S’pore Growth falls to 6% in fourth quarter

S’pore Growth falls to 6% in fourth quarter

Expansion slower than expected; compared to the July-Sept period, the economy shrank 3.2%

By Bryan Lee

SINGAPORE’S economic expansion fell to 6 per cent, its slowest rate in nearly three years, in the final quarter of last year after a sharp slump in drug production.
Despite a booming construction sector and a strong showing in industries such as the stock market and tourism, fourth-quarter growth was well below market expectations of about 8 per cent.

Still, economists were not alarmed by the figures, published yesterday as advance estimates, by the Ministry of Trade and Industry (MTI). ‘It’s much more of a correction after strong performances earlier,’ said Action Economics economist David Cohen.

Economists also took heart from the fact that the slowdown - from the previous quarter’s 9 per cent - was due largely to the volatile pharmaceutical industry, which is expected to bounce back in the current quarter.

Yesterday’s figures confirmed the relatively sluggish fourth quarter anticipated by Prime Minister Lee Hsien Loong’s New Year address two days earlier.

He had said that gross domestic product growth for the full year was 7.5 per cent, at the lower end of the official 7.5 to 8 per cent forecast range.
Seasonally adjusted, the economy shrank 3.2 per cent in the fourth quarter compared to the third quarter - the first quarter-on-quarter contraction since 2003.

While this sets up the possibility for a technical recession, defined as two straight quarters of quarter-on-quarter contraction, economists said this is unlikely.

‘After 17 quarters of expansion, it’s a payback. You can’t expect to keep expanding at that sort of pace,’ said United Overseas Bank economist Ho Woei Chen.

Economists say Singapore will not be alone in seeing slower fourth-quarter growth. The United States, Europe and Japan are all expected to report slowing economies. In the region, some moderation is expected, though countries with bigger domestic economies may suffer less than Singapore amid softening demand for exports.

The main drag on fourth-quarter growth was the manufacturing sector, whose output inched up just 0.5 per cent. The MTI said this was mainly because certain active pharmaceutical ingredients were not produced.

The drug industry is well known for yielding wild swings in output figures as factories can shut down for months just to switch production lines.

DBS Bank economist Irvin Seah added that an anaemic electronics industry was also likely to have contributed to the poor industrial figures. ‘We are simultaneously in a down cycle for both electronics and pharmaceuticals.’

Elsewhere, the construction and services sectors posted impressive expansion.

‘The financial services sector continued to experience rapid growth while wholesale and retail trade, transport and storage, and business services sectors registered better performance,’ said the MTI.

Looking ahead, the moderation foreshadows a generally slower economy this year as troubles in the US housing and financial markets loom over the global economy.

While construction, tourism and other domestic-related services should continue to do well, it should be a tougher year for exporters and trade-related services firms.

‘The fairy tale, where we were in the sweet spot of spectacular growth and low inflation, has ended,’ said Citigroup economist Chua Hak Bin.
Source : Straits Times - 03 Jan 2008

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Back lane in Balestier up for sale - Singapore

Back lane in Balestier up for sale - Singapore

Other properties up for auction include Changi bungalow, studio apartment
By KALPANA RASHIWALA
THE Official Receiver is auctioning off a back lane at Jalan Bunga Raya in the Balestier Road/Irrawaddy Road area.

10 Swiss Club Lane: Indicative price of $18m for the 17,557 sq ft property up for auction
The freehold strip of land, with a land area of 3,331 sq ft, is behind a row of seven terrace houses which are part of a set of 15 terrace homes at Jalan Bunga Raya which have been bought by a consortium involving a Chinese developer and some local partners.

Knight Frank is auctioning the back lane on Jan 10 on behalf of the Official Receiver. The plot is understood to have been owned by a now-defunct company, Bag Transpack Investment Co Pte Ltd.

Market watchers reckon the consortium that bought the 15 homes at Jalan Bunga Raya will be the most natural contender for the back lane, although BT understands that a party who owns a pair of semi-detached houses on the other side of the backlane is also a potential buyer.

Knight Frank has indicated a price of about $750,000 to $800,000 for the back lane, which works out to $80 to $86 per square foot of potential gross floor area.

The 15 neighbouring terrace houses were sold recently for $61 million or an all-in unit land price of $739 psf per plot ratio.

Knight Frank’s auction, which will be held at Amara Hotel, will also see several other properties going under the hammer.

These include two bungalows - one a Good Class Bungalow at 10 Swiss Club Lane with an indicative price of $18 million or $1,025 psf based on its 17,557 sq ft land area, while the other, at 18 Toh Close in the Changi area, has a $2.8 million to $3 million indicative price range, which works out to $420-450 psf.

The Toh Close bungalow has a 6,669 sq ft land area. Both bungalows are freehold and are being sold by their respective Singaporean owners.

Other properties in the auction include a 23rd level studio apartment at The Metz at Devonshire Road, a semi-detached house at Jalan Ishak in the Eunos area, a three-storey shophouse at Craig Road in the Tanjong Pagar area and a two-bedroom apartment on the 26th level of High Street Centre.

Source : Business Times - 03 Jan 2008

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Keeping in touch with the latest technology - Singapore

Keeping in touch with the latest technology - Singapore
SEMICONDUCTOR company ASTI wants more than just money from its sales in the US and Europe.

Mr Cher: ASTI’s precision engineering is making headway into the medical equipment area in the US
A presence in these markets will also keep the Singapore Exchange-listed company in tune with the latest technology and products, including those in the medical equipment field which it is branching into.

‘These are the largest markets for new technology and new products,’ says Charles Cher, ASTI’s group chief executive. ‘Particularly in the semiconductor and medical industries, the leaders at the forefront of technology and whose names are globally accepted in their particular industries are from the United States and Europe.’

ASTI has sales offices in the US and a manufacturing plant in Europe. ‘Through our sales and marketing offices in these countries, we are able to maintain close contact with our customers and work with them at early stages of their product development,’ Mr Cher says. According to him, ASTI’S offices in the US and Europe ‘are constantly marketing and expanding our business reach in the various countries where they are present and our customers also have the comfort to know that they can communicate with us regardless of time zones’.

‘Our proposition to our US and European customers is to assist them in lowering their cost of manufacturing by supplying them through our manufacturing locations in Asia, where the operating cost is lower than that in the US and Europe,’ Mr Cher says.

The semiconductor business is still the company’s bread and butter, with its main markets in Singapore, Malaysia, the Philippines, Taiwan, China and South Korea. But ASTI’s precision engineering is making headway into the medical equipment area in the US. It serves the global needs of one of the world’s leading medical equipment manufacturers, General Electric.

‘We have built our track record in the US and Europe and many of our key customers are from these countries,’ Mr Cher says. ‘Over the years, we have developed the ability and the knowledge to help them manage and control the challenges posed by costs and quality.’

The move into precision engineering ‘is a natural progression to (exploit) the economy of scale and for vertical downstream integration’, according to him. ‘The metal components that we manufacture are embedded in various medical equipment, especially medical scanners and image machines and various technical-related equipment, such as scientific instruments,’ Mr Cher says. ‘In addition, the medical industry has also utilised our vision inspection capabilities, one of which is in the manufacture of contact lenses.’

Source : Business Times - 03 Jan 2008

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Singapore Private banks still upbeat on 2008

Singapore Private banks still upbeat on 2008

Sub-prime woes have not changed their expansion plans in this part of the world, private bankers tell CHOW PENN NEE
LOSSES suffered by banking giants over sub-prime writedowns have not dampened the ambitious growth plans of their private banking divisions in Singapore.

Perspectives on wealth: Private banks say the wealth management pie will continue to grow strongly in the region this year. But they expect the industry to still face issues such as a talent crunch and market volatility
Private banks here are upbeat on 2008, saying the wealth management pie will continue to grow strongly in this part of the world. But they expect the industry to be still facing issues such as a talent crunch and market volatility.

Soaring salaries and bonuses, the surge in the number of millionaires and a booming economy in 2007 - the private banking sector never had it so good.

The flip side of this was, of course, a fierce war for talent, with poaching rampant. New players also entered the market, all fighting for a share of the wealth management pie.

The sub-prime meltdown in the middle of the year did not help matters. Banking giants Merrill Lynch and UBS were beset with losses from writedowns on their collateralised debt obligations (CDOs).
Clients now require their banks to have expertise not only in private wealth management but also in corporate finance such as advising on M&As or on IPOs that can help them grow their businesses.
The bright side of it all was that the sub-prime woes have not changed private banking expansion plans in this part of the world, private banks told BT.

Swiss bank UBS, which earlier announced $14 billion in losses from the sub-prime crisis, said the bank’s growth strategy is still on track.

‘Wealth management is UBS’s core business and we continue to be strategically bullish,’ said Yeong Phick Fui, UBS’s head of wealth management in Singapore. ‘We will continue to hire along the same rate as previous years.’

She added that UBS has about 200 billion Swiss francs (S$254 billion) under management in Asia Pacific and the industry is still growing. ‘No scale down is expected. Our strategy is to continue investing in the business,’ she said.

Francois Monnet, who heads Credit Suisse’s private bank here, agreed. ‘Private banking is strategically a core business for us. It is not something that we will walk away from when the market turns.’ The bank added another 100 private bankers in Singapore and Hong Kong last year.

Other private banks say they will still be actively hiring in 2008. BNP Paribas private banking said it is untouched by the sub-prime crisis and is still looking to grow 20 per cent annually. Similarly, Standard Chartered Private Bank said it is still looking to add on 200-300 private bankers in the next 3-4 years globally.

Banks are still on a hiring spree because the number of moneyed folk is likely to rise this year. Singapore is set to continue growing as a private banking hub.

‘There’s strong GDP growth in this region, we continue to see new IPOs, real estate is booming, companies are making profits, and millionaires will grow in number,’ noted Michel Longhini, head of BNP Paribas private banking Asia-Pacific.

Singapore had the fastest growth in the number of high net worth individuals (HNWI) in Asia Pacific, at 21.2 per cent in 2006, and also one of the fastest growing wealth markets in the world, according to a report by Merrill Lynch and Capgemini.

Today, Singapore’s role is in global private banking, Mr Longhini added, and growth is not just coming from Singapore, but from South-east Asia and Europe. Added to the fact that Singapore is attracting foreigners who book assets here, more millionaires will be minted next year.

‘The growth in millionaires in Singapore will be boosted by Singaporeans, expatriates and global HNWI who come to bank their wealth here,’ said Standard Chartered global head of private bank Peter Flavel. As a result of this, private banks will surge ahead with expansion.

‘The wealth creation cycle is highly correlated with the markets and economic growth,’ said Credit Suisse’s Dr Monnet. ‘With Singapore’s robust economic fundamentals, we expect continued growth in the private banking industry.’ Credit Suisse has the largest wealth management operations in Singapore outside of its headquarters in Switzerland.

The hunt for talent, therefore, ranks again among the top concerns for private banks in 2008, as it had been in 2007, the difference now being that banks have mostly done their en masse hiring and are now gunning for quality.

‘Today, private banks are much more selective, more quality-based,’ said BNPP’s Mr Longhini. ‘We now know who is good, who is not, and know the price we are willing to pay.’ Tan Su Shan, who heads Citi’s Private Bank here, agreed. ‘Before, we saw frenzied, mass hiring in newcomers (to the industry). Now we see consolidation in hiring.’ She added: ‘We’re also working with the resources we hired and are working to grow our internal talent pool by continuing to train and develop staff.’

The banks are casting their eyes on quality - meaning those who have prior private banking or other banking experience. ‘Quality hires will be able to command 30-35 per cent higher salaries,’ said Rahul Malhotra, Merrill Lynch’s head of global wealth management for Asia-Pacific. ‘We’re looking for 7 years’ experience or more.’

Banks say poaching is less predominant now, except among the new entrants, and most are looking inward at their corporate or investment bankers.

‘We see quality coming from within,’ said Mr Malhotra. Citi’s Ms Tan said they are now looking ‘organically’ for good people. ‘We have hirees from corporate banking and institutional desks such as equity or fixed income, or from private equity, investment banking or research,’ she said. ‘These people bring with them an institutional level of expertise and professionalism that can only enhance and improve upon the level of private banking in Singapore.’

Another challenge facing private banks this year is the market volatility and managing this tumultuous period for their clients.

‘From now to medium term, we’re looking at diversification of asset categories for our clients,’ said Mr Longhini. Mr Malhotra said the bank is waiting to see what happens in the US economy early this year and looking at ’shifting from fixed income to equity’. ‘We are seeing more consolidation of assets into safer types like fixed income,’ he added.

The past year saw private banks focus on the wealth transfer theme for clients. In the new year, the private banks say a big focus will be on private investment banking. With the noveau riche earning their wealth through their businesses, private banks say this is where they can step up and help integrate their clients’ private wealth with business ventures.

‘Asia’s new wealth is coming from real estate, services, the professional segment, IT, manufacturing and the energy sector,’ said Citi’s Ms Tan. ‘We want our private bankers to understand what the client does, their wealth creation process, and help manage it.’

At Credit Suisse, Dr Monnet says almost every private banking client is an entrepreneur, ‘mostly first or second-generation owners of businesses with their wealth tied to their enterprises and to real estate’. He noted: ‘The classical private banking offering no longer serves these entrepreneurs well.’ Clients now require their banks to have expertise not only in private wealth management but also in corporate finance such as advising on mergers and acquisitions or on initial public offering (IPO) activities that can help them grow their businesses, Dr Monnet explained.

‘We have already seen many cases of our private-banking clients with investment banking needs, be it divesting large shareholdings they have, monetising those shareholdings or having certain hedging needs, financing requirements such as shared-backed lending, aircraft, ship or real estate financing or bringing private equity investments into entrepreneur clients’ businesses.’
Source : Business Times - 03 Jan 2008

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Source : Business Times - 03 Jan 2008

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Singapore High rentals don’t worry some MNCs

Singapore High rentals don’t worry some MNCs

They are still expanding their premises: C&W report
By ARTHUR SIM

RISING office rents may have forced some businesses to adopt a wait-and-see approach on expansion here but others are expanding anyway.

Standing tall: US-based drug development services company PharmaNet is relocating to 5,000 sq ft premises at Springleaf Tower
A report by Cushman & Wakefield (C&W) reveals that key leasing transactions in December 2007 include Swiss wealth manager Julius Baer taking up 26,000 sq ft of office space at HarbourFront Tower 1, US-based global engineering, construction and diversified services company Flour Daniel leasing 15,000 sq ft at 80 Robinson Road, and US-based drug development services company PharmaNet relocating to 5,000 sq ft premises at Springleaf Tower.

Bank Julius Baer was the fastest growing company in the finance and banking services sector in 2007 and its spokeswoman Lim Li Koon said that leasing the HarbourFront premises is part of its ‘business continuity plan’ strategy. Ms Lim also said that it would continue to operate out of its office at One George Street.

C&W managing director Donald Han said that the office market is experiencing a ‘flight to availability of space for expansion’ with tenants also hoping to take advantage of lower rents in the office sub-markets.

According to C&W, latest data showed that prime office net effective rents were at an average of $14.30 psf per month in November 2007, an increase of 3.5 per cent over October 2007.

Similarly net effective rents for the Top 25 Grade A office buildings rents rose to an average of $16.02 psf per month in November 2007 from $15.54 psf per month in October 2007.

Mr Han said many businesses in Grade A areas like Raffles Place, where occupancy is close to 100 per cent, are currently negotiating to renew their leases. ‘Companies that need to be located close to their clients cannot move far from this comfort zone,’ he said.

Those that can are looking outside the CBD. Average rents for the office sub-market in areas like Beach Road and HarbourFront are around $10-$11 psf per month.

‘The secondary (sub) market is becoming the primary target for tenants looking to relocate at the moment,’ Mr Han said.

Source : Business Times - 03 Jan 2008

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Singapore Rental flats for needy to be allocated from this month

Singapore Rental flats for needy to be allocated from this month

By NISHA RAMCHANDANI

A TOTAL of 2,194 rental flats will be added to the public housing supply by early 2010 to help the needy, in a move first announced in November 2006.
The first batch of newly converted flats - consisting of 180 one and two-room units at Block 852, Woodlands Street 83 - will be allocated from this month. One-room flats generally go for about $30 a month and two-room flats for $50-60.

In March, 748 units will be made available when the Housing and Development Board (HDB) completes the conversion of vacant blocks at Boon Lay. In addition, 290 converted units at Redhill will be added to the supply early next year. HDB is also building 976 new rental flats at Choa Chu Kang, Sembawang and Yishun. This last batch will be ready by early 2010.

National Development Minister Mah Bow Tan said the flats will help ease the burden of those who are really needy. ‘This additional supply will help meet demand from lower-income Singaporeans who cannot afford or are not yet ready to buy their own flats,’ he said.

While demand seems to be increasing, Mr Mah attributed this to rental flats being an attractive option, rather than more people suffering financial hardship.

‘There is always strong demand for rental flats as they are heavily subsidised,’ he said. ‘Those who are financially capable of owning a flat or renting accommodation from the open market, and those who have family who can support them, should not deprive the more needy of subsidised rental housing.’

From this month, HDB will suspend the allocation of rental flats under the Daily Selection Scheme. Rental flats will continue to be allocated through monthly selection exercises.
Source : Business Times - 03 Jan 2008

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Yellow Pages ready with new growth plan-Singapore

Yellow Pages ready with new growth plan-Singapore

By CHOW PENN NEE
YELLOW Pages yesterday announced that it would introduce new print products, build up its digital platform and seek out acquisition targets as part of a new medium-term growth plan.

Starting next year, new print products targeted at specific markets will be introduced over two years.

Yellow Pages’ chairman Victor Ang said that with the completion of the management restructuring in October last year, the team is now ready to meet new challenges ahead.

He said: ‘We are confident that Danny (Chow), our newly appointed CEO, will be able to bring us to the next phase of growth through our new strategies for expansion.’

Singapore’s largest publisher of directories said it intends to look to the tourism sector which is set to become more vibrant with the upcoming integrated resorts and Formula One race developments. It plans to launch new print products, such as a new Hotel Edition Yellow Pages.

Subsequently, starting next year, new print products targeted at specific markets such as motorists, heavily populated heartland areas, newly arrived long-term residents and the active ageing population will be introduced over two years.

The group said print directories will remain as the core revenue-generating business, with income potentially increasing with the growth in advertising.
At the same time, Yellow Pages is also looking to building up its digital platform, with investment in content and technology in Internet Yellow Pages. The group plans to leverage on its comprehensive print database while expanding the number of user touch points.

New tie-ups with strategic partners - such as the recent partnership with Nokia for Mobile Yellow Pages and the collaboration with Bezurk to introduce travel search services on Internet Yellow Pages - will be brought in progressively over the next two years.

The Internet business registered a 78.6 per cent year-on-year increase in revenue contribution for the first half of FY2008.

Organic growth strategies aside, merger and acquisition opportunities are also being sought.

‘For the next three years of FY2009-FY2011, we are expecting more growth from our digital business and new print products, compared to the Singapore Phone Directories,’ said Mr Ang.

‘The result will be a shift in our current revenue mix, although print will continue to be a strong revenue contributor,’ he added.

The group’s principal activities are in the sale of advertising and publication of classified directories that connect businesses to businesses and businesses to consumers in both print and digital form.
Source : Business Times - 03 Jan 2008

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Two property investment opportunities in the offing - Singapore

Two property investment opportunities in the offing - Singapore

Changi Hotel site going for $55m, Geylang shophouse devt priced at $36m
By ARTHUR SIM

THE site of Changi Hotel, on Changi Road, is being offered for redevelopment with an asking price of $55 million.

Up for grabs: The 12 two-storey shophouse units in Geylang have a total strata floor area of 29,504 sq ft, while the Changi Hotel site can be redeveloped with a maximum GFA of 79,299 sq ft
The 26,433 square foot site has a plot ratio of 3.0 and can be redeveloped with a maximum gross floor area (GFA) of 79,299 sq ft. The site is being marketed by CB Richard Ellis (CBRE).

The property consultancy estimates that, including a development charge of about $12.5 million, the unit price for the site equates to about $850 per square foot per plot ratio (psf ppr).

Various corporate buildings sit on this same stretch of road, including AIA Changi and Great Eastern @ Changi.

CBRE executive director of investment properties Jeremy Lake said: ‘This regular site provides an excellent investment opportunity for the redevelopment of a corporate building or a boutique hotel.’

Colliers International has also put up for sale a newly restored two-storey shophouse development located at 512-534 Geylang Road with an indicative price of around $36 million.

To be sold via private treaty, the freehold property comprises 12 two-storey shophouse units with a total strata floor area of 29,504 sq ft.

Under the 2003 Master Plan, the subject property, which is also located in the Geylang Conservation area, is zoned for commercial use.

Colliers executive director of investment sales Ho Eng Joo said the island block of shophouses comes with 24 strata titles. They will be sold with vacant possession.

Mr Ho said that a potential use for the property is as a food and beverage establishment, as the area is already known for F&B. ‘Alternatively, the property is also suited for showrooms, karaoke lounges, pubs, shops and offices,’ he said.

Source : Business Times - 03 Jan 2008

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Warrant turnover may double again in 2008

Warrant turnover may double again in 2008

Volume doubled to record $28.2b last year and could hit $60b this year
By R SIVANITHY

TURNOVER in the local warrant market almost doubled last year to a record $28.2 billion. And this year it could hit a whopping $60 billion.
If turnover in the underlying market rises 50 per cent and warrant-to-market turnover rises from the present 5 per cent to 7 per cent, $60 billion is very achievable, SG Securities equity derivatives director (Asia ex-Japan) Edmond Lee told a news briefing.

‘The smaller tick rule implemented last month has reduced costs to issuers by about half and this will help increase volume,’ he said. ‘Also, the Singapore market saw an average of nine new underlying warrants issued per quarter since Q1 2006 - higher than Hong Kong’s five or six. So if this trend continues, there will be more choices for investors.’

Turnover last year was 97 per cent higher than 2006’s $14.3 billion - a jump driven mainly by index warrants, namely on the Straits Times Index and the Hang Seng. Volume in these two underlyings accounted for 42.6 per cent of total turnover.

In addition, 2007 saw a jump in trading of put warrants, from 15 per cent of turnover in 2006 to 23 per cent.

Put warrants are instruments that gain value in a falling market, while call warrants gain in a rising market. In the past, traders were reluctant to trade puts. But this has gradually changed over the past year or so.

‘The increase in put turnover illustrates increasing sophistication among Singapore retail investors,’ said SG’s vice-president for structured products (Asia ex-Japan) Ooi Lid Seng.

‘Also, as of June 30, there were about 20,000 active accounts trading warrants - around 10 times the figure a year earlier. So clearly the public is more involved in trading warrants.’ An active account is defined as one in which warrants are traded at least once in three months.

SG’s data also shows that 79 per cent of all warrants are issued on just 20 underlying assets, and that trading in the top 10 underlyings accounts for 80 per cent of turnover.

Warrants on the Hang Seng were 2007’s most active, accounting for 28 per cent, followed by 14.6 per cent for the ST Index and 8.8 per cent for DBS. Also popular were warrants on CapitaLand, UOB and Cosco Corp.

Although the overall warrant-to-market ratio for the year was 5 per cent, the November-December ratio was closer to 10 per cent, most probably because of volatility in the underlying market caused by the US sub-prime crisis.

‘This year should see a rise in volume and warrant/market ratio but we still need to attract a variety of investors through more education,’ said SG’s Mr Lee. ‘And the high volatility forecast for 2008 should mean plenty of good trading opportunities.’
Source : Business Times - 03 Jan 2008

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Singapore Home prices feel pull of gravity after 31% rise

Singapore Home prices feel pull of gravity after 31% rise

Q4 tempers spectacular growth of 2007; mass market may shine this year

By UMA SHANKARI

(SINGAPORE) Private home prices rose 31.0 per cent in 2007 - the biggest year-on-year jump since 1999 - despite a slowdown in the fourth quarter caused by the withdrawal of the Deferred Payment Scheme (DPS) and sub-prime woes, flash estimates show.

HDB resale prices also climbed some 17.4 per cent last year - the fastest growth seen since 1996 - as private home price gains filtered down. But HDB resale prices also saw a slowdown in growth in the fourth quarter.

At a doorstop yesterday, Minister for National Development Mah Bow Tan said that over the last few months, the government had taken several steps to try and cool down speculative activity in the property market. However, the market is also being affected by external factors beyond the authorities’ control, he said.

‘For Singapore, we are optimistic that we will continue to do well but there are many things beyond our control,’ Mr Mah said. ‘It is up to us to keep a close eye on the market and be able to tweak those policy levers that we can in order to keep property prices stable.’

Private home prices rose 6.6 per cent in the fourth quarter - down from the 8.3 per cent growth seen in the third quarter.

Similarly, HDB resale prices grew 5.6 per cent in the fourth quarter of 2007 - down from the 6.6 per cent rise for the previous quarter.

Experts said that the slowdown was brought on by both poor global market conditions as well as the removal of the DPS scheme.

Knight Frank managing director Tan Tiong Cheng said that the fourth-quarter slowdown was not surprising considering the sub-prime crisis in the United States.

‘People are still waiting for signs as to how bad the sub-prime situation will turn out,’ Mr Tan said. ‘It affects the whole outlook; people are uncertain.’

Demand could also be muted as lending by banks in the US, UK and Europe has been tremendously curtailed since the crisis, he said.

On the other hand, OCBC Investment Research analyst Winston Liew believes that the bigger culprit is the withdrawal of the DPS. ‘After the DPS was withdrawn, the whole market went down - the resale market, new launches and the stock market,’ he said. He has a ‘neutral’ rating on the Singapore property sector.

For the HDB resale market, the slowdown could also be attributed to buyers holding back in the face of rapidly increasing asking prices, said ERA assistant vice-president Eugene Lim.

‘The slowdown in price increase was largely expected as the market hit resistance level in the light of unrealistic sellers demanding for high cash-over-valuation (COV) transactions - particularly for the five-room and executive flat-types,’ said Mr Lim.

The slowdown in price growth, experts said, will continue in the first quarter of this year.

‘It is unlikely that there will be much activity in January or February,’ said Knight Frank’s Mr Tan. Agreed OCBC’s Mr Liew: ‘I would expect the rate of growth to slow down.’

CB Richard Ellis (CBRE), for example, expects the take-up of new homes to be between 9,000 and 11,000 units for 2008. By comparison, the property firm estimated that a record 15,000 new homes were sold in 2007, 34.5 per cent more than the 11,147 new homes sold in 2006.

This year, the property market will be driven by mid-end and mass-market homes, experts said. Prices and take-up of luxury homes are expected to moderate.

In the fourth quarter of 2007, the price increase was led by non-landed homes in outside central region (OCR) where the index showed an increase of 7.5 per cent.

The strong showing, CBRE said, could be attributed to new project launches during the quarter, such as Park Natura and Hillvista. Prices in the core central region and rest of central region rose by 7.0 per cent and 7.3 per cent respectively.

For 2008, ‘we expect a moderate rise in overall prices as luxury prices are likely to firm up at current levels while mid-tier and mass-market prices have the potential to rise by about 10-15 per cent’, said Li Hiaw Ho, executive director for research at CBRE.

Others were more bullish about the mass market. Ku Swee Yong, director of marketing and business development at Savills Singapore, predicts that mass-market prices will climb by 30-50 per cent this year.

In response to a question about the rapidly climbing prices in the mass market, Mr Mah told reporters that the government is watching the segment closely and will take action if necessary.

‘People who can’t afford the central region to buy or to rent are starting to look outside, which I think is the sensible thing to do,’ he said. ‘We will continue to keep an eye. We’re watching it every day. If necessary, we’ll do something, if not necessary we’ll just let it be.’

The overall price index for private homes could climb by anywhere between 10 per cent and 25 per cent this year, depending on how quickly the market recovers, experts said.

And for the HDB resale market, prices could climb by between 10 and 15 per cent, they said.

‘With the buoyant economy and expected positive market sentiment in 2008, the HDB property market in Singapore is likely to enjoy a double-digit growth in the 10-11 per cent range,’ said Mohamed Ismail, chief executive of property agency PropNex.
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URA releases flash 4th Quarter 2007 Private Residential Property Price Index

The Urban Redevelopment Authority (URA) released today the flash estimate of the price index of private residential property for 4th Quarter 2007.

Based on the estimated price index of private residential property, prices rose from 160.0 points in the 3rd Quarter 2007 to 170.5 points in the 4th Quarter 2007. This represents an increase of 6.6%, compared with the 8.3% increase in the previous quarter (see Annex A)1. For the year 2007 as a whole, the price index rose 31.0%.

URA also released today the flash estimates of the price changes in the three geographical regions for 4th Quarter 2007. Prices of non-landed private residential properties increased by 7.0% in Core Central Region, 7.3% in Rest of Central Region and 7.5% in Outside Central Region in the quarter (see Annex B). In comparison, for 3rd Quarter 2007, prices of non-landed private residential properties increased by 8.3% in Core Central Region, 7.9% in Rest of Central Region and 7.9% in Outside Central Region.

The flash estimates are compiled based on transaction prices given in caveats lodged during the first ten weeks of the quarter supplemented by information on the number of new units sold. The statistics will be updated four weeks later when URA releases the full 4th Quarter 2007 real estate statistics, when more data on the caveats lodged and the take-up of new projects are captured. Past data have shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution.

The Government will continue to monitor prices closely and release relevant price sensitive information in a timely manner. On the supply side, as at 3rd Quarter 2007, there are about 65,400 private residential units in the pipeline, of which about 41,600 new private housing units are expected to be completed between 2008 and 2010. About 38,000 units of the supply in the pipeline (or 58%) have not been sold by developers yet. This does not take into account new sites that will be made available for development through the Government Land Sales (GLS) programme. Prospective home-buyers are advised to take into consideration the ample pipeline supply of private housing, as well as the potential supply from GLS sites, when making decisions on property purchase.

1 The price index of private residential property refers to both landed and non-landed properties.

Source : Business Times - 03 Jan 2008

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