DAILY MARKET UPDATES 26th August 2008

Sharp fall in property prices unlikely
According to DTZ’s latest research report, Singapore’s property market presents plenty of buying opportunities for institutional investors. While the growth in prices may slow, there is unlikely to be a repricing. The Government's measures to boost Singapore's population could prop up demand for property and support prices. Sellers have become more realistic and lowered their expectations and more investors are coming back to look at properties that may have previously been overpriced but are now open to negotiation. 12% of the people intend to sell their properties in Singapore soon, while fewer than 5% plan to buy properties here. Growth funds and some opportunistic investors are pulling out of Singapore market, at a time when owners - including banks, foreign firms and opportunistic funds - are becoming more willing to sell. There is an increasing number of buying opportunities in gateway markets such as Singapore, Hong Kong and Tokyo. Interest in Singapore properties remains high, however, especially in the logistics and industrial market but the residential sector is likely to turn in a weak performance in the investment market this year. While repricing is not an apparent risk in Singapore's property market, the Asia-Pacific region is facing an average repricing of 25 to 100 basis points, or 0.25% to 1%.
- The Straits Times, B21 (See attached graph “26 Aug DTZ Report.jpg”)
Property subsales – who wins and who loses
An analysis of caveats by Savillis Singapore shows that 97% of those who have sold private apts and condos in the subsale market in the first 7 months of this year have made profits. Average gain per unit came to $417,563 or 36.5%. On average, those who bought their units in 2004 and sold them this year made the biggest gain, averaging nearly $692,000. The smallest gain of $175,600 was by those who bought units this year. The profit and loss does not take into account stamp duty and other expenses. Citylights (63), Varsity Park Condo (47) and The Sail @ Marina (45) had the most subsale. Savillis expects subsales to maintain at current levels of about 150 units a month.
- The Business Times, P1 (See attached “26 Aug propertysubsales.jpg”)
Subsale property gains top out at $4.2m
The biggest profit in absolute dollar terms from a subsale deal in the first 7 months was $4.2 million, reaped for a 22nd-floor unit at The Grange. Purchase price paid to the developer was $6.2 million in Sep 2005. On the average, The Grange has the most profitable subsale deals this year with 13 units sold, generating an average profit of slightly over $2 million per unit, 52% on percentage term. Biggest loss was $463,400 for a penthouse unit at The Cosmopolitan, which was sold for $2.3 million, against the $2.8 million purchase price in July 07. Analysts note that given the current market sentiment, profits from subsales can be expected to shrink in the days ahead, or there may be even more loss cases, particularly for those who bought at the peak of the market in 1H 2007. Demand for rental properties should increase by early 2009 as the Marina Bay Sands resort boosts its employment drive. A developer commented that with the diversification of different sellers, with varying financial strengths and abilities to hold, and similarly, of buyers is a very good sign for the market.
- The Business Times, P2 (See “26 Aug Chart toppers.jpg”)
S’pore among top private equity markets in SEA
South-East Asia is emerging as an attractive investment destination for private equity and Singapore offers numerous opportunities in the high-tech manufacturing, oil engineering, healthcare and digital media industries, according to a Deloitte Consulting study. The report, Hidden Treasures – Private equity Business in Asean, named Vietnam, Singapore and Malaysia as the region’s most active private equity markets in the last 18 months. Figures from Asia Private Equity Research show that investments reached US$7.3 billion for 1007 and H1 2008.
- The Business Times, P9
US hospital bed-maker opens R&D centre in Yishun
US-based Hill-Rom, one of the world's largest makers of hospital beds has opened a research and development (R&D) facility in Singapore, its first in Asia-Pacific. It plans to invest S$20 million to S$30 million in the 11,000 sq ft facility in Yishun over the next 5 years and will lift its current staff of 17 engineers to a head count of about 60. The centre already has 'four to five active projects' focused on developing electronic components and embedded software in hospital beds which cost ranges from S$30,000 to S$100,000. Hill-Rom, which employs 6,500 people around the world, has an innovation centre in Indiana, where it is based, and two R&D sites in France.
- The Straits Times, B21
Lian Beng wins coveted Ritz-Carlton Residences job
Lian Beng Group has won a $99.5 million contract to build the Ritz-Carlton Residences. The firm has set up a new unit, Millennium International Builders, which will build the project and focus on expanding into the luxury property market. The 32-storey project, which offers 3- and 4-bedroom units and 2 penthouses, has already sold some units - at more than $5,000 psf last year. Construction will begin this quarter and due for completion by end of 2010.
- The Straits Times, B20
$500m makeover for T1
27-year-old Changi Airport will be having a $500 million makeover which will be completed in 2011. It will add another 18,000 sq m of floor space and gird the facility. Takenaka Corporation will be doing the upgrading. T1's new look will have higher ceilings and glass walls to give arriving passengers a view of the landscaping outside. 15 more shops and food and beverage outlets will be added, the departure and seating areas for waiting passengers will be enlarged and the public viewing gallery will be designed for better views of the departure hall and runways. CAAS said the renovation will be done in phases and at night, or during off-peak periods to avoid inconveniencing passengers and the airlines.
- The Straits Times, B3
UAE mortgage market seen growing 220% in next 3 years
The mortgage market of UAE is projected to grow 220% to 64 million dirhams (S$24.7billion) in the next 3 years (Gulf News). The UAE is viewed by global investors as the best market for capital gains growth, and has been identified as the only Gulf country to witness an increase in consumer confidence for the 2nd half of this year. This can be attributed to the UAE’s move to allow foreigners to invest in local property.
- The Straits Times, P30
Vendors drop prices of Asia-Pac commercial properties
Commercial properties in the Asia-Pacific region have been priced down by 25-100 basis points in the past 3-4 months, said DTZ. The repricing has been greater in some markets such as Tokyo and Australian cities. In Singapore, it is hard to pin a number to the drop due to low number of transactions. But some sellers have marked down their assets about 10%. Singapore is one of the “gateway cities’ that international investors will look at when increasing their exposure in Asia-Pacific region.
- The Business Times, P30 (See attached “26 Aug – Diverging sentiment.jpg”)