Property, financial boom drives growth in services

Property, financial boom drives growth in services

Overall turnover in the sector expands by 15.6 per cent in second quarter
By Josephine Tay

SINGAPORE’S services sector racked up a robust second quarter, thanks to the booming property and financial sectors.
Overall business receipts for the three months ended June 30 were up 15.6 per cent over the same period last year, according to the Department of Statistics.

Financial services, real estate and business services were among the sectors that enjoyed bumper growth but economists were not optimistic that such robust expansion will be sustainable.

Fortis Bank strategist Joseph Tan said: ‘The main question is how the sub-prime activity in the United States will affect the market. If it is risk-averse, we will be negatively affected if trading volume falls.’

Financial services led the way with a 35.6 per cent rise in turnover, thanks mainly to brisk business in banks, stock brokers, funds managers and investment advisors.

The related field of insurance rose 28.2 per cent. If the financial and insurance sector figures were stripped out of the overall picture, services industry growth in Singapore was still 10.5 per cent.

United Overseas Bank economist Alvin Liew believes, however, that those two sectors are still key to further strong expansion. ‘Growth without financial services remains rather strong, but because financial services registered strong growth, if it slows, the overall robust growth seen here might not be sustainable.’

Real estate, excluding developers, grew by 27.2 per cent, which, in turn, came on the back of robust 19.2 per cent first-quarter growth.

The bumper figures stemmed from the dramatic recovery in the housing market but experts are divided over whether the good times will roll for much longer.

Mr Liew feels real estate ‘can be expected to do well over the next 12 to 18 months’, while Mr Tan believes demand could dry up.

‘A lot of the positive vibes in the property markets have been driven by gains in the equity markets,’ he said.

‘If activity in the markets slow down, real estate activity could slow down too.

‘But there are two trends in the sector. Fundamental demographic demand, such as with the integrated resorts and inflow of migrants, will continue to drive demand over time. But cyclically, we can expect retardation of demand as speculative buying and positive sentiments slow.’

Leasing services, a related field, also enjoyed a good quarter, with receipts up 12.7 per cent, thanks mainly to more business for firms leasing land and water transport gear.

Education services were up 15.9 per cent while business services rose 15.6 per cent. This sector covers fields such as legal and architecture but it was the 36.8 per cent surge in market research and management consultancy firms that really gave the sector a boost.

Transport saw growth across all sectors reflecting the higher returns from freight as regional trade boomed. Receipts in storage and supporting services rose 12.4 per cent.

Economists expect the services sector to grow fairly strongly for the rest of this year and into 2008.
Source : Straits Times - 28 Aug 2007

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No more wait for ex-spouse’s CPF

No more wait for ex-spouse’s CPF
WOMEN who go through a divorce and are granted a share of their husband’s Central Provident Fund (CPF) monies will receive the funds immediately.
Previously, they had to wait until their husbands reached 55 and only after the Minimum Sums in their Retirement and Medisave Accounts were set aside.

The change in the CPF Act, passed yesterday, is meant to ensure a smooth and equitable division of CPF assets in divorce cases, Manpower Minister Ng Eng Hen said.

It also applies to husbands who are awarded a share of their former wives’ CPF monies.

But the immediate transfer applies only to spouses who are Singaporean or permanent residents and the funds will go into their CPF accounts.

The changes will also allow the former spouse to keep the matrimonial home, after the divorce. Should she choose to sell the house later, the amount her former husband took from his CPF savings to buy the house will be returned to his CPF account.

Dr Ng said the amendment gave the courts ‘the liberty to decide who gets what in a divorce’.

MPs who rose to speak on the issue were mostly supportive of the change.

Madam Halimah Yacob (Jurong GRC) said it would provide sounder protection for women and children in divorce proceedings.

But Mrs Josephine Teo (Bishan-Toa Payoh GRC) warned that newly divorced women could become targets of men who wished to cheat them of their newly acquired property.

More must be done, she said, to inform women of their financial obligations to their former husbands should they choose to sell the house.

Madam Ho Geok Choo (West Coast GRC) asked if it was appropriate to compel a member to transfer his CPF monies to his former spouse, hence neglecting his own retirement needs.

Dr Ng said it was up to the courts to decide how best to divide the CPF assets.

Source : Straits Times - 28 Aug 2007

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More ways to top up loved ones’ CPF accounts

More ways to top up loved ones’ CPF accounts

Top-up limit raised, more family members can benefit
By Sue-Ann Chia
THE Central Provident Fund (CPF) top-up scheme has been expanded so family members have more ways to take care of one another.
The top-up limit has been raised and CPF members can now inject funds into more family members’ accounts.

These were among the key changes to the CPF Act that were passed by Parliament yesterday.

Setting out the rationale for these changes, Manpower Minister Ng Eng Hen said that as the population ages, retirement needs will increase.

He stressed that the family remains the main source of financial support in old age.

To encourage families to help each other save, the top-up limit has been raised to the Minimum Sum level at the time the top-up is made, not at the time when the recipient turned 55.

Key changes to the CPF Act
CPF top-up scheme:

Under the previous Act, if a CPF member turned 55 in 1987, his family would only be able to top his account up until the sum of $30,000 - the 1987 Minimum Sum level. Now, they can top his account up until the sum of $99,600.

For the first time, CPF members can also top up the retirement accounts of their siblings.

Tax relief of up to $7,000 a year will be given for cash top-ups, if the sibling is aged 55 and above and earns not more than $2,000 a year.

Another first: Top-ups can also be made to the CPF Special Accounts of spouses and siblings younger than 55.

The recipient cannot withdraw the top-up amount as a lump sum but must use it to provide a steady stream of income during retirement.

If the recipient dies, the balance from the top-up sum will be returned to the donor.

Members can also use their CPF savings to top up their grandparents’ retirement accounts. Previously, only cash top-ups were allowed.

The changes will take effect from Oct 1, except for top-ups to members below the age of 55, which will take effect from Jan 1 next year.

Five MPs welcomed the changes.

Among them was Madam Ho Geok Choo (West Coast GRC), who said they would help Singaporeans take personal responsibility for the care of their loved ones in their sunset years.

But Mr Liang Eng Hwa (Holland-Bukit Timah GRC) wondered if more could be done to encourage such top-ups. He suggested a ‘T bonus’ as an incentive to topping up, and easing the rule that requires members to have 1.5 times the prevailing Minimum Sum before they can top up someone else’s account.

Dr Ng replied that the ’substantial number’ of one in four members aged 40 to 55 have hit this amount and can be donors.

He said he would ask the CPF Board to do more to encourage such top-ups by sending letters to people in this group to say:

”Look, you’ve crossed 1.5, we think you’ve settled your own retirement needs, do you want to transfer some of your funds to your family members?’

‘That’s more targeted,’ he said.
Source : Straits Times - 28 Aug 2007

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Revised en bloc law fixes imbalances in mixed estates

Revised en bloc law fixes imbalances in mixed estates

By Fiona Chan

HOME owners who live in mixed developments - which have both apartments and shops or offices - will now get a bigger say if their estates go en bloc.
This is thanks to a proposed law change which will require another layer of consent from an estate’s owners for a collective sale.

Consent is granted now if owners who hold at least 80 per cent of a development’s share values vote in favour of a sale. If a development is less than 10 years old, the requirement is 90 per cent.

But the upcoming change will add another condition to en bloc sales regardless of whether the estate is mixed or not: The owners who want to sell must also have units that make up at least 80 per cent of the development’s total area. Again, this is upped to 90 per cent if the estate is less than 10 years old.

This change was made to address the imbalance in share values in a mixed development. Share values are assigned when a unit is first sold, and help determine what each owner pays in maintenance fees and how many voting rights he has in an estate’s management.

Although share values are partly determined by unit size, owners of commercial units generally get more share values than home owners. For every one share value given to a home owner, an office owner in the same estate gets four and a shop owner, five.

This has led to complaints from residents in mixed developments who are reluctant to sell their estate en bloc but who may not have a choice.

The proposed change has itself been tweaked since March, when the Ministry of Law first considered a second layer of consent.

Its initial proposal was based on the total number of an estate’s units, rather than its total area. But after feedback from the public and experts, the ministry changed its mind.

Property consultants yesterday said the new rule will make things more equitable for home owners.

‘The original plan to go by number of units would have been unfair to owners of large units, because they would have paid more for their units but would have only one say,’ said Mr Karamjit Singh, executive director of property firm Credo Real Estate.

Mr Lui Seng Fatt, head of investments at Jones Lang LaSalle, warned that this new rule may make it harder for mixed developments to go en bloc. ‘Also, owners with a larger floor area may now have a bigger say, not only in voting but also in how to split the sale proceeds,’ he added.

But the change may not have much impact on the en bloc market - 90 per cent of deals done since last year were in purely residential estates, said Mr Nicholas Mak, director of research and consultancy at Knight Frank.
Source : Straits Times - 28 Aug 2007

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Rents, wages up but S’pore cheaper than HK, Tokyo

Rents, wages up but S’pore cheaper than HK, Tokyo

Also, it has qualities like liveability that economies in region cannot easily copy, says Lim Hng Kiang. But it has to keep an eye on costs
By Erica Tay, Economics Correspondent
EVEN though property costs and wages are on the rise, Singapore remains cheaper than global cities in the region such as Hong Kong and Tokyo, said Trade and Industry Minister Lim Hng Kiang.
Nevertheless, the Republic cannot afford to be complacent, said Mr Lim. ‘We have to maintain vigilance over our costs, as excessive cost increases will dampen our growth prospects,’ he said.

Mr Lim was speaking in Parliament yesterday in response to MPs’ concerns about the impact of rising business costs on Singapore’s economic competitiveness.

In response to questions on this issue from Mr Liang Eng Hwa (Holland-Bukit Timah GRC), Mrs Josephine Teo (Bishan-Toa Payoh GRC), Dr Muhammad Faishal Ibrahim (Marine Parade GRC) and Madam Halimah Yacob (Jurong GRC), he laid out proactive steps that the Government has taken to address supply constraints.

Also, citing as examples London and New York, which are thriving hubs despite their high costs, Mr Lim said ‘competitiveness is more than offering low costs alone’, but also about value creation. In this respect, Singapore has attributes that economies in the region cannot easily replicate, such as its livability.

Also Mr Lim pointed out that in the past three years, the consumer price index has increased at an annual rate of 1 per cent, while overall unit labour cost actually declined at an annual average rate of 2.2 per cent. ‘However, in recent quarters, we have seen increases in property prices and rentals, as well as wages,’ he noted.

He cited recent moves to release land for temporary office space as well as provide more public flats for rental.

The Ministry of National Development (MND) also released additional information on property prices and rents ‘to allow the public and businesses to make more informed decisions on property purchases and rentals’.

And the MND has been putting out an ample supply of land with more than 42,000 private residential units and 640,000 sq m of office space to be completed by 2010.

The Government is also looking at ways to help more Singaporeans such as older workers and women take advantage of the strong employment market and rejoin the workforce.

Despite media reports of ’sky-high’ office rentals, Mr Lim said although the median prime office rent in the second quarter was $9.50 per sq ft per month, the median rent in other locations, accounting for about 80 per cent of office space here, was less than half of that.

Mr Lim also quoted studies which showed that Singapore remains cheaper than other global cities in the region.

A survey on global office market rentals by consultants CB Richard Ellis showed that Singapore was 30 per cent cheaper than Hong Kong, and 50 to 60 per cent cheaper than Tokyo.
Source : Straits Times - 28 Aug 2007

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Collective sales of homes to be more transparent

Collective sales of homes to be more transparent

Home owners to get more say with proposed changes to Land Titles (Strata) Act
By Joyce Teo

HOME owners faced with the momentous decision of selling their home en bloc will soon benefit from a clearer, fairer sales process - and the right to change their minds within five days.
Amid a record number of collective sales in the past two years, some home owners have been left unhappy at the sale process over issues such as how the sales committee is formed.

En-bloc sellers have been plagued by rumours and a lack of clear information on sale procedures. Some home owners with strong emotional attachments to their homes have felt pressured to sell.

In one high-profile dispute, the sale of Horizon Towers for $500 million was blocked on a technicality - the paperwork was not in order - by the Strata Titles Board, after action was taken by owners who were opposed to the sale. They had disputes over issues including the transparency of the sale process. The developers have now taken the sellers to the High Court for failing to see the sale through.

One of the proposed changes will give more power to the board, which can disregard any technical irregularity if it is satisfied that it will not prejudice any owner’s interest.

Another key change is the introduction of strict guidelines on the currently unregulated process of setting up an en-bloc sales committee to oversee a sale. For instance, owners can only form a sales committee and elect members at a general meeting.

On the cards
Another major change will provide for a five-day ‘cooling off’ period after a collective sale agreement is signed during which a home owner may change his mind.

The proposed changes are contained in an amendment to the Land Titles (Strata) Act, introduced to Parliament by Deputy Prime Minister and Minister for Law Professor S. Jayakumar yesterday.

He first outlined some of the changes in March. More proposals were added after public consultation in April and May - which attracted hundreds of suggestions - and talks with industry experts.

Prof Jayakumar said the extra changes will further enhance transparency and procedural clarity, and offer better protection to affected home owners. There are more than 30 proposed amendments to take effect as soon as early as October.

One change addresses an imbalance in voting rights in some mixed retail, office and residential developments - by adding a new level of owner consent by floor area, before a sale can proceed.

To ensure owners are kept in the know, general meetings must be held to look at issues such as appointing lawyers and consultants, or dividing sales proceeds.

Also, a lawyer must be present to witness the signing of the collective sale agreement, and to explain the legal terms and liabilities. Observers say this move will prevent owners from complaining that they were forced to sell under duress.

To assure owners the best price is reached, a collective sale launch must be made by public tender or public auction. If this method fails, the sales committee can follow up and negotiate with any bidder. Still, a sale by private treaty must be concluded within 10 weeks of the close of the tender or auction.

And an independent valuation has to be obtained on the date the tender closes with bids to be revealed to the owners as soon as practicable - to help them decide if the bids are favourable.

Another change will return any remaining money in a condo’s management and sinking funds to owners - not the purchasing developer.

The Strata Titles Board can increase the amount a minority owner gets from sales proceeds if, say, he spent a lot to do up his home before finding about the sale.

‘All the changes will give owners more say in a collective sale,’ said Mr Nicholas Mak of consultancy Knight Frank. ‘But they come at a price as the sale process will most likely be lengthened.’

Also, professional fees will inevitably rise, said Credo Real Estate’s managing director Karamjit Singh.

Source : Straits Times - 28 Aug 2007

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Some may slip through the HDB safety net

Some may slip through the HDB safety net
IT is a sensible policy to encourage home ownership. Secure housing, one of our most basic needs, also provides the place where we connect with the wider community through education, employment and community networks. In addition, owning one’s home provides stability and makes for sound financial planning.

As Prime Minister Lee Hsien Loong said in his recent National Day Rally speech: ‘Home ownership through an HDB flat is the best form of social welfare for citizens, as it gives every Singaporean a stake in Singapore’s success. When we help you to buy a house and give you something which is valuable and which is rooted in Singapore, when Singapore grows, property values go up, your flat value goes up.’

A big part of the social support system in Singapore is centred on helping Singaporeans own an HDB flat. The public housing board will assume an even bigger role with the changes announced by Mr Lee in his speech.

To help more of the lower-income own their own homes, the government will give a more generous housing grant, raising it to $30,000 from $20,000. Meanwhile, more people will also become eligible for the grant as the household income limit will be increased from $3,000 to $4,000. The government will also be helping elderly flat owners to unlock the value of their flat and convert it into a stream of income to supplement their retirement expenses by offering a form of reverse mortgage. HDB will buy back the tail end of the flat’s lease and leave the individual with a shorter lease of 30 years. HDB will then pay a lump sum to the owner and monthly payments for the rest of his or her life which will serve as a form of annuity. These new policies will reinforce the unique Singaporean HDB-centric social support system.

As noted in a report by Citigroup economist Chua Hak Bin yesterday, already the current distribution of social support or transfers is heavily skewed towards the decision to buy an HDB flat. The most generous of the subsidies are HDB housing grants of $30,000-$40,000 and a 20 per cent price discount for the purchase of new flats. Mr Chua posed the question of whether, over the longer term, Singapore’s social support system should shift towards a more Workfare-centred one rather than the current HDB-centred one.

He said: ‘Tying the most generous social support to home ownership may penalise those who are too poor to purchase an HDB flat and encourage the assumption of a heavier debt burden than otherwise. Should lower-income households who do not exercise their privilege to buy an HDB flat be given the lump-sum cash grant equivalent to $30,000-$40,000 (perhaps deposited into their CPF accounts) upon reaching a certain age instead? Such an option may produce an outcome where the social transfers are more a function of need rather than a decision tied to home ownership.’

Singaporeans who don’t own HDB flats may number 200,000 or less. Not that large a group, but they are most likely the ones who need help most. Hence the suggestions are definitely worth considering.
Source : Business Times - 28 Aug 2007

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Inflation expected to be 1-2% in ‘07: Hng Kiang

Inflation expected to be 1-2% in ‘07: Hng Kiang

By NISHA RAMCHANDANI
DESPITE soaring property prices and good wage increases, inflation is expected to come in at between one and 2 per cent this year, Minister for Trade and Industry Lim Hng Kiang said yesterday in response to parliamentary questions on the Singapore economy.
While this expected inflation rate is an increase from the average annual rate of one per cent for the past three years, Mr Lim said that inflation is ’still very reasonable’ seeing that Singapore has been enjoying practically 16 quarters of growth.

‘The current cost pressures are reflective of our competitiveness and resultant strong economic growth,’ Mr Lim said, noting that the economy is projected to grow by 7 or 8 per cent this year. The growth has been apparent in both the manufacturing and services sectors. Overall unit labour cost increased by 5.8 per cent year-on-year in the first half of 2007 while unit business cost for manufacturing increased by 2.6 per cent.

Mr Lim also pointed out that the government had taken steps to combat immediate space constraints by introducing a supply of interim office space, along with HDB flats for rent. The ministry of national development has also published additional information on property prices and rents to keep the public and businesses better informed. More than 42,000 private residential units and 640,000 square metres of office space will be available by 2010, to help meet demand.

With regards to manpower, the minister explained that the government is planning to help more Singaporeans - like women and older workers - rejoin the workforce so as to benefit from the robust employment market. ‘Our focus is to create better jobs for Singaporeans and better opportunities to attract global talent,’ he said.

Mr Lim cited Singapore’s ranking this May by the World Competitiveness Yearbook as the second-most competitive economy overall among 55 countries, as showing that Singapore remains an attractive destination for investors, talent and tourists, even in the face of increased costs.
Source : Business Times - 28 Aug 2007

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Services sector shows strong growth in Q2

Services sector shows strong growth in Q2

BUSINESS revenue in the services sector saw its strongest growth in 12 quarters in the April-June quarter, driven by the booming financial and property markets.

The Department of Statistics (DOS) says the business receipts index for services rose 15.6 per cent year-on-year in Q2 - the highest growth since the 18 per cent jump of Q2 2004.

Excluding financial and insurance services - which saw a 33.5 per cent surge in business receipts in the quarter - the overall increase was 10.5 per cent.

The financial services industry fared particularly well, with turnover growing 35.6 per cent in Q2, thanks to brisk business in Asian currency units and banks’ domestic banking units, as well as brokerages and fund management firms. Insurers also reported strong revenue growth.

The real estate industry saw another quarter of strong revenue, with its business receipts index rising 27 per cent in Q2, following a 19 per cent increase in Q1.

‘In particular, real estate agents registered a significant increase in their earnings,’ DOS said.

Within the business services segment, market research and management consultancies recorded revenue gains of nearly 37 per cent in Q2.

Private schools and others in the education services industry also saw double-digit growth in business receipts.

The one exception appears to be in ‘recreational activities’, where turnover dipped 2.4 per cent in the second quarter.

Source : Business Times - 28 Aug 2007

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No effort spared in ensuring safe F1 race: DPM

No effort spared in ensuring safe F1 race: DPM

By LYNETTE KHOO

NO effort is being spared to make sure that next year’s Formula One Grand Prix in Singapore is conducted safely, Deputy Prime Minister and Minister for Home Affairs Wong Kan Seng told Parliament yesterday.

Mr Wong: Attention is also being paid to the threat of terrorism
The race will take place on a street circuit around Marina Centre on Sept 26-28, probably at night.

‘At this stage, the various plans and details are still being worked out between the various government agencies, the race promoter, Singapore Grand Prix Pte Ltd (SGPPL), and the Federation Internationale de l’Automobile (FIA), which is the international governing body for all motor racing events,’ Mr Wong said in response to a question from Ellen Lee, MP for Sembawang GRC.

The Ministry of Home Affairs will be working with relevant agencies, SGPPL and FIA to implement the various safety and security measures for 2008 and succeeding years. Attention is also being paid to the threat of terrorism, as the F1 event is expected to draw a huge crowd, including a large number of foreigners, Mr Wong said.

Safety and security measures include lining up barricades around the perimeter of the race circuit, similar to the arrangement adopted by most countries hosting F1 races, and deploying police for crowd control and conducting checks on bags and personal belongings at designated access points to prevent smuggling of any weapons or prohibited items. Vehicle movement will be restricted in sensitive areas.
Source : Business Times - 28 Aug 2007

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