Singapore HDB prices up as demand rises

Singapore HDB prices up as demand rises

Rents also rise, Q3 data shows; prices and rents of private mass-market homes fall as demand shifts to HDB flats

By UMA SHANKARI

DEMAND is shifting to HDB flats from mass-market private homes - pushing up HDB prices and rents, but causing mass-market home prices and rents to fall.

Figures released yesterday by the Housing & Development Board (HDB) and Urban Redevelopment Authority (URA) show HDB’s resale price index rose 4.2 per cent in the third quarter.

This means that in the first nine months of 2008, HDB resale prices climbed 12.4 per cent. The number of transactions also increased in Q3 to 8,110, from 7,760 in Q2.

In contrast, private mass-market properties put up a decidedly lacklustre showing in Q3. Prices of non-landed properties in the outside central region - where most mass-market private homes are located - fell 1.5 per cent.

The decline was not expected - most analysts have said mass-market home prices will hold steady this year.

‘In contrast to the private property market, despite the gloomy economic outlook, demand in the resale HDB market is still very active, with buyers coming from up-graders, down-graders and Permanent Residents,’ said ERA assistant vice-president Eugene Lim.

Analysts attribute this to a shift in demand towards HDB flats and away from private mass-market projects.

‘In contrast to the private property market, despite the gloomy economic outlook, demand in the resale HDB market is still very active, with buyers coming from up-graders, down-graders and PRs.’

ERA assistant V-P Eugene Lim

‘Demand is moving towards the HDB market,’ said Nicholas Mak, director of research and consultancy at Knight Frank. ‘A greater proportion of new homeowners, such as newlyweds and new immigrants, are looking only at HDB flats.’

In the past, a greater proportion of new homeowners would have considered private mass-market apartments, he said: ‘Compared to purchasing private residential properties, buying an HDB flat may allow some to set aside funds for liquidity during this uncertainty.’

More people are also eligible to buy HDB flats now. Statistics show the number of Singapore citizens and Permanent Residents (PRs) is set to hit a record this year. In the first half of 2008, there were 34,800 new PRs and 9,600 new citizens, up from 28,500 new PRs and 7,300 new citizens in H1 last year.

Another reason homebuyers are choosing HDB flats over private mass-market homes is that HDB flat prices are still rising, while prices of private homes are falling.

‘People want the asset they buy to appreciate in value. In the HDB market there is still room for prices to move up,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore. At Sengkang, where HDB flats are going for around $250,000-$300,000, prices could climb 5-10 per cent in the next few quarters, he said.

Private mass-market rents have also been hit by the shift in demand. They fell 2.7 per cent in Q3, as demand switched to the HDB rental market. Overall median sub-let rents for HDB flats rose slightly in Q3.

But looking ahead, even growth in HDB prices is expected to slow as the economy worsens. ‘As such, although there is good demand for resale HDB flats, we expect buyers to turn more cautious and exercise more prudence by offering less for flats so as not to overstretch,’ said ERA’s Mr Lim.

Because of this, cash-over-valuation (COV) figures will continue to decline in the coming quarters, analysts say. The median COV for resale transactions fell to $19,000 in Q3, from $20,000 in Q2 and $21,000 in Q1.

The bigger drops in median COVs were for five-room flats (down 15 per cent) and executive flats (down 22 per cent), notes Mohd Ismail, chief executive of PropNex. ‘This is evidence of buyers resisting paying larger COVs for larger properties in this bleak economy,’ he said.

The increasing popularity of smaller three and four-room flats was also reflected in the median resale prices. The increase for smaller flats, at almost 5 per cent, outstripped the 1.5 per cent increase for larger flats.

HDB resale prices are expected to continue to increase, but probably at a more measured pace in the coming months.

ERA’s Mr Lim said: ‘For 2008 we may see an overall price increase of 15-17 per cent, slightly lower than the 17.5 per cent increase for the whole of 2007. As for 2009, we are likely to see only marginal quarterly price increases, as current resale prices are a new peak.’

Likewise, PropNex’s Mr Ismail expects the HDB resale price index to increase about 15 per cent for the whole of 2008.

Source : Business Times - 25 Oct 2008

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Singapore Private property prices seen falling 5-6% in ‘09-10

Singapore Private property prices seen falling 5-6% in ‘09-10

This will be so even under NUS economist’s best-case projection for the Singapore economy

By ANNA TEO

PRIVATE property prices will fall 5-6 per cent in the next two years even if the Singapore economy holds up, according to an economist’s projections.

Dr Abeysinghe’s findings show the housing affordability index for private home owners at the lower end of the income range (up to the 25th percentile) fell to 0.5 in 2007, from near-two in the late-1970s
National University of Singapore economist Tilak Abeysinghe’s forecasts see the domestic economy growing 3 per cent in 2009 - and one percentage point higher and lower under the best and worst-case scenarios.

In all three scenarios though, his simulations result in 5-6 per cent price falls a year in 2009 and 2010. Only in the optimistic outlook is there a projected 1.4 per cent rebound in 2011.

Already, the latest official figures show a 2.4 per cent dip in private housing prices in the third quarter from Q2 - the first decline since the property market bottomed out in 2004.

Housing prices tend to accelerate faster than expected during upswings and fall faster than expected during downswings, Dr Abeysinghe noted. He presented his findings yesterday at the Singapore Economic Policy Conference, jointly organised by the three local universities.

Since 1975, private property prices here have risen about 7 per cent a year - and with the uptrend, housing affordability has declined over the years.

Dr Abeysinghe’s findings show the housing affordability index for private home owners at the lower end of the income range (up to the 25th percentile) fell to 0.5 in 2007, from near-two in the late-1970s.

An index of exactly one means the household’s lifetime income is just enough to pay for the property. A measure below one implies ‘perpetual debt’ for the household.

The affordability index for private property owners in the medium income group averaged 1.2 over the period 1980-2007. This implies that if the household bought a property that cost $1 million, it would be left with $200,000 of income over its lifetime.

For high-income households, the index is a stronger 2.1 over the period 1980-2007. That’s still well below the index for HDB households - which ranges from three for the low-income group to 9.4 for the richest.

So while rising home prices spell higher wealth for individuals, the economy as a whole may not be ‘better off’ if highly-geared households have less to spend, Dr Abeysinghe says, alluding to the paradox of thrift.

More predictable increases in property prices that do not erode long-term affordability are desirable and needed for the economy’s health.

The conference also heard from Nanyang Technological University professor Choy Keen Meng that policy efforts to reduce inflation by one percentage point would result in about a two-point fall in GDP growth.

This ’sacrifice ratio’ of two compares with around 3-4 for the US and an average 2.5 for the OECD.

Source : Business Times - 25 Oct 2008

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MM sees 3-5% Asia growth as world recovers

MM sees 3-5% Asia growth as world recovers

China and India’s growth momentum may spill over to the rest of Asia in the next three to five years

By CHUANG PECK MING

DRIVEN by China and India, Asia will still see annual growth of 3-5 per cent as the world economy recovers in the next three to five years, says Minister Mentor Lee Kuan Yew.

WORD OF CAUTION
While China and India offer Singapore growth opportunities, Mr Lee said they also pose a big challenge to it
‘It (the 3 per cent to 5 per cent growth) isn’t bad in this condition,’ he said yesterday at the Singapore Human Capital Summit conference.

Employers should use the down-time to build up the skills and knowledge of their workers for the upturn in the economy, he said. ‘You’ve got to be optimistic and realistic enough that this will recover - when? I don’t know.’

The government will push on with the continuing education and training of workers, Mr Lee said.

In the absence of ‘malfunctioning’ in the banking system, he sees the global economy restored - in an upbeat scenario - in 3-5 years to the growth path it was on before it was derailed by the financial crisis.

‘Without foreign talent, Singapore would not be where it is today.’

Lee Kuan Yew
Minister Mentor

Asia excluding China and India will, meanwhile, do better than other regions, as it continues to post economic growth of 3-5 per cent a year.

The International Monetary Fund’s growth forecast is 5-6 per cent, but that includes China and India.

According to Mr Lee, while growth in China and India may ease, the two economies are large enough to have growth momentum of their own, with spillovers for the rest of Asia.

While China and India offer Singapore growth opportunities, Mr Lee said they also pose a big challenge to it.

‘We have to decide where is our future, assuming China and India will (continue to) grow,’ he said. ‘We have to accept that what we do they will do as well, if not better.’

So what is it that Singapore can do that China or India cannot do, at least in the next 20-30 years?

Singapore’s comparative advantage over China and India is its system, Mr Lee said. ‘They can have the individuals to catch up with us but they can’t catch up with our system so easily.’

In particular, he cited Singapore’s system of laws and fair play, its meritocracy and patent laws.

He also said that in a globalised world of greater mobility and competition, the ability to attract and retain talent is the key to economic success.

Singapore has won and lost talent, but its important that it ‘wins more than it loses’, he said. ‘Without foreign talent, Singapore would not be where it is today.’

The US has also done well because of foreign talent, Mr Lee noted. But the issue of foreign talent is politically dicey and political leaders must convince their electorate ‘why you need foreign talent to give that extra boost’.

Source : Business Times - 25 Oct 2008

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US$80b Asian currency swap scheme soon

US$80b Asian currency swap scheme soon

By next June, fund will help avert financial crises in region

By LEE U-WEN
IN BEIJING

THIRTEEN Asian countries including Singapore have recommitted themselves to setting up an US$80 billion currency swap scheme by June next year to help avert financial crises.

‘We must be measured in our response, lest an over-reaction cause more alarm and uncertainty.’
PM Lee, saying in a speech that financial authorities ‘must keep in close touch’ with one another, as the actions of one country will invariably affect others. Earlier yesterday, Mr Lee held a separate bilateral meeting at his hotel with Polish Prime Minister Donald Tusk.
The agreement was reached yesterday at a breakfast meeting of the Asean+3 network, held in Beijing’s Great Hall of the People just hours before the start of the two-day Asia-Europe Meeting (Asem), according to a statement from the office of South Korean President Lee Myung Bak. South Korea, China and Japan will contribute 80 per cent or US$64 billion to the fund, while Asean’s 10 members will cover the remaining US$16 billion.

Leaders at yesterday’s breakfast meeting included Singapore Prime Minister Lee Hsien Loong, Japan’s new Prime Minister Taro Aso and Chinese Premier Wen Jiabao.

The Asean+3 initiative will give any of the signatory nations access to the foreign exchange reserve pool in the event of a financial emergency. It will build on the existing eight-year-old Chiang Mai Initiative, under which the 13 nations set up bilateral contracts to supply funds through currency swap lines. The Asean fund will be a more powerful, self-managed reserve pooling mechanism governed by a legally binding single contract.

‘Leaders at the meeting shared the need to step up regional cooperation to cope with the global financial crisis and to coordinate policies,’ said the South Korean statement. ‘We agreed to strengthen Asia’s role by aggressively participating in international collaboration through multilateral cooperation systems, and to speed up cooperation to complete formation of the fund by the first half of next year.’

Europe has already approved a plan under which the 15 European nations and the UK will put up 1.7 trillion euros (S$3.3 trillion) in guarantees and emergency aid to help banks. French President Nicolas Sarkozy, who now holds the rotating EU presidency, told Asem leaders yesterday that rapidly growing Asia must continue to help offset the impact of the crisis. He hopes Asian governments will support EU proposals to tackle the crisis, which will be presented at a gathering of world leaders in Washington next month.

Meanwhile, in a short speech delivered at the first Asem plenary session, PM Lee said financial authorities ‘must keep in close touch’ with one another, as the actions of one country - such as guaranteeing deposits in the banking system - will invariably affect others. ‘We must be measured in our response, lest an over-reaction cause more alarm and uncertainty,’ he said. He added that it is important for countries to engage international financial institutions, as they have the resources and knowledge to help governments manage crises.

Mr Lee said Singapore welcomes the World Bank’s commitment to provide increased lending, equity investments and safety net programmes, and supports the International Monetary Fund’s commitment to fast-track the disbursement of emergency financing facilities.

Earlier in the day, Mr Lee held separate bilateral meetings at his hotel with Philippine President Gloria Arroyo, Polish Prime Minister Donald Tusk and Dutch Prime Minister Peter Balkenende.

The Asem summit continues today with more meetings and discussions between the 27 European Union member states and 16 Asian countries, together with the European Commission and the Asean Secretariat.

Source : Business Times - 25 Oct 2008

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Singapore URA data shows more completions put on hold

Singapore URA data shows more completions put on hold

URBAN Redevelopment Authority yesterday gave the public greater access to data on property supply in the pipeline, particularly for private homes, detailing the expected year of completion, location of the supply by regions, and development status.

The additional information was included in URA’s press release on Q3 2008 real estate data, although the information has always been available through its Realis system.

There were 66,422 uncompleted private homes from projects in the pipeline (with either provisional or written permission) as at end-Q3 2008, of which 23,008 units were in Core Central Region, 19,736 units in Rest of Central Region and 23,678 in Outside Central Region. About 51 per cent of the 66,400-plus total units in the pipeline are under construction.

URA said that 37,051 private homes are scheduled for completion between Q4 this year and end-2011. This is 20 per cent or 9,429 units lower than the 46,480 units slated for completion between Q3 2008 and end-2011 listed in URA’s end-Q2 data.

Of these, 2,195 units were completed in Q3 this year and have hence been removed from the supply pipeline. Other completions have been put on hold as some developments have been postponed. Weak market sentiment and higher construction costs have also delayed the construction of some projects.

Notwithstanding this, the 66,422-unit total supply of new private homes in the pipeline is not far off from the 67,569 units as at end-Q2 2008. More of these homes may now see completion post-2011.

URA’s data also showed that about 1.03 million sq m of office space, 500,000 sq m of business park space and 685,000 sq m of retail space are expected to be completed between Q4 this year and end-2011.

Projects that received provisional permission in Q3 include MGPA’s office, hotel and mall development at Marina View and a 46,010 sq m retail project at Serangoon Central by a unit of Pramerica Real Estate Investors (Asia). SingTel was also given approval for additions/alterations to its existing Pickering Operations Complex and City Exchange at George St/Pickering St. The approval is for 7,860 sq m of offices and 300 sq m of shop space.

Source : Business Times - 25 Oct 2008

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Singapore Private property prices, rents fall

Singapore Private property prices, rents fall

URA’s private-home price index down 2.4% in Q3; industrial property prices, rents make gains

By KALPANA RASHIWALA

OFFICIAL data released yesterday confirmed that the private property market has started sliding backwards, while analysts tried to work out how much of its recent gains it would eventually give up.

Price and rental indices for private homes, offices and shops fell in Q3 over the preceding quarter - for the first time since the market bottomed in 2004. Industrial property prices and rents still managed to register quarter-on-quarter gains in Q3, albeit at a slower pace than the increases reported in Q2.

Urban Redevelopment Authority’s (URA) price index for private homes declined 2.4 per cent in Q3 over the preceding quarter, more pronounced than the 1.8 per cent drop indicated in a flash estimate earlier this month.

The Q3 private-home price index is still 8.3 per cent higher than a year ago, leading some analysts such as JPMorgan’s Chris Gee to say the official price indices are lagging market expectations. ‘If you wanted to close a condo sale today, you’d expect the price to be around 20-30 per cent lower than last year’s peak.’

Between the trough in Q1 2004 and the peak in Q2 this year, URA’s price indices appreciated 68 per cent for offices, 58 per cent for private homes and 39 per cent for shop space. The question is how much of these gains will be surrendered during this downcycle and how long the slump will last.

‘This property slump will be much worse than the one during the Asian financial crisis; this time, we have a global crisis. We still don’t know what the entire suite of knock-on effects will be…’

A property industry veteran

The optimistic view is that about half the gains could be lost in a downcycle lasting until end-2009.

Some pessimists suggest the downturn will drag for around two to three years, and see prices easing back to the previous trough, that is, all the gains will be lost. ‘Although the Singapore economy is much broader-based today than a few years ago, financial services was a key driver of recent economic growth and had a disproportionate impact on the high-end residential and prime office markets. So if the financial industry tanks, the impact will be greater on these two property segments,’ said an analyst with a US bank.

A property industry veteran said: ‘This property slump will be much worse than the one during the Asian financial crisis; this time, we have a global crisis. We still don’t know what the entire suite of knock-on effects will be. Right now, it’s consumers lacking confidence. Failures may come from many other sources, some of which will be unexpected. The downtrend has begun and is not expected to reverse any time soon.’

URA’s data showed that developers sold 1,558 private homes in Q3, up 2.2 per cent from 1,525 units in Q2. The 3,845 private homes developers sold in the first nine months of this year are about a quarter of the 14,811 units they sold for the whole of last year.

A property analyst pointed out that an even more alarming trend was the decline in resale transactions of private homes, which have slipped from a high of 7,776 units in Q2 2007 to 1,974 units in Q3 this year.

‘Resale transactions are sometimes seen as a proxy for the level of genuine demand, whereas the primary market tends to attract more investment/speculative demand and the subsale market is an even more direct proxy for the level of speculation,’ the property analyst from the US bank said.

The number of private-home subsales islandwide fell 10.8 per cent quarter on quarter to 462 in Q3. Subsales accounted for 11.6 per cent of total private housing transactions in Q3, down from a 12 per cent share in Q2.

In the Core Central Region, subsales made up 24.1 per cent of total transactions in Q3, an increase from a 22 per cent share in Q3. The rising subsale share in the region was on the back of a 29 per cent drop in developer sales in Q3.

Meanwhile, URA’s Q3 price indices for non-landed private homes fell 2.7 per cent quarter on quarter in Core Central Region, 2.4 per cent in Rest of Central Region and 1.5 per cent in Outside Central Region (OCR).

The official price indices for office and shop space declined 3.9 per cent and 0.3 per cent respectively in Q3. The all-industrial property price index rose 0.9 per cent.

The public housing market continued to buzz, with Housing & Development Board’s resale flat price index rising 4.2 per cent quarter on quarter in Q3.

Colliers International director Tay Huey Ying said that developers’ sales failing to keep pace with launches led to a surge in the stock of launched but unsold private homes in uncompleted projects to 3,570 units in Q3, almost 30 per cent higher than Q2’s 2,755 units and more than double the recent low of 1,658 units in Q2 2007.

Knight Frank director Nicholas Mak expects the decline in private home prices and rentals to persist. ‘With the slowdown in the private residential market, it is anticipated that developers could sell between 4,900 and 5,400 units in 2008, which would be only about one-third of the primary market sales last year,’ he added.

Source : Business Times - 25 Oct 2008

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Mindy Yong

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Storm over Sands in US hits local IR lenders

Storm over Sands in US hits local IR lenders

Damaging ripple effects as parent company of Marina Bay Sands integrated resort struggles to raise funds

By SIOW LI SEN AND CHEW XIANG

THE Marina Bay Sands integrated resort (IR) has been visited by the desperate travails of its parent company, which is struggling to raise funds.

SHAPING UP
In August, Marina Bay Sands said it was on schedule to open in December 2009 and about 40 per cent of the construction had been completed
And local banks, which BT understands have a combined exposure of almost $2.2 billion to the $5.44 billion project, saw their stock prices take another hammering yesterday.

Already, Las Vegas Sands’ share price has fallen some 95 per cent from a year ago. On Thursday, it was US$8.21, down from the high of US$148.76 on Oct 29 last year.

The company issued a statement to say that it was working with an investment bank to raise capital and that Sheldon Adelson - the company’s chairman, CEO and principal stockholder - intends to take part in it, along with his family. Mr Adelson has already had to bail out the company once before, by investing US$475 million of his own money last month.

As concerns over the project increase, local banks are getting hit. BT understands that United Overseas Bank (UOB) has committed to lend almost $890 million to the project. DBS Group Holdings’ exposure is in the range of $740 million while that of OCBC Bank is around $570 million. The banks themselves declined to comment on their exposure, citing customer confidentiality.

But as disbursements of the loans are progressive, according to the construction schedule, the banks are unlikely to have disbursed the entire amounts, one banker said.

‘The development of Marina Bay Sands remains on track’ was all that Ron Reese, vice-president, communications, Las Vegas Sands Corp, would say.

Bankers and analysts also agreed that fears of the banks’ potential losses from Marina Bay Sands are overblown. If anything does happen, the project which has been touted as iconic by the government will be rescued, perhaps by one of the government- linked companies, they say.

‘Indeed, given the importance of the project to Singapore, it is unlikely to fail in the development stage . . . assistance will eventually come - at a price,’ said Morgan Stanley analyst Matthew Wilson.

‘Hence, initial debt and equity providers may take a haircut. Since it is such an iconic project, it is a vivid reminder of just how bad things have become from an economic and credit perspective,’ said Mr Wilson.

DBS closed 94 cents or 8.6 per cent down yesterday at $10.04 while UOB fell $1.72 or 12.5 per cent to $12.08, and OCBC ended 61 cents or 11.1 per cent down at $4.88.

The three local banks and Goldman Sachs were the original lead arrangers of the syndicated loan.

Fears that Marina Bay Sands might default stem from the falling revenues parent company Las Vegas Sands is getting as it is earning less from its casinos in Macao and Las Vegas.

Recession has caused gamblers to shy away from the tables.

Repayment of interest on the bank loans is generated from the cash flows of current casino operations.

‘We’re expecting the turbulent economic climate to have an increasingly negative impact on the corporate gaming operators with near-term internal liquidity remaining weak,’ said Michael Paladino, senior director at Fitch Ratings. ‘As consumers focus more and more on necessities spending, and we enter into recession, the gaming and lodging operating environment will continue to be under pressure, causing significant challenges for issuers that have substantial near-term refinancing risk.’

In August, Marina Bay Sands said it was on schedule to open in December 2009 and about 40 per cent of the construction had been completed. And even if the parent company decides to sell the project to another outfit, there will be bidders aplenty, one banker said.

‘People will compete to be here. The biggest driver of casinos is competition, the biggest fear is competition,’ he added.

The Singapore Tourism Board (STB) had projected 17 million tourist arrivals by 2015, although there is now doubt if those numbers are achievable.

This year’s target of 10.8 million visitors may not be met because Singapore visitor arrivals are down. According to data from the board, June was down 4.1 per cent over last year, July dipped 3.8 per cent and August posted the steepest fall at 7.7 per cent.

Source : Business Times - 25 Oct 2008

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Mindy Yong

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Dynamics of a financial tsunami

Dynamics of a financial tsunami

Hedge funds dump their holdings; shadow of corporate bankruptcies looms

By VIKRAM KHANNA

YESTERDAY might be remembered as another Black Friday. Within minutes of opening, the Dow was more than 400 points down. The financial tsunami is here. And like a real tsunami that washes away everything in its path, the tidal wave of selling on global stock markets has become indiscriminate. Stocks have been dumped, irrespective of corporate fundamentals.

It matters little whether a company has a good product, brand, management or prospects - although, of course, some are dumped more aggressively than others. Not only stocks, but oil and other commodities have also been hit, and several currencies. It’s as if someone has yelled ‘Fire!’ in a theatre - forget the movie, no matter how good it may be; just make for the exit. What we’re witnessing, in short, is panic in motion.

We saw it before, during the Asian crisis 10 years ago. But this time, it’s global. Most Asian stock markets are down 50-60 per cent year to date in US dollar terms. Korea is reeling from a 68 per cent decline, having dropped 20 per cent just in the last week.

But Asia isn’t alone. Investors in Eastern Europe and Russia have taken an even bigger hammering. The Russian market is down more than 75 per cent. Ukraine has been battered 82 per cent. And the stock market of Iceland has lost 95 per cent - an almost total meltdown there.

Emerging market currencies have also, naturally, come into the firing line. The Korean won, in particular, but also the Indian rupee, the Brazilian real, the South African rand and all the Eastern European currencies have plummeted. But so has the British pound and the euro.

Apart from recession and earnings concerns, the dynamic of the moment is hedge funds and other institutional investors dumping their holdings as they face margin calls and redemptions. Most of these entities are dollar-based, except for those from Japan, some of which are yen-based. Essentially, the funds are engaged in fire sales to repatriate the money home to repay panicked investors and banks. And so it is that the US dollar and the yen are soaring. This is a dramatic unwinding of the carry trade - the borrowing in a low-yielding currency to invest in higher-yielding assets - in both dollars and yen.

There is no telling how much further there is to go. The size of hedge fund positions, and how much has been unwound so far, is unknown. But it does look possible that hundreds more hedge funds will fail, including some big ones, which could entail systemic risks. In that event, central banks will have to orchestrate ‘bail-ins’ of these funds by already stretched banks, perhaps along the lines of the 1998 bail-in of the failed hedge-fund Long Term Capital Management (LTCM) - except, this time, on a vastly larger scale.

Also feeding the panic is the possibility of major corporate bankruptcies, including that of one (or more) of the big US carmakers - General Motors, Ford and Chrysler. Apart from being heavily in debt, which they find hard enough to service even in better times, these corporate behemoths have huge vehicle financing operations that have seen their funding dry up.

Politicians from the US state of Michigan, where these companies are headquartered, have written to Federal Reserve chairman Ben Bernanke and US Treasury Secretary Henry Paulson asking for emergency assistance. Investors might well ask: after the Detroit carmakers, who’s going to be next and how many more will there be?

These are extraordinary times in the markets which call for extraordinary measures, including further interest rate cuts and more. Eventually the markets will recover, perhaps sharply. But for now, the ball is in the court of the policymakers.

Source : Business Times - 25 Oct 2008

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Mindy Yong

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Singapore URA figures ease fears of housing glut

Singapore URA figures ease fears of housing glut

Only 8,538 new private homes to be ready in 2010 - down from 11,788 in 2nd-quarter forecast

By Joyce Teo, Property Correspondent

WORRIES about an oversupply of private homes are receding after the release of government figures that, for the first time, offer a detailed geographical breakdown of new homes in the pipeline.
It was the second straight quarter that the Urban Redevelopment Authority (URA) had lowered its forecast of home completions for 2010 and beyond.

The URA now expects only 8,538 homes to be ready in 2010 - down substantially from the 11,788 homes that it had forecast in the second quarter. Earlier, in the first quarter, it had forecast a whopping 17,545 homes.

In all, its forecast for the number of uncompleted homes in the pipeline dropped to 67,463 units in the third quarter, from 71,643 units in the second and 74,208 units in the first.

The lower supply figures would ease downward pressure on rentals, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

Earlier, concerns were building as the supply numbers remained high even as the market slowed considerably this year and the financial turmoil raged on.

The URA now expects to see 16,145 private homes completed in 2011, down from 19,559 in the second quarter.

And home completions in 2012 and beyond 2012 are now at 16,742 units and 13,565 units respectively, compared with 14,179 and 10,826 previously.

Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, said the lower URA completion figures are a result of developers deferring projects due to the slow take-up rates of new homes and high construction costs.

The delays in completion dates were expected, given insufficient construction resources, completion delays in collective sales and delayed launches, he said.

Since the market turned quiet at the start of the year, many developers have delayed launches.

In the first nine months of this year, developers launched 5,401 private homes for sale - just 44 per cent of the total launches in the same period last year, said Knight Frank.

In the same period, they sold a total of 3,845 private homes, which is only 29 per cent of the sale figures in the corresponding period last year.

Yesterday, for the first time, URA released more detailed pipeline supply data, breaking down supply by the three main regions and expected year of completion. The Straits Times proposed such a breakdown in a commentary last month.

The URA made this information available separately on its website.

The data showed that there is a pipeline supply of 23,008 private homes in the core central region which includes districts 9, 10 and 11, down from 24,582 in the second quarter.

Supply in city-fringe areas such as Bukit Timah, Newton and Toa Payoh, rose to 19,736, from 19,053 in the second quarter.

As for the suburban areas, the pipeline supply fell slightly to 23,678 units, from 23,934 in the previous quarter.

According to the new URA data, just 733 homes in the core central region would be ready this year, down from the 2,363 expected in the second quarter.

While the drop next year is not dramatic, considerably fewer high-end homes will come to market from 2010 onwards.

Coming up
Number of private homes expected to be completed:

In 2008: 2,440

In 2009: 10,033

In 2010: 8,538

In 2011: 16,145

In 2012: 16,742

After 2012: 13,565

Total 67,463

SOURCE: URA

Source : Straits Times - 25 Oct 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Central banks urged to calm forex markets

Central banks urged to calm forex markets

Volatile currency markets exacerbate economic stress, say analysts

Bourses worldwide have been going on a roller-coaster ride as wild currency swings have been seen the US dollar and the Japanese yen soaring against the euro and currencies of emerging markets. — PHOTO: AGENCE FRANCE-PRESSE

LONDON: The world’s major central banks urgently need to calm wild swings in major exchange rates, the latest manifestation of a deepening global financial crisis and one which has sent the US dollar and Japanese yen soaring against European and emerging markets currencies.
Foreign exchange analysts said extreme currency volatility, which has seen moves of a staggering 10 per cent on some major rates yesterday alone, could see the Group of Seven or 20 top central banks intervening soon to stabilise world markets.

Japan’s yen soared yesterday against the dollar and euro and one-month implied volatility rates on the dollar/yen exchange rate surged more than 20 percentage points to almost 45 per cent, prompting Japanese Vice-Finance Minister Kazuyuki Sugimoto to warn against such rapid and excessive currency moves.

As global investors grow fearful of a world recession and intense financial stress, they are cutting cross-border investments everywhere and repatriating money. Japan’s huge external surpluses buoy its yen in that environment.

What is more, central bank interest rates everywhere are expected to fall sharply soon to offset the world slowdown and currencies supported by relatively high nominal interest rates now are suffering disproportionately from the speculation.

ING’s chief FX strategist Chris Turner said currency volatility over the last two months had, to a large extent, been a symptom, not a cause, of the global financial crisis.

But he added that this week’s spike in volatility now seemed to be exacerbating global asset market declines. ‘G7 central banks may need to exercise their mandate of ensuring orderly FX markets by intervening in FX markets,’ Mr Turner said.

Analysts pointed out the 6 per cent collapse in the dollar/yen exchange rate towards 90 per dollar yesterday contributed to a near 10 per cent fall in the Nikkei - which itself has set the tone for sharp losses on European bourses and indications of a Wall Street slide too.

‘The scale and pace of movements in major foreign exchange rates this week have been sufficiently disorderly to justify immediate currency intervention by the authorities,’ said Mr Joe Prendergast, currency strategist at Credit Suisse in Zurich.

But he stressed the need to intervene should also go well beyond the desire for calmer trading and that central banks may need to cap further sharp gains in the dollar that would compound banking and economic stress.

‘The most overwhelming immediate reason to intervene and provide FX liquidity for the cross-border deleveraging and currency-matching process is to stem the fear and uncertainty that this scale of seemingly counter-intuitive currency movements creates,’ he said.

But he added that the balance sheets of banks and financial institutions in Europe and around the world were heavily short of dollars due to the currency mismatches created by the huge writedowns of distressed US dollar mortgage assets.

The rising dollar exchange rate exaggerates those losses. ‘Without intervention, dollar gains may escalate, irrespective of fundamental considerations, compounding global financial and economic dislocations,’ he added.

The yen extended gains against the dollar and euro yesterday, with the euro down more than 10 per cent to six-year lows on the yen.

Earlier the dollar soared to new two year highs versus a basket of currencies and the euro, while sterling hit a six-year low.

‘It’s extreme risk aversion and deleveraging of risky assets … and we are seeing safe-haven flows into dollar and yen,’ said Mr Lee Hardman, currency economist at BTM-UFJ. ‘A sharp decline in Asian equities has added to negative sentiment.’ Mr Turner at ING said how to execute intervention was a problem.

‘Policy makers will always prefer strength in numbers, but in which currency pair should intervention take place?’ he said.

‘Should G-7 central banks be selling dollars against Europe and Canada, or be buying dollars against yen.’ Analysts said G-7 central bankers may be waiting to coordinate some response with the International Monetary Fund.

The IMF is hurrying to approve by early next month a package that would allow certain emerging market economies exchange local currencies for US dollars to ease short-term credit strains, officials familiar with the plans said late on Thursday.

The so-called liquidity swap facility would be available to a group of pre-selected ‘top tier’ emerging market countries - those that are well-run but may be having difficulties obtaining credit, the officials told Reuters.

Leaders from the Group of 20 top economies, including G-7 and leading emerging economy governments, are scheduled to meet in Washington on Nov 15 to discuss a response to the global economic and financial crisis.

REUTERS

Source : Straits Times - 25 Oct 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com