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04 December 2012

4th December, Tuesday




Slower growth for S'pore 'realistic'

Source: The Straits Times

Private economists say Singapore's economy has the potential to expand faster than the Government's latest target of 2 per cent to 3 per cent growth in the coming years.

But they say the goal, outlined by Prime Minister Lee Hsien Loong on Sunday, is probably realistic given Singapore's policy choices and the uncertain global economy.

The country is also making a transition to an advanced economy, they added.

An economist said that Singapore has the potential to grow faster, but it has implemented policies such as tightening the supply of foreign labour. This will restrict growth. "Thus, over the medium- term horizon, we can expect a growth pace of 2 to 3 per cent," he said.

The uncertain economies of the United States and Europe could also affect Singapore's growth, said another economist.

One economist said that the muted forecasts themselves could lead to businesses cutting back investments. He said that hotels and food and beverage outlets may still need to spend on capital to raise productivity and make up for the labour shortfall. But manufacturers and exporters may be more cautious and look more closely at the world economy.

For workers, wage growth could slow amid the slowing growth. But a mitigating factor would be the constraints on foreign manpower which could help the labour market to remain tight.

Investors could also be affected. "If growth is slower, you shouldn't expect asset prices to grow at a breakneck speed," said an economist.


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Competition in EC market likely to heat up, say analysts

Source: Channelnewsasia

Competition in the Executive Condominium (EC) market is likely to heat up, say analysts.

Four EC sites have already been sold while bids for two sites have opened, indicating that at least six EC projects will be launched in 2013.

ECs like Heron Bay in Hougang which have five-bedroom units sell especially well. Less than a month after its launch last October, all 16 of its five-bedroom units were sold out.

ECs with five-bedroom units are also expected to be rolled out in Tampines and Woodlands. Though more expensive to build, five-bedroom units have more appeal due its capacity for multi-generational families and its rental potential, say developers.


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Investment Sales


Developers get more room for en bloc sites

Source: Business Times

Developers who buy residential en bloc sale sites are getting more time to meet the government's deadlines to finish developing their sites.

This is to take into account the time taken to get a collective sale order from the Strata Titles Board (STB) or the High Court.

The changes are in response to feedback from the industry which had asked for a fairer treatment of the rules, and are expected to give some breather to residential en bloc sales.

It takes several months for the collective sale order to be granted and this currently eats into the five-year deadline set for developers. The changes mean the deadline will start from the date of the en bloc sale order - instead of much earlier under current rules.

The changes involve two regulations under the ambits of the ministries of law and finance.

The first concerns foreign developers who buy residential en bloc sale sites for which they are given a five-year project completion period (PCP). The PCP currently starts from the date of the issue of a Qualifying Certificate (QC), which foreign developers must obtain from the authorities to buy private residential land in Singapore.

Under the change announced by the Singapore Land Authority (a statutory board under MinLaw), for QCs issued on or after 1 July 2012, the PCP for residential en bloc sites will now start from the date of the collective sale order.

The Ministry of Finance (MOF) said that it would adopt the same approach as MinLaw with regard to the additional buyer's stamp duty (ABSD). Under the change, for residential sites bought through collective sales from 1 July 2012, "the start date of the five-year period for the completion and sale of all residential units to qualify for ABSD remission will start from the date of the collective sale order", MOF said.

Separately, SLA in its circular Monday also made an announcement pertaining to developers who had responded to the government's call in 2008 and deferred redevelopment of en bloc sale sites they had bought and instead rented out the units in the existing development to alleviate a shortage of rental homes at the time. LDAU will grant a one-time extension of the PCP (upon application and without charge) based on how long these developers rented out their units.


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MCT in $680m Mapletree Anson deal

Source: Business Times

Marking its maiden acquisition since listing in April last year, Mapletree Commercial Trust (MCT) said it has entered a conditional sale-and-purchase agreement to acquire Mapletree Anson - a 19-storey premium office building - for $680 million.

The vendor is Mapletree Anson Pte Ltd, a wholly owned subsidiary of Mapletree Investments.

The purchase consideration is a discount of 0.7 per cent and 1.3 per cent to independent valuations conducted.

The property comprises 16 floors of office space with net lettable area (NLA) of 331,854 sq ft, two levels of carpark space, and a main lobby at the ground level.

The total cost of the acquisition is estimated to be about $690.2 million, comprising the purchase consideration, an acquisition fee of $3.4 million, to be paid in new units in MCT, as well as the estimated professional and other fees incurred.

Upon completion of the acquisition, MCT's total assets will increase by 21.5 per cent from about $3.19 billion, as at end-November, to $3.88 billion. MCT's NLA will also increase by 18.7 per cent from 1.8 million sq ft to 2.1 million sq ft.


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Muis sells four properties on 199-year leases

Source: Business Times

Four properties owned by The Islamic Religious Council of Singapore (Muis) have been put up for sale by public tender last week. However, they are all being sold on a unique leasehold of 199-years.

According to the marketing agent, such carved out leases are long-term investment strategies which are calculated based on the future needs of the organisation.

Two of the four properties are intermediate terrace houses located along Duku Road with an approximate land area of 2,000 sq ft.

The other two properties up for sale are inter-terrace conserved shophouses located at Rowell Road and Upper Weld Road. Both shophouses have an approximate land area of 1,100 sq ft and an approximate built up area of 2,100 sq ft. The properties have been zoned for commercial use within the Little India conservation area.

Explaining the possible reason behind the carving of a 199-year lease for all the properties in contrast to the more common 99-year leases, Lee Sze Teck, senior manager of training, research and consultancy at Dennis Wee Group said that the 199-year lease could provide more investment returns for the owner.

"If the buyer is allowed to redevelop the intermediate terraces or build an extension to the conservation shophouses, the buyer will be willing to pay more. The value of a 199-year lease could be around 15 per cent higher than a property with a brand new 99-year lease."


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Rising retail rents creeping into industrial sector

Source: Business Times

Far from the madding crowds of Singapore's glitzy shopping malls is a bridal boutique tucked away in a nondescript industrial building in an old housing estate, pushed off the high street by pricey retail rents.

The owner pays one quarter of the rent she once shelled out for a shop in the heart of Chinatown, where a string of restaurants, hotels and retail shops meant a steady stream of shoppers.

But rising rents may be creeping into the industrial parks too. Industrial property prices have surged 27 per cent this year after a government crackdown on residential investment pushed speculators into factories and warehouses.

Now the government is turning its attention to industrial property. To make land prices more affordable to businesses, in July, it capped lease terms for industrial sites sold under a government land sales programme at 30 years instead of 60.

Singapore's light industrial parks, typically simple mid-rise buildings with a few standard facilities such as cargo lifts and unloading bays, are home to small and mid-sized startups, wholesale businesses and back-end offices.

But rising shop rents have made them increasingly attractive to store owners who would normally prefer customer-friendly malls or pedestrian-filled shopping streets, and some have started converting part of the industrial space for retail.

The rising industrial property prices have not fully filtered through to rents in these buildings, which are up a relatively modest 6 per cent this year, but when long-term leases are renegotiated, tenants may be in for some nasty shocks.

That may lead some businesses to buy industrial properties instead of renting. "Together with the investors, the increase in demand drove prices up amidst cheap financing, creating a self-fulfilling prophecy of higher prices and cost of doing business," an analyst said.

The sharp rise in industrial property prices has rung alarm bells for some, but attracted interest from developers new to this space. Construction firm Hock Lian Seng Holdings Ltd won a bid in June to develop a site in an industrial area in Singapore's east.

Residential developers are also getting into the industrial game - and bringing some homey touches with them.

Oxley Holdings Ltd, which has built residential projects with units, started developing "lifestyle" industrial properties last year - complete with swimming pools, gyms and rooftop gardens. It has launched four such projects, two of which have been fully sold, indicating strong demand for strata-title units despite high valuations.


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International Markets


China Nov new home prices up a tad

Source: Business Times

China's new home prices rose the most in four months as smaller developers marketed more projects amid interest from buyers concerned that prices will start rising again.

Prices climbed for a sixth month, increasing 0.26 per cent to 8,791 yuan (S$1,720) per square metre in November from October, according to a property website, based on its survey of 100 cities.

The eastern city of Heze had the biggest gain in November, increasing 1.97 per cent. Home prices in Beijing rose 0.7 per cent from October, and increased 0.1 per cent in Shanghai.


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