No more fare fixing for Singapore SIA and MAS

No more fare fixing for Singapore SIA and MAS

Airlines end fare fixing and revenue sharing; codeshare deal in the works

By Karamjit Kaur, Aviation Correspondent

SINGAPORE Airlines and Malaysia Airlines have ended more than 30 years of fixing fares and sharing revenues on the Singapore-Kuala Lumpur route.
The strategic move, which comes less than two weeks before budget airlines muscle in on the lucrative route, is to allow the incumbents to be more nimble, so they can compete effectively with the new kids on the block, industry observers said.

However, it will not spell the end of the SIA-MAS partnership, both carriers said in separate statements yesterday.

They will, with effect from Monday, enter into a new codeshare agreement, which means that a passenger holding an SIA ticket can also fly with MAS and vice versa.

Tickets under the new deal go on sale from Friday.

Although fares will no longer be fixed and revenue will no longer be split 50:50, travellers will still be able to buy on-the-spot Singapore-KL shuttle tickets at the airport.

A two-way SIA shuttle ticket costs about $336, about the same fare that MAS charges out of KL.

The Straits Times understands that the shuttle agreement, inked between the two national carriers with both governments’ blessings, has to stay for now since it allows for more Singapore-KL flights than the Singapore-Malaysia air service agreement provides for.

To do away with the shuttle deal without expanding the bilateral air agreement would effectively reduce the number of flights between the two cities.

Even if the deal stays, SIA does not expect the demand for shuttle seats to be strong, spokesman Stephen Forshaw told The Straits Times.

He said: ‘In the last year or so, a variety of new, special fares have been added to the Singapore-KL route which have given people flying the route more choices. These fares have seen a reduction in demand for shuttle seats, and the new codeshare agreement and more competitive fare offerings should see that demand reduce further.’

Between them, SIA and MAS operate a total of 13 daily flights in each direction, offering more than 21,000 round-trip seats a week. They currently dominate the Singapore-KL market

The only other airline sharing the space is Japan Airlines, which flies once a day between Singapore and Osaka via Kuala Lumpur.

Consumers who have long complained about the high fares in the sector - $440 for a round-trip flight - can expect the cost of travel to come down with the changes announced by SIA and MAS.

Clearly, there is pressure to lower fares. Last week, the Singapore carrier offered a two-to-go round-trip deal at $286 per traveller, ahead of Feb 1, when Tiger Airways, Jetstar Asia and AirAsia begin flying between Singapore and KL. The low-cost carriers will operate a total of four round-trip flights a day to start with.

From December, all restrictions will be lifted to allow low-cost carriers to fly as many times as they wish between the two points.

The liberalisation of one of Asia’s most protected air routes is expected to benefit airlines now serving the market as well as the new players.

Mr Tony Davis, chief executive officer of Tiger Airways, believes that the Singapore-KL market, ‘grossly under-served’ today, will expand with the entry of budget carriers.

AirAsia chief Tony Fernandes said recently: ‘From our experience in the other markets that we serve, we believe the pie will grow and there will be more than enough business for everyone.’

Now, there are just 222 to-and-fro flights on the sector, compared to 303 flights for the Singapore-Bangkok route and 389 for the Singapore-Jakarta one.
Source : Straits Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Preschool’s short notice of closure upsets parents - Singapore

Preschool’s short notice of closure upsets parents - Singapore

By Ho Ai Li
ANXIOUS AND UNHAPPY: At the two-hour meeting with the management of EtonHouse on Tuesday night, parents questioned how hard the preschool had tried to find another site.

PARENTS who were given short notice that their children’s preschool would be closing voiced their frustrations at a fiery meeting on Tuesday night.
They were told a week or so into the new school term that their children, who had settled into the Whitley Road branch of preschool chain EtonHouse, would have to move as the building was shutting its doors by April.

Some parents have paid fees of about $3,900 for the first term, which runs for 10 weeks from January to March. The preschool takes in 70 children from 18 months to six years.

In a Jan 7 letter to parents, EtonHouse director Ng Hark Seng said the land the preschool stands on had been sold and it had been asked to move.

He said since last year, EtonHouse has been ‘actively looking for another site in the area, but has not been successful’.

But this cut no ice with the 30 to 40 parents present at the two-hour meeting. They were angry that EtonHouse had not informed them earlier or given them help to transfer their children to other preschools.

The parents questioned how hard the preschool tried to find another site. Many had to scramble to get their children a place in another preschool, a task made more difficult because the academic year had already started.

Events marketing manager Evelyn Goh, 38, said she had to take time off work to find a place for her two children. As did dental surgeon Wan Chee Meng, 42, who said he closed his clinic in order to do so.

Said civil servant A.Yoganathan, 38: ‘We paid a premium for our kids. Obviously, we expect better service.’

In response, Mr Ng apologised and said the school could have handled the situation better. He told parents that 43 places were available at two other EtonHouse branches.

Speaking to The Straits Times later, Mr Ng said: ‘When we knew there was no chance of continuing, we gave notice straight away.’

Asked why he informed parents about the move so late, he said: ‘We went back to ask (the landowners) whether they would allow us to stay.’

Mr Ng said he would discuss the possibility of compensating parents with the com- pany’s other directors.

But parent Alvin Loh, 39, was still disappointed. ‘There’s no closure. There’s nobody authorised to make decisions,’ he said

Source : Straits Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore Cops here prepared to meet casino threats

Singapore Cops here prepared to meet casino threats

WITH Singapore’s proposed casinos likely to face threats from crooks and syndicates, local police are venturing abroad to learn how to thwart these criminals.
Speaking on the sidelines of yesterday’s Interpol conference, Police Commissioner Khoo Boon Hui said officers have reached out to law enforcement officials in several countries. These include the United States, France and Australia, and Macau in China.

‘We (learnt) from them what are the problems - whether it is illegal money-lending, money laundering or vice,’ he said.

Two casinos are scheduled to open here by 2010.

Singapore police are now better equipped to deal with threats to the gaming centres, officials said.

A top official from the US state of Nevada, famous for its gambling industry, said casinos face challenges from lone cheaters to sophisticated gangs hoping to bilk them out of millions of dollars.

Mr Randall E. Sayre, who is a member of the Nevada State Gaming Control Board, stressed that casinos need strong surveillance systems and strong internal controls to keep crooks at bay.

Mr Sayre said Singapore officers went to Nevada to understand ‘our procedures and become familiar as to how we set our controls up to monitor the casinos’.

He added that Nevada officials have also been here several times.

‘Singaporean officers have embraced us and we have embraced them in a very cooperative and transparent relationship,’ said Mr Sayre.

Source : Straits Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore Tourist arrivals hit a record 10.3m

Singapore Tourist arrivals hit a record 10.3m

Numbers surpass targets, but travel agents worry about higher hotel room rates

By Lim Wei Chean

BANGKOK - LAST year was the best in the history of Singapore tourism.
A record 10.3 million tourists came, stayed 38 million nights and blew $13.8 billion.

It was the fourth straight record-breaking year, with the numbers surpassing the year’s targets of 10.2 million visitors and $13.6 billion in tourism spending, noted the Singapore Tourism Board (STB).

Small wonder that STB chief Lim Neo Chian was beaming as he unveiled the latest numbers here yesterday, on the sidelines of the Asean Tourism Forum.

He said the performance was buoyed by strong economic growth in Australia and India, two key sources of tourists, and the growth of low-cost airlines.

He also credited the more aggressive efforts put into marketing Singapore as a destination and the emergence of new offerings, such as malls with global fashion brands like Gap and Banana Republic.

Nine of Singapore’s top 10 visitor markets grew.

The number of Australians and Indians arriving made double-digit leaps from 2006 - 11 per cent and 14 per cent, respectively, to over 740,000 arrivals from these markets.

The number of tourists from Indonesia, Malaysia and the United States grew more modestly - about 2 per cent each - while the number of Japanese stayed about the same.

Going by the figures, the hotels also did a lot better, in terms of room occupancy rates and their plumped-up takings from raised room rates.

But although this delighted hoteliers, inbound travel agents saw some dark clouds.

They said the boom in the numbers came from business travellers, and that growth in the more price-sensitive leisure market had stagnated, with such travellers put off by the rising room rates.

Mr Allen Tsang, who chairs the inbound committee of the National Association of Travel Agents Singapore, said corporate travellers ‘were the only ones left who can afford the prices commanded’.

The breakdown for the year’s tourism arrivals is not available, but the STB counted 5,000 events for the meetings, incentive travel, conventions and exhibitions sector here last year.

CTC Holidays spokesman Jocelyn Su confirmed that the firm had cut short some tours here because its customers were unwilling to pay the much-higher prices:

‘Instead of three nights here, we now arrange for some tours to stay one night here, one in Bintan and maybe one in Johor Baru, which gives customers three countries for the same price.’

To these comments, STB chief Mr Lim said he expected the proportion of leisure visitors - now at 60 per cent - to dip, and for more people to come here for business, medical treatment or education.

Business travellers, who now make up 30 per cent of visitors, will swell to 35 per cent; those here for medical services and education should double from the current 10 per cent, he predicted.

Although optimistic about the prospects for this year, he said he was hopeful that the fallout from the global stock selloff would not deepen and hit tourism.

He said he was confident the economic fundamentals were still strong enough to power another good year.

Mr Lim is also banking on the new attractions - the Formula One race and the Singapore Flyer - to continue growing the tourism pie.

He conceded that the room crunch could crimp the growth in tourist arrivals, but pointed out that 10 new hotels would soon add 1,700 rooms to the current 37,000.

He added that the focus now was on encouraging visitors to spend 10-13 per cent more.
Source : Straits Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Sharp rally in Asia, but US, Europe still jittery - Singapore

Sharp rally in Asia, but US, Europe still jittery - Singapore

By Goh Eng Yeow, Markets Correspondent
AFTER two days of nightmarish plunges, Asia’s stock markets rallied sharply yesterday as investors took comfort from a dramatic slashing of US interest rates.
But the end to the savage sell-down may be shortlived as United States and European markets suffered falls after Asian markets closed.

Last night, Germany’s DAX, London’s FTSE and the CAC in Paris had all slumped 2 to 5 per cent on fresh worries about the state of the US economy.

At 2.30am Singapore time, the Dow Jones Industrial Index had shed 181.11 points after 4 hours of trading.

The Dow had dropped as much as 265 points within minutes of the opening bell, but its losses were pared as trading progressed. This was a repeat of Tuesday’s session, when it ended modestly lower after heavy losses earlier.

Things had been much brighter in Asia. Hong Kong - worst hit by the carnage on Monday and Tuesday - staged a spectacular recovery. The Hang Seng Index soared 10.7 per cent, or 2,332 points, its biggest oneday point gain ever, recovering 68 per cent of its losses.

Global markets have been battered by growing fears that the US economy is headed for recession and could drag the rest of the world down with it.

On Tuesday, the US Federal Reserve acted, slashing the key benchmark interest rate by a hefty 0.75 percentage points outside its usual meeting cycle. It hinted at more cuts later.

Yesterday in Singapore, investors went on a roller-coaster ride.

The benchmark Straits Times Index opened 106 points higher, only to lose all the gains and slip 15 points into the red before lunch.

But it rebounded strongly to close 117.07 points, or 4.1 per cent, higher at 3,104.25, its third biggest one-day point gain - thanks to heavy buying by European funds.

The rebound vindicated many market experts’ advice to investors to stay calm in the face of the worst three-week plunge seen by Asian bourses in a decade.

Traders hope the rebound can be sustained as expectations grow of a further Fed rate cut at its rates-fixing meeting next week.

But Europe’s fresh falls reflected renewed jitters about the deterioration of the US economy and its potential impact on the rest of the world.

Analysts say there is a growing fear that the markets selldown is not confined to stock investors, but will strike the wider economy and hit many ordinary people in the pockets.

The US is a vital Asian export market, so any slump in US consumer demand is bad news for many businesses in the region.

‘We can’t emphasise enough that the growing credit pandemic is global, and not restricted to the US or to developed markets,’ said Merrill Lynch’s chief investment strategist Richard Bernstein.

Goldman Sachs’ chief economist Jim O’Neil believes the Fed will follow up with another half-point cut next Wednesday to stay ‘ahead of the curve’.

Said day trader Peter Ong, 48: ‘The Fed has given us the best hongbao we could hope for as Chinese New Year approaches. If it had waited another week, we would all have been made bankrupts by the relentless margin calls.’
Source : Straits Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore will weather market turmoil: PM

Singapore will weather market turmoil: PM

Government sticking with growth forecast of 4.5%-6.5% despite fears of US slowdown

By Warren Fernandez, Deputy Editor & Foreign Editor
PARIS - PRIME Minister Lee Hsien Loong has said that he is confident Singapore will be able to weather the current turmoil in global financial markets and continue to do well economically this year.
While Singapore and Asia could not be sheltered from the ‘chill winds’ buffeting the world economy, and would be hit in the likelihood that the US economy goes into a recession, they were in a good position to face the economic storm ahead.

He said he was ‘confident that we are going to be able to weather this storm’.

Addressing a meeting of French business leaders yesterday, he gave several reasons why he remained bullish about Singapore and Asia, even as he gave a sober assessment of the economic impact of the drubbing that global markets took earlier this week.

Describing Monday as something of a ‘disaster’ in Singapore, which saw its worst one-day share price plunge since 1987, he said that the world’s capital markets were now linked as one common pool of global funds, and there was no way they could be delinked, as some economists had suggested.

Singapore and Asian economies would be hit if the United States were to be plunged into a recession, as seems likely, he said. The US remains a major market for many Asian countries.
With Singapore’s economy completely open to the world, and its external trade 31/2 times the size of its gross domestic product, there was ‘nowhere you can shelter from the wind chill’.

But PM Lee explained why he remained confident despite this.

He said Singapore’s efforts to restructure and upgrade its economy in recent years were paying off with a good stream of high quality investments, which would generate jobs and opportunities for Singaporeans.

He cited the plans by Norway’s Renewable Energy Corporation to build the world’s largest solar panel plant in Singapore, and also French company Soitec, which was constructing a major wafer fab plant.

Other projects, such as the $1.87 billion sports hub to be built by French firm Dragages, and work on the two integrated resorts would keep the construction industry more than busy for now.

The Republic was also increasingly linked to China and India, where robust domestic demand would continue to generate growth and boost Singapore and others in the region.

Singapore’s role as a regional service hub would ensure that the financial, transport and tourism sectors continue to do well. Major events such as next month’s Singapore Air Show and September’s Formula One race would give tourism a further boost.

Mr Lee added that four years of strong growth, from 2004 to last year, had ‘put us in a strong position’.

Other positive factors included the fact that Asian banks had been slow to embrace some of the new and more risky financial instruments, and so were limited in their exposure to the ’sub-prime’ or risky loans made by some US banks, which have contributed to the current market uncertainty.

Mr Lee also saw as a plus the Federal Reserve’s unprecedented 75 basis-point interest rate cut in between its regular meetings, as well as the Bush administration’s move to put together an economic stimulus package, which he hoped would be ‘passed expeditiously’ by Congress.

Despite the market volatility, Mr Lee said the government would not make a ‘knee-jerk’ reaction and would stick with its growth forecast of 4.5-6.5 per cent for the year for now.

Mr Lee left Paris later yesterday for Davos, Switzerland, to attend the World Economic Forum meeting.

Speaking in Riyadh, Minister Mentor Lee Kuan Yew also gave his assessment of the impact of a possible US recession on Asia.

He said that while the Chinese and Indian economies were not immune to a US slowdown, he believed they were now much less influenced by a US recession because they have got enough going in their own internal economies.

‘They can increase investments in infrastructure, they can increase consumption, they can increase all their projects and keep the economy buoyant. And if they can keep their economy up, say, instead of making 11, 12 per cent, they make 8, 9 per cent, then we will not go down so much. But that may take one, two years before we see the results.’

UP TO THE CHALLENGE
‘I am confident that we are going to be able to weather this storm.
This is not like the 1997 financial crisis, and we got through that. That was all around us, and we were at ground zero.

This is something broader, and in Asia, I think we are stronger, we are better prepared, and we will weather it.’

PM LEE

Source : Straits Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore Pacific Star launches Bangkok project here

Singapore Pacific Star launches Bangkok project here

(SINGAPORE) Singapore-based Pacific Star Group yesterday said that its first freehold residential-cum-retail development in Thonglor, Bangkok’s up-and-coming shopping and entertainment street, would be launched in Singapore this weekend.
The group said in a press statement that a select number of residential units in the project, called 8 Thonglor Residences, would be on sale at an exhibition to be held at Swissotel The Stamford’s Bras Basah Room from Jan 26-27.

The project, located between Sukhumvit Soi 55 and H1 - two bustling areas in the heart of Bangkok, with upmarket malls and trendy shops - is being marketed by DTZ Debenham Tie Leung.

Until recently, Thonglor was an unfashionable side street off Sukhumvit Road, Bangkok’s pre-eminent designer district. But the street, once dotted with tacky wedding centres, shabby restaurants and dilapidated car showrooms, has transformed itself into a swanky thoroughfare lined with designer boutiques.

8 Thonglor Residences is a 5,058 sq m mixed-use development comprising a 34-storey apartment tower with a mall spread over three levels housing a mix of food and beverage outlets and other lifestyle stores.

The building was acquired by Pacific Star’s 500 million euros (S$1 billion) fund Asian Real Estate Income Fund in November 2006 and redeveloped into a grade A property development.

Its residential component has a total of 196 units of one, two, three-bedroom apartments and penthouse duplexes.

Unit sizes range from 45 to 636 sq m each. Prices for the units have yet to be released.
Source : Business Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore West Coast sea-facing condo site launched

Singapore West Coast sea-facing condo site launched

URA site likely to attract top bids of $260 to $400 psf ppr, say analysts
By KALPANA RASHIWALA
THE Urban Redevelopment Authority (URA) yesterday launched the tender for a 99-year-leasehold condo site next to Blue Horizon condo facing West Coast Park and overlooking the sea.

‘The new condo will have views of West Coast Park, Clementi Woods and the sea, and yet be close to the CBD.’

- Knight Frank director(consultancy and research) Nicholas Mak

Property consultants generally expect the site at West Coast Crescent to attract widespread interest from developers given its strong attributes - the plot can be built into a new condo up to 36 storeys high boasting nice views of surrounding parks and the sea and just a 10-minute drive away from shopping and entertainment attractions at VivoCity, St James Power Station and Sentosa.

However, the range of likely top bids for the 1.2ha site with a 2.8 plot ratio (ratio of maximum potential gross floor area to land area) indicated by consultants polled by BT yesterday varied widely - from $260 to $400 per square foot (psf) of potential gross floor area.

At the high end, Savills Singapore director (marketing and business development) Ku Swee Yong predicts top bids for the site will be around $380-$400 psf of potential gross floor area, working out to absolute bid quantums of about $137 million to $145 million.

This will result in a breakeven cost of about $750-$800 psf for the new condo. ‘The developer should be able to achieve an average selling price of about $900-950 psf assuming the new project is launched next year,’ Mr Ku added.

He reckons units in the condo should enjoy strong demand from both owner occupiers as well as those seeking to rent out their units to expats, including Japanese, given the site’s proximity to the Waseda Shibuya Senior High School.

‘The western part of Singapore is attracting a lot of foreign investments from the petrochemical and pharmaceutical industries, among others.

‘The area is also near National University of Singapore, one north, and Science Park. So high-income professionals, researchers and engineers would be keen on living in the condo,’ Mr Ku said.

Agreeing, Knight Frank director (consultancy and research) Nicholas Mak added that the new condo will have views of West Coast Park, Clementi Woods and the sea, and yet be close to the CBD. ‘The District 5 site’s developer can count on demand from both the upgrader/mass market and mid-tier buyers,’ Mr Mak argues.

He expects the plot to attract three to six bids, with top bids in the $270-$310 psf ppr range, translating to breakeven cost of about $650-690 psf. ‘The developer would be looking at a likely average selling price of around $740-780 psf,’ Mr Mak added.

CB Richard Ellis executive director Li Hiaw Ho says that units at Blue Horizon next door were transacted in the resale market at an average $750 psf in Q4 last year. ‘Taking into consideration the award of a high-rise condo site in Boon Lay Way at $248 psf ppr in December 2007, it’s likely the mid-range of bids for the latest plot will come in at around $260-280 psf ppr, resulting in a break-even cost of around $600-650 psf. However, top bids may be higher than this, depending on market conditions at the time of the tender close.’

The site can be developed into a condo with about 300 units averaging 1,250 square feet. The tender for the plot closes on March 19.
Source : Business Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore developers seen posting sterling results

Singapore developers seen posting sterling results

But market turmoil, govts’ moves to curb inflation cloud this year’s prospects
(SINGAPORE) Singapore’s top three property developers are expected to report a sterling year of results, benefiting from a boom in Asia, but market turmoil and government intervention to curb house inflation is clouding 2008 prospects.
Keppel Land, which kicks off results for developers on Jan 29, is set to report fourth-quarter net profit more than tripled on rising property values and a one-off divestment gain, according to a Reuters poll of four analysts.

For the full year, Keppel Land’s net profit is expected to have more than doubled, reflecting strong residential property sales at its harbour-front Keppel Bay projects.

‘We’re expecting a very strong quarter for developers based on contributions from the residential sector,’ said Daiwa analyst David Lum.

Analysts say Keppel Land, 53 per cent owned by conglomerate Keppel Corp, will see fourth quarter earnings boosted by the divestment of its one-third stake in the One Raffles Quay office building to 40 per cent owned K-Reit Asia for S$939 million.

Private home prices in Singapore jumped 31 per cent in 2007, the largest increase in eight years, while developers will also benefit from booming property markets in China, India and Vietnam.

Mr Lum said a move by the government in October to cool Singapore’s housing market by ending a delayed payments scheme would have had little impact on the quarter.

But sales figures and the price growth of homes are expected to be slower in 2008, as homebuyers hold off on purchases to wait out the financial turmoil hitting global markets.

‘New property launches will probably be delayed until the second quarter of the year and beyond because buyers are more cautious, but we think prices will still pick up especially in the middle end of the market,’ said Wilson Liew, property analyst at Kim Eng.

Analysts expect CapitaLand’s fourth-quarter net profit to have slipped 23 per cent year-on-year, due to the absence of one-off revaluation gains that lifted earnings in the fourth quarter of 2006.

For the full year, five analysts polled by Reuters expect CapitaLand, South- east Asia’s largest developer by market value, to report a 135 per cent jump in earnings to S$2.4 billion.

Analysts say this would have been boosted by strong property sales in China, which currently contribute 32 per cent to CapitaLand earnings, despite a move by Beijing in July to curb property speculation by imposing a land appreciation tax.

‘The change had no impact as CapitaLand’s inventory in China is now close to fully sold, so any effect would probably only be felt later,’ said CIMB-GK analyst Donald Chua.

He also expects CapitaLand’s real estate investment trust (Reit) subsidiaries, which include CapitaMall Trust, CapitaCommercial Trust, and CapitaRetail China Trust, to continue making strong contributions.

City Developments, Singapore’s second-biggest developer, is expected to report fourth-quarter net profit slid 2.9 per cent from the same period the previous year, which was inflated by a S$151 million one-time gain from the divestment of four hotels to CDL Hospitality Trusts.

But analysts expect City- Dev to continue booking strong income from sales of its luxury apartments including the waterfront Sail @ Marina Bay project, and the sold-out Solitaire apartments in Singapore’s high-end Bukit Timah residential district.

For the full year, City- Dev’s net profit is expected to jump 77 per cent, according to a Reuters poll of five analysts.

They expect a further boost from continued earnings growth from its UK hotels arm, Millennium & Copthorne Hotels, which is scheduled to post its full-year results on Feb 20.

Shares in the three companies underperformed the 4.9 per cent fall in the benchmark STI Index in the quarter. Keppel Land shed 12.3 per cent, CapitaLand fell 23.1 per cent and CityDev was down 12.4 per cent. — Reuters
Source : Business Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Asian developers rise after US cut - HONG KONG

Asian developers rise after US cut - HONG KONG

Optimism that Fed’s interest rate cuts will bolster real estate sales

(HONG KONG) Sun Hung Kai Properties Ltd, Hong Kong’s biggest builder, and CapitaLand Ltd, Singapore’s largest, led gains in Asian property stocks on optimism that the US Federal Reserve’s interest rate cuts will bolster real estate sales.

Coming up roses? Investors studying the stock prices at a bank in Hong Kong yesterday; the Hang Seng Property Index rose 9.5 per cent, the biggest one-day jump since 1998
Sun Hung Kai rose 9.3 per cent to HK$154.90 at the 4 pm close in Hong Kong, the most in more than eight years as the city followed the US in cutting borrowing costs. Capitaland rose 7.8 per cent to $5.84 at the 5.05 pm close in Singapore. That helped drive the Bloomberg Asia Pacific Real Estate Index of 164 stocks up 6.5 per cent, the largest advance in at least nine years.

‘For those who’ve got cash in their hands, they’re taking advantage of the recent slump to accumulate on weakness,’ said Nancy Lee, who helps manage US$200 million at Taifook Asset Management Ltd in Hong Kong. ‘Now that we have a further rate cut, developers are looking even more attractive.’

Demand for real estate may rise as banks across Asia trim borrowing costs. HSBC Holdings plc cut its Hong Kong lending rate to 6 per cent after the US reduction, fuelling demand for credit in a city where property prices have been forecast to rise 45 per cent by 2010. HSBC’s cut would slash monthly payments on a 20-year, HK$1 million (S$185,900) loan to HK$7,164, down 13 per cent since the bank started cutting rates in September.

Sun Hung Kai and CapitaLand are among developers from developed Asian markets that are expanding into faster-growing countries such as India and China, gauging that their greater access to international capital markets will give them an edge over domestic builders.

DLF Ltd, India’s biggest developer, surged 7.1 per cent to 925 rupees as at 3.21 pm in Mumbai, snapping a six-day slide that slashed about US$14.5 billion from its market value.

India’s biggest developer has projects including a US$15 billion contract to develop with Dubai World a township near Bangalore, India’s technology hub.

Lower borrowing costs may also assist Emaar MGF Land’s plans to sell US$1.8 billion of shares in India beginning on Feb 1. The developer is a unit of Emaar Properties PJSC.

Unitech Ltd, India’s second biggest developer, traded 13 per cent higher at 396.90 rupees, reversing most of yesterday’s 15 per cent slide.

Central banks including those in Taiwan, Japan and the Philippines are under pressure to reduce interest rates or hold off further increases to boost growth amid concerns that the US will slip into recession amid fallout from the sub-prime mortgage crisis.

Cheung Kong (Holdings) Ltd, the developer controlled by Asia’s richest man, Li Ka-shing, surged 10 per cent in Hong Kong trading. Sino Land Co increased 9.3 per cent and Hang Lung Properties Ltd jumped 9.9 per cent. The Hang Seng Property Index rose 9.5 per cent, the biggest one-day jump since 1998.

Singapore stocks rose for the first time in four days after the US Federal Reserve cut its benchmark interest rate, seeking to avoid a recession in the city state’s biggest export market.

City Developments Ltd, Singapore’s second biggest property company, rose 8.1 per cent to $11.70. Keppel Land Ltd, the third largest, added 4.9 per cent to $5.95, its first gain in four days.

Sun Hung Kai, which in September said that it plans to increase investment in China to about HK$77 billion, last month joined Guangzhou R&F Properties Co and KWG Property Holding Ltd in a 4.6 billion yuan (S$923.2 million) project to build service apartments, offices, shops and hotels in southern China.

Investors are likely to put more money into Hong Kong real estate this year, following a 53 per cent increase in the value of deals last year, said CB Richard Ellis Group Inc, the world’s largest commercial real estate broker, in a report on Tuesday.

‘Following the buoyant investment activity in 2007, the investment market should remain robust in 2008, thanks to the influx of new international investors from the Middle East and South-east Asia,’ Henry Lam, executive director of investment properties for CB Richard Ellis in Hong Kong, said on Tuesday.

Strategists at Credit Suisse and Celestial Asia Securities Holdings Ltd expressed concern that yesterday’s rally could be short-lived.

Changes in Hong Kong housing prices tend to track changes in stock prices, Clifford Lam and Miranda Lai from Credit Suisse wrote yesterday in a research note.

‘We still believe that the chance of disappointment in the housing market is going to be high,’ the Hong-Kong based analysts wrote. — Bloomberg

Source : Business Times - 24 Jan 2008

Singapore Property - Buy , Sell , Rent , Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com