Property analysts say muted property market situation is temporary

Property analysts say muted property market situation is temporary
By Ng Baoying,
 
SINGAPORE: Investors have been cautious about the property sector amid expectations that the muted residential property market will weaken further. However, some property consultants are taking a slightly more positive stance, saying that this situation is temporary.

Transaction volumes for private homes have been thin, with developers holding back launches or cutting prices. And recently, there have been a slew of bearish reports from the likes of JP Morgan and Nomura, which are further dampening sentiment.

They said that private home prices could drop by as much as 35 per cent in the upper-end segments of the private residential property market by 2010 due to excess supply and poor sentiment.

They argue that marginal speculative sellers are likely to drive prices lower amid low transaction volumes and higher unsold pre-sale inventories.

Lower rental expectations and a large increase in supply are also seen compounding the situation in the longer term. Some also said the middle and low-end segments will not be spared.

But there are some property consultants who said that while things are slow now, dynamics will change going forward.

While the consensus view is that prices will continue to remain under pressure for the rest of the year and into 2009, some consultants said that the main reasons for falling prices are external.

Chua Chor Hoon, Senior Director, Research, DTZ Debenham Tie Leung, said: “It’s mainly the external factor, because of what’s happening in US, so sentiments are really weak now.

“(It’s also) partly because prices have gone up quite a lot last year - especially after the deferred payment scheme has been removed that made buyers more cautious. It’s a combination of factors, but I believe it’s the US economy that has a greater impact.”

She believes that prices will continue falling for the rest of this year and even into the year ahead, but a glimmer of hope exists.

Ms Chua said: “Prices are likely to fall for the rest of this year and they could continue to fall next year depending on how the US economy pans out.

“But we have a lot of good things coming up in 2010 - Youth Olympics, integrated resorts. So our fundamentals are quite strong. When the US economy picks up, I believe sentiments will follow suit.”

And some point out that the bearish reports are due to an over-estimation of supply numbers.

Ku Swee Yong, Director, Marketing & Business Development, Savills (Singapore), said: “The differences arose because of variance in the interpretation of a very basic set of data - the supply numbers - how many apartments will be completed in the next three years.

“We believe that the supply numbers have been overstated because there have been many projects filed and we know that these projects have been delayed.”

What is clear though is that shares in property developers have been taking a hit amid concerns over the property outlook. Most of them closed lower on Wednesday. - CNA/vm

 
Source : Channel NewsAsia  - 30 May 2008

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Pacific Star increases stake in Prime REIT to 50% - Singapore

Pacific Star increases stake in Prime REIT to 50% - Singapore
SINGAPORE : Singapore-based real estate investment house Pacific Star Group has agreed to buy the 25 percent stake held by MEAG Munich Ergo Asset Management in Prime REIT Management Holdings.

Prime REIT owns 100 percent of listed Macquarie Pacific Star Prime REIT Management. It is also the sole owner of Macquarie Pacific Star Property Management, which is the property manager of MMP REIT.

The purchase will increase Pacific Star’s interest in Prime REIT to 50 percent. Pacific Star’s existing stake in Prime REIT is held through its associated company Investmore Enterprises.

Pacific Star said the purchase reaffirms its commitment to the growth of the REIT industry in Singapore. - CNA /ls

Source : Channel NewsAsia  - 30 May 2008

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Singapore Sentosa launches fund to further marine cause

Singapore Sentosa launches fund to further marine cause
RESORTS World at Sentosa (RWS) yesterday launched a fund to sponsor education, research and conservation efforts related to marine life in a bid to further the marine conservation cause.
The RWS Marine Life Fund will disburse up to S$100,000 each year in 2008 and 2009, and up to S$1 million each year from 2010 when the Resort opens.

‘We hope to see some good applications for the Marine Life Fund. What’s exciting for us is that this fund is not reserved only for established conservation groups, but it has a pocket solely devoted to kids,’ said RWS’s Communications head Krist Boo.

‘We hope it will encourage children to learn about the ocean, and to love it. The online application process is easy for all.’

The new initiatives launched are an extension of the Resort’s conservation efforts. In 2006, RWS undertook the initiative to relocate corals and other marine life around the northern coastline affected by reclamation works that were carried out as part of the Resort’s construction.

 
 
To encourage and cultivate an interest for the oceans, besides researchers and NGOs, the Fund is also open to schoolchildren. 25 per cent of this Fund will be set aside for kids working on school projects related to marine conservation. There is no cap on the applied funding, and projects could span anything from fieldwork to classroom models. All applications will be assessed by a RWS committee which oversees the Fund, and for applications for funding above $20,000, an independent reviewer will be included in the assessment.

 
Source : Business Times - 30 May 2008

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Singapore HDB resale price growth expected to remain low

Singapore HDB resale price growth expected to remain low

Moderate 4-10% growth seen for 2008: Knight Frank
By ARTHUR SIM

THE rate of price increase of Housing and Development Board (HDB) resale flats will further decelerate in the next six to nine months, resulting in a relatively moderate 4-10 per cent growth for the whole of 2008.
Knight Frank director (research and consultancy) Nicholas Mak added: ‘If the local economy were to slip into a recession in 2008, overall prices of HDB resale flats could vary between a 2 per cent contraction and a 3 per cent growth for the year.’

Knight Frank’s projections are based on HDB’s resale price index, which increased in Q1′08 by 3.7 per cent over the previous quarter. But Mr Mak explained that price movements in the resale market are difficult to project because data on average valuations are not available even if median prices, which is likely to include cash-over-valuation (COV), is.

As such, Mr Mak expected that median COV of all resale flats, which fell to $21,000 in Q1′08 from $22,000 in Q4′08, could continue to fall this year.

Another possible cause for lament is that potential HDB upgraders - a significant factor in private mass market housing - could disappear in sync with falling HDB resale transactions.

In Q1′08, transactions fell about 6 per cent to 6,358 units from 6,748 units in Q4′07.

 
 
Knight Frank also believed that HDB upgraders have been supporting the private secondary market, which saw 3,521 units transacted in Q4′07.

While it did not have precise numbers of HDB upgraders buying into the secondary market, it noted that in Q4′07, the greatest number of private secondary market transactions occurred in the Outside the Central Region (OCR), and was ‘attributable to the HDB upgraders bracket’.

And Knight Frank believed that there could be an emerging resistance to swelling home prices.

In January, Knight Frank noted that City View @ Boon Keng, under HDB’s Design, Build and Sell Scheme (DBSS), pushed prices to $727,000 for a five-room unit. While the launch generated a lot of buzz, at end March 2008, 250 of the 714 flats available were still unsold.

‘The issue that arises is the validity of the pricing of such DBSS flats. Keeping in mind that there are more of such developments proposed in places like Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok, and given that they are still bound by public housing rules such as the income ceiling of buyers, one could begin to wonder about the intrinsic affordability of public housing initiatives,’ Mr Mak said.

 
Source : Business Times - 30 May 2008

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Singapore NTUC Income rules out option to stay in old bonus scheme

Singapore NTUC Income rules out option to stay in old bonus scheme

By GENEVIEVE CUA
IN his plainest statement yet on a controversial bonus cut, NTUC Income chief executive Tan Suee Chieh said yesterday the move is the right decision and policyholders will not be given an option to remain in the old bonus scheme.

Mr Tan Kin Lian: Disagrees with Income’s view that the old bonus rate is unsustainable 
Income announced last month that it would cut its annual bonus payouts for participating plans from 2.3 to 1.3 per cent and raise its special or terminal bonus rates from 25 per cent to between 30 and 120 per cent.

That move has raised the ire of its former chief executive Tan Kin Lian, whose postings in his blog have galvanised other policyholders.

News reports this week said Mr Tan Kin Lian was calling a truce in his protest. But a letter from him in The Straits Times yesterday said he disagreed with Income’s view that the old bonus rate was unsustainable. He said the actual yield earned by the life fund was higher than the projected yields at point of sale.

In a statement yesterday ahead of Income’s annual general meeting, Mr Tan Suee Chieh said Income’s board has ‘recognised’ that its financial position had to be strengthened since August 2006. The issue was ‘extensively discussed’ last year.

He said an appointed actuary’s opinion was that under the old structure, Income would be less likely to meet policyholders’ payouts and would end up with a weaker financial position.

‘The old structure was not sustainable and would undermine our ability to deliver total returns, which are ultimately more important to policyholders,’ Mr Tan Suee Chieh said. ‘There is now a better chance for NTUC Income to not only deliver returns as illustrated to policyholders, but to deliver even better returns.’

He also said the new bonus structure will reduce the likelihood of bonus cuts in the future.

While Income’s life fund has generated a total annualised return of about 7.8 per cent over the past 10 years, that is understood to comprise income and capital gains. The fund is understood to generate a running yield of between 2 and 3 per cent.

It is also understood that the old structure would have needed a running yield of 4.5 per cent a year to sustain the old bonus rates.

The new bonus structure is expected to release some $70 million of capital. This is expected to grow to $400 million over a few years to give Income greater flexibility in terms of investments.

Under the risk-based capital regime, high bonus rates will require high capital reserves, as bonuses once declared are guaranteed. Income has a capital adequacy ratio of about 180 per cent. And while well above requirements, it is one of the lower ratios in the industry.

Nick Dumbreck, president of the UK Institute of Actuaries, who also acted as consultant to Income, said: ‘Most policyholders’ main concern is with what they get back from the policy when it matures or is surrendered. The level of guarantee is secondary.

‘The level of guarantees has to be managed so that the exposure to equities can be sustained. That may mean cutting the annual bonuses. It is better to take action in advance of a problem arising. Once investment conditions become difficult, it can be too late to do anything.’

Mr Dumbreck said the ‘normal’ practice in the UK is to adjust the level of the final bonus and the annual bonus remains stable. ‘Normally the level of the regular bonus is set with reference to interest rates and bond yields,’ he said.

‘If bond yields remain stable, equity returns shouldn’t influence the annual bonus level. Normally you’d expect the final bonus to vary rather more from year to year to reflect the level of equities subject to smoothing.’

Source : Business Times - 30 May 2008

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Singapore could be gas pricing hub

Singapore could be gas pricing hub

Deregulated market, LNG trading make case for country, says consultant
By RONNIE LIM
ALREADY a major international oil pricing hub, Singapore has the credentials to become an international gas pricing hub too, according to a consultant who has helped advise the Republic on its gas code.
‘All eyes are on Singapore, which in July this year will launch its liberalised gas market,’ London-based Tony Taylor, lead consultant with energy consultancy Tri-Zen International, told a regional gas conference here yesterday.

That will make Singapore the only country in the Asia-Pacific with such a deregulated gas market, he said.

With this, the Energy Market Authority will introduce a Gas Network Code governing market players’ behaviour and licences for importing, shipping, retailing and transporting gas. The Gas Act has been modified to legalise this process.

The result will be open, third-party access to gas infrastructure, including the four natural gas pipelines - two from Malaysia, one from Sumatra and the last from West Natuna - and the liquefied natural gas (LNG) terminal that will be operational on Jurong Island in 2012, Mr Taylor said.

Apart from ensuring security and diversity of gas supply - instead of relying only on piped supplies from Malaysia and Indonesia - Singapore also aims to use the LNG terminal to trade gas regionally.
There was talk of Indonesia and Malaysia also wanting to do this with terminals in Batam and Tanjung Pelapas, but that seems much further down the road, Mr Taylor said.

He was sceptical at first about Singapore’s LNG trading plan, but now reckons that despite its small market size, Singapore will change the LNG landscape, being well-positioned for East-West trade.

Current global LNG pricing hubs include the Henry Hub in the US, the National Balancing Point in the UK and Japan Crude Cocktail, Mr Taylor said. And now ‘there is a case for Singapore setting an international market price for LNG’.

Singapore is already a major international oil refining and oil trading centre, and the market has become familiar with oil prices quoted on the Singapore spot market.

In gas, the Republic currently has four natural gas pipeline contracts with gas prices indexed to that of high sulphur fuel oil. It also has a legal, corporate governance and financial structure equal to those in centres like New York and London.

With Singapore imposing an import control policy on piped gas to ensure viability of the LNG terminal, this could effectively cause piped gas and LNG prices to converge, thus providing elements of pricing transparency.

‘If and when Singapore gains liquidity in LNG trades, a marker price may then be linked to an average price of Singapore LNG trades,’ he said.

But unlike crude and oil products that can be easily stored and traded, he said that LNG lacks fungibility, so LNG trades here will likely involve ‘displacement trades or paper trades’.

BG Asia Pacific - previously part of British Gas - was chosen last month as the sole LNG buyer for Singapore and has started negotiating supply and purchase contracts with potential buyers here, he said.

The $1 billion Singapore LNG terminal will build up throughput from an initial 1 million tonnes a year in 2012 to 3 million tonnes by 2018, with plans for an eventual doubling in capacity to 6 million tonnes.

 
Source : Business Times - 30 May 2008

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Facebook’s not for sale - even for $21b - CALIFORNIA

Facebook’s not for sale - even for $21b  - CALIFORNIA
GOAL: Mr Zuckerberg says Facebook intends to execute plans such as helping users share information more easily.
 
CALIFORNIA - FACEBOOK chief executive officer Mark Zuckerberg has no plans to sell the social networking site, even if Microsoft offered US$15 billion (S$20.6 billion).
‘The end goal isn’t to sell the company or IPO,’ Mr Zuckerberg, 24, said on Wednesday at the All Things Digital conference.

‘The goal of the company is to execute on the things we talked about before,’ he added. This would include helping users share information more easily.

Facebook has held at least three rounds of fund raising in the past year to expand overseas and take on more Web traffic.

The Palo Alto, California-based company borrowed US$100 million this month after visitors to its website tripled.

Facebook, the second most popular social networking service, is closing in on market leader MySpace, which is owned by News Corp.

Microsoft bought a 1.6 per cent stake in Facebook for US$240 million in October last year, valuing the business at US$15 billion.

While Microsoft has approached Facebook about a purchase, the companies are not in active talks, The Wall Street Journal reported this month.

Facebook had 109.2 million users in March, up from 32.1 million a year earlier, according to research firm ComScore. MySpace had 166.6 million users, up from 106.9 million last year.

Mr Zuckerberg started Facebook in 2004 from his Harvard University dormitory room. Facebook increased its appeal last year by expanding the site beyond college students. It also started offering software applications created by independent developers.

BLOOMBERG NEWS

Source : Straits Times - 30 May 2008

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Yahoo says Microsoft no longer keen on takeover - CALIFORNIA

Yahoo says Microsoft no longer keen on takeover  - CALIFORNIA

Software giant shifts focus to handling search firm’s online advertising business
INACCURATE PERCEPTION: Founder Jerry Yang insists Yahoo is not under siege, dismissing a snowballing bid to oust him and his board. — PHOTO: AP
 
CALIFORNIA - YAHOO chief executive (CEO) Jerry Yang said on Wednesday that Microsoft was ‘no longer interested’ in buying the pioneering Internet firm, but was considering ‘other partnerships’.
He also maintained that Yahoo was ‘not under siege’, despite a threatened stockholder revolt led by billionaire investor Carl Icahn.

His comments came during a speech at the All Things Digital conference organised by The Wall Street Journal.

‘Microsoft is no longer interested in buying the company,’ Mr Yang said, echoing comments made the previous evening by Microsoft CEO Steve Ballmer.

He implied that the sparring that took place between the companies while Microsoft’s nearly US$50 billion (S$68.1 billion) offer was on the table had given way to talks aimed at finding a way for them to work together.

Microsoft could have taken a ‘much more hostile’ tack and tried to oust the Yahoo board of directors that had rebuffed advances by the Redmond, Washington-based software giant, according to Mr Yang.

He stressed that it was Microsoft, not Yahoo, that walked away from the bargaining table.

Microsoft said it broke off takeover talks late last month after it had raised its Feb 1 bid of US$44.6 billion by US$3 billion, and Yahoo’s board still wanted more.

Mr Yang defended the board’s handling of failed takeover talks with Microsoft and pleaded anew the case that the struggling Internet firm was poised to recapture its former glory.

Microsoft wanted to buy Yahoo so it would be in a better position to take on Google, which dominates the lucrative world of Internet search.

Mr Yang said of Microsoft: ‘With the right circumstances, not only price, our board is open.’

Talks between Yahoo and Microsoft may be centred on letting Microsoft handle Yahoo’s online advertising in the belief it can pump more cash out of the promising revenue source. Yahoo has successfully tested such an arrangement with Google.

An alliance with Microsoft, or even Google, could represent salvation for Yahoo board members facing a showdown with Mr Icahn.

Mr Icahn has reportedly bought a stake of more than 4 per cent in the California firm and says he plans to oust board members he accuses of botching takeover talks with Microsoft.

‘The perception of us being a company under siege is just not accurate,’ Mr Yang said.

AGENCE FRANCE-PRESSE

Source : Straits Times - 30 May 2008

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