Long-term property investors should bet on Singapore: Analyst

Long-term property investors should bet on Singapore: Analyst

By Joyce Teo

SINGAPORE looks a pretty good bet for long-term property investors, given its strong savings rate, low corporate taxes and near-full employment, according to a key real estate player here yesterday.
And if prices fall further next year, it would be a good time to buy, said Mr Christopher Fossick, Jones Lang LaSalle’s managing director for Singapore and South-east Asia at a media briefing at the firm’s office. There is a consensus that the economy will go through a tough time next year, which means it will be tough for everybody, including those in property, he said.

‘If prices are lower, that provides opportunities,’ Mr Fossick added. He pointed out that Asia, particularly Singapore, given its status as a financial services hub, is better off economically than the United States and Europe. The level of household borrowings and corporate loans here is lower than in the US and Britain, he said.

He quoted a recent report commissioned by London Mayor Boris Johnson that said that the rising status of regional hubs such as Dubai and Singapore is threatening London’s position as the world’s financial capital.

He listed some of the key factors that should continue to attract investors here. Singapore’s corporate tax rate of 18 per cent, he said, is a tad above Hong Kong’s 17 per cent but below the 29 per cent rate in Britain and the 40 per cent levy in the US.

There is near full employment and a strong savings culture here. Singapore has a gross national savings rate of 45 per cent, compared with 11 per cent in the US, 14 per cent in Britain and 32 per cent in Hong Kong. Also, about 76.5 per cent of Singapore’s population are working, compared with 67.1 per cent in the US and Britain.

Property is always a medium- to long-term proposition, he added. Most investors treat it as such and have an investment horizon of more than 24 months. Jones Lang LaSalle’s regional director and head of markets, Mr Chris Archibold, said the office market will have a lower take-up rate over the next year but most of the expected new supply will not come to market until late next year anyway.

There are a lot of institutional investors on the sidelines waiting to enter the Singapore market, according to Mr Fossick.

‘They are saying, come 2009 and 2010, there will be opportunities to buy properties in Singapore,’ he said. ‘Obviously, it’s going to be at some discount from prices we saw in 2007.’

Source : Straits Times - 18 Dec 2008

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JLL sees property interest picking up here as investors exit other markets

JLL sees property interest picking up here as investors exit other markets

By UMA SHANKARI

BUYING interest in Singapore’s property market is beginning to pick up as the country benefits from investors who scale back in other markets, said Jones Lang LaSalle (JLL) yesterday.

Not so blue: While most investors are not expecting to see an upside to their investments in the next 6-24 months, in the longer run, the Singapore property market is still seen as a good bet
Foreign property funds and developers are looking for investment opportunities in the residential and commercial sectors here, said Chris Fossick, JLL’s managing director for South-east Asia and Singapore.

Property, he said, is a long-term investment. So while most investors are not expecting to see an upside to their investments in the next 6-24 months, in the longer run, the Singapore property market is still seen as a good bet, he said.

‘Our clients are telling us that they expect growth in Asia, and they want to take advantage of that growth. This is one of the few areas where they can get good returns on their investments,’ said Mr Fossick.

In the light of this, buying activity, which has fallen sharply since the start of this year, is beginning to show some signs of recovery as prices fall, he said.

In particular, affordability has improved in the residential market, said JLL. Prices have come off their peaks some 5-24 per cent for luxury and mass market projects, the property firm’s data shows.

‘The affordability of both luxury and mass market projects are better now than they were about 6-9 months ago,’ said JLL’s South-east Asia research head Chua Yang Liang. ‘Lower pricing will encourage fresh capital investment.’

The gap between monthly mortgage payments and monthly rentals have also narrowed compared with 1998, which also makes buying properties more attractive now than 10 years ago, Dr Chua said.

While most funds and developers are still watching the market closely and waiting for the right time to buy, some of them are already at ‘entry point’, said Mr Fossick. These funds and developers will buy if sellers offer the right price.

Mr Fossick, however, said that he does not expect many distressed asset sales. ‘I don’t see there being distress at all.’

Source : Business Times - 18 Dec 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

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mindy@mindyyong.com

Madoff scam: Great Eastern has $64m exposure

Madoff scam: Great Eastern has $64m exposure

It also sold US$45m of exposed funds to bank clients

By SIOW LI SEN

(SINGAPORE) Great Eastern Holdings (GEH) yesterday disclosed a S$64 million exposure to the biggest Wall Street fraudster of all time and also to selling US$45 million of funds related to Bernard Madoff to private bank clients.

GEH’s exposure represents 0.14 per cent of the group’s total assets of $45 billion as at Sept30, 2008

GEH, 87 per cent owned by OCBC Bank, also said that a joint venture with the Fairfield Greenwich Group - which has been particularly hard hit in the scandal - has $1 billion of assets under management.

The Singapore insurer said that while it has no direct exposure to Bernard Madoff, some of its funds have dealings with Fairfield Greenwich Group which has dealings with his investment securities firm.

Fairfield Greenwich Group, a fund of hedge funds specialist, had more than half of its US$14.1 billion in assets with Madoff. Its Fairfield Sentry fund is reported to have placed US$7.3 billion solely with Madoff who was arrested last week in what US prosecutors say was a US$50 billion Ponzi scheme to defraud investors.

In 2005, GEH subsidiary Lion Global Investors announced a 65-35 joint venture with Fairfield Greenwich Group.

The joint venture, Fairfield Capital Management, as at Nov 30 this year, has assets under management and advice of about $1 billion, a GEH spokeswoman told BT.

On the fate of the joint venture, she said: ‘At the moment, we have no plans to change the status quo.’

Asked about investors’ reaction, she said: ‘As the news only broke late last week, we have not yet seen any impact particularly given that redemption cycles tend to be either monthly or quarterly.’

GEH’s exposure via the relevant funds is about S$64 million, comprising S$7.7 million invested out of its shareholders’ fund and S$56.3 million from its Life Fund. This investment represents 0.14 per cent of the group’s total assets of S$45 billion as at Sept 30, 2008.

In addition, Lion Fairfield, acting as an agent, has sold about US$45 million of the Fairfield Sentry fund through private banking channels to accredited investors, it said.

Meanwhile, LionGlobal Flexi Fund, which is sold to retail investors, has an investment of about S$350,000 in the Fairfield Sentry fund. This investment represents less than 1.5 per cent of the LionGlobal Flexi Fund’s portfolio as at Dec 11, 2008.

GEH said that its exposure has no material impact on the group, including its subsidiary, Lion Global Investors Limited.

The fallout from the Madoff scam continues around the world, hitting particularly hard so-called specialist fund of hedge funds which earn fat fees by helping investors choose which hedge funds to invest in.

Critics are now wondering what work, especially due diligence, if any, specialists such as Fairfield Greenwich did.

Lion Fairfield Capital Management says on its website: ‘Lion Fairfield pursues Fairfield Greenwich’s approach of developing close relationships with managers who adhere to our relatively conservative investment philosophy and who agree to provide us complete transparency.’

Source : Business Times - 18 Dec 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

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