Singapore Home prices hold their own, but just barely

Singapore Home prices hold their own, but just barely

Analysts expect at least one quarterly dip this year
By KALPANA RASHIWALA

(SINGAPORE) Despite the quieter market, home prices continued to edge up in the first quarter, although at a slower pace, latest flash estimates show.
 
 
The quarter-on-quarter rate of increase in the Urban Redevelopment Authority’s price index for private homes decelerated to 4.2 per cent in Q1 this year, after a 6.8 per cent gain in Q4 2007.

Some property consultants are now factoring in declines for at least one of the remaining three quarters of this year, as the full impact of the US economic slowdown bites into the local property market.

URA’s flash estimate also showed that regional sub-indices for non-landed private home prices posted smaller gains all-round in Q1 this year than they did in Q4 2007. However, the 4.8 per cent increase in the Outside Central Region (OCR) in Q1 outpaced gains of 4.4 per cent in the Core Central Region (CCR) and 3.9 per cent in the Rest of Central Region (RCR) - for the first time in four years.

Jones Lang LaSalle said prices are steady in the CCR, supported by deep-pocketed investors, but may be peaking in the RCR, while demand continues to be strong in the OCR as en bloc sellers pick up replacement homes in the suburbs, where prices are relatively more attractive.

In the public housing segment, the Housing & Development Board’s flash estimate shows that the HDB resale flat price index rose 3.4 per cent in Q1 over the preceding quarter, again slower than the 5.7 per cent increase posted in Q4 last year.

Knight Frank director (consultancy and research) Nicholas Mak said that in a worst-case scenario - assuming the Singapore economy contracts in the coming months - URA’s overall price index for private homes could post a full-year increase of zero to 5 per cent.

This factors in one quarter of decline, to the tune of 0.5 to 2.5 per cent, possibly towards the end of the year. Any decline in the index would be the first since Q1 2004, Mr Mak added.

Mr Mak’s best-case scenario is for a 10-15 per cent full-year gain in the index, with increases in all four quarters.

URA’s private home price index rose 31.2 per cent in 2007.

Colliers International’s director for research and consultancy Tay Huey Ying too said that the Singapore property market is likely to experience the full impact of the US economic slowdown by Q3 or Q4 this year.

In a worst-case scenario, URA’s private home price index may rise 8 to 10 per cent for the whole of this year, with possibly a decline in the fourth quarter of not more than 4 per cent, Ms Tay said.

In a best-case scenario - if the US enters a mild recession and recovers by the year-end and Singapore’s GDP growth rate is at the higher end of the MTI’s forecast of 4 to 6 per cent - the full-year increase in URA’s index could be 12-15 per cent.

For the next quarter, CB Richard Ellis is predicting a marginal rise in the index, of about one to 2 per cent from the Q1 level. It estimates that developers sold about 700-1,000 private homes in Q1, less than the 1,449 units they sold in Q4 last year.

Observers said that price gains in the OCR may have come from the secondary market, from completed developments like The Clearwater and Aquarius by the Park in the Bedok Reservoir area. The fact that a new launch in the area, Waterfront Waves, sold for an average price of about $800 psf could have encouraged the trend.

In the western part of Singapore, units sold at The Lakeshore and LakeHolmz in the Boon Lay vicinity may also have helped boost the sub-index for non-landed homes in the OCR, analysts suggest.

Knight Frank’s Mr Mak said that the 4.4 per cent gain in the CCR during Q1 was the lowest rate of increase in the past seven quarters.

As for the HDB resale price index, ERA Singapore assistant vice-president Eugene Lim predicts a full-year increase of not more than 10 per cent, compared with a 17.5 per cent jump in 2007.

Some demand may be taken away from the resale market because of a higher supply of new flats coming onstream, so resale prices may increase at a more measured pace in the coming months.

The HDB said in its release yesterday that the total planned Build-To-Order (BTO) supply of 6,100 new flats for Jan-Sept 2008 will surpass the annual BTO flat supply in 2007 (6,000 units) and 2006 (2,400 units).

HDB’s records show that in February 2008, about a quarter of resale flats were transacted at prices not exceeding $10,000 above market valuation.

Source : Business Times   - 02 April 2008

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More red ink at UBS, but GIC stands by investment - Singapore

More red ink at UBS, but GIC stands by investment - Singapore

Swiss bank plans rights issue, giving GIC right to renegotiate terms of investment
By MICHELLE QUAH

(SINGAPORE) The Government of Singapore Investment Corp (GIC) is standing by its 11 billion Swiss franc (S$15.1 billion) investment in UBS, despite the Swiss bank’s announcement yesterday of a second straight quarterly loss - and an additional US$19 billion writedown - from the US sub- prime market meltdown.
 
Mr Kurer: To succeed UBS chairman Marcel Ospel who is stepping down at the bank’s AGM later this month 
GIC has also not ruled out a fresh injection of cash into UBS, which is looking to raise 15 billion Swiss francs in a rights issue to pad up its capital base.

When asked if it would participate in this second round of fund-raising, GIC said: ‘(We) will examine the terms of the rights issue and obtain other necessary information before we decide.’ This rights issue comes soon after the investment by GIC in December. UBS said then it would not need to raise capital again, being well-fortified.

But it’s going to the market for fresh funding again, after having to write down an additional US$19 billion on US real estate and related assets - taking its total writedowns to almost US$38 billion.

The bank reported a net loss of 12 billion Swiss francs in the first quarter. Its chairman Marcel Opel, who took responsibility for the situation, will step down later this month. But far from being battered by the news, UBS stock price rose as much as 10 per cent in Swiss trading on optimism it will recover from its sub-prime losses.

GIC’s investment in UBS notes was set to convert into a stake of up to 9 per cent in the Swiss bank in two years. The rights issue could dilute this.

GIC has, however, brushed off such concerns, saying the rights issue is ‘required to restore the capital position of the bank to a strong level’.

‘The dilution to shareholders as well as to holders of mandatory convertible notes is a necessary step in the long-term interests of the bank,’ GIC said yesterday.

It added that it could not make reasonable calculations as to exact dilutive effect at this point, as the terms of the rights issue have yet to be fixed.

UBS’s fresh attempt at fund-raising will, however, give GIC the right to renegotiate the terms of its investment. Under the terms of the bond, the maximum conversion price for the shares may be lowered if the bank sells more than 5 billion Swiss francs worth of new shares or equity-linked securities at lower prices or with a higher interest payment within one year of the investment.

When asked how the terms of its investment would be adjusted, GIC would only say: ‘The conversion price will be adjusted to reflect the value of the rights given to shareholders of common shares. This is a common practice for convertible securities.’

UBS’s Tier 1 capital ratio, a key measure of solvency, is expected to be at about 10.7 per cent after the rights offering is completed. The Swiss lender’s holdings of sub-prime assets fell to about US$15 billion, as at March 31, 2008, from US$27.6 billion, as at Dec 31, 2008.

UBS joins Citigroup and Merrill Lynch in having to source for a second round of funding from the market. Citigroup received a cash injection of US$7.5 billion in November and another US$14.5 billion in January - of which GIC invested US$6.88 billion. Merrill Lynch raised US$5.6 billion in December and US$6.6 billion in a second round in January.

UBS also announced yesterday that it is hiving off ailing parts of its business into a separate unit, and that it is prepared to cut more jobs to stem losses.

Its chairman Marcel Ospel, 58, will step down at the bank’s annual general meeting later this month, after resisting earlier calls - when UBS reported losses in the previous quarter - to do so. He said in a statement: ‘I ultimately take responsibility for the bank’s situation. With the measures that we have already taken, the proposals we are submitting to the annual general meeting and the processes we have put in place to deal with lessons learned, I believe that I have made all necessary contributions.’

Mr Ospel will be succeeded by the group’s general counsel (senior lawyer) Peter Kurer, 58.

GIC said it had been been consulted by the UBS board on Mr Ospel’s departure and Mr Kurer’s appointment, and was ’supportive of the decision’.

UBS has also indicated it intends to cut jobs in its investment bank - seen as the source of the losses, as opposed to its thriving wealth management division - as it fights to contain the damage.

Former UBS CEO Peter Wuffli, finance chief Clive Standish and investment banking head Huw Jenkins were earlier casualties of the bank’s financial plight.

Market pundits are currently still divided over whether the latest earnings report from UBS could spell the end of the worst. There are also concerns over the true depth of the financial industry’s troubles, following a 2.5 billion euro writedown by Deutsche Bank yesterday. Deutsche Bank also said that market conditions have become ’significantly more challenging’.
Source : Business Times   - 02 April 2008

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Singapore Property market may stay quiet for up to a year

Singapore Property market may stay quiet for up to a year 

Home prices, sales could remain weak as US sub-prime concerns linger

By Fiona Chan, Property Reporter 
 
A MONTH ago, property consultants were predicting that the cooling market would pick up after June. That optimism has fast drained away.
Consultants now expect home prices and sales to remain weak for up to a year from now, after official estimates yesterday confirmed that price growth was tapering off.

‘We can expect residential prices to continue weakening over the next 12 months’, in the light of the United States sub-prime debacle and an expected US recession, said Jones Lang LaSalle (JLL).

Other consultancies, such as CB Richard Ellis Research, believe price growth will slow further in the second quarter, to ‘1 per cent or 2 per cent’.

Home sales are also plunging as buyers retreat - and they are expected to stay low as sellers dig in their heels to wait out the slowdown.

New home sales were likely to have dropped in the first quarter to one of the lowest levels ever, second only to those recorded during the Sars period.
In the secondary market, sales have fallen to 2005 levels, according to estimates from Savills Singapore.

Mid-tier private properties on the city fringe, such as in Novena, Toa Payoh, Marine Parade and Queenstown, are likely to be hardest hit by falling buyer demand.

These areas saw the biggest slowdown in price growth in the first 10 weeks of the year, suggesting that prices in these regions may be peaking, said JLL.

Buyers in these areas have shallower pockets and are more sensitive to market sentiment, it added.

In the HDB segment, prices have stabilised at about $50,000 cash over valuation or less, said Mr Eugene Lim, assistant vice-president at ERA Realty Network.

‘Resale flats priced higher than that take much longer to sell or may not sell at all.’

Phillip Securities Research, meanwhile, aired concerns over the ‘huge supply’ of homes due to be completed in the next two years.

Supply is ‘expected to exceed the demand from buyers and result in a slide in local property prices from 2010′, it said.

HDB plans to release another 5,000 new build-to-order flats in the next six months. There are also 64,900 private homes in the pipeline, of which 90 per cent will be completed by 2011, while 60 per cent have yet to be sold.

Most experts believe, however, that confidence and demand will return by year-end - as long as the Singapore economy stays robust.

‘Sellers now take a while to sell their homes, but there are still buyers,’ said Mr Eric Cheng, the executive director of HSR property group.

‘Last year, it took maybe a month to sell a home. Now, it takes two months. But in 2000 or 2002, it took a year,’ he said.
 

Source : Straits Times   - 02 April 2008

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Singapore Home prices growing, but less sharply

Singapore Home prices growing, but less sharply 

By Fiona Chan, Property Reporter 

HOME seekers waiting for property prices to fall in a sluggish market were disappointed by numbers released yesterday.
Government estimates showed that the prices of private and Housing Board homes continued to rise in the first three months of the year to near their 1996 peaks.

But growth was markedly lower than before and is likely to slow further in coming months, experts said.

Some even suggested that home prices may start to ease later this year - for the first time in four years - if the Singapore economy brakes more sharply than expected.

Mr Nicholas Mak, director of research and consultancy at Knight Frank, was among industry watchers who had expected prices to plateau or even dip in the first quarter, after developers reported dismal sales of new homes in January and February.

But prices held stubbornly, backed by a still healthy economy, some new launches at benchmark prices and the reluctance of sellers to lower asking prices.

However, the number of home sales plunged from last year, leading consultants to warn that yesterday’s price figures are based on fewer deals and may not be representative of the whole market.

They added that buyers willing to take the plunge now are mostly genuine occupiers, with speculators having almost completely exited.

Private home prices climbed 4.2 per cent in the first 10 weeks of the year, down from 6.8 per cent in the previous quarter and the smallest rise since 2006. Suburban home prices gained the most, rising 4.8 per cent.

HDB resale flats also saw a smaller increase in prices: 3.4 per cent, compared with 5.7 per cent previously.

The ‘weaker than expected’ growth comes amid continued volatility in global stock markets and a weaker Singapore market outlook, said Mr Chua Yang Liang, Jones Lang LaSalle’s head of research for South-east Asia.

But Ms Tay Huey Ying, director of research and consultancy at Colliers International, called the price growth ‘very encouraging’, given the few transactions.

Property consultants took the chance yesterday to cut their forecasts for price growth for the whole year.

Most now predict single-digit rises compared with their earlier estimates of growth between 10 and 20 per cent. Last year, private home prices soared 31 per cent while HDB resale prices jumped 17.5 per cent.
Source : Straits Times   - 02 April 2008

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Singapore PM still looking for his successor

Singapore PM still looking for his successor 

It takes about three elections to groom a leader, so there’s no time to lose, he says

By Lydia Lim, Senior Political Correspondent 
Urgently seeking talent: ‘I have found some people, but we want the best possible team.’ — PM Lee (above, at the Istana yesterday) on his priority, developing a team from whom to draw the next PM and DPMs.
 
THE Prime Minister faces an urgent task: Find and field those who can take over from him before he turns 70.
Already 56, Mr Lee Hsien Loong is seeking political talent in their 30s and early 40s, one of whom he hopes will emerge as his successor.

He has no time to lose as past experience indicates that it takes about three general elections to groom a leader.

This means those who contest the next polls, due by 2011, might be ready to lead only two elections after that.

By then, Mr Lee will be 69 years old.

‘That is very late. So there’s no time to be lost,’ he said in an interview with The Straits Times and Chinese daily Lianhe Zaobao at the Istana yesterday.

He made the point in response to questions on the Cabinet reshuffle announced over the weekend.

However, he stressed, it is not for him to decide who the next prime minister will be.

It is for the younger ministers and others of their generation to pick someone they have confidence in and support.

That person must be someone Singaporeans will accept as their leader.

‘My job is to make sure that there’s as strong a team as possible. A whole Cabinet which is capable, and then among them, some star players,’ Mr Lee said.

Of concern to him is the outflow of top talent abroad.

He looked at recent data on the 600-odd students who score four As in their A levels each year.

About two-thirds pursue university degrees here, and one-third go overseas.

Of those who go overseas, at least 100 are not on scholarships. About half of these non-scholarship holders do not return but work abroad after they graduate.

In addition, another 100 of those who get their degrees here go overseas to work. They may come back one day but there is no guarantee.

‘This flow is going to continue,’ Mr Lee said.

‘So it’s a big challenge to find successors, particularly for politics.’

However, the appointment of MP K. Shanmugam as Law Minister in the new Cabinet is a ‘major step forward’, he said, as he has been looking for a successor to Professor S. Jayakumar for a very long time.

The promotion of five ministers of state to the senior grade is another step forward.

The Prime Minister wants to give them greater exposure to government work and political life, but has ‘no doubt that in time, some of them will make it as ministers’.

He confirmed that there will be further Cabinet changes before the next polls.
Source : Straits Times   - 02 April 2008

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Singapore HDB and private property prices up in Q1 flash estimates

Singapore HDB and private property prices up in Q1 flash estimates
Private residential property prices in Singapore rose 4.2 percent in the first quarter this year, according to the latest preliminary estimates from the Urban Redevelopment Authority.

The pace was slower than the 6.8 percent clip recorded in the fourth quarter of last year.

On a quarter-on-quarter basis, the biggest rise in property prices for non-landed properties came from outside central region - up 4.8 percent in the January-March quarter compared with the October-December period.

Properties in the prime districts of 9, 10 and 11, as well as the downtown area and Sentosa, rose 4.4 percent on quarter.

Prices in the rest of the central region increased 3.9 percent in the first quarter from the previous three months.

The preliminary estimates were based on transaction prices given in caveats lodged during the first 10 weeks of the quarter, as well as the number of new units sold.

Meantime, the Housing and Development Board (HDB) said prices of HDB resale flats rose 3.4 percent in the January to March period over the previous three months. This was lower than the 5.7 percent increase in the fourth quarter.

Both the URA and HDB will release final figures at the end of April.

The URA said that as at 4th Quarter 2007, there are about 64,900 private residential units in the pipeline, of which about 56,100 new private housing units are expected to be completed between 2008 and 2011.

There are also some 38,300 units that have yet to be put on sale by developers.

As for the supply of government flats, the HDB said it had made available in the first quarter of this year some 1,100 new flats in two Build-To-Order (BTO) projects in Punggol and Yishun.

It said that depending on demand, there could be another 5,000 new BTO flats in towns such as Punggol, Sengkang, Woodlands and Bukit Panjang.

The total planned BTO supply of 6,100 new flats for January till September 2008 will surpass the annual BTO flat supply in 2007 and 2006.

This new supply of flats will be in addition to those offered under Balloting Exercises for surplus replacement SERS and other flats, as well as the planned release of three Design-and-Build sites in Simei, Toa Payoh and Bedok with some 1,500 flats in the first half of 2008. - CNA/sf

Source : Channel NewsAsia   - 02 April 2008

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S’pore home prices rise at slower pace in first quarter

S’pore home prices rise at slower pace in first quarter

By Wong Siew Ying,

SINGAPORE: Prices of HDB resale flats rose 3.4 percent in the January to March period over the previous three months, according to flash estimates released by the HDB. The increase was lower than the 5.7 percent pace in the fourth quarter.

The slower rise in resale flat prices comes as no surprise to industry watchers who attribute it to the cautious sentiment in the overall property market.

They say buyers are not willing to fork out high cash over valuation, in view of the additional supply of flats in the pipeline.

So going by the current market sentiments, property agents say a 10 percent price increase for HDB resale flats this year is unlikely. Prices for HDB resale flats rose 17.5 percent last year.

But the showing for the first quarter isn’t bad, say property agents.

Ku Swee Yong, Savills’ director for international marketing, said: “Year on year, it (Q1 2008 Resale Price Index) is still up about 21 points, which is about 20% growth… that’s pretty strong. Buyers are still willing to pay above S$10,000 cash over valuation. That also represents very solid real demand…”

The slowdown in price increases in the private residential sector is also more noticeable in the first quarter this year. Prices rose 4.2 percent, compared to 6.8 percent in the last quarter.

The dip in private home price gains is the biggest quarterly drop in more than seven years since the third quarter of 2000 when prices fell by over 4 percent.

Market watchers say thin sales volumes in the quarter and developers’ resistance to cutting prices may have helped sustain the price increases.

Cushman & Wakefield’s Donald Han said: “It’s quite encouraging on the basis that we had very low volume in terms of transaction numbers for the first quarter, something like over 800 units were transacted in the first quarter compared to the average of 3,000 to 4,000 sold in 2007 on a per quarter basis.”

The slowdown in price gains was seen across all districts in Singapore, covering the high-end as well as the mass market segments.

According to the URA, prices of non-landed private residential properties increased by 4.4% on quarter in the core central region in the first quarter, slower than a 7.5% increase in the previous three months.

Prices of properties in the rest of the central region increased by 3.9% in the quarter, compared with a 7.7% increase in the previous period. Outside the central region, prices increased by 4.8%, slower than a 7% rise previously.

Analysts expect transaction volume of residential properties to be thin for the next three to six months and price increases to be moderate in the next quarter.

Donald Han, managing director of Cushman & Wakefield (Singapore), forecasts a 3% to 4% rise in the next quarter.

He expects the property market to be active again, probably towards the later half of this year when stability returns to the credit crunch market.

On the rental market, analysts say it will continue to perform well in view of the large influx of foreign workers to be expected in Singapore when the two integrated resorts are ready in the next two years. - CNA/ir

Source : Channel NewsAsia   - 02 April 2008

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