5.5% growth next year: Economists

5.5% growth next year: Economists

Forecast is higher than Govt’s figure of 3% to 5%

By Robin Chan

PRIVATE sector economists expect Singapore to grow even faster next year, as more signs emerge that the economy is returning to normal.

Growth is tipped to hit 5.5 per cent next year after a 2 per cent contraction this year - based on the median expectations of 20 economists, released yesterday by the Monetary Authority of Singapore (MAS).

This is better than the 4.5 per cent growth they predicted in September, and beats the Government’s official forecast of 3 per cent to 5 per cent growth in 2010.

‘The official view tends to be more conservative. This is natural as from a policymaker’s perspective, it is always safer to stay on the cautious end of a forecast,’ said DBS Bank economist Irvin Seah. ‘But from the private sector perspective, many recent indicators continue to point to a recovery in the global economy.’

Economists are looking at the low base from early this year, when the economy had contracted drastically, to give a boost in growth numbers in the first half of next year.

They are also counting on major economies stabilising so that consumer confidence can rebound and support manufacturing and export activity here.

‘While we are not expecting demand to come back in roaring fashion next year, we do expect demand to be good and orders stable,’ said Credit Suisse economist Joseph Tan.

Next year, the two integrated resorts will open, which should boost tourism-related sectors. Financial activity and trade are also expected to pick up and in turn make the service economy a stronger engine of growth.

The survey showed that economists are bullish on growth prospects, with most predicting between 5 per cent and 7 per cent growth next year.

But OCBC’s Selena Ling, for one, is still cautious, given that many countries have yet to halt their fiscal and monetary stimulus measures.

‘Coming out of the recession, there is still a fair bit of uncertainty about how strong and sustained the recovery will be,’ she said.

The Government said last month that the outlook for the second half of next year remains uncertain, although a return to recessionary conditions is not expected.

The survey expects first quarter gross domestic product (GDP) to shoot up 9.6 per cent compared with the same quarter this year, before moderating to between 3.7 per cent and 6 per cent in the following quarters.

Inflation for next year was revised upwards to 2.8 per cent after edging up 0.3 per cent this year, very much in line with the 2.5 per cent to 3.5 per cent the MAS expects.

Economists also expect the local currency to strengthen from $1.382 against the greenback at the end of 2009 to $1.35 by the end of next year. The MAS has kept its exchange rate policy unchanged.

The latest revision caps a wild year that has presented professional forecasters with one of their most challenging times guessing where the economy will go.

In January, economists were predicting the very worst for Singapore, expecting anything from a 5 per cent to 10 per cent contraction as the global economy teetered on the brink of collapse. But a 2 per cent contraction for the year and 5.5 per cent growth next year now puts the size of the recession in Singapore on a par with the dot.com bust, when the economy shrank 2.4 per cent and then grew 4.1 per cent the following year.

Economists like Mr Seah admitted that the crisis threw assumptions made in forecasting models out the window. ‘But we are now going through a state of normalisation, so that’s when we will see forecasting models hopefully starting to work again as the economic relationships return to normal,’ he said.

Source : Straits Times - 10 December 2009

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Pioneer Road North site draws 8 bids

Pioneer Road North site draws 8 bids

Highest bid of $19.4 million came from Kng Realty

By EMILYN YAP

A 30-year leasehold industrial site at Pioneer Road North and Soon Lee Drive has attracted strong demand, pointing to sustained confidence in the economy.

By the close of tender yesterday, the Urban Redevelopment Authority (URA) had received eight bids for the 18,958.8 square metre plot, which has a maximum gross plot ratio of two. The top bid came from Kng Realty Pte Ltd, at $19.4 million or $48 per square foot per plot ratio (psf ppr).

CB Richard Ellis Research executive director Li Hiaw Ho expects the development’s breakeven cost to range from $190-$210 psf.

Kng Realty’s bid is more than two times that of the trigger bid - an unnamed developer had committed to pay at least $8.2 million or $20 psf ppr for the land in October.

Kng Realty’s shareholders include Kim Chan Wah and Ng Hock Lye, both of whom are also shareholders of another company, Kng Development Pte Ltd.

Kng Development had won the tender for an industrial site at Kaki Bukit Road 2 in August. This firm’s other shareholders include Ng Teng Yeng, brother of property tycoon Ng Teng Fong.

The next highest bid for the Pioneer Road North site was $18 million or $44 psf ppr, which came jointly from Sia Kong Wah and Gimp Investment Pte Ltd. Kng Realty’s bid exceeded this by 7.8 per cent.

Other companies such as Soilbuild Group and EL Development also took part in the tender. The lowest bid came from Bok Seng Logistics Pte Ltd, at $9 million or $22 psf ppr.

‘The healthy response to the tender reflects the more optimistic business sentiment,’ said CBRE’s Mr Li.

According to Knight Frank head of industrial business space Lim Kien Kim, tender participants could also have been encouraged by good industrial space take-up in the Woodlands and Tuas South areas.

URA said it will evaluate the bids and announce the award of the tender later. Industrial sites it put up for sale in the last few months have seen healthy demand. For example, the one at Kaki Bukit Road 2 which eventually went to Kng Development drew as many as 18 bids.

Source : Business Times - 10 December 2009

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MAS poll points to 5.5% growth in 2010

MAS poll points to 5.5% growth in 2010

Estimate of this year’s contraction falls to 2% from 3.6% a quarter ago

THE economy is likely to grow 4.7 per cent in the current quarter before picking up pace in the first half of next year, with growth averaging 5.5 per cent in 2010, according to a poll of market economists.

The Monetary Authority of Singapore’s latest survey of professional forecasters - conducted the day the third-quarter economic results were released last month - has the median estimate of the current Q4 growth at 4.7 per cent, within a wide 1.2 to 7.5 per cent range.

The 20 economists who responded to the survey also now see the economy contracting 2 per cent in 2009. This compares with a median forecast of a 3.6 per cent decline from the previous poll a quarter earlier.

The official forecast for 2009 has now been narrowed to a half-point range - contraction of between 2 and 2.5 per cent. But some economists reckon that there’s a good chance - close to 50 per cent probability - that the GDP decline this year could be smaller than 2 per cent.

In any case, the focus would have moved on to 2010, where the first quarter is expected to gain from a low-base effect - the economists’ forecasts range from 5 to 11.4 per cent, with a 9.6 per cent median.

Q1 2009 was the weakest quarter during the recent downturn: GDP shrank 9.5 per cent year-on-year, though in momentum terms, the pace of the decline was easing. It was the fourth and final negative quarter in sequential terms.

The economists’ forecasts see GDP growth easing to 6 and 3.7 per cent over the next quarters, before picking up again to 5 per cent in Q4 2010.

Full-year growth is now projected at 5.5 per cent for 2010, one point higher than the median forecast from the September survey.

Meanwhile, the consumer price inflation rate is expected to jump sharply from an estimated 0.3 per cent in 2009 to 1.5 per cent next year.

The economists also now expect the 2009 unemployment rate to be 3.4 per cent by year-end - lower than the 3.8 per cent forecast from the earlier poll. The jobless figure is also expected to further ease to 3 per cent by the end of 2010.

Source : Business Times - 10 December 2009

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Pricey is right for 2010 home sales: observers

Pricey is right for 2010 home sales: observers

Mass-market sales may ease, focus is on high-end homes

By EMILYN YAP

(SINGAPORE) Markets are stabilising and developers here are ready to roll out pricey homes. Industry watchers are keeping their fingers tightly crossed for the high-end residential sector, which could see more launches next year if economies sail smoothly towards recovery.

According to Colliers International estimates, 10,671 private homes are set for launch next year. And 46 per cent or 4,958 units will be in the core central region (CCR).

Prime projects that could hit the market include the former Farrer Court site, which CapitaLand and partners bought en bloc in 2007, and Wheelock Properties’s Ardmore 3.

Another 33 per cent or 3,498 units will originate from the rest of central region (RCR). The outside central region (OCR) will account for the remaining 21 per cent or 2,215 launch-ready units.

The distribution of homes already launched this year is almost exactly the reverse, with the bulk of units coming from the booming mass-market sector. Colliers estimates that by end-December, 13,542 homes will have been released, of which 43 per cent or 5,822 units will be from OCR.

About 33 per cent or 4,429 units will be from RCR, while 24 per cent or 3,291 units would be from CCR.

‘Developers are likely to be encouraged to release more mid-tier or high-end units in 2010,’ says Colliers research and advisory director Tay Huey Ying. She cites several reasons - signs of investors and foreign buyers returning, improved economic prospects and the opening of the integrated resorts.

The strong take-up rate at Marina Bay Suites’ recent preview has raised hopes. Of the 90 units released, 87 were sold and the average price ranged from $2,200-$2,500 psf.

Jones Lang LaSalle (JLL) head of South-east Asia research Chua Yang Liang adds: ‘Positive sentiment from high net worth individuals and wealthy foreign buyers could return by H1 2010 and support transactional activity.’

Backing this view, a recent study by Barclays Wealth and the Economist Intelligence Unit found that wealthy individuals here plan to allocate a larger share of their investment portfolios to property in the next two years.

The big question is how much developers can sell fancy homes for, as doubts linger over the sustainability of economic recovery. DTZ Southeast Asia research head Chua Chor Hoon is one of several observers who expect ‘more upside potential’ for high-end property prices in the coming year.

According to Urban Redevelopment Authority indices, prices of non-landed CCR properties are still some way below the 2008 peak - 16.8 per cent down at Q3. In comparison, non-landed OCR property prices shot up this year and were just 2.5 per cent short of the peak.

Deutsche Bank analysts wrote in a report on Monday that high-end prices could rise 5-10 per cent in the coming year.

But even as optimism grows, some players are quick to highlight uncertainties. JLL’s Dr Chua stresses that new demand for property has to be backed by global or regional economic growth.

Several economists have flagged the risk of bubbles forming in Asian property markets. The Singapore government introduced cooling measures in September.

The Monetary Authority of Singapore also said more action may be needed if recent measures to dampen speculation prove insufficient.

City Developments executive chairman Kwek Leng Beng told BT last month the private home market here ‘will slow down’, following the MAS warning and the return of the confirmed list.

Source : Business Times - 10 December 2009

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URA closes tender for Pioneer Rd North site

URA closes tender for Pioneer Rd North site

By Jonathan Peeris

SINGAPORE : Property developer Kng Realty has submitted the highest bid of S$19.4 million for an industrial site at Pioneer Road North.

The Urban Redevelopment Authority (URA) has closed the tender for the site after receiving eight bids in total.

The next highest bid came from Sia Kong Wah & Gimp Investment at S$18 million.

Kng Realty’s bid translates to about S$48 per square foot.

Li Hiaw Ho, executive director at CBRE Research, said Kng Realty’s bid was more than twice the application bid of S$20 per square foot.

It is also higher than the S$37 per square foot that Soilbuild Group paid for a 30-year leasehold industrial site along Pioneer Road in November 2007.

Mr Li said the healthy response to the tender reflects the more optimistic business sentiment.

The site was offered for sale in November on a 30-year lease. It was originally on the Reserve List of the Government Industrial Land Sales Programme.

URA said it would decide on the winning bidder at a later date. - CNA/ms

Source : Channel NewsAsia - 10 December 2009

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