Real News‎ > ‎2014‎ > ‎January 2014‎ > ‎

18 January 2014

Singapore Economy

Analysts see more positive outlook for S'pore market

Source: Business Times

Stockbroking analysts are sounding a more positive outlook for 2014, with leading houses looking for average earnings per share growth of 8 to 13 per cent for key index stocks covered. This comes on the back of forecast GDP growth expectations ranging from 3 to 5 per cent for 2014.

Singapore Real Estate News

Rental yields of non-landed private homes down at 3.9%

Source: Business Times 

Rental yields for non-landed private homes fell below the 4 per cent psychological mark at 3.9 per cent in 2013, from 4.2 per cent the previous year, according to the Singapore Real Estate Exchange (SRX). "For many investors seeking income from residential properties, 4 per cent is a psychological barrier when it comes to rental yields," Jeremy Lee, SRX co-founder and chief technology officer said.

Wheelock sells half of units in Panorama's first release

Half of the 120 units released for sale at The Panorama condominium were booked yesterday, developer Wheelock Properties said. Located at Ang Mo Kio Avenue 2, The Panorama is Wheelock's first 99-year suburban condo project here in nearly two decades. Prices of the units sold ranged from $650,000 for the one bedroom units to nearly $2.4 million for the five bedroom units.

Hillford retirement resort - all 281 units - snapped up

All 281 units at what is billed as Singapore's first retirement resort were snapped up within five hours yesterday. About 1,000 prospective buyers, who had earlier indicated their interest in the 60-year leasehold The Hillford, thronged the launch hoping to secure a unit.

'Rents may drop' with foreign tenant quotas

Source: Straits Times

Rents in areas popular with foreigners could fall significantly because of new quotas which cap how many public flats can be sublet to non-citizens, according to property agents. If your price is too high, then others who are renting out might get in there first," said Dennis Wee Realty's Mr Jimmy Chua, pointing out that landlords may scramble to secure tenants before the quotas are reached by cutting rents.

Kingsford owner is $33m bungalow buyer

Source: Business Times 

The owner of Kingsford Development, a Shenyang-based developer that has been making news in Singapore at state land tenders, has bought a plum bungalow on Sentosa Cove for $33 million. The building sits on 18,794 square feet of land, one of the largest for a bungalow plot in the upscale waterfront housing district.

Upper Serangoon View worth watching

Source: Straits Times

The long-anticipated upgrading works at Rivervale Plaza have finally been completed. The occasion was marked with a ceremony held Sunday evening at the two-storey mall in Sengkang. The upgrading first began in June 2011, but was delayed due to contractor problems.

The chill spreads in the home rental market

Source: Straits Times

It took a big fire at Marina Bay Suites to expose the chill in the rental market. One disconcerting fact to emerge from the incident at the posh condo is that less than 10 per cent of the units are occupied even though over 90 per cent of them have been sold by the developer already.

MOM to step up worksite inspections

Sounce: Channel News Asia

The Manpower Ministry (MOM) is stepping up worksite inspections from January 20 for two weeks to check on unsafe practices involving formwork structures.

MOM has also issued an advisory to professional engineers on Saturday to remind them of their obligations in the design, construction and inspection of formwork structures.

This follows two accidents at separate construction worksites last week which were caused by malpractices in erecting formwork structures.

MOM said while investigations into these accidents are in progress, preliminary findings showed that the formwork structures gave way during the concrete casting process.

This indicates that the structures were unable to support the load imposed on them during the casting process.

Fortunately, there were no serious injuries arising from these accidents.

MOM said the stepped up inspections will target formwork practices at construction worksites, such as unsafe design of formwork structures, improper erection of formwork structures, incompatible formwork components, and improper supervision and inspection of formwork structures.

MOM said these are in addition to its regular checks on formwork structures as part of its construction safety inspections.

- CNA/fa

Real Estate Companies' Brief

A-Reit Q3 DPU down 2.2% at 3.54 cents

Source: Business Times

Despite total amount available for distribution rising 4.9 per cent from $81.1 million to $85.1 million for the third quarter ended December, Ascendas real estate investment trust (A-Reit) posted a distribution per unit of 3.54 cents in Q3, a dip of 2.2 per cent from 3.62 cents a year ago. This was largely due to a 7.3 per cent increase in the number of units in issue at the end of the period.

OUE C-Reit launches IPO at 80 cents a unit

OUE Commercial Real Estate Investment Trust (OUE C-Reit) kicked off the first mainboard initial public offering (IPO) of the year yesterday evening, with a price of 80 cents per unit, a forecast distribution yield of 6.8 per cent for this year, and a 24 per cent discount to net asset value (NAV). The retail offering of 56.25 million units is open for application until noon on Thursday.

Solid Q4 results from industrial landlords

Source: Straits Times

Industrial landlords Cambridge Industrial Trust and Ascendas Reit yesterday posted solid sets of results for the final three months of last year. Cambridge Industrial Trust notched up a 3.8 per cent rise in fourth-quarter distributable income to $15.5 million from the preceding year, as it saved on paying performance fees to its manager.

Global Economy & Global Real Estate News

China Home Prices Advance as Guangzhou, Shenzhen Jump 20%

Source: Bloomberg News

New-home prices in China’s cities defined by the government as first tier rose more than 15 percent last month, led by Guangzhou and Shenzhen in the south, as local property curbs failed to deter buyers.

Prices climbed 20 percent in Guangzhou and Shenzhen from a year earlier, and jumped 18 percent in Shanghai and 16 percent in Beijing. They increased in 69 of the 70 cities tracked by the government, the National Bureau of Statistics said in a statement today.

At least 10 Chinese cities, many of them provincial capitals, have tightened local property policies since November, with the major cities of Shenzhen, Shanghai and Guangzhou all raising minimum down payments for second homes to 70 percent from 60 percent. Premier Li Keqiang has held off introducing more nationwide policies to cool the real estate market since he took office in March.

“China’s big cities will certainly implement the tightening measures more strictly this year,” said Alan Jin, Hong Kong-based property analyst at Mizuho Securities Asia Ltd. “China still cares about the fast-rising home prices, otherwise those local curbs wouldn’t have come out. They don’t seem to find better ways to tackle the problem.”

‘Near Despair’

Existing-home prices rose 20 percent in the capital Beijing last month from a year earlier and increased 14 percent in Shanghai, according to today’s data.

Private data also showed there’s no sign of cooling in the property market. Home prices in December had the biggest year-on-year gain in 2013, gaining 12 percent, according to SouFun Holdings Ltd., the nation’s biggest real estate website owner.

Beijing, the financial center of Shanghai, and the southern business hubs of Guangzhou and Shenzhen are considered first-tier cities by the bureau of statistics. The four “are characterized by high levels of international business connectivity, deep corporate bases and well-developed international grade stock, and they are the country’s most liquid and transparent markets,” according to broker Jones Lang LaSalle Inc.

First-tier cities, including Beijing and Shanghai, may impose further curbs if prices rise too fast, Standard & Poor’s Hong Kong-based analyst Bei Fu said on a conference call yesterday.

Almost one-fifth of respondents in a Renmin University of China survey gave a zero score to the government’s property policies, indicating “near despair” with housing prices, the official China News Service reported last month, citing survey results.

Home prices will rise about 5 percent this year from 2013, while home sales volume will jump about 10 percent, according to S&P.

Builders Begin Work on More U.S. Homes Than Forecast

Source: Bloomberg

Factories churned out more cars and appliances in December and homebuilders overcame inclement weather to begin work on more homes than projected, putting the U.S. economy on a strong footing heading into 2014.

Output at factories, mines and utilities climbed 0.3 percent to cap the strongest quarter since 2010, according to Federal Reserve figures issued today in Washington. Housing starts fell 9.8 percent to a 999,000 annualized rate following November’s 1.11 million pace that was the highest in six years, the Commerce Department reported.

Housing and manufacturing will be sources of strength for the economic expansion as gains in consumer spending propel demand for building materials, furniture and the newest model car. Another report today showing employers had more openings in November than at any time in more than five years means hiring will probably rebound following a disappointing gain last month.

“When I look at 2014, I’m looking at continued solid growth,” said Michael Carey, chief economist for North America at Credit Agricole CIB in New York, who was among the most accurate forecasters of the housing and production reports over the past two years, according to data compiled by Bloomberg. Housing “is going to be a contributor to growth in the next year, clearly, and the industrial sector as well.”

Construction Climbs

The median estimate of 83 economists surveyed by Bloomberg projected U.S. housing starts would drop to a 985,000 annualized rate. Estimates ranged from 925,000 to 1.08 million. The Commerce Department revised the November reading up to 1.11 million, which was the most since November 2007.

For all of 2013, builders began work on 923,400 homes, up 18.3 percent from the prior year and the most since 2007’s 1.36 million.

Most stocks fell, dragging the Standard & Poor’s 500 Index lower for the week, as earnings from companies including General Electric Co. and Intel Corp. disappointed investors. The S&P 500 declined 0.4 percent to 1,838.7 at the close in New York.

Some U.S. trading partners are also doing better. Retail sales in the U.K. rose more than economists forecast in December, led by a surge at department stores and smaller shops during the key Christmas season.

Permits (NHSPATOT) for future U.S. housing projects declined, a sign activity may pause in early 2014, today’s report also showed. Applications fell 3 percent to a 986,000 pace in December, less than the projected 1.01 million, according to the Bloomberg survey median.

Housing’s Contribution

“Housing will make a significant contribution to growth this year,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, who forecast a decrease to 997,000. “Higher prices are bringing more building.”

Work on single-family houses fell 7 percent to a 667,000 rate in December, while construction of multifamily projects such as condominiums and apartment buildings declined 14.9 percent.

Two of four regions showed a decrease in ground breaking last month, led by a 33.5 percent plunge in the Midwest. Starts fell 12.3 percent in the South, were little changed in the Northeast and rose 15 percent in the West to a six-year high.

Weather may have played a role in setting back some builders, auto dealers and retailers as last month was the coldest December since 2009. Snowfall was 21 percent above normal, according to weather-data provider Planalytics Inc.

Still, labor-market gains and rising real-estate values have developers upbeat about the industry’s prospects. Homebuilder sentiment in January held near its highest level in eight years, dipping to 56 from 57 in December. Readings greater than 50 mean more respondents report good market conditions.

Less Confident

Not all the news was good today. Consumer confidence unexpectedly declined in January, a sign spending may take time to accelerate early this year. The Thomson Reuters/University of Michigan preliminary sentiment index fell to 80.4 from 82.5 in December.

“The sentiment index is still at a respectable level,” said Michael Moran, chief economist at Daiwa Capital Markets America Inc. in New York. Still “it tells us were not breaking out into new territory.”

Chillier-than-normal temperatures were less disruptive to factories last month. The gain in production last month followed a 1 percent increase in November. For the final three months of 2013, output climbed at a 6.8 percent annualized pace, the most since the second quarter of 2010.

Consumer Spending

“There’s been a pickup in manufacturing in the last couple months,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, the top-ranked forecaster of production in the past two years, according to data compiled by Bloomberg. “Certainly you have to start with the consumer in the last couple of months and there’s been a pretty strong pace in goods consumption.”

Manufacturing (IPMGCHNG), which makes up 75 percent of total production, advanced 0.4 percent in December after a 0.6 percent gain. Economists projected a 0.3 percent increase last month, according to the Bloomberg survey median. Factory output in the fourth quarter increased at a 6.2 percent annualized rate, the strongest since the first three months of 2012.

Output increased last month over a broad swath of industries, including autos, appliances, furniture, home electronics and clothing.

Automakers completed their best sales year since 2007 and are upbeat about the year ahead. Dearborn, Michigan-based Ford Motor Co. (F), the second-largest U.S. automaker, plans to add 5,000 jobs in the U.S. as it introduces 16 new vehicles in North America this year.

Job Openings

Ford isn’t alone in looking to add staff. The number of positions waiting to be filled increased by 70,000 in November to 4 million, the most since March 2008, figures from the Labor Department also showed today. The gain in openings indicates employers were gaining confidence in the economic expansion, a sign last month’s hiring slowdown may have been weather-related.

Payrolls expanded by 74,000 workers last month after a revised 241,000 gain in November that was larger than initially estimated, the Labor Department reported on Jan. 10. The jobless rate dropped to 6.7 percent in December, the lowest level since October 2008, as more people left the labor force.

“All we need to do is get the jobs figures back up and get some more earnings growth, and that should sustain consumers at a decent pace,” said Credit Agricole CIB’s Carey.

- By Michelle Jamrisko and Lorraine Woellert