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27 January 2014

Real Estate Companies' Brief

New property additions bolster Parkway Life Reit in Q4
Source: Straits Times

New additions to its portfolio and increased rents bolstered numbers at Parkway Life Real Estate Investment Trust in the fourth quarter. Distribution per unit (DPU) rose 4.5 per cent to 2.82 cents on the back of a 4.5 per cent rise in distributable income to $17.04 million.

Views, Reviews & Forums

Consider safety and security issues in green efforts

Source: Straits Times

The Housing Board's green efforts are the right way forward but it needs to consider two important factors - security and safety - for the efforts to be sustainable ("HDB's green efforts set to rub off on developers"; last Thursday).

Relook HDB-CPF system of loans and fund usage

Source: Straits Times

The Singapore rental market is one that is largely confined to foreigners ("The chill spreads in the home rental market"; last Monday). Singaporeans are inclined to buy a home as the purchase is relatively painless, being funded with Central Provident Fund savings.

Global Economy And Global Real Estate News

Fed tapering poses risks to recovery: IMF

MD Lagarde warns of effects of reversal in currency flows to emerging economies
Source: Today Online

The International Monetary Fund’s (IMF) Managing Director has warned of the risks posed to global economic recovery from the reduction of the Federal Reserve’s monetary stimulus and falling prices in the eurozone.

Despite growing evidence that the global economy is faring better than it has for years, Ms Christine Lagarde said policymakers around the world have to be alert to the potential repercussions from the Fed’s “tapering”, a policy change it decided to embark upon last month.

So far, the move has been minimal — it has reduced the amount of bonds it buys each month by US$10 billion (S$12.8 billion) to US$75 billion — but many economists think that it could end this year if the United States economic recovery gains steam.

Over the past few years, the Fed’s stimulus, in its various guises, has had a big impact on financial markets. In addition to shoring up stock markets around the world, the new money the stimulus created has flown to emerging economies as investors sought better returns. Currencies such as the Indian rupee and the Brazilian real have been beneficiaries.

The withdrawal could prompt a reverse in those flows and see their currencies come under pressure.

“This is a new risk on the horizon and really needs to be watched,” Ms Lagarde said in a discussion on Saturday about the global economic outlook at the World Economic Forum in Davos.

Though the shock waves that hit Argentina this week were not specifically about tapering, the turmoil the country’s currency experienced — it fell by nearly 15 per cent on Thursday alone — was felt throughout the world, prompting stock markets to post broad-based declines.

Ms Lagarde also cautioned about the outlook for the 18-country eurozone. Although the currency bloc has emerged from its longest recession and many of the bailed-out countries appear headed for modest growth, inflation has fallen sharply. At last count, it was down at 0.8 per cent in the year to December, way below the European Central Bank’s target to keep price rises just below 2 per cent.

Many economists have worried that the eurozone may be about to suffer a debilitating bout of deflation, as Japan has experienced for the best part of two decades. Falling prices can hurt an economy as consumers postpone spending in the hope of getting cheaper deals in the future, while businesses fail to innovate and invest.

Ms Lagarde said the IMF thinks there is a 15 to 20 per cent chance that the eurozone may suffer deflation.

“The risk is that longer-term expectations are anchored at a much lower level than it is currently associated with,” she said.

Getting out of a deflationary spiral can be hugely difficult. Japan is now undertaking a major policy experiment — dubbed “Abenomics” after Prime Minister Shinzo Abe — involving a massive monetary stimulus, more government spending and big structural reforms. The hope is to get inflation up to 2 per cent.

Finance Minister Haruhiko Kuroda said the early signs were positive and voiced some optimism over the country’s growth.

“We are only halfway there,” he said. “There’s still a long way to go.”

- From Davos, Switzerland