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17 November 2012

17th November, Saturday




Growth forecast cut to 1.5% for this year

Source: Business Times

Singapore will probably grow just 1.5 per cent this year, or less, after the economy did far worse than earlier thought in 3Q.

The Ministry of Trade and Industry (MTI) Friday said that the growth, sliding to the bottom of its previous 1.5-2.5 per cent forecast range, may even slip under 1.5 per cent if weakness in the externally oriented sectors persists in the current quarter.

Last quarter, the economy shrank a seasonally adjusted, annualised 5.9 per cent - more than three times the advance estimate of a 1.5 per cent quarter-on-quarter contraction.

Year-on-year growth of 0.3 per cent, too, fell short of both the 1.3 per cent advance estimate and the 0.9 per cent market consensus formed after weak September trade and production figures hinted at a downgrade.

The government is projecting a "cautiously positive" 1-3 per cent growth next year, given continued sluggishness in the global economy.

This assumes that the US "fiscal cliff" does not materialise and a gradual fiscal contraction - which MTI thinks is more likely - allows the US economy to grow at a moderate pace next year.

The forecast also presumes stagnation in the eurozone but no outright crisis, and moderate improvement in Asia's growth from resilient domestic demand, despite muted external demand.

And with the global outlook "still clouded with uncertainties", risks surrounding the extent of the US fiscal cutback and potential escalation of the eurozone debt crisis may threaten the 1-3 per cent forecast yet, MTI warned.

Barring such risks, MTI expects subdued growth next year from Singapore's outward-facing sectors such as electronics manufacturing and wholesale trade to be supported by modest growth in the transport engineering, construction and biomedical clusters.


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October non-oil domestic exports up 7.9%

Source: Business Times

Non-oil domestic exports (NODX) surprised by growing 7.9 per cent year-on-year in October, though International Enterprise (IE) Singapore has revised total trade and NODX forecasts for this year downwards to 3-4 per cent and 2-3 per cent respectively, on the back of a weaker-than-expected total trade performance in 3Q.

Compared to September (seasonally adjusted), October's NODX dipped 1.2 per cent, marking the third month-on-month contraction in four months, due to both electronic and non-electronic NODX.

For 3Q, total trade slipped 2.8 per cent from a year earlier to $240 billion - after posting a 2.9 per cent expansion in 2Q - as a 12.6 per cent decrease in oil trade offset the 1.3 per cent expansion in non-oil trade, said trade promotion agency IE Singapore which released the data Friday.

On a quarter-on-quarter, seasonally adjusted basis, total external trade fell 6.1 per cent in 3Q, after a 3.1 per cent contraction in 2Q, while NODX declined 5.9 per cent in 3Q, following a 3.4 per cent contraction in 2Q.

Electronics NODX contracted 0.8 per cent year-on-year in October, after a 16.6 per cent fall in September, on lower exports of PCs (-8.7 per cent) and PC parts (-21 per cent) as well as diodes and transistors (-12.5 per cent). However, this was offset by a 12.7 per cent expansion in non-electronics products, led by structures of ships and boats (up 148.1 per cent).

Pharmaceutical exports, too, saw a recovery, rising 2.7 per cent after registering a 3 per cent contraction in September.

NODX shipments to all of Singapore's top 10 markets rose in October, except for South Korea and Malaysia, which were down 1.5 per cent and 6.8 per cent respectively. Exports to the United States shot up 48 per cent, while exports to Europe, Singapore's largest market, climbed 8.9 per cent.

China also picked up, with exports growing 6.7 per cent versus 1.5 per cent in September. But NODX to emerging markets slumped 16.8 per cent in October, after a 16.7 per cent expansion in September, due mainly to Cambodia, Laos, Myanmar and Vietnam, South Asia and the Caribbean.

Total trade is expected to grow by 3-5 per cent next year while NODX is expected to grow by 2-4 per cent, according to projections by IE Singapore.

Projections are based on factors including the International Monetary Fund's expectations of 3.6 per cent growth in the global economy next year, continued weakness in the eurozone, sluggish growth in the US economy, and likely moderate growth in Asia.


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BTO flats affordable for first-timers: Khaw

Source: The Straits Times

The rise in prices of new Housing Board flats is less than that of resale HDB units, National Development Minister Khaw Boon Wan said in Parliament Friday.

Since January 2009, the price of new HDB flats for first-time buyers has risen by 12 per cent, which is lower than the corresponding 34 per cent rise in the HDB resale price index.

These homes for first-time buyers are also affordable, he added.

Mr Khaw said that first- time buyers of new flats in non- mature estates used, on average, 23 per cent of their monthly income for housing loans. Also, they were able to pay their monthly instalments using their Central Provident Fund contributions, with minimal or no cash outlay.


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SERS residents get "generous package" says Khaw

Source: Channelnewsasia

National Development Minister Khaw Boon Wan said flat owners affected by the Selective En Bloc Redevelopment Scheme (SERS) are given a generous package.

Flat owners affected by SERS can upgrade to new flats in nearby locations, with a fresh 99-year lease.

Mr Khaw told Parliament that residents are fully compensated for their existing flats and paid reasonable expenses for their relocation.

They are given assured allocation of new replacement flats at subsidised prices. Flat owners who are eligible for a subsidised flat are also given a further 20% price discount off the Built-To-Order (BTO) prices.


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Hot in the suburbs

Source: The Straits Times

City fringe and eastern suburban estates have broken new home price records in the past six months as clear pricing hot spots emerge across Singapore.

Once considered sky-high outside upscale precincts, the $1,500 per sq ft (psf) mark is fast becoming the norm in some hot spots - most dominant in the east. Many new mass market projects eclipsing the $1,500 psf mark are tied to "titillating new lifestyle concepts" to attract buyer interest, experts say.

The eastern suburban estates, with their ample, appealing lifestyle amenities, have surged ahead of the western districts in terms of prices.

One reason could be that the east was one of the first parts of Singapore outside the city centre to be developed, experts add. Another factor is the substantial number of government land sale sites in eastern towns where developers have launched new projects at benchmark prices.

This has driven up other prices in the vicinity in tandem.

This includes The Seawind project in Bedok, with a median price of $1,520 psf, and The Sound, at $1,650 psf. Developments in the Marine Parade planning area, such as The Seafront on Meyer and Aalto, have also easily eclipsed the $1,500 psf mark.

While homes in the east have been popular with expatriates and proved themselves to be good investments, said an analyst, price gains are set to moderate.

This is due to the increase in supply of completed homes from new residential hot spots such as Hillview, Kovan and Sengkang. When Punggol's development becomes more established in the years ahead, it will also siphon some interest away from homes in the east, he added.

Experts note that home prices in western districts such as Jurong Gateway and one-north in Buona Vista are also expected to catch up when they are fully developed.


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Amber Rd condo enclave hot with expats

Source: The Straits Times

It used to be a quiet beachfront road lined with old bungalows, but today Amber Road is packed with condominiums and popular with expatriates.

The outlook for this estate is "encouraging for owners, due to the proximity to East Coast Park and the very entrenched mindset among buyers that this is among the upper-echelon, niche localities in the east", said an analyst.

Most homes here are private. Major condominium projects in the area include the 400-unit The Esta, which was completed in 2008, and One Amber, with 562 apartments finished in 2010. Both are freehold properties. The 114-unit freehold Amber Residences obtained its temporary occupation permit (TOP) last year, while the freehold The Cape, with 76 apartments, was launched with a TOP expected in 2015. The upcoming Silversea, which was launched in 2009 and expected to obtain its TOP in 2014, is also nearby. The 383-unit project on a 99-year lease had sold around 370 of the 377 units launched as of September.

Analysts expect about 700 new homes to be completed in the next few years. The bulk of these will come from Silversea, as well as from the collective sale in January last year of Marine Point on Marine Parade Road, which is expected to be redeveloped into around 150 freehold private residential units.

Overall, developer prices for 99-year leasehold and freehold properties in the Amber Road area range from $1,600 per sq ft (psf) to $2,000 psf, analysts said.

"The expatriate community loves living in this area due to the proximity to the airport, to the amenities and to the beach," said one analyst. Reputable schools such as Convent of the Holy Infant Jesus Katong Primary School and Tao Nan School are also close by, he noted.

Monthly rents at Amber Residences range from $5,000 to $6,800, and at One Amber, from $3,700 to $6,600.

Resale activity has been relatively healthy, but waned recently, in line with an islandwide slowdown.

Reasons cited buyer resistance to rising prices and the lack of an MRT station nearby. New investors in the area who aim to rent out their units may have to compete with owners who bought properties here at lower prices or with longer-term loans, or who made their purchases before the seller's stamp duty was implemented. The absence of an MRT station also meant that significant price hikes are unlikely in the short to medium term, said an analyst.


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Cooling measures likely to boost sales of sub-$1.5m homes

Source: The Straits Times

Demand for homes under $1.5 million is expected to increase thanks to recent cooling measures aimed at preventing buyers from over-extending themselves.

A property consultancy said in a report that demand for lower-priced, non-landed private homes is likely to be healthier as the measures restrict the maximum term of loans.

It offered some examples to show the impact of the latest cooling measures on affordability. For instance, a home buyer aged 35 with a monthly household income of $12,000 can now afford a residential property with a maximum value of $1.5 million to $1.6 million on a 30-year loan period. This assumes a debt-servicing ratio - a buyer's total monthly debt payments divided by net income - of 35 per cent, which is the recommended position of affordability, the report noted.

An older home buyer aged 40 years with a similar monthly household income can now afford a home that costs $1.3 million to $1.4 million. This takes into account a 25-year loan term under the new rules.

These buyers could look to District 19 - comprising Hougang, Sengkang and Punggol - to meet their housing needs. The area has the highest concentration of homes of at least 70 sq m in size sold for under $1.5 million in the past four months. It is followed by District 18, which includes Pasir Ris, Tampines and Simei.

The consultancy added that overall demand for homes could moderate in the coming quarter as the pool of local investors and foreign buyers thins on the back of multiple rounds of cooling measures.

"Any potential lower demand coupled with ample upcoming supply of new homes will put downward pressure on residential property prices. Competition in the secondary market will set in if the economy cools and unemployment rate increases," it added.

The firm expects overall prices to increase marginally by around 0.1 to 0.3 per cent in the last three months of the year.


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Foreign investors not impacting industrial rents much: Hng Kiang

Source: Business Times

Foreign investors in Singapore's industrial property probably do not exert a significant impact on the rentals of factory space here, Minister for Trade and Industry Lim Hng Kiang said Friday.

He said that while Singapore does not collect data on whether owners of industrial space are foreigners, foreign buyers of industrial properties are most likely either large private developers or real estate investment trusts, and such entities own about 27 per cent of the industrial space here.

Foreign investors thus "do not form a very large percentage".

Mr Lim ruled out the possibility of the government restricting the purchase of industrial properties to users of the space, as this would have significant impact on businesses.

He added that not all industrialists buy industrial space; some prefer to rent, an arrangement which gives them more business flexibility.


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Govt to release sufficient land to moderate industrial property prices, rentals

Source: Channelnewsasia

Sufficient land will be released through the Industrial Government Land Sales Programme to moderate prices and rentals of industrial properties.

Minister for Trade and Industry Lim Hng Kiang said the government has also started to release land parcels with shorter tenures. These properties are targeted at small- and medium-sized enterprises which require customised land-based facilities at more affordable prices.

Noting that the misuse of industrial space by non-industrial users could have contributed to the increase in industrial prices and rental, Mr Lim emphasised that the government will continue with enforcement actions.


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JTC's prepared industrial land allocation down 25%

Source: Business Times

JTC Corporation's net allocation of prepared industrial land (PIL) fell 25 per cent to 23.1 hectares (ha) in the third quarter of 2012 from 30.8 ha in the previous quarter.

Gross allocation of PIL was higher at 57.4 ha, supported by healthy take-up of land by companies in the consumer healthcare and marine and offshore industries, the government industrial landlord said Friday.

JTC said 19.2 ha (33 per cent) of the gross allocation of PIL came from the manufacturing sector while 38.3 ha (67 per cent) was contributed by the manufacturing-related and supporting industries sector.

Terminations rose to 34.4 ha in the third quarter from 21.7 ha in 2Q. Some 44 per cent (15.2 ha) of land terminations came from the manufacturing sector while manufacturing-related and supporting industries sector contributed the remaining 56 per cent (19.2 ha).

Occupancy level for ready-built facilities (RBF) remained healthy at 96.1 per cent. Gross allocation of RBF rose 4 per cent quarter on quarter to 22,560 sq m. Net allocation of RBF declined to -2,480 sq m from 10,080 sq m in the previous quarter. This was mainly due to lower allocation of the Business Park Space, which experienced strong take-up last quarter.

JTC said construction of its small footprint standard factories is expected to be completed by the next quarter. Development work for Surface Engineering Hub and MedTech1 are expected to be completed in the second half of next year.


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Investment Sales


Katong Junction sold for $55.28m

Source: Business Times

Katong Junction, a four-storey freehold commercial building at Joo Chiat Road, has been sold for $55.28 million.

This works out to $1,162 per sq ft based on the building's existing gross floor area of 47,558 sq ft.

Katong Junction has been bought by East Coast Holdings, whose shareholders comprise real estate investor Kishore Buxani and offshore investors advised by Mukesh Valabhji of Seychelles-based Capital Management Group.

The property is being sold by a company controlled by Tan Suat Hua, an architect by training and one of the original shareholders of Singapore Healthpartners Pte Ltd (now known as The Farrer Park Company), which is developing Connexion, a hospital, medical centre and hotel project. She later sold her stake.

Mr Buxani, who confirmed the purchase when contacted, said the plan is to spruce up the asset when the existing leases run out by late 2014 and reposition it as a retail property comprising mostly food outlets. "F&B outlets are thriving in the East Coast area, which is shaping up as the Holland Village of the east."

However, Mr Buxani is not ruling out the possibility of strata titling Katong Junction and selling individual units.

Its existing 47,558 sq ft gross floor area (GFA) reflects a plot ratio of about 3.56 based on the land area of 13,346 sq ft. This exceeds the 3.0 plot ratio for the site under Master Plan 2008. The site is zoned for commercial use.


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