Robust private home sales in June

Robust private home sales in June

But it is too early to call a recovery, cautions OCBC Investment Research

By UMA SHANKARI

(SINGAPORE) Private home sales stayed strong in June.

Freehold property: Artist’s impression of Vista Residences; Far East Organization’s Mr Chia says that buyers are mainly Singaporeans and there is strong interest from young professional managers, teachers and civil servants
Far East Organization sold 74 apartments in its 280-unit Vista Residences at a private preview last weekend, the developer said yesterday.

And Frasers Centrepoint said that it has fully sold two of its projects - the 330-unit 8@Woodleigh and the 110-unit Woodsville 28. Homes at 8@Woodleigh went for an average of $790 per sq ft (psf), while units at Woodsville 28 sold for an average price of $775 psf.

8@Woodleigh was launched just two weeks ago. Woodsville 28 was launched in July 2008 but most units languished until the buying momentum returned to the market this year.

Over at the freehold Vista Residences - on Jalan Dusun and Jalan Datoh at the corner of Thomson Road - prices start at $960 psf. The project will be officially launched tomorrow, but Far East released 88 units at a weekend preview, and 85 per cent of them were snapped up.

‘Buyers are mainly Singaporeans and there is particularly strong interest from young professional managers, teachers and civil servants who are buying to occupy,’ said Chia Boon Kuah, chief operating officer of Far East Organization’s property arm.

While units at Vista Residences have sold for more than homes in the nearby The Arte - a City Developments project where units were launched at an average price of $880 psf in March - the difference in pricing is due to the difference in unit sizes and floor plans, analysts say.

‘Vista Residences offer smaller size units that command higher psf pricing and also smaller balcony space than The Arte,’ OCBC Investment Research analyst Foo Sze Ming said in a note yesterday. ‘As such, we caution that the strong buying momentum at higher psf pricing for the new launch should not be viewed as a new uptrend for property prices.’

Mr Foo said that it is too early to call a recovery in the property market. ‘We remain unconvinced by the recent ‘recovery’ in the physical property market,’ he said.

‘We believe buying strength over the recent weeks could have been driven by the spillover effect from earlier pent-up demand that drew cash rich local investors back into the market. In our view, potential catalysts for price increase will have to come from an inflow of foreign funds into the property market, as well as a pick up in employment opportunities.’

Foreign funds were the driving force of the property boom in 2007, but have not come back to the market in a big way.

Looking ahead, more mass-market and mid-market launches are expected in the coming weeks, including Oasis@Elias, a 388-unit, 99-year leasehold project at Elias Road by Chip Eng Seng, and The Gale, a 329-unit, freehold project at Flora Road by Tripartite Developers.

Source : Business Times - 30 June 2009

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Worst over for US Treasuries, say dealers

Worst over for US Treasuries, say dealers

Benchmark 10-year note yield seen finishing year little changed at 3.58%

(NEW YORK) Wall Street’s largest bond-trading firms say that the worst may be over for investors in Treasuries after government securities posted their biggest first-half losses in at least three decades.

The 16 primary dealers, which trade directly with the Federal Reserve and are obligated to bid at Treasury auctions, forecast that the benchmark 10-year note yield will finish the year little changed at 3.58 per cent, after rising from 2.21 per cent at the end of 2008, according to a survey by Bloomberg News.

The dealers, which include JPMorgan Chase & Co and Goldman Sachs Group Inc, said that the sell-off will slow after signs emerged this month that foreign buyers are scooping up record amounts of debt being sold by the Obama administration. Plus, yields at the highest since November are luring investors speculating that the economy’s recovery may be slow.

‘We have seen an incredible amount of demand,’ said Richard Tang, head of fixed-income sales at primary dealer RBS Securities Inc in Stamford, Connecticut. ‘A lot of it is asset reallocation, out of risk assets and commodities. It’s been significant.’

The firms have been accurate so far this year. A survey in January showed that they predicted that Treasuries would fall as efforts to spur the economy gain traction and the flight to safety that drove the best returns in government debt since 1995 waned. Ten-year notes would lose 3.5 per cent, based on the median forecast of yields in January.

The value of US government debt has actually declined 4.41 per cent since December, and is on a pace to post a loss for only the third time since Merrill Lynch & Co started calculating returns with its US Treasury Master index in 1978. The index rose 14 per cent last year as the global economy lapsed into the worst recession in six decades.

If yields stayed constant for the remainder of the year, investors would still realise a loss for 2009 even after collecting interest payments.

Bonds rallied last week as indirect bidders, a class of investors that includes foreign central banks, purchased 67.2 per cent of the record US$27 billion in seven-year notes sold on June 25, or double the amount of bids than at the last sale in May.

The ratio was also the highest since 2004 on the sale of a US$37 billion in five-year notes the day before, while the US$40 billion in two-year notes auctioned on June 23 attracted the most indirect bids in at least six years.

‘There was fear about central bank selling,’ said Jeffry Feigenwinter, head of Treasury trading in New York at primary dealer BNP Paribas Securities. ‘When they showed up at these auctions, some of those fears were put to rest.’

The surge in demand cannot be ignored even with a change in a rule that went into effect this month that may have raised the levels of indirect bids by eliminating a provision allowing some customer awards to be classified as dealer bids, said William O’Donnell, head of Treasury strategy at RBS.

The Fed’s holdings of Treasuries on behalf of central banks and institutions from China to Norway rose by US$257.2 billion this year, or 15 per cent, according to data compiled by Bloomberg. That compares with an increase of US$127.3 billion, or 10 per cent, in the first half of 2008.

The US relies on foreign investors to finance the federal budget deficit. About 51 per cent of the US$6.45 trillion in marketable Treasuries are held outside the US, up from 35 per cent in 2000, according to data compiled by the government.

Concern that international investors would pull back from American financial assets have grown as the US Dollar Index weakened 9.4 per cent since February after President Barack Obama and Fed chairman Ben Bernanke committed US$12.8 trillion to thaw frozen credit markets and snap the longest US economic slump since the 1930s.

New York-based Goldman Sachs, another primary dealer, estimated that the US may borrow a record US$3.25 trillion this fiscal year ending Sept 30, almost four times the US$892 billion in 2008, to finance the budget deficit.

‘The debt is expected to explode, as we all know,’ said John Spinello, chief technical strategist in New York at primary dealer Jefferies Group Inc. ‘Will they maintain that 50 per cent share? We don’t know.’

People’s Bank of China governor Zhou Xiaochuan said that the nation will not change its currency reserve policy suddenly, speaking to reporters at a central bankers’ meeting on Sunday in Basel, Switzerland.

The US dollar fell against most of its major counterparts on June 26 after China repeated its call for a supranational currency ‘delinked’ from sovereign nations. The People’s Bank of China said that the International Monetary Fund should manage more of members’ foreign exchange reserves.

‘To prevent the deficiencies in the main reserve currency, there’s a need to create a new currency that’s delinked from the economies of the issuers,’ the People’s Bank said in its 2008 review. China is the biggest foreign holder of Treasuries, with US$763.5 billion as at April. — Bloomberg

Source : Business Times - 30 June 2009

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Just two left standing for Ferrari franchise

Just two left standing for Ferrari franchise

It now looks like a race between Ong Beng Seng and Hadi Tanaga

By SAMUEL EE

(SINGAPORE) Two local auto distributors are understood to have been shortlisted by Ferrari to take over the local dealership, with the decision expected in the first 10 days of July.

Head to head: Mr Ong (above) and Mr Tanaga are vying to represent Ferrari
Ong Beng Seng, F1 promoter and the man behind Hyundai distributor Komoco Motors, and Hadi Tanaga, who owns Premium Automobiles, the Audi dealer, are said to be the last two standing out of at least five parties who had applied to represent the Italian super sports car marque.

The decision to appoint a dealer could come in the next few days, according to a source from Ferrari Asia Pacific, the prancing horse’s regional headquarters in Shanghai. He added that it should not take longer than the next 10 days.

The source did not say it but the time frame could relate to the fact that Ferrari’s agreement with current importer Hong Seh Motors is understood to expire by mid-July, thus making after-sales support an important issue with the exclusive Italian manufacturer’s well-heeled customers here.

Hong Seh has held the Ferrari franchise since 1982. The home-grown company was one of the five parties which had submitted proposals to represent the Italian marque here.

Another party was Karsono Kwee, the man behind Porsche and Rolls-Royce, among other brands.

The well-known motor magnate was understood to have been a strong contender but chose to bow out of the race even before Ferrari could shortlist him because of pressure from Porsche.

Apparently, the German sports car maker was unhappy about the idea of Mr Kwee taking on another sports car brand.

Ferrari has been reviewing its dealer network in the region for the past three years with the aim of maximising the full potential of its business.

As part of the selection criteria, the new partner will have to invest in a new and more visible showroom in Leng Kee Road or the Orchard Road area. Another requirement is an increased focus on after-sales service and customer care.

As early as late 2008, the first of the five suitors began submitting their proposals to the Italian carmaker - a disproportionately large number considering the small size of the Singapore market.

So far, senior management from Ferrari’s Shanghai office have been making regular visits to the Republic to meet with the applicants.

Yesterday, they informed Mr Ong and Mr Tanaga that they are the final two applicants to be considered.

Source : Business Times - 30 June 2009

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Number of PMET job seekers rises 123% in South West District

Number of PMET job seekers rises 123% in South West District

By Desmond Wong

SINGAPORE: The number of Professionals, Managers, Executives and Technicians (PMETs) seeking jobs has gone up by 123 per cent to about 1,000 in the South West District between last October and April this year.

To meet the demand, its Community Development Council (CDC) is planning more job-matching opportunities for residents.

CDC’s job fair on Monday had over 300 job openings and focused on the public sector, which the council said is particularly relevant in these difficult economic times.

Senior Parliamentary Secretary for Environment and Water Resources Amy Khor, who is also the mayor of South West District, said: “There is a perception now in the market that being in a government job is actually a lot more secure in such uncertain times.

“I think the demand for government jobs has increased because of this perception. Also, the government has announced that over the next five years, there will be more than 10,000 jobs available.”

The CDC also held networking sessions with government agencies to enable PMET applicants to present themselves in a more personal light.

Thirty-six of the applicants were also given name cards by the CDC, with additional information about themselves, to give prospective employers a snapshot of what the job seekers have to offer.

PMETs at the fair said that given the difficult times, they were willing to be less picky.

Jeremy Yap Choon Hock, a job applicant, said: “Across the board in the private sector, the pay has dropped 20 per cent, 30 per cent. So I am actually prepared to face that in any job that I apply for.”

The CDC intends to increase the number of job fairs it hosts from three to eight per month.

- CNA/so

Source : Channel NewsAsia - 30 June 2009

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Prices of new private homes could rise by 5-10% in H2: analysts

Prices of new private homes could rise by 5-10% in H2: analysts

By Wong Siew Ying

SINGAPORE: Market watchers said prices of private residential properties could climb by between five and 10 per cent on average in the second half of 2009.

Strong sales in recent months have driven prices up despite the economic slowdown. Concerns are being raised over a potential property bubble.

Close to 6,000 units of new private homes have been sold so far in 2009. This has surpassed the over 4,200 deals done for the whole of last year.

Observers said the pick-up in the market is partly due to price corrections, the recent stock market rally and signs of an economic turnaround.

Market watchers said pent-up demand also drove sales up in the last four months and they expect the trend to continue until the end of the year, barring any major setback to economic recovery.

But some analysts said this could be a cause for concern if it is unsupported by sound fundamentals.

Tay Huey Ying, director, Research & Advisory, Colliers International, said: “A lot of this is highly dependent on prices remaining affordable because people are coming in on price weakness, and in the absence of sustained economic expansion, that could generate growth in employment as well as personal income. Then we could be looking at an imminent formation of a property bubble.”

Going forward, experts said developers are likely to test the market with gradual price increases. And home prices in the mass market segment could creep up by about five per cent.

Joseph Tan, executive director, Residential, CB Richard Ellis, said: “It’s fairly safe to say that that mass market has actually bottomed out because if you look at transactions in the last two months, prices have increased by 10 to 15 per cent, compared to first quarter.

“We have seen the return of high and mid-tier markets in terms of transactions. We’ve seen fairly good demand for properties priced between S$1,500 per square foot up to S$2,000 per square foot.”

With rising interest in more expensive properties, analysts said the number of upgraders from public housing flats to private apartments will dwindle. These buyers accounted for about 50 per cent of total home sales in January, but just over 30 per cent in May.

Overall, observers said Singaporeans will still form the bulk of home buyers. But the opening of the two integrated resorts next year could see renewed interest from foreign investors. - CNA/vm

Source : Channel NewsAsia - 30 June 2009

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Contraction in S’pore prime office market could ease: JL LaSalle

Contraction in S’pore prime office market could ease: JL LaSalle

By Yasmine Yahya

SINGAPORE: Singapore’s Prime Grade A office market has seen three straight quarters of rental contractions but Jones Lang LaSalle says that pullback is easing.

The property consultancy said rentals fell 11 per cent in the second quarter, compared to 28 per cent in the first quarter.

Jones Lang said landlords have been taking a defensive strategy of securing occupants for their office space at the expense of rentals.

This came on the back of the challenging business environment and large supply of office space due to come on stream over the next few years.

The central business district expects to add another 1.2 million square feet of new space by the end of 2009.

As such, Jones Lang said it does not expect the office market to recover in the short term. However, it points out that any further rent correction to come must be seen in perspective to the run-up experienced in 2007.

That year, rentals surged to about S$18.40 per square foot per month, surpassing the historical high by up to 80 per cent.

Since then, office rentals have declined by 48 per cent to about S$9.50 per square foot per month. This is still more than double the historical low of S$4.55 per square foot per month seen in 2004. - CNA/vm

Source : Channel NewsAsia - 30 June 2009

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Singapore proposes changes to tax laws to meet international standard

Singapore proposes changes to tax laws to meet international standard

SINGAPORE - The Ministry of Finance (MOF) is proposing changes to Singapore’s tax laws to meet the new internationally agreed standard on exchange of information for tax purposes.

The ministry is seeking comments from now till July 28 on the draft Income Tax (Amendment) (Exchange of Information) Bill, the MOF said in a statement.

The bill proposes amendments to the Income Tax Act, as well as the Goods & Services Act and Stamp Duties Act, to allow Singapore to enter into Avoidance of Double Taxation Agreements (DTAs) with other countries.

The changes will allow the Inland Revenue Authority of Singapore (IRAS) to provide information on local accounts to foreign authorities even if the request does not relate to a Singapore tax matter.

On March 6 this year, Singapore endorsed the Organisation for Economic Cooperation and Development’s (OECD’s) 2008 Standard for the effective exchange of information through DTAs.

The MOF said it decided to do so as the OECD standard has become an internationally agreed standard following its endorsement by the United Nations in October 2008.

It added that the “proposed amendments are in keeping with Singapore’s status and reputation as a trusted and responsible business and financial hub”.

“Such provisions will enhance the level of assistance that Singapore can provide to foreign jurisdictions under DTAs which incorporate the standard, and vice versa,” the ministry said.

However, requests still need to be “clear, specific, relevant and consistent with the new internationally agreed standard”. “The standard allows the requested jurisdiction to reject requests that are frivolous or spurious in nature or ‘fishing expeditions’ by the requesting jurisdictions.”

The public can submit their comments directly to the Finance Ministry via its website, email, fax or post as well as the REACH consultation portal by July 28.

- CNA/al

Source : Channel NewsAsia - 30 June 2009

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OCBC says too early to call for recovery in property market

OCBC says too early to call for recovery in property market

By Yasmine Yahya

SINGAPORE: OCBC Investment Research has said mass-market residential projects are seeing strong demand, especially from local buyers, but it is still too early to call for a recovery in the property market.

In its latest report on the property sector, OCBC noted that the recently launched 8@Woodleigh condominium at Potong Pasir was fully sold within two weeks, while Vista Residences in Balestier has also seen a strong take-up rate for the units launched so far.

It said local buyers are still driving the demand for these properties, but there is also a rising proportion of buyers who are taking up these units for investment rather than for their own stay.

Still, OCBC said it remains unconvinced that the market is showing a real recovery. This is because the buying strength seen in recent weeks could have been driven by the spillover effect from an earlier pent-up demand that had drawn cash-rich local investors back into the property market.

OCBC said the potential catalysts for an increase in property prices will have to come from the inflow of foreign funds into the property market as well as a pick-up in employment opportunities.

Foreign funds had been the driving force of the property boom in 2007. For now, they have not come back in a strong way, said OCBC.

- CNA/ir

Source : Channel NewsAsia - 30 June 2009

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