle management executives on work trips. From 166 hotels in 2004, there were as many as 2,000 by the end of last year. The increase between 2006 and last year was 125 per cent. Most of these budget hotels, especially those belonging to major chains, offer clean rooms, clean sheets, en-suite shower facilities and very often, free broadband connection. Last year, Chinese tourists generated US$781.9 billion (S$1.155 trillion), nearly 20 times compared to 2000.
- The Straits Times, A8
S Korea guaranteeing banks' foreign debts
The government said that it will provide up to US$100 billion to secure banks' maturing foreign currency debt for three years on loans taken out from today until June 30 next year. The government and the Bank of Korea will also provide additional liquidity equivalent to US$30 billion to the banking sector by utilising foreign exchange reserves. South Korean banks' foreign debt reaching maturity at the end of June 2009 is estimated at about US$80 billion, the statement said.
- The Business Times, P2
Indian hotels start feeling the pinch
According to HVS International, a global hospitality consulting firm, almost all the major Indian hotel markets - Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore - have witnessed a sharp fall in occupancies with Delhi registering an 8 per cent dip during the April-September period this year over the same period last year. Though tariffs have not yet been slashed - as most hotels are still assessing the inflationary market - they are offering corporate discounts and better deals to keep the clients hooked. In some cases, corporate discounts are as high as 40 to 50 per cent. Indian hotels command top dollar rates and are one of the most highly-priced in the world. For instance, a standard five-star hotel room in any of the Indian metros cost in the range of 14,000 to 17,000 rupees (S$425-515). Compare this to Singapore, Thailand or Malaysia, where a similar room can be had for around 10,000-12,000 rupees.
- The Business Times, P20