UP: Singapore now ranks among top 10 most expensive cities in Asia for expatriates

UP: Singapore now ranks among top 10 most expensive cities in Asia for expatriates

By Yang Huiwen

SINGAPORE has become one of the 10 most expensive cities in Asia for expatriates to live, according to a new cost-of-living survey.

The Republic’s promotion from 13th spot last year to 10th in the ECA International survey, is largely down to price increases not slowing as quickly as elsewhere in Asia.

This is despite a weakening Singapore dollar making goods and services that much cheaper here for foreigners.

The strengthening of the yen saw the region’s top four spots taken up by Japanese cities.

Tokyo reclaimed its position as Asia’s most expensive city, followed by Nagoya, Yokohama and Kobe.

Explaining Singapore’s move up the ranks, Mr Lee Quane, regional director of ECA Asia, said: ‘Prices have not slowed down as much in Singapore as in other parts of Asia.’

The pace of increase in prices of goods and services in countries such as China and Malaysia, for instance, has slowed down by half. Prices are down by just one quarter in Singapore, said Mr Quane.

Still, Singapore remains a more affordable place than long-time rival Hong Kong, where the cost of living is being driven up by the strength of the Hong Kong dollar, which is pegged to the US dollar.

Hong Kong jumped from 98th spot to 29th in the global ranking, and is the seventh most costly city in Asia.

Globally, Singapore came in 72nd, up from being 114th last year.

Seoul, Kuala Lumpur, Jakarta, Manila and New Delhi are among the Asian cities which have become relatively cheaper for expatriates.

The survey found that the cost of living in Asia has increased relative to the United States and Europe, given that the West has been hit hardest by the global financial crisis.

So, while inflation has slowed in many Asian cities compared to a year ago, it has fallen more dramatically in many Western countries where growth has been slower.

Singapore International Chamber of Commerce (SICC) chief executive Phillip Overmyer says global companies with operations in Singapore are feeling the pinch.

‘We’re seeing demand coming down, yet costs remain very high,’ making Singapore and some other Asian cities very expensive places to operate, he warned.

‘What I see going on right now are serious evaluations (by companies). Where do we go if we need to move? What do we do if recession is going to last for a few years?’

Ms Jane Fraser, 38, an advertising executive, said the cost of living in Singapore is still ‘reasonably bearable’. However, housing rents, which have been steadily declining of late, are still a bugbear, she said.

ECA carries out its survey twice a year to help multinational companies calculate remuneration packages and living costs for expatriates. The study compares a basket of 125 consumer goods and services commonly bought by expats in over 370 locations and measures these items against inflation, availability of goods and exchange rates.

Most expensive cities in Asia
1. Tokyo (1)

2. Nagoya (4)

3. Yokohama (2)

4. Kobe (5)

5. Beijing (10)

6. Shanghai (12)

7. Hong Kong (9)

8. Shenzhen (16)

9. Guangzhou (15)

10. Singapore (13)

Bracket indicates March 2008 ranking

Source : Straits Times - 11 June 2009

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Economists up growth forecast for next year

Economists up growth forecast for next year

MAS poll shows they expect 4.2% expansion after 2009’s sharp fall

By Gabriel Chen & Linette Lai

MORE economists are now expecting a sharp recovery for the Singaporean economy in 2010, according to a new survey.
The Monetary Authority of Singapore (MAS) poll of 19 economists shows that their consensus is for growth hitting 4.2 per next year, as compared to the 3.3 per cent they forecast in March.

The economic bounce-back will follow a deep 6.5 per cent contraction this year, says the poll, which compares to a 4.9 per cent shrinkage forecast in an earlier March survey.

Some economists have already factored in a more upbeat take on the economy. Standard Chartered Bank economist Alvin Liew has boosted his growth forecast for next year to 4.4 per cent, up from 2 per cent.

And Citigroup economist Kit Wei Zheng has upped his 2010 growth projection to 6.2 per cent from 4.2 per cent.

The growing number of upgrades comes amid promising signs of ‘green shoots’ as the stock and property markets stage rallies unthinkable only a few months ago.

Also, the Purchasing Managers’ Index - a leading indicator of manufacturing activity - turned positive last month for the first time in nine months.

Economists say that just as Singapore’s extreme openness causes it to be hit disproportionately in the downturn, it can benefit it more during a recovery.

‘Huge and synchronised stimulus plans are beginning to take effect, in China first and increasingly in other countries. This will lead to a fairly powerful regional trade recovery and Singapore will be very sensitive to that,’ said HSBC economist Robert Prior-Wandesforde.

Barclays Capital economist Leong Wai Ho is also optimistic.

‘Our impression is that packed queues for musicals, crowded restaurants and increased property transactions suggest the clouds of gloom have parted,’ he said.

‘This is an indication the sentiment-sensitive segments of the economy are firing up again.’

Economists say that the forecast dramatic bounce-back next year could partly be down to what is known as the ‘base effect’.

With this year’s contraction expected by the survey to be deeper, even a small move into positive territory the following year will lead to a bigger growth spike when comparing 2009 with 2010.

Many believe that the forecast deep contraction for 2009 - 6.5 per cent, compared with a 4.9 per cent forecast in an earlier survey in March - is substantially down to timing.

For the March survey, economists did not have access to first-quarter gross domestic product (GDP) advance estimates published later in the month which showed a record 11.5 per cent shrinkage.

And then, equally dire forecasts were published.

In April, the full-year economic growth forecast was revised dramatically downwards by the Government to the current -9 per cent to -6 per cent, instead of the contraction of -2 per cent to -5 per cent thought previously.

Then, early last month, the International Monetary Fund (IMF) slashed its forecast for Singapore’s 2009 growth, saying the economy could decline 10 per cent to end up as the worst performer in Asia.

This was in stark contrast to the IMF’s projection last November when it said Singapore’s economy would shrink by just 1.4 per cent this year.

On the back of the grim news and downgrades, many economists followed suit and proceeded to trim their own growth projections - a move captured in the May survey.

But experts suggest this pessimism will not last if the economy continues to show signs of recovery.

‘I suspect the next survey will probably show that respondents will be somewhat less negative than reflected in the present survey,’ Mr Kit said.

While economic conditions are improving, economists urge caution at a time when Singapore still faces its worst recession ever.

‘At the end of the day, a sustainable recovery story is still predicated on a US economic recovery. And the signs pointing to the latter are still relatively weak at this juncture,’ OCBC Bank economist Selena Ling said.

Source : Straits Times - 11 June 2009

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To let: 400,000 sq ft shadow office space

To let: 400,000 sq ft shadow office space

Financial institutions in search of tenants for space that they pre-committed to

By UMA SHANKARI

CLOSE to 400,000 square feet of shadow office space is now available as financial institutions scramble to find replacement tenants for the space that they pre-committed to in the boom years.

A white paper on the subject by Colliers International says that the amount of shadow office space in Singapore rose by a steep 48 per cent over the last two months to hit 370,000 sq ft in May 2009 - up from 250,000 sq ft in March.

This is equivalent to 0.5 per cent of the islandwide office stock, or about the size of MAS Building at Shenton Way.

Likewise, Jones Lang LaSalle (JLL) estimates that some 400,000 sq ft of shadow office space is now available. The bulk of this came onstream from February to May this year, said JLL’s regional director and head of markets, Chris Archibold.

Shadow space is loosely defined as excess office space that companies have leased but are looking to sublet to a third party for reasons such as reduction in headcount.

‘This will add to the downward pressure on rents exerted by the potential supply of 9.6 million sq ft from Q1 2009 to Q4 2012, and could keep rents depressed for a prolonged period and delay market recovery until after 2010.’

- Colliers

Colliers’ white paper, which was released yesterday, identified the financial industry as the largest contributor of shadow space. It accounts for 46 per cent of all shadow space currently being marketed.

‘This is hardly surprising,’ said Colliers. After all, the financial services sector experienced explosive growth of 11.7 per cent in 2006 and 15.7 per cent in 2007. During this period, many financial institutions - including Citigroup, Credit Suisse, Deutsche Bank, Merrill Lynch, Prudential Assurance and UBS - embarked on aggressive expansion plans.

‘With the current economic downturn being fuelled by the collapse of the global financial markets, the reverse is now true,’ Colliers observed.

The white paper also gave a breakdown of where the available shadow space is located.

Of the 370,000 sq ft of shadow space available as at May 2009, some 42 per cent is located in the Raffles Place/New Downtown micro-market.

A further 24 per cent is located in the Marina/City Hall area, while the Shenton Way/Tanjong Pagar micro-market accounted for some 14 per cent.

Even more shadow space is likely to become available over the rest of the year and in 2010, analysts said.

Colliers projects that some 400,000 to 600,000 sq ft of additional shadow space could become available by 2010 from just financial institutions.

The problem will be worsened when construction of new major office buildings, in which financial companies have pre-committed to large amount of spaces, is expected to be completed.

‘This will add to the downward pressure on rents exerted by the potential supply of 9.6 million sq ft from Q1 2009 to Q4 2012, and could keep rents depressed for a prolonged period of time and delay market recovery until after 2010,’ said Colliers.

It projects that Grade A office rents will decline by up to 60 per cent in 2009 and 20 per cent in 2010.

JLL’s Mr Archibold, who similarly estimates that another 400,000 sq ft of shadow office space could be added up to 2010, also expects rents to take a hit from the increase in shadow space.

Colliers’ data shows that as at March 2009, grade A office rents in the Raffles Place area have plummeted by some 41 per cent since peaking in Q3 2008.

The intense race for tenants has even resulted in landlords offering incentives such as rent holidays in addition to closing rents that are sometimes 25-30 per cent below asking rents in order to retain or secure new tenants, the firm observed.

Source : Business Times - 11 June 2009

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PC Show still hopes to dazzle amid gloom

PC Show still hopes to dazzle amid gloom

By WINSTON CHAI

THE bargain-hunting instinct that Singaporeans are famous for is luring tech companies out in full force at the PC Show in their search for a silver lining during the economic gloom.

Bargains galore: Industry observers say the PC Show is likely to do especially well
And this has helped maintain the scale of Singapore’s longest-running IT trade show at a time when other major events are being canned or downsized.

The 19th PC Show - which opens at Suntec Convention Centre later today - will again tempt gadget- crazed locals with a gizmo bonanza spanning four days, across four levels of the massive showground.

‘Exhibitors are definitely offering more attractive bundles this year to make the deals more enticing for consumers,’ says Gillian Loh, a project manager with show organiser Lines Exposition and Management Services.

More than 600 companies will be dangling promotions for everything from flat-panel televisions to featherweight notebooks and the latest high-definition video cameras.

‘Most of the exhibitors took part in the PC Show last year and have signed up with us again this year,’ says Ms Loh.

But while the level of participation this time around is comparable to that in 2008, the difference is that some companies have chosen to expand their presence.

Those taking bigger booths at this year’s show include LG Electronics, Toshiba, Hewlett-Packard and Dell.

‘We know Singaporeans look forward to IT fairs like the PC Show, and the good deals they can get,’ says Serena Yong, general manager of the personal systems group at HP Singapore.

‘The 2008 PC Show attracted more than 600 exhibitors and 1.1 million visitors, with over $51.7 million generated in sales. This year we expect a similar turnout or even better results.’ Ms Loh’s optimism could stem from the staggering sales at similar technology fairs in the past three quarters.

While global markets reeled from the impact from the financial meltdown in the second half of 2008, cash registers rang to new highs at the Comex and Sitex shows, which were staged during that period.

Similarly, 2009’s first technology bazaar - the IT Show - offered gadget makers a temporary reprieve from the retail slump, with record sales of $58.5 million.

‘The high turnout at this year’s previous consumer technology show suggests Singaporeans are still willing to invest in consumer IT products,’ says Andrew Koh, director and general manager of Canon Singapore’s consumer imaging and information group. ‘On a macro level, digital photography, gaming and digital content represent an affordable entertainment option.’

Industry observers say the PC Show, which coincides with the June school holidays, is likely to do especially well because people are now more inclined to spend on stay-at-home distractions such as new TVs and computers, rather than big-ticket family holidays.

Although shoppers flock to trade fairs to hunt down the best bargains, the flip side is that they may rein in their spending during other periods.

Also, a recent study suggests people may be going for less expensive gadgets during the downturn. According to research firm GfK, local notebook sales in April were driven largely by lower-end netbooks costing $1,000 or less.

Mobile phones, which typically retail for under $500 with a subscription contract, also grew strongly in the first quarter of this year, with sales spiking 15.6 per cent to $183 million.

Source : Business Times - 11 June 2009

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S’pore becoming more expensive for expatriates

S’pore becoming more expensive for expatriates

By JESSICA YEO

SINGAPORE is now the 10th most expensive city in Asia for expatriates, despite its weakened currency, a survey shows.

Having moved up three notches from its previous ranking of 13th place in ECA International’s survey on cost of living a year ago, Singapore is however still ranked below Japanese and Chinese cities, which dominate the top ten.

‘Price rises have not slowed down as much in Singapore as in other parts of Asia,’ said ECA’s regional director for Asia, Lee Quane.

Prices of goods and services in China and Malaysia have increased at half of last year’s pace, while in Singapore, they have increased by three-quarters, Mr Quane added.

Also, currencies of locations previously more expensive than Singapore (such as London, Stockholm and Istanbul) have depreciated at an even faster rate than the Sing dollar.

Meanwhile, the survey showed that due to the strong yen, Tokyo maintained its position as the most expensive city for expats. Its lead was followed by three other Japanese cities: Nagoya, Yokohama and Kobe.

Chinese cities and territories - Beijing, Shanghai, Hong Kong, Shenzhen and Guangzhou - stayed ahead of Singapore, due to the strengthening yuan.

‘The yuan has continued to strengthen while the yen has appreciated by almost 8 per cent against the US dollar,’ Mr Quane said.

‘Many Western currencies, including sterling, the euro and the Swiss franc, have weakened. As a result, people coming from these economies into Asia will notice a considerable difference in costs compared with 12 months ago.’

Globally, Singapore jumped to the 72nd most expensive city worldwide from 114th year-on-year.

However, not all Asian cities remained expensive for expats. Due to the weakened won, Seoul has fallen to the 17th most expensive city in Asia, from its top position as the most expensive Asian city two years ago.

Similarly, the depreciating currencies of Malaysia, Thailand, Indonesia and Taiwan have lowered expatriate living costs in those countries.

Among the top 10 cheapest places for expats are Indian cities, as the weakened rupee coupled with lower inflation has made the cost of living for those locations fall.

The biannual survey by ECA compares a basket of 125 consumer goods and services commonly purchased by international assignees in over 370 locations worldwide.

Source : Business Times - 11 June 2009

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Property auctions rise as hammer falls

Property auctions rise as hammer falls

May deals outstrip all of Q1; some banks allowing owners to hock their own properties
By KALPANA RASHIWALA
(SINGAPORE) Property auctions are in vogue again, with deals touching $18.5 million in May alone. This is higher than the $17.9 million for the whole of Q1 this year, show Colliers International figures.

Banks are playing their part by occasionally stepping aside and letting owners hock their own properties. This is because prices tend to slide when financial institutions repossess a property and offer it as mortgagee sale.

After a slow start to the year, a total of $47.7 million worth of properties have been sold at auction in the first five months. Colliers deputy managing director and auctioneer Grace Ng is now predicting that the year would see about $150 million of auction deals - compared to $83.7 million for 2008, which was an 11-year low.

The May figure is the highest since August last year, when auction sales touched about $22.7 million. But last August’s number was bumped up by state auctions that raised $13.81 million, while no such special factor was at play in May.

Owner sales accounted for 44 of the 59 properties that went under the hammer last month. Fifteen properties actually got sold, of which just over half - eight - were mortgagee sales. They fetched a combined $8.7 million.

Said Ms Ng: ‘We’re not seeing a surge in the number of repossessed properties in the market yet as financial institutions are making an effort to manage the situation by helping owners to ride through this difficult period and giving them the opportunity to sell the properties in the open market instead of repossessing the property immediately.’

Knight Frank executive director and auctioneer Mary Sai added: ‘Banks know that once they take over a property and it is offered as a mortgagee sale at an auction, some buyers will offer lower prices thinking it’s a fire sale or cheap sale. So it’s to the bank’s advantage to talk things over with the borrower, restructure the mortgage if necessary or at least give him a chance to try selling the property himself first.’

The stockmarket rally and strong homes sales by developers improved the overall sentiment and contributed to the strong auction sales in May.

Attendance at property auctions perked up last month, said Ms Sai. ‘Success rates also rose. For instance, in Q1, one or two properties, or even none in some cases, were sold at auctions. However, in May, most of the big auction houses achieved sales of at least two properties per auction.’

Jones Lang LaSalle head of auctions Mok Sze Sze noted that the price gap between buyers and sellers narrowed in May, resulting in more deals being sealed at auctions. Even though 96 properties were offered for auction in April and only 59 in May, last month saw more sealed deals.

Looking ahead, Ms Mok expects total auction sales for this year to surpass last year’s tally.

Colliers’ Ms Ng expects buoyant sales to continue in the next few months but whether the trend can be sustained depends on the economic recovery, the stockmarket performance and the selling price.

Agreeing, Knight Frank’s Ms Sai said: ‘There are buyers at auctions if prices are right. But if the reserve price is too high, they will not participate.’

Several landed homes were auctioned off in May, which accounted for its strong showing. They included a semi-detached house at 69 Namly Garden which was sold for $3.7 million or $716 per square foot of land area; the $4.1 million ($442 psf) sale of a bungalow at 20 Bright Hill Crescent off Upper Thomson Road; and 2 Pasir Ris Way (a semi-D) that fetched $2.3 million ($459 psf). The Pasir Ris and Namly Garden properties were mortgagee sales.

Colliers’ Ms Ng does not foresee an immediate rise in the number of mortgagee sale properties hitting the auction block.

‘A pick-up is likely to happen only in Q3 or Q4 this year. Currently, there’s an average of 18 distressed properties being put up for auction per month and the number could go up to about 22 properties per month in Q3 or Q4 this year.’

Knight Frank’s Ms Sai expects owner sales to continue buoying auctions in coming months, given the advantage this mode has over private treaty. ‘Once the sale is done, the seller collects 10 per cent payment immediately at the auction - instead of having a two-week option period. Prices and terms are pre-determined, avoiding protracted negotiation.

‘The advantage to the buyer is that the seller has to sell once the reserve price is reached at the auction, unlike private treaty where the seller can change his mind even if you meet his price before he grants an option.’

 
Source : Business Times - 11 June 2009

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