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13 October 2012

13th October, Saturday




MAS forecasts subdued growth for remainder of the year

Source: Business Times

Growth will remain subdued for the rest of 2012, and could come in "slightly below" the economy's potential rate in 2013, the government said Friday.

But the good news is that the level of output will remain above Singapore's underlying potential and keep the economy at full employment, said the Monetary Authority of Singapore, as it unveiled a surprise decision to keep its policy stance unchanged to fight inflation.

Another piece of good news - though technical - was that Singapore escaped a technical recession on the ground that numbers for 2Q were upgraded to register a 0.2 per cent GDP growth instead of the contraction indicated by flash estimates. There is a hard slog ahead.

"While there remains considerable uncertainty over the evolving fiscal situation in the US and eurozone, recent central bank policy initiatives worldwide have reduced the risk of a severe global recession," MAS said.

Sub-par growth in the major industrialised economies will still support moderate growth in Asia, where domestic incomes and demand are expected to hold up, the central bank added.

It expects growth in 2013 to be driven by domestic activities such as construction, tourism and financial services. "Manufacturing and related industries are likely to regain some traction in the latter part of 2013, barring further adverse developments in the external environment," MAS said.

But in this current quarter, the last in 2012, externally oriented sectors such as manufacturing and wholesale trade will continue to be affected by the global slowdown, the Ministry of Trade and Industry (MTI) said in a separate statement.

Still, healthy expansion in the transport engineering and construction sectors may offer modest support, and the government still expects GDP growth for 2012 to fall within its 1.5 to 2.5 per cent growth forecast, last narrowed from 1-3 per cent in August.


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Monetary policy stays tight to fight inflation

Source: Business Times

The Republic's central bank struck a hawkish stance Friday by keeping monetary policy unchanged against easing expectations, underlining inflation management as its core priority.

Headline inflation this year may inch past 4.5 per cent - above the government's previous forecast - even as the economy contracted 1.5 per cent sequentially in the third quarter. Improved second-quarter GDP figures helped Singapore narrowly avoid a technical recession.

MAS maintained the modest and gradual pace at which the Singapore dollar appreciates against a basket of other currencies, by keeping unchanged the slope, width, and centre of the band within which this trade-weighted exchange rate fluctuates.

"Domestic supply-side factors will become more binding," MAS said. "In particular, persistent tightness in the labour market will support slightly stronger wage increases in 2013, which will continue to be passed through to consumer prices."

These supply-side factors include policy moves to restrict foreign manpower growth, with two more rounds of levy hikes due in January and July next year.

Meanwhile, imported inflation, while broadly benign, may also be affected by temporary spikes in food prices due to bad weather, MAS said.

In this environment, headline inflation will remain elevated for some time. The central bank expects it to be slightly above 4.5 per cent this year, largely because of higher certificate of entitlement premiums for vehicles. The previous official forecast pointed to a 4-4.5 per cent reading.

Headline inflation will stay high in 4Q this year and 1Q next year, driven by car prices and imputed rentals on owner-occupied accommodation, but it is likely to moderate gradually over the rest of 2013 to 3.5-4.5 per cent, MAS said.


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Where are home prices headed?

Source: The Straits Times

Home prices are likely to hold their ground despite being pummelled by six rounds of cooling measures, according to most property analysts.

They pointed to low interest rates and a stable employment outlook as factors supporting prices.

They predicted the measures - including last week's new restrictions on loan terms - would take a toll on sales volumes. However, another factor helping to keep prices steady is the strong holding power of developers.

Some contrarian analysts said prices might fall by up to 10 per cent in the next 12 months.

But most agreed that private home prices are likely to continue flatlining instead. They have risen by less than 1 per cent in the first nine months of the year.


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City-fringe home sales chalk up highest price gains

Source: The Straits Times

City-fringe homes tend to be overshadowed by those in prime and mass-market areas but property experts call the segment a "quiet achiever".

The segment - also known as the Rest of Central Region (RCR) - outperformed homes in the city and suburbs with the highest gains for new and resale units since the trough in the second quarter of 2009.

Mr Lee Sze Teck, Dennis Wee Group's senior manager of training, research and consultancy, said prices in the sector have jumped 59.2 per cent since the low in 2009. They have also outstripped suburban prices, which rose 55.3 per cent, and the city, where values added 46.8 per cent.

Property consultants said that city-fringe homes are sought after partly for their proximity to the city, exclusivity and accessibility. Generally, there are MRT links and lifestyle amenities. Investors find it easy to get tenants, especially as expats with smaller housing budgets scale down.

Mr Lee added that such units are "priced more attractively" - possibly 20 per cent or so - than central region homes. For instance, One Dusun Residences in Balestier is selling for about $1,500 psf compared with Suites @ Newton where flats go for about $2,100 psf.

Areas like Balestier and Geylang have done particularly well.

Top-selling projects in the city fringe include Katong Regency, Guillemard Edge and Thomson Grand. The Cascadia in Bukit Timah has recorded the best capital gains. Prices have risen about 15.4 per cent, from around $1,419 psf last year to about $1,638 psf now. Beacon Heights, in Kallang, also did well with a 13.1 per cent gain, while 8@Woodleigh notched up 10.9 per cent over the same period.

But the pace of price growth for city-fringe properties has slowed in the past two years. City-fringe flat prices rose 18 per cent in 2010, the highest annual increase among all property segments, according to the Urban Redevelopment Authority, but increases slowed to 5 per cent last year and have been around 1 per cent this year. Rents have increased by about 12.5 per cent over the past two years to June, although the pace of increase has slowed in the first half of the year, said one analyst.

Within the next five years, nearly 20,000 condominium units are expected to be completed in the city fringe, Mr Lee said. Four sites have been sold under the Government Land Sales programme this year but experts feel more land could be released given the demand.


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Face of Redhill to change with more condo projects

Source: The Straits Times

Think Redhill and a plethora of car showrooms as well as blocks of public housing probably spring to mind.

But a dramatic increase in private housing in this city-fringe neighbourhood is set to modify the area's image.

Until recently, interest focused mainly on the 1,000 or so completed condominium units at four projects there. But three upcoming projects will more than double that figure by adding more than 1,500 units.

Of the three, only one - the 373-unit Ascentia Sky - has been launched. As of August, it was more than 98 per cent sold, at a median price of $1,398 per sq ft. The other two projects will be built in Alexandra Road and Prince Charles Crescent, on sites sold earlier this year, property analyst Lee Sze Teck noted.

Another two sites in the area, which can yield more than 1,000 units, are on the reserve list of the Government Land Sales programme. This means they will be put up for sale only if a developer makes an acceptable minimum bid.

Mr Lee, senior manager of training, research and consultancy at Dennis Wee Group, said prices have generally held up well in the area partly because it is popular with investors and expatriates.

Most condos are close to Redhill MRT station, just a couple of stops from the city centre. Amenities in the area include Crescent Girls' School, a swimming complex and several places of worship.

But there are no major malls. The nearest ones are Tiong Bahru Plaza and Great World City.

Since 2009, when property prices were at a low, prices have jumped at least 37 per cent. For instance, median resale prices at the 14-year-old Tanglin Regency stood at $1,216 per sq ft in the third quarter, up from $826 psf in the second quarter of 2009. Next door, prices at the 11-year-old Tanglin View have surged 54 per cent to $1,285 psf in the same period. Across the road, at The Metropolitan condominium, completed three years ago, median prices are also up more than 50 per cent to $1,317 psf. And at the nine-year-old freehold Alessandrea, prices have risen by 37 per cent in that period.

Still, one analyst noted that the number of resale transactions seems to have dipped. He said it could be due to last year's cooling measures. In 2010, 134 sales were recorded at the five condos in the area including Ascentia Sky. In the first nine months of this year, there were only 59 sales.

Still, compared to nearby estates like Tiong Bahru and Queenstown, Redhill boasts the lowest median resale prices so far this year, at $1,350 psf. At Tiong Bahru, with its many amenities, the figure is $1,378 psf while at Queenstown, it is $1,450 psf because of the limited private homes available.

Median rentals are also up since 2010. The rate of growth is higher than projects in nearby areas like Tiong Bahru. In the second quarter, rents at Tanglin View were $4.46 psf a month - a rise of 8.9 per cent - and $4.39 psf a month at Tanglin Regency, a rise of 20.1 per cent.

Industrial sites around Redhill present a catchment area of tenants and "is a very promising area due to its proximity to the city". "Prices of the newer condos may be relatively high now. But in a few years, the price increase in other parts of Singapore will make the prices in this area appear acceptable to more buyers," the analyst said.


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Caveats for strata factories, warehouses down in Q3

Source: Business Times

The number of caveats lodged for the purchase of strata factories and warehouses roughly halved in the third quarter of 2012, compared with the preceding quarter and the third quarter of last year.

The consultancy noted in its report that 729 caveats were lodged for purchases of strata factories and warehouses in 3Q, about half the 1,405 in 3Q last year; the figure was also markedly down from the 1,344 in 2Q this year.

The property consultancy attributes the fall to weak economic sentiment and soaring strata industrial property prices. Prices of 60-year-leasehold upper-storey factory and warehouse units rose 3 per cent quarter on quarter to reach $437 per sq ft (psf) in 3Q, surpassing 3Q 2008's peak by 41 per cent.

Leasing activity remained firm as more industrialists deferred their purchase plans amid the sky-high prices and renewed their leases instead. Monthly rents stabilised at $2 psf for upper-storey factory and warehouse units and $3 psf for high-tech units.

The consultancy warned that more than 20 million sq ft of total factory and warehouse space is expected to be completed next year. This is substantially more than the past decade's average annual figure of around nine million sq ft.

"How well prices can hold up will depend on banks' lending policies in financing buyers, particularly for the new 30-year leasehold units," the consultancy said.

In the longer term, however, a potential glut is expected to apply pressure on prices, particularly for projects that are not well located, he said.

Looking ahead, the rental market will continue to benefit from the current high industrial property prices as both are co-related.


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Tuas sites draw highest bids of $4.9m and $6.3m

Source: Business Times

JTC Corporation awarded the tenders for two sites at Tuas South Street 6 and 7 to the highest bidders, Kwong Lee Holdings and 800 Super Holdings respectively.

Kwong Lee Holding's highest bid of $4.9 million ($53.12 per sq ft per plot ratio, or psf ppr) for plot 31 at Tuas South Street 6 was 4 per cent higher than the second highest bid of $4.7 million ($51.08 psf ppr) submitted by Asiagroup Leasing.

A total of 11 bids were submitted for the 0.86-ha Tuas South Street 6 plot with the lowest bid of $2.4 million ($26.02 psf ppr) submitted by Uni Truck and Engineering.

The highest bid for the second site, at Tuas South Street 7, for $6.3 million ($57.98 psf ppr) was submitted by 800 Super Holdings, which was recently awarded two other plots at Tuas South Street 7 after submitting a highest combined bid of $9.5 million.

The 1.01-ha site at Tuas South Street 7 attracted six bidders with the lowest bid at $3 million ($27.61 psf ppr) submitted by UBTS Technologies.


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