Signs of speculation in private property market

Signs of speculation in private property market

By Mok Fei Fei, 938LIVE

SINGAPORE: The government is seeing some signs of speculation in the Singapore property market, according to National Development Minister Mah Bow Tan.

Speaking on the sidelines of the topping out ceremony of the Marina Bay Financial Centre on Wednesday morning, Mr Mah said the government is monitoring the situation.

He added that it is uncertain if the buying momentum seen in recent months can be sustained.

“The forecast is still for negative growth this year. Although it’s not as negative as it was in the beginning of the year. I think there is still uncertainty… But what is important really is for all of us, all the players in the market, to make sure that the market remains healthy,” said Mr Mah.

According to latest data from the Urban Redevelopment Authority (URA), sales of uncompleted private homes reached a record high of 1,825 units in June as improving sentiment in the market spurred homebuyers to snap up more units.

Mr Mah assured that there is adequate supply of units in the market for now and the government is prepared to release more land for sale if necessary.

On the Marina Bay Financial Centre, Mr Mah noted that it has already attracted over S$20 billion of private real estate investments from both local and international investors. About 61 per cent of space in the centre has been pre-leased.

Mr Mah also reiterated the government’s commitment to the project, saying another S$1 billion in infrastructure works will be invested over the next 10 to 15 years. The figure is on top of the S$7.5 billion already invested in Marina Bay.

- 938LIVE/so

Source : Channel NewsAsia - 29 July 2009

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Can new Orchard Road malls thrive despite recession?

Can new Orchard Road malls thrive despite recession?

Addition of hundreds of new shops will further squeeze retailers’ profits

CAN the three huge new malls on Singapore’s main retail strip thrive despite a limp global economy?

Latest mall: ION Orchard opened 70 per cent of its stores last week after offering a 30 per cent rebate on rent through October to attract tenants to fill its 640,000 square feet of retail space
The revamp of Orchard Road, along with two resorts featuring the country’s first casinos opening next year, is part of the government’s plans to make Singapore a regional tourist and shopping mecca and fuel a rebound from its worst recession ever.

But retailers on Orchard Road, which packs some 40 shopping centres into 2.5 kilometres, could struggle for some time.

Locals and tourists are spending less while the addition of hundreds of new shops in nearly a fifth more retail space will further squeeze profits.

‘The timing of the new malls wasn’t great,’ said David Cohen, an economist at consultancy Action Economics in Singapore. ‘Sales could be soft for a while.’

So far this year, Singapore’s retail sales are down more than 10 per cent from a year earlier. Big-ticket items - such as jewellery, cars and furniture - have been especially hard hit.

‘We really started to feel the recession in November, and in the last few months sales have been recovering very gradually,’ said Desmond Png, a manager at a Hugo Boss store in Ngee Ann City mall on Orchard. ‘Before, if a customer liked a shirt, and we had it in three colours, he’d buy all three.’ ‘Now he’s getting just one.’

The biggest of the new malls, the ION Orchard, opened 70 per cent of its stores last week after offering a 30 per cent rebate on rent through October to attract tenants to fill its 640,000 square feet of retail space. Costing about $2 billion, the project includes a luxury 52-storey condominium.

Rents at prime Orchard spaces will likely fall up to 12 per cent this year, according to consultancy CB Richard Ellis.

‘Yes, we’ve just gone through one of the worst global recessions ever,’ said Soon Su Lin, chief executive of Orchard Turn Development, ION’s landlord. ‘But the tenants see this as a long-term investment. We believe the market will improve.’

A regional economic recovery is also key for Orchard Road since tourists from countries such as Indonesia, Malaysia and China account for at least 20 per cent of the country’s retail sales, Mr Cohen said.

Annual tourist arrivals, which fell 12 per cent in the first five months of the year, are equal to 173 per cent of Singapore’s total population, the second highest ratio in the region after Hong Kong.

‘Compared to Malaysia or Hong Kong, I prefer shopping in Singapore because of the comfort and safety,’ said Fitria Evariany, a 33-year-old Indonesian housewife who visits Singapore three times a year to shop. ‘I come here to buy certain brands I can’t get back home.’

Most economists are optimistic that government tax breaks and spending programmes will keep the unemployment rate low, and the economy will grow more than 4 per cent next year after a 5 per cent drop this year.

‘As long as unemployment doesn’t get out of control, consumers will still spend,’ said Selena Ling, an economist with OCBC Bank in Singapore. ‘But if there’s a protracted recession, then it’s a totally different ball game.’ - AP

Source : Business Times - 29 July 2009

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