Singapore Economy

Bank lending contracts; Moody's downgrades outlook

Bank lending in May has contracted year on year for the eighth straight month, preliminary data from the Monetary Authority of Singapore (MAS) showed.  At the same time, ratings agency Moody's downgraded its outlook for Singapore's banking system to "negative" from "stable", citing weaker operating conditions and rising risks to asset quality and profitability.  Preliminary MAS data showed that loans through the domestic banking unit - which captures lending in all currencies but mainly reflects Singapore-dollar lending - were around S$593 billion in May, down 0.7 per cent year-on-year but up 0.5 per cent from S$590 billion in April.

Local market unscathed in June despite Brexit jitters

Singtel is now the largest listed company by market capitalisation here after a spate of active trading pushed up its share price over the past month.  The telco's shares saw a surge last month as the combined value of local stocks rose slightly after the market weathered Brexit jitters with relative resilience. Singtel was a standout among blue chips. Its market cap rose 6.7 per cent month on month to $65.81 billion last month, allowing it to overtake Prudential and secure the No.1 spot in market cap terms.  Singtel's share price also gained 6.7 per cent over the month to close at $4.13 yesterday. The counter rose a total of 12.5 per cent in the six months ended June 30.

Singapore Real Estate

Singapore private home prices weaken for 11ths straight quarter, down 0.4% in Q2: URA flash data

Private home prices fell for an 11th straight quarter in the second quarter of this year, but at a slower rate than previously, according to Urban Redevelopment Authority flash estimates on Friday (July 1).  They were down an estimated 0.4 per cent for the quarter, compared with a 0.7 per cent decline in the first quarter.  Private home prices are in the longest losing streak in almost two decades, as property curbs dampen demand.  Those curbs have included a cap on debt repayment costs at 60 percent of a borrower's monthly income, and higher stamp duties on home purchases. In his budget speech in February, Finance Minister Heng Swee Keat said it was "premature" to relax the curbs.

Jurong Country Club noteholders demand early redemption from JTC

The 196 members of Jurong Country Club (JCC) holding notes totalling S$23.5 million want JTC Corporation to redeem the debt when the club closes this year - not when the notes mature in 2033.  The debenture holders, out of a total membership of about 2,500, had each subscribed to non-interest-bearing unsecured notes of S$120,000 when they registered as members in 1993, the year the club was built. This was a condition of membership at the time. The notes mature on Sept 1, 2033.

Asia-Pac real estate transparency improves the most: JLL survey

Asia-Pacific is the most improved region for real estate transparency, according to Jones Lang LaSalle's (JLL) Global Real Estate Transparency Index (GRETI) 2016 released on Thursday.  Australia continues to hold the top spot as the region's most transparent real estate market. Together with New Zealand, the two countries are classified as "highly transparent".  The index measures transparency by looking at factors including data availability, governance, transaction processes, and the regulatory environment.

Funan mall closes with farewell party

Funan DigitaLife Mall bid farewell with a thank you party on Thursday. The 31-year-old building marked its last operational day before closing for three years to redevelop itself into an experiential hub of the future.  CapitaLand senior management hosted the party for some 400 invited guests comprising tenants, loyal shoppers and mall staff at the building's main atrium to celebrate the mall's milestones in the last three decades.

Riverview reopens under Four Points brand

The former Riverview Hotel reopens today under the Four Points by Sheraton brand.  It is the sixth hotel managed by Starwood Hotels and Resorts here and the first under the Four Points brand, making it Starwood's sole mid-market, four-star offering in Singapore. Owner Keck Seng Hotel, a unit of property investment firm Keck Seng, has spent $25 million renovating the property, which opened in 1985.  The upgrade of what is now called the Four Points by Sheraton Singapore, Riverview includes new rooms while food and beverage and function room spaces have all been renovated, Mr Vincent Ong, senior director of brand management for Starwood Hotels and Resorts, Asia Pacific, told The Straits Times yesterday.

Companies' Brief

GLP makes 4.9b yen development profit from Japan asset sale

Global Logistic Properties (GLP) will make a 4.9 billion yen (S$64.2 million) development profit, or a margin of 46 per cent, from the sale of an asset to GLP J-Reit.  The company said on Thursday that it was selling its 50 per cent share of GLP-MFLP Ichikawa Shiohama to the Reit for about 15.5 billion yen.  The 122,000 square metre property is a joint venture with Mitsui Fudosan along the Tokyo Bay Area that was completed in January 2014 and fully leased to global retailers such as Rakuten, H&M and Forever 21.

EC World Reit to raise up to S$663 million in initial public offering

EC World Real Estate Investment Trust (Reit) plans to raise up to S$663.1 million through an initial public offering (IPO) on the main board of the Singapore Exchange, according to a preliminary prospectus lodged by the China-focused logistics and port assets trust.  Each unit will be priced between 76 and 82 Singapore cents. That would give the Reit total capitalisation of between S$996.8 million and S$1.04 billion, including S$405.9 million of borrowings.

Yanlord Land Group

Yanlord Land Group Limited said that it has entered into a cooperative agreement with China Merchants Property Development Co Ltd (CMPD) and Poly Real Estate Group to develop a 170,000 sq m site in Nanjing city's Gulou district.   This site was acquired through a public land auction for about 4.82 billion yuan (S$976.5 million). Under the terms of the agreement, Yanlord will obtain a 33 per cent stake in the project company. The cooperative agreement was entered into by the respective subsidiaries of Yanlord, CMPD and Poly Real Estate.

Sim Lian Group

Sim Lian Group is acquiring Dalyellup Shopping Centre, a freehold investment grade neighbourhood shopping centre located in Dalyellup, Western Australia, for A$31.56 million (S$31.6 million).  The open market valuation of the centre is A$31.8 million, based on a valuation dated April 1, conducted by Jones Lang LaSalle. Sim Lian said that it intends to fund the proposed acquisition with a combination of internal funds and bank borrowings.

Chiwayland International

Chiwayland International has acquired a 114,270 sq m land parcel in Caddens located in the heart of Penrith in Sydney for A$40 million (S$40 million).  The group intends to develop about 400 apartments and 364 townhouses on the plot. This is its seventh property development project since entering the Australian real estate market in 2014.

Views, Reviews & Forum

Homing in on an overseas property

Singaporean investors are one of the largest capital sources of outbound property investments among Asian investors.  Good quality properties in predominantly English-speaking countries such as Australia and the United Kingdom, as well as those in neighbouring Malaysia, continue to appeal to local investors.  While parking funds in assets in a foreign land may be daunting for first-time investors, good planning and due diligence can help mitigate the risks involved and achieve good returns on the investment. A wide range of factors, including affordability, legislation, destination choice and macro risks, should all be considered as they may make or break your deal.

Tourist arrival rebound points to better year for hospitality Reits

Things are looking a bit more optimistic this year for Singapore's hospitality real estate investment trusts (Reits) even with additional room supply coming onstream, as a resurgence in visitor arrivals this year could help stave off downward pressure on earnings.  According to preliminary data from the Singapore Tourism Board (STB), visitor arrivals to Singapore have rebounded this year, rising around 14 per cent year-on-year in the first four months to 5.53 million. This has been fuelled in part by a surge in arrivals from key source markets China (up 53 per cent) and Indonesia (up nearly 10 per cent). If growth keeps up at this pace, it suggests that arrivals will surpass the STB's own fairly cautious projections. In March, the tourism board had forecast visitor arrivals would expand by 0-3 per cent to between 15.2 million and 15.7 million this year, citing an uncertain global economy. For the whole of 2016, STB is forecasting 0-2 per cent growth in tourism receipts, at S$22 billion to S$22.4 billion.

Higher public carpark charges from Dec 1

Come Dec 1, drivers will have to pay more to park their vehicles in public carparks.  Parking charges for public carparks outside the restricted zone and designated areas will go up from S$0.50 to S$0.60 per half hour.  Charges within the restricted zone and designated areas will be raised by 20 cents, from S$1.00 to S$1.20 per half an hour.  The restricted zone covers parts of the central area such as Outram, the Downtown Core, Rochor and Orchard areas, while the designated areas are areas outside but near the restricted zone.

Electric car-sharing scheme to be rolled out from 2017

An electric car-sharing scheme will be rolled out islandwide next year, offering commuters a greener alternative to owning a car.  The authorities have appointed BlueSG, a subsidiary of French electric car-sharing operator Bollore Group, to run a fleet of 1,000 cars by 2020 under the national electric vehicle (EV) car-sharing programme.  This addition will be significantly more than the 300 shared cars currently in the market.  The electric cars will be powered by 2,000 charging points at selected parking spaces in 500 locations, of which 80 per cent would be within neighbourhoods.

Asia bullish as post-Brexit rally continues

Bullish Asian markets continued their post-Brexit rally but analysts are not yet convinced that the coast is clear. Regional bourses took their cue from the 1.64 per cent increase on Wall Street overnight.  Singapore's benchmark Straits Times Index added 48.2 points or 1.73 per cent to 2,840.93, in a lively session that saw $1.7 billion worth of shares changing hands.  Hong Kong rose 1.75 per cent, Tokyo weakened through the day but was still up 0.06 per cent while Kuala Lumpur put on 0.72 per cent. Shanghai was down 0.07 per cent. However, London's FTSE 100 opened weakly before rising by 0.2 per cent by noon while the sterling stayed range-bound around 1.34 against the greenback.

MAS advises investors to be mindful of currency exchange risks

Investors should be aware of the risks - particularly around currency exchange - when it comes to buying overseas property, the Monetary Authority of Singapore (MAS) said yesterday.  It noted that while the weakening of foreign currencies against the Singdollar may lower the initial cost for investors, "currency fluctuations will continue to affect the value of their investments".  The caution comes in response to a Straits Times query about the banking sector's exposure to the British property market, following last week's vote to leave the European Union.

Firms to get 250% tax deduction if staff help at charities

Companies can now enjoy tax deductions of 250 per cent when their employees help out at institutions of a public character (IPCs).  The initiative, called the Business and IPC Partnership Scheme, was introduced in the Budget this year to encourage people to use their skills to help such organisations.  IPCs are charities authorised to receive tax-deductible donations. They include Oh! Open House, which organises art walks, and SOSD, a body that helps stray dogs.  Under the scheme, a business that assigns an accountant to help a charity with its books could claim 250 per cent of the employee's monthly wage in tax deductions.

Changes to consumer law will also better protect against errant contractors

We refer to the letters asking for consumer protection legislation to cover the renovation industry (“More measures needed to protect consumers from bogus contractors”; June 24 and “More consumer protection laws in renovation industry needed”; June 22).  The Consumer Protection (Fair Trading) Act (CPFTA) protects consumers against unfair practices by goods and services suppliers, including renovation contractors.

Global Economy & Global Real Estate