DAILY MARKET UPDATES 30th October 2008

German fund pays $63m for building
A German fund manager has just finalised the $63 million purchase of an industrial building in Changi Business Park - Applied Materials Building. Hamburg-based Union Investment Real Estate Asia Pacific made the deal as part of its strategy to diversify its portfolio in Singapore. Colliers International brokered the acquisition. There were other bidders for the property but Union Investment's offer was the most attractive. Union Investment bought the 198,000 sq ft property from Applied Materials SEA. The building, with a 30-year plus 30-year leasehold tenure, will be placed in the firm's Unilmmo Global fund. For the next 18 months, Union Investment will lease the building back to Applied Materials. The building has six other tenants, including the Discovery Channel. Average rents are around $2.20 to $2.80 psf - below Changi Business Park's rents of $4 to $4.50 psf. Union Investment also owns VisionCrest Commercial and The House of Tan Yeok Nee in Orchard Road. It bought both for a total of $260 million. The fund is still looking for more properties but is more cautious now.
- The Straits Times, B21
(also see The Business Times, P30, “Union Investment buys $63m building”)
2 trusts ride out storms in third quarter
Two key property trusts - CDL Hospitality Trusts and MP Reit - put up favourable third-quarter results. CDL Hospitality Trusts reported that distribution per stapled security for the third quarter was 2.93 cents, up 24 per cent from the same period last year. Gross revenue grew 21 per cent to $29.09 million, while net property income rose 20.7 per cent to $27.28 million. Macquarie Prime (MP) Reit said it has achieved a distribution per unit for the third quarter of 1.78 cents, up 15.6 per cent from 1.54 cents last year. Gross revenue rose 24.8 per cent to $32.6 million, due to higher rental renewal rates, new leases and revenue from overseas properties. Net property income rose 21.7 per cent to $23.6 million. Average rental renewal rates for MP Reit's office space in Ngee Ann City and Wisma Atria grew 138 per cent.
-The Straits Times, B6
New serviced homes brand for Frasers Hospitality soon
Frasers Hospitality is looking to start a new serviced residence brand and will announce this soon. In times of a slowing economy, business actually picks up for serviced residences because MNCs start to look for more flexible housing packages for their staff. Already, he says that Frasers Hospitality has seen its long term stay business in Singapore (averaging about six months) increase from about 50 per cent previously to about 65 per cent in 2008 to date. When the brand is launched sometime next year, rooms are expected to be smaller. Frasers Centrepoint is considering turning unsold properties such as Martin Place Residences into high-end serviced apartments. As at September, Frasers Centrepoint was reported to have launched and sold about 30 units at its 302-unit Martin Place Residences, with apartments going for about $1,800 psf on average.
-The Business Times, P9
Prospects for region remain bright
Singapore companies, which have been pouring billions of dollars in investments into South-east Asia, should not be distracted by the financial crisis or slowdown as the region's fundamentals will continue to present opportunities for growth, according International Enterprise Singapore. The spread of urbanisation across South-east Asia is likely to continue to stimulate demand for infrastructure and property development. The projection is that by 2025, over half - 57 per cent - of the region's population of 578 million currently will be urbanised, up from 46 per cent now.
-The Business Times, P18
Marina IR not likely to open fully in end-'09
The integrated resort (IR) at Marina Bay is unlikely to be fully open at the end of next year, sources have said. Foundation works was delayed by three to four months, and then a shortage of labour and the rising cost of building materials also created setbacks. Sources confirm that it is 'several months' behind schedule and that, even if the physical structure can be ready by then, it will be 'impossible' for all its facilities to be fully operational. The free-fall in the stock value of the resort's parent company Las Vegas Sands Corp has also raised questions about the fate of the US$4.5 billion (S$6.7 billion) project here.
- The Straits Times, A1
Sentosa IR to delay parts of project
Four hotels, Universal Studios and the casino of the Sentosa integrated resort are set to open as scheduled in the first quarter of 2010. But sources told The Straits Times that Resorts World at Sentosa is negotiating with the Government to defer the opening of the remaining facilities in the $6 billion resort. The setback has arisen out of a pressing need to find storage space for the equipment for the 14 attractions in the Universal Studios theme park. To create space on-site, the resort has had to turn one of its venues into a store and, while the venue is used this way, construction has to be put on the backburner. The project is 'on track' for a 'soft opening' in 2010.
- The Straits Times, A4
China, Korea face housing market bust
China and South Korea have moved to prop up their frazzled housing markets but probably need to do more to avoid major price slides. A share price collapse this week for Chinese property developers suggests that many investors believe a housing market bust is on the cards, despite a policy U-turn. Last week Beijing unveiled cuts in taxes, mortgages and down payments on homes to breathe life into a property industry that accounts for about 10 per cent of GDP. In South Korea, where around half the country's personal wealth is tied up in property, the government pledged five trillion won (S$5.3 billion) last week to buy unsold homes and land from developers to prevent mass bankruptcies in the industry. An interest rate cut of 75 basis points followed on Monday as policy makers tried to keep the global financial storm at bay.
- The Business Times, P28
What MAS has done and is considering
Under our regulatory regime for the sale of investment products, financial institutions and their representatives have to fully comply with MAS' requirements. Given current market conditions, we have instructed the chief executive officers of all financial institutions to conduct a thorough review of their processes and procedures for their sales and marketing activities. If financial institutions fall short of the required standards, MAS will take appropriate action. MAS has announced that we are conducting formal inquiries into potential breaches of the law, inadequate internal controls by financial institutions that sold structured products linked to Lehman Brothers, and poor sales practices by their representatives.
- Angelina Fernandez (Ms), Director (Communications), MAS
- The Straits Times, A25 – ST Forum
Global credit crunch squeezes Jones Lang LaSalle earnings
Jones Lang LaSalle’s third quarter profit dropped as the worldwide credit shortage curtailed property purchases and added severance costs as the company fired employees. Net income declined to US$15 million from US$46.5 million a year earlier. Investment in UK shops, offices and warehouses has declined, down 17 per cent in Q3 as potential buyers found it more difficult to borrow money, Jones Lang said.
- The Business Times, P30
Asia shrugs off Wall St rally
A surge of nearly 900 points (10.9 percent) on Wall Street on Tuesday, and the second-largest point gain on record, failed to ignite bourses in Asia yesterday. They gave up early gains to close mostly flat as fears over a global economic slowdown continued to leave investors cautious, even as governments signalled they were going to cut interest rates to boost their economies. The only Asian market that performed well was Tokyo, where the benchmark Nikkei 225 index soared 7.74 per cent. Singapore was up 0.28 per cent yesterday.
- The Straits Times, A1
Credit crunch takes toll on smaller firms
Credit woes and corporate governance issues appear to be on the rise among small and mid-cap companies, as the financial upheaval continues. Analyst at DMG & Partners said that at times like these, the banks are quite cautious and may cut back on lending to small companies even if they are fundamentally sound. Head of OCBC Investment Research said that firms that are highly geared or have near term refinancing obligations are under pressure to secure credit lines and face higher interest costs. For the small-cap firms, these are viewed as being more vulnerable operationally.
- The Business Times, P2
Japan ready to calm markets, ease yen rise
Japan Prime Minister Taro Aso is expected to unveil today emergency measures that Japanese authorities are deploying to fight the global financial and economic crisis. This will almost certainly be followed tomorrow by a cut in the Bank of Japan's (BOJ) policy lending rate - the first in seven years - coupled, possibly, with foreign exchange market intervention. Tokyo's Nikkei 225 stock average rebounded 7.7 per cent or 589.98 points yesterday to 8,211.90 in expectation of an interest rate cut and the government's package of emergency measures. The package of measures are expected to centre on restoring stability to Japan's financial markets and institutions, however, with macro-economic supports in the form of tax cuts and public spending on infrastructure and other big-ticket government projects.
- The Business Times, P1
Singapore firms are zen over the yen
The latest currency to bring mayhem to the markets is the Japanese yen, which scored a 13-year high of 90.87 yen to the US dollar last week amid the unwinding of yen 'carry trades'. But the latest surge in the yen is likely to have a smaller impact on Singapore businesses, given the limited exposure that companies here have in the Japanese market. The big victims are the Japanese car importers, who say they are reeling from higher import costs.
- The Straits Times, A30
China gears up for potential net capital outflows
The State Administration of Foreign Exchange will tighten checks on cross-border capital flows through the services trade and cash transfers by individuals in and out of the country. China approved new foreign-exchange management rules in August, allowing the government to take necessary safeguarding and control measures to cope with an imbalance in international payments or economic crises. The nation is at risk of 'massive outflows' of capital if expectations for the yuan appreciation turn around. Growth in China's capital and financial account surplus slowed by 20 per cent in the first half of the year to US$71.9 billion from a year earlier.
- The Straits Times, A33
Jakarta's rupiah defence 'not enough'
Indonesia's latest moves to defend the plunging rupiah may not be enough to help boost the local currency's value, analysts say. The measures include government bond buyback plans and the requirement that all state-owned companies place US-dollar funds at home. The rupiah has plunged by more than 10 per cent against the greenback in the past week as overseas investors dumped emerging-market assets amid global liquidity crisis worries. The Jakarta Composite Index has plunged 61 per cent after touching a record high in January. Indonesian government bonds have dropped 17 per cent, according to HSBC Holdings, in the worst showing among 10 Asian nations. Overseas holdings of Indonesian bonds have declined 11 per cent to 94.91 trillion rupiah (S$13.3 billion) from a record in August.
- The Straits Times, B20
Lenders slap tight curbs on credit cards, credit lines
(Washington) After years of flooding Americans with credit card offers and sky-high credit lines, lenders are sharply curtailing both. The pullback is affecting even creditworthy consumers and threatens an already beleaguered banking industry with another wave of unprecedented losses. Lenders wrote off an estimated US$21 billion in bad credit card loans in the first half of 2008 as more borrowers defaulted on their payments. Currently, the total losses amount to 5.5 per cent of credit card debt outstanding, and could surpass the 7.9 per cent level reached after the technology bubble burst in 2001.
- The Business Times,P17
More layoffs in coming months
Announcements about job cuts are coming thick and fast as the financial crisis hits the real economy worldwide. Motorola said that it planned to cut thousands of jobs. Credit Suisse announced its plans to cut 500 jobs in its securities unit and some support functions. Whirlpool is eliminating about 5,000 jobs this year and next. It did not comment on the possibility of local layoffs. British energy giant BP, fresh from unveiling an 83 per cent jump in third-quarter net profits, said it is planning to cut more jobs than previously announced.
- The Straits Times, A7
Andrews Terrace
- New launch
- Waterfront living at 53 Andrews Terrace (Wak Hassan Drive)
- From $288 psf onwards
- 99-years leasehold w.e.f. 28 January 2008
- Expected TOP: 31 Mar 2009
- 14 units, 3-storey terrace houses with attics, private elevator, car porch, balcony and roof terrace
- Choice unit with private swimming pool
- Close proximity to Orchird Country Club, SAF Yacht Club, Sembawang Golf Course.
- Minutes away from Sembawang Park, Sembawang Beach
- Near choice schools and shopping-cum-entertainment hotspots like Northpoint, Sun Plaza, etc
- Developer: Fragrance Homes
- Marketing agnet: L2 Group
- The Business Times, P28 - Advertisement