Whiff of Hollywood to touch Singapore Buona Vista

Whiff of Hollywood to touch Singapore Buona Vista

Singapore aims big with billion-dollar media hub at one-north
By ONG BOON KIAT

(SINGAPORE) Locals could be rubbing shoulders with movie stars and Hollywood bigwigs at the one-north cluster in the near future.
 
In the frame: Mr Chan, second from left, with MDA, JTC and IDA officials yesterday 
And films like box-office hit 300, part of a new wave of films that rely extensively on state-of-the-art digital movie studios, could be spawned from studios coming up in a new 19 hectare Buona Vista enclave, called Mediapolis@one-north .

Singapore’s new media hub is a billion-dollar mega project that could see more than a dozen buildings sprawled across a lush landscape by 2020.

Announcing Mediapolis at the Asia Television Forum trade show yesterday, Minister for Information, Communications and the Arts Lee Boon Yang said the hub will be a ‘crucible’ for creating and distributing content from Singapore to the world.

Mediapolis will sit on land roughly the size of 19 football fields adjacent to Portsdown Avenue, a plot now partly occupied by the Ayer Rajah military camp.

It will ‘have facilities not found elsewhere in Singapore and become the ideal home for international and local media companies, media schools and R&D (research and development) firms’, the minister said.

At yesterday’s media briefing, Chan Yeng Kit, chairman of the Mediapolis steering committee, said that Mediapolis is proceeding despite the financial downturn because demand for co-production expertise and facilities remains robust.

Mr Chan, who is also the permanent secretary of the Ministry of Information, Communications and the Arts (Mica), added: ‘In some ways, the downturn does provide a window of opportunity for us, with construction costs coming down. By prepping the ground now and strengthening the whole ecosystem for media with scaled-up infrastructure and greater depth, we will be ready to catch the tide and gear up for the next stage of growth when recovery comes.’

The media industry is ‘fairly recession-proof’, he noted, because consumers will still continue to spend on entertainment in a downturn.

Four government agencies will jointly steer Mediapolis. They are the Media Development Authority (MDA), JTC Corporation, the Infocomm Development Authority of Singapore (IDA) and the Economic Development Board (EDB).

Commercial developers are expected to undertake most of the development at the park, alongside JTC. The total gross floor area will come to around 400,000 square metres, according to a JTC spokesman.

Construction will kick off in the first quarter of next year on a 1.2 hectare plot of land. Local media production firm Infinite Frameworks will be Mediapolis’ first developer.

The firm yesterday announced that it will be investing between $80 million and $120 million to build Singapore’s first purpose-built soundstage complexes. These are hanger- like studios that can be fitted with movie sets and so-called green screens, which are used by studios to create the illusion of on-location shooting.

When completed by 2020, Mediapolis will have movie studios, digital production and broadcast facilities, research labs, games and animation studios, offices, service apartments and high-tech hotels.

There will also be a sprawling park that can host outdoor movie screenings and provide location settings for film companies.

According to JTC assistant chief executive Philip Su, Mediapolis could swell by another 18 hectares in a future second-phase development after 2020. This will likely be sited south of the current 19 hectare plot.

Mediapolis is expected to stoke an already bullish Singapore media industry. According to a joint statement, between 2000 and 2005, this industry reported an annual turnover of US$13.4 billion in revenue, contributing 4.5 per cent, or US$3.6 billion, to Singapore’s gross domestic product and employing 53,500 people.

There has also been an influx of overseas projects, with the upcoming shoot of Jan de Bont’s Point Break 2 here next year an eye-catching example. A number of global media giants such as Lucasfilm, Linden Lab, EA, Ubisoft and Rainbow SpA have also set up facilities in Singapore.
Source : Business Times - 11 Dec 2008

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Prime office rentals coming down to earth

Prime office rentals coming down to earth

Q4 sees them crash by up to 20% in some cases as tenants call the shots
By KALPANA RASHIWALA

(SINGAPORE) Landlords may be frowning but those looking for office space have reason to cheer. After climbing steadily for nearly four years, average Grade A and prime office rental values in Singapore are estimated to have slipped about 20 per cent in the fourth quarter of this year over the preceding quarter, according to latest figures by CB Richard Ellis.
 
 
Grade A covers the best office space within CBRE’s prime office space basket.

The Q4 decline means that for the whole of this year, the estimated fall in rentals is around 13 per cent for Grade A space and 14 per cent for prime space. ‘Modest rental growth featured in the early part of 2008, but the market had peaked by Q3 2008. It was only in Q4 that the sheer depth of the financial crisis pitched the office market into decline,’ CBRE executive director Moray Armstrong said.

‘We expect further downward pressure on rents through 2009,’ he added without elaborating.

The firm estimates the average monthly Grade A office rental value at the end of this year at about $15 per square foot, down from $18.80 psf in Q3. The average prime office rental value in Q4 is estimated to have eased to $12.90 psf from $16.10 psf in Q3. The Q3 figures were unchanged from the preceding three months.

The latest figures confirm that the office upcycle which had seen rents galloping over the past two years has ended.

Office rents nearly doubled last year, rising 96 per cent for Grade A category and 92 per cent for prime space. That was on top of respective gains of 53 and 50 per cent posted in 2006.

Putting the latest rental slide in perspective, Mr Armstrong said: ‘The extraordinary pace of rental growth experienced through the past three years was clearly not sustainable and would have been arrested by the increased volume of new supply in the pipeline. We had already anticipated a supply-led softening in the market from 2010 onwards.

‘The rapid deterioration in the economy and loss of business confidence have accelerated the process as office demand has dried up.’

Tenant retention is the top priority for existing landlords. Next year is likely to be a market where lease renewals outnumber relocations, Mr Armstrong says.

Cushman & Wakefield Singapore managing director Donald Han predicts Grade A office rents will weaken a further 10-15 per cent in first-half 2009 from current levels. ‘Landlords are more keen to provide existing tenants with an incentive to retain them, in terms of rental discounts during lease renewal negotiations; because if they leave, the landlord will suffer downtime until it finds a replacement tenant that will also have to be given fitting-out time. This means loss of rental income.’

The office rental slide reflects a reversal of the market dynamics to a more demand-led rather than a supply-led model, Mr Han argues. ‘Office rents had surged because of a shortage of existing office stock; now rents are softening because of weakening demand,’ he explains.

Another seasoned market watcher said while a 20 per cent drop in Q4 rentals seems alarming, the absolute drop of about $3.20 to $3.80 psf in monthly rents is not so, given that ‘rents were at artificially high levels’ on the back of shortage of existing Grade A and prime space.

Grade A vacancy rates had been sub-1 per cent for almost two years before rising to 1.2 per cent in Q3. Some analysts estimate this will rise further to over 2 per cent by end-2008.

CBRE does not expect to see significant changes in vacancy levels until sizeable new office developments start to be completed from 2010.

Tenants, meanwhile, are looking to contain costs during the economic downturn, Cushman’s Mr Han observes.

CBRE’s Mr Armstrong says: ‘Corporates will be under severe pressure to contain and indeed reduce costs. (But) the reality in the Singapore office market is that many tenants with renewals and rent reviews next year under leases committed three to four years ago will still be faced with rents that could potentially increase by 75 per cent to 150 per cent. We expect some fairly robust negotiations.’

He also predicts an increase in subletting and surrenders of space by tenants if job attrition in the key financial services sector spirals.

‘Take-up in new developments will inevitably be sluggish until demand improves and tenants are able to secure capital expenditure approvals to relocate. It will be highly competitive,’ Mr Armstrong says.

Source : Business Times - 11 Dec 2008

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4% interest on some CPF savings till March

4% interest on some CPF savings till March

CENTRAL Provident Fund (CPF) members will continue to get an interest rate of 4 per cent on a portion of their savings for the three months from Jan 1 to March 31 next year.
This is the minimum rate that the Government has guaranteed for the Special, Medisave and Retirement Accounts (SMRA). Savings in the Ordinary Account will earn an interest of 2.5 per cent.

The 4 per cent guarantee for the SMRA will last until Dec 31 next year, the CPF Board said in a statement yesterday. After that, all CPF accounts will have a floor rate of 2.5 per cent.

Prime Minister Lee Hsien Loong announced this new way of computing the CPF interest rate last year, as part of changes to help Singaporeans build a bigger retirement nest egg.

Previously, the SMRA got a fixed interest of 4 per cent. But since Jan 1 this year, the SMRA interest rate has been pegged to the 12-month average yield of the 10-year Singapore Government Security, plus 1 per cent.

The average yield from Dec 1 last year to Nov 30 this year, plus 1 per cent, worked out to 3.79 per cent, the CPF Board said.

A chart accompanying its statement showed that at its peak in June this year, the yield was around 4 per cent. The lowest was around March, at about 2 per cent. As 3.79 per cent falls below the 4 per cent guarantee, CPF members will get 4 per cent for the next three months.

Another change announced last year was the interest for the first $60,000 saved in all the CPF accounts - with up to $20,000 of this sum coming from the Ordinary Account.

The first $60,000 will earn an extra 1 per cent interest which will go into the member’s Special or Retirement Account.

The CPF Board yesterday also issued the reminder that CPF members who turn 55 and are able to meet the Minimum Sum requirement - which is $106,000 currently - will still need to set aside a sum in their Medisave Accounts when making a withdrawal. From Jan 1, the sum to be set aside will be raised from the current $14,000 to $18,000.

Source : Straits Times - 10 Dec 2008

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Big crunch comes to Sony, 16,000 jobs to go - TOKYO

Big crunch comes to Sony, 16,000 jobs to go - TOKYO

Battle is on at electronics and media giant to save US$1.1b a year

(TOKYO) Japan’s Sony Corp said that it will cut 16,000 jobs, curb investment and pull out of businesses to save US$1.1 billion a year as the financial crisis ravages demand for its electronics products.

Rainy days ahead: Sony will cut 8,000 regular workers, or roughly 4 per cent of its workforce of 185,800, and a comparable number of temporary and contract staff
The job cuts are the biggest announced by an Asian company so far in the crisis and underscore the challenges facing Sony, which has fallen behind Apple Inc’s iPod in portable music and is losing money on flat TVs.

Sony said that it would cut 8,000 regular workers, or roughly 4 per cent of its workforce of 185,800, and an equal number of or more temporary and contract staff.

But analysts warned that the measures may not be bold enough to streamline a sprawling empire that ranges from semiconductors to movies and insurance.

The cuts are also risky because they mean that Sony will be investing less in future growth.

‘The number sounds big, but this staff reduction won’t be enough. Sony doesn’t have any core businesses that generate stable profits,’ said Katsuhiko Mori, a fund manager at Daiwa SB Investments.

‘After the workforce reduction, the next thing we want to see is what is going to be the business that will drive the company.’

Sony is not the only one suffering. Japanese rival Panasonic lowered its earnings forecasts last month while South Korea’s Samsung Electronics Co said on Monday that it would cut capital investment and warned of tough times.

Shares in Sony, which have fallen nearly 70 per cent this year, rose 3 per cent to 15.8 euros (S$30.71) in Frankfurt after the announcement.

Sony flagged the need for restructuring in October when it more than halved its annual profit forecast, blaming slowing demand for its Bravia liquid crystal display TVs and Cyber-shot digital cameras and a firmer yen.

The restructuring is a setback for chief executive Howard Stringer, who had implemented a major restructuring after taking the helm in 2005 and until recently, seemed to have put the company on a recovery track.

It also underlines the grim outlook for Sony and its rivals during the year-end shopping season and into next year as the financial crisis grows into a recession that has already engulfed the United States, parts of Europe and Japan.

‘The outlook for the global economy suggests that things would become tougher for Sony next year, and it cannot expect a recovery without these restructuring measures,’ said Fujio Ando, senior managing director at Chibagin Asset Management.

Sony, along with other Japanese exporters, has also been hit hard by a surging yen against the dollar and euro, which cuts into the value of its profits and makes its products less competitive in overseas markets.

Sony said that it would raise prices on some electronics products in Europe in response to the weak euro.

South Korean competitors Samsung and LG Electronics have found some relief in the weaker won.

Both companies have adjusted production to cope with falling orders and say that they do not plan to cut staff, but analysts are not so sure.

‘Japanese electronics makers suffer more than their rivals in South Korea because of the stronger yen,’ said Lee Min Hee, an analyst at Dongbu Securities in Seoul. ‘But going forward, Korean manufacturers could consider more drastic measures.’

Sony said that it would delay boosting output for LCD TVs in Slovakia and outsource production of image sensor chips, as it aims to cut electronics investment by 30 per cent in the next business year compared with a prior plan.

It also unveiled plans to reduce its network of 57 manufacturing sites by five or six through outsourcing and by shifting and consolidating factories to low-cost areas. Earlier this week, it announced the closure of a video-tape plant in France.

Sony said that it would detail the effect of the restructuring on earnings in its third-quarter results in January. It has already warned that it may need to revise downwards its profit forecasts even more due to the yen’s strength.

Other technology and car manufacturers could follow suit in the coming weeks with their own restructuring plans, raising the prospect for industry realignment.

‘Sony’s restructuring might be followed by other Japanese manufacturers. With the stronger yen, a lot more companies will probably need to do similar reductions. There will be more mergers, sales of units and restructuring in Japan,’ Mr Mori said.

Meanwhile, in the US, chipmakers Texas Instruments Inc and smaller rival National Semiconductor Corp slashed current-quarter revenue forecasts to far below Wall Street expectations as demand for mobile phones and analog chips came to a virtual standstill.

Also, smaller chipmakers Broadcom Corp and Altera Corp warned on Monday of weaker-than-expected demand.

‘Conditions (are) likely to get worse before they get better,’ TI’s head of investor relations Ron Slaymaker told analysts on a conference call. — Reuters

Source : Business Times - 10 Dec 2008

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Recent rally may not have legs to last

Recent rally may not have legs to last

Stock markets have bounced off lows but watchers wary of calling the bottom

By TEH HOOI LING

(SINGAPORE) On the back of hundreds of billions of dollars worth of stimulus packages, stock markets around the world have bounced off their lows of October and November - some by as much as a third.

But beware, say most market watchers. This is likely to be a bear market rally - its sustainability is questionable and it may retest previous lows again.

‘It’s hard to call it a bottom,’ said Timothy Wong, head of regional equity research with DBS Vickers Securities. ‘There’s been a lot of selling the last couple of months. The market is oversold in terms of valuation. But there is still no clarity of the underlying economic fundamentals recovering.’

Terence Wong, head of research at DMG & Partners, shared this view. ‘When news of more retrenchments and negative data comes out, prices are going to be hit again even though people say it’s all been factored in.’

Meanwhile, a fund manager described what we have seen in the last few sessions as a ‘relief rally’.

‘Markets are relieved that governments around the world are pledging to spend billions to soften the worst economic downturn in our lifetime. However, there is no assurance that the problems we are in can be readily remedied by throwing money around,’ he said.

Still, the rally - be it bear or bull - is much welcome. And some markets have enjoyed a much bigger surge than others. For example, Hong Kong’s Hang Seng Index - despite shedding 2 per cent yesterday - is now a whopping 34 per cent off its low on Oct 28. China’s CSI Index, which measures the 300 most representative A-shares on the Shanghai and Shenzhen stock exchanges, has rebounded by 25 per cent from its low on Nov 4.

At its Monday close, the US S&P 500 Index was 21 per cent above its Nov 20 low.

The Straits Times Index (STI), however, is a laggard. Following its strong 5.8 per cent surge yesterday, it is still only 9.6 per cent above its Oct 24 low of 1,600 points.

Bear market rallies can bounce as high as 50 per cent off their lows.

Norman Villamin, head of research and strategy, Citi Global Wealth Management Asia Pacific, has been expecting a bear rally.

‘The backdrop today is very similar to what we saw in Japan in the 1990s,’ he said. ‘Prices have fallen significantly, down to book value everywhere except the US. What we are seeing now, which was missing in the past one year, is a sense of confidence that there will be some demand out there.’

US President-elect Barack Obama’s details over the weekend of a stimulus plan to put 2.5 million people back to work in the next two years and talk of a second stimulus package from China give the market confidence that there will be some demand which can be counted on, said Mr Villamin.

But based on past experience - the most recent being the US$150 billion package announced by the US government in May - the effect of an injection on the markets lasts just 4-6 months.

‘For a sustainable recovery, we need to see one or more of the following taking place,’ said Mr Villamin.

One, in addition to the public sector spending, demand must also come from the private sector. And this will happen only when there are signs that the private sector’s focus has moved away from deleveraging.

Two, the government stimulus package encourages US corporates to start investing again.

Three, government spending is able to create enough jobs to make up for all the lost positions in the private sector.

Four, there is aggressive debt relief for individuals and private sector balance sheets. But this is unlikely to be a top priority.

Adding to that, a fund manager said the market also needs to see US housing prices stop declining.

David Lee, managing director and chief investment officer of hedge fund Ferrell Asset Management, added two more negatives which need to subside for stocks to see meaningful rallies: banks need to start lending again, and refinancing rates need to decline - and credit spreads must fall as a result.

But he’s seeing some positives already. Redemptions lately have been much smaller than anticipated, and money supply in the US is growing rapidly.

Further, Mr Obama’s economic strategy and his new team are seen as having a lot of credibility. Meanwhile, exchange rates have been fairly stable, and ‘market participants, especially analysts, are beginning to focus on fundamentals as doomsday scenarios are norm and are no more an unanticipated event’, he said.

‘This Christmas is early and if we do not see aggressive selling in the third week of December, the market should be looking brighter ahead!’

So what should investors do?

Take profit on trading positions, said Mr Wong of DMG.

For longer-term investors, here is some advice from Citi’s Mr Villamin: ‘Take the current rally to rebalance your portfolio. Relook your liquidity needs and take the opportunity to reallocate your assets so as to meet your long-term investment objectives. On a three- to five-year horizon, one can find value in the current market.’

Source : Business Times - 10 Dec 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong
(+65)91002985
mindy@mindyyong.com